FDA Rejects Relacorilant, Corcept's Growth Catalyst Falters

What happened

Corcept Therapeutics has sustained profitability through its drug Korlym, with $559.3 million in nine-month 2025 revenue and $19 million Q3 net income. However, the FDA unexpectedly rejected the New Drug Application for relacorilant, citing insufficient benefit-risk evidence despite positive Phase 3 data. This rejection critically undermines the company's strategy to diversify beyond Korlym and reduce dependence on a single asset. While Korlym's revenues provide a valuation floor, the failure exposes Corcept to heightened risks from generic competition and reimbursement pressures. The setback necessitates a reassessment of growth prospects, as the valuation had embedded significant pipeline success.

Implication

The FDA's decision on relacorilant removes a near-term diversification opportunity, forcing Corcept to rely solely on Korlym amidst increasing competitive threats from generics and other therapies. With the valuation previously embedding high expectations for relacorilant, the stock is likely overvalued, warranting a lower margin of safety assessment. Korlym's revenue stream, though profitable, may face accelerated erosion from authorized generics and payer behavior, limiting upside potential. Management must now pivot to other pipeline candidates or seek regulatory re-submission, but these efforts will require time and resources with uncertain outcomes. Consequently, the investment thesis shifts negatively, recommending a SELL position until clearer signs of pipeline recovery or sustained Korlym resilience emerge.

Thesis delta

The previous thesis held Corcept as a HOLD/NEUTRAL, balancing Korlym's profitability with relacorilant's regulatory potential. The FDA rejection invalidates the positive regulatory assumption, shifting the stance to SELL due to heightened single-asset risk and diminished growth prospects. This reflects the materialization of a key downside risk identified in the watch items.