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Here are highlights from Wednesday's Analyst Blog:
Mortgage Apps at 7-Month Low
Mortgage rates, which had declined to record lows since the Fed started its massive mortgage-backed securities (MBS) purchase program, have been creeping up in recent weeks and remained above 5% for a fifth straight week. Refinancing activity is very sensitive to mortgage rates and has thus come down sharply in recent weeks.
Further, though the pace of decline of housing prices has moderated, it is still on a downward trend. Foreclosures have been rising, discouraging many potential buyers.
This is certainly not good news for banks like Wells Fargo (NYSE: WFC | Quote | Chart | News | PowerRating) and Bank of America (NYSE: BAC | Quote | Chart | News | PowerRating) which had benefited a lot from the surge in refinancing activity during the first quarter.
ACOR & BIIB Team Up on MS Drug
This morning, Acorda Therapeutics (Nasdaq: ACOR | Quote | Chart | News | PowerRating) announced that it has entered into an exclusive collaboration and licensing agreement to develop and commercialize Fampridine-SR, the company's therapy to improve walking ability in patients with multiple sclerosis (MS), with Biogen Idec (Nasdaq: BIIB | Quote | Chart | News | PowerRating) for territories outside the U.S. These territories include Europe, Canada and Australia, among others, and relate to all current and future aminopyridine products.
Biogen will pay Acorda an upfront payment of $110 million in cash as part of the transaction. Acorda can earn an additional $400 million in regulatory and sales related milestones, plus a tiered double-digit royalty on sales of the drug. Biogen will handle all regulatory and commercialization activities outside the U.S. In June 2009, Acorda received feedback from the European Medicines Agency (EMEA) that the marketing authorization application (MAA) in Europe is eligible to be filed under the centralized procedure.
In addition to the tiered double-digit royalties that Biogen will pay Acorda, Biogen will also assume Acorda's sub-royalty responsibility to Elan Corp. (NYSE: ELN | Quote | Chart | News | PowerRating) on Fampridine-SR. Acorda will pay Elan a sub-license fee of 7% ($7.7 million) on all upfront and future milestone payments received from Biogen. Elan will continue to manufacture the commercial supply for Fampridine-SR.
We view the deal as very positive for both companies. Acorda has partnered up with the worldwide leader in MS to commercialize its drug in Europe and other markets outside the U.S. Biogen already promotes its MS drugs -- Avonex and Tysabri -- in these markets, and under Biogen's marketing and promotion arm we see Fampridine-SR ramping to $275 million ex-U.S. by 2013. Biogen exited the first quarter with $2.5 billion in cash and a slowing top-line outside the U.S. where Avonex has matured and Tysabri is slowed by continued fears over PML. Therefore, the deal is a natural fit and should benefit both companies in the long run.
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