Corcept Therapeutics Inc. — Q2 2021 Form 10-Q
Business context and reporting period. This quarterly report covers the three and six months ended June 30, 2021. Corcept is a commercial-stage pharmaceutical company whose marketed product is Korlym for certain adults with endogenous Cushing’s syndrome; it is also developing selective cortisol modulators for other indications.
Financial results and position
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Net product revenue | $91.6m | $88.6m | $171.0m | $181.8m |
| Income from operations | $31.9m | $35.3m | $51.6m | $73.0m |
| Net income | $26.5m | $28.3m | $50.0m | $58.4m |
| Diluted EPS | $0.21 | $0.23 | $0.39 | $0.48 |
| Operating cash flow | Not presented separately for the quarter | $69.8m | $86.5m |
Q2 product revenue increased 3.4% year over year, while six-month revenue declined 5.9%. Management attributed Q2’s increase almost entirely to a higher average Korlym price; the first-half decline reflected lower sales volume, partly offset by price. A price increase took effect March 1, 2021. Cost of sales was 1.5% of revenue in Q2 and 1.6% for the first half, implying gross margins of approximately 98.5% and 98.4%, respectively. Operating margins were approximately 34.9% in Q2 and 30.2% for the first half.
For the first half, R&D expense was $57.3m, up from $52.6m, and SG&A was $59.5m, up from $53.1m. The company reported $95.4m of cash and cash equivalents and $376.2m of marketable securities at June 30, totaling $471.6m, versus $476.9m at year-end 2020. Total liabilities were $45.8m; the balance sheet presents no borrowings. No material change in contractual obligations was reported. The company repurchased $62.7m of shares under its program during the first half, with $127.6m of authorization remaining at June 30.
Changes, outlook, and material developments
- First-half net income fell 14.4% year over year as revenue declined and operating expenses increased. Operating cash flow decreased to $69.8m from $86.5m.
- Management expects 2021 R&D and SG&A expenses to exceed 2020 levels. The filing does not provide a clear numerical revenue forecast in the supplied text. Management said current cash resources and expected operations should fund planned activities without additional financing, though it may raise funds for other reasons.
- COVID-19 restrictions and changes in patient and physician behavior continued to hinder Korlym growth and slowed enrollment in some trials, including Cushing’s syndrome and antipsychotic-induced weight-gain studies. Management expects pandemic-related impediments to persist while outbreaks continue.
- Corcept stopped enrollment in its metastatic pancreatic cancer study after interim results suggested activity but not enough benefit to justify further study in end-stage disease. It suspended a Phase 2a NASH study after elevated liver enzymes occurred in four of the first five patients; the elevations resolved after treatment stopped. The company plans a dose-finding study.
- After positive Phase 2 ovarian cancer results, the company planned to begin a pivotal Phase 3 study of relacorilant plus nab-paclitaxel in Q1 2022. Two Phase 3 relacorilant Cushing’s syndrome trials were ongoing. The filing also describes clinical programs in other indications.
- Corcept settled its Sun generic-Korlym litigation, granting Sun a right to sell a generic starting October 1, 2034, or earlier under customary settlement circumstances; the agreement was submitted for FTC and DOJ review. Teva litigation and its appeal concerning a patent remain ongoing; Hikma litigation also remains ongoing.
- Other notable exposures include generic competition, Korlym’s single-source API supplier, reimbursement and pricing pressures, clinical and regulatory uncertainty, and pending securities and shareholder derivative litigation. The company recorded no loss contingency provision to date.
Key investor verification points
- Assess whether Korlym sales volume recovers as pandemic-related disruption eases, and distinguish price effects from underlying demand.
- Track spending growth, operating cash flow, and the use of cash for share repurchases relative to clinical-development needs.
- Verify relacorilant trial progress and the planned ovarian cancer Phase 3 start; monitor the safety and design of miricorilant’s proposed liver-disease dose-finding study.
- Monitor generic-entry risks, including the Sun settlement terms and outcomes of Teva and Hikma proceedings.
- Review COVID-19 effects on commercial activity and trial enrollment, as well as developments in the disclosed securities and derivative cases.