Corcept Therapeutics (CORT) 10-Q 7 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 30, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2
Trading Symbol	CORT
Entity Registrant Name	CORCEPT THERAPEUTICS INC
Entity Central Index Key	1,088,856
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		108,368,585

CONDENSED BALANCE SHEETS

CONDENSED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 37,048	$ 24,248
Trade receivables	4,951	3,334
Inventory	1,451	1,207
Prepaid expenses and other current assets	1,241	1,441
Total current assets	44,691	30,230
Strategic inventory	3,420	4,090
Property and equipment, net of accumulated depreciation	173	236
Other assets	71	74
Total assets	48,355	34,630
Current liabilities:
Accounts payable	2,360	1,886
Accrued clinical expenses	492	336
Other accrued liabilities	2,507	1,876
Long-term obligation-current portion	12,034	9,424
Deferred revenue	37	33
Total current liabilities	17,430	13,555
Long-term obligation, net of current portion	$ 19,399	$ 24,463
Commitments
Stockholders' equity:
Common stock, par value $0.001 per share, 280,000 shares authorized and 108,229 and 101,395 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively	$ 108	$ 101
Additional paid-in capital	342,184	320,511
Accumulated deficit	(330,766)	(324,000)
Total stockholders’ equity (deficit)	11,526	(3,388)
Total liabilities and stockholders' equity	$ 48,355	$ 34,630

CONDENSED BALANCE SHEETS (Paren

CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
CONDENSED BALANCE SHEETS [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	280,000,000	280,000,000
Common stock, shares issued	108,229,000	101,395,000
Common stock, shares outstanding	108,229,000	101,395,000

CONDENSED STATEMENTS OF COMPREH

CONDENSED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
CONDENSED STATEMENTS OF COMPREHENSIVE LOSS [Abstract]
Product sales, net	$ 11,956	$ 5,851	$ 22,058	$ 10,255
Operating expenses:
Cost of sales	439	215	741	389
Research and development	3,341	4,252	7,718	11,537
Selling, general and administrative	9,342	7,965	18,795	17,769
Total operating expenses	13,122	12,432	27,254	29,695
Loss from operations	(1,166)	(6,581)	(5,196)	(19,440)
Interest and other expense	(770)	(971)	(1,570)	(2,041)
Net loss and comprehensive loss	$ (1,936)	$ (7,552)	$ (6,766)	$ (21,481)
Basic and diluted net loss per share	$ (0.02)	$ (0.07)	$ (0.06)	$ (0.21)
Weighted average shares outstanding used in computing basic and diluted net	107,874	100,980	104,906	100,751

CONDENSED STATEMENTS OF CASH FL

CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating activities
Net loss	$ (6,766)	$ (21,481)
Adjustments to reconcile net loss to net cash used in operations:
Stock-based compensation	2,977	2,603
Accretion of interest expense	1,499	1,979
Amortization of debt financing costs	11	14
Depreciation and amortization of property and equipment	97	65
Changes in operating assets and liabilities:
Trade receivables	(1,617)	(797)
Inventory	426	(94)
Prepaid expenses and other current assets	200	(1,256)
Other assets	(8)	12
Accounts payable	474	214
Accrued clinical expenses	156	(1,645)
Other accrued liabilities	631	323
Deferred revenue	4	19
Net cash used in operating activities	(1,916)	(20,044)
Investing activities
Purchases of property and equipment	(34)	(158)
Cash used in investing activities	(34)	(158)
Financing activities
Proceeds from issuance of common stock upon exercise of options and warrants, net of issuance costs	18,703	1,311
Payments related to long-term obligation	(3,953)	(2,012)
Net cash provided by (used in) financing activities	14,750	(701)
Net increase (decrease) in cash and cash equivalents	12,800	(20,903)
Cash and cash equivalents at beginning of period	24,248	54,877
Cash and cash equivalents at end of period	$ 37,048	$ 33,974

Basis of Presentation and Summa

Basis of Presentation and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2015
Basis of Presentation and Summary of Significant Accounting Policies [Abstract]
Basis of Presentation and Summary of Significant Accounting Policies	1. B asis of Presentation and Summary of Significant Accounting Policies Description of Business and Basis of Presentation Corcept Therapeutics Incorporated was incorporated in the State of Delaware in May 1998 , and our headquarters are located in Menlo Park, California. We are a pharmaceutical company engaged in the discovery, development and commercialization of medications for the treatment of severe metabolic, oncologic, and psychiatric disorders that are associated with the activity of the hormone cortisol. In 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 have discovered and patented three families of selective glucocorticoid receptor (GR) antagonists, consisting of more than 300 distinct compounds, and we are developing them to treat a broad range of disorders. Basis of Presentation The accompanying unaudited condensed balance sheet as of June 30, 2015 and the condensed statements of comprehensive loss for the three- and six-month periods ended June 30, 2015 and 2014 and the condensed statements of cash flows for the three- and six-month periods ended June 30, 2015 and 2014 have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP 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, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or any other period. These financial statements and notes should be read in conjunction with the financial statements for the year ended December 31, 2014 included in our Annual Report on Form 10-K. The accompanying balance sheet as of December 31, 2014 has been derived from audited financial statements at that date. Use of Estimates The preparation of financial statements in conformity with GAAP 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. We evaluate our estimates and assumptions on an ongoing basis, including those related to revenue recognition, inventory, accrued liabilities, clinical trial accruals, stock-based compensation and the timing of payments with respect to our long-term capped royalty obligation, which determines our interest expense. We base our estimates on relevant experience and on other specific assumptions that we believe are reasonable. Fair Value Measurements 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. Cash and Cash Equivalents 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 as measured using Level 1 inputs, which approximates cost. As of June 30, 2015 and December 31, 2014, all of our funds were held in checking and money market fund accounts maintained at major U.S. financial institutions. Inventory 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 write down inventory that has become obsolete or has a cost basis in excess of its expected net realizable value. Any expired inventory is disposed of and the related costs are recognized as cost of sales in the statement of comprehensive loss. Inventory amounts that are not expected to be consumed within 12 months following the balance sheet date are classified as strategic inventory, a noncurrent asset. 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 an FDA approved facility. Long-term Obligation 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 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. 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. 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 the 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. 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, 2015. See Note 3, Long-Term Obligation , for additional information regarding this agreement. Net Product Revenue We primarily sell Korlym directly to patients through Dohmen Life Science Services (Dohmen), a specialty pharmacy. Prior authorization and confirmation of coverage by the patients’ private or government insurance plan or by a third-party charity, such as the National Organization for Rare Disorders (NORD – discussed below), is a prerequisite for Dohmen to ship Korlym. We recognize revenue upon the delivery of our products to these patients. We donate cash to NORD, an independent non-profit 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 revenue amounts attributable to our donations to NORD. We estimate our net product revenue by deducting from our gross product revenue (a) estimated government rebates and chargebacks and (b) allowances for our patient assistance program. Government Rebates and Chargebacks: We are obligated to provide to government programs, including Medicaid rebates and chargebacks on our product sales to eligible patients. We estimate these rebates and chargebacks and deduct the amounts from our gross product revenue at the time we recognize our product revenue. We estimate rebates and chargebacks using (i) specific amounts prescribed by the respective government programs, and (ii) sales that are eligible for such rebates and chargebacks using payer information provided by our specialty pharmacy. Allowances for Patient Assistance Program: We provide financial assistance to eligible patients whose insurance policies require them to pay high deductibles and co-payments. We calculate the cost of assistance by applying our program guidelines to the eligible sales in the period. Research and Development Research and development expenses consist of direct expenses, such as the cost of clinical trials, pre-clinical studies, manufacturing development, preparations for submissions to the FDA or other regulatory agencies 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. 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. Stock-Based Compensation We account for stock-based compensation related to option grants to employees and directors under the fair value method, based on the value of the award at the grant date as determined using the Black-Scholes option valuation model. For service-based awards, we recognize expense over the requisite service period. 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. Recently Issued Accounting Pronouncement In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard on revenue recognition from contracts with customers. This standard's core principle is that a reporting entity will recognize revenue when it transfers 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. On July 9, 2015, FASB delayed the effective date of this standard by one year. The standard will be effective for us beginning in the first quarter of 2018. Early application is permitted in 2017.

Composition of Certain Balance

Composition of Certain Balance Sheet Items	6 Months Ended
	Jun. 30, 2015
Composition of Certain Balance Sheet Items [Abstract]
Composition of Certain Balance Sheet Items	2. Composition of Certain Balance Sheet Items Inventory The composition of inventory was as follows: June 30, December 31, 2015 2014 (in thousands) Raw materials $ $ Work in progress Finished goods Total inventory Less strategic inventory classified as non-current Total inventory classified as current $ $ We have one tablet manufacturer for Korlym — AAI Pharma Services Corp. (AAI). In addition, we have one manufacturer for 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 we require, we may not be able to meet our customer demand. In order to mitigate these risks related to the manufacture of our product, we purchase and hold as “strategic inventory” additional quantities of API and Korlym tablets that are not expected to be consumed within 12 months following the relevant balance sheet date. Other Accrued Liabilities Other accrued liabilities consisted of the following: June 30, December 31, 2015 2014 (in thousands) Accrued compensation $ $ Government rebates Professional fees Commercialization costs Legal fees Other $ $

Long-Term Obligation

Long-Term Obligation	6 Months Ended
	Jun. 30, 2015
Long-Term Obligation [Abstract]
Long-Term Obligation	3. Long-Term Obligation As discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, Long-term Obligation , 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 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, 2015, we have paid Biopharma $9.8 million, with an additional payment of $2.5 million made in July 2015. Under the terms of the Financing Agreement, our payments are 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. We are obligated to make payments as follows: · 20 percent of our net product sales of Covered Products, subject to quarterly payment caps of $3.75 million during 2015. There is no quarterly cap on payments with respect to net product sales in 2016 and later. · 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). · 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, for the four calendar quarters preceding such incurrence and, in each case, fail to cure within the applicable cure period . · 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. 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. As discussed in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, Long-term Obligation , we estimate 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 $ 737,000 and $ 1.5 million for the three- and six-month periods ended June 30, 2015, respectively, $935,000 and $2.0 million for the three- and six-month periods ended June 30, 2014, respectively, and total accreted interest of $11.3 million for the period from August 2012 through June 30, 2015, 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. The following table provides a summary of the payment obligations under the Financing Agreement as of June 30, 2015 and December 31, 2014, utilizing the payment assumptions discussed above. June 30, December 31, 2015 2014 (in thousands) Total repayment obligation $ $ Less interest to be accreted in future periods Less payments made Less current portion Long-term obligation, net of current portion $ $ 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, 2015 and December 31, 2014. 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 our future product revenue and an estimated cost of capital. Management’s estimate of the future product revenue is subject to significant uncertainty due to the fact that Korlym has only been available since 2012 and there is an extended time period associated with the Financing Agreement. 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, 2015 and December 31, 2014, the unamortized issuance costs were approximately $48,000 and $58,000 , respectively, and are included in other assets on our balance sheets.

Stock Option Plans

Stock Option Plans	6 Months Ended
	Jun. 30, 2015
Stock Option Plans [Abstract]
Stock Option Plans	4. Stock Option Plans We have two stock option plans – the 2004 Equity Incentive Plan (the 2004 Plan) and the 2012 Incentive Award Plan (the 2012 Plan) – with stock options outstanding as of June 30, 2015. On February 18, 2015, our Board of Directors authorized an increase of approximately 4.1 million 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, 2014, pursuant to the terms of the 2012 Plan. During the six month period ended June 30, 2015, we issued an aggregate of 627,000 shares of our common stock upon the exercise of stock options. The following table provides a summary of stock-based compensation. Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 (in thousands) (in thousands) Research and development $ $ $ $ Selling, general and administrative Total stock-based compensation $ $ $ $

Capital Stock

Capital Stock	6 Months Ended
	Jun. 30, 2015
Capital Stock [Abstract]
Capital Stock	5. Capital Stock In March 2015, we issued approximately 6.2 million shares of our common stock upon the exercise of warrants that had been issued in two private placement transactions, one in 2008 and the other in 2012, at an exercise price of $2.77 and $4.05 , respectively. The transactions generated aggregate net proceeds of approximately $17.1 million, after the deduction of issuance costs. Approximately 3.1 million shares of the securities, which generated aggregate gross proceeds of $5.9 million, issued in these transactions were to venture capital funds, trusts and other entities affiliated with members of our Board of Directors, whom we consider to be our related parties.

Net Loss Per Share

Net Loss Per Share	6 Months Ended
	Jun. 30, 2015
Net Loss Per Share [Abstract]
Net Loss Per Share	6. Net Loss Per Share 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 condensed statements of comprehensive loss. 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. 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. June 30, 2015 2014 (in thousands) Stock options outstanding Warrants outstanding — Total

Basis of Presentation and Sum12

Basis of Presentation and Summary of Significant Accounting Policies (Policy)	6 Months Ended
	Jun. 30, 2015
Basis of Presentation and Summary of Significant Accounting Policies [Abstract]
Description of Business and Basis of Presentation	Description of Business and Basis of Presentation Corcept Therapeutics Incorporated was incorporated in the State of Delaware in May 1998 , and our headquarters are located in Menlo Park, California. We are a pharmaceutical company engaged in the discovery, development and commercialization of medications for the treatment of severe metabolic, oncologic, and psychiatric disorders that are associated with the activity of the hormone cortisol. In 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 have discovered and patented three families of selective glucocorticoid receptor (GR) antagonists, consisting of more than 300 distinct compounds, and we are developing them to treat a broad range of disorders. Basis of Presentation The accompanying unaudited condensed balance sheet as of June 30, 2015 and the condensed statements of comprehensive loss for the three- and six-month periods ended June 30, 2015 and 2014 and the condensed statements of cash flows for the three- and six-month periods ended June 30, 2015 and 2014 have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP 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, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or any other period. These financial statements and notes should be read in conjunction with the financial statements for the year ended December 31, 2014 included in our Annual Report on Form 10-K. The accompanying balance sheet as of December 31, 2014 has been derived from audited financial statements at that date.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP 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. We evaluate our estimates and assumptions on an ongoing basis, including those related to revenue recognition, inventory, accrued liabilities, clinical trial accruals, stock-based compensation and the timing of payments with respect to our long-term capped royalty obligation, which determines our interest expense. We base our estimates on relevant experience and on other specific assumptions that we believe are reasonable.
Fair Value Measurements	Fair Value Measurements 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.
Cash and Cash Equivalents	Cash and Cash Equivalents 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 as measured using Level 1 inputs, which approximates cost. As of June 30, 2015 and December 31, 2014, all of our funds were held in checking and money market fund accounts maintained at major U.S. financial institutions.
Inventory	Inventory 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 write down inventory that has become obsolete or has a cost basis in excess of its expected net realizable value. Any expired inventory is disposed of and the related costs are recognized as cost of sales in the statement of comprehensive loss. Inventory amounts that are not expected to be consumed within 12 months following the balance sheet date are classified as strategic inventory, a noncurrent asset. 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 an FDA approved facility.
Long-term Obligation	Long-term Obligation 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 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. 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. 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 the 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. 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, 2015. See Note 3, Long-Term Obligation , for additional information regarding this agreement.
Net Product Revenue	Net Product Revenue We primarily sell Korlym directly to patients through Dohmen Life Science Services (Dohmen), a specialty pharmacy. Prior authorization and confirmation of coverage by the patients’ private or government insurance plan or by a third-party charity, such as the National Organization for Rare Disorders (NORD – discussed below), is a prerequisite for Dohmen to ship Korlym. We recognize revenue upon the delivery of our products to these patients. We donate cash to NORD, an independent non-profit 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 revenue amounts attributable to our donations to NORD. We estimate our net product revenue by deducting from our gross product revenue (a) estimated government rebates and chargebacks and (b) allowances for our patient assistance program. Government Rebates and Chargebacks: We are obligated to provide to government programs, including Medicaid rebates and chargebacks on our product sales to eligible patients. We estimate these rebates and chargebacks and deduct the amounts from our gross product revenue at the time we recognize our product revenue. We estimate rebates and chargebacks using (i) specific amounts prescribed by the respective government programs, and (ii) sales that are eligible for such rebates and chargebacks using payer information provided by our specialty pharmacy. Allowances for Patient Assistance Program: We provide financial assistance to eligible patients whose insurance policies require them to pay high deductibles and co-payments. We calculate the cost of assistance by applying our program guidelines to the eligible sales in the period.
Research and Development	Research and Development Research and development expenses consist of direct expenses, such as the cost of clinical trials, pre-clinical studies, manufacturing development, preparations for submissions to the FDA or other regulatory agencies 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. 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.
Stock-Based Compensation	Stock-Based Compensation We account for stock-based compensation related to option grants to employees and directors under the fair value method, based on the value of the award at the grant date as determined using the Black-Scholes option valuation model. For service-based awards, we recognize expense over the requisite service period. 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.
Recently Issued Accounting Pronouncement	Recently Issued Accounting Pronouncement In May 2014, the Financial Accounting Standards Board (FASB) issued a new standard on revenue recognition from contracts with customers. This standard's core principle is that a reporting entity will recognize revenue when it transfers 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. On July 9, 2015, FASB delayed the effective date of this standard by one year. The standard will be effective for us beginning in the first quarter of 2018. Early application is permitted in 2017.

Composition of Certain Balanc13

Composition of Certain Balance Sheet Items (Tables)	6 Months Ended
	Jun. 30, 2015
Composition of Certain Balance Sheet Items [Abstract]
Composition of Inventory	June 30, December 31, 2015 2014 (in thousands) Raw materials $ $ Work in progress Finished goods Total inventory Less strategic inventory classified as non-current Total inventory classified as current $ $
Other Accrued Liabilities	June 30, December 31, 2015 2014 (in thousands) Accrued compensation $ $ Government rebates Professional fees Commercialization costs Legal fees Other $ $

Long-Term Obligation (Tables)

Long-Term Obligation (Tables)	6 Months Ended
	Jun. 30, 2015
Long-Term Obligation [Abstract]
Summary of Payment Obligations under Financing Agreement	June 30, December 31, 2015 2014 (in thousands) Total repayment obligation $ $ Less interest to be accreted in future periods Less payments made Less current portion Long-term obligation, net of current portion $ $

Stock Option Plans (Tables)

Stock Option Plans (Tables)	6 Months Ended
	Jun. 30, 2015
Stock Option Plans [Abstract]
Summary of Stock-Based Compensation	Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 (in thousands) (in thousands) Research and development $ $ $ $ Selling, general and administrative Total stock-based compensation $ $ $ $

Net Loss Per Share (Tables)

Net Loss Per Share (Tables)	6 Months Ended
	Jun. 30, 2015
Net Loss Per Share [Abstract]
Securities Outstanding that could Potentially Dilute Per Share Data	June 30, 2015 2014 (in thousands) Stock options outstanding Warrants outstanding — Total

Basis of Presentation and Sum17

Basis of Presentation and Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Millions	1 Months Ended	6 Months Ended
	Aug. 31, 2012	Jun. 30, 2015
Accounting Policies [Line Items]
Date of incorporation		May 1, 1998
Entity incorporated, State		Delaware
Additional cash and cash equivalents, description		We consider all highly liquid investments purchased with maturities of three months or less from the date of purchase to be cash equivalents
Financing Agreement with Biopharma
Accounting Policies [Line Items]
Proceeds from issuance of long-term obligation	$ 30
Maximum | Financing Agreement with Biopharma
Accounting Policies [Line Items]
Cumulative payments to be made under financing agreement	$ 45	$ 45

Composition of Certain Balanc18

Composition of Certain Balance Sheet Items (Composition of Inventory) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Composition of Certain Balance Sheet Items [Abstract]
Raw materials	$ 2,859	$ 3,595
Work in progress	865	15
Finished goods	1,147	1,687
Total inventory	4,871	5,297
Less strategic inventory classified as non-current	(3,420)	(4,090)
Total inventory classified as current	$ 1,451	$ 1,207

Composition of Certain Balanc19

Composition of Certain Balance Sheet Items (Other Accrued Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Composition of Certain Balance Sheet Items [Abstract]
Accrued compensation	$ 1,008	$ 564
Government rebates	855	275
Professional fees	341	330
Commercialization costs	96	556
Legal fees	93	120
Other	114	31
Total Accrued Liabilities Current	$ 2,507	$ 1,876

Long-Term Obligation (Narrative

Long-Term Obligation (Narrative) (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended		35 Months Ended
	Jul. 31, 2015	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2014	Dec. 31, 2013	Aug. 31, 2012
Debt Instrument [Line Items]
Aggregate payments to long-term obligations				$ 3,953,000	$ 2,012,000
Accretion of interest expense		$ 737,000	$ 935,000	1,499,000	1,979,000	$ 11,300,000
Issuance costs capitalized		140,000		140,000		140,000
Unamortized issuance cost		48,000		48,000		48,000	$ 58,000
Cash and cash equivalents		$ 37,048,000	$ 33,974,000	$ 37,048,000	$ 33,974,000	37,048,000	$ 24,248,000	$ 54,877,000
Financing Agreement with Biopharma
Debt Instrument [Line Items]
Aggregate payments to long-term obligations						$ 9,800,000
Payment obligation based on a percentage of net product sales				20.00%
Percentage of payments received for upfront, milestone or other contingent fees		20.00%		20.00%		20.00%
Increase in percentage used to calculate long term payment obligations, description				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, for the four calendar quarters preceding such incurrence and, in each case, fail to cure within the applicable cure period
Financing Agreement with Biopharma | Subsequent Events
Debt Instrument [Line Items]
Aggregate payments to long-term obligations	$ 2,500,000
Minimum | Financing Agreement with Biopharma | Cash Required Under Debt Covenants
Debt Instrument [Line Items]
Cash and cash equivalents		$ 50,000,000		$ 50,000,000		$ 50,000,000
Maximum | Financing Agreement with Biopharma
Debt Instrument [Line Items]
Cumulative payments to be made under financing agreement		$ 45,000,000		$ 45,000,000		$ 45,000,000			$ 45,000,000
Payment obligation based on a percentage of net product sales				50.00%
Maximum | Financing Agreement with Biopharma | Quarterly Payment During 2015
Debt Instrument [Line Items]
Quarterly payment amount cap				$ 3,750,000
Maximum | Financing Agreement with Biopharma | Quarterly Payment During 2016 and Later
Debt Instrument [Line Items]
Quarterly payment amount cap				$ 0

Long-Term Obligation (Summary o

Long-Term Obligation (Summary of Payment Obligations under Financing Agreement) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Long-Term Obligation [Abstract]
Total repayment obligation	$ 45,000	$ 45,000
Less interest to be accreted in future periods	(3,735)	(5,232)
Less payments made	(9,832)	(5,881)
Less current portion	(12,034)	(9,424)
Long-term obligation, net of current portion	$ 19,399	$ 24,463

Stock Option Plans (Narrative)

Stock Option Plans (Narrative) (Details) - shares	Feb. 18, 2015	Jun. 30, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common shares issued upon exercise of options		627,000
2012 Equity Incentive Award Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increase in shares authorized for grant	4,100,000
Increase in shares available for issuance based on percentage of common stock outstanding			4.00%

Stock Option Plans (Summary of

Stock Option Plans (Summary of Non-Cash Stock-Based Compensation) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Non-cash stock-based compensation expense	$ 1,568	$ 1,226	$ 2,977	$ 2,603
Research and development expense
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Non-cash stock-based compensation expense	178	169	383	331
Selling, general and administrative expense
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Non-cash stock-based compensation expense	$ 1,390	$ 1,057	$ 2,594	$ 2,272

Capital Stock (Narrative) (Deta

Capital Stock (Narrative) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	1 Months Ended
	Mar. 31, 2015	Dec. 31, 2012	Dec. 31, 2008
Related Party Transaction [Line Items]
Shares issued upon exercise of warrants	6.2
Exercise price of warrants		$ 4.05	$ 2.77
Net proceeds generated	$ 17.1
Venture Capital Funds, Trusts and Other Entities [Member]
Related Party Transaction [Line Items]
Shares issued upon exercise of warrants	3.1
Net proceeds generated	$ 5.9

Net Loss Per Share (Details)

Net Loss Per Share (Details) - shares shares in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities outstanding that could potentially dilute per share data	17,425	22,662
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities outstanding that could potentially dilute per share data	17,425	14,618
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities outstanding that could potentially dilute per share data		8,044