Corcept Therapeutics Incorporated — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. Although the request identifies 2021 Q4, this is an annual filing; the supplied text does not provide a clear standalone fourth-quarter financial summary. Amounts below are for the full year unless stated otherwise. The filing was signed February 15, 2022.
Business context
Corcept is a commercial-stage pharmaceutical company developing medicines that modulate cortisol. Its marketed product, Korlym (mifepristone), treats certain adults with endogenous Cushing’s syndrome in the United States. Its development portfolio includes relacorilant, exicorilant, miricorilant and dazucorilant.
Financial performance and liquidity
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Net product revenue | $366.0 million | $353.9 million | +3.4% |
| Income from operations | $124.5 million | $128.2 million | -2.9% |
| Net income | $112.5 million | $106.0 million | +6.1% |
| Diluted earnings per share | $0.89 | $0.85 | +4.7% |
| Cash from operating activities | $167.9 million | $152.0 million | +10.5% |
| Cash, cash equivalents and marketable securities, year-end | $335.8 million | $476.9 million | -29.6% |
- Revenue growth reflected higher Korlym volume and price, including a price increase effective March 1, 2021. Management attributed 20.7% of the 2021 increase to higher sales volume.
- Cost of sales was $5.3 million, or 1.4% of revenue, versus 1.6% in 2020. Operating margin was approximately 34.0% versus 36.2%; net margin was approximately 30.7% versus 30.0%.
- R&D expense was $113.9 million, down from $114.8 million; SG&A expense rose to $122.4 million from $105.3 million. Lower oncology spending was partly offset by higher compensation and spending on other programs. Interest and other income fell to $0.5 million from $3.4 million. Income tax expense declined to $12.5 million from $25.6 million, mainly reflecting a lower effective tax rate.
- Year-end current assets were $266.5 million and current liabilities $47.5 million, a current ratio of approximately 5.6. Total liabilities were $48.0 million; the balance sheet reports no borrowings or other financial debt.
- Cash and securities declined substantially, principally in a year with $207.5 million spent on a tender offer and $88.5 million on the stock repurchase program. Operating cash flow increased year over year. The company reported $318.8 million of share purchases, including amounts associated with option exercises, and net cash used in financing activities of $302.6 million.
Material changes and outlook
- Korlym revenue continued to grow, but at a slower rate than in 2020: annual revenue growth was approximately 3.4% in 2021 versus 15.5% in 2020.
- Relacorilant was in two Phase 3 Cushing’s syndrome trials, GRACE and GRADIENT. In a Phase 2 platinum-resistant ovarian cancer trial, the intermittent-dose combination with nab-paclitaxel improved median progression-free survival versus nab-paclitaxel alone (5.6 versus 3.8 months; statistically significant). Overall-survival data were immature and the reported comparison was not statistically significant. The company planned to start a pivotal Phase 3 trial in Q2 2022.
- Two Phase 2 trials of miricorilant for antipsychotic-induced weight gain were underway. A Phase 2a NASH study was suspended after elevated liver enzymes in four of five treated patients; elevations resolved after treatment stopped. A Phase 1b dose-finding study was initiated to examine an alternative regimen.
- Dazucorilant had completed Phase 1; management planned to advance it to Phase 2 for ALS in 2022. Management expected R&D and SG&A expense to be higher in 2022 as development and commercial activities advanced.
- Management said existing resources were expected to fund operations and planned R&D for the next 12 months and beyond, though additional financing could be pursued. No specific 2022 revenue guidance is stated in the supplied filing text.
Risks, contingencies and unusual items
- COVID-19 restrictions and patient/physician behavior reduced Korlym growth opportunities and slowed enrollment in some trials, particularly Cushing’s syndrome, CRPC and AIWG studies. Management expected pandemic-related impediments to continue while restrictions and risk-reducing behavior persisted.
- Korlym faces competition from other Cushing’s treatments and potential generics. Teva had FDA approval for its generic and could elect to launch while litigation continued; the company said it would seek to prevent or address such a launch. Teva’s challenge to a Corcept patent was rejected, with the Federal Circuit affirming in December 2021. Corcept settled its Sun litigation, granting a right to sell a generic beginning October 1, 2034, or earlier in customary circumstances. Hikma litigation remained pending.
- In November 2021, the U.S. Attorney’s Office for the District of New Jersey issued a records subpoena concerning Korlym sales and promotion, healthcare-professional relationships and payments, and reimbursement. The government said Corcept was not then a defendant, but its conduct was within the investigation’s scope.
- A securities class action had claims proceeding to discovery after a partial denial of the company’s motion to dismiss; related derivative cases were stayed, and another derivative complaint was filed in January 2022. The company said outcomes could not be predicted. It recorded no loss contingency for the legal and regulatory matters described.
- Manufacturing and distribution are concentrated: PCAS is the sole Korlym API supplier and one specialty pharmacy dispenses the product. The company held strategic inventory to mitigate supply risk. Generic entry, reimbursement or pricing changes, clinical failures, adverse effects, patent challenges and data-security or regulatory issues could materially affect results.
- The audit opinion on the consolidated financial statements and the auditor’s opinion on internal control over financial reporting were unqualified; management concluded controls were effective at year-end.
Most important facts for investors to verify
- Current Korlym sales, pricing and patient-volume trends, including the effect of COVID-19 and payer mix.
- Developments in Teva and Hikma generic litigation, any generic launch, and the terms and regulatory review of the Sun settlement.
- Progress, enrollment, safety findings and readouts for GRACE, GRADIENT, the ovarian cancer program, AIWG studies and the NASH dose-finding trial.
- Status and potential implications of the New Jersey U.S. Attorney’s Office investigation and pending shareholder litigation.
- Cash and securities after the 2021 repurchases, ongoing investment needs, and whether expected 2022 cost increases and clinical milestones remain on plan.