Corcept Therapeutics Incorporated — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; comparative period is Q1 2022. Corcept is a commercial-stage pharmaceutical company whose marketed product is Korlym for certain patients with endogenous Cushing’s syndrome. It is also developing cortisol modulators for endocrine, oncology, ALS and metabolic indications.
Key financial results
| Metric | Q1 2023 | Q1 2022 | Change |
|---|---|---|---|
| Net product revenue | $105.7 million | $93.7 million | Up 12.8% |
| Income from operations | $14.9 million | $26.8 million | Down 44.5% |
| Net income | $15.9 million | $22.8 million | Down 30.3% |
| Diluted earnings per share | $0.14 | $0.20 | Down $0.06 |
| Operating cash flow | $26.0 million | $35.2 million | Down $9.3 million |
Revenue growth reflected higher sales volume and a January 1, 2023 price increase; higher sales volume accounted for 42.9% of the increase. Operating expenses rose to $90.8 million from $66.9 million. R&D increased to $40.9 million from $28.1 million, and SG&A rose to $48.6 million from $37.5 million. Cost of sales remained 1.3% of revenue. Operating margin was approximately 14.1%, versus 28.6%; net margin was approximately 15.0%, versus 24.3%. Interest and other income rose to $3.6 million from $0.1 million, partly offsetting lower operating income.
Financial position and liquidity
At March 31, 2023, cash and cash equivalents were $299.9 million and marketable securities were $165.1 million, totaling $465.1 million. Total assets were $617.8 million; total liabilities were $88.3 million; and stockholders’ equity was $529.6 million. The filing reports no debt balance. Operating cash flow was $26.0 million; investing cash flow was $207.5 million, primarily from maturities of marketable securities; financing cash flow was $0.2 million. Management said current resources are expected to fund operations and planned R&D for the next 12 months and beyond without additional financing.
Material developments, outlook and risks
- Management expects R&D and SG&A expenses to be higher in 2023 than in 2022 as clinical programs and commercial, administrative and marketing activities advance. The filing provides no specific revenue or earnings guidance in the supplied text.
- Clinical programs include Phase 3 relacorilant trials in Cushing’s syndrome (GRACE and GRADIENT), the Phase 3 ROSELLA ovarian cancer trial, and a Phase 2 dazucorilant ALS trial. Management planned to start a Phase 2 miricorilant trial for presumed NASH in Q4 2023. Clinical outcomes, enrollment and regulatory approval remain uncertain.
- After quarter-end, Corcept repurchased 6.6 million shares in its tender offer at $22 per share, for $145.4 million before fees. The offer had been announced in March and expired March 31; the purchase occurred April 5.
- The proposed $14.0 million Melucci securities-litigation settlement is subject to court approval and is expected to be fully covered by insurers; the company had recorded equal settlement liability and insurance receivable.
- Generic competition is a significant risk. Teva litigation remained pending, with a trial date set for September 27, 2023; the company says Teva has FDA approval and could choose to launch while litigation continues. Hikma’s settlement permits generic sales beginning October 1, 2034, or earlier under customary circumstances.
- A U.S. Attorney’s Office investigation concerning Korlym sales, promotion, healthcare-professional relationships and reimbursement was ongoing. The government had said Corcept was not then a defendant but was an entity whose conduct was within the investigation’s scope.
- Other risks include dependence on Korlym revenue, a single supplier for Korlym’s active ingredient, competition and reimbursement pressure, and potential effects of the Inflation Reduction Act. Corcept anticipates that Medicare changes taking effect in 2025 may materially limit Medicare revenue and reduce profits.
Investor facts to verify
- Whether Korlym volume growth and the January price increase can sustain revenue growth amid payer pressure and competition.
- Progress, enrollment, results and timelines for the Phase 3 relacorilant and ROSELLA trials and other pipeline programs.
- Developments in Teva litigation and the government investigation, as well as final court approval of the insured Melucci settlement.
- Post-tender-offer cash, share count and capital-allocation plans; the filing reported 101,577,897 shares outstanding on April 26, 2023.
- Execution of supply arrangements and the effect of higher planned R&D and SG&A spending on operating profitability and cash generation.