Corcept Therapeutics Inc

NASDAQ:CORT

Earnings Call Transcript 2018-Q1

[Operator]

Good day and welcome to the Corcept Therapeutics Conference Call. Today's conference is being recorded. [Operator Instructions] At this time I would like to turn the conference over to Charlie Robb. Please go ahead, sir.

[Charles Robb, CFO]

Good afternoon. I am Corcept's Chief Financial Officer and thank you all for joining us. Earlier today, we issued news release giving our first quarter financial results and providing an update on our clinical development activities. For a copy, go to corcept.com and click the Investors tab. Complete financial results will be available when we file our Form 10-Q with the SEC. Today's call is being recorded. A replay will be available through May 22 at 1-888-203-1112 in United States and 719-457-0820 internationally. The passcode will be 3450659.

Statements made during this call that are not statements of historical fact are forward-looking statements subject to known and unknown risks and uncertainties that might cause actual results to differ materially from those expressed or implied by such statements.

Forward-looking statements include statements regarding our revenue and expense estimates for 2018 and beyond; the pace of physicians' and patients' acceptance of Korlym; the cost, timing and results of our clinical trials, including the interim and final results of our trials of relacorilant to treat patients with Cushing's syndrome; our Phase 1/2 trial of relacorilant to treat patients with pancreatic cancer and other solid tumors; our trial of CORT125281 in castration-resistant prostate cancer; our Phase 1 trial of CORT118335 and our anticipated Phase 2 trials of CORT118335 to treat patients with antipsychotic-induced weight gain and non-alcoholic steatotic hepatitis; the protections afforded by Korlym's orphan drug designation for Cushing's syndrome and our other intellectual property rights, including the composition of matter patents covering our selective cortisol modulators and patents covering the use of cortisol modulators to treat patients with Cushing's syndrome, triple-negative breast cancer, castration-resistant prostate cancer, pancreatic cancer, and other indications.

These and other risks are set forth in our SEC filings, which are available at our Web-site and the SEC's Web-site. We disclaim any intention or duty to update forward-looking statements made during this call.

Now, I'll review our financial results. Corcept's revenue in the first quarter was $57.7 million, a 109% increase from our revenue in the first quarter of 2017. This growth reflects a net price increase of approximately 4% taken at the start of the year, but otherwise represents broad-based organic growth, more physicians prescribing Korlym to more patients. As we stated on our last call, we expect revenue for 2018 to be between $275 million and $300 million. We look forward to significant growth in 2019 and beyond.

Our fully diluted net income in the first quarter was $0.14 per share compared to $0.04 per share in the first quarter of 2017. When considering our income, keep in mind that our expenses in the first quarter included for the first time a material amount of income tax, $3.8 million. Last quarter we reported a one-time gain of $77 million as we brought on to our balance sheet the majority of our deferred tax assets, which represent the value of the net operating losses and R&D tax credits we accumulated in the years we spent developing Korlym and our proprietary selective cortisol modulators. Having recognized the value of these assets, our income tax expense now reflects both tax we must ultimately pay and the tax we are using at our deferred tax assets to offset.

[In the first quarter] [ph] $600,000 of [indiscernible] obligation, accrued [indiscernible] net operating losses to offset state income tax. We will offset the remaining $3.2 million of [indiscernible] expense entirely using our deferred tax assets. This amount is not cash expense.

Excluding non-cash expense related to stock compensation and utilization of our deferred tax assets, our first quarter non-GAAP net income was $24.5 million compared to $7.4 million in the first quarter of 2017. Our cash and investments at March 31 were $140.4 million, up from $104 million at year-end. Our March 31 balance includes the $12.9 million we received in January in settlement of litigation with former specialty pharmacy.

As we've said in past calls, we believe revenue from our [Cushing's] [ph] syndrome franchise together with our cash on hand will be sufficient to fully fund our commercial business, conduct Phase 2 and Phase 3 trials of relacorilant in both Cushing's syndrome and solid tumors, conduct Phase 1, Phase 2, and phase 3 trials of CORT125281 for castration-resistant prostate cancer and CORT118335 for antipsychotic-induced weight gain and NASH, and [advance to clinic] [ph] additional proprietary selective cortisol modulators.

I will now turn the call over to Dr. Joseph Belanoff, our Chief Executive Officer. Joe?

[Joseph K. Belanoff, CEO, President and Director]

Thank you, Charlie, and thank you everyone for joining us today. Corcept had another strong quarter. Revenue grew to $57.7 million, 109% more than our revenue in the first quarter last year. Excluding significant non-cash items, our non-GAAP income was $24.5 million, a 233% increase over the first quarter last year. Our cash and investments grew by $36.4 million to $140.4 million.

We generated these increases despite a commercial challenge we face at the start of every year, when many insurance companies force patients to obtain reauthorization of coverage for Korlym and many other medications and to spend the reimbursement until that process is complete. Patients taking Korlym with help from their doctors and our specialty pharmacy eventually overcome this hurdle and we provide Korlym to them at no cost until they do. As we've said in past calls, we expect our growth to continue. We are forecasting 2018 revenue of between $275 million and $300 million and expect significant growth in 2019 and beyond.

The first quarter growth in our Cushing's syndrome franchise was driven by the factors I've described on previous calls. Most important, Korlym works extraordinarily well for nearly all patients with hypercortisolism. Physicians are increasingly aware that hypercortisolism is a serious condition that merits treatment and are screening more patients for the disorder, often patients who exhibit the symptoms of excess cortisol activity, such as glucose intolerance or hypertension, but who have not responded to conventional therapies for those specific problems. When they identify patients with hypercortisolism, physicians have become more likely to select cortisol modulation with Korlym at the optimum medical treatment.

A poster giving one example of this shift in medical practice was presented at the 2017 annual meeting of the American Association of Clinical Endocrinologists or AACE. An endocrinologist in private practice screens 34 patients with severe Type 2 diabetes who were taking U-500 insulin. [Indiscernible] discovered 14 with hypercortisolism who refused surgery or were not candidates for surgery. These patients were prescribed Korlym. A poster at this year's AACE annual meeting, Poster #81995, will present the results. After six months of treatment with Korlym, these patients exhibited a 41% reduction in their daily insulin requirement and at the same time significantly improved glycemic control is demonstrated by among other measures a 1% or greater reduction of Hemoglobin A1C.

Despite doctors' growing awareness of and willingness to treat hypercortisolism and despite growing appreciation of Korlym's ability to normalize cortisol's level of activity, a significant limitation of Korlym's potential for growth is unchangeable, Korlym's affinity for the progesterone receptor or PR. PR affinity makes Korlym an abortifacient. Just as important, it causes endometrial thickening and vaginal bleeding in many women of all ages. Physicians and patients would strongly prefer to avoid these effects.

Korlym's PR affinity also erects a logistical barrier to patient access. Because its active ingredient is the same as the abortion pills, Korlym's distribution is tightly controlled. A medication with Korlym's efficacy that did not cause PR related adverse events would be a significantly superior treatment and one that could be distributed more broadly. It would make cortisol modulation a safer and easier to access option.

As many of you know, we are conducting the Phase 2 trial of one of our proprietary selective cortisol modulators, relacorilant, a potent cortisol modulator with no progesterone activity. Relacorilant's Phase 2 trial is a 30-patient open-label study being conducted in the United States and Europe. The trial consists of two cohorts.

The first, low dose group, receive a daily relacorilant dose of 100 mg for four weeks followed by four weeks of 150 mg and then four more weeks of 200 mg. This group has completed the study. The second, high dose cohort, follows the same protocol but with daily doses of 250 mg for the first four weeks followed by four weeks each of 300 mg, 350 mg, and 400 mg per day. We added the 400 mg dose because of the lack of toxicity seen at lower doses.

Last quarter we released top line results from the low-dose cohort. They were striking. At these doses, we expected relacorilant to be very well tolerated, and it was. We also did not expect to see much efficacy. But instead we saw statistically significant improvement in key symptoms of Cushing's syndrome. Patients with hyperglycemia exhibited statistically significant dose-dependent improvements in glucose tolerance. Serum osteocalcin, a marker of bone growth, suppressed in patients with Cushing's syndrome who often suffer from osteoporosis, also improved with statistical significance. 45% of the patients with hypertension experienced a 5 millimeter or greater reduction in systolic or diastolic blood pressure.

That the improvement in glucose tolerance and serum osteocalcin were statistically significant in just 17 patients is proof of their consistency. There was not only a large drug effect size, there was also a small standard deviation. Again, despite relacorilant's clear evidence of clinical activity, there were no serious adverse events and no drug-related discontinuations. As expected, there was also no evidence of PR affinity in the cohort's female patients, ranged in age from 31 to 60 [indiscernible]. The reason for this is simple. Relacorilant does not bind to PR, a fact we have verified pre-clinically with our results published last year in a leading peer-reviewed publication, the Journal of Medicinal Chemistry. These results will be displayed in detail at the American Association of Clinical Endocrinologists AACE's annual meeting in Boston next week.

As we disclosed in our press release, this trial is now fully enrolled. In the meantime, we have already learned enough to begin preparing our Phase 3 trial which we expect to open later this year.

I'll now turn to our oncology program. Cortisol modulators may help treat solid tumors through several [mechanisms] [ph]. In cancers, where the tumors express the glucocorticoid receptor or GR, such as pancreatic, triple-negative breast, and ovarian cancer, cortisol stimulates genes that prevent apoptosis, the programmed cell death chemotherapies are meant to provoke. Preventing the stimulation of apoptosis suppressing genes by adding a cortisol modulator to a chemotherapy regimen should allow that regimen to achieve its optimal effect.

Cortisol modulation may also increase the effectiveness of therapies that stimulate the body's immune system to fight cancer. A healthy body produces cancer cells regularly but the immune system identifies and destroys them. Cortisol even at normal levels suppresses the immune system. The physiological and psychological stress of cancer and its treatment raise cortisol activity, creating even greater immunosuppression. Cortisol modulators counter this effect, allowing the immune system to act more potently.

Our open label Phase 1/2 trial of relacorilant plus nab-paclitaxel, Celgene's drug Abraxane, to treat patients with solid tumors, continue to seek this combination's maximum tolerated dose. The human results produced so far replicate the combination's potent preclinical effects. The trial's lead investigator, Dr. Pamela Munster of the University of California at San Francisco, will present the current results at the ASCO Annual Meeting in June.

As I mentioned on the last conference call, based on these initial findings, we have opened an expansion cohort in patients with metastatic pancreatic cancer, a dire disease for which there are no good treatment options, and expect to open additional expansion cohorts in patients with other tumor types including ovarian and triple-negative breast cancer, later this year. We expect to have results from our cohort of patients with metastatic pancreatic cancer by year-end.

As we develop relacorilant, our collaborators at the University of Chicago are following their groundbreaking foundational research in cortisol modulation with their own clinical trials involving Korlym. With financial support from Celgene, they continue to enroll patients in their 64-patient, double-blind, placebo-controlled, multicenter Phase 2 trial of Korlym plus Abraxane to treat patients with triple-negative breast cancer. We are providing Korlym and possess the intellectual property covering the use of this combination of medications.

These investigators have also begun enrolling a 74-patient open-label Phase 2 trial of Korlym in combination with Merck's immunotherapy agent Keytruda to treat patients with triple-negative breast and HER2 negative breast cancer.

It is well-known that androgens stimulate growth in tumors of the prostate. That is why androgen deprivation, known as chemical castration, is a common treatment. It has been shown more recently that patients treated with the androgen receptor blocker, enzalutamide, Pfizer's drug Xtandi, quickly developed colonies of cells where cortisol is the tumor's growth factor. Combining a cortisol modulator with an androgen modulator such as enzalutamide from the outset of treatment, they block this cancer escape route.

The development of cortisol modulation to treat patients with castration resistant prostate cancer is now advancing on two tracks. Our open label Phase 1/2 trial of our proprietary selective cortisol modulator CORT125281 combined with Xtandi is dosing patients at sites in the United States and the United Kingdom. At the same time, University of Chicago investigators continue to enroll patients in their 84-patient controlled multicenter Phase 2 trial of Korlym plus Xtandi. The Department of Defense and the Prostate Cancer Foundation are funding this trial. Pfizer is providing Xtandi. We are providing Korlym and possess the intellectual property for the use of this combination of medications.

As many of you know, we are conducting a Phase 1 trial of our proprietary selective cortisol modulator, CORT118335. This compound has particularly potent effects to [indiscernible]. We feel it has the potential to treat two serious disorders, antipsychotic-induced weight gain and non-alcoholic steatotic hepatitis which is commonly referred to as NASH.

Antipsychotic medications such as Eli Lilly's drug ZYPREXA and Johnson & Johnson's drug Risperdal are effective treatments for psychotic disorders. In the United States, millions of people rely on them. Unfortunately, these medications also cause serious metabolic side effects, including weight gain, hyperglycemia, and hyperlipidemia. There are no good treatment options for patients suffering these ill effects caused by the antipsychotic medication that they absolutely need to take.

Controlled study show that Korlym was an effective treatment for the metabolic side effects caused by these medications. [Indiscernible] ago, we conducted a placebo-controlled clinical trial in which healthy human subjects were administered ZYPREXA plus either placebo or Korlym. We conducted a similar trial using Risperdal. In both studies, Korlym prevented the adverse metabolic effects that these medications cause. The study results were published in the journals, Advances in Therapy in October 2009 and in journal Obesity in December 2010.

Many of you are already familiar with NASH, a form of liver inflammation that is often a precursor to cirrhosis. NASH affects millions of people in the United States and there are no good treatment options. Our interest in cortisol modulation as a treatment for NASH is also based on human data, the observation that Korlym reverses fatty liver disease in patients with Cushing's syndrome.

But despite its demonstrated promise, Korlym's abortifacient properties, which necessitate tightly controlled distribution, disqualify it as a treatment for these widespread conditions. A selective cortisol modulator is required. In animal models, CORT118335 potently prevents and reverses the effects of ZYPREXA. It also prevents and reverses both fatty liver disease and liver fibrosis, a symptom of NASH. These results are striking on their own. They are especially compelling in light of our clinical findings with Korlym. If CORT118335's Phase 1 trial is successful, we plan to advance it to Phase 2 for these indications by year-end.

To recap, Corcept had another excellent quarter, driven by the continued increase in the number of patients receiving Korlym. Revenue increased by 109% over the same period in 2017. We expect 2018 revenue of between $275 million and $300 million, with significant growth in 2019 and beyond. Excluding significant non-cash items, our non-GAAP net income increased by 233% over the first quarter last year. Our cash and investments grew by $36.4 million. We have no debt.

Our Phase 2 trial of relacorilant is fully enrolled. A poster detailing the results from its low-dose cohort will be displayed at the AACE Meeting in Boston next week and results from the high-dose group will be released as soon as they are available. We are planning to start relacorilant's Phase 3 trial later this year. Our trial of relacorilant in combination with Abraxane continues to generate promising early data, which will be detailed at the ASCO Meeting this June. We expect to have data from the trial's expansion cohort in patients with metastatic pancreatic cancer later this year.

Our Phase 1/2 trial of CORT125281 in combination with Xtandi is enrolling patients with castration-resistant prostate cancer. The Phase 1 trial of CORT118335 continues to progress. We plan to initiate Phase 2 trials in patients with antipsychotic-induced weight gain and NASH, serious common disorders, by year-end. I'll stop now to answer questions.

[Operator]

[Operator Instructions] We'll go first to Adam Walsh with Stifel.

[Adam A. Walsh, Stifel]

My first question is, can you just remind us of your thinking around the Phase 3 trial designed for relacorilant, will it be open-label or randomized placebo-controlled, and how long would you think the Phase 3 might take to complete?

[Joseph K. Belanoff, CEO, President and Director]

Yes, and just I have other people in the room who are near and dear to me. I'd like to let Bob Fishman, he is our Chief Medical Officer, answer that question.

[Robert S. Fishman, Chief Medical Officer]

We have plan for a 100-patient open label trial, similar to what we conducted with Korlym. We are currently in discussions about the path to the NDA. We'll know more in the coming months. But that's our expectation and I would assume on the order of a couple of years to enroll.

[Adam A. Walsh, Stifel]

Okay, terrific. And then I'm just curious, with respect to the ANDA filing, any intelligence on where Teva might have gotten the Korlym to perform the bioequivalent studies, and I guess whether you think that matters at the end of the day.

[Charles Robb, CFO]

This is Charlie Robb. I'll answer that. So, no additional intelligence now, I mean just to provide a bit of background for folks, recall Teva has submitted to the FDA an application to sell a generic form of Korlym and we brought suit against Teva under the Hatch-Waxman Act rules in March. So, our lawsuit alleging infringement of our Orange Book patents, so the lawsuit stayed FDA approval while the district court litigation progresses for 30 months or the length of litigation, whichever occurs first, so that's sort of the legal background.

The question is, where did Teva get the tablets that they used to demonstrate or claimed to have demonstrated bioequivalence with Korlym. The answer is, we still don't know. They certainly didn't get them from us or didn't ask us for them. So, we will find out over the course of the litigation. We don't know now.

I think the consequences of what we find out are sort of two-fold. On the one hand if what we find cast a doubt on the validity of Teva's bioequivalence study, that would be an issue we would raise with the FDA in terms of the FDA's reliance on that data. If that isn't the case but Teva obtained the tablets improperly, we might have a separate claim against Teva or others that we would pursue. So, we don't know now what the answers are but we are going to find out. It's something that really matters to us.

[Adam A. Walsh, Stifel]

Thanks so much for the color. And then a question with respect to the Phase 3 trial, just curious, I know you're planning for the trial now but is the high-dose cohort data a gating factor to beginning the Phase 3 or could that proceed ahead of those data?

[Joseph K. Belanoff, CEO, President and Director]

I can't say with certainty what the answer to that question is, and I could only give you sort of a little bit more information, Adam, which is I just want to really remind the audience that this is an open label study and we have to really be very careful about what we say.

[Adam A. Walsh, Stifel]

Understood. And then my final question, and thanks for taking so many, is just regarding the competitive dynamics in terms of the Cushing space. There are a couple of competitors that do have some data reads I believe coming out this year. Maybe, Joe, you could just highlight what you think the strengths of Korlym are relative – I mean not obviously directly to the competitors but just relative to kind of what's out there or how you're thinking about the competitive dynamics?

[Joseph K. Belanoff, CEO, President and Director]

I think the strengths really described in two different ways. Probably the most obvious strength really dates to data that we produced in the SEISMIC study and then it replicated in commercial practice, which is that basically every patient that's on the medication at the right dose gets better. In the pivotal trial which got the drug approved, 87% of the patients who were registered are significantly improved in clinical global improvement. So I think that's really a very – that's a very strong drug in any disorder, much less this disorder.

I think the other thing to point out is that at this time, and certainly for years to come, we're the only drug which has the mechanism of action of being a competitive antagonist at the glucocorticoid receptor or the ability to modulate cortisol by blocking its effects at the endpoint in a way which can be moderated to individual patients.

I think one of the really critical things about that is, a very important characteristic of cortisol is that it has a diurnal rhythm. So, drugs which would simply lower the amount of cortisol in the system are very non-physiologic in their effect. Cortisol is high in the morning, it drops through the day, it rises through the night, and that sine curve is extremely important.

So, merely lowering drug's for instance 24-hour urinary free cortisol to something which averages the normal limit is very unphysiologic. Korlym does not do that and I think that's an important thing to consider for physicians as they use whatever drugs come along.

[Adam A. Walsh, Stifel]

That's helpful. Thanks so much.

[Operator]

And we'll go next to Tazeen Ahmad with Bank of America.

[Tazeen Ahmad, Bank of America Merrill Lynch]

So, Joe, maybe you could give us a preview of what kind of data you would be considering positive data for pancreatic, the ones that you plan on releasing by year-end, and where you think in the treatment regimen this could be? There's very limited opportunities now for patients to be treated in pancreatic, so how are you thinking about the market opportunity there? Thanks.

[Joseph K. Belanoff, CEO, President and Director]

First, I really do have to point out to everybody that this is really the very beginning of a development program. We've seen the first group of patients be treated. They of course were treated in open label fashion, as you see in the Phase 1/2 study. And we've been really struck. And again, I want to hold much of this until the poster actually is presented at ASCO. We've really seen some striking individual results and that actually has what caused us and really caused our investigators to be interested in expanding the cohort to study more of those patients.

Again, unfortunately for many patients with pancreatic cancer, survival is measured in terms of weeks, not even months and certainly not years. And so, improvement in that disease is really of great clinical benefit, if we can provide it.

So, I think that the best way to really answer your question is, in the form that we have given the medicine so far, we really have seen these striking individual results and they were in patients who previously had received the [background] [ph] medication, which was Taxane, but for whom the medicine had failed them.

So, it's again an uncontrolled result, very important to understand, as a clinician scientist, my own vote is that until you have a controlled result, you don't know exactly what you have. But clearly, we have seen activity which has exceeded what we were expecting.

[Tazeen Ahmad, Bank of America Merrill Lynch]

And how many patients in total do you think you'd be enrolling in this study?

[Joseph K. Belanoff, CEO, President and Director]

The expansion cohort is 20 patients.

[Tazeen Ahmad, Bank of America Merrill Lynch]

Okay. And then maybe one question on your expectations for the full Phase 2 data for the follow-on to relacorilant, what should we be looking for beyond what you've presented for the interim read on last quarter's call?

[Joseph K. Belanoff, CEO, President and Director]

I mean I think basically we're just looking for improvements in the symptoms of Cushing's syndrome, and prominent among them are glucose tolerance, blood pressure, but there are other things which involve distribution of weight, which in the Cushing's syndrome is particularly around the middle, psychiatric effects like sleep and attention and so forth. And again, I think for those who know me for a long time, kind of recovering academics.

So, we measure basically everything that we can. I think we have over 20 different endpoints. But I think the primary things that you'll be looking at, you'll first get noted, are things like the effect on glucose tolerance and on blood pressure.

[Tazeen Ahmad, Bank of America Merrill Lynch]

Okay, great. Thanks so much.

[Operator]

We'll go next to Corey Davis with Seaport.

[Corey Davis, Seaport Global Securities]

First on Korlym in the quarter, you mentioned kind of the normal payer churn that everybody experiences in Q1, but you ensured the patients continue to get product. Is there a way, if not precisely, to quantify for us at least partially in terms of is all of that or most of it resolved now such that you don't see some sort of unusually high snapback in Q2 and subsequent quarters or won't we really notice that?

[Joseph K. Belanoff, CEO, President and Director]

Look, the answer to your first question is, yes, that time has now come and gone. And I think the most important thing to understand is that this is a regular phenomenon for us. And so, in sort of thinking about the year before the year had begun, this was really part of our thinking as well because it's something that we faced basically in all the years that we have launched and other particularly orphan drugs' base as well. So, we don't provide quarter by quarter guidance, but yes, what we expected to see was not so different than what we actually saw.

[Corey Davis, Seaport Global Securities]

Okay. Another question that's come up a lot, and I'm sure it's been asked and answered before, but how concentrated is Korlym prescribing right now, and every unit of the incremental growth, does it come more from new prescribers or existing prescribers adding new patients?

[Joseph K. Belanoff, CEO, President and Director]

I'm going to give you a very brief statement and then I want to introduce you to the fourth person that's in our room, Sean Maduck, who runs all of our commercial franchise. The answer is, it comes from both places, both existing physicians who were prescribing to more patients as they have seen the medicine work, and it also comes from new doctors prescribing to patients who were not previously prescribed. And it's actually a little bit more of the latter than it is the former, but I'll introduce you to Sean and he can provide a little more color.

[Sean Maduck, SVP, Commercial]

I think that was most of the answer. I think the only other piece to add to that is that for the last couple of quarters we've really on an increasing basis added more new prescribers. And as Joe stated, as doctors – the hardest thing for us was a company [indiscernible] to get physicians to write their first prescription, and when they do and they see the benefit of Korlym, they look for more patients. So, from a dispersion standpoint from the business, we have many unique prescribers, new prescribers that come into the business, we have many multi-prescribers, and we are seeing prescriptions from all over the country.

[Corey Davis, Seaport Global Securities]

Okay, thanks. And the next question would just be, how you differentiate relacorilant other than what you've talked about it? It seems like Korlym is a pretty good drug. So, how does [it gets better] [ph] better, if it can, on efficacy?

[Joseph K. Belanoff, CEO, President and Director]

I think that in terms of efficacy it would be surprising to get something which was better, because Korlym works in pretty much everybody and that's terrific. But it really does have this [indiscernible] that's very, very [indiscernible] of the [indiscernible] receptor side effects in addition to the medical side effects causing endometrial hypertrophy and irregular vaginal bleeding, it has both political and actually logistical problem that this is the same ingredient which is in the abortion pill and has to have very restricted distribution as a consequence.

I can tell you this, and it's always sort of hard to prove a negative, although I really have some anecdotal evidence that this is the case, there are places in the country where Korlym is not prescribed, and I can tell you with certainty that there are doctors who prescribe to men who like the medicine very much, who don't prescribe to women.

So, this is not a small thing and taking away the progesterone receptor side effects is a major clinical advance for people who want to use this medication. And again, I'll just repeat, it's in two different ways. One, it's a serious medical advance. And two, it allows potentially for far less restricted distribution than is currently necessary.

[Corey Davis, Seaport Global Securities]

And last question, Charlie, thanks for breaking out all of the non-GAAP or non-cash expenses, so we can use adjusted EPS instead of GAAP, and I know you don't give guidance for your expense items, but can you help us just with R&D and SG&A, should they continually climb throughout the subsequent quarters this year or stay flat off at Q1's run rate?

[Charles Robb, CFO]

I think the way to think about this is, just as our clinical programs advance, our clinical spending advances with them. And so, they are going to become – as they advance, of course there will be more patients taking medicine, more sites opened, more product being purchased, and I think you just need to figure that into your forecast.

As for the administration portion of our spending, I mean I think that we really are, and it has been true for quite some time, that we generate marginal revenue with very little additional administrative expense, and that's going to continue to be true.

[Corey Davis, Seaport Global Securities]

All right, thanks guys.

[Operator]

And we'll go next to David Buck with B. Riley FBR.

[Mike, B. Riley FBR]

This is Mike [indiscernible] filling in for Dave Buck. So, just in terms of the enrollment plan for relacorilant, what's the Company doing to ensure timely enrollment for the Phase 3 studies?

[Joseph K. Belanoff, CEO, President and Director]

Phase 3 study for – we have no Phase 3 studies for relacorilant so far, but is the question, how do we expect to enroll, how do we expect to deal with the enrollment as we get to Phase 3?

[Mike, B. Riley FBR]

Yes, exactly.

[Joseph K. Belanoff, CEO, President and Director]

Bob?

[Robert S. Fishman, Chief Medical Officer]

This is Bob Fishman. I can take that. One of the really important developments since Phase 2 is that as we started to see evidence of individual benefit and individual patients, really the entire complexion of enrollment changed, and now we have a well-organized and very scholarly and excellent group of investigators that do a nice job planting the seed for what will be a global study.

We are applying all lessons learned logistically from Phase 2, we have a good sense of who were the great trailers, who were the people who will enroll and contribute. In essence, we are really getting to know the landscape and that alone is going to be one of the powerful really key success factors for enrolling Phase 3.

[Mike, B. Riley FBR]

Great. Thank you.

[Operator]

We'll go next to Matt Kaplan with Ladenburg Thalmann.

[Matthew L. Kaplan, Ladenburg Thalmann]

Congrats on the quarter. I just wanted to dig in a little bit more to the relacorilant Phase 2, ongoing Phase 2 study. If you look at I guess now kind of the concept about adding the 400 mg dose, stepping it up higher above 350, and talk a little bit about what you're seeing as the potency I guess of relacorilant versus Korlym in the studies that were done with Korlym so far?

[Joseph K. Belanoff, CEO, President and Director]

As I said, we really have the opportunity and that's the great thing about a Phase 2 study, is to really try to test all the dose that we could, and as I said earlier, the lack of toxicity we saw at lower doses really enabled us to add a higher dose than we had even anticipated at the beginning of the study. And that's the reason it's there and our first and most important thing with the Phase 2 study is really to learn as much as we could and that's what we are doing. And it's our expectation that dosed appropriately, which means for each individual patient, that relacorilant will be just as potent as Korlym is but without the important detriment of progesterone activity.

[Matthew L. Kaplan, Ladenburg Thalmann]

That's helpful. And then could you talk about your current penetration of the overall Cushing's market, where you are with Korlym and the potential?

[Joseph K. Belanoff, CEO, President and Director]

Yes, without really sort of pinning it down to very specific numbers, as you know we don't give any [indiscernible], we feel like our penetration is still a fraction of what it might be and we feel like – and I think I'll elaborate it in two ways.

One, I think that even with Korlym, there are many doctors who we think have patients who would benefit from the medication who have not yet tried it. And I just wanted to echo something that Sean said. Sort of the proof of that to us is the growth in new prescribers every quarter and we think that that is really something that we have not seen the end of. So, that's the first part.

Second thing is, I think the overall market size has probably grown, not that the patients weren't there but they weren't being screened for previously. So, many times in the past because it was really what was in the literature, we said we thought there was about 10,000 patients with Cushing's syndrome, and clearly there are millions of patients with Cushing's syndrome. But could there be somewhat more than 10,000? I think the answer to that is, yes, because I think there are patients who are now being screened for hypercortisolism who were just kind of suffering along with all of their various symptoms and medicines weren't getting at the core of it.

So, I think that in some sense the penetration rate is now – it would be even with the static number but it's actually lower than you might think it is because I think there are patients who will be added to the potential patients to be treated.

[Matthew L. Kaplan, Ladenburg Thalmann]

It's helpful, thanks. And then turning to, going back to the Phase 3 design for relacorilant, thanks for the detail, how long do you anticipate treating patients for, will it be a 24 week study, will it be a four-week study, what are your thoughts?

[Joseph K. Belanoff, CEO, President and Director]

No, our anticipation will be that it will be a six-month study, same as the SEISMIC study for Korlym. And I think that's actually another thing just to think about. I don't want to put too much emphasis. I want to just make sure that people understand the differences. The results we're seeing with relacorilant are essentially what you've seen so far three-month study and there were certainly good effects with Korlym in three months, but defects continue not just over months four, five, and six, but even beyond that when we saw them in their expansion study.

[Operator]

And we'll take a follow-up from Corey Davis with Seaport.

[Corey Davis, Seaport Global Securities]

I wanted to go back to something that you mentioned about the diurnal rhythm of cortisol, because I'm not sure I quite caught it. Were you saying that any drug that inhibits it has to follow that same pattern or there might be clinical consequences?

[Joseph K. Belanoff, CEO, President and Director]

What I'm saying is that this is a very important biologic characteristic of cortisol, which is that it is not released in a static way. It's highest when we wake up in the morning and then it drops through the day and then it rises through the night, and it's got this very nice sine curve, and that's very, very important. I think for most of the people who know me know I am a psychiatrist by training, and I can tell you that the [Nader] [ph] and the [indiscernible] cortisol, is very important for psychiatric effects, not the least of which is sleep. In order to get a good night of sleep, your cortisol access has to really turn off. On the other hand, you have to really be ready to kind of greet the day with higher cortisol levels. So, that's a very, very – it's evolved over a long period of time, a very, very important biological characteristic of cortisol.

So a medicine that simply gave you an average in the appropriate range but obliterated the diurnal rhythm of cortisol would leave you in a condition where you were not feeling well. That would not be a good thing to do. And that is in fact something that Korlym does not do. Korlym, if anything, exacerbates the diurnal rhythm. It actually makes sure that you have a high peak and a [nader] [ph].

And I think that one of the interesting things clinically is that people will notice with Korlym that even in the first week they start to sleep better, and that's actually very important characteristic of this type of medication, a glucocorticoid receptor competitive antagonist that Korlym is and that we are developing.

[Corey Davis, Seaport Global Securities]

Is that unrelated to what you said about measuring urine levels of cortisol? I think you were getting at that that's not perfectly predictive of a clinical effect. Is that correct?

[Joseph K. Belanoff, CEO, President and Director]

What I'm saying is that getting a person to a 'normal' level of urinary-free cortisol dodges the question of whether or not they kept a normal diurnal rhythm. Getting to a normal cortisol level is simply lowering the water in the pool. It is not actually mimicking the normal biological activity.

[Corey Davis, Seaport Global Securities]

Okay. I think I got it. Thank you.

[Joseph K. Belanoff, CEO, President and Director]

Okay. Thank you for everyone for listening in and for listening to a little bit of science, but we really look forward to talking to you next quarter. Thanks.

[Operator]

That does conclude today's conference. We thank you for your participation.