Corcept Therapeutics Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; comparisons are with Q1 2020 unless otherwise noted. Corcept is a commercial-stage pharmaceutical company; its marketed product is Korlym for certain adults with endogenous Cushing’s syndrome, and it is developing cortisol modulators for additional indications. Amounts below are in millions, except per-share data.
Financial performance and liquidity
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Net product revenue | $79.4 | $93.2; down 14.8% |
| Cost of sales | $1.3; 1.6% of revenue | $1.9; 2.0% of revenue |
| Research and development | $29.0 | $26.1 |
| Selling, general and administrative | $29.5 | $27.5 |
| Operating income | $19.6; 24.7% margin | $37.7; 40.5% margin |
| Net income / diluted EPS | $23.5 / $0.18 | $30.1 / $0.25 |
| Cash from operating activities | $25.4 | $33.3 |
| Cash, cash equivalents and marketable securities | $454.8 at March 31 | $476.9 at December 31, 2020 |
| Total liabilities | $41.6 | $48.4 at December 31, 2020 |
Revenue declined primarily because fewer Korlym tablets were shipped; management attributed this mainly to COVID-19-related barriers to physician visits, diagnosis, treatment initiation and dose adjustment. The filing reports a March 1 Korlym price increase. R&D rose with increased spending on Cushing’s syndrome, metabolic and preclinical programs, partly offset by lower oncology spending tied to trial enrollment timing. SG&A increased due to compensation and professional-service costs. Interest and other income fell to $0.3 million from $1.5 million, largely reflecting lower market interest rates.
The Q1 2021 income tax benefit was $3.6 million, versus $9.1 million of tax expense in Q1 2020, mainly because of increased excess tax benefits from stock-option exercises. This materially affected the comparison between operating income and net income. Cash and cash equivalents were $52.4 million; marketable securities were $402.4 million. The company reported no debt. Cash used in financing was $45.9 million, including $33.5 million of share repurchases and $16.4 million paid for tax withholding on net option exercises. Current assets were $409.6 million and current liabilities $40.6 million.
Business developments, outlook and risks
- Outlook: Management expects 2021 R&D and SG&A expenses to exceed 2020 levels. It expects to fund current operations and planned R&D without additional financing under current plans, while noting it may raise capital for other reasons. The filing refers to public 2021 revenue guidance but does not provide a clear guidance figure in the supplied text.
- Clinical programs: Two Phase 3 relacorilant trials for Cushing’s syndrome were underway. The company reported in May 2021 that a Phase 2 ovarian-cancer trial showed statistically significant progression-free survival improvement for the intermittent-dose relacorilant arm; the daily-dose arm’s improvement was not statistically significant. A pivotal Phase 3 trial was being planned. An interim analysis in a pancreatic-cancer trial was expected in the first half of 2021.
- Safety-related development change: In April 2021, Corcept suspended its Phase 2 NASH trial after elevated liver enzymes were observed in four of the first five patients treated for four weeks. The elevations resolved after treatment withdrawal; the affected patients also had substantial liver-fat reductions. The company said it was revising the program to pursue the potential benefit safely.
- COVID-19: The pandemic reduced Korlym sales and slowed enrollment and site activity in several trials, with less disruption reported in trials for immediately life-threatening cancers. The duration and extent of these effects remained uncertain.
- Generic competition and litigation: Teva, Sun and Hikma had filed ANDAs for generic Korlym and were in patent litigation. Teva appealed a patent ruling in Corcept’s favor; the filing cautions that generic entry could materially reduce sales. The company also disclosed a securities class action and two stayed shareholder derivative actions; outcomes were uncertain. No loss contingency was accrued.
- Supply and other risks: Corcept relies on a single supplier for Korlym’s active ingredient and a single specialty pharmacy for distribution. Principal risks also include clinical-trial failure or delay, adverse effects, reimbursement and pricing pressure, patent challenges, and dependence on Korlym revenue.
- Capital allocation: The $200 million repurchase authorization ran through September 30, 2021 unless suspended or terminated; $156.8 million remained at March 31.
Important facts for investors to verify
- Whether Korlym shipments and revenue recover as pandemic-related healthcare disruptions ease, and the impact of the March price increase.
- Progress, enrollment and results for the Phase 3 Cushing’s trials and other clinical programs, including the revised NASH plan and the ovarian-cancer findings.
- Developments in Teva, Sun and Hikma generic litigation and the timing or possibility of generic Korlym competition.
- Whether the cash and investment balance remains sufficient as operating expenses, clinical spending and share repurchases continue.
- Updates on the securities and derivative litigation and any change in the company’s assessment of potential losses.