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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________
FORM 10-Q
_______________________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             
Commission File Number:
000-50679
_______________________________________________________
CORCEPT THERAPEUTICS INCORPORATED
(Exact Name of Corporation as Specified in Its Charter)
_______________________________________________________
Delaware77-0487658
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
149 Commonwealth Drive
Menlo Park, CA 94025
(Address of principal executive offices, including zip code)
_______________________________________________________
(650) 327-3270
(Registrant’s telephone number, including area code)+
_______________________________________________________
Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par valueCORTThe Nasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer☐  Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ☒
On July 28, 2020, there were 115,557,656 shares of common stock outstanding at a par value of $0.001 per share.



TABLE OF CONTENTS

2

PART I. FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
CORCEPT THERAPEUTICS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30,
2020
December 31,
2019
 (Unaudited)(See Note 1)
ASSETS  
Current assets:  
Cash and cash equivalents$58,523  $31,269  
Short-term marketable securities346,835  244,693  
Trade receivables, net of allowances22,725  19,928  
Inventory4,927  5,424  
Prepaid expenses and other current assets5,323  6,044  
Total current assets438,333  307,358  
Strategic inventory11,193  11,981  
Operating lease right-of-use asset3,472  3,446  
Property and equipment, net of accumulated depreciation619  1,050  
Long-term marketable securities4,200  39,352  
Other assets4,536  3,448  
Deferred tax assets, net35,470  45,677  
Total assets$497,823  $412,312  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$6,304  $7,537  
Accrued clinical expenses11,289  6,477  
Accrued and other liabilities 22,631  23,269  
Short-term operating lease liability2,019  1,558  
Total current liabilities42,243  38,841  
Long-term operating lease liability1,486  1,903  
Long-term accrued income taxes396  386  
Total liabilities44,125  41,130  
Commitments and contingencies (Note 5)
Stockholders’ equity:
Preferred stock    
Common stock121  120  
Additional paid-in capital481,714  457,060  
Treasury stock(63,814) (62,704) 
Accumulated other comprehensive income840  261  
Retained earnings (accumulated deficit)34,837  (23,555) 
Total stockholders’ equity453,698  371,182  
Total liabilities and stockholders’ equity$497,823  $412,312  
The accompanying notes are an integral part of these condensed consolidated financial statements.
3

CORCEPT THERAPEUTICS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share data)
Three Months Ended June 30,Six Months Ended June 30, 2020
 2020201920202019
Product revenue, net$88,565  $72,257  $181,812  $137,086  
Operating expenses:
Cost of sales1,234  1,377  3,112  2,617  
Research and development26,497  21,656  52,620  41,900  
Selling, general and administrative25,572  24,591  53,107  48,980  
Total operating expenses53,303  47,624  108,839  93,497  
Income from operations35,262  24,633  72,973  43,589  
Interest and other income1,010  1,178  2,481  2,275  
Income before income taxes36,272  25,811  75,454  45,864  
Income tax expense(7,945) (5,625) (17,062) (7,404) 
Net income$28,327  $20,186  $58,392  $38,460  
Other comprehensive income (loss):
Net unrealized gain on available-for-sale investments, net of tax impact of $(170), $(73), $(190) and $(124), respectively
545  227  606  391  
Foreign currency translation loss, net of tax(15)   (27)   
Total comprehensive income$28,857  $20,413  $58,971  $38,851  
Basic net income per share$0.25  $0.18  $0.51  $0.34  
Diluted net income per share$0.23  $0.17  $0.48  $0.31  
Weighted-average shares outstanding used in computing net income per share
Basic115,006  114,340  114,790  114,590  
Diluted123,234  121,783  122,756  122,831  
The accompanying notes are an integral part of these condensed consolidated financial statements.
4

CORCEPT THERAPEUTICS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 Six Months Ended June 30,
 20202019
Cash flows from operating activities:  
Net income$58,392  $38,460  
Adjustments to reconcile net income to net cash generated from operations:
Stock-based compensation16,407  14,432  
Deferred income taxes10,017  5,834  
Accretion of interest income(72) (1,053) 
Depreciation and amortization of property and equipment362  263  
Non-cash amortization of right-of-use asset749  772  
Others148    
Changes in operating assets and liabilities:
Trade receivables(2,797) (2,186) 
Inventory1,414  (1,543) 
Prepaid expenses and other current assets721  1,538  
Other assets(1,088) (100) 
Accounts payable(1,251) (1,299) 
Accrued clinical expenses4,812  2,197  
Accrued and other liabilities(628) (7,349) 
Operating lease liabilities(731) (730) 
Net cash provided by operating activities86,455  49,236  
Cash flows from investing activities:
Purchases of property and equipment(89) (667) 
Proceeds from maturities of marketable securities153,193  130,145  
Purchases of marketable securities(219,314) (131,001) 
Net cash used in investing activities(66,210) (1,523) 
Cash flows from financing activities:
Proceeds from issuance of common stock upon exercise of options, net of issuance costs7,347  3,947  
Repurchase of common stock(275) (30,975) 
Cash paid to satisfy statutory withholding requirement for net settlement of cashless option exercise(63) (4,169) 
Net cash provided by (used in) financing activities7,009  (31,197) 
Net increase in cash and cash equivalents27,254  16,516  
Cash and cash equivalents, at beginning of period31,269  41,625  
Cash and cash equivalents, at end of period$58,523  $58,141  
Supplemental disclosure:
Exercise price of shares tendered in net settlement of cashless option exercise$772  $931  
Recognition of right-of-use asset and lease liability$775  $1,878  
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

CORCEPT THERAPEUTICS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands) 
Common StockAdditional
Paid-in
Capital
Treasury StockAccumulated
Other
Comprehensive
Income (Loss)
Retained Earnings (Accumulated
Deficit)
Total
Stockholders’
Equity
SharesAmount
Balance at December 31, 2018115,031  $117  $417,228  $(23,657) $(70) $(117,736) $275,882  
Issuance of common stock upon exercise of options1,497  1  3,365  —  —  —  3,366  
Shares tendered to satisfy cost and statutory withholding requirements for net settlement of cashless option exercise(428) —  —  (5,100) —  —  (5,100) 
Stock-based compensation related to employee and director options—  —  6,724  —  —  —  6,724  
Other comprehensive income, net of tax—  —  —  —  164  —  164  
Purchases of treasury stock(1,168) —  —  (13,555) —  —  (13,555) 
Net income—  —  —  —  —  18,274  18,274  
Balance at March 31, 2019114,932  118  427,317  (42,312) 94  (99,462) 285,755  
Issuance of common stock upon exercise of options317    1,514  —  —  —  1,514  
Stock-based compensation related to employee and director options—  —  7,791  —  —  —  7,791  
Other comprehensive income, net of tax—  —  —  —  227  —  227  
Purchases of treasury stock(1,612) —  —  (17,420) —  —  (17,420) 
Net income—  —  —  —  —  20,186  20,186  
Balance at June 30, 2019113,637  $118  $436,622  $(59,732) $321  $(79,276) $298,053  
Balance at December 31, 2019114,549  $120  $457,060  $(62,704) $261  $(23,555) $371,182  
Issuance of common stock upon exercise of options67    480  —  —  —  480  
Stock-based compensation related to employee and director options—  —  7,988  —  —  —  7,988  
Other comprehensive income, net of tax—  —  —  —  49  —  49  
Purchases of treasury stock(20) —  —  (275) —  —  (275) 
Net income—  —  —  —  —  30,065  30,065  
Balance at March 31, 2020114,596  120  465,528  (62,979) 310  6,510  409,489  
Issuance of common stock upon exercise of options1,011  1  7,638  —  —  —  7,639  
Shares tendered to satisfy cost and statutory withholding requirements for net settlement of cashless option exercise(54) —  —  (835) —  —  (835) 
Stock-based compensation related to employee and director options—  —  8,548  —  —  —  8,548  
Other comprehensive income, net of tax—  —  —  —  530  —  530  
Net income—  —  —  —  —  28,327  28,327  
Balance at June 30, 2020115,553  $121  $481,714  $(63,814) $840  $34,837  $453,698  
The accompanying notes are an integral part of these condensed consolidated financial statements
6

CORCEPT THERAPEUTICS INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Summary of Significant Accounting Policies
Description of Business and Basis of Presentation
Corcept Therapeutics Incorporated is a commercial-stage pharmaceutical company engaged in the discovery and development of medications that treat severe metabolic, oncologic and psychiatric disorders by modulating the effect of the hormone cortisol. In 2012, the U.S. Food and Drug Administration (“FDA”) approved Korlym® (“mifepristone”) 300 mg tablets, as a once-daily oral medication for the treatment of hyperglycemia secondary to hypercortisolism in adult patients with endogenous Cushing’s syndrome who have type 2 diabetes mellitus or glucose intolerance and have failed surgery or are not candidates for surgery. We have discovered and patented four structurally distinct series of selective cortisol modulators, consisting of more than 1,000 compounds. We are developing compounds from these series as potential treatments for a broad range of serious disorders.
We were incorporated in the State of Delaware in May 1998. Our headquarters are located in Menlo Park, California.
Basis of Presentation
We have prepared the following in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X: (i) condensed consolidated balance sheet as of June 30, 2020, (ii) statements of comprehensive income and stockholders’ equity for the three and six months ended June 30, 2020 and 2019 and (iii) statements of cash flows for the six months ended June 30, 2020 and 2019. These do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation (which in the applicable periods consist only of normal, recurring adjustments) have been included. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results for the remainder of 2020 or any other period. These financial statements and notes should be read in conjunction with the financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K. The December 31, 2019 balance sheet was derived from audited financial statements at that date.
There have been no material changes in the significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2019 except for the adoption of the accounting pronouncements set forth below.
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which changes the methodology for measuring credit losses on financial instruments and for determining when such losses are recorded. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. We adopted this standard on January 1, 2020 using the modified retrospective approach with the cumulative effect of the adoption recorded as an adjustment to retained earnings. It had no impact on our condensed consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurements (Topic 820),” which eliminates or modifies certain disclosure requirements for fair value measurements and requires disclosure of additional information. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. We adopted this standard on January 1, 2020 using the modified retrospective approach with the cumulative effect of the adoption recorded as an adjustment to retained earnings. It had no impact on our condensed consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2019, the FASB issued ASU No. 2019-12 (ASC Topic 740), “Simplifying the Accounting for Income Taxes.” This standard simplifies accounting for income taxes by removing certain exceptions to the general principles and clarifying existing guidance. This standard will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2021. Early adoption is permitted. We are assessing the impact of this standard on our consolidated financial statements.
7

2. Composition of Certain Balance Sheet Items
Inventory
June 30,
2020
December 31,
2019
 (in thousands)
Raw materials$  $1,389  
Work in progress9,413  10,086  
Finished goods6,707  5,930  
Total inventory16,120  17,405  
Less strategic inventory classified as non-current(11,193) (11,981) 
Total inventory classified as current$4,927  $5,424  
Because we rely on a single manufacturer for the active pharmaceutical ingredient (“API”) for Korlym, we have purchased and hold significant quantities of API. We classify inventory we do not expect to sell within 12 months of the balance sheet date as “Strategic Inventory,” a long-term asset. 
Property and Equipment
June 30,
2020
December 31,
2019
(in thousands)
Furniture and equipment$304  $304  
Software1,472  1,541  
Leasehold improvements533  533  
2,309  2,378  
Less accumulated depreciation(1,690) (1,328) 
$619  $1,050  
Accrued and other liabilities
June 30,
2020
December 31,
2019
 (in thousands)
Government rebates$9,160  $8,209  
Accrued compensation5,615  12,331  
Income taxes payable5,417  472  
Legal fees918  1,087  
Accrued selling and marketing costs664  491  
Professional fees463  367  
Accrued manufacturing costs113  33  
Other281  279  
Total accrued and other liabilities$22,631  $23,269  
Other assets
As of June 30, 2020 and December 31, 2019, Other assets included $4.4 million and $3.3 million of deposits for clinical trials, respectively.
8

3. Available-for-Sale Securities and Fair Value Measurements
The available-for-sale securities in our Condensed Consolidated Balance Sheets are as follows:
June 30,
2020
December 31,
2019
(in thousands)
Cash equivalents$34,758  $18,461  
Short-term marketable securities346,835  244,693  
Long-term marketable securities4,200  39,352  
Total marketable securities$385,793  $302,506  
The following table presents our available-for-sale securities grouped by asset type:
 Fair Value
Hierarchy
Level
June 30, 2020December 31, 2019
Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair ValueAmortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
  (in thousands)
Corporate bondsLevel 2$120,055  $352  $(4) $120,403  $109,780  $136  $(6) $109,910  
Commercial paperLevel 262,107  1    62,108  41,237      41,237  
Asset-backed securitiesLevel 239,560  78    39,638  57,195  63  (5) 57,253  
Repurchase agreementsLevel 2        18,000      18,000  
U.S. treasury securitiesLevel 1128,449  438  (1) 128,886  75,574  71    75,645  
Money market fundsLevel 134,758      34,758  461      461  
Total Marketable securities$384,929  $869  $(5) $385,793  $302,247  $270  $(11) $302,506  
We estimate the fair value of marketable securities classified as Level 1 using quoted market prices for these or similar investments obtained from a commercial pricing service. We estimate the fair value of marketable securities classified as Level 2 using inputs that may include benchmark yields, reported trades, broker/dealer quotes and issuer spreads.
We periodically review our debt securities to determine if any of our investments is impaired due to credit-related or other issues. If the fair value of our investment in any debt security is less than our amortized cost basis, we determine whether an allowance for credit losses is appropriate by assessing quantitative and subjective factors including, but not limited to, the nature of security, changes in credit ratings, analyst reports concerning the security’s issuer and industry, interest rate fluctuations and general market conditions.
Unrealized losses on our available-for-sale debt securities as of June 30, 2020 were not significant and were primarily due to changes in interest rates, and not increased credit risk. Accordingly, we have not recorded an allowance for credit losses associated with these investments.
We do not intend to sell the investments that are in an unrealized loss position, and it is highly unlikely that we will be required to sell the investments before recovery of their full amortized cost basis, which will most likely be at maturity.
We classified accrued interest on our marketable securities of $1.2 million and $1.0 million as of June 30, 2020 and December 31, 2019, respectively, as prepaid and other current assets on our condensed consolidated balance sheet.
As of June 30, 2020, all our marketable securities had original maturities of less than two years. The weighted-average maturity of our holdings was six months. As of June 30, 2020, our long-term marketable securities had remaining maturities of 13 months. None of our marketable securities changed from one fair value hierarchy to another during the three and six months ended June 30, 2020.
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4. Leases
We lease our office facilities in Menlo Park, California. On January 1, 2019, we recognized a right-of-use asset and a corresponding lease liability of $1.9 million. Effective October 1, 2019, we amended the lease to extend its term from March 31, 2020 to March 31, 2022 and to add more space beginning April 1, 2020. As a result of this amendment, we recognized an additional right-of-use asset and corresponding lease liability of $3.0 million. Effective June 17, 2020, we amended the lease commencement date for the additional space to June 15, 2020. As a result of this amendment, we recognized an additional right-of-use asset and corresponding lease liability of $0.8 million. The right-of-use asset and lease liability recognized equals the present value of the remaining payments due under our amended lease.
As the operating lease for our facilities does not include an expressly stated interest rate, we calculated the present value of remaining lease payments using a discount rate equal to the interest rate we would pay on a loan with monthly payments and a term equal to the monthly payments and remaining term of our lease. We recognize operating lease payments as expenses using the straight-line method over the term of the lease.
Operating lease expense for each of the three and six months ended June 30, 2020 was approximately $0.4 million and $0.8 million, respectively.
For any future operating lease transactions, we will recognize operating lease right-of-use assets and liabilities equal to the present value of the expected lease payments at the lease commencement date.
Our right-of-use assets and related lease liabilities were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(in thousands)
Cash paid for operating lease liability$422  $391  $812  $769  
Right-of-use assets obtained in exchange for new operating lease liability$775  $  $775  $1,878  
As of June 30, 2020, our operating lease had a weighted average remaining lease term of 21 months and a weighted average discount rate of 4.8 percent.
As of June 30, 2020, future minimum lease payments under non-cancelable operating leases were as follows (in thousands):
2020 (remainder)$1,055  
20212,109  
2022530  
3,694  
Less imputed interest(189) 
Total lease liabilities$3,505  

5. Commitments and Contingencies
In March 2020, to ensure we have sufficient API to meet future demand for Korlym tablets, we committed to purchase an additional 400 kilograms of API from Produits Chimiques Auxiliaires et de Synthese SA (“PCAS,” a member of the Seqens Group) for a total price of $5.9 million.
There have been no other material changes in our obligations under contractual agreements described in our Annual Report on Form 10-K for the year ended December 31, 2019.
In the ordinary course of business, we may be subject to legal claims and regulatory actions that could have a material adverse effect on our business or financial position. We assess our potential liability in such situations by analyzing potential outcomes under various litigation, regulatory and settlement strategies. If we determine a loss is probable and its amount can be reasonably estimated, we accrue an amount equal to the estimated loss.
No losses and no provision for a loss contingency have been recorded to date.
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6. Stockholders’ Equity
Stock Option Plans
We have two stock option plans – the 2004 Equity Incentive Plan (the “2004 Plan”) and the 2012 Incentive Award Plan (the “2012 Plan”). In February 2020, our Board of Directors authorized a 4.6 million increase in the shares available for grant under the 2012 Plan.
During the three and six months ended June 30, 2020, we issued 1.0 million and 1.1 million shares, respectively, of our common stock upon the exercise of stock options, compared to 0.3 million and 1.8 million shares during the same period of 2019, respectively. Of the shares exercised during the three and six months ended June 30, 2020, 0.1 million were issued as part of a net-share settlement of cashless option exercises.
The following table summarizes our stock-based compensation:
Three Months Ended June 30,Six Months Ended June 30, 2020
 2020201920202019
 (in thousands)(in thousands)
Stock-based compensation capitalized in inventory$59  $55  $129  $83  
Cost of sales15  55  38  83  
Research and development2,794  2,505  5,399  4,484  
Selling, general and administrative5,680  5,176  10,970  9,865  
Total stock-based compensation$8,548  $7,791  $16,536  $14,515  
Related Party Transaction
On February 26, 2020, we purchased from our Chief Executive Officer $0.3 million of our common stock at a price of $13.54 per share, which was the last quoted price per share on the Nasdaq Capital Market on the date of purchase. We purchased the shares in order to provide him with liquidity to satisfy tax liability arising from his net (cashless) exercise in 2019 of stock options that were about to expire.
7. Net Income Per Share
We compute basic and diluted net income per share by dividing our net income by the weighted-average number of common shares outstanding during the period. We used the treasury stock method to determine the number of dilutive shares of common stock resulting from the potential exercise of stock options. The statements of condensed consolidated comprehensive income show the computation of net income per share for each period, including the number of weighted-average shares outstanding.
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The following table shows the computation of net income per share for each period:
Three Months Ended June 30,Six Months Ended June 30, 2020
 2020201920202019
 (in thousands)(in thousands)
Numerator:  
Net income$28,327  $20,186  $58,392  $38,460  
Denominator:
Weighted-average shares used to compute basic net income per share115,006  114,340  114,790  114,590  
Dilutive effect of employee stock options8,228  7,443  7,966  8,241  
Weighted-average shares used to compute diluted net income per share123,234  121,783  122,756  122,831  
Net income per share
Basic$0.25  $0.18  $0.51  $0.34  
Diluted$0.23  $0.17  $0.48  $0.31  
As of June 30, 2020 and 2019, we had 26.4 million and 24.7 million stock options outstanding, respectively.
Because including them would have reduced dilution, we excluded from the computation of diluted net income per share, on a weighted-average basis, 13.4 million and 13.0 million stock options outstanding during the three and six months ended June 30, 2020, respectively, and 10.8 million and 9.8 million stock options outstanding during the three and six months ended June 30, 2019, respectively.