Corcept Therapeutics Inc

NASDAQ:CORT

Earnings Call Transcript 2018-Q3

[Operator]

Good day and welcome to the Corcept Therapeutics Conference Call. Today's conference is being recorded. [Operator Instructions]

And at this time, I would like to turn the conference over to Charlie Robb. Please go ahead sir.

[Charles Robb, Chief Financial Officer]

Thank you. Good afternoon everyone. I am Corcept's Chief Financial Officer. Thank you all for joining us.

Earlier today we issued a press release announcing our third quarter financial results and reviewing our clinical progress. Copy is available at Corcept.com. 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 November 15, at 888-203-1112 from the United States and 719-457-0820 internationally. Passcode will be 7489528.

Statements during this call other than statements of historical fact are forward-looking statements based on our plans and expectations and are subject to risks and uncertainties that might cause actual results to differ materially from those such statements express or implied. These risks and uncertainties include, but are not limited to our ability to generate sufficient revenue to fund our commercial operations and development programs. The protections afforded by Korlym's Orphan Drug designation and our intellectual property. The availability of competing treatments including generic versions of Korlym; our ability to obtain acceptable prices or adequate insurance coverage and reimbursement for Korlym; and the scientific regulatory management and financial risks related to the development of our product candidates. These and other risks are set forth in our SEC filings, which are available at our Web site and the SEC Web site.

On this call, forward looking statements will include those concerning our 2018 revenue guidance and expected growth in 2019 and beyond. Our stock repurchase program, physician awareness of hypercortisolism and the selection of Korlym is the best of medical treatment for many patients. The timing cost and outcome of our lawsuit against Teva Pharmaceuticals USA, the clinical attributes of relacorilant; data from the dose finding portion of our Phase 1/2 study of relacorilant plus Abraxane; and the progress and results of our discovery and development programs including our current and planned clinical trials of relacorilant COR125281 and COR118335. We disclaim any intention or duty to update forward-looking statements made on this call.

Now I'll review our financial results. Corcept's revenue in the third quarter was $64.4 million, a 51% increase from the third quarter of 2017. The increase was due to broad based organic growth more physicians in every part of the country prescribing Korlym to more patients. We have not raised prices since the net 4% increase at the beginning of the year.

We reaffirm our 2018 revenue guidance between $250 million and $270 million. Our fully diluted GAAP net income in the third quarter was $0.14 per share compared to $0.11 per share in the third quarter of 2017. Excluding non-cash expenses related to stock based compensation, use of deferred tax assets, interest on our retired royalty financing obligation and related income tax affects, fully diluted non-GAAP net income in the third quarter was $27.9 million compared to $17.4 million in the third quarter of 2017.

A reconciliation of GAAP to non-GAAP net income is contained in our press release. Cash and investments were $196.7 million at September 30, compared to $159.9 million at the end of the second quarter. We repurchased 674,000 shares of our common stock in the third quarter at a total cost of $8.9 million. Under the currently authorized terms of our stock repurchase program $91.1 million remains available to acquire shares. The timing and size of any future repurchases will be based on market conditions, our stock price and other factors.

I want to take a moment to emphasize an important legal development. As many of you know Teva Pharmaceuticals is seeking approval to market a generic version of Korlym. We have sued Teva for alleged patent infringement. Teva moved to dismiss our complaint. Last week seven months after we first filed suit, the judge denied Teva's motion. The judge's ruling means that the Hatch-Waxman Act's automatic stay of FDA approval remains in place and our lawsuit can proceed. We expect and are prepared for lengthy litigation.

In closing, we believe our revenue 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 Cushing’s syndrome and both pancreatic and ovarian cancer, conduct Phase 1, Phase 2 and Phase 3 trials of CORT125281 for castration resistant prostate cancer and CORT118335 for antipsychotic induced weight gain in NASH. Advanced to the clinic, additional proprietary selective cortisone modulators and fund our plan to repurchase up to $100 million of our common stock.

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

[Joseph Belanoff, President and Chief Executive Officer]

Thank you, Charlie. Thank you everyone for joining us today.

Last quarter Corcept made important progress. Our revenue increased as more physicians prescribed Korlym for the first time and experienced prescribers wrote second and third prescriptions. We expect growth to continue because there are so many patients we've yet to reach. As a reminder, at least 20,000 people in the United States have been diagnosed with Cushing’s syndrome. Three thousand new cases of Cushing’s syndrome are diagnosed each year. Half of these cases are cured by surgery, but that leaves at least 10,000 patients in need of medical therapy. Some of these patients have been treated with Korlym but there are many, many more that can benefit from it.

Our success with Korlym allows us to fully develop -- to fully fund development of our proprietary selective cortisone modulators as treatments for a broad range of serious endocrine oncologic and metabolic disorders. At this moment, especially, no one should lose sight of the breadth of our development programs and the steady progress of our drug candidates. To help investors and patients follow Corcept's rapid evolution, we have completely overhauled our Web site corcept.com to make it a better resource for anyone interested in cortisone modulation and our development programs. These programs are the future of Corcept and the future is rapidly approaching.

Relacorilant our planned successor to Korlym in Cushing’s syndrome has begun its Phase 3 trial. Before describing the trial, let me explain why relacorilant is such a promising compound. Like Korlym, we expect relacorilant on to be an effective treatment for patients with Cushing’s syndrome because the two drugs operate by the same well understood mechanism, modulating or turning down the excess cortisol activity that causes patients harm. Cortisone modulation is very effective and Korlym's phase 3 trial, 87% of patients experience significant clinical benefit.

Similarly relacorilant clinical data shows clear indications of efficacy. Earlier this year, we released the analysis applying the primary endpoints we're using in relacorilant's Phase 3 trial data from its Phase 2 trial. Patients taking relacorilant exhibited clinically meaningful improvements in hypoglycemia and hypertension and at rates comparable to those seen at the same point in Korlym's pivotal trial.

We expect relacorilant to offer many patients important safety benefits as many as you know Korlym's affinity for the progesterone receptor, PR, for short, gives rise to significant off target effects. The most notorious of these of course is the active ingredient in Korlym is used to terminate early pregnancy. PR affinity also causes many women who take Korlym regardless of their age to experience endometrial thickening and vaginal bleeding. Adverse events they and their physicians would strongly prefer to avoid.

Korlym is another off target effect that is less politically sensitive, but quite important. Hypokalemia which means low potassium. In many patients Korlym causes cortisol levels to rise sometimes sharply. This does not diminish Korlym's efficacy, but it activates the [indiscernible] receptor causing the body to lose potassium. Korlym's patients require careful monitoring for hypokalemia, which is relatively common among them, 44% of patients in Korlym's pivotal trial experienced hypokalemia and remains one of the most frequently reported adverse events and causes of discontinuation in patients taking the drug today. Low potassium can cause muscle weakness and arrhythmias and can be quite dangerous if not managed properly because relacorilant has no affinity for PR as expected it did not cause endometrial thickening or vaginal bleeding in its Phase 1 and Phase 2 trials. And because it does not increase cortisol levels to the extent Korlym does, relacorilant also did not cause hypokalemia.

We are excited to start relacorilant's Phase 3 trial, which we expect will confirm these benefits. We plan to enroll 130 patients with Cushing’s syndrome at sites in the United States, Canada and Europe. The trial has a two phase design, in the initial open label portion all patients will receive relacorilant for 22 weeks with doses starting at 100 milligrams per day then increasing at 100 milligram increments clinically indicated to a maximum of 400 milligrams per day.

After 22 weeks, patients who exhibit pre-specified improvements in glucose tolerance or hypertension or enter a double-blind placebo controlled, randomized withdrawal phase lasting 12 weeks. Half of the patients entering this phase will continue to receive relic oral and the rest will be switched to placebo. The rate and degree of relapse in patients receiving placebo will be measured against the rate and degree of relapse in those continuing medicine.

I will now turn to our oncology program which is examining several approaches to cortisone modulation therapy. As some of you know in cancers where the tumors express GR, glucocorticoid receptor such as ovarian, pancreatic and triple negative breast cancer cortisol stimulates genes that prevent apoptosis, the cell death chemotherapies are meant to provoke. Adding a cortisone modulator should allow chemotherapy to achieve its optimal effect. We have been testing this mechanism in a Phase 1 to 2 trial, relacorilant combined with the taxane now paclitaxel which is Celgene's drug Abraxane in patients with solid tumors.

The data have been very encouraging. At the ASCO conference earlier this year reported that four of nine patients with metastatic pancreatic cancer had exhibited durable D disease control meaning that tumors that either remain stable or shrunk for at least three months. These are outstanding results in patients with aggressive metastatic disease all of whom have progressed on one or more prior taxane-based treatments. We expect by year end to have sufficient data to decide whether the appropriate next step is pursuing a pivotal trial.

The FDA's recent designation of relacorilant as an off orphan drug for pancreatic cancer is helpful. The tax and fee savings are significant and the seven years marketing exclusivity will supplement our composition of matter and method of used patents which expire in 2033 and 2037 respectively.

You may remember that we also reported at ASCO that of seven patients with metastatic ovarian cancer treated with Abraxane and relacorilant, for exhibited durable disease control including one patient with a complete response. All of these patients had previously failed taxane therapy. We plan to open a controlled multi-center Phase 2 trial of relacorilant plus Abraxane in patients with metastatic ovarian cancer by year-end.

As we advance relacorilant is a treatment for patients with solid tumors. Investigators at the University of Chicago are leading a 64-patient double-blind placebo controlled multi-center Phase 2 trial of Korlym plus Abraxane and patients with triple negative breast cancer. Celgene is providing financial support for this trial. We are providing Korlym.

Turning to a second potential therapeutic mechanism, University of Chicago investigators are studying whether cortisol modulators can treat cancer by stimulating the immune system. A healthy body regularly produces cancer cells, but the immune system identifies and destroys them. Cortisol suppresses the immune system. The stress of cancer and its treatment increased cortisol activity creating even greater immunosuppression. Cortisol modulators administered either as monotherapy or in combination with immunotherapy medications may counter this effect allowing the immune system to act more potently.

The University of Chicago researchers are leading a 74 patient open label Phase 2 trial of Korlym in combination with Pembrolizumab Merck's Drug Keytruda in HER-2 negative breast and triple negative breast cancer. Merck is providing financial support for the trial. We are providing Korlym.

Finally, we are exploring the use of cortisol modulators to treat castration resistant prostate cancer. Androgen stimulate growth in tumors of the prostate, which is why androgen deprivation and androgen synthesis inhibitors are common treatments. Unfortunately patients treated with an androgen receptor blocker such as enzalutamide, Pfizer's drug XTANDI eventually developed tumors where cortisol is the primary growth factor. The shift in gene expression allows the disease to progress. Combining a cortisol modulator with an androgen modulator such as XTANDI from the outset of treatment may block this escape route.

We are continuing to dose patients in our Phase 1/2 trial of a proprietary selective cortisol modulator CORT125281 in combination with XTANDI to treat patients with metastatic castration resistant prostate cancer. We expect to have an update next year to determine whether a controlled Phase 2 trial is warranted.

As we work to advance CORT125281, University of Chicago investigators continue to enroll patients in their 84 patient controlled multi-center Phase 2 trial Korlym plus XTANDI. The Department of Defense and the Prostate Cancer Foundation are funding this trial. Pfizer is providing XTANDI. We are providing Korlym.

In all of the University of Chicago trials, I have described, we possess the intellectual property covering the use of cortisol modulators plus anticancer agents in these indications.

I will end my remarks by noting that one of our most promising compounds CORT118335 was safe and well-tolerated in Phase 1 trial. We are now optimizing its formulation for well-advanced clinical development and plans to start placebo controlled Phase 2 trials in antipsychotic induced weight gain and non-alcoholic steatohepatitis, commonly referred to as NASH early next year. It is hard to overstate the potential benefit of these programs. Millions of people rely on antipsychotic medications such as Zyprexa and Risperdal to treat psychosis. Although these drugs work well, their metabolic side effects including weight gain, hypoglycemia and hyperlipidemia are so severe as to substantially shorten the lives of many patients.

We have demonstrated in placebo controlled clinical trials in healthy human subjects, the cortisol modulation with Korlym significantly mitigates the metabolic side effects caused by Zyprexa and Risperdal. The results were published in the journals advances in therapy in October 2009 and in obesity in December 2010. Unfortunately, we could not develop Korlym further for this use because its status as the abortion pill made broad distribution for a common disorder impossible.

CORT118335 is more potent in Korlym in preventing and reversing antipsychotic induced weight gain in animal models of the disease. Korlym [1835] [ph] is a selective cortisol modulator with no affinity for PR. Bluntly put because it is not the abortion pill it can be developed and if approved distributed to the millions of patients who could benefit.

Our other plan Phase 2 trial was study CORT118335 as a treatment for NASH a form of liver inflammation that is often a precursor to cirrhosis. We know cortisol modulation may offer treatment for NASH because we have observed Korlym reversing fatty liver disease in patients with Cushing’s syndrome. CORT118335 is more potent than Korlym in animal models of fatty liver and fibrosis. Results that are made even more compelling by our positive clinical findings with Korlym.

I think we will look back at this moment as one where the bright future of Corcept can fully into view. Korlym is a potent effective medication. It has helped many patients with Cushing’s syndrome and it has made Corcept a rare self-funding biotech company. Korlym has allowed us to establish and continue to broaden the platform of cortisol modulation across a variety of disease stakes. We expect its revenues to grow substantially in the coming years. Nonetheless, for all of Korlym’s terrific qualities, it remains the abortion pill. Our selective cortisol modulators relacorilant, CORT12528, CORT1118335 and other molecules we are progressing towards a clinic are the future and the future is rapidly approaching.

Relacorilant’s Phase 3 trial in patients with Cushing’s syndrome has just opened. By year end. We will have collected sufficient clinical data from our ongoing Phase 1/2 trial of relacorilant plus Abraxane to decide whether we think a pivotal trial is warranted in patients with metastatic pancreatic cancer.

We also plan to open a controlled Phase Two trial of relacorilant plus Abraxane in patients with metastatic ovarian cancer by year-end. As we have reported, the FDA recently designated relacorilant and orphan drug medication for both Cushing’s syndrome and pancreatic cancer. Our dose finding trial of CORT125281 combined with XTANDI continues to dose patients. If these results are positive, we plan to start a control Phase 2 trial in that indication next year.

Finally, our lead drug candidate for metabolic disorders CORT118335 was well tolerated in its Phase 1 trial. We are currently optimizing its formulation and plan to start placebo controlled multicenter Phase 2 trials in patients with antipsychotic induced weight gain and non-alcoholic steatohepatitis, NASH early next year.

I'll stop now to answer questions.

[Operator]

[Operator Instructions] We have a question from Matt Kaplan.

[Joseph Belanoff, President and Chief Executive Officer]

Matt, please go ahead.

[Matt Kaplan, Ladenburg Thalmann]

Thanks Joe. And congrats on the progress and thanks for all the added detail on the programs beyond what Korlym’s doing in the marketplace. Just wanted to focus first on Korlym just for a minute. Can you give us a little bit more color in terms of where you are with Teva and the litigation there? You mentioned, the recent refusal of the judge to dismiss the case, but what does that mean and what are the next steps here?

[Joseph Belanoff, President and Chief Executive Officer]

Yes. I'm very glad to pass that over to Charlie to answer the question.

[Charles Robb, Chief Financial Officer]

Yes, Matt. This is Charlie Robb. So let me just give a very brief background for those who aren't completely up on the story. So I think everybody does know that Teva is seeking approval to market a generic version of Korlym following expiration of Korlym’s Orphan Drug Protection next -- in February of next year. We received notice of that back in February of this year and as part of the requirements of the Hatch-Waxman Act, Teva certified as part of that notice that their generic product would not infringe the two patents we had listed at that point in the FDA’s orange book.

Now in March, we sued Teva alleging that they would indeed infringe those two patents. And what has been going on for the past seven months is Teva attempts to have our complaint dismissed. So on October 23 just last week, the judge ruled against Teva. So what does that mean? Well, most immediately it has -- Teva is now in a position for actually having to respond to our lawsuit, I imagine to deny our allegations and so forth. And the back and forth that's involved with that will occupy one or two months up towards the end of this year is just going to be spent with Teva answering our complaint and us responding to that.

The other immediate implication of this is, under the terms of the Hatch-Waxman statute. Our lawsuit in March triggered a 30-month automatic stay of FDA approval of Teva’s generic product. Beginning in February of 2018, there's a 30-month stay, pending our litigation. And so are our victory against Teva and its motion to dismiss means that 30-month stay remains in effect and our lawsuit will proceed.

So for the next month or two Teva will answer our complaint, finally, and at that point the parties will go to court and establish a schedule for the upcoming litigation discovery timelines and things of that nature. And so, while I don't have a crystal ball about exactly what the timing of all this will be. I mean these lawsuits take a very long time and we are prepared for and anticipating really link the litigation. So that's what's sort of on the immediate horizon.

I think the other development though to note is actually something that happened several months ago which is in the midst of the back and forth with Teva about their motion to dismiss. We obtained an additional Orange Book patent, a third patent which we added to our claims against Teva. So we started with two patents and right now we have three patents in the lawsuit. And if we are issued additional applicable patents and we work diligently every day to expand our intellectual property portfolio. If that work results in additional applicable patents, we will assert those also sort of the appropriate time and place. So my anticipation is lengthy litigation if we're able to obtain additional patents that litigation will also become more complex and wide ranging.

[Matt Kaplan, Ladenburg Thalmann]

Okay. That's very helpful. Thanks Charlie. And then just shifting gears now to relacorilant. Joe thank you for the detail on the Phase 3 study designed. Can help us understand in terms of the initial 22-week period, how many, what percentage of those patients do you expect to have sufficient meaningful benefit improvements to make it to the 12 week which we're all phase?

[Joseph Belanoff, President and Chief Executive Officer]

Thanks Matt. I think we understand the question. I'd just like to reintroduce you to Bob Fishman, who is our Chief Medical Officer, I think is really best able since he's been in that study every single day to answer that question. Go ahead Bob.

[Bob Fishman, Chief Medical Officer]

Hi Matt. It's Bob here. Thanks for your question. So the best indicator of that would be the preliminary results that we showed last time and you'll recall that across improvements in glucose control and improvements in hypertension using our Phase 3 responder criteria, it was about half or a bit more of the patients who showed meaningful clinical benefit and that that's essentially the assumption that we're making in our Phase 2 about our ability to accrue enough responders to move on to the randomized control phase.

[Matt Kaplan, Ladenburg Thalmann]

And just with that in terms of – I’m sorry, I cut you off.

[Joseph Belanoff, President and Chief Executive Officer]

Go ahead, Matt. Please.

[Matt Kaplan, Ladenburg Thalmann]

And then with the withdrawal phase, how durable do you expect the relacorilant effect to be after it's withdrawn and patients are switched to placebo?

[Bob Fishman, Chief Medical Officer]

It will depend on the indications. We have to keep in mind that one of the benefits of the drug that we expect is that patients Cushing's syndrome will improve in general. We are hopeful that they will lose weight. And so there will be -- if successful improvement across many elements in the specific timeline may be different. But, from our past experience with Korlym what we're confident about is that within the three months -- that the three-month window of the randomized withdrawal phase should be more than sufficient to observe if true a separation of the patients who stay on drug versus those who switch over to placebo.

[Joseph Belanoff, President and Chief Executive Officer]

Now let me give you a little context for that. It's now a long time ago, but in the pivotal study for Korlym, the FDA required at that point everyone to come up [medicine] [ph] at the end of the six-month study. And then if they chose to six weeks later enter into a extension study. And what we've found in that study was that relatively rapidly, in fact, there were some patients who after two weeks, and we knew this because we got complaints from their physicians that taking them off the medicine was unethical and they needed to restart it right away. Symptoms reemerged. So our experience with Korlym was that symptoms reemerged quickly and certainly within that six-week period that I discussed that was true with Korlym. And that really informs the timing of what we're doing with relacorilant.

[Matt Kaplan, Ladenburg Thalmann]

Great. Thanks. Thanks a lot guys for taking the questions.

[Joseph Belanoff, President and Chief Executive Officer]

Next please.

[Operator]

Our next question comes from Adam Walsh.

[Adam Walsh, Stifel]

Hey guys. Thanks so much for taking my questions. I have just a few here. First of all, on the relacorilant trial that you have previously talked about it taking maybe two years. But, I'm looking at clinicaltrials.gov and it says estimated primary completion date of January 2020. And then a study completion date of January 2021. Can you just true-up the two year guidance with what I'm seeing here and what the differences would be?

[Joseph Belanoff, President and Chief Executive Officer]

That sounds like about two years.

[Adam Walsh, Stifel]

No. I totally get that, but the prime estimate of primary completion date is January 2020. I assume that you had some input into the primary completion date. What is the difference between those two, in other words, the two years, it sounds like is 2020, but the 2021 date. I'm just -- I'm sorry that two years is 2021, but the 2020 date. I'm just trying to true that up with the two years of guidance, will that 2020 data point be meaningful, the primary completion. I'm sorry I didn't mean to pull up clinicaltrials.gov and stump you guys. But I'm just curious to hear the two year guidance is picked sooner that the data could -- my question is, could the data come sooner than two years?

[Bob Fishman, Chief Medical Officer]

I understand the impetus of your question. No. The answer is, it's a two year study soup to nuts and January 2021 is about correct.

[Adam Walsh, Stifel]

Okay, perfect. And then, obviously an exciting development program with 335 in the antipsychotic induced weight gain in the NASH. And you talked about planning to start the study in the first quarter of 2019. When could we see initial data flow from that project?

[Bob Fishman, Chief Medical Officer]

I suspect that that's going to come in parts and we'll really roll out exactly what those studies are going forward. I don't think you should really expect anything before the --really the very end of next year. Those studies are basically and we haven't actually spoken to exactly the design of the studies, but they're going to -- it's going to be roughly a year maybe a little less with the quickest one before they produce any results.

[Adam Walsh, Stifel]

Okay. That's helpful. And then, Joe, you mentioned that you're optimizing formulation for 335. What does that mean and how does -- how should we think about that?

[Joseph Belanoff, President and Chief Executive Officer]

I think one of the really critical things for us, 118335 is a very interesting molecule for very, very big disorders. And we really thought that this was the moment in time, we have a decent formulation, but we really thought that this is a molecule that has legs and rather than have that be an issue later in the development program, we wanted to pause for a little bit to see if we could really optimize it at this point in time and expect to and as I said planning to begin the study for Phase 2 studies early next year.

[Adam Walsh, Stifel]

Okay. That's perfect. And then, finally, just I get this question from investors sometime. I mean you did a Korlym guidance last quarter, how confident are you in your ability to kind of predict forward-looking Korlym sales and that's it. Thank you guys.

[Joseph Belanoff, President and Chief Executive Officer]

Thanks very much Adam. I'd like to just because we really -- all of our teams very important this might be good for -- place in the call to reintroduce you to Sean Maduck, who runs all of our Cushing's syndrome franchise and [cort] [ph] and Korlym and beyond. And he is really responsible for all of our commercial activities. So Adam, if you just allow me to bring Sean onto the call, he will give you that information and maybe some others that you find useful.

[Sean Maduck, Senior Vice President, Commercial]

Adam thanks for the question on forecasting of sort of future revenues. Before I answer that, I thought I'd take a minute to give a high level overview to everybody on the call of our commercial business. In doing so, there's really three key points, I want everybody to focus on.

Number one, Korlym is being prescribed by physicians throughout the country for all ideologies of Cushing's syndrome both in academic centers and then in the community. Number two, we continue to add new prescribers every quarter and both our prescriber base and our patient base are growing. And the third important point is that, we continue to experience very favorable insurance reimbursement.

So now diving into each of these specifically in terms of our prescribing as everybody may remember discussed this on previous calls. We have six sales regions that are comprised of 40 clinical specialists that are evenly distributed across the country in those regions. Since our Korlym launch in 2012, we have actually had over 1,200 healthcare providers writing one or more prescriptions for Korlym. And over that time, no region has accounted for more than approximately 20% of our unique prescriber base.

Our enrollment activity has experienced a very similar distribution to that with no single region accounting for, again, more than approximately 20% of patient enrollments. And in fact, there have been patient enrollments for Korlym in all but two states in the country. So let's sum it up and we have a very healthy business and our patient population is very dispersed. We believe that hypercortisolism patients who could benefit from treatment exist in every single endocrinology practice.

So moving on to our growing prescriber and patient bases. Again, as I stated on previous calls this is a highly scientific cell. I mean we educate physicians on the spectrum of disease and the appropriate screening tools that are available to them. Many more sick patients are being diagnosed today because of our educational efforts and our commitment to the patient identification.

It takes many contacts sometimes five to seven or more with each Korlym naïve physician to start the process of screening patients, confirming a diagnosis and then choosing an appropriate treatment pattern before -- screening for these patients is absolutely a new paradigm for many endocrinologists and mindsets are being changed one physician at a time. Many patients who are diagnosed with the disease are followed without treatment and this progression is monitored. For others they are diagnosed for the very first time and then they go to first line treatment which is directly the surgery. And for others, the physician, diagnosis then determines that medical therapy is the best treatment out for them and all available medical therapies become an option including Korlym. So physician by physician, we continue to add new prescribers and patients every single quarter.

The last thing I want to talk about at a high level before I again get to the question is around managed care and insurance reimbursement. So 99% of our Korlym patients are on label – prescriptions are on label and we continue to see favorable insurance reimbursement. So far in 2018 over 90% of patients prescribed Korlym have required a prior authorization. These prior authorizations have very rigorous approval criteria that is very closely aligned with Korlym’s label and this is consistent with what we are seeing this year and what we've seen in previous years.

Now to obtain PA approval, prescribing physician has to provide supporting lab evidence of both confirmed hypoglycemia and hypercortisolism and evidence of a failed surgery or lack of candidacy for surgery. So overall, from a managed care standpoint, we have an overall prior authorization approval rate greater than 90%.

And the last thing I'd add on that is, as we stated in the past, every patient who is prescribed Korlym that has Cushing’s syndrome will get the drug regardless of their insurance situation, so they will get free drug if they are unable to get approved.

So summarize the three points quickly again. Korlym continues to be prescribed throughout the country, for all ideologies and in all settings. We continue to add new prescribers and every quarter and we expect that to continue as we grow and we continue to realize favorable reimbursement environment.

So in terms of our ability to predict the future, I think you were still in a world as I described on the last call of small numbers. I mean we're in our seventh year post launch and we run our business year-over-year and we continue that growth to continue. As we stated in the call, we expect that growth will continue to fund our pipeline.

Again, scientific cell, the challenges we have today again are the challenges we’ve had since launch. It can be a challenge to convert physicians who have legacy mindsets and it takes time to shift them. And we've been successful at doing that up to that this point and we expect that to continue in the future.

So in short, I mean we expect steady growth to continue because we know we haven't come close to saturating the potential prescriber patient population.

[Adam Walsh, Stifel]

Sean. Thank you so much. It's really helpful. I appreciate the color.

[Sean Maduck, Senior Vice President, Commercial]

Welcome.

[Joseph Belanoff, President and Chief Executive Officer]

Thanks Adam.

[Operator]

The next question comes from David Buck.

[David Buck, FBR]

Yes. Hi, good afternoon, Joe. Just a couple of questions. First, maybe Joe or maybe Sean, can you talk a little bit about what the trend has been in terms of those for patient any changes there throughout the year. And has there been any kind of mix shift that's led to some of the fluctuation in in revenues over the last couple of quarters.

And separately for Charlie. Can you just talk about when you see potentially the additional patents in the FDA Orange Book, I believe there there's an additional -- currently four patterns in the FDA Orange Book, when you see the remaining patents after the litigation?

And then just for Joe, can you talk a little bit more about how you expect to get a sense of differentiation of relacorilant as you move into Phase 3 from Korlym itself. You mentioned hypoglycemia, you mentioned, obviously not having the PR receptor, but anything else you'd like to see elucidate and pay for it? Thanks.

[Joseph Belanoff, President and Chief Executive Officer]

Let me just sort out this questions. The first question is dose changing, the answer is no not really. I mean we think that modestly over time it will go up a little bit just as the market more -- as the patient base matures only in the sense that -- the average dose is always affected by how many new patients are coming on and at some point in time patients on medicine will greatly outnumber those who are coming on at the beginning of each month. But the simple answer to your question is no, dose is not really changing in any serious way. Maybe a few milligrams up or down usually up but that's not really a factor.

The second clinical question. Yes, you've really picked out the important things. I mean relacorilant has selected cortisol modulator unlike Korlym and it does not touch the progesterone receptor. That's a huge deal not just medically, but politically and in terms of distribution and so forth. So that's a very big thing. Now that was of course completely anticipated. I mean we could tell pre-clinically that this molecule and our other selected modulators don't touch the progesterone receptor. And of course, that turned out to be -- that that was no surprise that turned out to be true and of course our Phase 1 and Phase 2 studies.

The interesting thing was that we noticed that early on we actually had made just a little bit of a comment at Phase 1, but it is clear to us now that relacorilant does not block the feedback mechanism [BHP] [ph] access to the degree that Korlym does, or cortisol doesn't rise as much and cortisol rise which you can deal with in terms of the glucocorticoid receptor essentially for some patients floods the mineral glucocorticoid receptor and causes hypokalemia. And to-date we haven't seen anything really in terms of hypokalemia that's associated with the medicine. That's a very, again not as sexy as taking away the abortion pill status but medically a very important thing because that's a side effect that really has to be managed and it's quite common. It is manageable. But for many physicians new to the drug they don't really are and is quite attentive to what their patients may fall off the medicine. So that's actually -- if it pans out a very large differentiating factor in addition to the lack of progesterone antagonism. And I'll leave the last question, the patent question to Charlie.

[Charles Robb, Chief Financial Officer]

Yes. Hi, David. Well, I can give you one bit of information, which is we've had in this public information that we've had our patent allowed for the differential diagnosis and treatment with mifepristone of patients with ectopic Cushing's syndrome, which is a precise piece of the business. So those -- claims have been allowed the patent will issue as soon as the administrative we'll finish sharing at the patent office and that will be added to the Orange Book.

With respect to our other applications both of those that have been published and are publicly known and those that have not been I really can't say anything as they're allowed, we'll let folks know about them and we will add them to the lawsuit as we think best. And I really can't comment beyond that.

[Joseph Belanoff, President and Chief Executive Officer]

The only thing I wanted to add to that David is just you probably already understand this, but just for the general audience as a whole, the way it works is there are patents which you can now see because they are published. There are also patents that you cannot see their application because they've yet to be published. And I can tell you that those are certainly in that category. I mean this is an area that we obviously have really studied for a long period of time, we think we've made important discoveries. And so in some sense there is a conveyor belt of intellectual property that's operating right now. And just to reiterate what Charlie said you'll see them as they come along.

[David Buck, FBR]

Great. Thanks very much. And just I guess to wrap that part of the comment about complexity of litigation because something we'll see.

[Joseph Belanoff, President and Chief Executive Officer]

Yes. I think I sometimes joke a little bit about it. I mean the one thing I've learned this is my end of one of dealing with this kind of litigation is that, it is expensive and protracted and fortunately we have the money to pay for.

[David Buck, FBR]

All right. Thank you.

[Joseph Belanoff, President and Chief Executive Officer]

Okay. Next question.

[Operator]

The next question comes from Alan Leong.

[Joseph Belanoff, President and Chief Executive Officer]

Thank you, Alan.

[Alan Leong, BioWatch News]

Congratulations on the clinical progress and my greetings to the team. I also saw the public listing for the Cushing's pivotal trial and the target dose that 400 milligrams. And wondering, if you can just put a little more color on that. I mean I expect you saw nothing concerning at the higher doses, but was there any signals towards incremental efficacy or perhaps greater proportion of patients covered. I expect some patients there must be an amazing amount of excess cortisol. So feel free to provide some color on it.

[Bob Fishman, Chief Medical Officer]

Hi. This is Bob Fishman. Thanks so much for your question. Yes. A few comments. First of all, Alan, well done. Just to set it up, we'll look forward to presenting our data at the next endocrine session. But just some general themes, we were pleased to see that in our higher dose group there was evidence of greater response. We showed that to you last time. That's continued to be true. And among all of the patients, of course, we followed them individually very carefully and they were -- the outcomes included clear instances in which patients -- in which as patients escalated to the higher dose. There was evidence of additional benefit.

So when you combine the evidence of response combined with the tolerability we're really pleased with the definition of the workable dose range that came out of Phase 2.

[Alan Leong, BioWatch News]

Bob, if I may ask a little bit maybe related to it, the ongoing testing with the new assay test. Is that relating well to disease activity is it coming out as you expected so far?

[Bob Fishman, Chief Medical Officer]

Referring to the FKBP5?

[Alan Leong, BioWatch News]

Oh, yes. On FKBP5…

[Bob Fishman, Chief Medical Officer]

On FKBP5 just as a reminder to everyone a marker of this signaling through it's part of the glucocorticoid receptor and appears to be a good index of its activity in the signaling. Going through and we have a clear validated assay and are collecting in all of our studies.

The short answer is, we're continuing to collect those data to make to learn as much as we can about it. We're collecting the assay, in fact, in all of the studies and it will be an exploratory endpoint and that data is still accumulating and I think we'll have an update at the timing of the results of the study overall.

[Joseph Belanoff, President and Chief Executive Officer]

But to remind you, Alan. At the endocrine Society meeting we released the first data in patients, which I think was really very consequential and very interesting, which is that we had a study of patients who were first tested pre-surgically for Cushing's disease. And what we found first and again always nice to find out what you're hoping to. The patients with Cushing's syndrome indeed had very elevated levels of FKBP5 activity. And then, when they had successful surgery it normalized and that's public information that's out.

So that was actually really the first information we had in patients not just a healthy subject giving prednisone that we thought would happen would actually happening. And that really spurred us to make sure not to segue with what Bob was saying that we are now testing that finding in every study we're doing including the oncology studies and metabolic studies in addition to the Cushing’s syndrome.

So we're really developing a real body of information because I think that from a scientific point of view that is an important thing as we're working on in the entire company because I think that if it turns out to be correct, it's going to change the entire way that the disease is assayed.

[Alan Leong, BioWatch News]

Let me ask, one more quick question. Of course investigators have a full suite of early trials using three different drugs to treat prostate cancer in the lab and preclinical data saw some good stuff at the CORT125281. You now have a new trial or relacorilant, was that covering the basis or is the solid tumors trials continuing to give a green light. I guess if you can provide some color on the motivation for putting a full suite of trials on to the prostate cancer?

[Joseph Belanoff, President and Chief Executive Officer]

Well, I have a simple answer and then I'll give you a more complicated answer. The simple answer is, there is a tremendous amount of interest in testing each of these compounds because pre-clinically they all look very good and in modest ways. But I think the more interesting answer and I think maybe if all the things we're working on our oncology, one where the scientific story is best understood is castration resistant prostate cancer. It's very clear that we have in the world very nice medications to modulate androgen activity like enzalutamide. But unfortunately when enzalutamide is given within hours of it being given you will begin to develop colonies of cells for which androgen is no longer the growth factor cortisol is the growth factor.

And there was a very good New England Journal editorial on this and so forth. So I think that there really just is a lot of interest in this mechanism. And fortunately, we were able to fund it. The study with Korlym is being funded by Michael Milken's Foundation and the Department of Defense. We are of course are doing our own study with CORT125281. And Korlym study in castrate resistant prostate cancer also was recently grant funded.

So I think there's a lot of interest in the mechanism and that's how it came to be. Obviously, as we get data we will probably narrow what we're working on, but at this point it really gives us lots of information in an important field.

[Alan Leong, BioWatch News]

Thank you very much.

[Joseph Belanoff, President and Chief Executive Officer]

All of you out there for being so patient. We'll look forward to talking to you next quarter and hope you have a good evening. Thank you.

[Operator]

Thank you, ladies and gentlemen, this concludes the teleconference. You may now disconnect.