Acorda Therapeutics said it will eliminate about 25% of its staff—more than 100 jobs—and slash R&D and selling, general, and administrative (SG&A) expenses in a restructuring, as the Ardsley, NY, biotech reels from the loss of patent protection for its top-selling drug, and slow sales for the Parkinson’s disease drug it launched eight months ago.
The company didn’t say how many jobs it will cut. That number is estimated to be 119, based on the 474 jobs Acorda reported as of February 21, according to its Form 10-K annual report for 2018, filed six days later.
Acorda said most of its reduction in workforce will occur immediately and be completed in the first quarter of 2020. The company estimated that the job cuts will cost the company approximately $8 million in pre-tax charges, substantially all of which will be cash spending for severance and other employee separation related costs in the fourth quarter of this year and Q1 2020.
The layoffs will generate approximately $21 million in annual cost savings beginning in Q2 2020, Acorda added.
Shares fall 20%
Investors responded to Acorda’s restructuring announcement—made after the close of the markets—with a stock sell-off that sent shares tumbling 20% from yesterday’s closing price of $2.7050, to $2.1542 as of 11:40 a.m.
Acorda has been hobbled by the loss of exclusivity for its top-selling drug, the multiple sclerosis treatment Ampyra® (dalfampridine). Last year, the U.S. Court of Appeals for the Federal Circuit rejected Acorda’s appeal of a U.S. District Court for the District of Delaware decision invalidating four of the five patents protecting Ampyra.
Acorda reported third-quarter net revenue for Ampyra of $37.6 million—a roughly 73% plunge from $137.8 million in the year-ago quarter. For January–September 2019, Ampyra net revenue stood at $121.9 million, down about 69% from $390.9 million in the first three quarters of 2018.
Another headwind for Acorda is slow sales of its Parkinson’s disease OFF-symptoms candidate Inbrija™ (levodopa inhalation powder), which was commercially launched in February following delays in the FDA’s review of the drug. Acorda recorded $4.9 million in Q3 net revenue for Inbrija, bringing the drug’s total net revenue this year to just $9.2 million. Acorda has said it will not offer revenue guidance on Inbrija during its launch year.
“This restructuring, although difficult, will enable Acorda to focus its resources on ensuring the success of Inbrija, and will provide flexibility for the company to address its capital structure,” Acorda Therapeutics founder, president, and CEO Ron Cohen, MD, said yesterday in a statement. “Inbrija is an important medication for people with Parkinson’s who suffer from OFF periods, thanks to the extraordinary work of Acorda’s associates in developing and making it available. We are saddened that a number of them will be leaving the company, and grateful for their commitment and many contributions.”
Addressing analysts on the company’s quarterly conference call to discuss Q2 2018 results, Cohen projected much greater sales for Inbrija: “Based on our market research, we believe that peak sales for Inbrija would be greater than $800 million,” Cohen said August 2, 2018, according to a transcript published by Seeking Alpha.
Later last year, the FDA extended by three months the PDUFA target decision date for the company’s NDA of Inbrija following agency requests for “additional information on chemistry, manufacturing, and controls (CMC),” Acorda said at the time. The FDA refused to file Acorda’s initial NDA for Inbrija in 2017, saying it didn’t know when the manufacturing site would be ready for inspection, and had an additional unspecified question about the submission of the drug master production record, the company disclosed last year.
Acorda reported cash and cash equivalents as of September 30 of approximately $253 million, and estimates that that cash balance will shrink by year’s end to “greater than $225 million.” That figure is 52% above the $147.648 million recorded as of June 30—but 23% below the $293.564 million the company had at the beginning of this year.
To improve its cash balance, Acorda said, it will cut its R&D spending this year by 21% to 25%, to a range of $55 million to $60 million, compared with its earlier forecast of $70 to $80 million. The company said it will slash R&D expenses by more than half in 2020 to a range of $20 million to $25 million.
Also being sliced will be SG&A spending, which is set to dip in 2019 by 7.5% to 9.5%, to a range of $185 million to $190 million, reduced from a range of $200 million to $210 million.
Acorda is also projecting total non-GAAP operating expenses for the full year 2020 in the range of $180 million to $190 million—down about $60 million from the company’s previous 2019 guidance, issued August 1 when Acorda released second-quarter results. All of Acorda’s expense projections for this year and 2020 are non-GAAP since they exclude restructuring costs and share-based compensation.