Key points:
- Acorda Therapeutics’ stock price soared 53.3% on a $16.5m award.
- A three-bench arbitration panel awarded the company the amount.
- Investors cheered the announcement, but I wouldn’t buy Acorda shares.
The Acorda Therapeutics Inc (NASDAQ: ACOR) stock price soared 53.5% after announcing that a three-judge bench had issued the final decision in its dispute with Alkermes (ALKS) regarding the licensing royalties of AMPYRA.
The panel had ruled in Acorda’s favour and awarded the firm $15 million plus pre-judgement interest of $1.5 million to be paid by Alkermes to Acorda. Furthermore, Acorda will no longer have to pay Alkermes any royalties for future sales of AMPYRA.
Also read: The Best Biotech Penny Stocks Under $5 To Buy Right Now.
WELCOME BONUS - Free Share Bundle When You Invest £50!
Get up to £500 cashback for investing with IG.
Acorda is finally free to use alternative suppliers of AMPYRA and is no longer tied to exclusively sourcing the drug from Alkermes. The company noted that it had already secured alternative suppliers of AMPYRA and would not deal with ALkermes.
The recent judgement comes after Acorda filed an arbitration demand with the American Arbitration Association in July 2020 after the two companies could not resolve the business dispute emanating from the expiry of Alkermes AMPYRA patent.
Typically, the patent expiry means that other suppliers can reverse-engineer the drug in question and make the same product at their discretion without paying a royalty or licensing fee to the company that initially held the patent.
However, Alkermes continued demanding royalty and licensing fees from Acorda despite the expiry of the latter’s patent on AMPYRA, which meant that Acoda no longer had to pay any royalty and licensing fees to Alkermes.
The award is a big win for Acorda Therapeutics and will significantly impact the company’s finances, given that the firm had a market capitalisation of $8.28nmillion yesterday. Therefore, the monetary award will give the company a cash balance twice its market valuation.
Investors cheered the announcement, as evidenced by the rally in Acord Therapeutics’ stock price. On the other hand, Alkermes stock is likely to open lower today.
So, should you buy Acorda Therapeutics stock? The short answer is no; it is never a good idea to chase a stock higher since significant pullbacks usually follow parabolic rallies.
*This is not investment advice.
Acorda Therapeutics stock price.
The Acorda Therapeutics stock price soared 53.30% to trade at $0.5137, rising from Friday’s closing price of $0.3353.