Why Corcept Therapeutics Plummeted by 50% Today

No biotech wants to exit a year with a regulatory rejection. Unfortunately for Corcept Therapeutics (NASDAQ: CORT) and its shareholders, that's exactly what happened to the California-based company. As a result, the company's share price eroded by just over 50% in Tuesday's trading.

Not the response it wanted

That morning, Corcept announced it had received a complete response letter from the U.S. Food and Drug Administration (FDA) in which the regulator declined to approve its relacorilant. This is a hormone-blocking oral medication targeting hypertension (i.e., high blood pressure) secondary to hypercortisolism.

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This disorder, also known as Cushing's syndrome, is a rare hormonal affliction in which the body suffers prolonged exposure to cortisol, a stress hormone.

Corcept stated that, although the FDA acknowledged the drug met its primary endpoint in a late-stage clinical trial, the regulator "could not arrive at a favorable benefit-risk assessment for relacorilant without Corcept providing additional evidence of effectiveness."

Determined to march on

Corcept is not giving up on its once-promising medication. It pledged to continue trying to find a way to commercialize it, saying that it aims to meet with FDA officials in the near future to discuss potential ways forward for the drug.

However, any chance of success now would likely require additional clinical trials, so even in the best-case scenario, the drug would not have an easy route to approval. The FDA's response, therefore, has to be considered a significant defeat for Corcept.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Corcept Therapeutics. The Motley Fool has a disclosure policy.