Acorda Therapeutics Inc (ACOR) Gets a Price Target Chop Following Fatalities That May Have Been Caused by Tozadenant Drug

J.P.


What sent Acorda Therapeutics Inc (NASDAQ:ACOR) investors into such a frenzy that shares plummeted to the market floor almost 40% yesterday? The drug maker revealed its Parkinson’s asset tozadenant may have led to seven patients in a Phase 3 trial to develop a harsh decrease in white blood cells called agranulocytosis, resulting in certain cases in sepsis and five deaths. Two patients of the seven had no white blood cell counts available during the event with one having a high count of white blood cells.

These safety issues are concerning to investors, especially if Acorda is now connected with a prospectively fatal side effect. The Acorda team does not believe this has been experienced with different A2a antagonists and is in talks with both the FDA as well as the DSMB while temporarily pausing new enrollment in long-term safety trials for the drug. Additionally, ACOR intends to boost the frequency of blood cell count monitoring in the pivotal trial on the heels of these 5 fatal sepsis events.

J.P. Morgan analyst Cory Kasimov notes that from his perspective, “it was always a toz-up,” where his expectations were never high for a drug that has now run into serious safety challenges.

Dialing back expectations for toz, the analyst reiterates a Neutral rating on ACOR stock while cutting the price target from $24 to $19, which represents a close to 12% increase from where the shares last closed. (To watch Kasimov’s track record, click here)

Yet, Kasimov notes the ACOR team holds out optimism, explaining, “Despite the added burden of these monitoring requirements, management is hopeful that the remaining patients will opt to complete the treatment period (90% of patients have already completed dosing).”

In the bigger picture, the analyst cannot help remaining quite cautious on the company’s prospects, even as he holds out a positive perspective for ACOR”s other Parkinson’s disease asset Inbrija: “Though the company still expects top-line results in 1Q18, today’s headline (at least in our view) represents a significant rebalancing of the value proposition for tozadenant and raises the bar substantially on what efficacy will need to look like to drive meaningful use. With that said, our own expectations were already quite low in regards to this asset; nevertheless this morning’s news substantially reduces the potential for upside optionality. Though we see promise in ACOR’s other potential near term sales driver, Inbrija, regulatory risk and increasing pipeline uncertainty causes us to stay on the sidelines and retain our Neutral rating.”

There are more on the Street playing it cautious than bullish when it comes to the New York biotech firm, as TipRanks analytics exhibit ACOR as a Hold. Based on 10 analysts polled by TipRanks in the last 3 months, 3 rate a Buy on Acorda stock, 6 maintain a Hold, while 1 issues a Sell on the stock. The 12-month average price target stands at $22.50, marking a 32% upside from where the stock is currently trading.

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