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April 5, 2017

Acorda Axing 20% of Workforce after 4 of 5 Ampyra Patents Invalidated

  • Acorda Therapeutics said today it will eliminate 20% of its workforce in a restructuring that comes five days after a federal judge invalidated four of the five patents protecting the company’s top-selling drug, the multiple sclerosis treatment Ampyra (dalfampridine).

    The layoffs are expected to total about 120 jobs, based on the 597 employees the company reported as constituting its workforce as of February 20, according to its Form 10-K annual report for 2016, filed February 27.

    Acorda said the restructuring will enable it to focus on two late-stage programs to develop new treatments for Parkinson’s disease. One is CVT-301, a self-administered inhaled formulation of levodopa (L-dopa) indicated for treatment of Off periods (periods of worsening symptoms during therapy) in people with Parkinson’s that is now in Phase III trial, and the company’s most advanced pipeline program.

    CVT-301—which applies Acorda’s ArCUS drug delivery technology—generated positive data in February, showing a statistically significant improvement in motor function. The company today restated earlier plans for filing an NDA for CVT-301 during the second quarter.

    The other priority program for Acorda is tozadenant, an oral adenosine A2a-receptor antagonist also in Phase III development as an adjunctive treatment to levodopa in Parkinson’s disease patients to reduce Off periods. Acorda acquired worldwide rights tozadenant when it bought Biotie Therapies in a deal completed September 30, 2016, for $376 million.

    Tozadenant, envisioned as a chronic therapy for reducing overall Off time, is expected to generate Phase III data this year.

    “The decision to reduce headcount is extremely difficult, but is necessary to ensure that Acorda can continue to bring important therapies to the market,” Acorda President and CEO Ron Cohen, M.D., said in a statement. “Over the last several years, we have strategically diversified our portfolio, and we believe that CVT-301 and tozadenant can be a platform for significant future growth. We believe that the steps that we are taking will position Acorda to deliver long-term value for our shareholders.”

    The company projected it would incur approximately $8 million in pre-tax charges for restructuring-related costs, including severance, primarily during the second quarter. Acorda expects its reduction in workforce to generate approximately $21 million per year in annual cost savings starting in Q2.

    Acorda said it would provide updated financial guidance to investors when it holds its quarterly conference call with analysts to discuss first-quarter results on April 27. The company expects to be cash-flow positive for 2017, having reported cash and cash equivalents of approximately $159 million as of December 31, 2016.

  • Judge Cites 'Obviousness'

    Acorda blamed the restructuring on the decision by Judge Leonard Stark of the U.S. District Court for the District of Delaware invalidating U.S. Patent Nos. 8,663,685, 8,007,826, 8,440,703, and 8,354,437 covering Ampyra®.

    “Defendants have proven clearly and convincingly that the Acorda Patents are invalid due to obviousness,” Judge Stark wrote in his decision.

    He upheld the validity of the fifth patent, No. 5,540,938, which was originally granted to Elan and covers the formulation of Ampyra Extended Release Tablets, 10 mg. That patent expires in July 2018, compared with between 2025 and 2027 for the four invalidated patents.

    Unless the court ruling is overturned, Acorda will face generic competition nine years sooner than it planned. That is no small problem for Acorda, since Ampyra accounted for 95% of the company’s total revenues last year--$493.358 million of the total $519.601 million.

    The March 31 decision was a victory for companies seeking to market generic versions of the MS drug, which include Mylan, Roxane Laboratories, and Teva Pharmaceutical Industries. The three companies and Apotex had been sued for patent infringement in 2014 by Acorda and Alkermes, which acquired Elan's drug technology business in 2011.

    Of the 10 companies seeking to market generic versions of Ampyra, Apotex became the seventh to settle with Acorda in February, with the companies agreeing that Apotex can launch its generic Ampyra in 2025, or earlier "under certain circumstances" that were not disclosed in a February 10 regulatory filing. Other companies settling with Acorda include Allergan's generics unit Actavis and Par Pharmaceuticals, now an entity of Endo International.

    Dr. Cohen has said Acorda is preparing to appeal the decision, and has prepared a contingency plan should it lose the appeal.

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