Corcept Therapeutics (NASDAQ:CORT), an endocrine-oriented drugmaker, is having an exceptionally bad day today. The drugmaker's shares are in free fall, thanks to Teva Pharmaceutical Industries' (NYSE:TEVA) decision to file a U.S. marketing application for a generic version of the company's only marketed drug, Korlym, indicated for patients suffering from Cushing syndrome.
In response to this news, Corcept's shares were down by 24.6% on over three times the average daily volume at 2:15 p.m. EST. Teva's shares, on the other hand, are failing to respond to this positive regulatory development. The Israeli generic-drug giant's shares are down by 1.8% at this writing, and are largely sinking in lockstep with the broader markets today.
Teva is arguing that either its generic product won't infringe on Korlym's patents, or the branded drug's key patents are "invalid and/or are unenforceable." Not surprisingly, Corcept's management isn't buying this kitchen-sink argument, with the company set to "vigorously defend" Korlym's intellectual property.
As a patent dispute can take several years to resolve, the market appears to be overreacting to this particular piece of news. In other words, Teva could end up winning this patent dispute, but it won't happen anytime soon.
That being said, Corcept's shares have been trading at a sky-high premium for a while now, so a healthy pullback was likely coming down the pike anyways.
In all, this sizable downturn might actually represent an attractive entry point for risk-tolerant investors. Corcept, after all, should be able to successfully fend off Teva's patent challenge to continue generating industry-leading levels of top-line growth.