Corcept's Relacorilant Faces FDA Rejection with CRL, Jeopardizing Pipeline Diversification

What happened

Corcept Therapeutics received a Complete Response Letter from the FDA for relacorilant's New Drug Application as a treatment for hypercortisolism, marking a regulatory setback. This candidate was central to the company's strategy to diversify beyond its profitable but mature Korlym franchise, which generates significant cash flow but faces generic competition. The master report highlighted relacorilant as a binary regulatory risk, with a CRL likely skewing the investment stance to SELL due to embedded high expectations. Corcept's valuation, with a P/E around 73x, had assumed successful approval, and this delay undermines near-term growth prospects. Consequently, the company's reliance on Korlym intensifies, exposing it to accelerated erosion risks from generic versions and competitive pressures in the Cushing's market.

Implication

Investors must immediately downgrade revenue projections, as relacorilant's approval delay removes a key near-term catalyst, likely pressuring the stock price. Strategically, this hampers Corcept's diversification into new markets, leaving it overly reliant on Korlym, which is vulnerable to generic substitution and payer scrutiny. Valuation multiples, already stretched, will face downward revision as confidence wanes in the pipeline's execution, potentially triggering a sell-off. Pipeline credibility suffers, increasing skepticism around upcoming milestones like the ovarian cancer filing, which now carries higher regulatory risk. This event validates the master report's caution, shifting the investment stance from HOLD/NEUTRAL toward SELL, as downside protection weakens with diminished growth prospects.

Thesis delta

The CRL for relacorilant directly triggers a negative shift in the investment thesis, moving it from neutral to bearish due to the realized regulatory risk. It undermines the company's ability to diversify beyond Korlym, reducing the margin of safety that was already moderate-to-low. This necessitates a reassessment of growth assumptions and increases the likelihood of a stance downgrade to SELL, as per the master report's watch items.