Corcept Therapeutics Inc

NASDAQ:CORT

Earnings Call Transcript 2019-Q4

[Operator]

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

[Gary Robb, CFO & Secretary]

Good afternoon. Thank you for joining us. I'm Corcept's Chief Financial Officer. Earlier today, we issued a press release announcing our financial results for the fourth quarter and full year and reviewing our research and development programs. A copy is available at corcept.com. Complete results will be available when we file our Form 10-K with the SEC.

Today's call is being recorded. A replay will be available through March 5 at 888-203-1112 from the United States and 719-457-0820 internationally. The pass code will be 7085899.

Statements during this call, other than statements of historical fact, are forward-looking statements based on our plans and expectations that are necessarily subject to risks and uncertainties, which might cause actual results to differ materially from those such statements expressed or imply. These risks and uncertainties include, but are not limited to, our ability to generate sufficient revenue to fully fund our commercial operations and development programs; the availability and competitive viability of competing treatments for Cushing's syndrome, including generic versions of Korlym; the initiation or outcome of litigation; our ability to obtain acceptable prices or adequate insurance reimbursement for Korlym and risks related to the development of our product candidates, including clinical outcomes, regulatory approvals, mandates, oversight and other requirements. These and other risks are set forth in our SEC filings, which are available at our website and the SEC's website.

On this call, forward-looking statements include those concerning our revenue guidance and our expected growth and financial performance in future years; physician awareness of hypercortisolism and the selection of Korlym as the optimum medical treatment, the timing, cost and outcome of litigation, including our lawsuits against Teva Pharmaceuticals and Sun Pharmaceuticals and the challenges to our intellectual property before the Patent Trial and Appeals Board; the scope and protective power of our intellectual property, the benefits of Orphan Drug designation; the clinical attributes of relacorilant, miricorilant and exicorilant; the progress, timing, design and results of our development programs, including the GRACE, GRADIENT and GRATITUDE trials and our other current and planned clinical trials. We disclaim any intention or duty to update forward-looking statements.

Our revenue in the fourth quarter was $87.9 million, a 32% increase from the fourth quarter of 2018. For the full year, our revenue was $306.5 million, an increase of 22% from 2018. We have reiterated our 2020 revenue guidance of between $355 million and $375 million.

Our GAAP net income was $94.2 million for the year and $29.4 million in the fourth quarter of 2019 compared to $75.4 million for the year and $22 million in the fourth quarter of 2018. Excluding noncash expenses related to stock-based compensation and the utilization of deferred tax assets, together with related income tax effects, non-GAAP net income was $133.3 million for the year and $40.3 million in the fourth quarter of 2019 compared to $108.2 million for the year and $30.4 million in the fourth quarter of 2018.

A reconciliation of GAAP to non-GAAP net income is in our press release. Our cash and investments increased $48.4 million in the fourth quarter to a balance of $315.3 million at December 31, 2019. We believe our revenue, together with our cash on hand, will be sufficient to fully fund our commercial business and complete our planned development programs.

Now a brief legal update. As most of you know, we are currently prosecuting 2 lawsuits against Teva Pharmaceuticals. In February of 2018, Teva gave notice it was seeking to market a generic version of Korlym. In March of 2018, we sued Teva for patent infringement, thereby staying FDA approval of Teva's proposed generic product until August of 2020. In December 2019, the Patent Office issued us a patent covering methods of improving mifepristone absorption, which we have asserted against Teva in a second lawsuit. The District Court has not yet decided whether these 2 lawsuits should be consolidated.

Separately, Teva is challenging the validity of another of our patents, known as the '214 patent. Before the Patent Office Trial and Appeal Board or PTAB in a proceeding known as Post Grant Review, PGR for short. As we have said repeatedly, patent litigation is complex and takes a long time to resolve. Our dispute with Teva is no exception. The Markman hearing in the first lawsuit we filed against Teva is scheduled for March 5. As a reminder, a Markman hearing is where the court decides the meaning of any disputed patent claims.

We expect the court will set a schedule for the balance of the litigation, including a tentative trial date and whether or not to consolidate our two lawsuits sometime in the next few weeks. We are also drafting briefs and conducting expert discovery in the PGR of our '214 patent. Oral argument before the PTAB will take place in August of this year, followed by a decision in November.

The losing party in a PGR proceeding may appeal an adverse decision to the Federal Circuit Court of Appeals, which takes about 1 year to resolve. The soonest we expect definitive resolution of the PGR is the fourth quarter of 2021. As many of you know, Sun Pharmaceuticals is also seeking FDA approval to market generic Korlym. We have sued Sun for patent infringement, staying FDA approval of Sun's proposed generic product until the earlier of December 8, 2021, and a decision by the District Court that the patents we have asserted against Sun are invalid, unenforceable or not infringed. Despite overlapping subject matter and legal issues with our lawsuit against Teva, and the fact that the same judge is presiding over both cases, our dispute with Sun is separate and is following its own time line. A Markman hearing in the case is set for November of this year. The timing of events after that is still to be determined.

I will conclude by reviewing a recent positive development. 1 year ago, the PTAB agreed to review the validity of the '348 patent, 1 of the patents underlying our 30-month stays against Teva and Sun. The challenge was initiated by Neptune Generics, a subsidiary of the litigation and finance firm, Burford Capital. Neptune had threatened to attack the '348 patent unless we paid it a substantial fee to leave us alone. We refused and Neptune asked the PTAB to institute a proceeding notice Inter Parts Review, IPR for short, in which they challenged the '348 patent's validity. I'm pleased to report that the PTAB has decided Neptune's IPR in our favor.

The decision, which is available at the Patent Office's website, found every claim of the '348 patent to be valid. Put simply, we won. Neptune has until mid-March to ask the PTAB to reconsider its decision and until mid-April to file a notice of appeal to the Federal Circuit. Whatever Neptune decides to do next, if anything, we remain confident in our ability to protect our patent. This victory is significant. As a matter of principle, it is important to defend one's rights when they are attacked. We have done so and without paying Neptune a nickel. As a practical matter, it is helpful that the '348 patent will continue to play its partner lawsuits against Teva and sun, its validity bolstered by the PTAB's positive decision. Although the District Court is not bound by the PTAB decision, Teva and Sun can and undoubtedly will continue to challenge the '348 patent's validity. The PTAB's positive ruling makes their positions more difficult. Although this result is not surprising to us, it is nonetheless, good news.

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

[Joseph Belanoff, Co-Founder, President, CEO & Director]

Thank you, Charlie. 2019 was an excellent year for Corcept. Thanks to the skill and dedication of our commercial team, the number of patients receiving Korlym increased each quarter as is the number of first-time and repeat prescribers of the medication. Our revenue grew 22% to $306.5 million and we expect growth to continue. As Charlie mentioned, we have reaffirmed our 2020 revenue guidance of between $355 million and $375 million. At year-end, we had $315 million in cash and investments. Our strong financial position allows us to pursue the optimal development of our proprietary selective cortisol modulators. Our programs in Cushing's syndrome, solid tumors, antipsychotic-induced weight gain and NASH are advancing. These programs represent Corcept's future. Success in any of them could produce a medication of great benefit to many patients.

As most of you know, we are actively enrolling patients in our Phase III trial of relacorilant, our planned successor to Korlym to treat patients with Cushing's syndrome. We call this study GRACE.

GRACE has now opened at 54 sites in the United States, Europe and Israel. The trial has 2 parts. In its initial open label phase, patients received Korlym -- relacorilant for 22 weeks. Those who exhibit prespecified improvements in glucose metabolism or hypertension are randomized to a double-blind, placebo-controlled second phase, in which half continue receiving relacorilant, and the rest are switched to placebo. GRACE's primary endpoints are the rate and degree of relapse in patients receiving relacorilant compared to those receiving placebo during this randomized withdrawal phase. Expected enrollment is 130 patients. We plan to submit an NDA for relacorilant to treat patients with Cushing's syndrome in the fourth quarter of 2021.

Later this quarter, we plan to open a second Phase III trial, which we have named GRADIENT. GRADIENT will be a double-blind, placebo-controlled trial of relacorilant to treat patients whose Cushing's syndrome is caused by an adrenal adenoma. Patients with this etiology of Cushing's syndrome have not been rigorously studied. Although they usually have a more indolent course of disease, their health outcomes are poor. GRADIENT has a planned enrollment of 130 patients at sites in the United States and Europe. Patients will receive either relacorilant or placebo for 6 months, with the primary endpoints being improvement in glucose metabolism and hypertension. Many of the investigators for GRACE will also participate in GRADIENT.

With GRACE actively enrolling patients and GRADIENT about to begin, I'd like to comment briefly on the contribution we expect these trials to make to the long-term development of our Cushing's syndrome business. The purpose of the GRACE trial is to definitively demonstrate the efficacy and safety of relacorilant.

Relacorilant's efficacy data have been very encouraging. Its Phase II results were comparable to what we observed at similar time points in Korlym's pivotal study. Our poster presenting relacorilant's Phase II data at the American Association of Clinical Endocrinologists Annual Congress is available at the Investors Past Events tab of our website. Another of GRACE's important objectives is to confirm relacorilant's promising safety profile. As effective as it is for many patients, Korlym causes major side effects that limit its use and require that its distribution to be tightly controlled. Korlym binds potently to the progesterone receptor, PR for short, which makes it an abortifacient. Korlym's active ingredient, mifepristone, is the same as the abortion pills, which is why Korlym's label includes a black box warning, the most serious medication warning required by the FDA for termination of pregnancy. In addition to terminating pregnancy, Korlym's PR affinity causes endometrial thickening and vaginal bleeding in approximately 1/4 of the women who take it regardless of their age. These adverse effects can result in hospitalization and Korlym discontinuation. Approximately 70% of patients with Cushing's syndrome are women. By a different mechanism, Korlym also causes potassium to become dangerously low in many patients, a condition known as hypokalemia. Hypokalemia affects men and women equally.

More than 40% of the patients in Korlym's pivotal trial experienced low potassium. Hypokalemia is manageable, but requires close and continued monitoring. It is one of the leading causes of Korlym discontinuation, relacorilant does not cause these off-target effects. Unlike Korlym, relacorilant does not bind to PR. It is not the abortion pill and does not cause the other adverse effects arising from PR affinity, such as endometrial thickening and vaginal bleeding. It also does not appear to cause hypokalemia.

If the efficacy and safety characteristic relacorilant has demonstrated in its development through Phase II are confirmed by GRACE, relacorilant will constitute a major medical advance, an effective cortisol modulator that does not cause Korlym's most significant off-target effects. Although GRADIENT will study patients with the same indication is GRACE, Cushing's syndrome, and test the same drug candidate, relacorilant, GRADIENT serves a different purpose. GRADIENT is not a required part of relacorilant's NDA, rather our expectation is that GRADIENT's findings will lead to better care for patients with a serious, but not yet rigorously studied etiology of Cushing's syndrome. Cushing's syndrome caused by adrenal adenomas or adrenal hyperplasia. Where GRACE has what might be characterized as a narrow purpose, securing approval for a successor to Korlym, GRADIENT is part of our long-term investment and development of cortisol modulation as a treatment for patients with hypercortisolism.

I'll now provide a brief update of our program in metabolic disorders. Preclinical and clinical data show that cortisol modulation has the potential to treat both weight gain caused by antipsychotic medications and nonalcoholic steatohepatitis or NASH. Serious disorders that affect millions of people and for which there are few good treatment options. Millions of people depend on antipsychotic medications such as olanzapine and risperidone to treat schizophrenia, bipolar disorder and other serious conditions.

Unfortunately, these life-saving drugs cause serious metabolic side effects, including rapid and sustained weight gain, hyperglycemia and hyperlipidemia. Cardiovascular disease, not suicide, is the leading cause of death in patients with schizophrenia. In addition to the medical morbidities caused by these needed medications, their ill effects are seen and felt by patients who then often stop taking them. We demonstrated in double-blind, placebo-controlled trials that mifepristone significantly reduced the weight gain and other adverse effects of olanzapine and risperidone in healthy subjects. The results were published in the Journals Advances in Therapy in October 2009 and in Obesity in December 2010. Unfortunately, we could not advance mifepristone as a treatment for such a common disorder because mifepristone is the active ingredient in the abortion pill, and for that reason cannot be widely distributed.

Our proprietary selective cortisol receptor modulator, miricorilant, can be widely distributed and is therefore, suitable for development. What's more in animal models, it is even more potent on a per milligram basis to mifepristone in preventing and reversing olanzapine and risperidone-induced weight gain.

Our first clinical study of miricorilant produced highly encouraging results. Each of 66 healthy subjects received 10 milligrams of olanzapine and either 600 milligrams of miricorilant or placebo daily for 14 days. With clear statistical significance, subjects who receive miricorilant gain less weight measured at both Day 8 and Day 15 than those who received placebo.

In addition, enzymes ALT and AST, markers of liver damage that temporarily increase at the onset of olanzapine therapy, increased less markedly subjects receiving miricorilant, which suggests that miricorilant may have protective effects in the liver. These results demonstrating miricorilant's activity are especially encouraging, given the short duration of treatment and [indiscernible].

Full results from this study will be presented this April at the Annual Meeting of the American Psychiatric Association in Philadelphia. Late last year, we began a Phase II trial of miricorilant in patients with schizophrenia, who have gained weight rapidly after starting antipsychotic medication. This study is called GRATITUDE.

Study participants receive either 600 milligrams of miricorilant or placebo in addition to their existing antipsychotic medication. Planned enrollment is 100 patients. The study's primary endpoint is weight loss, while maintaining or improving this patient's psychiatric condition. As I have mentioned on prior calls, we've been developing a formulation of miricorilant suitable for use in Phase III and commercially that greatly increases the drug's bioavailability.

We expect that formulation to be available by the fourth quarter of this year, at which point we plan to open a double-blind, placebo-controlled Phase II trial in patients with long-standing antipsychotic-induced weight gain. Thus, we will also add a cohort of patients receiving a significantly higher dose of miricorilant to GRATITUDE.

Finally, we plan to open a double-blind, placebo-controlled Phase II trial of miricorilant to treat patients with NASH by year-end. In animal models, miricorilant prevents and reverses both fatty liver and liver fibrosis. Miricorilant's potential benefit to patients with a serious widespread disorder merits clinical study.

I will now turn to our oncology program. Many solid tumors express the glucocorticoid receptor or GR. Unfortunately, cortisol activation of GR inhibits apoptosis, programmed cell death, which is the mechanism by which chemotherapy achieves its intended effect. We are testing the hypothesis that coadministering a cortisol modulator may allow chemotherapy to achieve its maximum benefit. At the ASCO conference last year, we presented data from our Phase I/II study of relacorilant in combination with nab-paclitaxel, Celgene's taxane-based drug, Abraxane, in patients with a variety of solid tumors. The results were striking, 7 of 25 patients with metastatic pancreatic cancer and 5 of 11 patients with metastatic ovarian cancer achieved durable disease control. Meaning their tumors either shrank or ceased growing for 16 weeks or longer. Of particular note was the duration of benefit. Tumor shrinkage in 2 patients with metastatic pancreatic cancer lasted longer than 50 weeks. A patient with ovarian cancer exhibited tumor shrinkage for 65 weeks. All of these patients' tumors had progressed during multiple lines of prior therapy, including treatments with taxanes, that some responded when relacorilant was added to their treatment was surprising and heartening.

Our ASCO poster presenting these data is available at the Investors Past Events tab of our website. We are conducting a 180-patient controlled Phase II trial of relacorilant plus nab-paclitaxel in patients with metastatic or unresectable ovarian cancer at sites in the United States and Europe. The primary endpoint is progression-free survival with secondary endpoints including overall survival and duration of benefit. We expect to report results of this study in the first half of next year. We are also preparing to start a Phase III trial of relacorilant plus nab-paclitaxel in patients with metastatic pancreatic cancer, a disease with a very poor prognosis and no good treatment options. Following discussions with the FDA, we have identified a trial design that could support accelerated approval. For those of you not familiar with it, accelerated approval is an FDA program that permits faster approval of drugs that treat serious conditions and fill an unmet medical need provided 1 or more confirmatory trials are initiated prior to approval being granted. We expect to begin enrolling patients in this trial next quarter.

Cortisol is the body's natural immunosuppressant. Although this effect can be beneficial by reducing the prevalence and severity of autoimmune disorders, it also makes it easier for tumor cells to survive and proliferate. In the second quarter, we plan to launch a Phase Ib trial of relacorilant plus the PD-1 checkpoint inhibitor pembrolizumab, Merck's drug KEYTRUDA, in 20 patients with metastatic or unresectable adrenal cancer. We know that cortisol modulation with Korlym treats the symptoms of Cushing's syndrome these patients frequently experience. Our trial will examine whether relacorilant can, by reducing the immune suppression caused by these patients excess cortisol, both treat the symptoms of Cushing's syndrome and help the immunotherapy achieved its maximum effect.

Finally, cortisol modulation may help treat castration-resistant prostate cancer. Stimulation of the androgen receptor causes prostate cancer cells to proliferate, which is why androgen receptor antagonism with medications such as enzalutamide, Pfizer's drug XTANDI, is a standard therapy. Unfortunately, when prostate tumor cells are exposed to enzalutamide, their growth often shifts to being stimulated by cortisol. Adding a cortisol antagonist to androgen deprivation therapy may block this tumor escape route. This year, we expect to conclude a dose-finding trial of our selective cortisol modulator, exicorilant, combined with enzalutamide in patients with castration-resistant prostate cancer. Investigators at The University of Chicago are also leading a trial of relacorilant plus enzalutamide in patients with this disease.

Corcept had an excellent 2019. Our Cushing's syndrome business added physicians and patients. We expect more growth in 2020 and have reaffirmed our revenue guidance of $355 million to $375 million, with $315 million of cash and investments at year-end, a balance that will grow this year. We are able to fully fund the development of our proprietary compounds as potential treatments for a variety of serious disorders.

Our GRACE trial is actively enrolling patients. As previously stated, we plan to submit an NDA for relacorilant in Cushing's syndrome in the fourth quarter of next year. This quarter, we will open our Phase III GRADIENT trial, a double-blind placebo-controlled study, examining relacorilant's activity in an understudied etiology of Cushing's syndrome, Cushing's syndrome caused by adrenal adenomas or adrenal hyperplasia. Our controlled Phase II trial of relacorilant plus nab-paclitaxel in advanced ovarian cancer is actively accruing patients. We expect to report results in the first half of 2021.

Next quarter, we plan to start a Phase III trial of relacorilant plus nab-paclitaxel in patients with metastatic pancreatic cancer that may provide the basis for accelerated approval. Also in the second quarter, we plan to open a Phase Ib study of relacorilant in combination with a checkpoint inhibitor in patients with metastatic or unresectable adrenal cancer.

Finally, we expect our dose-finding trial of exicorilant in combination with enzalutamide in patients with metastatic castration-resistant prostate cancer to conclude by year-end. Miricorilant's Phase II trial for the treatment of recent antipsychotic-induced weight gain is actively enrolling patients.

And by year-end, we plan to use an improved formulation of miricorilant in two double-blind, placebo-controlled Phase II trials, 1 in patients with long-standing antipsychotic-induced weight gain and the other in patients with NASH. I'll stop here for questions.

[Operator]

[Operator Instructions]. The first question will come from Charles Duncan with Cantor Fitzgerald.

[Charles Duncan, Cantor Fitzgerald & Co.]

Congratulations on a good year of growth and revenue generation with Korlym. Sorry for the background noise. So I wanted to -- so I wanted to ask a couple of questions just related to Korlym's franchise. I mean, when you think about guidance, what are the key kind of triggers between the $355 million level and the upper end? And can you give us some sense of kind of thoughts behind new patients or new prescribers? And then, of course, any impact on pricing expected in those guidance -- those guidelines?

[Joseph Belanoff, Co-Founder, President, CEO & Director]

Well, I'll answer the second part of your question first. I think, as you know, Chaz, we had a 5% price increase at the beginning of the year. And what we do with pricing is every quarter, really since we've been commercial, we look at where pricing is and go from there.

But at this point in time, we have a substantial franchise, and approximately inflation-based price growth is where we're probably going to be. And that's about as much really guidance I can give you at this point. And yes, in terms of where we fall in the range, it is just a question of how many new patients are added. And as you know, the -- I think as we probably announced midyear last year, we're beginning the process of adding new clinical specialists to our group. There are a significant number of doctors we have not yet been able to reach with the number that we had. We've been in the process in the second half of the year of bringing those people on board. That process continues. And also, as you know, Chaz, as someone who's followed the company for a long time. It's an extensive training period. We don't expect those clinical specialists to really be productive until the second half of this year. And how productive they are, will obviously influence where we end the year.

[Charles Duncan, Cantor Fitzgerald & Co.]

Okay. And then one additional question on Korlym and then one on relacorilant, if I may. Quickly on Korlym. I'm wondering if you could fast forward to couple of years from now assuming -- or maybe three, assuming relacorilant is approved. It seems like the profile of Korlym is such that it's adequate given the lack of kind of alternatives right now. But if relacorilant is approved, would you continue to market Korlym? Or would that be something that you think that the profile just doesn't make sense, given the push to possibly a better drug?

[Joseph Belanoff, Co-Founder, President, CEO & Director]

I can really answer that question more medically than commercially. If relacorilant continues to produce the results that it's produced so far, it's my opinion, my personal opinion, that it will entirely replace Korlym. I think that the efficacy and added benefits particularly in safety, the ease of distribution will make it just a superior drug. It is not simply another purple pill. It is really a meaningful advance. So cross our fingers, we'll see if our results can replicate, but that's where it is. I haven't really considered the commercial question that you're talking about so far. But I really do think that relacorilant will be a far superior drug if it replicates its results as we've seen.

[Charles Duncan, Cantor Fitzgerald & Co.]

And relative to relacorilant's results, and then I'll hop back in the queue. You mentioned possibly filing by the end of next year. But I'm wondering if you could provide any additional granularity on when you'd expect clinical results from that trial? And as you point out press release, so was it at that time?

[Joseph Belanoff, Co-Founder, President, CEO & Director]

Yes. Just to answer your question. As you and the other analysts do sort of count back and you'll know when the results are. But I think we've really -- since so much goes into an NDA submission, not just the efficacy studies, we're really hard at work at preparing all of those things. So we really can be on target to send our NDA in by the end of 2021.

[Operator]

The next question will come from the line of Swayampakula Ramakanth with H.C. Wainwright.

[Swayampakula Ramakanth, H.C. Wainwright & Co.]

This is RK from HCW. Congratulations on a great 2019. And going into 2020, can you give us a little bit of an idea in terms of how we should think about the cost lines for 2020?

[Joseph Belanoff, Co-Founder, President, CEO & Director]

Yes, I'm going to give -- turn that question over to Charlie.

[Gary Robb, CFO & Secretary]

Yes. Hi RK. Sure. I can -- we don't provide earnings guidance, but I think I can give you sort of a general sense of things. And if you look back -- folks, look back at sort of the history of our revenue growth and our expense increases over the years, I think there's -- you can see sort of a pretty predictable pattern, which is we have a sort of a marginal increase every year in our sort of SG&A spending, as Sean add some salespeople, and we -- the marketing team grows a bit, and we added on the administrative side. And those then tend to be pretty flat across the year, just sort of the accidents in the calendar the way our business works. And I think -- I don't see any reason why that won't continue. And I think it will certainly continue this year. Research and development, obviously, you've heard Joe go over the list of programs, which are expanding considerably.

And I think the -- we expect to spend more this year in research and development as our trials open and accrue patients. Exactly how much we spend will depend on how fast those things go. But I think that a fair step-up in R&D spending is to be expected. And that being said, the other thing I'd add is, we expect to remain significantly cash flow positive across the year.

[Swayampakula Ramakanth, H.C. Wainwright & Co.]

Then of the multiple oncology studies that are either being conducted this year or are being planned for. Joe, what are the -- 1 or 2 of those studies, which do you think could be -- could end up as a low-hanging fruit or which one is exciting in your mind?

[Joseph Belanoff, Co-Founder, President, CEO & Director]

I don't think there's any low-hanging fruit in any of the metastatic diseases that we're studying or else someone who have already gotten there, and those patients would have a much better outcome than they currently do today. So they're all high bars. But look, metastatic pancreatic cancer, metastatic ovarian cancer, metastatic adrenal cancer are all terrible diseases, and I'd love to be able to bring a treatment forward for any one of them. Obviously, at this point, we have data -- a small amount of data, but good data in pancreatic and ovarian cancer. And our next studies will really tell us where we are.

[Swayampakula Ramakanth, H.C. Wainwright & Co.]

And then the last question for me is regarding miricorilant for NASH. As we know, there are multiple drugs in development. And how should we think about the competitiveness of this drug, miricorilant, against others which are out there in the various development pathways?

[Joseph Belanoff, Co-Founder, President, CEO & Director]

RK, I'm going to -- I just want to introduce -- reintroduce Andreas Grauer, our Chief Medical Officer, who's going to answer that question.

[Andreas Grauer, Chief Medical Officer]

Well, okay, that's an excellent question, and I think we'll find that out, right? We are planning to do a proof-of-concept study as of first study with imaging endpoints. And I think at that point, we will get a much better idea on how the preclinical data translate into clinical benefit. And we'll take it from there.

[Operator]

The next question will come from Tazeen Ahmad with Bank of America.

[Tazeen Ahmad, Bank of America Merrill Lynch]

Maybe if I could ask a couple on the pipeline. Joe or Charlie, as far as the GRACE study, you talked about the target of enrolling 130 patients. You've given us a guideline of when you plan to apply for approval. But can you talk to us about the cadence with which the study has been enrolling so far? How do you feel about the pace of enrollment? I know it's not exactly apples-to-apples, but can you compare it to the pace of enrollment of your Phase II study, for example, which, of course, was much smaller? And then I have a couple of questions on some of the other programs.

[Joseph Belanoff, Co-Founder, President, CEO & Director]

Yes, Tazeen, we're not going to comment really on where we are in that study and enrollment until it's done. And hopefully, that will be within sight. I think an interesting thing with the Phase II study was that the first half, which we used lower doses of relacorilant, really took quite a bit longer to enroll than the second half, which had higher doses because I think the people who are in the high -- the doctors who were in enrolling patients in the higher dose cohort, saw how the patients in the lower cohort -- lower dose cohort had done. And I'm hoping that those positive results will really be meaningful to the investigators currently enrolling in our study.

We're just now really at the point of almost getting all of our sites up. We're very close to that. And as -- and I guess the only other thing I would tell you is that because, as you know, we never introduced Korlym in Europe, it's our expectation that like the Phase II study, the bulk, maybe 70% of the enrollment will actually come from European sites.

[Tazeen Ahmad, Bank of America Merrill Lynch]

Okay. And maybe a question on relacorilant on your Phase II study, where you're looking at relacorilant plus nab-paclitaxel. Can you give us an idea of what you would consider to be clinically meaningful data when that reads out? I think you said you're expecting results for that in the first half of '21.

[Joseph Belanoff, Co-Founder, President, CEO & Director]

In the ovarian cancer study, yes. Tazeen, if it's okay, I'm going to pass you back to Andreas.

[Andreas Grauer, Chief Medical Officer]

Yes. Can you please clarify the question? I mean, we -- as Joe was saying in his words that the endpoint would be progression-free survival. So an improvement in that would obviously be clinically very meaningful.

[Tazeen Ahmad, Bank of America Merrill Lynch]

So is it any level of improvement, I guess? Are you looking for a particular level of improvement? And I guess, how would you compare that to what might currently be used in that study?

[Joseph Belanoff, Co-Founder, President, CEO & Director]

Well, the overall study, Tazeen, is a statistically significant improvement in relacorilant plus nab-paclitaxel relative to nab-paclitaxel alone. And I don't have in front of me the number of months that actually generates for this size of patients, but we'll be very glad to get back to you with that after the call.

[Tazeen Ahmad, Bank of America Merrill Lynch]

Okay, that's fine. And maybe the third one, if I could squeeze in. I think in your prepared remarks, you talked about a study that you're doing in metastatic prostate with exicorilant but there's also, I believe, a physician-sponsored study with relacorilant. Is that in the same indication? I just wanted to clarify.

[Joseph Belanoff, Co-Founder, President, CEO & Director]

It is, Tazeen. Yes, they're both studies in metastatic castration-resistant prostate cancer. That's correct. And they're running in parallel and you had it exactly right. Exicorilant the company is doing. Relacorilant, an investigator group led by a lead investigator at the University of Chicago is doing. And we'll, obviously, look at the results of both of those.

[Tazeen Ahmad, Bank of America Merrill Lynch]

Okay. Is there any reason to think that one might perform better than the other?

[Joseph Belanoff, Co-Founder, President, CEO & Director]

Well, the only reason we're doing exicorilant absolutely, in some sense, we got first pick was that in the animal models, exicorilant -- both performed well, but exicorilant outperformed relacorilant in that -- in the animal study. But as you know, there's a great distance between treating cancer in rats as there is in people. So having two shots on goal, we think, really is beneficial in terms of gaining information.

[Operator]

The next question will come from Adam Walsh with Stifel.

[Edwin Zhang, Stifel, Nicolaus & Company]

This is Edwin Zhang on for Adam. My first question, a quick one on the GRACE study. It seems to me that you are still enrolling patients now. So my question is, what are the limiting factors that the enrolling pace is not as fast as you expect? So that's my first question.

[Joseph Belanoff, Co-Founder, President, CEO & Director]

I'm not sure I exactly understand your question. But the enrolling -- the major thing for enrolling is really just the number of patients with the disease and the number of sites that are open to treat them.

[Edwin Zhang, Stifel, Nicolaus & Company]

I recall in the last year, you expect the enrollment to be finished by year-end 2019. Is that right?

[Andreas Grauer, Chief Medical Officer]

I think we talked about that at one of the earlier earnings calls where we said that in the last quarter -- last year, we were able to better assess the enrollment speed because one of the key factors was the opening of the clinical study sites, which today with all the contracting and all these administrative hurdles takes longer and longer, and you can't recruit until you have your sites open.

And now that we have the vast majority of the sites open, nearly all of them, we have a clearer picture of our enrollment expectations. And in addition, this is not a frequent disease, so it's not a surprise, right? But on the other hand, where I think we were well setup where the study is enrolling. And we'll see what the future brings there, all right?

[Edwin Zhang, Stifel, Nicolaus & Company]

Yes, fair enough. My second question on the relacorilant on NASH. Have you talked to the FDA on the trial design and do you plan to target on early or late-stage NASH patients? Can you also explain the mechanism of action for -- you take NASH, for example, how the other cortisol modulator impacts liver fibrosis?

[Joseph Belanoff, Co-Founder, President, CEO & Director]

I'm going to answer the second question and then I'll pass it back for Andreas for the first question. It's interesting because one of the things that you see frequently with patients with Cushing's syndrome,is fatty liver. And as you know, fatty liver is really the prerequisite for -- a percentage of those patients go on to have NASH. And then, of course, unfortunately, a percentage of the patients who want to have NASH go onto have cirrhosis. And essentially, I think really, fatty liver disease is really perceived as the liver manifestation of metabolic syndrome and metabolic syndrome is often driven by excess cortisol activity. So modulating cortisol is really a treatment first for fatty liver. And we've certainly seen in anecdotal ways that improved with patients who take Korlym for Cushing's syndrome. But I think that in the animal models, where you can really accelerate that with testing for fibrosis, you also see a benefit there as well. Now we're coming up to our first study in people. Obviously, not everything, again, as I said before, in animals translates to people, but we have some sense that this really might translate and that is the mechanism. And as for your question, your regulatory question, I'll pass back to Andreas.

[Andreas Grauer, Chief Medical Officer]

Yes. And there, the answer is pretty straightforward. No, we have not talked to the FDA yet, that would be premature. We want to produce clinical data first so that we have something in hand to talk to the FDA about the most appropriate development program. On the other hand, I think the, how would I phrase, clinical development in NASH is sort of fairly well organized. And in the moment, follows relatively predictable endpoints. So I don't expect too many surprises once we see the results of our early studies, I think we'll be able to position and design our future trials and interact with the FDA.

[Operator]

The next question will come from Alan Leong with BioWatch News.

[Alan Leong, BioWatch]

Congratulations to the quarter an even brighter outlook. I think this first one would be -- the first one it might be for you, Joe, and also maybe Andreas. The pancreatic cancer trial will include some fairly desperate cases. And I recognize that the usual research design had its difficulties. Could you provide any color at this point on the pancreatic trial design?

[Andreas Grauer, Chief Medical Officer]

Yes, you're absolutely right, right? This is a patient population that is in desperate need of a treatment that improves -- that creates some clinical responses. And which is why, after seeing the results in our early study that's been presented at ASCO, we decided that this is something that we should pursue because we might be able to give pancreatic cancer patients exactly that. So what we're going to do is we're going to execute the study in two phases. The first phase will be a single-arm phase with approximately 40 patients, after which, we will do an interim analysis and then continue with a two arm design, adding a nab-paclitaxel arm to the study in a prospective randomized fashion.

[Joseph Belanoff, Co-Founder, President, CEO & Director]

I think the difficulty thing and I think, Alan, you're alluding to it is, this is a group of patients for whom really nothing works very well. And there really are difficult issues around running a placebo-controlled study. As we've mentioned before, this is a program where we have met from the FDA. We've taken their feedback seriously, and we hope we've designed a study to really optimize our chances, obviously, to both show the medicine works and to achieve regulatory benefit.

[Alan Leong, BioWatch]

Yes, it would really be groundbreaking to add something into a traditional therapy and getting an improvement in that area. If I may, can I ask you about adrenal cancer because it's rare and there isn't a lot of medical commentary on it. And it's apparent, your work with Cushing's syndrome gives you unusual access. Will the trial be using just KEYTRUDA and relacorilant? Or will the duo be added to the ongoing or any current therapy? And just to add on to it, furthermore, you could have paired with Abraxane or another therapy rather than a checkpoint inhibitor. Can you provide any color on these things?

[Andreas Grauer, Chief Medical Officer]

Yes, I think it's sort of the other way around, right? We -- so first of all, we feel that these patients with adrenocortical cancer, like we've shown with mifepristone will benefit from glucocorticoid receptor modulation. After all, they have Cushing's syndrome. And we're focusing this trial on patients with glucocorticoid access. So that determined our initial patient selection. But the philosophy behind doing that trial, as Joe was explaining in his remarks was that we wanted to look at the effect of glucocorticoid receptor modulation on the effect of a checkpoint inhibitor. And this patient population that has even measurable glucocorticoid access one can easily imagine that a checkpoint inhibitor that needs the immune effect will not work as well in this patient population and there are published data that support that assumption. So the idea of unleashing the effect of a checkpoint inhibitor by inhibiting glucocorticoid action seemed particularly worthy of study. That's why we picked that particular approach.

[Alan Leong, BioWatch]

Yes. Yes, it'd certainly be the acid test.

[Joseph Belanoff, Co-Founder, President, CEO & Director]

And just -- and I know, Alan. I know you followed the story for a long time. And I just want to underscore one of the things that Andreas said. We have patients in our -- both in our pivotal trial with Korlym. And of course, many patients since then with Korlym has been commercial, who have adrenal cancer. And their Cushing's syndrome is well treated by mifepristone, but it doesn't, in isolation, do much for their cancer. Their cancer still progresses. Now they're very pleased because they don't have diabetes anymore and their quality of life is better. But we really want to now see if we can do both things. We want to see if we can really -- to use Andreas' term, unleash the checkpoint inhibitor, which, to date, in the absence of cortisol modulation has very limited effect. So it's a very interesting study. There's a lot of academic interest, and we'll see how it pans out.

[Alan Leong, BioWatch]

Last question. Yes, there are new antipsychotics coming to the market with less impact on metabolic metrics. Do you see any meaningful impact from their introduction to the market? Or will it still remain a large unmet need? Can you provide any color on that?

[Joseph Belanoff, Co-Founder, President, CEO & Director]

Well, as a psychiatrist prescribing these medications for now almost 30 years, I'm always waiting for the one, which is, again, neutral of side effects related to metabolic things. So I'm hoping that, that will happen. But it hasn't been my experience so far that that's the actual case, at least to the degree that was hoped for before it was released commercially. But even that being said, what's very true is that not every antipsychotic medication works for every patient.

As the big studies have shown, there's rapid switching between medications often related to different side effects. And so I'm confident that there's no world in front of us that's very soon to occur where one medication is going to be the most effective medication for every single patient. And I think that the metabolic demands that are placed on patients with almost all the medications we have today are really very substantial and alleviating that would have great utility. And I say that as a practitioner.

[Operator]

The next question will come from Matt Kaplan of Ladenburg Thalmann.

[Raymond Wu, Ladenburg Thalmann]

This is Raymond in for Matt. Congrats on the 2019 results. Yes, so thanks for the overview on the litigation, but perhaps is there any additional detail on how the recent IPR ruling on Neptune Generics might provide any insight or probabilities on how we should think about the PGR case against Teva going forward perhaps?

[Joseph Belanoff, Co-Founder, President, CEO & Director]

Yes, Charlie is going to answer that question.

[Gary Robb, CFO & Secretary]

Yes, sure. It's a natural question to ask, and I mean -- and I think there are a couple of points that are important to keep in mind. But one thing just to unwrap, as a technical matter, the decision with respect to the '348 patent in the IPR, it doesn't bind the patent tribunal in any respect with regards to PGR or the District Court. They really are separate. They're separate disputes, separate proceedings. That being said, I think the thing to really -- or really 2 points that I think are important to keep in mind. One of them is very simple, but very important and it's that we won, this patent was very important to us. We have asserted it against both Teva and Sun. It's one of the patents that underlies our 30-month stay against both those companies. And this is the first time that our intellectual property has been put before an impartial tribunal in an adversarial proceeding, where Neptune was poking as many holes in it as it could and the PTAB decided in our favor on every count.

And I think that, that is just an unequivocal win and should not be interpreted in any other way. It's just good news. Now my second point really relates to my first point, which is that I think -- my hope is that the victory in this proceeding will cause people to perhaps reexamine their assumptions about our prospects for success in other proceedings. I think that there is a prevailing understanding in the market now that we are going to lose to Teva. That's just -- and if you look back at the history of it, when Teva filed its first motion to dismiss against our lawsuit in 2018, the market immediately assumed that Teva would win and we would lose. When in fact, Teva lost and we won. And when Teva filed its second motion to dismiss, the assumption was that Teva would win and we would lose. And in fact, we won and Teva loss.

Now there are obviously important, large decisions and disputes that are, again, kind of starting to come onto the horizon with the PGR decision in November, a District Court trial at some point in the future that we'll have a better sense of soon. And we have said at every point that we have confidence in our intellectual property. And so far, we've been right. But I think the market assumes at every point that our chance of success is zero. And I think that is an inaccurate assumption and that everyone needs to decide for themselves what the proper risk calculation is. Obviously, I can't do that for anyone and my opinion is simply my opinion. But I think our confidence is something that should be taken seriously as people evaluate what they think is going to happen next.

[Raymond Wu, Ladenburg Thalmann]

I guess just perhaps just to follow up quickly with a question on the clinical and pipeline timeline. So I was wondering -- just following up on the previous question and comments, would you be able to provide a layout of potential data announcement for the upcoming years, perhaps in medical conferences with regard to miricorilant and metabolic disorders, and relacorilant and oncology?

[Andreas Grauer, Chief Medical Officer]

Yes. So miricorilant, as liver Joe had introduced, we are planning to share the results and we've submitted the results of our placebo-controlled study in prevention in healthy volunteers to the American Psychiatric Society. So that is the currently planned...

[Raymond Wu, Ladenburg Thalmann]

Do you have a date?

[Andreas Grauer, Chief Medical Officer]

Yes. So that's in April, I think. That's the currently planned presentation of results for miricorilant. We're not expecting data -- we're not expecting data readout from the Phase II next year. So yes, no further releases there to be expected.

[Joseph Belanoff, Co-Founder, President, CEO & Director]

Yes. I'm just going to repeat that. So the Phase I study and that I was alluding to in my comments, will be -- we're seeing much of the results, but the full data will be released in April American Psychiatric Association meeting, but the larger Phase II studies will not produce results in 2020, not until 2021.

[Operator]

The question is coming from Roger Song with Jefferies

[Jiale Song, Jefferies]

This is Roger for Chris. Yes, so most of my questions has been answered. First of all, congrats for the 4Q. And I just maybe have one quick kind of follow-up question for the Korlym litigation. And obviously, this '348 win is kind of important for the company. And as a investor, we also want to play kind of a different kind of scenario. And in your mind or in your model, if you have this kind of a generic coming into the market whenever it becomes a reality, how you can maximize relacorilant, miricorilant demand in the case of the both Korlym and the generic Korlym is available?

[Gary Robb, CFO & Secretary]

Well, I mean, I would say two things. First, it is not our estimate that there will be generic of product available, certainly this year. That's -- our revenue guidance, for example, is our best estimate of revenue. And our best estimate of revenue includes our opinion that there will not be a generic Korlym, no matter what, in 2020, certainly. And everyone needs to come to their own conclusions about that, but that is our belief. Now as to what we would do if there ever were to be a generic Korlym, that is something a scenario that we planned for along with many other scenarios. And I think that's really -- all I can say is that we think hard about that possibility even though we're confident in our position, it's always hope for the best and prepare for the worst and we give that a lot of thought. And that's really, I think, all I can tell you.

[Joseph Belanoff, Co-Founder, President, CEO & Director]

Well, listen, thank you, everybody, for listening. I really appreciate it and look forward to talking to you next quarter. Bye.

[Gary Robb, CFO & Secretary]

Bye.

[Operator]

This concludes today's call. Thank you for your participation. You may now disconnect.