CORCEPT THERAPEUTICS INC quarterly report, Q3 FY2023

Corcept Therapeutics Inc. — Q3 2023 Form 10-Q

Reporting period: Quarter and nine months ended September 30, 2023. Corcept is a commercial-stage pharmaceutical company whose marketed product is Korlym for certain adults with endogenous Cushing’s syndrome; it is also developing cortisol-modulating drug candidates.

Financial results and liquidity

Amounts below are in millions of dollars, except per-share data. Quarterly comparisons are with Q3 2022; nine-month comparisons are with the same 2022 period.

Metric	Q3 2023	Q3 2022	Nine months 2023	Nine months 2022
Net product revenue	$123.6	$101.7	$347.0	$298.8
Income from operations	$31.2	$31.9	$75.6	$90.1
Net income	$31.4	$34.6	$74.8	$84.8
Diluted earnings per share	$0.28	$0.30	$0.66	$0.73
Operating cash flow	Not provided separately	Not provided separately	$121.2	$86.9

Revenue grew 21.5% in Q3 and 16.1% year to date. Management attributed growth to higher sales volume and a January 2023 price increase. Higher volume accounted for 52.3% of Q3 growth and 44.2% of nine-month growth.
Operating expenses rose to $92.4 million in Q3 and $271.4 million year to date, largely reflecting increased research and development and selling, general and administrative spending. Operating margin was approximately 25.2% in Q3 versus 31.4% a year earlier, and 21.8% year to date versus 30.2%.
Research and development expense was $45.5 million in Q3 and $129.6 million year to date; selling, general and administrative expense was $45.3 million and $137.1 million, respectively. Cost of sales remained 1.3% of revenue.
Interest and other income increased to $5.2 million in Q3 and $12.1 million year to date, primarily due to higher market interest rates. Income tax expense was $5.0 million in Q3 and $13.0 million year to date; the year-over-year increase was primarily attributed to lower stock-based compensation deductions.
At September 30, cash and cash equivalents were $111.8 million, short- and long-term marketable securities totaled $303.0 million, and combined cash, cash equivalents and marketable securities were $414.8 million, versus $436.6 million at December 31, 2022. Current assets were $431.5 million and current liabilities $121.9 million.
Cash provided by operations was $121.2 million for the nine months, up from $86.9 million. Investing activities provided $73.8 million, while financing activities used $149.5 million, including $145.4 million for the tender offer. Cash increased $45.5 million from year-end to $111.8 million.
The balance sheet reports no borrowings or debt. Total liabilities were $132.3 million and stockholders’ equity was $461.7 million at September 30. The filing says current resources are expected to fund operations and planned R&D for the next 12 months and beyond without additional financing.

Material changes and business developments

Revenue growth did not translate into higher earnings: Q3 net income fell 9.3%, and nine-month net income fell 11.8%, as operating expenses increased faster than revenue and tax expense rose.
Corcept repurchased 6.6 million shares in its March/April 2023 tender offer at $22 per share for $145.4 million, excluding related fees and expenses. Weighted-average basic shares declined year over year.
Research and development spending increased across programs, especially oncology. Management expected both R&D and SG&A expense to be higher in 2023 than in 2022.
Development milestones disclosed include completed enrollment in the GRACE Phase 3 relacorilant trial, ongoing enrollment plans for GRADIENT and ROSELLA, and initiation of the MONARCH Phase 2b miricorilant trial in October 2023. These are pipeline updates, not reported trial outcomes.

Outlook, risks and contingencies

Management stated it expects to fund operations and planned development activities over the next 12 months and beyond from existing resources and operations. No specific revenue or earnings guidance figures are provided in the filing text.
Korlym remains the company’s principal revenue source. Key risks include generic competition, pricing and reimbursement changes, and dependence on a single supplier for Korlym’s active ingredient. The company held $8.8 million of strategic inventory at September 30.
Teva has FDA approval for a proposed generic Korlym product. A patent trial concluded in September 2023, but the judge had not issued a verdict as of the filing. Hikma’s settlement permits generic entry beginning October 1, 2034, or earlier under specified customary circumstances.
A U.S. Attorney’s Office investigation concerns Korlym sales and promotion, healthcare-professional relationships and payments, prior authorizations, and reimbursement. The government told the company it did not then consider Corcept a defendant; the company stated it is cooperating.
The proposed $14.0 million settlement of the Melucci securities litigation is subject to court approval and is expected to be covered in full by insurers. The balance sheet records a $14.0 million liability and matching insurance receivable.
The filing cites potential effects of the Inflation Reduction Act, including Medicare-related manufacturer costs beginning in 2025. It also identifies clinical-development, regulatory, supply-chain, product-safety, reimbursement and litigation risks.

Important facts for investors to verify

Updates and outcomes in the Teva patent litigation, and the timing or possibility of generic Korlym entry.
Status of the NJ USAO investigation and court approval and payment of the Melucci settlement.
Korlym sales growth, including the relative contributions of volume and price, and any changes in reimbursement or payer mix.
Progress, enrollment, costs and results for GRACE, GRADIENT, ROSELLA, MONARCH and other clinical programs.
Cash generation and spending trends, including the effect of higher R&D and SG&A costs and working-capital movements on operating cash flow.
Supplier continuity for Korlym’s active ingredient and the potential financial impact of IRA provisions and future generic competition.