Acorda to Terminate 25% of Headcount as Company Undergoes Restructuring
Acorda Therapeutics will terminate approximately 25% of its headcount as the company initiates a corporate restructuring only weeks after being snubbed by the U.S. Supreme Court over a patent appeal for multiple sclerosis drug Ampyra.
Late Wednesday, the company announced the restructuring that has sent share prices plunging more than 13% in premarket trading, wiping out nearly 12% in gains from the previous day. The job cuts and reduction in operating expenses will allow the company to focus its resources on the success of its Parkinson’s disease drug Inbrija.
The majority of the eliminated jobs will take place immediately, with the remainder terminated in the first quarter of 2020, the company said. Cutting one-fourth of its headcount is expected to save the company about $21 million beginning next year. The cuts in headcount and other expenditures will cost the company about $8 million, Acorda said.
Ron Cohen, president and chief executive officer of Acorda, said the restructuring, although difficult, will provide the company with the flexibility to address its capital structure and focus on the future success of Inbrija.
Acorda had sought to use the courts to protect patents on Ampyra, which had been its chief revenue driver. The loss of the patents paved the way for generic challengers such as Mylan, Teva Pharmaceuticals, Hikma Pharmaceuticals and Roxane Laboratories. Sales of Ampyra have slid significantly with the generic competition. In the first half of this year, sales dropped 67% to $84.7 million for the first half of 2019. That slide has continued. Along with the announcement of job cuts, Acorda released a snapshot of its third-quarter financial report expected next month that showed sales of Ampyra were $37.6 million compared to $137.8 million for the same quarter in 2018. Ampyra was approved in 2010 as a treatment to help multiple sclerosis patients walk without causing seizures.
Inbrija, which became commercially available in February, generated revenue of $4.9 million for the quarter.
“Inbrija is an important medication for people with Parkinson’s who suffer from OFF periods, thanks to the extraordinary work of Acorda’s associates in developing and making it available. We are saddened that a number of them will be leaving the company, and grateful for their commitment and many contributions,” Cohen added.
Inbrija was approved in December as the first inhaled formula of levodopa (L-dopa) for the intermittent treatment of OFF episodes in Parkinson’s disease patients. During the Phase III clinical trial used for approval, data showed patients treated with Inbrija saw a statistically significant improvement in motor function.
The restructuring will force the company to provide a revised financial guidance for this year and a new guidance for 2020. For 2019, R&D expenses are expected to be about $55 million, down from the expected $70 to $80 million. Other expenses, including sales and administrative, have been revised to be between $185 and $190 million, down from $210 million. In 2020, R&D expenses will fall even more to about $25 million. Sales and administrative expenses will also decline more to about $165 million, the company said.
As of Sept. 30, Acorda had cash and cash equivalents of approximately $253 million. A complete third-quarter report is expected on Nov. 4.