Can company sustain huge growth rate?
While COVID-19 made it hard to conduct clinical trials and reduced the number of new patients being diagnosed with Cushing’s syndrome, which Corcept Therapeutics’ lead drug, Korlym, treats, the company’s share price went up by more than 143% over the past year. Its revenue rose 15% to $353.9 million, and the company forecasted 2021 revenue of between $375 million and $405 million. Corcept’s 2020 net income was $106 million, up 12.5% from 2019. Its balance sheet is strong, with $476.9 million in cash and — rare for a biotech company — no long-term debt.
In February Corcept announced its fourth quarter and full-year 2020 audited financial results. Highlights were:
· 2020 revenue of $353.9 million, compared to $306.5 million in 2019
· Fourth quarter revenue of $85.7 million, compared to $87.9 million in 2019
· 2020 GAAP net income of $106.0 million, compared to $94.2 million in 2019
· Fourth quarter GAAP net income of $26.0 million, compared to $29.4 million in fourth quarter 2019
· Cash and investments of $476.9 million at year-end, compared to $315.3 million at year-end 2019
· Acquisition of 458,769 shares pursuant to the company’s stock repurchase program
· Reiterated 2021 revenue guidance of $375–405 million
“Corcept’s financial and clinical accomplishments in 2020 lay the foundation for significant progress this year,” said Joseph K. Belanoff, MD, Corcept’s chief executive officer. “As the COVID-19 pandemic is brought under control, the easing of public health restrictions and greater willingness of patients to visit their doctors will allow more physicians to diagnose and optimally treat patients with Cushing’s syndrome.”
He added, “Improving conditions should also permit more rapid progress in our clinical development programs, many of which have been significantly slowed by the pandemic. We are currently evaluating our proprietary, selective cortisol modulators as potential treatments for patients with metastatic ovarian and pancreatic cancer, castration-resistant prostate cancer, adrenal cancer, Cushing’s syndrome, antipsychotic-induced weight gain and non-alcoholic steatohepatitis. We will have topline data from our ovarian and pancreatic cancer trials in the second quarter. In the fourth quarter, we plan to initiate a Phase 2 trial in patients with amyotrophic lateral sclerosis (ALS).”
Corcept’s website says that the company is “leading the discovery and development of drugs that modulate the effects of the hormone cortisol,” explaining that cortisol dysregulation affects many endocrine, metabolic, oncologic, psychiatric and ophthalmologic diseases. Corcept specializes in the research and development of selective glucocorticoid receptor (GR) antagonists, “having discovered more than 500 proprietary molecules since being founded in 1998.” The drug candidates are designed to “address serious unmet medical needs related to excess cortisol activity.” Corcept’s collaborations with researchers around the world have resulted in more than 30 studies to “investigate the potential benefits GR antagonists may have in the treatment of serious and life-threatening diseases driven by cortisol dysregulation.”
Cushing’s syndrome is the result of the body producing too much cortisol. High cortisol also can cause diabetes, high blood pressure, depression and osteoporosis and reduce the body’s ability to fight certain types of cancers.
Currently, Corcept’s only marketable drug is Korlym, but the company views a promising drug in its pipeline, Relacorilant, as a potential replacement for Korlym. Relacorilant, which seems to have fewer adverse side effects, is in phase 3 trials to treat endogenous Cushing’s syndrome and hypercortisolism and in an early stage trial for a combination treatment with Merck’s Keytruda to treat adrenal cancer. A study by Prophecy Market Insights projected that the market opportunity for Cushing’s syndrome was $313 million last year and was expected to grow to a $676.2 million market by 2029, giving it a CAGR of 8.9%. Corcept is listed as a key player in that market. (https://brandessenceresearch.com/healthcare/cushing-s-syndrome-market-size)
In March Corcept announced enrollment of the first patient in the Phase 1b trial of relacorilant in combination with the PD-1 checkpoint inhibitor pembrolizumab (Merck’s medication, Keytruda®) in patients with adrenal cancer with cortisol excess.
According to Andreas Grauer, MD, Corcept’s chief medical officer, “Cortisol activity blunts the cancer-killing attributes of immunotherapeutic agents such as checkpoint inhibitors, which may be why pembrolizumab is rarely effective as monotherapy in patients with adrenal cancer with cortisol excess. Our trial will examine whether adding relacorilant to pembrolizumab therapy will reduce cortisol-activated immune suppression sufficiently to help pembrolizumab achieve its intended tumor-killing effect, while relacorilant treats the Cushing’s syndrome caused by excess cortisol activity.”
The open-label, Phase 1b trial has a planned enrollment of 20 patients with metastatic or unresectable adrenal cancer with cortisol excess at five sites in the United States. Relacorilant is a non-steroidal, selective modulator of the glucocorticoid receptor that does not bind to the body’s other hormone receptors. Corcept is studying relacorilant in a variety of serious disorders, including Cushing’s syndrome and adrenal, ovarian and pancreatic cancer. Relacorilant is proprietary to Corcept and is protected by composition of matter and method of use patents. Relacorilant has received orphan drug designation in the United States for the treatment of Cushing’s syndrome and pancreatic cancer.
Simply Wall St has a positive view of Corcept while offering a few words of caution. As to rewards of owning stock in the company, Simply Wall Street said that it is trading “at 54.1% below our estimate of its fair value,” earnings are forecast to grow 24.75% per year and earnings grew by 12.4% over the past year. In terms of risks, the publication said that there was significant insider selling over the past 3 months and that shareholders have been diluted in the past year.
Corcept’s share price is up 398% in the last half decade, a good return for long-term holders. During the last half decade, Corcept Therapeutics became profitable. The start of profitability could signal fast earnings growth to come, which in turn justifies very strong share price gains.
Zacks Equity Research reported that Corcept shares lost about 11.1% in a month, underperforming the S&P 500. Corcept reported fourth-quarter 2020 earnings of 20 cents per share, which was in line with the Zacks Consensus Estimate but decreased from the year ago quarter’s earnings of 24 cents.
Adjusted earnings were 27 cents per share in the reported quarter compared with 33 cents a year ago. Revenues in the fourth quarter declined 2.5% year over year to $85.7 million. Research and development expenses escalated 16.4% to $28.3 million. Selling, general and administrative expenses also increased 5.2% to $25.7 million.
Corcept expects revenues of $375 to $405 million in 2021. In the past month, investors saw an upward trend in estimates revision. The consensus estimate has shifted 31.25%. The company has a nice Growth Score of B and a Momentum Score of A.