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Acorda Therapeutics Inc. (ACOR - Analyst Report) reported second quarter earnings (including share-based compensation charges but excluding other special items) of 13 cents per share, above the year-ago earnings of 7 cents but below the Zacks Consensus Estimate of 16 cents per share.

Quarterly revenues increased 15.9% to $75.7 million, beating the Zacks Consensus Estimate of $73.0 million. Higher revenues were attributable to strong Ampyra sales.

Quarter in Detail

Bulk of the net product revenues at Acorda came from Ampyra sales. Ampyra sales came in at $66.3 million, reflecting a year-over-year increase of 28.0%. Ampyra revenues also increased 15.5% on a sequential basis. We are pleased to see that Ampyra sales improved significantly after staying almost flat sequentially last quarter.

Acorda has a licensing agreement with Biogen Idec for the development and commercialization of Ampyra outside the US. In July 2011, Biogen received conditional approval for Fampyra (ex-US trade name of Ampyra) in the EU, as a treatment for improved walking in adult patients with multiple sclerosis.

Fampyra royalties on ex-US sales were $2.5 million in the reported quarter, in comparison to $0.1 million in the year-ago quarter. Currently, Fampyra is available in Germany, the UK, Denmark, Norway, Iceland, Canada, Australia and New Zealand. Biogen expects to launch the product in other countries of EU as well. Biogen has an initial plan of 30 regulatory filings this year. Acorda also has a supply agreement with Elan Corporation for manufacturing Ampyra.

Zanaflex capsules and tablets recorded sales of $2.5 million in the second quarter, down 77.5%. We expect Zanaflex revenues to decline further due to generic competition. We note that Canadian generic firm, Apotex Inc., launched its generic version of Zanaflex in February this year. 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 $0.3 million, royalties from Watson for the sale of the authorized generic version amounted to $1.8 million.

Acorda’s research and development (R&D) expenses increased 5.2% to $12.6 million. The increase was attributable to Acorda’s efforts to develop its pipeline. Selling, general and administrative (SG&A) expenses came in at $44.2 million, up 10.2% from the year-ago period.

Pipeline Update

Acorda is conducting a post-approval commitment study on the usage of 5mg dose of Ampyra. The company has already completed enrollment in this study and expects results in August this year.

Ampyra is also in a proof-of-concept study in adults with cerebral palsy. Initial results should be out by the end of this year. Another proof-of-concept study of Ampyra in patients with post-stroke deficits was initiated in the second quarter of the year. The company expects initial results in early 2013.

Meanwhile, patient enrollment for a phase II study of AC105 in patients with acute spinal cord injury is scheduled to commence by the end of the year. Results of GGF2, which is currently in a phase I study in heart failure patients, should also be out by the end of this year.

Guidance for 2012

Acorda maintained its Ampyra revenue guidance of $255 million - $275 million. The company continues to expect combined royalty revenues from the Zanaflex franchise and Fampyra sales in ex-US markets of at least $25 million.

Acorda also reiterated its R&D and SG&A expense guidance. While R&D spending is expected in the range of $50 million - $60 million in 2012, SG&A spending is forecast in the range of $145-$160 million. The guidance excludes stock-based compensation expenses.

Our Recommendation

The impressive sales of Ampyra please us. We are also encouraged by Biogen’s effort to expand Fampyra in the EU. Meanwhile, the generic threat for Zanaflex is a matter of concern for Acorda.

We currently have a Neutral recommendation on Acorda. Acorda carries a Zacks #3 Rank (short-term ‘Hold’ rating).

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