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An Acorda Win Ups the Takeover Ante

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The approval of a new MS drug will not likely go unnoticed by Big Pharma.

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The FDA may have just made Acorda Therapeutics (ACOR) ripe for the picking.

Late Friday the pharmaceutical oversight agency approved the biopharma's high-profile multiple sclerosis drug, making Acorda an attractive asset to the major players in the MS space.

Acorda's Ampyra is a new class of drug that isn't made to slow the progression of MS like the other drugs on the market, but is meant to treat one of its most debilitating symptoms. MS is a degenerative disease caused by the deterioration of the protective coating of nerve cells that affects 400,000 people in the United States and 2.5 million people worldwide. As the nerves around the spinal cord and in the brain become damaged, patients often lose their ability to walk, move certain parts of their body, see properly, or control their attention span, as well as other incapacitating issues.

Ampyra is designed to improve walking in patients with MS, which makes it a therapy that's easily paired with other drugs or able to treat virtually all MS patients. Approval from the FDA wasn't the only positive for Acorda -- the success of the drug hinges heavily on its label and the company's risk evaluation and mitigation strategy regarding patients that are considered "non-responders." Fortunately for the biopharma, Ampyra wasn't given a black box, the most severe warning doled out by the FDA, for its risk of causing seizures in certain patients. The label and REMS guide didn't include any mention of patients who won't respond to the therapy -- a clear win for Acorda.

(See, Biotech Drugs to Watch In 2010)

Ampyra will likely hit the market in March and investors hope that Acorda will find a buyer before then. Biogen Idec (BIIB) appears to be the most likely candidate. The biotech is paired with Acorda on Ampyra already -- Biogen paid $110 million upfront for international rights to Ampyra. Acorda will receive another $400 million from Biogen once certain milestones are reached and landed double-digit royalties on all sales of the drug outside of the US.

Biogen is also a good fit because it has two MS drugs on its roster already, Avonex and Tysabri. The latter is one of the most effective drugs in treating the disease, but has been plagued by safety problems since its inception. Tysabri, which is co-marketed by Elan (ELN), is known to cause a rare brain disease called PML. Despite the obvious marketing problems that have surfaced around the sale of Tysabri, Biogen was able to achieve blockbuster status for the drug; sales broke $1 billion in 2009. Tysabri and Avonex are both used to slow down the progression of MS.

(See, Will Turnover at Biogen Mean Victory for Icahn?)

Germany's Merck Serono is another company that is likely to be interested in Acorda. It already markets Novantrone, an immunosuppressant that is usually only used in people with advanced cases of MS due to complications it can cause in the heart. Merck KGaA is also developing an oral treatment for MS (all MS drugs currently on the market are injections) that has investors very excited.

Meanwhile, Novartis (NVS) is going head-to-head with the German Merck to be the first company to develop an oral MS treatment. Novartis's drug fingolimod is a once-daily oral treatment. Both drugs seem to be effective in reducing relapse rates in MS patients.
No positions in stocks mentioned.

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