Acorda Therapeutics Inc. (ACOR) reported adjusted earnings of 40 cents per share for the third quarter of fiscal 2011, down from 43 cents in the year-ago period. After adjusting costs related to the Apotex patent infringement trial court decision regarding Zanaflex, earnings stood at 85 cents per share, well above the Zacks Consensus Earnings Estimate of 72 cents per share.
The year-ago comparable earnings were 31 cents. Results were boosted mainly due to a milestone payment received from Biogen Idec (BIIB) for the conditional approval of Fampyra (ex-US trade name of Ampyra) in the EU, as a treatment for improving walking in adult patients with multiple sclerosis.
Revenues
Third quarter revenues shot up 46.2% to $93.0 million, driven primarily by the milestone payment from Biogen. Revenues exceeded the Zacks Consensus Estimate of $90 million.
Third quarter revenues comprised $65.4 million (up 6.8%) in product sales and $2.6 million (up 10.8%) in license and royalty revenue. Acorda has a licensing agreement with Biogen for the development and commercialization of Fampyra outside the US. Further, Acorda has a supply agreement with Elan Corporation (ELN) for manufacturing Ampyra. Elan received $1.75 million (7% of $25 million received from Biogen) from Acorda related to the EU approval of Fampyra.
Product sales consisted mainly of Ampyra, which was launched in March 2010. Ampyra sales came in at $54.7 million, reflecting a year-over-year increase of 9.8%.
However, Zanaflex capsules and tablets recorded sales of $10.7 million in the third quarter, down 7% from the year-ago figure. Privately-held Canadian generic firm, Apotex Inc, filed an Abbreviated New Drug Application (ANDA) seeking approval for its generic versions of the three Zanaflex capsule dosage strengths. Acorda filed a lawsuit in October 2007 against Apotex asserting patent infringement. However, on September 7, 2011, the US District Court for the District of New Jersey ruled against Acorda.
Expenses
Acorda’s research and development (R&D) expenses increased 13.8% to $9.1 million. The expenses mainly consisted of costs related to post-marketing studies and life cycle management programs of Ampyra and expenditure associated with the phase I trial of glial growth factor 2 (GGF2). GGF2 is being evaluated for the treatment of heart failure patients.
Selling, general and administrative (SG&A) expenses came in at $34.7 million, 13.6% higher than the year-ago figure. The increase in SG&A spend was due to costs incurred on the sales and marketing of Ampyra and the Zanaflex patent infringement lawsuit.
2011 Guidance Reaffirmed
For 2011, the company continues to expect Ampyra revenues to range from $205 – $230 million.
Further, Acorda expects SG&A expenses for the year in the range of $130 million to $140 million, driven primarily by commercial and administrative costs related to the marketing of Ampyra.
R&D expenses for 2011 are expected to lie in the range of $35 million to $40 million as compared to previously guided $40 million to $45 million. This includes costs related to post-marketing studies of Ampyra and other development expenses.
Both SG&A and R&D guidance for 2011 are exclusive of share-based compensation expense.
Our View
We currently have a Neutral recommendation on Acorda, which carries a Zacks #3 Rank (short-term Hold rating). We are pleased with the conditional approval of Fampyra in the EU, which triggered the substantial milestone revenue. We believe Fampyra’s approval will boost revenues further. We expect investor focus to remain on the sales ramp-up of Ampyra.
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