Acorda's Next Hurdle

The Superman star invited Cohen to his Westchester home to discuss Acorda's research and potential products, including Fampridine-SR, a drug that held promise for the treatment of multiple sclerosis and spinal injuries.

"A few years later, he actually tried the drug and told a medical magazine he may have received some positive benefits from it," Cohen recalls. "But the drug was in the early stage of development then, and Christopher was injured as bad as you could be and still be alive," says Cohen, who has spent 14 years researching spinal-cord injury and MS. "The greater the injury, the less likely the drug would have any effect."

Reeve, who could move only the index finger of one hand, died in October 2004 after nine years of paralysis. While Fampridine-SR might not have been able to help him, in recent clinical trials, it has been shown to improve the walking ability of patients with multiple sclerosis, which attacks the insulation of the nerves that carry electrical signals from the brain and spinal cord to muscles and limbs. Over 80% of MS sufferers are walking-impaired at some point in the ailment's progression, according to the National Multiple Sclerosis Society. Many depend largely on wheelchairs and walkers for mobility.

A molecule synthesized from coal tar during the heyday of organic chemistry in the 1890s, Fampridine acts like a liquid bandage that prevents leakage from the damaged area of the affected nerves and allows current to be conducted the rest of the way through the nerve, allowing patients to walk for limited periods. Acorda has packaged the molecule as the active ingredient in a sustained-release tablet.

In a series of clinical trials last year, patients who took Fampridine were tested over 14 weeks for improvements in their ability to walk unassisted on a 25-foot-long track. Four times as many patients taking Fampridine-SR saw improvement in their walking speeds, compared with those not taking the drug.

The product is currently midway through a second round of so-called Phase 3 clinical trials, the final step before it is submitted to the Food and Drug Administration for approval. Hawthorne, N.Y.-based Acorda expects to announce trial results during this year's second quarter. If things go well, FDA approval could come as soon as late 2009 or early 2010.

The first round of Phase 3 testing was encouraging — particularly gratifying since the drug hadn't passed muster in Phase 3 tests in 2004 focused on a different use for it.

Following the release of positive trial results on Sept. 25, 2006, Acorda's common skyrocketed to 20 from 2 prior to the news, before ending the year near 16. Rumors that the company might be a takeover target, fueled by demands by hedge-fund activist Daniel Loeb of Third Point, a shareholder, that the company be sold, pushed the stock to a 52-week high of 26.58 last May. Loeb has since sold his position; the shares have settled back to the low 20s.

The next milestone for Fampridine could come in a few months, when results from cardiac-safety tests begun last September are announced. All drugs must undergo these tests to rule out any cardiovascular side effects. "Although routine, not every one passes these tests," says Joel Sendek, an analyst with Lazard Capital Markets in New York. "But once they pass this hurdle, and if the Phase 3 results reconfirm the previous positive results — which we think they will — Acorda will be in a good position to file for approval with the FDA. And if approved, we expect the drug to be a big seller."

Sendek has a one-year price target of 28 on Acorda, which lost $1.31 a share in 2006 and is projected to lose $1.99 this year. He foresees earnings of 90 cents a share in 2010, based on early Fampridine sales and revenue from Acorda's only other product, Zanaflex, which helps MS patients control spasticity.

The company, which doubled the size of its national sales staff to 65 in 2006, sold $26.5 million worth of Zanaflex that year, up from $5.9 million in 2005, and Piper Jaffray analyst Caroline Stewart estimates that its sales topped $41 million last year. Stewart thinks that, combined, sales of Zanaflex and Fampridine will reach $182 million by 2010. Says CEO Cohen: "The sales force we are building for Zanaflex is a natural base for marketing Fampridine, since many of the same doctors who prescribe Zanaflex would likely prescribe Fampridine to their patients."