Corcept Therapeutics Stock Plummets 50% After FDA Request for More Data

Corcept Therapeutics (NASDAQ: CORT) saw its stock price drop approximately 50% on December 31, 2023, following a request from the U.S. Food and Drug Administration (FDA) for additional data to support the efficacy of relacorilant, its candidate treatment for Cushing’s syndrome. This significant setback has raised concerns regarding the company’s pipeline and led analysts to re-evaluate their forecasts for the firm. As a result of today’s plunge, Corcept’s stock has now decreased by 70% compared to its peak earlier in the year.

The FDA’s demand for further evidence regarding relacorilant’s effectiveness has notably shaken investor confidence in Corcept’s prospects for growth. Initially, the drug was projected to be a major revenue driver in the Cushing’s syndrome market, where Corcept already markets Korlym. With the potential for delays or even rejection now looming over relacorilant, analysts have removed it from their financial models related to this indication. Furthermore, Korlym faces pressure from generic competition, particularly from Teva Pharmaceuticals, limiting Corcept’s upside in this crucial therapeutic area.

Impact of Regulatory Challenges on Corcept’s Future

The regulatory hurdle not only jeopardizes future sales but also raises questions regarding the robustness of Corcept Therapeutics’ clinical data and trial strategy. Despite the severity of the FDA’s request, some analysts believe that the market’s reaction may have been overly severe. For instance, Truist Securities has reduced its price target for Corcept shares to $50, acknowledging the bearish implications of the recent news. Nonetheless, the firm retains a “buy” rating, suggesting potential upside of over 40% from current levels.

The analysts at Truist Securities noted, “We see value in Korlym in Cushing’s with upside from relacorilant in PROC,” referring to platinum-resistant ovarian cancer, which could still offer future opportunities for the company. Following today’s decline, Corcept Therapeutics’ price-to-sales (P/S) ratio stands at approximately 10, a figure that is not particularly high for a biotechnology firm that is experiencing substantial growth.

Long-Term Outlook for Corcept Investors

While the news from the FDA is undeniably negative, the exclusion of relacorilant from valuation models may be premature, especially if management can effectively address the agency’s concerns. Investors considering purchasing Corcept shares may find value as the company heads into 2026, particularly since it is not categorized as an unprofitable biotech firm. In its latest quarter, Corcept reported nearly $20 million in net income and $208 million in revenue, representing a year-over-year increase of approximately 14%.

Moreover, Corcept’s balance sheet remains robust, and ongoing research in ovarian cancer could create new revenue opportunities. Despite the challenges posed by generic competition affecting Korlym, the drug continues to generate cash flow, and the potential for relacorilant in oncology remains intact.

For long-term investors, the current valuation may present an attractive entry point, especially if management successfully navigates regulatory obstacles and diversifies its pipeline. The recent selloff has reset expectations; however, the fundamentals suggest that Corcept is not in a state of disarray. With effective execution and improved clarity, the stock could see a meaningful rebound in the coming months.