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0.001
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101123000
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78000
317449000
2595000
345000
3452000
-314098000
44000
0
1624000
328000
561000
101000
44390000
87000
2225000
1072000
897000
3488000
296000
44390000
33974000
1257000
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2166000
39437000
119000
1
193000
1643000
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7396000
27636000
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-6931000
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0.20
33600000
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45000000
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0
0.001
280000000
0.001
10000000
99849000
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12738000
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28000
313534000
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1301000
288000
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100000
63077000
113000
1428000
1096000
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4318000
203000
63077000
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4450000
910000
58311000
40000
110000
3288000
5546000
5743000
29322000
45000000
35100000
-8910000
87000
0.04
52900000
P18M
-20790000
99814000
23398000
-0.24
22000
3000
3608000
298000
181000
-21727000
-23981000
881000
2575000
-20812000
-22000
25335000
16544000
21000
2254000
269000
-771000
43000
33000
19000
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201000
2207000
8748000
P30D
2270000
305000
14494000
8904000
CORT
CORCEPT THERAPEUTICS INC
false
Accelerated Filer
2014
10-Q
2014-06-30
0001088856
--12-31
Q2
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The following table presents information on securities outstanding
as of the end of each period that could potentially dilute the per
share data in the future.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="68%" align="center" border="0">
<tr>
<td width="80%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>June 30,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center"><i>(in
thousands)</i></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Stock options outstanding</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">14,618</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">14,494</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Warrants outstanding</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">8,044</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">8,904</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">
Total</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">22,662</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">23,398</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; TEXT-INDENT: 4%">
<b>Long-term Obligation</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
In August 2012, we entered into a Purchase and Sale Agreement
(Financing Agreement) with Biopharma Secured Debt Fund II Sub,
S.à r.l (Biopharma), a private limited liability company
organized under the laws of Luxembourg. Under the terms of the
Financing Agreement, we received $30.0 million from Biopharma,
which was recorded as a long-term obligation at issuance. We are
obligated to make payments calculated as a percentage of
(i) any licensing or other contingent payments arising from
Korlym and any other products containing mifepristone or any of our
proprietary selective GR-II antagonists (Covered Products) and
(ii) net Covered Product sales earned in the calendar quarter
ended June 30, 2013 and thereafter (together, Korlym
Receipts), until such time as we have paid Biopharma a total of
$45.0 million.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Interest expense related to the Financing Agreement is calculated
based on the internal interest rate to Biopharma that would result
from these assumed payment streams.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The accounting for the Financing Agreement requires us to make
certain estimates and assumptions, including the timing of royalty
payments due to Biopharma, the expected rate of return to
Biopharma, the split between current and long-term portions of the
obligation and the accretion of related interest expense. Korlym
has only been marketed since April 2012 and the magnitude and
timing of Korlym revenue is difficult to predict. Therefore, these
estimates and assumptions are subject to significant variability
and are likely to change as we gain experience marketing Korlym,
which will result in changes in our classification of the current
and long-term portions of the amounts payable pursuant to the
Financing Agreement, as well as the internal rate of return paid to
Biopharma and the accretion of interest expense related to this
obligation. The amount of our payment with respect to each quarter
will be based on Korlym Receipts recorded in that quarter and may
differ from our estimates. While changes in the timing of Korlym
revenue may affect the timing of recognition of interest expense
and the split between the current and long-term portions of the
obligation at any balance sheet date, the aggregate amount to be
repaid to Biopharma is fixed at $45.0 million.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The amount shown as the current portion of the obligation is an
estimate of the total amount under the Financing Agreement that
would be paid to Biopharma within 12 months following June 30,
2014.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
See Note 4, <b><i>Long-Term Obligation</i></b>, for additional
information regarding this agreement.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; TEXT-INDENT: 4%">
<b>Net Product Sales</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
From our initial launch in April 2012 through June 30, 2013,
we sold Korlym primarily to a specialty pharmacy and a specialty
distributor, which subsequently resold Korlym to patients and
healthcare providers. Korlym is not available in retail pharmacies.
As of July 1, 2013, we began using Dohmen Life Science
Services. (Dohmen), formerly known as Centric Health Resources,
Inc., as our specialty pharmacy. Dohmen operates on a consignment
basis, without carrying any Korlym inventory. Accordingly, all of
our sales through Dohmen are made directly to patients.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-INDENT: 4%">
We recognize product revenues from sales of Korlym upon delivery to
patients as long as (i) there is persuasive evidence that an
arrangement exists between ourselves and the customer,
(ii) collectability is reasonably assured and (iii) the
price is fixed or determinable. Prior authorization or confirmation
of coverage level by the patient’s private insurance plan or
government payor is a prerequisite to the shipment of product to a
patient. In order to conclude that the price is fixed or
determinable, we must be able to (i) calculate gross product
revenues from the sales to our customers and (ii) reasonably
estimate net product revenues.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
We make cash donations to a non-profit third party organization
that provides patients who meet certain eligibility requirements
with financial assistance for the treatment of Cushing’s
syndrome, which treatment may include Korlym. We do not include in
net product revenues sales of Korlym tablets to such patients
funded through this source.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
We calculate gross product revenues based on the price that we
charge our customers. We estimate our net product revenues by
deducting from our gross product revenues (a) trade
allowances, such as discounts for prompt payment and distributor
fees, (b) estimated government rebates and chargebacks,
(c) reserves for expected product returns and
(d) estimated costs of our patient co-pay assistance program.
We initially record estimates for these deductions at the time we
recognize the gross revenue. We update our estimates on a recurring
basis as new information becomes available.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
<i>Trade Allowances: </i>Through June 30, 2013, we
offered our specialty pharmacy and specialty distributor customers
a discount on Korlym sales for payment within 30 days. We also
offered them a small discount for providing data services. We
expected these customers to earn these discounts and, accordingly,
deducted them in full from gross product revenues and trade
receivables at the time we recognized such revenues. Beginning in
the third quarter of 2013, we ceased incurring a prompt-payment
discount to our specialty pharmacy.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
<i>Rebates and Chargebacks: </i>We contract with Medicaid and
other government programs so that Korlym will be eligible for
purchase by, or qualify for partial or full reimbursement from,
such government programs. We estimate the rebates and chargebacks
that we are obligated to provide to government programs and deduct
these estimated amounts from our gross product sales at the time
the revenues are recognized. We base our estimates of these rebates
and chargebacks upon (i) the discount amounts applicable to
government-funded programs and (ii) information obtained from
our vendors regarding the percentage of sales by our customers to
patients who are covered by entities or programs that are eligible
for such rebates and chargebacks.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
<i>Allowances for Patient Assistance Program: </i>We provide
financial assistance to eligible patients whose insurance policies
require them to pay high deductibles and co-pays. We estimate the
cost of assistance to be provided under this program by applying
our actual experience regarding such assistance to our estimate of
the percentage of our sales in the period that will be provided to
patients covered by the program.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
<i>Sales Returns: </i>Because sales through Dohmen, our
specialty pharmacy, are made to individual patients who do not have
the right to return the product, our exposure to product returns is
now limited to the specialty distributor channel and is not
expected to be material.</p>
</div>
-20044000
We consider all highly liquid investments purchased with maturities of three months or less from the date of purchase to be cash equivalents.
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-INDENT: 4%">
The following table provides a summary of the payment obligations
under the Financing Agreement as of June 30, 2014 and
December 31, 2013, utilizing the payment assumptions discussed
above.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="76%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>June 30,</b><br />
<b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>December 31,</b><br />
<b>2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center"><i>(in
thousands)</i></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Total repayment obligation</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">45,000</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">45,000</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">
Less interest to be accreted in future periods</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(6,931</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(8,910</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">
Less payments made</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(3,037</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(1,025</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">
Less current portion</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(7,396</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(5,743</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Long-term obligation, net of current portion</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">27,636</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">29,322</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>2. Fair Value of
Financial Instruments</b></font></p>
<!-- xbrl,body -->
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">As of
June 30, 2014 and December 31, 2013, we had invested our
financial assets in a money market fund that can be converted to
cash at par on demand. We measured these funds, which totaled
$33.6 million and $52.9 million as of June 30, 2014
and December 31, 2013, respectively, at fair value, which
approximates cost, as of the respective dates and classified them
as Level 1 assets in the fair value hierarchy for financial
assets.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">All cash
equivalents and short-term investments held as of June 30,
2014 and December 31, 2013 were in active markets and valued
based upon their quoted prices.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>3. Composition of
Certain Balance Sheet Items</b></font></p>
<!-- xbrl,body -->
<p style="MARGIN-BOTTOM: 0px; MARGIN-LEFT: 8%; MARGIN-TOP: 6px">
<font style="FONT-FAMILY: Times New Roman" size="2"><i>Inventory</i></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">The composition
of inventory was as follows:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 12px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<!-- Begin Table Head -->
<tr>
<td width="72%"></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>June 30,</b></font><br />
<font style="FONT-FAMILY: Times New Roman" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>December 31,</b></font><br />
<font style="FONT-FAMILY: Times New Roman" size="2"><b>2013</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><i>(in
thousands)</i></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<!-- End Table Head --><!-- Begin Table Body -->
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Raw materials</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">3,488</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">4,318</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Work in progress</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,257</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Finished goods</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">897</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,226</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total inventory</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">5,642</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">5,546</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Less strategic inventory
classified as non-current</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(4,570</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(4,450</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total inventory classified
as current</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,072</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,096</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
<!-- End Table Body --></table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">The finished
goods inventory as of June 30, 2014 and December 31, 2013
includes all costs of manufacture and packaging with the exception
of the cost of raw materials that were expensed prior to FDA
approval.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">In order to be
prepared for potential demand for Korlym and because we have
single-source manufacturers of both the API for Korlym and Korlym
tablets, we have invested in inventory of both of these materials.
Inventory amounts that are not expected to be consumed within
twelve months following the balance sheet date are referred to as
“Strategic Inventory” and classified as a noncurrent
asset.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-LEFT: 8%; MARGIN-TOP: 18px">
<font style="FONT-FAMILY: Times New Roman" size="2"><i>Other
Accrued Liabilities</i></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">Other accrued
liabilities consisted of the following:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 12px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<!-- Begin Table Head -->
<tr>
<td width="72%"></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>June 30,</b></font><br />
<font style="FONT-FAMILY: Times New Roman" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>December 31,</b></font><br />
<font style="FONT-FAMILY: Times New Roman" size="2"><b>2013</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><i>(in
thousands)</i></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<!-- End Table Head --><!-- Begin Table Body -->
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Accrued
compensation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">561</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">466</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Professional
fees</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">345</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">369</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Commercialization
costs</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">328</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">288</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Government
rebates</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">119</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">40</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Legal fees</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">193</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">110</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">78</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">28</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,624</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,301</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; TEXT-INDENT: 4%">
<b>Trade Receivables</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Trade receivables are recorded net of customer allowances for
co-pay assistance, doubtful accounts and sales returns. See the
discussion below under “Net Product Sales” regarding
the methods for estimation of these allowances and sales returns.
We determine our allowance for doubtful accounts based on existing
contractual payment terms, actual payment patterns of our customers
and individual customer circumstances. To date, we have determined
that an allowance for uncollectible trade receivables is not
required.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Other accrued liabilities consisted of the following:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="76%"></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="7%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>June 30,</b><br />
<b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>December 31,</b><br />
<b>2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center"><i>(in
thousands)</i></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Accrued compensation</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">561</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">466</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Professional fees</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">345</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">369</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Commercialization costs</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">328</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">288</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Government rebates</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">119</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">40</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Legal fees</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">193</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">110</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Other</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">78</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">28</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,624</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,301</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
100751000
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>4. Long-Term
Obligation</b></font></p>
<!-- xbrl,body -->
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">As discussed in
Note 1, <b><i>Basis of Presentation and Summary of Significant
Accounting Policies, Long-term Obligation</i></b>, under the
Financing Agreement with Biopharma, we are obligated to make
payments calculated as a percentage of our net sales of Korlym, any
future mifepristone-based products, our selective GR-II antagonists
(together referred to as Covered Products) and any upfront,
milestone or other contingent payments with respect to Covered
Products. Biopharma’s right to receive payments will expire
once it has received cumulative payments of $45.0 million.
Through June 30, 2014, we made aggregate payments to Biopharma
in the amount of $3.0 million, with an additional payment in
the amount of $1.3 million made in July 2014.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 12px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">Under the terms
of the Financing Agreement, our payments are entirely variable,
with no fixed minimums. If there are no net sales, upfront,
milestone or other contingent payments in a period with respect to
Covered Products, then no payment will be due for that
period.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We are
obligated to make payments as follows:</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="5%"><font size="1"> </font></td>
<td valign="top" width="2%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">20 percent of our net product sales of Covered Products,
beginning with the calendar quarter ended June 30, 2013,
subject to quarterly payment caps of $3.0 million during 2014,
and $3.75 million during 2015. There is no quarterly cap on
payments with respect to net product sales in 2016 and
later.</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="5%"><font size="1"> </font></td>
<td valign="top" width="2%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">20 percent of payments received for upfront, milestone or other
contingent fees under co-promotion and out-license agreements for
Covered Products (without application of quarterly
caps).</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="5%"><font size="1"> </font></td>
<td valign="top" width="2%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">The percentage used to calculate our payments to Biopharma
would increase to 50 percent and any applicable payment caps would
lapse if we (i) fail to provide Biopharma with certain
information regarding our promotion and sales of Covered Products,
(ii) do not devote a commercially reasonable amount of
resources to the promotion and marketing of the Covered Products or
(iii) violate the indebtedness covenant by incurring
indebtedness greater than the sum of earnings before interest,
taxes, depreciation and amortization, including such items as
non-cash stock-based compensation, (EBITDA) for the four calendar
quarters preceding such incurrence and, in each case, fail to cure
within the applicable cure period.</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0">
<tr>
<td width="5%"><font size="1"> </font></td>
<td valign="top" width="2%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">•</font></td>
<td valign="top" width="1%"><font size="1"> </font></td>
<td valign="top" align="left">
<p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">Upon the occurrence of a Corcept change of control transaction
or the licensing of Korlym to a third-party for promotion and sale
in the United States, the entire $45.0 million, less any amounts
already paid by us, would become due.</font></p>
</td>
</tr>
</table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">To secure our
obligations in connection with this Financing Agreement, we granted
Biopharma a security interest in our rights in patents, trademarks,
trade names, domain names, copyrights, know-how and regulatory
approvals related to the Covered Products, all books and records
relating to the foregoing and all proceeds of the foregoing
(together, the Collateral). If we (i) fail to deliver a
royalty payment when due and do not remedy that failure within 30
days, (ii) fail to maintain a first-priority perfected
security interest in the Collateral in the United States and do not
remedy that failure within five business days of receiving notice
of such failure or (iii) become subject to an event of
bankruptcy, then Biopharma may attempt to recover up to $45.0
million (after deducting any payments we have already made). In
addition, pursuant to this agreement, we are not allowed to pay a
dividend or other cash distribution, unless we will have cash and
cash equivalents in excess of $50.0 million after such
payment.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">As discussed in
Note 1, <b><i>Basis of Presentation and Summary of Significant
Accounting Policies, Long-term Obligation</i></b>, we make
estimates of the timing of payments during the term of this
agreement for purposes of calculating the expected rate of return
to Biopharma, the accretion of related interest expense and the
current portion of our obligation. We recorded interest expense of
$935,000 and $2.0 million for the three- and six-month periods
ended June 30, 2014, respectively, $1.1 million and
$2.2 million for the three- and six-month periods ended
June 30, 2013, respectively, and total accreted interest of
$8.1 million for the period from August 2012 through
June 30, 2014, as calculated based on the internal interest
rate to Biopharma that would result from these assumed payment
streams. The timing of payment amounts will be based on actual
Korlym Receipts recorded in the financial statements over the term
of this agreement and may differ from these estimates. While
changes in the timing of Korlym revenue may affect the timing of
recognition of interest expense and the split between the current
and long-term portions of the obligation at any balance sheet date,
the aggregate amount to be repaid to Biopharma is fixed at $45.0
million.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">The carrying
value of the long-term obligation was $35.0 million as of
June 30, 2014 and $35.1 million as of December 31,
2013. The long-term obligation, including accrued interest, is
presented on the balance sheet in two components; the Long-term
obligation - current portion, which equates to the estimated amount
due under the agreement to be paid within twelve months following
the balance sheet date, and the remaining amount, which is included
in Long-term obligation, net of current portion.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 12px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">The following
table provides a summary of the payment obligations under the
Financing Agreement as of June 30, 2014 and December 31,
2013, utilizing the payment assumptions discussed above.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 12px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<!-- Begin Table Head -->
<tr>
<td width="72%"></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>June 30,</b></font><br />
<font style="FONT-FAMILY: Times New Roman" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>December 31,</b></font><br />
<font style="FONT-FAMILY: Times New Roman" size="2"><b>2013</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<!-- End Table Head --><!-- Begin Table Body -->
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><i> </i></font></td>
<td valign="bottom" colspan="5" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><i>(in
thousands)</i></font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"><i>  </i></font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total repayment
obligation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">45,000</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">45,000</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Less interest to be
accreted in future periods</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(6,931</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(8,910</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">) </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Less payments
made</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(3,037</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(1,025</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">) </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Less current
portion</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(7,396</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">) </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">(5,743</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Long-term obligation, net
of current portion</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">27,636</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">29,322</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
</tr>
<!-- End Table Body --></table>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">The estimated
fair value of the long-term obligation, as measured using Level 3
inputs, approximates the carrying amounts as presented on the
balance sheet as of June 30, 2014 and December 31, 2013.
The estimated fair value was calculated using the income method of
valuation. The key assumptions required for the calculation were an
estimate of the amount and timing of future product revenues and an
estimated cost of capital. Management’s estimate of the
future product revenues is subject to significant uncertainty due
to the fact that Korlym has been available for less than two years
and the extended time period associated with the Financing
Agreement.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We capitalized
$140,000 of issuance costs related to the Financing Agreement,
which are being amortized over the estimated term of the
obligation, based on the assumptions discussed above. At
June 30, 2014 and December 31, 2013, the unamortized
issuance costs were $72,000 and $87,000, respectively, and are
included in other assets on our balance sheets.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; TEXT-INDENT: 4%">
<b>Inventory</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
We consider regulatory approval of product candidates to be
uncertain, and product manufactured prior to regulatory approval
may not be sold unless regulatory approval is obtained. We expense
the manufacturing costs for product candidates incurred prior to
regulatory approval as research and development expense as we incur
them. When regulatory approval of a product is obtained, we begin
capitalizing manufacturing costs related to the approved product
into inventory, provided such product is produced by a facility the
FDA has approved to manufacture Korlym.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-INDENT: 4%">
We value our inventories at the lower of cost or net realizable
value. We determine the cost of inventory using the specific
identification method, which approximates a first-in, first-out
basis. We analyze our inventory levels quarterly and write down
inventory that has become obsolete or has a cost basis in excess of
its expected net realizable value, as well as any inventory
quantities in excess of expected requirements. Any expired
inventory is disposed of and the related costs are recognized as
cost of sales in the statement of comprehensive loss.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
Inventory amounts that are not expected to be consumed within
twelve months following the balance sheet date are classified as
strategic inventory, a noncurrent asset.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; TEXT-INDENT: 4%">
<b>Property and Equipment</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
We state property and equipment at cost less accumulated
depreciation. Property and equipment are depreciated using the
straight-line method over the estimated useful lives of the assets,
ranging from three to five years.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; TEXT-INDENT: 4%">
<b>Cash and Cash Equivalents</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
We invest our cash in bank deposits, money market accounts,
corporate debt securities and obligations of the U.S. government
and U.S. government sponsored entities. We consider all highly
liquid investments purchased with maturities of three months or
less from the date of purchase to be cash equivalents. Cash
equivalents are carried at fair value, which approximates cost. As
of June 30, 2014 and December 31, 2013, all of our funds
were invested in cash and cash equivalents that consist of a money
market fund maintained at a major U.S. financial institution.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>1. Basis of Presentation
and Summary of Significant Accounting Policies</b></font></p>
<!-- xbrl,body -->
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Description
of Business and Basis of Presentation</b></font></p>
<p style="MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">Corcept
Therapeutics Incorporated was incorporated in the state of Delaware
in May 1998, and our facilities are located in Menlo Park,
California. Corcept is a pharmaceutical company engaged in the
discovery, development and commercialization of drugs for the
treatment of severe metabolic, psychiatric and oncologic disorders.
Since our inception, we have been developing our lead product,
Korlym<font style="FONT-FAMILY: Times New Roman" size="1"><sup style="VERTICAL-ALIGN: baseline; POSITION: relative; BOTTOM: 0.8ex">®</sup></font>.
Mifepristone, the active ingredient in Korlym, is a potent
competitive antagonist of the glucocorticoid receptor II (GR-II),
which means that it competitively blocks the effects of cortisol
throughout the body at one of its two receptors. In February 2012,
the United States Food and Drug Administration (FDA) approved
Korlym (mifepristone) 300 mg Tablets as a once-daily oral
medication for 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
released Korlym for sale in the United States in April 2012. In
December 2013, we initiated a study of mifepristone for the
treatment of triple-negative breast cancer. In addition, we have
discovered and patented three series of novel selective GR-II
antagonists. Unless otherwise stated, all references in these
financial statements to “we,” “us,”
“our,” “Corcept,” the
“Company,” “our company” and similar
designations refer to Corcept Therapeutics Incorporated.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">The
accompanying unaudited condensed balance sheet as of June 30,
2014 and the condensed statements of comprehensive loss for the
three- and six-month periods ended June 30, 2014 and 2013
and the condensed statements of cash flows for the six-month
periods ended June 30, 2014 and 2013 have been prepared
in accordance with U.S. generally accepted accounting principles
for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by U.S.
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating
results for the three- and six-month periods ended June 30,
2014 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2014 or any other
period. These financial statements and notes should be read in
conjunction with the financial statements for the year ended
December 31, 2013 included in our Annual Report on Form
10-K. The accompanying balance sheet as of
December 31, 2013 has been derived from audited financial
statements at that date.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Use of
Estimates</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">The preparation
of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ
materially from those estimates.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We evaluate our
estimates and assumptions on an ongoing basis, including those
related to our reserves for chargebacks and rebates, patient
assistance, potential product returns and excess/obsolete
inventories, allowances for doubtful accounts, accruals of clinical
and preclinical expenses, contingent liabilities, and the timing of
payments with respect to our long-term capped royalty obligation,
which determine its effective interest rate. We base our estimates
on relevant experience and on other specific assumptions that we
believe are reasonable.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We update our
assumptions and estimates on a recurring basis as new information
becomes available. Any changes in estimates are recorded in the
period of the change.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Cash and
Cash Equivalents</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We invest our
cash in bank deposits, money market accounts, corporate debt
securities and obligations of the U.S. government and U.S.
government sponsored entities. We consider all highly liquid
investments purchased with maturities of three months or less from
the date of purchase to be cash equivalents. Cash equivalents are
carried at fair value, which approximates cost. As of June 30,
2014 and December 31, 2013, all of our funds were invested in
cash and cash equivalents that consist of a money market fund
maintained at a major U.S. financial institution.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 18px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Credit Risks
and Concentrations</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We have a
concentration of credit risk related to our cash and cash
equivalents. We are exposed to credit risk in the event of default
by the financial institutions holding these funds or by the entity
or entities that issued the securities held by the fund to the
extent of the amount recorded on our balance sheet. We mitigate
this risk by investing in a money market fund that invests
primarily in short-term U.S. Treasury notes and bills. We
experienced no loss or lack of access to cash and cash equivalents
in our operating or investment accounts during the three- and
six-month periods ended June 30, 2014 and 2013.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We are exposed
to credit risk in regard to our trade receivables with this risk
being spread among various third-party payors – pharmacy
benefit managers, insurance companies, private charities and
government programs – and individual patients. We extend
credit to third-party payors based on their creditworthiness. We
monitor our exposure and will record a reserve against
uncollectible trade receivables as necessary. To date, we have not
incurred any credit losses.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We have a
concentration of risk in regard to the manufacture of our product.
As of June 30, 2014, we had one tablet manufacturer for Korlym
with an operational facility – AAI Pharma Services Corp.
(AAI). In addition, we have a single-source manufacturer of
mifepristone, the active pharmaceutical ingredient (API), in Korlym
- Produits Chimiques Auxiliaires et de Synthèse SA (PCAS). If
either of these companies is unable to manufacture API or Korlym
tablets in the quantities and time frame required, we may not be
able to manufacture our product in a timely manner. In order to
mitigate these risks related to the manufacture of our product, we
placed orders for additional quantities of mifepristone API and
Korlym tablets, which are now in inventory.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Fair Value
Measurements</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We categorize
financial instruments in a fair value hierarchy that prioritizes
the information used to develop assumptions for measuring fair
value. The fair value hierarchy gives the highest priority to
quoted prices in active markets for identical assets or liabilities
(Level 1 input), then to quoted prices in non-active markets or in
active markets for similar assets or liabilities, inputs other than
quoted prices that are observable for the asset or liability, and
inputs that are not directly observable, but that are corroborated
by observable market data for the asset or liability (Level 2
input), then the lowest priority to unobservable inputs, for
example, our own data about the assumptions that market
participants would use in pricing an asset or liability (Level 3
input). Fair value is a market-based measurement, not an
entity-specific measurement, and a fair value measurement should
therefore be based on the assumptions that market participants
would use in pricing the asset or liability.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">No assets or
liabilities in our financial statements are required to be reported
at fair value other than our cash equivalents.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Trade
Receivables</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">Trade
receivables are recorded net of customer allowances for co-pay
assistance, doubtful accounts and sales returns. See the discussion
below under “Net Product Sales” regarding the methods
for estimation of these allowances and sales returns. We determine
our allowance for doubtful accounts based on existing contractual
payment terms, actual payment patterns of our customers and
individual customer circumstances. To date, we have determined that
an allowance for uncollectible trade receivables is not
required.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Inventory</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We consider
regulatory approval of product candidates to be uncertain, and
product manufactured prior to regulatory approval may not be sold
unless regulatory approval is obtained. We expense the
manufacturing costs for product candidates incurred prior to
regulatory approval as research and development expense as we incur
them. When regulatory approval of a product is obtained, we begin
capitalizing manufacturing costs related to the approved product
into inventory, provided such product is produced by a facility the
FDA has approved to manufacture Korlym.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 12px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We value our
inventories at the lower of cost or net realizable value. We
determine the cost of inventory using the specific identification
method, which approximates a first-in, first-out basis. We analyze
our inventory levels quarterly and write down inventory that has
become obsolete or has a cost basis in excess of its expected net
realizable value, as well as any inventory quantities in excess of
expected requirements. Any expired inventory is disposed of and the
related costs are recognized as cost of sales in the statement of
comprehensive loss.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">Inventory
amounts that are not expected to be consumed within twelve months
following the balance sheet date are classified as strategic
inventory, a noncurrent asset.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Property and
Equipment</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We state
property and equipment at cost less accumulated depreciation.
Property and equipment are depreciated using the straight-line
method over the estimated useful lives of the assets, ranging from
three to five years.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Long-term
Obligation</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">In August 2012,
we entered into a Purchase and Sale Agreement (Financing Agreement)
with Biopharma Secured Debt Fund II Sub, S.à r.l (Biopharma),
a private limited liability company organized under the laws of
Luxembourg. Under the terms of the Financing Agreement, we received
$30.0 million from Biopharma, which was recorded as a long-term
obligation at issuance. We are obligated to make payments
calculated as a percentage of (i) any licensing or other
contingent payments arising from Korlym and any other products
containing mifepristone or any of our proprietary selective GR-II
antagonists (Covered Products) and (ii) net Covered Product
sales earned in the calendar quarter ended June 30, 2013 and
thereafter (together, Korlym Receipts), until such time as we have
paid Biopharma a total of $45.0 million.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">Interest
expense related to the Financing Agreement is calculated based on
the internal interest rate to Biopharma that would result from
these assumed payment streams.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">The accounting
for the Financing Agreement requires us to make certain estimates
and assumptions, including the timing of royalty payments due to
Biopharma, the expected rate of return to Biopharma, the split
between current and long-term portions of the obligation and the
accretion of related interest expense. Korlym has only been
marketed since April 2012 and the magnitude and timing of Korlym
revenue is difficult to predict. Therefore, these estimates and
assumptions are subject to significant variability and are likely
to change as we gain experience marketing Korlym, which will result
in changes in our classification of the current and long-term
portions of the amounts payable pursuant to the Financing
Agreement, as well as the internal rate of return paid to Biopharma
and the accretion of interest expense related to this obligation.
The amount of our payment with respect to each quarter will be
based on Korlym Receipts recorded in that quarter and may differ
from our estimates. While changes in the timing of Korlym revenue
may affect the timing of recognition of interest expense and the
split between the current and long-term portions of the obligation
at any balance sheet date, the aggregate amount to be repaid to
Biopharma is fixed at $45.0 million.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">The amount
shown as the current portion of the obligation is an estimate of
the total amount under the Financing Agreement that would be paid
to Biopharma within 12 months following June 30,
2014.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">See Note 4,
<b><i>Long-Term Obligation</i></b>, for additional information
regarding this agreement.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Net Product
Sales</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">From our
initial launch in April 2012 through June 30, 2013, we sold
Korlym primarily to a specialty pharmacy and a specialty
distributor, which subsequently resold Korlym to patients and
healthcare providers. Korlym is not available in retail pharmacies.
As of July 1, 2013, we began using Dohmen Life Science
Services (Dohmen), formerly known as Centric Health Resources,
Inc., as our specialty pharmacy. Dohmen operates on a consignment
basis, without carrying any Korlym inventory. Accordingly, all of
our sales through Dohmen are made directly to patients.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 12px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We recognize
product revenues from sales of Korlym upon delivery to patients as
long as (i) there is persuasive evidence that an arrangement
exists between ourselves and the customer, (ii) collectability
is reasonably assured and (iii) the price is fixed or
determinable. Prior authorization or confirmation of coverage level
by the patient’s private insurance plan or government payor
is a prerequisite to the shipment of product to a patient. In order
to conclude that the price is fixed or determinable, we must be
able to (i) calculate gross product revenues from the sales to
our customers and (ii) reasonably estimate net product
revenues.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We make cash
donations to a non-profit third party organization that provides
patients who meet certain eligibility requirements with financial
assistance for the treatment of Cushing’s syndrome, which
treatment may include Korlym. We do not include in net product
revenues sales of Korlym tablets to such patients funded through
this source.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We calculate
gross product revenues based on the price that we charge our
customers. We estimate our net product revenues by deducting from
our gross product revenues (a) trade allowances, such as
discounts for prompt payment and distributor fees,
(b) estimated government rebates and chargebacks,
(c) reserves for expected product returns and
(d) estimated costs of our patient co-pay assistance program.
We initially record estimates for these deductions at the time we
recognize the gross revenue. We update our estimates on a recurring
basis as new information becomes available.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><i>Trade
Allowances: </i>Through June 30, 2013, we offered our
specialty pharmacy and specialty distributor customers a discount
on Korlym sales for payment within 30 days. We also offered them a
small discount for providing data services. We expected these
customers to earn these discounts and, accordingly, deducted them
in full from gross product revenues and trade receivables at the
time we recognized such revenues. Beginning in the third quarter of
2013, we ceased incurring a prompt-payment discount to our
specialty pharmacy.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><i>Rebates and
Chargebacks: </i>We contract with Medicaid and other
government programs so that Korlym will be eligible for purchase
by, or qualify for partial or full reimbursement from, such
government programs. We estimate the rebates and chargebacks that
we are obligated to provide to government programs and deduct these
estimated amounts from our gross product sales at the time the
revenues are recognized. We base our estimates of these rebates and
chargebacks upon (i) the discount amounts applicable to
government-funded programs and (ii) information obtained from
our vendors regarding the percentage of sales by our customers to
patients who are covered by entities or programs that are eligible
for such rebates and chargebacks.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><i>Allowances
for Patient Assistance Program: </i>We provide financial
assistance to eligible patients whose insurance policies require
them to pay high deductibles and co-pays. We estimate the cost of
assistance to be provided under this program by applying our actual
experience regarding such assistance to our estimate of the
percentage of our sales in the period that will be provided to
patients covered by the program.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><i>Sales
Returns: </i>Because sales through Dohmen, our specialty
pharmacy, are made to individual patients who do not have the right
to return the product, our exposure to product returns is now
limited to the specialty distributor channel and is not expected to
be material.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Cost of
Sales</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">Cost of sales
includes the cost of product (the cost to manufacture Korlym, which
includes material, third-party manufacturing costs and indirect
personnel and other overhead costs) based on units for which
revenue is recognized in the current period, as well as costs of
stability testing, logistics and distribution of the product. We
began capitalizing Korlym production costs as inventory following
approval by the FDA in February 2012. Prior to receiving FDA
approval for Korlym, we expensed all costs related to the
manufacturing of the product as incurred; we classified these costs
as research and development expense. A portion of the product
manufactured prior to FDA approval is available for us to use
commercially.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 18px">
 </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Research and
Development</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">Research and
development expenses consist of costs incurred for research and
development activities that we sponsor. These costs include direct
expenses, such as the cost of clinical trials, pre-clinical
studies, manufacturing development, preparations for submissions to
the FDA and efforts to prosecute and defend those submissions and
the development of second-generation compounds, as well as research
and development-related overhead expenses. We also expense as
incurred nonrefundable payments to third parties and our cost of
acquiring technologies and materials used in research and
development that have no alternative future use.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We base our
cost accruals for clinical trials, research and preclinical
activities on estimates of work completed under service agreements,
milestones achieved, patient enrollment and past experience with
similar contracts. Our estimates of work completed and associated
cost accruals include our assessments of information from
third-party contract research organizations and the overall status
of clinical trial and other development and administrative
activities.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Segment
Reporting</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We determine
our operating segments based on the way we organize our business to
make operating decisions and assess performance. We have only one
operating segment, which concerns the discovery, development and
commercialization of pharmaceutical products.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Stock-Based
Compensation</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 8%">
<font style="FONT-FAMILY: Times New Roman" size="2"><i>Stock-based
compensation for employee and director options</i></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We account for
stock-based compensation related to option grants to employees and
directors under the fair value method, based on the fair
value-based measurement of the award at the grant date as
determined utilizing the Black-Scholes option valuation model. For
service-based awards, we recognize expense over the requisite
service period.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-LEFT: 8%; MARGIN-TOP: 18px">
<font style="FONT-FAMILY: Times New Roman" size="2"><i>Stock-based
compensation expense related to non-employees</i></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We recognize
the expense of options granted to non-employees based on the
fair-value based measurement of the option grants at the time of
vesting. For service-based awards, we recognize expense over the
requisite service period. For options with performance-based
vesting criteria, we recognize expense based on the minimum number
of shares that will vest over time as the criteria are met based on
the Black-Scholes valuation of the vested shares.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">See Note 6 for
a detailed discussion of stock-based compensation
expense.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Recently
Issued Accounting Pronouncements</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">In
May 2014, the Financial Accounting Standards Board (FASB)
issued Accounting Standards Update (ASU) No. 2014-09. ASU
2014-09 supersedes the revenue recognition requirements in Revenue
Recognition (Topic 605), and requires entities to recognize revenue
in a way that depicts the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or
services. In applying this new guidance to contracts within its
scope, an entity will: (1) identify the contract(s) with a
customer, (2) identify the performance obligation in the
contract, (3) determine the transaction price,
(4) allocate the transaction price to the performance
obligations in the contract, and (5) recognize revenue when
(or as) the entity satisfies a performance obligation.
Additionally, this new guidance will require significantly expanded
revenue recognition disclosures. This guidance, which will become
effective for us as of January 1, 2017, is to be applied
retrospectively. Early application is not permitted. We are
currently evaluating the new standard, but do not anticipate a
material impact to our financial statements once
implemented.</font></p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; TEXT-INDENT: 4%">
<b>Cost of Sales</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Cost of sales includes the cost of product (the cost to manufacture
Korlym, which includes material, third-party manufacturing costs
and indirect personnel and other overhead costs) based on units for
which revenue is recognized in the current period, as well as costs
of stability testing, logistics and distribution of the product. We
began capitalizing Korlym production costs as inventory following
approval by the FDA in February 2012. Prior to receiving FDA
approval for Korlym, we expensed all costs related to the
manufacturing of the product as incurred; we classified these costs
as research and development expense. A portion of the product
manufactured prior to FDA approval is available for us to use
commercially.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>7. Net Loss Per
Share</b></font></p>
<!-- xbrl,body -->
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">Basic and
diluted net loss per share is computed by dividing the net loss by
the weighted-average number of common shares outstanding during the
period. The computation of net loss per share for each period,
including the number of weighted-average shares outstanding, is
shown on the face of the statements of comprehensive
loss.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We have
excluded the impact of common stock equivalents relating to shares
underlying outstanding stock options and warrants from the
calculation of diluted net loss per common share because all such
securities are antidilutive for all periods presented.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">The following
table presents information on securities outstanding as of the end
of each period that could potentially dilute the per share data in
the future.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 12px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<!-- Begin Table Head -->
<tr>
<td width="82%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>June 30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>2013</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><i>(in
thousands)</i></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<!-- End Table Head --><!-- Begin Table Body -->
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Stock options
outstanding</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">14,618</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">14,494</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Warrants
outstanding</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">8,044</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">8,904</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">22,662</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">23,398</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
</tr>
</table>
</div>
1100000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-INDENT: 4%">
<b>Credit Risks and Concentrations</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
We have a concentration of credit risk related to our cash and cash
equivalents. We are exposed to credit risk in the event of default
by the financial institutions holding these funds or by the entity
or entities that issued the securities held by the fund to the
extent of the amount recorded on our balance sheet. We mitigate
this risk by investing in a money market fund that invests
primarily in short-term U.S. Treasury notes and bills. We
experienced no loss or lack of access to cash and cash equivalents
in our operating or investment accounts during the three- and
six-month periods ended June 30, 2014 and 2013.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
We are exposed to credit risk in regard to our trade receivables
with this risk being spread among various third-party payors
– pharmacy benefit managers, insurance companies, private
charities and government programs – and individual patients.
We extend credit to third-party payors based on their
creditworthiness. We monitor our exposure and will record a reserve
against uncollectible trade receivables as necessary. To date, we
have not incurred any credit losses.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
We have a concentration of risk in regard to the manufacture of our
product. As of June 30, 2014, we had one tablet manufacturer
for Korlym with an operational facility – AAI Pharma Services
Corp. (AAI). In addition, we have a single-source manufacturer of
mifepristone, the active pharmaceutical ingredient (API), in Korlym
- Produits Chimiques Auxiliaires et de Synthèse SA (PCAS). If
either of these companies is unable to manufacture API or Korlym
tablets in the quantities and time frame required, we may not be
able to manufacture our product in a timely manner. In order to
mitigate these risks related to the manufacture of our product, we
placed orders for additional quantities of mifepristone API and
Korlym tablets, which are now in inventory.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; TEXT-INDENT: 4%">
<b>Segment Reporting</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
We determine our operating segments based on the way we organize
our business to make operating decisions and assess performance. We
have only one operating segment, which concerns the discovery,
development and commercialization of pharmaceutical products.</p>
</div>
22662000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The following table provides a summary of non-cash stock-based
compensation.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<tr>
<td width="72%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center">
<b>Three Months Ended</b><br />
<b>June 30,</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="6" align="center"><b>Six Months Ended</b><br />
<b>June 30,</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center"><i>(in
thousands)</i></td>
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center"><i>(in
thousands)</i></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Research and development</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">169</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">157</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">331</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">305</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Selling, general and administrative</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,057</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,108</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,272</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2,270</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">
Total non-cash stock-based compensation</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,226</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,265</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,603</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">2,575</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; TEXT-INDENT: 4%">
<b>Use of Estimates</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results
could differ materially from those estimates.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
We evaluate our estimates and assumptions on an ongoing basis,
including those related to our reserves for chargebacks and
rebates, patient assistance, potential product returns and
excess/obsolete inventories, allowances for doubtful accounts,
accruals of clinical and preclinical expenses, contingent
liabilities, and the timing of payments with respect to our
long-term capped royalty obligation, which determine its effective
interest rate. We base our estimates on relevant experience and on
other specific assumptions that we believe are reasonable.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
We update our assumptions and estimates on a recurring basis as new
information becomes available. Any changes in estimates are
recorded in the period of the change.</p>
</div>
-0.21
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-INDENT: 4%">
<b>Research and Development</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Research and development expenses consist of costs incurred for
research and development activities that we sponsor. These costs
include direct expenses, such as the cost of clinical trials,
pre-clinical studies, manufacturing development, preparations for
submissions to the FDA and efforts to prosecute and defend those
submissions and the development of second-generation compounds, as
well as research and development-related overhead expenses. We also
expense as incurred nonrefundable payments to third parties and our
cost of acquiring technologies and materials used in research and
development that have no alternative future use.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
We base our cost accruals for clinical trials, research and
preclinical activities on estimates of work completed under service
agreements, milestones achieved, patient enrollment and past
experience with similar contracts. Our estimates of work completed
and associated cost accruals include our assessments of information
from third-party contract research organizations and the overall
status of clinical trial and other development and administrative
activities.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
<b>Description of Business and Basis of Presentation</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
Corcept Therapeutics Incorporated was incorporated in the state of
Delaware in May 1998, and our facilities are located in Menlo Park,
California. Corcept is a pharmaceutical company engaged in the
discovery, development and commercialization of drugs for the
treatment of severe metabolic, psychiatric and oncologic disorders.
Since our inception, we have been developing our lead product,
Korlym<sup style="FONT-SIZE: 85%; VERTICAL-ALIGN: top">®</sup>. Mifepristone,
the active ingredient in Korlym, is a potent competitive antagonist
of the glucocorticoid receptor II (GR-II), which means that it
competitively blocks the effects of cortisol throughout the body at
one of its two receptors. In February 2012, the United States Food
and Drug Administration (FDA) approved Korlym (mifepristone)
300 mg Tablets as a once-daily oral medication for 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 released Korlym for sale in the United
States in April 2012. In December 2013, we initiated a study of
mifepristone for the treatment of triple-negative breast cancer. In
addition, we have discovered and patented three series of novel
selective GR-II antagonists. Unless otherwise stated, all
references in these financial statements to “we,”
“us,” “our,” “Corcept,” the
“Company,” “our company” and similar
designations refer to Corcept Therapeutics Incorporated.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
The accompanying unaudited condensed balance sheet as of
June 30, 2014 and the condensed statements of comprehensive
loss for the three- and six-month periods ended
June 30, 2014 and 2013 and the condensed statements of
cash flows for the six-month periods ended June 30, 2014
and 2013 have been prepared in accordance with U.S. generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and
footnotes required by U.S. generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been included.
Operating results for the three- and six-month periods ended
June 30, 2014 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2014 or
any other period. These financial statements and notes should be
read in conjunction with the financial statements for the year
ended December 31, 2013 included in our Annual Report on
Form 10-K. The accompanying balance sheet as of
December 31, 2013 has been derived from audited financial
statements at that date.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>6. Stock Option
Plans</b></font></p>
<!-- xbrl,body -->
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We have three
stock option plans – the 2000 Stock Option Plan (the 2000
Plan), the 2004 Equity Incentive Plan (the 2004 Plan) and the 2012
Incentive Award Plan (the 2012 Plan).</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">On
February 6, 2014, our Board of Directors authorized an
increase of 3,993,300 shares in the number of shares available for
issuance under the 2012 Plan, which was equivalent to 4% of the
shares of our common stock outstanding as of December 31,
2013, pursuant to the terms of the 2012 Plan.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">During the
six-month period ended June 30, 2014, we issued an aggregate
of 1.1 million shares of our common stock upon the exercise of
stock options.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">The following
table provides a summary of non-cash stock-based
compensation.</font></p>
<p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 12px; MARGIN-TOP: 0px">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="92%" align="center" border="0">
<!-- Begin Table Head -->
<tr>
<td width="68%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>Three Months Ended</b></font><br />
<font style="FONT-FAMILY: Times New Roman" size="2"><b>June 
30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>Six Months Ended</b></font><br />
<font style="FONT-FAMILY: Times New Roman" size="2"><b>June 
30,</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>2013</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>2014</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: rgb(0,0,0) 1px solid" valign="bottom" colspan="2" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><b>2013</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><i>(in
thousands)</i></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" colspan="6" align="center"><font style="FONT-FAMILY: Times New Roman" size="2"><i>(in
thousands)</i></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<!-- End Table Head --><!-- Begin Table Body -->
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Research and
development</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">169</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">157</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">331</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">305</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Selling, general and
administrative</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,057</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,108</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,272</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2"> </font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,270</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font style="FONT-FAMILY: Times New Roman" size="2">Total non-cash stock-based
compensation</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,226</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">1,265</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,603</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font style="FONT-FAMILY: Times New Roman" size="2">$</font></td>
<td valign="bottom" align="right"><font style="FONT-FAMILY: Times New Roman" size="2">2,575</font></td>
<td valign="bottom" nowrap="nowrap"><font style="FONT-FAMILY: Times New Roman" size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td> </td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: rgb(0,0,0) 3px double"> </p>
</td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; TEXT-INDENT: 4%">
<b>Recently Issued Accounting Pronouncements</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
In May 2014, the Financial Accounting Standards Board (FASB)
issued Accounting Standards Update (ASU) No. 2014-09. ASU
2014-09 supersedes the revenue recognition requirements in Revenue
Recognition (Topic 605), and requires entities to recognize revenue
in a way that depicts the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or
services. In applying this new guidance to contracts within its
scope, an entity will: (1) identify the contract(s) with a
customer, (2) identify the performance obligation in the
contract, (3) determine the transaction price,
(4) allocate the transaction price to the performance
obligations in the contract, and (5) recognize revenue when
(or as) the entity satisfies a performance obligation.
Additionally, this new guidance will require significantly expanded
revenue recognition disclosures. This guidance, which will become
effective for us as of January 1, 2017, is to be applied
retrospectively. Early application is not permitted. We are
currently evaluating the new standard, but do not anticipate a
material impact to our financial statements once implemented.</p>
</div>
1
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; TEXT-INDENT: 4%">
<b>Stock-Based Compensation</b></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 8%">
<i>Stock-based compensation for employee and director
options</i></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
We account for stock-based compensation related to option grants to
employees and directors under the fair value method, based on the
fair value-based measurement of the award at the grant date as
determined utilizing the Black-Scholes option valuation model. For
service-based awards, we recognize expense over the requisite
service period.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt; TEXT-INDENT: 8%">
<i>Stock-based compensation expense related to
non-employees</i></p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
We recognize the expense of options granted to non-employees based
on the fair-value based measurement of the option grants at the
time of vesting. For service-based awards, we recognize expense
over the requisite service period. For options with
performance-based vesting criteria, we recognize expense based on
the minimum number of shares that will vest over time as the
criteria are met based on the Black-Scholes valuation of the vested
shares.</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%">
See Note 6 for a detailed discussion of stock-based compensation
expense.</p>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2"><b>Fair Value
Measurements</b></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">We categorize
financial instruments in a fair value hierarchy that prioritizes
the information used to develop assumptions for measuring fair
value. The fair value hierarchy gives the highest priority to
quoted prices in active markets for identical assets or liabilities
(Level 1 input), then to quoted prices in non-active markets or in
active markets for similar assets or liabilities, inputs other than
quoted prices that are observable for the asset or liability, and
inputs that are not directly observable, but that are corroborated
by observable market data for the asset or liability (Level 2
input), then the lowest priority to unobservable inputs, for
example, our own data about the assumptions that market
participants would use in pricing an asset or liability (Level 3
input). Fair value is a market-based measurement, not an
entity-specific measurement, and a fair value measurement should
therefore be based on the assumptions that market participants
would use in pricing the asset or liability.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">No assets or
liabilities in our financial statements are required to be reported
at fair value other than our cash equivalents.</font></p>
</div>
158000
-12000
10255000
2012000
797000
1256000
-19440000
-21481000
94000
-701000
2603000
-20903000
-158000
29695000
17769000
19000
2041000
323000
214000
0
389000
65000
14000
2603000
-1645000
1979000
11537000
1311000
<div>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%">
The composition of inventory was as follows:</p>
<p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 12pt; MARGIN-TOP: 0pt">
 </p>
<table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="76%" align="center" border="0">
<tr>
<td width="76%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>June 30,</b><br />
<b>2014</b></td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td style="BORDER-BOTTOM: #000000 1pt solid" valign="bottom" colspan="2" align="center"><b>December 31,</b><br />
<b>2013</b></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">
<td valign="bottom"> </td>
<td valign="bottom">  </td>
<td valign="bottom" colspan="6" align="center"><i>(in
thousands)</i></td>
<td valign="bottom"> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Raw materials</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">3,488</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">4,318</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Work in progress</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,257</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">2</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Finished goods</p>
</td>
<td valign="bottom">  </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">897</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"> </td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">1,226</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">
Total inventory</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,642</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">5,546</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman" bgcolor="#CCEEFF">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 1em; TEXT-INDENT: -1em">
Less strategic inventory classified as non-current</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(4,570</td>
<td valign="bottom" nowrap="nowrap">) </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom"> </td>
<td valign="bottom" align="right">(4,450</td>
<td valign="bottom" nowrap="nowrap">) </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 1px solid"> </p>
</td>
<td> </td>
</tr>
<tr style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
<td valign="top">
<p style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 3em; TEXT-INDENT: -1em">
Total inventory classified as current</p>
</td>
<td valign="bottom"><font style="FONT-SIZE: 8pt">  </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,072</td>
<td valign="bottom" nowrap="nowrap">  </td>
<td valign="bottom"><font style="FONT-SIZE: 8pt"> </font></td>
<td valign="bottom">$</td>
<td valign="bottom" align="right">1,096</td>
<td valign="bottom" nowrap="nowrap">  </td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
<td valign="bottom"> </td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td valign="bottom">
<p style="BORDER-TOP: #000000 3px double"> </p>
</td>
<td> </td>
</tr>
</table>
</div>
<div>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>5. Significant
Agreements</b></font></p>
<!-- xbrl,body -->
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 8%">
<font style="FONT-FAMILY: Times New Roman" size="2"><i>Pharmaceutical Manufacturing Agreement</i></font></p>
<p style="MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">In March 2014,
we entered into a long-term manufacturing and supply agreement with
PCAS for the manufacture of mifepristone, the active pharmaceutical
agreement in Korlym<font style="FONT-FAMILY: Times New Roman" size="1"><sup style="VERTICAL-ALIGN: baseline; POSITION: relative; BOTTOM: 0.8ex">®</sup></font>.
We have agreed to purchase a minimum percentage of our mifepristone
requirements from PCAS; the amount of the commitment will depend on
our future needs. The initial term of the agreement is five years
from March 20, 2014, with an automatic extension of one year
unless either party gives 12 months prior written notice that it
does not want an extension. We have the right to terminate the
agreement if PCAS is unable to manufacture the product for a
consecutive nine-month period.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-LEFT: 8%; MARGIN-TOP: 18px">
<font style="FONT-FAMILY: Times New Roman" size="2"><i>Tablet
Manufacturing Agreement</i></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">On
April 7, 2014, we entered into a manufacturing agreement with
AAI Pharma Services Corp. (AAI) under which AAI will manufacture
and package Korlym tablets. The initial term of this agreement is a
period of three years from April 7, 2014, with consecutive
automatic extensions of two years unless either party gives written
notice - in the case of AAI, 18 months prior to the end of the
applicable term, and in our case 12 months prior to the end of the
applicable term - that it does not want such an extension. We have
the right to terminate the agreement if AAI is unable to
manufacture the product for a consecutive four-month period or if
the product is withdrawn from the market. There are no minimum
purchase obligations under this agreement.</font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-LEFT: 8%; MARGIN-TOP: 18px">
<font style="FONT-FAMILY: Times New Roman" size="2"><i>Clinical
Trial Agreement</i></font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%">
<font style="FONT-FAMILY: Times New Roman" size="2">In March 2014,
we entered into an agreement with Quotient Clinical Limited, a
clinical research organization (CRO), for a Phase 1 study of one of
our new compounds. The total commitment under the agreement is
approximately $2.6 million, which is expected to be expended over
approximately a 1-year period.</font></p>
</div>
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Pursuant to this agreement, we are not allowed to pay a dividend or other cash distribution, unless we will have cash and cash equivalents in excess of $50.0 million after such payment.
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The percentage used to calculate our payments to Biopharma would increase to 50 percent and any applicable payment caps would lapse if we (i) fail to provide Biopharma with certain information regarding our promotion and sales of Covered Products, (ii) do not devote a commercially reasonable amount of resources to the promotion and marketing of the Covered Products or (iii) violate the indebtedness covenant by incurring indebtedness greater than the sum of earnings before interest, taxes, depreciation and amortization, including such items as non-cash stock-based compensation, (EBITDA) for the four calendar quarters preceding such incurrence and, in each case, fail to cure within the applicable cure period.
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Five years
In March 2014, we entered into a long-term manufacturing and supply agreement with PCAS for the manufacture of mifepristone, the active pharmaceutical agreement in Korlym®. We have agreed to purchase a minimum percentage of our mifepristone requirements from PCAS; the amount of the commitment will depend on our future needs. The initial term of the agreement is five years from March 20, 2014, with an automatic extension of one year unless either party gives 12 months’ prior written notice that it does not want an extension. We have the right to terminate the agreement if PCAS is unable to manufacture the product for a consecutive nine-month period.
P12M
The initial term of the agreement is five years from March 20, 2014, with an automatic extension of one year unless either party gives 12 months’ prior written notice that it does not want an extension.
Three years
The initial term of this agreement is a period of three years from April 7, 2014, with consecutive automatic extensions of two years unless either party gives written notice - in the case of AAI, 18 months prior to the end of the applicable term, and in our case 12 months prior to the end of the applicable term - that it does not want such an extension.
On April 7, 2014, we entered into a manufacturing agreement with AAI Pharma Services Corp. (AAI) under which AAI will manufacture and package Korlym tablets. The initial term of this agreement is a period of three years from April 7, 2014, with consecutive automatic extensions of two years unless either party gives written notice - in the case of AAI, 18 months prior to the end of the applicable term, and in our case 12 months prior to the end of the applicable term - that it does not want such an extension. We have the right to terminate the agreement if AAI is unable to manufacture the product for a consecutive four-month period or if the product is withdrawn from the market. There are no minimum purchase obligations under this agreement.
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