Federal court rules Ampyra patents invalid, sinking Acorda stock
- A federal appeals court has upheld a previous ruling, invaliding patents for Acorda Therapeutics' multiple sclerosis drug Ampyra and opening the door for generic competition that could threaten the biotech's livelihood.
- In a 2-1 vote, the U.S. Court of Appeals for the Federal Circuit chose to uphold a U.S. District Court of Delaware decision to toss out four patents on the grounds of obviousness. Those patents were previously set to expire between 2025 and 2027.
- Now, a handful of generic companies have the opportunity to enter the market without a clear legal barrier — a development that weighed on Acorda stock, which fell nearly 25% Monday. Cowen & Co. analyst Phil Nadeau expects up to eight Ampyra generics to launch soon.
It's been a bruising and ultimately losing court battle for Acorda.
Just four years after receiving the Food and Drug Administration OK'd Ampyra (dalfampridine), Acorda found itself engulfed in legal battles. A few generic companies had notified the biotech they were filing applications with the FDA for generic versions of the branded therapy, which helps improve walking in adults with multiple sclerosis.
Those cases were consolidated in 2015, and a September 2016 bench trial found the defendants had proven Acorda's patents invalid based on obviousness. The appeals court's ruling upholds that finding with a 54-page majority opinion, teeing up the potential for generic entry.
Jefferies analyst Michael Yee said the bank "somewhat expected" the decision in a Sept. 10 analyst note, noting the same court turned down an injunction request from Acorda in July.
Cowen & Co.'s Phil Nadeau also said in an investor's note the bank's model was not optimistic of the appeal's chances. Now, Nadeau projects Ampyra to post $75 million in revenue this quarter and just $5 million in revenue for the last three months of 2018.
Meanwhile, Acorda CEO Ron Cohen said his company continues to believe the patents protecting Ampyra are valid. "We are reviewing the decision and will consider the future options, including the possibility of a further appeal," he said in a statement.
Ampyra had peak U.S. sales potential of $500 million or more, Yee mentioned in his Sept. 10 note. Acorda recorded net Ampyra sales of $253 million for the first half of 2018 and recently reiterated guidance of $330 million to $350 million in annual revenue for the drug, according to its most recent quarterly Securities and Exchange Commission filing.
In April 2017, the company announced it would lay off about 100 employees, 20% of its headcount, as it starts to prepare for the potential of generic Ampyra.
As the legal proceedings slogged along, Acorda scrambled to reach settlements with the numerous interested generic makers. For example, the company announced on Aug. 3 it reached an agreement with Mylan NV that permitted them to launch an Ampyra generic in 2025 or earlier under certain circumstances.
"Based on our analysis, at least 2 companies (Teva and Hikma/Roxane) that were classified as 'first to file' had not yet settled and had tentative FDA approvals of generic Ampyra so could launch, in our view," Yee wrote. "We count at least 5-6 that had approvals but had previously settled so those remain unclear as to next steps."
As the patent cliff has never appeared closer for a drug that makes up nearly all Acorda's current revenue, the biotech is now shifting focus to its candidate for Parkinson's disease, Inbrija (levodopa inhalation powder).
Inbrija was accepted for U.S. review in February and is expected to have an approval decision by Oct. 5.
While the market eagerly waits for that critical regulatory call, Acorda shares fell roughly 25% on Monday, knocking off more than $300 million in its value.
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