Earnings Miss at Acorda

Acorda Therapeutics Inc.’s ( ACOR - Analyst Report ) fourth quarter earnings (including share-based compensation charges but excluding other special items) of 9 cents per share were way below the Zacks Consensus Estimate of 18 cents and the year-ago earnings of 32 cents per share. Including one-time items, fourth quarter 2012 earnings came in at $3.27 per share as opposed to 32 cents in the final quarter of 2011, benefiting from tax benefit adjustments.

Quarterly revenues increased 12.2% to $81.5 million, beating the Zacks Consensus Estimate of $79 million.

Full year 2012 earnings (including share-based compensation charges but excluding other special items) were up 11% from the year-ago period to 72 cents per share, slightly lower than the Zacks Consensus Estimate of 73 cents per share. In 2012, revenues increased 4.6% to $305.8 million. Revenues came in slightly above the Zacks Consensus Estimate of $304 million.

Quarter in Detail

Bulk of the net product revenues at Acorda came from Ampyra sales. Ampyra sales came in at $72.7 million, reflecting a year-over-year increase of 27.1%. Ampyra revenues also increased 4.2% on a sequential basis.

Acorda has a licensing agreement with Biogen Idec ( BIIB - Analyst Report ) for the development and commercialization of Ampyra outside the US. Ampyra is available outside the US under the trade name Fampyra.

Fampyra royalties on ex-US sales remained flat with the year-ago period at $1.3 million.

Zanaflex capsules and tablets recorded revenues of $5.2 million in the final quarter of 2012, down 55.9%. We note that Acorda has authorized Actavis, Inc. (ACT) to commercialize the generic version of Zanaflex.

Acorda’s research and development (R&D) expenses shot up 76.5% to $18.2 million. Selling, general and administrative (SG&A) expenses came in at $45.6 million, up 27.6% from the year-ago period.

Guidance for 2013

Acorda maintained its Ampyra revenue guidance of $285 million – $315 million, issued earlier on Jan 7. The company continues to expect combined revenues from the Zanaflex franchise and Fampyra to be $25 million.

Acorda also reiterated its adjusted SG&A and R&D expense guidance. While the former is expected in the range of $170 million – $180 million, the latter is expected in the range of $60 million – $70 million.

Currently, Acorda is preparing to submit a 505(b)(2) type new drug application (NDA) for diazepam nasal spray for the management of seizure in certain epilepsy patients. The company plans to submit the regulatory application to the FDA in 2013 with potential launch planned in 2014.

Pipeline Update

Apart from releasing financial results, Acorda also provided an update on its pipeline. The company stated that it is preparing to submit a 505(b)(2) type new drug application (NDA) for diazepam nasal spray for the management of seizure in certain epilepsy patients. The company plans to submit the regulatory application to the Food and Drug Administration (FDA) in 2013 with potential launch planned in 2014.

Acorda is also evaluating Ampyra for other indications including cerebral palsy (phase II proof-of-concept study ongoing with results expected by second quarter 2013) and post-stroke deficits (phase II proof-of-concept study ongoing with results due in the second quarter of 2013).

Our Take

Though sales of Ampyra have improved in the past few quarters, it remains to be seen whether the performance can be sustained. Moreover, we remain concerned about the company’s dependence on Ampyra for growth.

Acorda carries a Zacks Rank #4 (Sell). Pharma stocks that currently look attractive include companies like Sanofi ( SNY - Analyst Report ) , which carries a Zacks Rank #2 (Buy).