CORCEPT THERAPEUTICS INC annual report, FY2022

Corcept Therapeutics Incorporated — FY 2022 Form 10-K

Reporting period: Fiscal year ended December 31, 2022. This is an annual filing, not a quarterly report; the supplied text does not provide a clear standalone fourth-quarter income statement or cash-flow summary. Corcept is a commercial-stage biopharmaceutical company whose marketed product is Korlym, for certain adults with endogenous Cushing’s syndrome. Its pipeline focuses on selective cortisol modulators.

Financial performance and liquidity

MetricFY 2022FY 2021Change
Net product revenue$401.9 million$366.0 million+9.8%
Income from operations$112.6 million$124.5 million-9.5%
Net income$101.4 million$112.5 million-9.9%
Diluted EPS$0.87$0.89-2.2%
Cash provided by operating activities$120.3 million$167.9 million-28.3%
  • Cost of sales was $5.4 million, or 1.3% of revenue; gross margin was approximately 98.7%. Operating margin was approximately 28.0%, and net margin approximately 25.2%.
  • Research and development expense increased 15.0% to $131.0 million. Selling, general and administrative expense increased 24.9% to $152.8 million.
  • Cash, cash equivalents and marketable securities totaled $436.6 million at year-end, up from $335.8 million. Current assets were $499.3 million and current liabilities $72.5 million.
  • The balance sheet presents no borrowings or other debt balance. Total liabilities were $81.6 million. The company says it expects current resources and Korlym revenue to fund operations and planned R&D for the next 12 months and beyond without additional financing.
  • Investing activities used $114.3 million, primarily reflecting purchases of marketable securities. Financing activities used $17.3 million, including cash paid for share withholding and netted option exercises. FY 2021 financing cash use was $302.6 million, including a $207.5 million tender offer and $88.5 million of repurchases.

Material changes versus the prior year

  • Revenue growth reflected higher sales volume and Korlym price increases. Management attributed 54.6% of the 2022 revenue increase to sales volume and the remainder to price increases effective January 1, 2022.
  • Despite higher revenue, operating income and net income declined as R&D and SG&A spending rose. R&D growth reflected advancing development programs and employee compensation; SG&A growth reflected commercial activity, compensation and legal fees.
  • Operating cash flow fell to $120.3 million, primarily due to higher current income taxes following the capitalization of R&D costs for tax purposes. Cash taxes paid rose to $39.7 million from $9.1 million.
  • Basic and diluted weighted-average shares fell to 106.8 million and 116.0 million, respectively, from 115.7 million and 126.0 million, following substantial 2021 repurchases.

Outlook, business developments and risks

  • Management expects R&D and SG&A expenses to be higher in 2023 as clinical, commercial and administrative programs advance. The filing provides no specific 2023 revenue or earnings guidance.
  • Relacorilant is in Phase 3 trials for Cushing’s syndrome and a Phase 3 trial for platinum-resistant ovarian cancer. Dazucorilant entered a Phase 2 ALS trial in October 2022. The company planned a Phase 2 NASH trial for the fourth quarter of 2023; this is a stated plan, not a reported outcome.
  • Corcept suspended a Phase 2a NASH trial of miricorilant after four of five treated patients developed elevated liver enzymes, which returned to baseline or below after treatment stopped. Two Phase 2 trials did not show reversal of antipsychotic-induced weight gain; the company plans to study prevention of that weight gain.
  • COVID-19-related limits on patient visits and clinical-site activity had constrained Korlym growth and slowed some trials. Management said impacts could continue while restrictions or risk-reducing behavior persist.
  • Generic competition is a central commercial risk. Teva has FDA approval for a generic Korlym product, and litigation remained ongoing; the filing says Teva could elect to market its product. Corcept settled with Hikma, granting it the right to sell a generic beginning October 1, 2034, or earlier under customary settlement conditions. The settlement was subject to government review.
  • A U.S. Attorney’s Office investigation into Korlym sales and promotion, healthcare-professional relationships and payments, prior authorizations, and reimbursement remained ongoing. The company said it was cooperating and was not then considered a defendant.
  • The proposed $14.0 million settlement of the Melucci securities class action was recorded in FY 2022 with an equal insurance recovery; the company stated the payment would be covered in full by insurers. Court approval remained pending.
  • Other risks include dependence on Korlym, one API supplier and one specialty pharmacy; reimbursement and drug-pricing changes, including the Inflation Reduction Act; clinical and regulatory uncertainty; potential product side effects; and patent challenges. The auditor reported unqualified opinions on the financial statements and internal controls. Inventory excess and obsolescence estimates were identified as a critical audit matter.

Important facts for investors to verify

  • Korlym prescription volume, net pricing, payer mix and rebate/chargeback assumptions underlying revenue growth.
  • Whether Teva markets its generic product, the status and outcome of the remaining patent litigation, and the effective dates and terms of generic-entry settlements.
  • Progress, enrollment, safety findings and results for the relacorilant Phase 3 trials and the dazucorilant ALS trial; confirm the status of the planned NASH trial.
  • Developments in the U.S. Attorney’s Office investigation and final court approval and insurance payment of the Melucci settlement.
  • Future operating cash flow and tax payments under R&D capitalization rules, and whether spending increases remain consistent with management’s stated funding outlook.