Activist investor pushing for Acorda sale
- Scopia Capital Management, a key shareholder in Acorda Therapeutics, is pushing for a strategic review, including consideration of a sale, of the biotech following invalidation of four of the company's five patents covering an extended release version of its main drug Ampyra.
- Scopia owns around 7.7 million Acorda shares, or about 17% of the outstanding shares, and is the company's largest shareholder.
- In a response filed with the Securities and Exchange Commission, Acorda pushed back against a sale, touting potential U.S. sales as high as $500 million for its yet-to-be-approved Parkinson's disease (PD) product Inbrija (CVT-301), and an even higher ceiling for its Phase 3 PD drug tozadenant, if approved.
Acorda Therapeutics' stock crashed by over 21% when the U.S. District Court for the District of Delaware pulled the rug out from under four of the patents on Ampyra (dalfampridine). The fifth patent is set to expire in July 2018, opening up Acorda to future generic competition to a drug that provides 95% of the company's income.
Acorda has since cut its staff by a fifth
The biotech submitted a new drug application for Inbrija (levodopa inhalation powder) to the Food and Drug Administration in June 2017, and should hear whether it has been accepted for review by the end of September. A marketing authorization application filing in Europe is planned by the end of 2017.
Tozadenant is also in the late stages of development, with data expected in the first quarter of 2018. Yet both drugs won't be a major contributor to Acorda's revenues for still some time.
"While we have been supportive of the company’s strategy to this point, we believe it is now time to sell the company. Had the company prevailed in the Ampyra litigation, Acorda would have been a unique company with a path to $1B in revenues and significant standalone value," wrote Ashu Tyagi, a partner at Scopia, in a letter to Acorda's board of directors.
"Unfortunately, the Company was unsuccessful, and it has now crossed the Rubicon. In 2018 the business will revert to burning cash with a levered balance sheet and no clear timeline to return to profitability," Tyagi's letter continued.
Tyagi cited the recent sales of Cynapsus to Sunovion for $624 million and of NeuroDerm to Mitsubishi Tanabe for $1.1 billion as demonstrating the current value of late-stage assets in Parkinson’s disease.
Acorda responded forcefully, referring to "its contingency planning related to the Ampyra patents" and stating it "fully considered Scopia’s proposals." The company sees the best way forward as focusing on Inbrija and tozadenant, coupled with cost-cutting moves that will save the company $50 million in 2017.
In Acorda's view, a sale may not adequately compensate shareholders, and could destabilize operations or devalue the company.
But it's not clear if Scopia or its competitors will allow Acorda enough time to forge a new path forward. Ten generic companies have submitted Abbreviated New Drug Applications to the FDA to market generic versions of Ampyra extended release tablets. The recent patent ruling would allow a number of those companies to launch their copies beginning in July 2018.
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