ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition and is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements and the accompanying notes to financial statements, risk factors and other disclosures included in this Form 10-K. Our consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”).

We make statements in this section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of such forward-looking statements and the potential risks and uncertainties that may affect their accuracy, see “Forward-Looking Statements” included in “Risk Factors” in this Form 10-K and the “Overview” and “Liquidity and Capital Resources” sections of this MD&A.

Overview

We are a commercial-stage company engaged in the discovery and development of drugs that treat severe metabolic, oncologic and psychiatric disorders by modulating the effects of the hormone cortisol. Since 2012, we have marketed Korlym® (mifepristone) for the treatment of patients who suffer from Cushing’s syndrome. Our portfolio of proprietary selective cortisol modulators consists of four structurally distinct series totaling more than 1,000 compounds, including relacorilant, exicorilant and miricorilant.

Cushing’s Syndrome

Korlym. We sell Korlym in the United States, using experienced sales representatives to call on physicians caring for patients with endogenous Cushing’s syndrome (hypercortisolism). Because many people who suffer from Cushing’s syndrome are undiagnosed or inadequately treated, we have developed and continue to refine and expand programs to educate physicians and patients about screening for hypercortisolism and the role Korlym can play in treating the disorder. We also have a field-based force of medical science liaisons.

We use one specialty pharmacy and one specialty distributor to distribute Korlym and provide logistical support to physicians and patients. Our policy is that no patient with Cushing’s syndrome will be denied access to Korlym for financial reasons. To help us achieve that goal, we fund our own patient support programs and donate money to independent charitable foundations that help patients pay for all aspects of their Cushing’s syndrome care, whether or not that care includes taking Korlym.

Relacorilant. We are conducting two Phase 3 trials of our proprietary, selective cortisol modulator, relacorilant, as a treatment for patients with Cushing’s Syndrome.

Our Phase 3 GRACE trial is expected to enroll 130 patients at sites in the United States, Canada, Europe and Israel. Each patient in GRACE will receive relacorilant for 22 weeks. Patients who exhibit pre-specified improvements in hypertension or glucose metabolism enter a 12-week, double-blind, “randomized withdrawal” phase in which half of the patients continue receiving relacorilant and the rest receive placebo. If successful, we expect GRACE to provide the basis for a new drug application to treat patients with all etiologies of Cushing’s syndrome.

Our Phase 3 GRADIENT trial is expected to enroll 130 patients whose Cushing’s syndrome is caused by an adrenal tumor. Half of patients will receive relacorilant for 26 weeks and half will receive placebo. Many of the clinical sites in GRACE are participating in GRADIENT.

The United States Food and Drug Association (“FDA”) and the European Commission (“EC”) have designated relacorilant as an orphan drug for the treatment of Cushing’s syndrome. In the United States, relacorilant’s orphan designation confers tax credits, reduced regulatory fees and, provided we obtain approval, seven years of exclusive marketing rights for the treatment of patients with Cushing’s syndrome. Benefits of orphan drug designation by the EC are similar, but also, include protocol assistance from the European Medicines Agency (“EMA”), access to the centralized marketing authorization procedure in the European Union (“EU”) and, if we obtain approval, ten years of exclusive marketing rights in the EU for the treatment of patients with Cushing’s syndrome.

Oncology

Relacorilant in Patients with Solid Tumors. In July 2020, we completed enrollment in a 178-patient, controlled Phase 2 trial of relacorilant in combination with nab-paclitaxel in patients with advanced, high-grade serous ovarian tumors, which we

are conducting at sites in the United States and Europe. We expect top-line data from this trial to be available in the first half of 2021.

In addition, our Phase 3 RELIANT trial of relacorilant plus nab-paclitaxel in patients with metastatic pancreatic cancer is expected to enroll 80 patients, all of whom will receive relacorilant plus nab-paclitaxel. We expect to complete an interim analysis of data from the first 43 patients in the first half of 2021.

We are also conducting an open-label, Phase 1b trial of relacorilant plus the PD-1 checkpoint inhibitor pembrolizumab in 20 patients with advanced adrenocortical cancer with cortisol excess.

Cortisol Modulators in Patients with CRPC. We are conducting an open label, dose-finding trial of our proprietary, selective cortisol modulator exicorilant in combination with Xtandi in patients with metastatic CRPC. Investigators at the University of Chicago are conducting a dose-finding trial of relacorilant combined with Xtandi in the same patient population. We are providing relacorilant.

Metabolic Diseases

Antipsychotic-Induced Weight Gain (“AIWG”). We are studying our selective cortisol modulator miricorilant as a potential treatment for AIWG. In 2020, we completed a double-blind, placebo-controlled Phase 1b trial, in which 96 healthy subjects received daily doses of the antipsychotic medication olanzapine (10 mg) and either miricorilant (600 mg or 900 mg) or placebo for 14 days. Study participants who received miricorilant gained less weight than subjects receiving placebo. In addition, markers of liver damage that rise temporarily at the start of olanzapine therapy increased less sharply in subjects receiving miricorilant.

Our double-blind, placebo-controlled, Phase 2 GRATITUDE trial is studying the ability of miricorilant to reverse recent AIWG, with a planned enrollment of 100 patients with schizophrenia or bipolar disorder at 30 sites in the United States. Study participants receive their established antipsychotic medication plus either miricorilant or placebo for 12 weeks. Our double-blind, placebo-controlled Phase 2 GRATITUDE II trial is studying the ability of miricorilant to reverse long-standing AIWG in 120 patients with schizophrenia at 35 centers in the United States.

Liver Disease. We are conducting a double-blind, placebo-controlled, Phase 2 trial of miricorilant as a potential treatment for NASH. The trial has a planned enrollment of 150 patients at 15 sites in the United States. Patients will receive a daily dose of miricorilant (600 mg or 900 mg) or placebo for 12 weeks.

Continued Discovery and Development

Our selective cortisol modulator CORT113176, which has shown promise in animal models of amyotrophic lateral sclerosis (or “ALS”), has completed its Phase 1 trial. We plan to advance it to Phase 2 as a potential treatment for that disease. In addition, we continue to identify selective cortisol modulators and plan to advance the most promising of them towards the clinic.

COVID-19 Pandemic

Much of the world is subject to pandemic-related public health restrictions, including in California, where we are headquartered, and in the states where we sell Korlym and where our clinical trial sites are located. Most of our third-party manufacturers, distributors (including the specialty pharmacy that dispenses Korlym), information technology service providers, law and accounting firms, clinical research organizations and others are also subject to pandemic-related restrictions.

These restrictions, as well as measures voluntarily undertaken by patients, physicians, hospitals and medical clinics to reduce the risk of coronavirus infection have reduced our revenue and make it difficult to grow our Korlym business.The pandemic’s impact on the pace of our clinical development programs has been variable. Enrollment has slowed significantly in trials of indications not considered immediately life-threatening, such as Cushing’s syndrome, CRPC, AIWG and NASH.In addition, some clinical sites have stopped enrolling new patients or have reduced the frequency with which physicians see study participants. Some sites have suspended or halted the initiation of new clinical trials. These changes lengthen the time it takes us to complete our development programs, although trials in patients with immediately life-threatening diseases, such as advanced pancreatic and ovarian cancer, have experienced many fewer disruptions and delays.

Please see "COVID-19 Pandemic" under Item 1 of this Annual Report and the risk factor under Item 1A of this Annual Report, “The COVID-19 pandemic or other public health emergencies, natural disasters, terrorism or other catastrophes could disrupt our activities and render our own or our vendors’ facilities and equipment inoperable or inaccessible and require us to curtail or cease operations.”

Results of Operations

Net Product Revenue –Net product revenue is gross product revenue from sales to our customers less deductions for estimated government rebates and chargebacks.

Net product revenue was $353.9 million for the year ended December 31, 2020, compared to $306.5 million and $251.2 million for the years ended December 31, 2019 and 2018, respectively. For the years ended December 31, 2020, 2019 and 2018, higher sales volumes accounted for 31.9 percent, 58.4 percent and 85.7 percent of the increases in net revenue, respectively, as we shipped Korlym to more patients. Increases in the average price of Korlym tablets accounted for the remainder of the increases. The increase in Korlym’s price for the year ended December 31, 2020 was due to a relative decrease in the number of patients covered by Medicaid (which reimburses Korlym at a lower rate), a statutorily-mandated increase in the price paid by other government programs, one price increase that took effect on August 1, 2019 and another on January 1, 2020.

Cost of sales –Cost of sales includes the cost of API, tableting, packaging, personnel, overhead, stability testing and distribution.

Cost of sales was $5.6 million for the year ended December 31, 2020, compared to $5.5 million and $5.2 million for the years ended December 31, 2019 and 2018, respectively. The dollar value of our cost of sales increased in both years due to greater sales unit volumes. Cost of sales was 1.6 percent, 1.8 percent and 2.1 percent of our net product revenue for the years ended December 31, 2020, 2019 and 2018, respectively. Cost of sales as a percentage of revenue declined due to an increase in the average price of Korlym as well as a decrease in its cost of manufacture.

Research and development expenses – Research and development expenses include the cost of (1) recruiting and compensating development personnel, (2) clinical trials, (3) drug product and preclinical studies in support of clinical trials and regulatory submissions, (4) discovery research and (5) the development of drug formulations and manufacturing processes.

Research and development expenses increased to $114.8 million for the year ended December 31, 2020 from $89.0 million for the comparable period in 2019. The increase was due to increased spending on the advancement of our oncology and endocrinology development programs and on the recruitment and compensation of development personnel.

Research and development expenses increased to $89.0 million for the year ended December 31, 2019 from $75.2 million in 2018. The increase was primarily due to increased spending on the recruitment and compensation of development personnel and on the discovery and advancement of new selective cortisol modulators, partially offset by the completion of drug-drug interaction studies related to relacorilant.

Year Ended December 31,

(in thousands)

Development programs:

It is difficult to predict the timing and cost of development activities, which are subject to many uncertainties and risks, including inconclusive or negative results, slow patient enrollment, adverse side effects and difficulties in the formulation or manufacture of study drugs and the lack of drug-candidate efficacy. In addition, clinical development is subject to intensive government oversight and regulations that may change unpredictably and without notice. We expect our research and development expense to be higher in 2021 than in 2020 as our clinical programs advance. Research and development spending in future years will depend on the outcome of our pre-clinical and clinical trials and our development plans.

Selling, general and administrative expenses - Selling, general and administrative expenses include (1) compensation of employees, consultants and contractors engaged in commercial and administrative activities, (2) the cost of vendors supporting commercial activities and (3) legal and accounting fees.

Selling, general and administrative expenses increased to $105.3 million for the year ended December 31, 2020 from $100.4 million for the comparable period in 2019. The increase in selling, general and administrative expenses was primarily due to increases in employee recruiting and compensation expenses, increased legal and marketing costs, volume-related pharmacy and other distribution costs and professional service fees.

Selling, general and administrative expenses increased to $100.4 million for the year ended December 31, 2019 from $81.3 million for the comparable period in 2018. The increase in selling, general and administrative expenses was primarily due to increased spending on the recruitment and compensation of additional employees, increased legal and marketing costs, and added distribution expenses arising from increased Korlym sales volumes.

We expect our selling, general and administrative expenses to be higher in 2021 than in 2020 due to increased commercial and administrative activities arising from increased sales volumes, litigation and administrative support for increased research and development activities.

Interest and other income - Interest and other income for the years ended December 31, 2020, 2019 and 2018 was $3.4 million, $5.1 million and $2.7 million, respectively, and consisted primarily of interest income from marketable securities. Interest and other income decreased for the year ended December 31, 2020 from the comparable period in 2019 primarily due to market-wide reductions in interest rates. The increase from the year ended December 31, 2019 from the comparable period in 2018 was due to growth in our holdings of cash and marketable securities.

Income tax expense - Income tax expense for the years ended December 31, 2020, 2019 and 2018 was $25.6 million, $22.5 million, and $16.7 million, respectively. The increases in income tax expense during the years ended December 31, 2020, 2019 and 2018 were primarily due to increases in net income and decreased discrete benefits from exercises of non-qualified stock options.

Liquidity and Capital Resources

Since 2015, we have relied on revenues from the sale of Korlym to fund our operations. Based on our current plans and expectations, we expect to fund our operations and planned research and development activities without needing to raise additional funds, although we may choose to raise additional funds for other reasons. If we were to raise funds, equity financing would be dilutive. Debt financing could involve restrictive covenants. Funds raised through collaborations with other companies may require us to relinquish certain rights in our product candidates.

As of December 31, 2020, we had cash, cash equivalents and marketable securities of $476.9 million, consisting of cash and cash equivalents of $76.2 million and marketable securities of $400.7 million, compared to cash and cash equivalents of $31.3 million and marketable securities of $284.0 million as of December 31, 2019.

The cash in our bank accounts and our marketable securities could be affected if the financial institutions holdings them were to fail or severely adverse conditions were to rise in the markets for public or private debt securities. We have never experienced a loss or lack of access to cash.

Net cash provided by operating activities for the years ended December 31, 2020, 2019 and 2018 was $152.0 million, $136.1 million and $115.7 million, respectively. These increases were primarily due to greater revenue, as a result of an increase in Korlym’s price as well as shipping Korlym to more patients.

Net cash used in investing activities for the years ended December 31, 2020, 2019 and 2018 was $119.3 million, $117.8 million and $90.8 million, respectively, primarily due to increased purchases of marketable securities with cash generated by our operating activities.

Net cash provided by financing activities for the year ended December 31, 2020 was $12.2 million. Net cash used in financing activities for the years ended December 31, 2019 and 2018 was $28.6 million and $14.3 million, respectively. For the same periods, stock option exercises provided $23.2 million, $8.4 million and $9.3 million, respectively. We repurchased an aggregate of $9.7 million of our common stock during the year ended December 31, 2020 pursuant to our program to repurchase up to $200 million of our common stock (the “Stock Repurchase Program”). In the first quarter of 2020, we purchased from our Chief Executive Officer $0.3 million of our common stock at the current market price to provide him liquidity to satisfy tax liability arising from his net (cashless) exercise in 2019 of stock options that were about to expire. We repurchased an aggregate of $31.0 million and $23.7 million during the years ended December 31, 2019 and 2018, respectively, pursuant to our program to repurchase up to $100 million of our common stock that expired on June 30, 2019. During the years ended December 31, 2020 and 2019, we also acquired 0.1 million and 0.5 million shares at a cost of $1.1 million and $6.1 million, respectively, in satisfaction tax withholding requirements for the settlement of employee option exercises. We had no such transactions in 2018.

As of December 31, 2020, we had retained earnings of $82.5 million.

Contractual Obligations and Commitments

The following table presents our estimates of obligations under contractual agreements as of December 31, 2020.

Contractual Obligations Total Less than1 year 1-3Years 3-5Years More than5 Years

(in thousands)

Manufacturing purchase commitments(1) $ 159 $ 159 $ — $ — $ —

Research and development studies(3) $ 116 $ 116 $ — $ — $ —

Total other contractual obligations $ 2,914 $ 2,384 $ 530 $ — $ —

(1) As of December 31, 2020, we had no remaining commitments to purchase API from PCAS and have a $0.2 million commitment to purchase Korlym tablets.

(2) In October 2019, we amended our office lease to add more space and extend its term from March 31, 2020 through March 31, 2022 for the original office space and on April 1, 2020, the lease term would begin for additional space through March 31, 2022. In June 2020, we amended our office lease to commence the additional space on June 15, 2020. As of December 31, 2020, the remaining minimum rental payments due under the lease were $2.6 million.

(3) In December 2013, we entered into an agreement with Quotient Sciences Limited (“Quotient”), a clinical research organization, to assist in the management and conduct of our Phase 1 studies of miricorilant and our other selective cortisol modulators. As of December 31, 2020, the total non-cancelable commitment under the agreement was approximately $0.1 million.

We have other contractual payment obligations and purchase commitments, the timing of which are contingent on future events, including the initiation and completion of manufacturing projects. In March 2014, we entered into a long-term agreement with one contract manufacturer, PCAS to produce mifepristone, the API for Korlym. On July 25, 2018, we amended this agreement to add a second manufacturing site and extend its term to December 31, 2021, with two one-year automatic renewals, unless either party provides 12 months advance written notice of its intent not to renew. The amendment provides exclusivity between PCAS and Corcept. If PCAS is unable to meet our requirements, we may purchase mifepristone from another supplier.

We have agreements with two third-party manufacturers to produce and bottle Korlym tablets.

We enter into contracts in the normal course of business with CROs for preclinical studies and clinical trials. The contracts are cancellable, with varying provisions regarding termination. If a contract with a specific vendor were to be terminated, we would only be obligated for products and services we had received as of the effective date of the termination and any applicable cancellation fees.

Net Operating Loss Carryforwards

See Note 9, Income Taxes in our audited consolidated financial statements.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies and Estimates

Our consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires us to make estimates and judgments that affect the amount of assets, liabilities and expenses we report. We base our estimates on historical experience and on other assumptions we believe to be reasonable. Actual results may differ from our estimates. Our significant accounting policies are described in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in Part IV of this Annual Report on Form 10-K. We believe the following accounting estimates and policies to be critical:

Net Product Revenue

To determine net product revenue, we deduct from sales the cost of our patient co-pay assistance program and our estimates of (i) government chargebacks and rebates, (ii) discounts provided to our SD for prompt payment and (iii) reserves for expected returns. We record these estimates at the time we recognize revenue and update them as new information becomes available. Our estimates take into account our understanding of the range of possible outcomes. If results differ from our estimates, we adjust our estimates, which changes our net product revenue and earnings. We report any changes in the period they become known to us, even if they concern transactions occurring in prior period.

Government Rebates

Korlym is eligible for purchase by, or qualifies for reimbursement from, Medicaid and other government programs that are eligible for rebates on the price they pay for Korlym. To determine the appropriate amount to reserve against these rebates, we identify Korlym sold to patients covered by government-funded programs, apply the applicable government discount to these sales and then estimate the portion of total rebates we expect will be claimed. We then (i) deduct this reserve from revenue in the period to which the rebates relate and (ii) include in accrued expenses on our consolidated balance sheet a current liability of equal amount.

Chargebacks

Although we sell Korlym to the SD at full price, some of the government entities to which the SD sells receive a discount. The SD recovers such discounts by reducing its payment to us (this reduction is called a “chargeback”). Chargebacks sometimes relate to Korlym sold to SD in prior periods. We deduct from our revenue in each period chargebacks claimed by the SD for Korlym we sold to the SD that period. We also create a reserve for chargebacks we estimate the SD will claim in future periods against Korlym it purchased in the current period but has not yet resold. We determine the amount of this reserve based on our experience with SD chargebacks and our understanding of the SD’s customer base and business practices. We deduct this reserve from revenue and include in accrued expenses on our consolidated balance sheet a current liability of equal amount.

Patient Assistance Program and Charitable Support

It is our policy that no patient be denied Korlym due to inability to pay. We provide financial assistance to eligible patients whose insurance policies have high deductibles or co-payments and deduct the amount of such assistance from gross revenue. We determine the assistance we provide each patient by applying our program guidelines to that patient’s financial position and their insurance policy’s co-payment and deductible requirements. We also donate cash to charities that help patients with financial need pay for the treatment of Cushing’s syndrome (which treatment may not include Korlym). We do not include in our revenue payments these charities make on behalf of patients receiving Korlym. We provide Korlym at no cost to patients without insurance who do not qualify for charitable support.

Sales Returns

For safety reasons, federal law prohibits patients from returning Korlym they have received. Korlym sold to our SD is subject to return. We deduct the amount of Korlym we estimate the SD will return from each period’s gross revenue. We base our estimates on quantitative and qualitative information including, but not limited to, historical return rates, the amount of Korlym held by the SD and projected demand. If we cannot reasonably estimate returns with respect to a particular sale, we defer recognition of revenue until we can make a reasonable estimate. To date, returns have not been material.

Leases

We account for leases in accordance with ASC 842, Leases, which requires lease transactions with terms longer than 12 months to be recognized on the balance sheet as a liability (“lease liabilities”), offset by an asset of equal amount (“right-of-use assets”).

We recognize right-of-use assets and lease liabilities at lease commencement. We measure lease liabilities based on the present value of lease payments over the lease term discounted by the rate equal to the rate we would pay on a loan with monthly payments and a term equal to the monthly payments and remaining term of our lease. We estimate our incremental borrowing rate based on bank quotes and an analysis of public companies with debt and credit carrying terms similar to our lease term. We do not include in the lease term options to extend or terminate the lease unless it is reasonably certain at commencement that we will exercise any such options. We account for the lease components separately from non-lease components for our operating leases.

Inventory and Cost of Sales

We value inventory at the lower of cost or net realizable value and determine the cost of inventory we sell using the specific identification method, which approximates a first-in, first-out basis. We assess our inventory levels at each reporting period and write down inventory that is either expected to be at risk of expiration prior to sale, or has a cost basis in excess of its expected net realizable value, or for which there are inventory quantities in excess of expected requirements. We destroy expired inventory and recognize the related costs as cost of sales in that period’s statement of comprehensive income.

Cost of sales includes the cost of manufacturing Korlym, including materials, third-party manufacturing costs and indirect personnel and other overhead costs, based on the number of Korlym tablets for which we recognize revenue, as well as costs of stability testing, logistics and distribution incurred during the applicable period.

Accruals of Research and Development Costs

We base our accruals for discovery research, preclinical studies and clinical trials on our estimates of work completed, milestones achieved, patient enrollment and past experience with similar activities. Our estimates include assessments of information from contract research organizations and the status of our own research, development and administrative activities.

Stock-based compensation

We account for stock-based compensation under the fair value method, based on the value of the award at the grant date. To date, our stock-based compensation has consisted entirely of option grants, which we value using the Black-Scholes model. We recognize stock-based compensation expense over the applicable vesting period, net of estimated forfeitures. If actual forfeitures differ from our estimates, we adjust stock-based compensation expense accordingly.

We recognize the expense of options granted to non-employees based on their fair value at the time of vesting.

Income Taxes

We account for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires recognition of deferred tax assets and liabilities for the expected tax consequences of our future financial and operating activities. Under ASC 740, we determine deferred tax assets and liabilities based on the temporary difference between the financial statement and tax bases of assets and liabilities using the tax rates in effect for the year in which we expect such differences to reverse. If we determine that it is more likely than not that we will not generate sufficient taxable income to realize the value of some or all of our deferred tax assets (net of our deferred tax liabilities), we establish a valuation allowance offsetting the amount we do not expect to realize. We perform this analysis each reporting period and reduce or increase the size of our valuation allowance accordingly.

The deferred tax assets that we record each period depend primarily on our ability to generate future taxable income in the United States. Each period, we evaluate the need for a valuation allowance against our deferred tax assets and, if necessary, adjust the valuation allowance so that net deferred tax assets are recorded on our balance sheet only to the extent we conclude it is more likely than not that these deferred tax assets will be realized. If our outlook for future taxable income changes significantly, our assessment of the need for, and the amount of, a valuation allowance may also change.

We also account for uncertain tax positions in accordance with ASC 740, which requires us to adjust our consolidated financial statements to reflect only those tax positions that are more-likely-than-not to be sustained upon review by federal or state examiners. We recognize in the consolidated financial statements the largest expected tax benefit that has a greater than 50 percent likelihood of being sustained on examination by the taxing authorities. We report interest and penalties related to unrecognized tax benefits as income tax expenses.

Recently Issued Accounting Pronouncements

See Note 1, Basis of Presentation and Summary of Significant Accounting Policies in our audited consolidated financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures About Market Risk

The primary objective of our investment activities is to preserve principal. As of December 31, 2020, the fair value of our cash and cash equivalents and marketable securities was $476.9 million. Our marketable securities consisted primarily of commercial paper, corporate notes, asset-backed securities, repurchase agreements, U.S. Treasury securities and a money market fund invested in short-term U.S. Treasury securities maintained at a major U.S. financial institution. To minimize our exposure to interest rate and other market risks, we have limited the maturities of our investments to less than three years, with the duration of our portfolio not to exceed two years. Due to the short-term nature and high liquidity of these instruments, an increase or decrease in market interest rates by 25 basis points would not have a material impact on the total value of our portfolio as of December 31, 2020.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements required by this item are set forth beginning at page F-1 and are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file with the SEC is recorded, processed, summarized and filed within the time periods specified in the SEC’s rules and forms and that such information is accumulated and discussed with our management, including our Chief Executive Officer and Chief Financial Officer, so as to allow timely decisions regarding disclosure. Management recognizes that controls and procedures, no matter how well designed and operated, can only provide reasonable, not absolute, assurance the desired control objectives will be met. In reaching a reasonable level of assurance, management has weighed the cost of contemplated controls against their intended benefits. The design of any system of controls is based on management’s assumptions about the likelihood of future events. We cannot assure you that our controls will achieve their stated goals under all possible conditions. Changes in future conditions may render our controls inadequate or may cause our degree of compliance with them to deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

As of December 31, 2020, our Chief Executive Officer and Chief Financial Officer evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on their evaluation, they concluded that they are effective.

There were no changes in our internal controls over financial reporting during the quarter ended December 31, 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

(b) Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control system is designed to provide reasonable assurance regarding the preparation and fair presentation of externally-reported consolidated financial statements in accordance with U.S. GAAP. As discussed in Item 9A(a) above, internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable assurance that their objectives have been met.

As of December 31, 2020, our management conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2020, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the officers who certify our financial reports and to the members of the Company’s senior management and board of directors as appropriate to allow timely decisions regarding required disclosure at the reasonable assurance level.

Our independent registered public accounting firm has issued an attestation report on our internal control over financial reporting. It is set forth below.

To the Stockholders and Board of Directors of Corcept Therapeutics Incorporated

Opinion on Internal Control over Financial Reporting

We have audited Corcept Therapeutics Incorporated’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Corcept Therapeutics Incorporated (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 2020 and 2019, the related consolidated statements comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and our report dated February 23, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Redwood City, California

February 23, 2021

ITEM 9B. OTHER INFORMATION

None.

PART III

Certain information required by Part III is omitted from this Form 10-K because we expect to file with the U.S. Securities and Exchange Commission, not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, a definitive proxy statement (“Proxy Statement”), pursuant to Regulation 14A in connection with the solicitation of proxies for our 2021 Annual Meeting of Stockholders, and certain information included therein is incorporated herein by reference.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item will be included in the Proxy Statement and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The information required by this Item will be included in the Proxy Statement and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item will be included in the Proxy Statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item will be included in the Proxy Statement and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item will be included in the Proxy Statement and is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this Form 10-K

(1) Financial Statements:

Page

Report of Independent Registered Public Accounting Firm 2

Audited Consolidated Financial Statements

Consolidated Balance Sheets 4

Consolidated Statements of Comprehensive Income 5

Consolidated Statements of Cash Flows 6

Consolidated Statement of Stockholders’ Equity 7

Notes to Consolidated Financial Statements 8

(2) Financial Statement Schedules:

All schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.

(3) Exhibits:

Item 601 of Regulation S-K requires the exhibits listed below. Each management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K has been identified.

(A) EXHIBITS

Exhibit Number Description of Document

4.2 Description of Common Stock

Exhibit Number Description of Document

23.1 Consent of Independent Registered Public Accounting Firm

24.1 Power of Attorney (See signature page)

32.2 Certification pursuant to 18 U.S.C. Section 1350 of Charles Robb

101.SCH XBRL Schema Document

101.CAL XBRL Calculation Linkbase Document

101.DEF XBRL Definition Linkbase Document

101.LAB XBRL Labels Linkbase Document

101.PRE XBRL Presentation Linkbase Document

# Confidential treatment granted

† Management contract or compensatory plan or arrangement

ITEM 16. FORM 10-K SUMMARY

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CORCEPT THERAPEUTICS INCORPORATED

By: /s/ JOSEPH K. BELANOFF

Joseph K. Belanoff, M.D.,

Chief Executive Officer and President

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Joseph K. Belanoff and Charles Robb, and each of them acting individually, as his or her true and lawful attorneys-in-fact and agents, each with full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, with full power of each to act alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Exchange Act, this Annual Report on Form 10-K has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature Title Date

Joseph K. Belanoff, M.D. (Principal Executive Officer)

/s/ CHARLES ROBB Chief Financial Officer and Secretary February 23, 2021

Charles Robb (Principal Financial Officer)

/s/ JOSEPH DOUGLAS LYON Chief Accounting Officer February 23, 2021

Joseph Douglas Lyon (Principal Accounting Officer)

James N. Wilson

/s/ GREGG ALTON Director February 23, 2021

Gregg Alton

/s/ G. LEONARD BAKER, JR. Director February 23, 2021

G. Leonard Baker, Jr.

/s/ GILLIAN CANNON Director February 23, 2021

Gillian Cannon

/s/ DAVID L. MAHONEY Director February 23, 2021

David L. Mahoney

/s/ KIMBERLY PARK Director February 23, 2021

Kimberly Park

/s/ DANIEL N. SWISHER, JR Director February 23, 2021

Daniel N. Swisher, Jr.

CORCEPT THERAPEUTICS INCORPORATED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm 2

Audited Financial Statements

Consolidated Balance Sheets 4

Consolidated Statements of Comprehensive Income 5

Consolidated Statements of Cash Flows 6

Consolidated Statement of Stockholders’ Equity 7

Consolidated Notes to Financial Statements 8

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Corcept Therapeutics Incorporated

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Corcept Therapeutics Incorporated (the Company) as of December 31, 2020 and 2019, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 23, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Inventory Excess and Obsolescence Reserve

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2001.

Redwood City, California

February 23, 2021

CORCEPT THERAPEUTICS INCORPORATED

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

December 31,

ASSETS

Current assets:

Prepaid expenses and other current assets 6,697 6,044

Operating lease right-of-use asset 2,509 3,446

Property and equipment, net of accumulated depreciation 1,675 1,050

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Short-term operating lease liability 2,050 1,558

Long-term operating lease liability 501 1,903

Long-term accrued income taxes 398 386

Commitments and contingencies (Note 10)

Stockholders’ equity:

Accumulated other comprehensive gain 415 261

Retained earnings (accumulated deficit) 82,456 (23,555)

Total liabilities and stockholders’ equity $ 571,731 $ 412,312

The accompanying notes are an integral part of these consolidated financial statements.

CORCEPT THERAPEUTICS INCORPORATED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

Year Ended December 31,

Operating expenses:

Other comprehensive income:

Foreign currency translation gain, net of tax 204 4 —

Basic net income per share $ 0.92 $ 0.82 $ 0.65

Diluted net income per share $ 0.85 $ 0.77 $ 0.60

Weighted average shares outstanding used in computing net income per share

The accompanying notes are an integral part of these consolidated financial statements.

CORCEPT THERAPEUTICS INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended December 31,

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operations:

Amortization (accretion) of interest income 1,303 (1,738) (1,721)

Depreciation and amortization of property and equipment 525 703 236

Non-cash amortization of right-of-use asset 1,712 1,468 —

Changes in operating assets and liabilities:

Other receivable — — 12,896

Prepaid expenses and other current assets (653) 1,696 (5,071)

Long-term accrued income taxes 12 147 239

Operating lease liability (1,685) (1,452) —

Cash flows from investing activities:

Purchases of property and equipment (1,238) (1,088) (298)

Cash flows from financing activities:

Net cash provided by (used in) financing activities 12,214 (28,645) (14,335)

Supplemental disclosure:

Recognition of right-of-use asset and lease liability $ 775 $ 4,913 $ —

The accompanying notes are an integral part of these consolidated financial statements

CORCEPT THERAPEUTICS INCORPORATED

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

Shares Amount

Issuance of common stock upon exercise of options 2,121 2 9,320 — — — 9,322

Other comprehensive loss, net of tax — — — — 5 — 5

Issuance of common stock upon exercise of options 2,929 3 10,399 — — — 10,402

Stock-based compensation related to non-employee options — — 232 — — — 232

Other comprehensive income, net of tax — — — — 331 — 331

Issuance of common stock upon exercise of options 2,819 2 25,303 — — — 25,305

Other comprehensive income, net of tax — — — — 154 — 154

Purchases of treasury stock (479) — — (9,945) — — (9,945)

The accompanying notes are an integral part of these consolidated financial statements

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation and Summary of Significant Accounting Policies

Description of Business and Basis of Presentation

Corcept Therapeutics Incorporated is a commercial-stage pharmaceutical company engaged in the discovery and development of medications that treat severe metabolic, oncologic and psychiatric disorders by modulating the effect of the hormone cortisol. In 2012, the U.S. Food and Drug Administration (“FDA”) approved Korlym(“mifepristone”) 300 mg tablets, as a once-daily oral medication for the treatment of hyperglycemia secondary to hypercortisolism in adult patients with endogenous Cushing’s syndrome who have type 2 diabetes mellitus or glucose intolerance and have failed surgery or are not candidates for surgery. We have discovered and patented four structurally distinct series of selective cortisol modulators, consisting of more than 1,000 compounds. We are developing compounds from these series as potential treatments for a broad range of serious disorders.

We were incorporated in the State of Delaware in May 1998. Our headquarters are located in Menlo Park, California.

Basis of Presentation

The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

Principles of Consolidation

Our consolidated financial statements include the financial position and results of operations of Corcept Therapeutics UK Limited, our wholly owned subsidiary, which we incorporated in the United Kingdom in March 2017.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

We reevaluate our estimates and assumptions each quarter, including those related to revenue recognition, recognition and measurement of income tax assets and liabilities, inventory, allowances for doubtful accounts and other accrued liabilities, including our bonus accrual, clinical trial accruals and stock-based compensation.

Fair Value Measurements

We value financial instruments using assumptions we believe third-party market participants would use. When choosing which assumptions to make when determining the value of a financial instrument, we look first for quoted prices in active markets for identical instruments (“Level 1 inputs”). If no Level 1 inputs are available, we consider (i) quoted prices in non-active markets for identical instruments; (ii) active markets for similar instruments; (iii) inputs other than quoted prices for the instrument; and (iv) inputs that are not directly observable, but that can be corroborated by observable data (“Level 2 inputs”). In the absence of Level 2 inputs, we rely on unobservable inputs, such as our estimates of the assumptions market participants would use in pricing the instrument (“Level 3 inputs”).

Cash and Cash Equivalents and Marketable Securities

We consider highly liquid investments that will mature in three months or less from the time we purchase them to be cash equivalents. Cash equivalents are valued using Level 1 inputs, which approximate our cost.

We invest the majority of our funds in marketable securities, primarily corporate notes, U.S. Treasury securities, asset-backed securities, commercial paper and repurchase agreements. We classify our marketable securities as available-for-sale securities and report them at fair value as “cash equivalents” or “marketable securities” on our consolidated balance sheet, with related unrealized gains and losses included in stockholders' equity. Realized gains and losses and permanent declines in value are included in “interest and other income (expense)” on our consolidated statement of comprehensive income.

Credit and Concentration Risks

Our cash, cash equivalents and marketable securities are held in one financial institution. We are subject to credit risk from our cash equivalents and marketable securities. We limit our investments to U.S. Treasury obligations and high-grade corporate debt, asset-backed securities and repurchase agreements with less than a 36-month maturity at the time of purchase.

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

These investments are diversified and do not expose us to concentrations of credit risk. We have never experienced a loss in, or lack of access to, our operating or investment accounts.

We have a single-source manufacturer of mifepristone, the active pharmaceutical ingredient (API), in Korlym - Produits Chimiques Auxiliaires et de Synthèse SA (PCAS). If PCAS is unable or unwilling to manufacture API in the amounts and time frames required, we may not be able to manufacture Korlym in a timely manner. In order to mitigate this risk, we have purchased and hold in inventory a reserve quantity of mifepristone API.

We have a concentration of risk in regard to the distribution of our product. A single specialty pharmacy, Optime Care, Inc. (“Optime”), dispenses Korlym to patients for us. Optime is an independent third party. Its unwillingness or inability to dispense Korlym to patients in a timely manner would harm our business.

We sell the Korlym that Optime dispenses directly to patients, with title to the medicine passing directly from us to the patient upon the patient’s receipt of the drug. Our receivables risk is spread among various third-party payers - pharmacy benefit managers, insurance companies, government programs and private charities. We extend credit to third-party payers based on their creditworthiness. We monitor our exposure and record an allowance against uncollectible trade receivables as necessary. To date, we have not incurred any credit losses.

Inventory and Cost of Sales

Regulatory approval of product candidates is uncertain. Because product manufactured prior to regulatory approval may not be sold unless regulatory approval is obtained, we record the cost of manufacturing our product candidates as research and development expenses at the time such costs are incurred. We capitalize to inventory manufacturing costs related to Korlym.

Cost of sales also includes the cost of manufacturing Korlym, including materials, third-party manufacturing costs and indirect personnel and other overhead costs, based on the number of Korlym tablets for which we recognize revenue, as well as costs of stability testing, logistics and distribution.

We classify inventory we do not expect to sell or use in clinical studies within 12 months of the balance sheet date as strategic inventory, a non-current asset.

Net Product Revenue

We sell Korlym directly to patients through a single specialty pharmacy. We also sell Korlym to a specialty distributor (“SD”), for which we recognize revenue at the time the SD receives Korlym. SD sales were less than one percent of our net revenue in the years ended December 31, 2020, 2019 and 2018.

To determine our revenue from the sale of Korlym, we (i) identify our contract with each customer; (ii) identify the obligations of Corcept and the customer under the contract; (iii) determine the contracted transaction price; (iv) allocate the transaction price to the contract’s performance obligations, which in our case consists of delivering Korlym to the customer; and (v) recognize revenue once Korlym has been delivered, provided we deem it probable that we will collect the payment due to us.

Confirmation of coverage by private or government insurance or by a third-party charity is a prerequisite for selling Korlym to a patient.

To determine net product revenue, we deduct from sales the cost of our patient co-pay assistance program and our estimates of (a) government chargebacks and rebates, (b) discounts provided to our SD for prompt payment and (c) reserves for expected Korlym returns. We record these estimates at the time we recognize revenue and update them as new information becomes available. Our estimates take into account our understanding of the range of possible outcomes. If results differ from our estimates, we adjust our estimates, causing a change to our net product revenue and earnings. We report any changes in the period they become known, even if they concern transactions occurring in prior periods.

Government Rebates: Korlym is eligible for purchase by, or qualifies for reimbursement from, Medicaid and other government programs that are eligible for rebates on the price they pay for Korlym. To determine the appropriate amount to

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

reserve against these rebates, we identify Korlym sold to patients covered by government-funded programs, apply the applicable government discount to these sales, then estimate the portion of total rebates we expect will be claimed.

Chargebacks. Although we sell Korlym to the SD at full price, some of the government entities to which the SD sells receive a discount. As it makes such sales, SD recovers the full amount of any related discounts by reducing its payment to us (this reduction is called a “chargeback”). Chargebacks sometimes relate to Korlym purchased by the SD in prior periods. We deduct from our revenue in each period chargebacks claimed by the SD for Korlym it purchased in that period. We also create each period a reserve for chargebacks we estimate the SD will claim in future periods against Korlym it has not yet resold. We determine the amount of this reserve based on our experience with SD chargebacks and our understanding of the SD’s customer base and business practices. We then deduct this reserve from revenue and include in accrued expenses on our consolidated balance sheet a current liability of equal amount.

Patient Assistance Program and Charitable Support: It is our policy that no patient be denied Korlym due to inability to pay. We provide financial assistance to eligible patients whose insurance policies have high deductibles or co-payments and deduct the amount of such assistance from gross revenue. We determine the assistance we provide each patient by applying our program guidelines to that patient’s financial position and their insurance policy’s co-payment and deductible requirements for the purchase of Korlym. We donate cash to charities that help patients with financial need pay for the treatment of Cushing’s syndrome. We do not include payments from these charities in revenue, but as a deduction to selling, general and administrative expenses. We provide Korlym at no cost to uninsured patients who do not qualify for charitable support.

Sales Returns: Federal law prohibits the return of Korlym sold to patients. Sales to our SD are subject to return. We deduct the amount of Korlym we estimate the SD will return from each period’s gross revenue. We base our estimates on quantitative and qualitative information including, but not limited to, historical return rates, the amount of Korlym held by the SD and projected demand. If we cannot reasonably estimate returns with respect to a particular sale, we defer recognition of revenue until we can make a reasonable estimate. To date, returns have not been significant.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the year ended December 31, 2020:

Chargebacks Government Rebates Total

(in thousands)

Provision related to prior period sales — 532 532

Provision related to prior period sales — (95) (95)

Provision related to prior period sales (3) (631) (634)

Leases

We determine whether an arrangement contains a lease at inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To determine whether a contract is or contains a lease, we consider all relevant facts and circumstances to assess whether the customer has the right to both (i) obtain substantially all of the economic benefits from use of the identified asset and (ii) direct the use of the identified asset.

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

We recognize right-of-use assets and lease liabilities at lease commencement. We measure lease liabilities based on the present value of lease payments over the lease term discounted using the rate equal to the rate we would pay on a loan with monthly payments and a term equal to the monthly payments and remaining term of our lease. We estimate our incremental borrowing rate based on non-tender bank quotes and an analysis of public companies with debt and credit carrying terms similar to our lease term. We do not include in the lease term options to extend or terminate the lease unless it is reasonably certain at commencement that we will exercise any such options. We account for the lease components separately from non-lease components for our operating leases.

We measure right-of-use assets based on the corresponding lease liabilities adjusted for (i) prepayments made to the lessor at or before the commencement date, (ii) initial direct costs we incur, and (iii) tenant incentives under the lease. We evaluate the recoverability of our right-of-use assets for possible impairment in accordance with our long-lived assets policy. We do not recognize right-of-use assets or lease liabilities for leases with a term of twelve months or less; rather, we recognize the associated lease payments in the consolidated statements of comprehensive income on a straight-line basis over the lease term.

Operating leases are reflected on our consolidated balance sheets as operating lease right-of-use assets, short-term operating lease liabilities and long-term operating lease liabilities.

We begin recognizing operating lease expense when the lessor makes the underlying asset available to us. We recognize operating lease expense under our operating leases on a straight-line basis. Variable lease payments are expensed as incurred.

The Company did not have any finance leases at either December 31, 2020 or 2019.

Research and Development

Research and development expenses include the direct cost of discovering and screening new compounds, pre-clinical studies, clinical trials, manufacturing development, submissions to regulatory agencies and related overhead costs. We expense nonrefundable payments and the cost of technologies and materials used in research and development as we incur them.

Segment Reporting

We determine our operating segments based on the way we organize our business, make decisions and assess performance. We have only one operating segment, which is the discovery, development and commercialization of pharmaceutical products.

Stock-Based Compensation

Income Taxes

We account for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), which requires recognition of deferred tax assets and liabilities for the expected tax consequences of our future financial and operating activities. Under ASC 740, we determine deferred tax assets and liabilities based on the temporary difference between the financial statement and tax bases of assets and liabilities using the tax rates in effect for the year in which we expect such differences to reverse. If we determine that it is more likely than not that we will not generate sufficient taxable income to realize the value of some or all of our deferred tax assets (net of our deferred tax liabilities), we establish a valuation allowance offsetting the amount we do not expect to realize. We perform this analysis each reporting period and reduce our measurement of deferred taxes, if the likelihood we will realize them becomes uncertain.

The deferred tax assets we record each period depend primarily on our ability to generate future taxable income in the United States. Each period, we evaluate the need for a valuation allowance against our deferred tax assets and, if necessary, adjust the valuation allowance so that net deferred tax assets are recorded only to the extent we conclude it is more likely than

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

not that these deferred tax assets will be realized. If our outlook for future taxable income changes significantly, our assessment of the need for, and the amount of, a valuation allowance may also change.

We are also required to evaluate and quantify other sources of taxable income, such as the possible reversal of future deferred tax liabilities, should any arise, and the implementation of tax planning strategies. Evaluating and quantifying these amounts is difficult and involves significant judgment, based on all of the available evidence and assumptions about our future activities.

We account for uncertain tax positions in accordance with ASC 740, which requires us to adjust our consolidated financial statements to reflect only those tax positions that are more-likely-than-not to be sustained upon review by federal or state examiners. We recognize in the consolidated financial statements the largest expected tax benefit that has a greater than 50 percent likelihood of being sustained on examination by the taxing authorities. We report interest and penalties related to unrecognized tax benefits as income tax expenses.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which changes the methodology for measuring credit losses on financial instruments and when such losses are recorded. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. We adopted this standard on January 1, 2020 using the modified retrospective approach with the cumulative effect of the adoption recorded as an adjustment to retained earnings. It had no impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU No. 2019-12 (ASC Topic 740), “Simplifying the Accounting for Income Taxes.” This standard simplifies accounting for income taxes by removing certain exceptions to the general principles and clarifying existing guidance. This standard will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. We will adopt the new standard in the first quarter of 2021. The adoption of this standard is not expected to have a significant impact on our consolidated financial statements.

2. Significant Agreements

Commercial Agreements

In August 2017, we entered into a distribution services agreement with an independent third party, Optime, to provide exclusive specialty pharmacy and patient services programs for Korlym beginning August 10, 2017. Under the terms of this agreement, Optime acts as the exclusive specialty pharmacy distributor of Korlym in the United States, subject to certain exceptions. Optime provides services related to pharmacy operations; patient intake, access and reimbursement; patient support; claims management and accounts receivable; and data and reporting. We provide Korlym to Optime, which it dispenses to patients. Optime does not purchase Korlym from us and it does not take title to the product. Title passes directly from us to the patient at the time the patient receives the medicine.

The initial term of our agreement with Optime is five years, unless terminated earlier by us upon 90 days’ notice. The agreement contains additional customary termination provisions, representations, warranties and covenants. Subject to certain limitations, we have agreed to indemnify Optime for certain third-party claims related to the product, and we have each agreed to indemnify the other for certain breaches of representations, warranties, covenants and other specified matters.

Manufacturing Agreements Related to Korlym

We purchase all of our API for Korlym from PCAS. On July 25, 2018, we amended our agreement with PCAS to add a second manufacturing site and extend its term to December 31, 2021, with twoone-year automatic renewals, unless either party provides 12 months advance written notice of its intent not to renew. The amendment provides exclusivity between PCAS and Corcept. In the event PCAS cannot meet our requirements, we may purchase API from another supplier. As of December 31, 2020, there were no minimum future purchase obligations under this agreement.

We have agreements with two third-party manufacturers to produce and bottle Korlym tablets.

Lease Agreement

See discussion below in Note 5, Leases, regarding our office lease.

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

3. Available for Sale Securities and Fair Value Measurements

The available-for-sale securities in our Consolidated Balance Sheets are as follows:

Year Ended December 31,

(in thousands)

The following table presents our available-for-sale securities grouped by asset type:

(in thousands)

We estimate the fair value of marketable securities classified as Level 1 using quoted market prices for these or similar investments obtained from a commercial pricing service. We estimate the fair value of marketable securities classified as Level 2 using inputs that may include benchmark yields, reported trades, broker/dealer quotes and issuer spreads.

We periodically review our debt securities to determine if any of our investments is impaired due to credit-related or other issues. If the fair value of our investment in any debt security is less than our amortized cost basis, we determine whether an allowance for credit losses is appropriate by assessing quantitative and subjective factors including, but not limited to, the nature of security, changes in credit ratings, analyst reports concerning the security’s issuer and industry, interest rate fluctuations and general market conditions.

Unrealized losses on our available-for-sale debt securities as of December 31, 2020 were not significant and were primarily due to changes in interest rates, and not increased credit risk. Accordingly, we have not recorded an allowance for credit losses associated with these investments.

We do not intend to sell the investments that are currently in an unrealized loss position, and it is highly unlikely that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.

We classified accrued interest on our marketable securities of $1.3 million and $1.0 million as of December 31, 2020 and 2019, respectively, as prepaid and other current assets on our consolidated balance sheet.

As of December 31, 2020, all our marketable securities had original maturities of less than two years. The weighted-average maturity of our holdings was five months. As of December 31, 2020, our long-term marketable securities had remaining maturities ranging from 13 to 17 months. None of our marketable securities changed from one fair value hierarchy to another during the year ended December 31, 2020.

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

4. Composition of Certain Balance Sheet Items

Inventory

Year Ended December 31,

(in thousands)

Less strategic inventory classified as non-current (16,247) (11,981)

Total inventory classified as current $ 4,910 $ 5,424

Because we rely on a single manufacturer for the API for Korlym, we have purchased and hold significant quantities of API. We classify inventory we do not expect to sell within 12 months of the balance sheet date as “Strategic Inventory,” a long-term asset.

Property and Equipment

Year Ended December 31,

(in thousands)

Furniture and equipment $ 810 $ 304

Less accumulated depreciation (1,853) (1,328)

Property and equipment, net of accumulated depreciation $ 1,675 $ 1,050

Accrued and other liabilities

Year Ended December 31,

(in thousands)

Accrued selling and marketing costs 665 491

Total accrued and other liabilities $ 21,186 $ 23,269

Other assets

As of December 31, 2020 and 2019, other assets includes $4.8 million and $3.3 million of deposits for clinical trials, respectively.

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

5. Leases

We lease our office facilities in Menlo Park, California. In January 2019, we recognized a right-of-use asset and a corresponding lease liability of $1.9 million. In October 2019, we amended the lease to extend its term from March 31, 2020 to March 31, 2022 and to add more space beginning April 1, 2020. In June 2020, we amended our lease commencement date for additional space to June 15, 2020. As a result of this amendment, we recognized an additional right-of-use asset and corresponding lease liability of $0.8 million. The right-of-use asset and lease liability recognized equals the present value of the remaining payments due under our amended lease.

As the operating lease for our facilities does not include an expressly stated interest rate, we calculated the present value of remaining lease payments using a discount rate equal to the interest rate we would pay on a loan with monthly payments and a term equal to the monthly payments and remaining term of our lease. We recognize operating lease payments as expenses using the straight-line method over the term of the lease.

Operating lease expense for the years ended December 31, 2020 and 2019 was approximately $1.9 million and $1.5 million, respectively. Rent expense for the year ended December 31, 2018 was $1.3 million.

Our right-of-use assets and related lease liabilities were as follows:

Year Ended December 31,

(in thousands)

Cash paid for operating lease liabilities $ 1,840 $ 1,551

Weighted-average remaining lease term (years) 15 months 27 months

Weighted-average discount rate 4.8 % 5.0 %

As of December 31, 2020, future minimum lease payments under non-cancelable operating leases were as follows (in thousands):

Less imputed interest (88)

Total operating lease liabilities $ 2,551

6. Related Party Transactions

In February 2020, we purchased from our Chief Executive Officer $0.3 million of our common stock at a price of $13.54 per share, which was the last quoted price per share on the Nasdaq Capital Market on the date of purchase. We purchased the shares in order to provide him with liquidity to satisfy the tax liability arising from his net (cashless) exercise in 2019 of stock options that were about to expire.

There were no other related party transactions during the years ended December 31, 2020, 2019, and 2018.

7. Preferred Stock and Stockholders’ Equity

Preferred Stock

Our Board of Directors is authorized, subject to any limitations prescribed by law, without stockholder approval, to issue up to an aggregate of 10,000,000 shares of preferred stock at $0.001 par value in one or more series and to fix the rights, preferences, privileges and restrictions granted to or imposed upon the preferred stock, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences. The rights of the holders of common stock will be subject to the rights of holders of any preferred stock that may be issued in the future. As of December 31, 2020 and 2019, we had no outstanding shares of preferred stock.

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

Common Stock

Significant stock transactions

On November 3, 2020, we announced that our Board of Directors approved a program to repurchase up to $200 million of our common stock (the “Stock Repurchase Program”). Unless it is terminated or suspended prior to its expiration, the Stock Repurchase Program will remain in effect until September 30, 2021. The timing and amount of any repurchases pursuant to it will be determined based on market conditions, stock price and other factors. The Stock Repurchase Program does not require us to acquire any specific number of shares and it may be modified, suspended or discontinued at any time without notice. Repurchases pursuant to the Stock Repurchase Program may be made through a variety of methods, including open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions or any combination of such methods.

During the year ended December 31, 2020, we repurchased 0.5 million shares of common stock under the Stock Repurchase Program in open market transactions at a cost of $9.7 million (average price of $21.08 per share). During the years ended December 31, 2019 and 2018, we repurchased 2.8 million and 1.8 million shares of common stock at a cost of $31.0 million and $23.7 million, respectively, under a Stock Repurchase Program that expired on June 30, 2019. We recorded repurchased shares as treasury stock on our consolidated balance sheet, at cost. We have not decided whether repurchased shares will be retired or sold.

During the years ended December 31, 2020, 2019 and 2018, we issued 2.8 million, 2.9 million and 2.1 million shares, respectively, of our common stock upon the exercise of stock options.

We have never declared or paid any dividends.

Shares of common stock reserved for future issuance as of December 31, 2020 are as follows:

Common stock: (in thousands)

Exercise of outstanding options 24,946

Shares available for grant under stock option plans 9,041

On February 4, 2021, our Board of Directors authorized an additional increase of 4.7 million shares in the number of shares available under the 2012 Equity Incentive Plan (the “2012 Plan”), which was equivalent to 4% of the shares of our common stock outstanding at December 31, 2020.

Stock Option Plans

We have two stock option plans – the 2004 Equity Incentive Plan (the “2004 Plan”) and the 2012 Incentive Award Plan (the “2012 Plan”).

In 2004, our Board of Directors and stockholders approved the 2004 Plan, which became effective upon the completion of our initial public offering (IPO). Under the 2004 Plan, options, stock purchase and stock appreciation rights and restricted stock awards can be issued to our employees, officers, directors and consultants. The 2004 Plan provided that the exercise price for incentive stock options will be no less than 100% of the fair value of the Company’s common stock, as of the date of grant. Options granted under the 2004 Plan vest over periods ranging from one year to five years. The vesting period of the options is generally equivalent to the requisite service period.

In 2012, our Board of Directors and stockholders approved the 2012 Plan. As of the effective date of the 2012 Plan, 5.3 million shares that remained available for issuance of new grants under the 2004 Plan were transferred to the 2012 Plan. After that date, no additional options were or will be issued under the 2004 Plan. Vested options under the 2004 Plan that are not exercised within the remaining contractual life and any options under the 2004 Plan that do not vest because of terminations after the effective date of the 2012 Plan will be added to the pool of shares available for future grants under the 2012 Plan.

Under the 2012 Plan, we can issue options, stock purchase and stock appreciation rights and restricted stock awards to our employees, officers, directors and consultants. The 2012 Plan provides that the exercise price for incentive stock options will be no less than 100 percent of the fair value of our common stock as of the date of grant. Options granted under the 2012 Plan carry a contractual term of ten years and are expected to vest over periods ranging from one year to four years. We assume the vesting period of the options that we grant under the 2012 Plan to be equal to the option grantee’s period of service.

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

Upon exercise of options, new shares are issued.

Option activity during 2018, 2019 and 2020

The following table summarizes all activity under the 2004 Plan and the 2012 Plan:

Outstanding Options

(in thousands) (in thousands) (in years) (in thousands)

Increase in shares authorized for grant 4,582 —

The total intrinsic value of options exercised during the years ended December 31, 2020, 2019 and 2018 was $28.8 million, $26.6 million and $26.6 million, respectively, based on the difference between the closing price of our common stock on the date of exercise of the options and the exercise price.

The total fair value of options that vested during the years ended December 31, 2020, 2019 and 2018 was $34.0 million, $30.2 million and $22.6 million, respectively.

Stock-Based Compensation related to Employee and Director Options

The following table summarizes the weighted-average assumptions and resultant fair value-based measurements for options granted to employees and directors.

Year Ended December 31,

Weighted-average assumptions for stock options granted:

Expected term 6.0 years 6.0 years 5.9 years

Expected volatility of stock price 59.1% 67.4% 67.9%

Dividend rate 0% 0% 0%

Weighted-average grant date fair value-based measurement $7.55 $7.09 $10.11

The expected term of options reflected in the table above has been based on a formula that considers the expected service period and expected post-vesting termination behavior depending on whether the option holder is an employee, officer or director.

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

The expected volatility of our stock used in determining the fair value-based measurement of option grants to employees, officers and directors is based on the volatility of our stock price. The volatility is based on historical data of the price for our common stock for periods of time equal to the expected term of these grants.

We calculate employee stock-based compensation expense using the number of options we expect to vest, based on our estimate of the option grantees’ average length of employment, and reduced by our estimate of option forfeitures. We estimate forfeitures at the time of option grant and revise this estimate in subsequent periods if actual forfeitures differ from our estimates.

As of December 31, 2020, we had $54.8 million of unrecognized compensation expense for employee and director options outstanding as of that date, which had a weighted-average remaining vesting period of 2.39 years.

Summary of Stock-based Compensation

The following table presents a summary of stock-based compensation by financial statement classification.

Year Ended December 31,

(in thousands)

Stock-based compensation capitalized in inventory $ 238 $ 120 $ 87

8. Net Income Per Share

We compute basic and diluted net income per share by dividing our net income by the weighted-average number of common shares outstanding during the period. We used the treasury stock method to determine the number of dilutive shares of common stock resulting from the potential exercise of stock options. The statements of consolidated comprehensive income show the computation of net income per share for each period, including the number of weighted-average shares outstanding.

The following table shows the computation of net income per share for each period:

Year Ended December 31,

(in thousands, except per share data)

Numerator:

Denominator:

Net income per share

As of December 31, 2020, 2019, and 2018 we had 24.9 million, 23.6 million, and 22.8 million stock options outstanding, respectively.

Because including them would have reduced dilution, we excluded from the computation of diluted net income per share, on a weighted-average basis 11.2 million, 9.9 million and 5.0 million stock options outstanding during the years ended December 31, 2020, 2019, and 2018, respectively,

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

9. Income Taxes

The domestic and foreign components of income before income taxes were as follows:

Year Ended December 31,

(in thousands)

Foreign (32) — —

The income tax expense for the year ended December 31, 2020, 2019, and 2018 consisted of the following:

Year Ended December 31,

(in thousands)

U.S. federal taxes:

State taxes:

Foreign taxes:

Current $ 41 $ — $ —

Deferred $ (850) $ — $ —

Total foreign taxes (809) — —

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets are as follows:

Year Ended December 31,

Deferred tax assets: (in thousands)

Federal and state net operating losses $ 5,412 $ 7,391

Capitalized research and patent costs 5,139 7,317

Operating lease liability 630 857

Deferred tax liabilities

Operating lease right-of-use asset (620) (854)

Total deferred tax liabilities (620) (854)

Each quarter, we assess the likelihood that we will generate sufficient taxable income to use our federal and state deferred tax assets. If we believe that recovery of these deferred tax assets is not more likely than not, we will establish a valuation allowance. Significant judgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, we consider all available evidence, including recent operating results, projections of future taxable income, our ability to utilize net operating losses and tax credit carryforwards, and the feasibility of tax planning strategies. Other than valuation allowances against our California net deferred tax assets, we have determined that it is more likely than not we will realize the benefit related to all other deferred tax assets. If we increase a valuation allowance, we will include an expense of equal amount in the Condensed Consolidated Statement of Comprehensive Income in the period in which such determination is made.

The valuation allowance increased by $0.2 million and $0.2 million for the years ended December 31, 2020 and 2019, respectively, and decreased by $1.3 million for the year ended December 31, 2018.

At December 31, 2020, we had California net operating loss carryforwards of $75.2 million, which will begin to expire in the year 2032, and net operating loss carryforwards from other states of $2.9 million, which will begin to expire in the year 2024 if not utilized. On June 29, 2020, the California governor signed Assembly Bill 85 (“AB 85”) into law. AB 85 limits the use of business incentive tax credits and suspends the use of California net operating losses for 2020, 2021 and 2022 for companies with taxable income of $1 million or more. AB 85 will not have a material impact on our condensed consolidated financial statements.

At December 31, 2020, we also had federal research and development tax credits of $6.8 million and orphan drug tax credits of $7.8 million, respectively, and California research and development credits of $8.5 million. The federal research credits will expire in the years 2039 through 2040 and the California research credits have no expiration date.

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

The following table presents a reconciliation from the statutory federal income tax rate to the effective rate.

Year Ended December 31,

(in thousands)

We maintain liabilities for uncertain tax positions. The measurement of these liabilities involves considerable judgment and estimation and are continuously monitored by management based on the best information available, including changes in tax regulations, the outcome of relevant court cases, and other pertinent information.

The aggregate annual changes in the balance of gross unrecognized tax benefits are as follows (in thousands):

Year Ended December 31,

Increase in tax positions for prior years 158 261 —

Decrease in tax positions for prior years — — (135)

Increase in tax positions for current year 1,284 1,012 752

Decrease in tax positions for current year — — —

As of December 31, 2020, the amount of unrecognized tax benefits that would favorably impact the effective tax rate were approximately $6.1 million, and approximately $1.4 million of unrecognized tax benefits would be offset by a change in valuation allowance. A valuation allowance is maintained on the remaining tax benefits related to California deferred tax assets and would not impact the effective tax rate. We had no or immaterial amounts of accrued interest and no accrued penalties related to unrecognized tax benefits as of December 31, 2020, 2019 and 2018. We do not expect our unrecognized tax benefits to change materially over the next 12 months.

While we believe we have adequately provided for all tax positions, amounts asserted by tax authorities could be greater or less than the recorded position. Accordingly, our provisions on federal and state tax-related matters to be recorded in the future may change as revised estimates are made or the underlying matters are settled or otherwise resolved.

The Company’s primary tax jurisdiction is the United States. For federal and state tax purposes, the years 1999 through 2020 remain open and subject to tax examination by the appropriate federal or state taxing authorities.

10. Commitments and contingencies

We have entered into a number of agreements to purchase API for the manufacturing of relacorilant, miricorilant and exicorilant. We have also entered into a number of agreements to perform clinical studies on miricorilant and CORT113176. See the discussion in Note 2, Significant Agreements, for further discussion regarding the commitments under these agreements.

In March 2020, to ensure we have sufficient API to meet future demand for Korlym tablets, we committed to purchase an additional 400 kilograms of API from Produits Chimiques Auxiliaires et de Synthese SA (“PCAS,” a member of the Seqens Group) for a total price of $5.9 million. As of December 31, 2020, there remained no obligation in connection with this purchase commitment.

CORCEPT THERAPEUTICS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued

In the ordinary course of business, we may be subject to legal claims and regulatory actions that could have a material adverse effect on our business or financial position. We assess our potential liability in such situations by analyzing the possible outcomes of various litigation, regulatory and settlement strategies. If we determine a loss is probable and its amount can be reasonably estimated, we accrue an amount equal to the estimated loss.

No losses and no provision for a loss contingency have been recorded to date.

11. Quarterly Financial Data (Unaudited)

The following table is in thousands, except per share amounts:

Quarter Ended March 31 June 30 September 30 December 31

CORT US Equity

CORT · 10-K · period ended 2020-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A. CONTROLS AND PROCEDURES

ITEM 9B. OTHER INFORMATION

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

ITEM 16. FORM 10-K SUMMARY

CORT US Equity☆

CORT · 10-K · period ended 2020-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A. CONTROLS AND PROCEDURES

ITEM 9B. OTHER INFORMATION

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

ITEM 16. FORM 10-K SUMMARY

CORT US Equity