Acorda Therapeutics, Inc. (ACOR) has had an eventful first few weeks of 2008. In late January 2008, the company reported a thorough safety analysis showed no risk of QT elongation. This news was followed closely by the licensing of two early stage (pre-clinical and clinical) candidates from privately held Neurorecovery, Inc. Finally, just recently the company raised nearly $75 million through the offering of approximately 3.8 million shares of common stock.
Looking forward into 2008, phase III trial data on Fampridine-SR (MS-F204) should become available late in the second quarter, followed by preparation of the New Drug Application (NDA) and subsequent filing in early 2009. However, despite all the news flow, we remain cautious and skeptical about Acorda and prefer to remain on the sidelines as of now.
We continue to see little movement in shares of Acorda until late in the second quarter of 2008. Clean results from a Thorough QT study sent the shares soaring in late January 2008, but true to their nature, management quickly decided to use the opportunity to (once again) issue stock to raise cash and the stock is now back down to pre-QT data news. Data from MS-F203, the first phase III trial on Fampridine-SR, has been presented at multiple venues over the past several months most recently at ECTRIMS (European Committee on Treatment and Research in Multiple Sclerosis), which took place in Prague, Czech Republic, in October 2007. This data is known and already digested in the shares.
As such, we believe the market is waiting for the confirmatory results from MS-F204 before there will be a meaningful movement from the current level. The risk is that MS-F204 disappoints, or fails to match the response rates and timed improvements seen in MS-F203. We have witnessed many occasions where a second phase III trial did not live up to the expectations set by the first.
Management is currently engaged with regulatory consultants in Europe, trying to decide the path to approval outside the U.S. We expect the company to seek a commercialization partner outside the U.S., but we do not expect a finalized deal until perhaps the third quarter of 2008 after Acorda has had ample time to analyze the full data from the MS-F204 trial.
We believe our financial model is essentially in-line with consensus. Our model assumes an approval and launch of Fampridine-SR in early 2010. We forecast profitability based on the ramp of Fampridine-SR in 2010. Our 2010 non-taxed EPS forecast is $0.38. By 2012 we see EPS at approximately $1.97. We arrive at our $19 price target by applying a biotech-like 25x multiple (peer-average) on this figure and discounting back to present day at 20%. We would not be buyers of the stock until below $16.
Read the full analyst report on ACOR.
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