Biogen Idec and Acorda Therapeutics’ $500 million-plus deal produces mixed market reaction

Biogen Idec and Acorda Therapeutics announced July 1 that they will collaborate on a drug designed to improve walking ability in people with multiple sclerosis. The deal, which will bring the drug to market outside of the United States, could exceed $500 million and also involves a related supply agreement. Despite the deal’s high price tag, Acorda’s shares tanked on the news as analysts speculated that the partnership could complicate any potential acquisition offers for the company.

Amy Swinderman
CAMBRIDGE, Mass.—Biogen Idec and Acorda Therapeutics announced July 1 that they will collaborate on a drug designed to improve walking ability in people with multiple sclerosis (MS). The deal, which will bring the drug to market outside of the United States, could exceed $500 million and also involves a related supply agreement. Despite the deal's high price tag, Acorda's shares tanked on the news as analysts speculated that the partnership could complicate any potential acquisition offers for the company.

Under the agreement, Biogen Idec and Acorda will develop and commercialize Fampridine-SR, a novel, oral sustained-release compound being developed to improve walking ability in people with MS, in markets outside the United States. Biogen Idec will assume clinical and regulatory responsibilities for and commercialize Fampridine-SR and any aminopyridine products developed under the agreement in ex-U.S. markets worldwide. Biogen Idec will pay Acorda an upfront payment of $110 million, up to $400 million in regulatory and sales milestone payments and tiered, double-digit royalty payments. The door is also open for the companies to carry out future joint development activities under a cost-sharing arrangement.

The deal also involves a sublicensing of an existing license agreement between Acorda and Elan Pharma International Ltd., a subsidiary of Elan Corp. plc. Fampridine-SR was developed using Elan's proprietary Oral Controlled Release MXDAS (MatriX Drug Absorption System) technology and will be manufactured by Elan based on an existing supply agreement with Acorda. Under the agreement, Acorda will pay Elan 7 percent of the upfront and milestone payments that Acorda receives from Biogen Idec.

Founded in 1978, Biogen Idec focuses on high unmet medical needs. The company markets products that address diseases such as MS, lymphoma and rheumatoid arthritis in more than 90 countries, earning $4.1 billion in sales last year. President and CEO Jim Mullen said the deal with Acorda fits into the company's strategy of expanding its manufacturing, sales and distribution capacity on a global basis to take advantage of growth opportunities in more rapidly developing markets outside of North America and Europe.

"We are very pleased to partner with Acorda, a leader in the development of therapies for spinal cord, MS and related nervous system disorders, to help make Fampridine-SR available to MS patients outside of the United States," Mullen said in a statement. "As we look to expand our global MS leadership, we believe Fampridine-SR has the potential to become an important oral therapy that may help improve the walking ability of a wide range of patients—including patients with relapsing forms of MS, as well as primary and secondary progressive MS."

Existing MS treatments are designed to suppress the immune system's assault on myelin, the insulating layer of nerve fibers, preventing further erosion that worsens symptoms. Fampridine is the first in a new family of medicines designed to restore nerve signals after myelin is lost. Fampridine has completed two successful Phase III clinical trials demonstrating improved walking ability in people with MS. It has been found to improve impulse conduction in nerve fibers in which the insulating layer, called myelin, has been damaged.

Fampridine-SR's New Drug Application (NDA) has been assigned priority review by the U.S. Food and Drug Administration (FDA), and its target Prescription Drug User Fee Act (PDUFA) date is Oct. 22. The compound is also eligible to be submitted for a Marketing Authorization Application (MAA) via the European Medicines Agency's (EMEA) Centralized Procedure as a new active substance.

Although Fampridine-SR could face regulatory hurdles due to some side effect concerns, most analysts and MS advocates are hopeful the drug will be approved because it has the potential to meaningfully boost the quality of life for the roughly two-thirds of MS patients who have difficulty walking.

Acorda found Biogen Idec a good partner to bring Fampridine-SR to market because of its reputation as a global leader in the MS field, said President and CEO Dr. Ron Cohen in a statement. Acorda has focused on the development of therapies that restore neurological function to people with MS, spinal cord injuries and related nervous system conditions.

"We are delighted to be working with them to make Fampridine-SR, if approved, available to people living with MS in Europe, Canada, Australia and other areas of the world," Cohen said. "We believe that Biogen Idec's international expertise in MS and neurology also will help us optimize future development of Fampridine-SR and maximize its value in markets outside the U.S."

Although analysts responded positively to the deal, some said it will make Acorda a less attractive takeover target. The company's stock fell $3.46, or 12.3 percent, to $24.73 in midday trading following the July 1 announcement. Shares have traded between $14.42 and $35.65 over the last 52 weeks. Meanwhile, Biogen shares were recently up 2.3 percent at $46.19.

JP Morgan analyst Geoffrey Meacham noted that the deal could complicate any possible acquisition offers for Acorda.

"Strategic flexibility is reduced, but not eliminated," Meacham said. "Further, the bulk of Fampridine economics are in the U.S., so we believe that the U.S. opportunity alone, plus outstanding terms on ex-U.S. economics, could still be attractive to other parties. That said, we recognize that some investors were looking for a near-term acquisition and therefore would expect near-term trading to be choppy."

Ratings firm Piper Jaffray lowered its rating on Acorda to neutral following the news, saying the downgrade reflects a new ratings system the firm has started, but that the firm believes Acorda's shares already reflect a timely FDA approval for Fampridine-SR.

RBC Capital Markets analyst Michael Yee told Dow Jones Newswires that his firm Yee is surprised the deal was made before the FDA rules on whether it will approve the drug, but added that the deal "may be another strong signal there is less regulatory risk than the Street perceives."

Amy Swinderman

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