Acorda Therapeutics: Managing The Transition
Summary
- Today, we take our first look at Acorda Therapeutics which has two approved products on the market.
- One of these is seeing increasing generic competition while the other is ramping up sales. The company recently announced a significant workforce reduction to reduce costs.
- Can Acorda manage this transition without diluting shareholders? A full investment analysis follows in the paragraphs below.
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Man is guaranteed only those rights which he can defend.”― Jack McCoy
Today, we take our first in-depth look at Acorda Therapeutics (NASDAQ:ACOR). The stock has not done its long-term shareholders much of a favor over the years, but I get an inquiry on it from time to time from Seeking Alpha followers. So today, we will discuss this name in the spotlight. A full analysis follows below.
Company Overview:
Acorda Therapeutics is a small biopharma concern based just outside of New York City. The company is focused on developing and commercializing therapies for neurological disorders. It has a couple of products on the market as well as some assets in the pipeline. The company is developing products via its ARCUS® technology platform. This technology transforms medicines into light, dry powders. These powders are designed to deliver high doses of medication through an inhalation device that is activated by a patient’s own breath. This process works by changing the size and shape of the particles, allows more medicine to travel deep into the lungs. The stock currently trades just over $4.50 a share and sports an approximate market capitalization of just over $50 million.
Product Portfolio & Pipeline:
The company has two approved products on the market, a brief description follows below.
AMPYRA® (dalfampridine) - This is a prescription medicine approved by the FDA to help improve walking in adults with multiple sclerosis or MS.
INBRIJA - This is a prescription medicine used when needed for OFF episodes in adults with Parkinson’s treated with regular carbidopa/levodopa medicine. Off Episodes Parkinson’s disease is characterized by a lack of dopamine, which leads to tremors, stiffness, and slowness. INBRIJA® was developed via the company's ARCUS platform.
The company also has a couple of other candidates in the pipeline. However, both of these are in Phase 1 development. Given the state of the company's financial situation (which we will touch on later), they will not be germane to this analysis.
Second Quarter Results:
On August 5th, the company posted second quarter numbers which showed a GAAP loss of $2.29 a share, twenty cents a share under expectations. Revenues shrunk approximately five percent on year-over-year basis to $31.8 million.
Source: August Company Presentation
The company's main dilemma is that it faces shrinking revenues coming from AMPYRA, which lost its exclusivity just over three years ago and generics entered the market. Net revenues from AMPYRA came in at $21.8 million this last quarter compared to $26.1 million in the year-ago period.
Source: August Company Presentation
Meanwhile, Acorda is trying to ramp up sales from INBRIJA, which garnered FDA approval at the close of 2018. Net sales from this product reached $6.4 million in the quarter, which was a 36% increase from the second quarter of 2020. The company did announce commercial partnership with Esteve Pharmaceuticals for INBRIJA in Spain in late July, but the drug will not launch over there for another year or so. It is actively pursuing other partnerships for this product to speed up its marketing rollout.
Analyst Commentary & Balance Sheet:
The company gets very little attention from Wall Street. So far in 2021, Wedbush raised its price target to $4 from $1 in mid-January and maintained its Neutral rating. The same week, Cowen & Co. which seems to be the biggest bull on the stock, reissued its Buy rating with whopping $35 price target. The last analyst activity on the stock was on July 27th, when H.C. Wainwright reiterated its Buy rating and $10 price target on Acorda.
After posting a net loss of $22.9 million during the second quarter, the company exited the first half of 2021 with $71 million of cash and cash equivalents, which included restricted cash of $25 million. The company has just over $170 million in long-term debt. On September 9th, the company announced it was cutting approximately 15% of its overall employee base resulting in $20 million in annual savings going forward. There has been no insider activity (buying or selling) in the stock since the close of 2019.
Verdict:
Source: August Company Presentation
I began this analysis as a follower had an inquiry if I had any view on this name. After looking over its financials, it is hard to be too enthusiastic on the shares. Cutting $20 million from its annual expenses via workforce reduction looks like a good first step to reducing cash burn. However, the company is likely to remain unprofitable for the foreseeable future and will likely need a capital infusion (and likely shareholder dilution) soon. Therefore, I have to give ACOR a 'thumbs down' as I see no compelling reason to own it at the present time.
A soldier is a man who knows he's being lead to his death but keeps going because it's an order.”― Suraj Sani
Bret Jensen is the Founder of and authors articles for the Biotech Forum, Busted IPO Forum, and Insiders Forum
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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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