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Acorda Therapeutics Inc. (ACOR - Analyst Report) reported first quarter earnings (including share-based compensation charges) of 26 cents per share, compared to a loss of 2 cents in the year-ago period.

First quarter 2012 earnings came in at 19 cents per share, including a one-time charge of $2.5 million. The Zacks Consensus Estimate was 15 cents per share.

Quarterly revenues increased 16.3% to $71.2 million, beating the Zacks Consensus Estimate of $70.0 million.

Quarter in Detail

Product sales consisted mainly of Ampyra. Ampyra sales came in at $57.4 million, reflecting a year-over-year increase of 22.7%. However, Ampyra revenues remained flat on a sequential basis, mainly due to weak demand in January. Acorda said that demand was affected by the switching of insurance plans, pharmacy benefit providers and specialty pharmacies by patients at the end of 2011. Acorda said that sales rebounded from Feb through April.

Acorda has a licensing agreement with Biogen Idec (BIIB - Analyst Report) for the development and commercialization of Ampyra outside the U.S. In July 2011, Biogen received conditional approval for Fampyra (ex-U.S. trade name of Ampyra) in the E.U., as a treatment for improved walking in adult patients with multiple sclerosis. Fampyra royalties on ex-U.S. sales were $1.8 million in the reported quarter, in comparison to $0.1 million in the year-ago quarter. Acorda also has a supply agreement with Elan Corporation for manufacturing Ampyra.

Zanaflex capsules and tablets recorded sales of $7.2 million in the first quarter, down 41% from the year-ago figure. We expect Zanaflex revenues to decline further due to the presence of generic competition. Canadian generic firm, Apotex Inc., launched its generic version of Zanaflex in early Feb 2012. Acorda also launched an authorized generic version of Zanaflex at the same time in collaboration with Watson Pharmaceuticals .

While revenues from the sale of the authorized generic version of Zanaflex were $1.1 million, royalties from Watson for the sale of the authorized generic version amounted to $1.5 million.

Acorda’s research and development (R&D) expenses increased 2.8% to $11.0 million. Excluding a $2.5 million payment related to the Neuronex agreement, R&D expenses came in at $8.5 million. Acorda continues to spend on Ampyra post marketing studies and life cycle management programs of Ampyra and pipeline development.

Selling, general and administrative (SG&A) expenses came in at $38.7 million, up 2.1% from the year-ago period.

Guidance for 2012

Acorda maintained its Ampyra revenue guidance of $255 million - $275 million. With Ampyra sales rebounding from Feb 2012, the guidance should be achievable. Moreover, Acorda is working on increasing awareness of Ampyra, which should drive sales.

The company also maintained its guidance for royalties on Fampyra sales and revenue from the Zanaflex franchise of at least $25 million.

While R&D spending is expected in the range of $50 - $60 million in 2012, SG&A spending is expected to be about $145 - $160 million.

Ampyra is currently in a proof-of-concept study in adults with cerebral palsy – initial results should be out later this year. Another proof-of-concept study of Ampyra in patients with post-stroke deficits will be initiated in the second quarter of the year.

Meanwhile, patient enrollment for a phase II study of AC105 in patients with acute spinal cord injury is scheduled to commence in the second half of the year. Results of GGFR, which is currently in a phase I study in heart failure patients, should be out in the second half of the year.

Our Recommendation

We currently have an Outperform recommendation on Acorda. We are pleased with the conditional approval of Fampyra in the E.U. Although Ampyra’s sales were flat on a sequential basis in the first quarter of 2012, we expect sales to rebound. We expect investor focus to remain on the sales ramp-up of Ampyra.

Meanwhile, the upcoming Neuronex acquisition is in line with the company’s strategy of expanding its portfolio by in-licensing a development or commercialization stage neurology product.

Acorda carries a Zacks #3 Rank (short-term ‘Hold’ rating).

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