Capital, Restructuring

Updated: Acorda shares surge as a big investor pushes it to the auction block

Looking to score a quick return, one of Acorda’s biggest shareholders $ACOR wants to call a time-out on the biotech’s death defying high wire act and roll out a safety net — for investors.

Scopia Capital Management filed notice with the SEC today that it has sent Acorda CEO Ron Cohen a letter outlining its call for a strategic review — including a hard push for a company auction. While counting itself a longtime admirer of Acorda, Scopia concluded that while the company has the cash needed to move forward “continuing to pursue an independent strategy presents significant risk for shareholders.”

Ron Cohen

Scopia controls 16.5% of Acorda’s shares, which surged 5% this morning as the buyout buzz word circulated. And Scopia added more than a million shares as the news about a possible sale hit.

Acorda was recently forced to restructure after the company lost a key patent decision covering its cash cow, the MS drug Ampyra. It’s appealing the decision, but with the distinct possibility that generic competition is looming, the biotech slashed more than 100 jobs in April and circled the wagons around CVT-301, now under review at the FDA.

The idea at Acorda is that if they do lose patent protection next summer, the sales force can move seamlessly on to the new drug. But even in the best of all possible worlds, few developers can rely on anything being seamless in R&D and at the FDA. And Scopia doesn’t like this position at all.

From the letter:

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. 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. These are treacherous waters. At the same time, recent acquisitions of both Cynapsus ($624M) and NeuroDerm ($1.1B) speak to the strategic value of late stage assets in Parkinson’s disease. Acorda is a more valuable acquisition candidate than either of these companies.

Inbrija (formerly CVT-301) should launch next year and treat a real unmet need in advanced Parkinson’s disease. While we believe in the value of this drug, it will take time to launch and will likely only replace Ampyra revenues. Tozadenant may succeed in Phase 3 next year, or it might fail. The path to a highly profitable, multi-product independent company will be solely determined by this binary event. That is a lot of development risk for shareholders to bear.

Acorda, though, says it doesn’t agree. In a reply posted with the SEC, the company said a sale now would simply destabilize the company and leave shareholders shortchanged.

Acorda has a market cap today of a little more than a billion dollars.


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