What happened

Shares of Corcept Therapeutics (NASDAQ:CORT), a biopharmaceutical company, plunged today after investors learned the U.S. Patent and Trademark Office (USPTO) will consider arguments from Teva Pharmaceuticals (NYSE:TEVA). Investors worried about the threat this poses to Korlym, Corcept's only revenue stream, hammered the stock 22.1% lower on Wednesday.

So what 

Korlym is a tablet the Food and Drug Administration approved in 2012 for the treatment of hyperglycemia caused by Cushing's syndrome. Previously, the FDA approved Korlym's active ingredient, mifepristone, for the termination of early stage pregnancies in 2000. In other words, Korlym's a lot older than it looks.

Businesspeople looking at a fallen colleague.

Image source: Getty Images.

Seven years of orphan drug exclusivity ended this February, prompting Teva Pharmaceuticals, the world's largest generic drugmaker, to try marketing a generic version of the decades-old drug. Corcept's stock tanked today because the USPTO officially scheduled a post-grant review of patent 214.

Now what

A post-grant review is a path taken to invalidate an existing patent that is similar to an inter partes review with two key differences. A post-grant review petition must be filed within nine months of the patent's birthday, and it allows the plaintiff to challenge the patent's validity with arguments that cover a lot more ground.

Patent challenges fail more often than they succeed, but the situation doesn't look good for Corcept. The 214 patent covers a warning and dose adjustment instructions on Korlym's drug label that physicians would need to follow when prescribing a cheaper generic version.

Korlym is potentially dangerous to some patients because it inhibits CYP3A, an enzyme tasked with clearing a very long list of drugs from the bloodstream, including statins. Since Korlym is one of many drugs with dosages that physicians regularly adjust to address CYP3A-related interactions, there's a better-than-average chance the 214 patent won't survive Teva's challenge.