By Jennifer Hoyt Cummings
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Shares of Acorda Therapeutics Inc. (ACOR) fell Wednesday after the biotechnology company announced a licensing and collaboration agreement with Biogen Idec Inc. (BIIB) - a deal that analysts said will make Acorda a less attractive takeover target.
The companies announced Wednesday that Biogen will be developing and commercializing Acorda's multiple-sclerosis therapy, Fampridine-SR, outside the U.S. Acorda plans to continue developing and commercializing Fampridine-SR, an oral, long-lasting drug designed to improve walking ability of MS patients, in the U.S.
Analysts widely called the deal as a positive move for Acorda, but added that investors who have pushed the shares up in recent months on takeover hopes are exiting the stock Wednesday since the deal detracts from the likelihood Acorda will be acquired.
Robert W. Baird analyst Christopher Raymond said investors may also be disappointed that Acorda chose to partner with such a major player in the MS market. Raymond said investors may think Biogen's sales team might make its disease-modifying drugs, like Anovex, a priority over Fampridine-SR, which treats the symptoms of MS.
A representative from Acorda wasn't immediately available for comment.
Shares of Acorda were recently down 13% at $24.67, after earlier falling as low as $24.28. As of Tuesday's close, the stock had gained 37% year to date. Meanwhile, Biogen shares were recently up 2.3% at $46.19.
Under the agreement, Acorda will receive an upfront payment of $110 million and additional payments of up to $400 million from Biogen, depending on whether the drug achieves regulatory approvals and sales targets. Acorda will be eligible for tiered, double-digit royalties on sales outside the U.S. and Biogen will also assume the royalty payments to Elan Corp. (ELN), the original owner of the drug, on sales outside the U.S.
RBC Capital Markets analyst Michael Yee told Dow Jones Newswires he doesn't think Acorda should be trading lower Wednesday, particularly since the company just brought in $110 million in cash.
Yee said Biogen is a clear top choice for a partnership, given its leadership in the MS market and its dominant sales force, which has a worldwide presence. Yee also praised the terms of the deal, and said he likes that Acorda is maintaining the U.S. rights to the drug.
In the U.S., Fampridine-SR faces regulatory hurdles and worries about side effects, though most analysts and MS advocates have been hopeful the drug will be approved. They see it as a safe treatment with the potential to meaningfully boost the quality of life for the roughly two-thirds of MS patients who have difficulty walking. That potential, they say, outweighs the concerns that surround the drug.
Approval from the U.S. Food and Drug Administration could come as soon as October. The European Medicines Agency previously notified Acorda that it can proceed with its marketing-authorization application.
Yee said his firm is surprised the deal was made before the FDA rules on whether it will approve the drug. This "may be another strong signal there is less regulatory risk than the Street perceives," Yee wrote in a note Wednesday.
Piper Jaffray lowered its rating on Acorda to neutral Wednesday, saying the downgrade reflects a new ratings system the firm has started. The firm said it believes Acorda's shares already reflect a timely approval by the FDA for Fampridine-SR.
-By Jennifer Hoyt Cummings, Dow Jones Newswires; 212-416-2474; jennifer.cummings@dowjones.com
(Tess Stynes contributed to this report.)