Deal Struck, Shares Stuck

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Acorda Therapeutics (Nasdaq: ACOR) secured a decent upfront payment to license the ex-U.S. rights to its multiple sclerosis drug, Fampridine-SR, from the perfect partner. Unfortunately, investors still smacked the stock down nearly 15% yesterday.

The reason? It's something that I'm constantly harping on -- here and here and here, for example -- investing on the hopes of a buyout. The problem with that strategy is that investors have very little control over whether a buyout happens; it's management and the board of directors that make the decisions, and sometimes they think partnering is a better move for the company. Acquisitions should be thought of as a fringe benefit, and factoring them into valuations is just plain dangerous.

Rant over. Let's get to the terms of the deal, shall we?

In exchange for giving up its marketing rights outside the U.S., Acorda is getting $110 million upfront from Biogen Idec (Nasdaq: BIIB). There's also another $400 million in payments possible if the drug hits regulatory and sales milestones. Acorda is also due double-digit royalties on sales outside the U.S. It does have to give 7% of these payments to Elan (NYSE: ELN), whom Acorda licensed the drug from, but it still looks like a good deal to me.

Biogen is the perfect partner for Fampridine-SR. The company markets two multiple sclerosis drugs, Avonex and Tysabri, but Fampridine-SR won't really compete with those or other drugs like EMD Serono and Pfizer's (NYSE: PFE) Rebif or Teva Pharmaceuticals' (Nasdaq: TEVA) Copaxone. Rather than lowering the severity or frequency of attacks, Fampridine treats one of the most debilitating aspects of the multiple sclerosis: the inability to walk.

Acorda retained the rights to the sales in the U.S. and is looking for a decision from the Food and Drug Administration by Oct. 22. The phase 3 data looked good, and now that it has worked out its hiccup over the formatting issues with its marketing application, I'd expect an approval in the fall.

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