Xeris Biopharma's 7% Surge: A Rival's FDA Setback Creates a Clearer Path

The immediate driver behind Xeris Biopharma's 7%+ stock surge was a direct, near-term positive catalyst: a rival's regulatory defeat. On Wednesday, Corcept Therapeutics announced that the U.S. Food and Drug Administration had issued a Complete Response Letter (CRL) rejecting its drug, relacorilant, for the treatment of Cushing's syndrome. The FDA's decision was based on a lack of sufficient evidence of effectiveness, a clear and specific hurdle that removes a potential commercial threat to Xeris's own product.

This is a classic case of competitive risk elimination. Xeris's Recorlev, which was approved for Cushing's syndrome in late 2021, now faces less competition in the U.S. market. The FDA's rejection means Corcept will likely need to conduct more clinical trials to address the agency's concerns, a process that is both lengthy and expensive. For Xeris investors, this translates to a clear, immediate reduction in competitive pressure and a more favorable outlook for Recorlev's market share.

The stock's strong reaction reflects pure investor relief. As one analysis noted, the rally was driven by a sense of relief that a would-be rival had been neutralized. With Corcept's path forward now uncertain and requiring additional data, Xeris's established drug gains a clearer runway. This is a tactical win, removing a cloud over its core commercial asset.

Xeris's Current Position: Strong Growth, But High Expectations

The rally in Xeris Biopharma is built on undeniable momentum. The company delivered a record-breaking quarter, with total product revenue surging 40% year-over-year to $74 million. The standout performer was Recorlev, whose revenue grew 109% to $37 million in the third quarter. This explosive growth, driven by a 108% increase in the average number of patients on therapy, is the core engine powering the stock. Management's confidence in this trajectory is clear, as they raised full-year 2025 total revenue guidance to $285-$290 million, implying 42% growth at the midpoint over 2024.

The financial health of the business is also improving. For the first time in its history, Xeris achieved a quarterly net income in Q3 2025. This milestone, confirmed by the CFO, signals growing commercial strength and operational discipline. The company is also generating strong cash flow, with adjusted EBITDA of $17.4 million for the quarter, a dramatic improvement from the prior year. This operational leverage, combined with a high gross margin of 85%, shows the business is maturing beyond pure growth.

Yet the rally's justification hinges on whether this underlying strength can justify the current valuation. The company is now investing heavily to sustain this growth, planning to nearly double its sales and patient support teams in the coming quarters. This expansion, along with continued R&D spending, will pressure near-term earnings. The market is clearly pricing in a multi-year run for Recorlev toward "billion-dollar product" status. The risk is that any stumble in patient growth or increased competition from new entrants could quickly disappoint these high expectations. For now, the fundamentals are strong, but the stock's path depends on execution at scale.

Valuation and Forward Scenarios: The Path to $1 Billion

The recent rally in Xeris Biopharma is a classic case of a rival's misstep creating a clear, near-term opportunity. When the FDA denied approval for Corcept Therapeutics' relacorilant last week, it removed a potential commercial threat to Xeris's flagship drug, Recorlev. The market's reaction was swift, with shares gaining over 7%. This isn't a fundamental re-rating based on new data from Xeris, but a tactical shift in the competitive landscape that directly benefits the company's growth trajectory.

The bullish case is built on a long-term, multi-decade vision. At its June 2025 Analyst Day, Xeris laid out a clear path to value creation, guiding to approximately $1 billion in Recorlev net revenue by 2035. This target implies a significant acceleration from current levels, positioning the drug as a cornerstone of the company's future. The Jefferies analyst note that reinforced the recent move underscores this potential, with analyst Glen Santangelo reiterating a Buy rating. He noted that the addressable market for Cushing's disease could triple to around $3 billion by 2030 if awareness increases, a scenario that would disproportionately benefit Xeris as the established player.

Yet the path to that billion-dollar target is not without a lingering risk. Corcept has vowed to continue pursuing approval, but the FDA's complete response letter cited a lack of additional evidence of effectiveness. This means any future approval for Corcept would likely require more clinical trials, a longer and more expensive path. For now, this setback is a major win for Xeris, removing a competitive headwind and solidifying its market position. The key risk is that Corcept eventually succeeds, but the new regulatory and financial hurdles make that a longer-term, less immediate threat.

The bottom line is a forward-looking setup defined by a cleared competitive field and ambitious targets. The market is rewarding Xeris for the immediate relief from competition, but the stock's valuation must now be judged against the company's own multi-year plan. The path to $1 billion in Recorlev revenue by 2035 is a long road, but the recent catalyst has removed a significant obstacle from the first leg.

Catalysts and Risks: What to Watch Next

The near-term path for these biotech stocks hinges on specific, executable steps. For Corcept, the immediate catalyst is a planned meeting with the FDA to discuss the best path forward after the Complete Response Letter for relacorilant. This meeting is critical; it will clarify the timeline for any future competition and whether the company can secure approval for its hypertension drug. The stock's move is directly tied to this regulatory clarity.

For Xeris Biopharma, the key execution risk is the planned expansion of its sales force. Management has stated that sales and patient support teams will nearly double in size, with new hires expected in January. This expansion is explicitly tied to accelerating Recorlev's market penetration. The stock's momentum depends on this investment translating into sustained patient growth, not just a one-time bump.

The primary risk for both is that the recent price moves are purely event-driven and may not be sustained if growth metrics fail to meet the raised guidance. Xeris has already increased its full-year revenue outlook to a $285 million–$290 million range. If the company's execution on its sales force expansion and pipeline milestones like the phase 3 trial for XP 8121 does not keep pace, the valuation could quickly contract. The setup is one of high expectations; any stumble in the commercial or clinical pipeline could trigger a sharp re-rating.