CORT has a stable and growing $400M+ Korlym base biz for Cushing's, and while there is investor debate / uncertainty around the growth profile post-COVID (see our thoughts below), upside could come from the pipeline. Second-gen Cushing's drug relacorilant is theoretically safer but just as efficacious as Korlym, and it could meaningfully expand the franchise and drive revenue growth if big Phase III data in H1:23 is positive and enables a new launch in 2024.
We expect Q4 Korlym revenue to be ~$102-105M vs consensus $105M. This implies +4-5% yoy growth, meaning growth comes purely from price and volumes are flat yoy. We note volume grew a healthy +HSD to +LDD yoy in H1:22, which decelerated in Q3 (volumes were flat yoy), and we believe this may continue in Q4 since (1) CORT seems to be still adjusting to the new post-COVID environment, (2) broad initiatives to improve sales / physician interactions are still being put in place, (3) CORT still has 50 sales reps and hiring and productivity will take time to ramp, and (4) competitive dynamics seem to favor Isturisa based on KOL feedback and Isturisa access is improving over time. We also note Q4 is the toughest comp of the year, and we model deceleration in revenue growth. That said, we'd argue expectations aren't high, and we think the Street may already appreciate some of these dynamics with the -30% pullback in the stock.
Korlym 2023 guidance will be the single most important disclosure when CORT reports Q4. CORT remains committed to growing Korlym revenue "double digits," which already seems to be appreciated by sell-side consensus ($440M in 2023 and +10% yoy). We're flagging Korlym yoy price growth is higher than expected (+9% vs historically +5%). This implies consensus is assuming 2023 yoy revenue growth comes entirely from price. This may suggest there could indeed be upside to 2023 consensus if CORT is able to grow volumes even modestly. Thus, it's not unreasonable to think CORT could guide 2023 Korlym revenue $440-460M (+10-15% yoy) or $440-470M (+10-18% yoy). While the upper end of revenue guidance is fluid, CORT likely needs to guide yoy growth to be at least +10% on the low end to remain committed to its goal of maintaining a double-digit revenue growth profile.
While this may be the case, we don't have huge confidence nor great visibility CORT would be able to achieve this, and it's why our 2023 Korlym estimate of $432M is below consensus and assumes modest volume contraction. We also note it may take some time to get better visibility, as Q1 is typically a challenging period and revenue generally declines sequentially from Q4 due to donut-hole and insurance dynamics.
Exhibit 1 - WAC Price for 28-Day Supply of 300mg Korlym
Source: Company Reports, Jefferies Research.
Two catalysts in 2023 and our up / down estimates. (1) The single most important data catalyst for 2023 is the Phase III 2nd-gen relacorilant data in Cushing's, which should come in H1:23 (+/- 15-30% stock impact) and sets up an NDA submission in H2:23 for a 2024 launch. There isn't necessarily a buyside bar on efficacy, and CORT believes the study just needs to hit stat sig vs placebo on the primary endpoint of glucose AUC. We note the study is open label. (2) Miricorilant is also being studied in a Phase IB dose-finding study in NASH with data planned in H1:23 (+5-10% upside vs minimal downside). We note prior a Phase I study of miricorilant had ~40-75% liver fat reductions, though dosing was too high and patients experienced ALT/AST elevations. Expectations are low for NASH.
