Corcept Therapeutics, Incorporated
- Company Name
- Corcept Therapeutics, Incorporated
- Stock Symbol
- Class Period
- August 2, 2017 to February 5, 2019
- Motion Deadline
- May 13, 2019
- Northern District of California
The complaint charges Corcept and certain of its officers with violations of the Securities Exchange Act of 1934. Corcept is a pharmaceutical company that develops medications to treat severe metabolic, oncologic and psychiatric disorders by modulating the effect of cortisol. Korlym is the Company’s FDA-approved drug for the treatment of hyperglycemia secondary to hypercortisolism in adults with endogenous Cushing’s syndrome.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, defendants failed to disclose to that: (1) the Company had improperly paid doctors to promote Korlym; (2) the Company aggressively promoted Korlym for off-label uses; (3) the Company’s sole specialty pharmacy was a related party; (4) the Company artificially inflated its revenue and sales using illicit sales practices through a related party; and (5) such practices were reasonably likely to lead to increased regulatory scrutiny. As a result of defendants’ false statements and/or omissions, Corcept securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $25 per share.
On January 25, 2019, Southern Investigative Reporting Foundation (“SIRF”) published a report alleging that Corcept had paid doctors to prescribe its drug Korlym for off-label uses in 2016 and 2017. The report condemned the Company for exploiting regulatory loopholes, charging patients an excessive price for its lone drug product, and touting evidence of the drug’s effectiveness that SIRF alleged does not exist. On this news, the price of Corcept shares fell $1.52 per share, or 11%, to close at $12.29 per share on January 25, 2019.
On January 31, 2019, likely due to increased scrutiny of its illicit sales practices, the Company forecast a sharp slowdown in sales of Korlym, projecting full-year 2019 revenue of $285 to $315 million while investors and analysts had expected approximately $328 million. On this news, the price of Corcept shares fell $1.15 per share, or more than 10%, to close at $10.03 per share on February 1, 2019.
Then on February 5, 2019, Blue Orca Capital published a report alleging that Corcept’s “sole specialty pharmacy and exclusive distributor [wa]s an undisclosed related party” and that the relationship “create[d] a material risk that the Company [wa]s using its captured pharmacy to boost sales, hide losses, or engage in other financial shenanigans.”