Acorda Therapeutics (NASDAQ:ACOR) started the week like it ended last week: in the red. The biotech fell more than 12% on Monday after an analyst downgraded the biotech following last week's disclosure that a U.S. District Court invalidated four patents covering its multiple sclerosis drug Ampyra.
Grand total, shares of Acorda Therapeutics have fallen 31% over the last two trading days.
JPMorgan analyst Cory Kasimov pegged Acorda's value at $24 per share, down from his previous valuation of $32 per share, but investors sent shares even lower, ending the day at $18.40.
With the potential to face generic competition for Ampyra as early as July of next year, investors are turning to Acorda's pipeline for something to drive sales higher. Fortunately, the company has a Parkinson's disease drug, CVT-301, which recently passed its phase 3 clinical trial.
Unfortunately, biotech investing often comes down to what the company can do for investors right now. And with Acorda planning on filing its marketing application for CVT-301 with the FDA in the second quarter, an approval may not come until 2018.
Acorda plans to appeal the lawsuit invalidating its patents, but a decision from the appellate court could take a while, perhaps coming even after the launch of CVT-301.
Investors looking to hold for the long term may be getting a good price right now, but they should keep an eye on the biotech's cash situation. The company ended last year with $158.5 million in the bank, and management expects Ampyra revenue of $535 million to $545 million this year. If those sales are cut in half next year, after generic competition begins, shareholders could see dilution through a secondary offering to raise capital.