Corcept Therapeutics (NASDAQ: CORT) experienced a dramatic decline of 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 its drug candidate, relacorilant, intended for treating Cushing’s syndrome. This setback has raised concerns about the strength of Corcept’s drug pipeline and prompted analysts to reassess their outlook on the company.
The FDA’s request has significantly undermined investor confidence in Corcept’s short-term growth prospects. Relacorilant was projected to be a crucial revenue generator in the Cushing’s syndrome market, where the company currently markets Korlym. With this recent regulatory hurdle, analysts have excluded relacorilant from their financial models for this indication, increasing uncertainty around its future. Adding to the pressure, Korlym is facing competition from generic alternatives, particularly from Teva Pharmaceuticals, which limits Corcept’s potential for growth in its primary therapeutic area.
Market Reaction and Analyst Insights
The market’s response to the FDA’s announcement has sparked discussions about the robustness of Corcept Therapeutics’ clinical data and trial strategy. Following the stock’s plunge, shares of Corcept are down approximately 70% from their year-to-date high in late March.
Despite the steep decline, some analysts suggest that the market reaction may be overly severe. Truist Securities, for instance, has revised its price target for Corcept shares to $50, a significant reduction reflecting the bearish sentiment surrounding the biotech firm. Nonetheless, the firm has retained a “buy” rating, indicating that the stock still holds potential upside of over 40% from its current levels. Analysts at Truist emphasized, “We see value in Korlym in Cushing’s with upside from relacorilant in PROC,” referring to its potential in treating platinum-resistant ovarian cancer.
Currently, Corcept’s stock trades at a price-to-sales (P/S) ratio of about 10, which is relatively low for a fast-growing biotech company. While the FDA news is undeniably negative, the complete removal of relacorilant from valuation models may be premature, especially if management can address the agency’s concerns effectively.
Future Considerations for Investors
With the stock’s recent downturn, potential investors might consider Corcept as a viable option heading into 2026, given that it is not categorized as an unprofitable biotech company. In its latest quarterly report, Corcept reported nearly $20 million in net income and $208 million in revenue, reflecting a year-over-year increase of approximately 14%.
The company maintains a strong balance sheet, and its ongoing research in ovarian cancer could unlock additional revenue streams. Despite the challenges posed by generic competition for Korlym, the drug continues to generate cash flow, while relacorilant’s potential in oncology remains promising.
The recent selloff has reset expectations, but the underlying fundamentals indicate that Corcept is not fundamentally broken. If the company can navigate regulatory challenges and successfully diversify its pipeline, the stock may see a meaningful rebound in the coming months. Overall, while the current sentiment is cautious, the long-term outlook could prove favorable for investors willing to enter at this lower valuation.
