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Acorda Down on Q3 Earnings

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Acorda Therapeutics Inc.’s (ACOR - Free Report) shares, which were down 4.3% immediately after the release of third quarter 2013 results, were up marginally (0.9%) in Friday's trading session. Overall, shares are down 3.4% since third quarter earnings.

The company’s performance was mixed with earnings surpassing expectations and revenues missing the same. Third quarter 2013 earnings (including share-based compensation charges) of 18 cents per share were well above the Zacks Consensus Estimate of 10 cents per share but 25% below the year-ago earnings.

Quarterly revenues increased 9.7% to $84.9 million, missing the Zacks Consensus Estimate of $90 million.

Quarter in Detail

The bulk of net product revenues at Acorda came from Ampyra, which is marketed for the improvement of walking in multiple sclerosis patients. Ampyra revenues came in at $77.8 million, up 11.5% from the year-ago period. Ampyra revenues remained flat on a sequential basis.

Acorda has a licensing agreement with Biogen Idec (BIIB - Free Report) for the development and commercialization of Ampyra outside the U.S. Ampyra is available outside the U.S. under the trade name Fampyra. Fampyra royalties grew 33.3% from the year-ago period to $2 million.

Ampyra is being studied for other indications as well. Acorda intends to commence a phase IIb/III study with Ampyra (once-daily) for the treatment of post-stroke deficits, especially walking improvement. The study is scheduled to commence in the second quarter of 2014 following discussions with the FDA and once results from a second pharmacokinetics (PK) study of the once-daily formulation are available. As far as evaluating Ampyra for cerebral palsy is concerned, Acorda has decided it will not continue with the development of Ampyra for this indication.

Zanaflex capsules and tablets recorded revenues of $2.7 million in the third quarter of 2013, down 28.9%. Acorda has authorized Actavis, Inc. (ACT - Free Report) to commercialize the generic version of Zanaflex.

Acorda’s research and development (R&D) expenses increased 15% to $13.8 million. Selling, general and administrative (SG&A) expenses came in at $42.3 million, up 5.5% from the year-ago period.

Guidance Narrowed

Acorda narrowed its Ampyra revenue guidance to $295 million – $305 million from the earlier guidance of $285 million – $315 million. Acorda cut its 2013 R&D guidance by $15 million to $45 million - $55 million (old guidance: $60 million – $70 million). The cut reflects Acorda’s decision to not move ahead with the development of Ampyra for cerebral palsy as well as adjustments in other R&D programs. The company expects R&D spend to increase next year with the advancement of its pipeline.

Acorda also lowered its 2013 SG&A guidance by $5 million to $165 million – $175 million (old guidance: $170 million - $180 million). The new guidance reflects timing issues. Acorda expects SG&A spend to increase next year as it moves closer to launching Diazepam Nasal Spray – the new drug application for the candidate will be filed by the end of this year.

Our Take

Acorda’s third quarter results were mixed. Although earnings surpassed expectations, revenues missed and Ampyra’s performance was lackluster with sales remaining flat on a sequential basis. The company narrowed its 2013 guidance for Ampyra. We expect lower costs to boost the bottom line in 2013.

Meanwhile, we are pleased with the company’s progress with its pipeline and expect to hear more on the same at the upcoming R&D day.

Acorda is a Zacks Rank #3 (Hold) stock. Currently, companies like Actelion Ltd. look well-positioned with a Zacks Rank #1 (Strong Buy).

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