Acorda Acquires Medtronic Drug, Fills Out Mid-Stage Neurology Pipeline

7/1/11Follow @arleneweintraub

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that it’s very clear that these are naturally occurring growth factors that have broad and potent effects on the heart.” Acorda has begun a Phase 1 study of GGF2 in patients with heart failure.

Even though the cardiology project takes Acorda beyond its core neurology expertise, Cohen believes it’s important to pursue, because the company needs to be nimble and opportunistic, he says. “We’re going where the science takes us,” Cohen says. “If we show proof-of-concept, we’ll have a decision to make: create a cardiology department or partner with someone else.”

Further back in the development pipeline is rHIgM22, an antibody that Acorda licensed from the Mayo Clinic a decade ago. Acorda has shown that the compound stimulates remyelination in animal models of MS—meaning it restores the protective sheath around axons, which in turn restores electrical signals between neurons. Acorda hopes to file for approval from the FDA to begin human trials of rHIgM22 “as soon as we can,” Caggiano says.

And AC105 isn’t the only spinal-cord-injury play in Acorda’s pipeline. Another early-stage compound that the company is studying is chondroitinase, an enzyme that may also help patients with such injuries. The company’s animal studies have shown that the enzyme promotes the recovery of visual and motor functions in injuries to the brain or spinal cord. Caggiano says Acorda will need to do more preclinical work on the compound before the company can determine its potential for human use.

It remains to be seen how investors will react to the addition of Medtronic’s compound to Acorda’s pipeline. But a string of good news has already prompted investors to horde the company’s stock. In mid-April, rumors emerged that Acorda’s patent exclusivity on dalfampridine might be extended from 2018 to 2026—creating such a frenzy on Wall Street that trading in the company’s shares was halted temporarily. The company confirmed the rumors on April 19.

The extra years of patent protection could make a huge difference in the development plan for dalfampridine, Cohen says. “Having a runway out to 2026 substantially changes the risk/benefit equation,” he says. “We’re more likely now to invest in new trials to see what the drug will do.”

Acorda’s stock got more of a boost on May 20, when the European Medicine Agency (EMA) recommended conditional marketing approval of the overseas version of dalfampridine, which will be marketed by Biogen Idec. All told, Acorda’s stock has jumped more than 50 percent since April 14, trading at about $32.40 before the Medtronic announcement.

Some analysts believe investors are still undervaluing Acorda. Lazard Capital Markets analyst Joel Sendek wrote in a May report that the patent extension alone makes Acorda an “attractive acquisition target, given its steady cash flow, profitability, and fielded sales force which can be easily incorporated into a larger commercial organization, with greater economies of scale.” He estimates Acorda will pull in sales of $283.7 million this year—up 50% from last year—and it will turn a profit this quarter. His price target for the company’s stock is $37.

Cohen declines to comment on acquisition speculation, preferring instead to focus on the task at hand. “Our mission is to develop therapies that restore function and improve the lives of people with neurological disease,” he says. “Now that [dalfampridine] is out and providing a revenue stream, we can leverage our expertise and develop the next great drug to help people with these terrible diseases.”

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