Acorda Therapeutics Inc (NASDAQ:ACOR) has had a tough week this week. The company is currently (mid-market US on Wednesday) trading for just $17.50 a share and a market capitalization of a little over $815 million. That's a close to 40% discount to the price at which Acorda shares closed out the session on Tuesday and it's the company's lowest price since June this year.
Here's a look at why the company has taken such a sharp hit and what's next for Acorda and its shareholders. Specifically, we'll try to answer the question – is the gap down recoverable and, in turn, are current prices an opportunity to pick up some cheap shares ahead of a long-term return to the pre-dip pricing?
So, the decline came, as is so often the case in the development stage biotechnology space, on the back of an update related to the company's lead Parkinson's study.
The study is rooted in a drug called tozadenant, which is designed as an adjunctive treatment to levodopa in Parkinson’s disease patients to reduce OFF time. For those not familiar with Parkinson's disease, OFF time is the period during the day (generally in the morning, but this can vary from patient to patient) during which the Levodopa therapy (which is the standard of care therapy in this sector) isn’t effective in managing the symptoms of the disease. It can be an extremely unpleasant period and there are a few options available to patients in this population right now, but none of them really offer effective relief.
With tozadenant, Acorda was hoping to change this.
The drug is an oral adenosine A2a receptor antagonist and it's designed to inhibit the activity of the A2a receptor. This receptor is strongly involved in the regulation of the central nervous system and overactivity (or overstimulation might be a better way to describe it) can lead to the physical symptoms that cause problems during the OFF period in Parkinson's patients.
By inhibiting its activity, therefore, the idea is that the drug can reduce said symptoms. That's the idea and there's plenty of early-stage data in place to back it up. The company has been able to generate strong numbers from a variety of phase I and phase II trials in Parkinson's patients, most of which point to a marked improvement in the OFF period symptoms for the patients in question – even those suffering at the later stages of the disease.
The latest update derives from some ongoing extension studies set up to build on the already collected data, as is the standard approach when a company is pushing for commercial acceptance in the US.
So what's happened?
Well, from an efficacy standpoint, things look strong. There's been no indication that the drug has failed to maintain its efficacy on an extended timeline. The problem, however, is safety.
As per the latest communication from Acorda, the company has stopped enrolling new patients to its extension studies based on the fact that five patients have died in the studies in question.
The deaths, reportedly, were rooted in the patients in question developing sepsis (which is a type of infection) and their subsequent inability to counter the infection based on a dramatically reduced white blood cell count. In total, seven patients developed sepsis and five died as a result of the infection.
So why is this bad news for Acorda?
Well, outside of the obvious fact that you don't want patients to die in your trials, the drug that is under investigation (tozadenant) has been shown to potentially reduce white blood cell count in patients. As such, if the drug is reducing the white blood cell count and the patients are dying because they can't fight off infection because of a low cell count, it's the tozadenant that's indirectly causing the deaths.
This hasn’t been confirmed, yet, but it's the logical conclusion.
In response to the development, and in addition to the halting of enrollment of new study participants, Acorda has also increased the regularity with which patients in a phase III trial (one that's ongoing right now) are tested for blood cell monitoring purposes.
So what does this mean as far as answering the above-outlined questions is concerned?
Well, in short, things don't look good.
This is not a disease-modifying drug meaning patients are likely going to be reluctant to take it just to achieve some SOC side effect relief if there's a chance it could increase their chances of dying from an infection. Combine this with the fact that this population is generally elderly and this reluctance increases further.
For now, then, it looks as though the smart move is to stay out of this one until we get some clarification on causality.
Disclosure: the author has no positions in any of the stocks mentioned in this piece.