Acorda Therapeutics, Inc. (ACOR) recently received an unfavorable court ruling in its patent litigation case against Apotex. Apotex had filed an abbreviated new drug application (ANDA) with the US Food and Drug Administration (FDA) seeking approval for its generic version of three dosage strengths of Zanaflex capsules (tizanidine hydrochloride).
In its ruling, the US District Court for the District of New Jersey held that the patent covering the use of multiparticulate tizanidine compositions are invalid and not infringed by Apotex. The patent litigation case had commenced in 2007.
Acorda started marketing Zanaflex capsules from 2005 for the management of spasticity. Zanaflex capsules and tablets recorded sales of $11.1 million in the second quarter of 2011, down 11.2% from the year-ago figure. Revenues from Zanaflex capsules have been declining due to increasing managed care pressure on patients to opt for low-cost generic tizanidine tablets over the higher-cost Zanaflex capsules.
We expect Apotex to launch its generic version of Zanaflex once it gains approval from the FDA. Acorda’s earnings and revenues will take a hit with the entry of generic versions of the product. Acorda is currently evaluating its options and may file an appeal.
Besides Zanaflex, Acorda has another marketed product, Ampyra, in its portfolio. Ampyra, which was launched in 2010, is approved for improving walking in patients with multiple sclerosis.
With Zanaflex sales declining and the product likely to face generics in the near future, Acorda’s future depends on the successful commercialization of Ampyra. Acorda has a licensing agreement with Biogen (BIIB) for Ampyra (ex-US trade name: Fampyra) in ex-US markets. The company expects Ampyra sales in the range of $205 – $230 million in 2011.
We currently have a Neutral recommendation on Acorda, which carries a Zacks #3 Rank (short-term Hold rating). We expect investor focus to remain on the successful commercialization of Ampyra.
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