Corcept Therapeutics Incorporated — 2011 Form 10-K
Reporting period: Fiscal year ended December 31, 2011; the filing also reports fourth-quarter results. Filed March 13, 2012. Corcept was a development-stage pharmaceutical company focused on cortisol-related metabolic and psychiatric disorders. The FDA approved Korlym (mifepristone) on February 17, 2012, after year-end, for a defined group of adults with endogenous Cushing’s syndrome. The company planned its U.S. commercial launch for the second quarter of 2012.
Financial performance and position
| Metric | FY 2011 | FY 2010 |
|---|---|---|
| Revenue | No collaboration revenue; no product sales reported | No collaboration revenue |
| Research and development expense | $21.0 million | $18.9 million |
| General and administrative expense | $11.3 million | $8.5 million |
| Total operating expenses / operating loss | $32.3 million / $(32.3) million | $27.4 million / $(27.4) million |
| Net loss | $(32.4) million; $(0.39) per share | $(26.0) million; $(0.38) per share |
| Net cash used in operating activities | $(27.4) million | $(22.3) million |
| Cash and cash equivalents at year-end | $39.6 million | $24.6 million |
| Working capital at year-end | $34.7 million | $21.1 million |
| Total liabilities at year-end | $5.0 million, all current; no long-term liabilities reported | $3.9 million, all current |
Margins are not meaningful because the company reported no 2011 revenue. Q4 2011 net loss was $9.9 million, or $0.12 per share, versus $7.1 million, or $0.10 per share, in Q4 2010. The filing reports no conventional debt balance.
Material changes versus the prior comparable period
- Net loss increased by $6.4 million year over year, as operating expenses rose about 18%. R&D increased 11%, principally reflecting Cushing’s syndrome program and Korlym manufacturing and commercialization preparation costs; G&A increased 33%, including market research, staffing, commercialization preparation and legal costs.
- Operating cash use rose by $5.1 million. Cash increased by $15.1 million, primarily supported by a January 2011 common-stock offering that generated approximately $41.8 million in net proceeds.
- Corcept submitted the Korlym NDA in April 2011 and received FDA approval in February 2012. Approval occurred after the reporting period and did not generate reported 2011 product revenue.
Outlook, commentary and risks
- Management expected cash resources to fund operations through the end of 2012, including the Korlym launch and planned clinical programs. It expected operating cash use to increase in 2012 as commercialization, clinical development and related infrastructure costs continued.
- Management expected R&D expense to decrease in 2012 compared with 2011, as lower Cushing’s syndrome trial costs were expected to outweigh increased spending on psychotic depression and selective GR-II antagonist programs. It expected G&A expense to increase with commercialization.
- Study 14, a Phase 3 trial of mifepristone for psychotic depression, remained ongoing. The company had reduced the trial to eight sites to conserve funds; enrollment was slower than anticipated, and prior Phase 3 trials had not met their primary endpoints.
- Key risks include uncertain Korlym uptake and reimbursement, competition, and dependence on single-source suppliers for the drug’s active ingredient and tablets. The API agreement with PCAS was due to expire in November 2012; a backup tablet supplier had not yet been qualified.
- Corcept anticipated that additional funding might be needed beyond 2012. Potential sources included equity or debt financing, partnerships, or the committed equity financing facility, each subject to availability and/or dilution or other unfavorable terms.
- Other material uncertainties include product safety and post-approval requirements, regulatory and clinical-trial outcomes, patent protection, and reputational or market-acceptance concerns related to mifepristone’s association with pregnancy termination. No material legal proceedings were reported. The auditor issued unqualified opinions, and management reported effective internal control over financial reporting.
Important facts for investors to verify
- Korlym’s launch timing, prescribing uptake, net pricing, reimbursement access and resulting revenue after FDA approval.
- Cash burn and liquidity relative to the company’s end-of-2012 funding estimate, including actual commercialization costs and any subsequent financing.
- Manufacturing continuity: extension of the PCAS agreement and qualification of an alternate tablet supplier.
- Study 14 enrollment, completion timing, results and any additional trial or funding requirements.
- Potential dilution from outstanding options and warrants; at December 31, 2011, 10.3 million options and 9.1 million warrants were outstanding.