Today Acorda Therapeutics (ACOR) reported earnings. Acorda stock has risen on hopes for blockbuster sales of its MS walking drug Ampyra. First the stock went higher, but started falling when investors realized that sales will drop next quarter. Our negative stance on Ampyra sales has proven right. Earlier in the year, when Wall Street was unanimously wildly bullish on Acorda, we wrote the following:
In the short term, the bulls may be right. For the first time, MS patients with difficulty in walking have hope. MS patients, in general tend to be very knowledgeable about new drugs and as such they are likely to demand that neurologists prescribe Ampyra. Anecdotal evidence supports that neurologists will initially cede to such requests.
We do not believe that prescription momentum will continue. Our analysis shows that after a while when patients have real experience with the drug, usage will start declining. It reminds us of Rogaine, the hair growing drug with lot of hype but not very effective. It is clear that Ampyra has shown only a marginal benefit in a relatively small sample for such a complex disease. It is not clear that drug would have demonstrated any benefit over a larger sample using more comprehensive walking measurements. It appears that even the patients who benefit from the drug will not show any material improvement to their overall disability over a long period.
The wholesale acquisition cost (WAC) for AMPYRA-dalfampridine- Extended Release Tablets will be $1,056 per 30-day supply (60-count pill bottle), an annual cost of $12,850. It is an expensive drug for at best marginal benefit. Outside USA, it is likely that cost benefit analysis will severely hamper adoption, and as such analyst estimates appear too high.
For the above reasons, we will continue to add to short position on this stock especially on spikes up.
Now that our thesis on Acorda has been proven correct, it is time to become more aggressive in short selling the stock. Technically, the stock is now oversold. The ZYX Change Method calls for patiently waiting for the oversold condition to be alleviated and scaling in short positions on spikes over $30
