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Acorda files for bankruptcy, reveals asset sale plan

Dive Brief:

  • Acorda Therapeutics has filed for bankruptcy and, on Monday, announced it has reached an agreement to sell essentially all its assets to another drugmaker.
  • Acorda said it chose to pursue Chapter 11 bankruptcy, which aims to reorganize a business and repay creditors, following a “lengthy strategic review.” The company markets three products: a Parkinson’s disease medication, Inbrija, and two treatments called Ampyra and Fampyra that are meant to help multiple sclerosis patients walk.
  • Merz Therapeutics, one of the businesses under German company Merz Group, has decided to buy rights to those three drugs and Acorda’s other assets for $185 million. Merz is acting as a stalking horse bidder, meaning other potential buyers may come forward. The sale will be conducted through a court-supervised process and is expected to conclude in June.

Dive Insight:

Founded in 1995, Acorda hit a series of setbacks over the past decade that have significantly whittled its share price.

In April 2017, a court invalidated key patents protecting Amypra, which, at the time, accounted for almost all of the company’s revenue. By August, one of Acorda’s main shareholders, the asset management firm Scopia Capital Management, was pushing for a strategic review and the consideration of a sale. Later that month, the Food and Drug Administration rejected an approval application for Inbrija, which Acorda got through a $525 million acquisition of Civitas Therapeutics in 2014.

Not long after, Acorda discontinued development for one of the drugs it secured through the $363 million purchase of a Finland-based biotechnology company.

Acorda had answers to most of these challenges. It appealed the patent ruling, refiled the Inbrija application and set up a poison pill to discourage investors from siding with Scopia.

The latter two pieces of that plan ultimately worked. The FDA approved Inbrija in December 2018, and Acorda never sold. But with the Ampyra case, which went all the way up to the U.S. Supreme Court, the company lost. A couple weeks after the high court refused to take the case, Acorda announced plans to lay off a quarter of its workforce, or about 120 employees, as part of a larger restructuring designed to cut costs.

Acorda hasn’t rebounded since. Following the bankruptcy announcement, company shares lost more than three-quarters of their value.

“Acorda’s management team and board have evaluated all of our strategic options, and following an exhaustive process believe that this option is in the best interest of stakeholders,” said Ron Cohen, the company’s CEO, in a statement.

“One of our top priorities is to ensure an uninterrupted supply of our medications to people with multiple sclerosis and Parkinson’s disease. We are confident that Merz Therapeutics, if they are the ultimate acquirer, will be able to seamlessly continue serving these patients’ needs,” Cohen added.

To continue to fund operations during the bankruptcy process, Acorda said it and certain noteholders have entered a financing agreement that will provide $20 million in “new money.” As of Sept. 30, the company had $33.6 million in cash, cash equivalents and restricted cash.

While biotech bankruptcies are relatively rare, Acorda wasn’t alone in its announcement. Eiger BioPharmaceuticals, a drugmaker focused on rare metabolic diseases, filed for Chapter 11 protection on Monday as well.

Eiger has already agreed to sell its only product to a stalking horse bidder for up to $26 million.