Acorda Therapeutics Inc. (ACOR) reported earnings of 31 cents per share in the third quarter of 2010, in contrast to the Zacks Consensus Estimate of a loss of 12 cents and the year-ago loss of 51 cents. Higher revenues helped boost the company’s earnings.

Revenues

Revenues saw a whopping 318.4% increase to $63.6 million in the third quarter, beating the Zacks Consensus Estimate of $50 million with Ampyra sales exceeding expectations.

Third quarter revenues consisted of $61.3 million in product sales and $2.4 million in license fees. Gross sales of Ampyra, which was launched in March 2010, came in at $52.6 million. The product is off to a strong start with about 6,300 physicians having written at least one prescription for the drug (as of September 30, 2010).

During the third quarter, a large backlog of prescription requests were met. In such a scenario, Acorda expects fourth quarter sales of Ampyra to be less than in the third quarter.

Zanaflex capsules and tablets recorded gross sales of $13.6 million in the third quarter, down 6.2%. Acorda expects revenues from Zanaflex capsules to continue declining in the final quarter of the year as well, due to increasing managed care pressure on patients to opt for low-cost generic tizanidine tablets over higher-cost Zanaflex Capsules.

Operating Expenses

While research and development (R&D) expenses declined 2.4% to $8.0 million; selling, general and administrative (SG&A) expenses increased 31.2% to $30.7 million. The substantial increase in the SG&A spend was due to the costs incurred on the launch of Ampyra. We believe SG&A expenses will continue to increase as the company focuses on the successful commercialization of Ampyra.

Acorda expects its R&D expenses to decline slightly in 2010 as compared with 2009, modified from the previous guidance that predicted an increase.

Our Take

We currently have an Outperform recommendation on Acorda. The successful commercialization of Ampyra helped the company achieve profitability during the third quarter.

We expect investors to remain focused on the sales ramp-up of the product and its approval in the European Union (EU). Acorda’s partner, Biogen Idec Inc. (BIIB), is currently seeking regulatory approval for Ampyra in Canada and the EU, and a response should be out in the first half of 2011.

Meanwhile, Acorda is looking to expand its portfolio by in-licensing a development or commercialization stage neurology product. We believe that if the company succeeds, it will generate additional revenues.

 
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