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Acorda (ACOR) Investor Urges for Company to Explore Sale

8/7/2017 7:17:09 AM

Acorda Therapeutics Investor Urges for Company to Explore Sale August 7, 2017
By Mark Terry, Breaking News Staff

New York-based hedge fund Scopia Capital Management is urging Ardsley, NY-based Acorda Therapeutics (ACOR) to explore a sale.

In late March, the U.S. District Court for the District of Delaware overturned four of Acorda’s key patents for its lead drug Ampyra for multiple sclerosis (MS). That leaves the company with a single patent coverage for the drug, although it indicates it plans to appeal. The company otherwise will lose exclusivity for the drug after July 2018.

Ten companies filed with the U.S. Food and Drug Administration (FDA) to market generic versions of Ampyra, including Mylan (MYL) and Roxane Laboratories. Acorda responded with a lawsuit. Seven of the generic companies, including Allergan (AGN) and Par Pharmaceuticals, settled with Acorda. Mylan (MYL), Roxane and Teva Pharmaceutical Industries (TEVA) refused to settle, and challenged the patents’ validity in court.

Scopia filed a letter to the company with the U.S. Securities and Exchange Commission indicating it had gathered a 17 percent stake in Acorda and was requesting the formation of a special committee of independent directors to initiate “a review of all strategic alternatives to maximize value.” That includes a sale of the company.

Ashu Tyagi, a partner at Scopia, wrote in the letter, “We are highly confident that multiple qualified, potential buyers would be interested in engaging with Acorda at a significant premium to its present value.”

Over the last year, company shares have dropped 14.2 percent. Acorda’s market cap is currently $1 billion.

Acorda projects Ampyra revenue for this year between $535 million and $545 million. The company currently has an application with the FDA for Inbrija for advanced Parkinson’s disease, and expects to launch the drug, pending approval, as early as 2018. It also has another promising Parkinson’s drug, tozadenant, that it picked up when it bought Biotie Therapies Corp in 2016. The drug is in Phase III trials.
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However, Scopia, in its letter, suggested that the company’s plans to transition from Ampyra to Inbrija and Tozadenant was risky. A sales ramp-up of Inbrija would take time to replace lost revenue from Ampyra, and Tozadenant’s success in Phase III was not guaranteed.

Reuters wrote, Scopia “said Acorda would be a more valuable acquisition candidate than Cynapsus Therapeutics Inc., which was sold to Sunovion Pharmaceuticals Inc. for $624 million last year, and NeuroDerm Ltd (NDRM), which agreed last month to be sold to Mitsubishi Tanabe Pharma Corp for $1.1 billion. The fund was NeuroDerm’s largest shareholder when it agreed to be sold.”

In April, Acorda initiated significant restructuring, including laying off approximately 20 percent of its 597 employees. At the time, the company stated, “Acorda believes that the cost savings from the restructuring and subsequent operating expense reductions will enable it to fund operations through the key milestones for its late-stage development programs, including the commercial launch of CVT-301, pending approval from the U.S. Food and Drug Administration (FDA), and Phase III data for tozadenant. The Company plans to file a New Drug Application (NDA) for CVT-301 with the FDA in the second quarter of 2017.”

Scopia seems to disagree, and this approach on the part of Acorda was a shift away from its early-stage clinical work. The majority of the job cuts were on its research-and-development staff. As part of its planning, the company is looking to partner or license out a number of its early-stage programs. These include rHlgM22 for multiple sclerosis that’s currently in a second Phase I trial; BTT1023, a fully human monoclonal antibody against vascular adhesion protein-1 (VAP-1); and oncology indications for tozadenant. The company indicated it preferred to keep SYN0120, a dual-mechanism compound that may have applications in psychosis, cognition, and Parkinson’s disease.

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