SecProbe.io

CORRESP
1
filename1.htm

[LETTERHEAD
OF ACORDA THERAPEUTICS]

Ms.
Carol Stacey

Office of the Chief Accountant

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

Fax:  202-772-9213

November 28, 2005

Re:  Acorda
Therapeutics, Inc.

Request to provide certain
historical financial information to satisfy the financial statement
requirements of Rule 3-05 of Regulation S-X.

Dear Ms. Stacey,

Reference is made to our letter, dated
October 26, 2005, to Mary K. Fraser of the Division of Corporation Finance (the
“3-05 Letter”), a copy of which is attached hereto.  In our 3-05 Letter, we requested concurrence
of the Securities and Exchange Commission (“SEC”)
Staff with our conclusion that historical financial statements were not
required, under Rule 3-05 of Regulation S-X and Rules 3-01 and 3-02 of
Regulation S-X as they relate thereto (“Rule 3-05”), to be filed  with our registration
statement, as our acquisition of Zanaflex assets (the “Acquired Assets”) did
not constitute the acquisition of a business.
As noted in the comment letter received from the Staff on November 10,
2005 and in a subsequent conversation with Ms. Bruckner on November 16, 2005,
we are aware that the Staff has determined that the Zanaflex Acquisition did constitute
the acquisition of a business under Rule 3-05, principally because one of the
assets acquired was generating revenue from and after the time of acquisition.

Rule 3-05 of Regulation S-X requires that the
financial statements specified in Rules 3-01 and 3-02 of Regulation S-X be
provided for an acquired business.  We
have been advised by the Seller that it is impracticable to prepare complete
financial statements in accordance with Rules 3-01 and 3-02 of Regulation S-X
relating to the assets acquired.  The
Seller cannot objectively allocate certain expenses to the assets.  Any allocation would be subjective and would
not be relevant to investors given the differences between Seller’s corporate
structure and that of the Company’s.  The
Seller has advised us that they are able to provide financial statements from
mid-2002-2004 that reflect gross sales to gross margin information for the
2002-2004 period and some limited selling and research and development expenses
from 2002.  This is a consequence of the
introduction of generic tablets in mid-2002, after which all promotional and
selling activities (and expenses) for the tablet product ceased.

Page
1

Further, because we are
acquiring specific assets and integrating them into our existing corporate
infrastructure, we believe that the presentation of certain financial
information other than complete financial statements prepared in accordance
with Rules 3-01 and 3-02 of Regulation S-X would be more relevant and
useful to investors.

Based on our discussions
with Ms. Bruckner and for the reasons set forth below, we are writing
to seek your concurrence with respect to a proposal that we made to Ms.
Bruckner that, in satisfaction of the requirements of Rule 3-05, we include
certain audited financial information in our registration statement in lieu of
complete audited financial statements for the Acquired Assets.  Specifically, we propose to include audited
statements of (i) direct revenues in the form of gross sales detailed down to
the gross margin level associated with the product line, and (ii) direct
expenses consisting of selling and research and development expenses associated
with the Zanaflex tablet product line for the fiscal periods ended December 31,
2003 and 2002.  Our reasons in support of
this proposal are set forth below.

Background

In July 2004, Acorda Therapeutics, Inc (the
Company) acquired the U.S. sales, marketing and distribution rights to Zanaflex
Capsules™ and Zanaflex® tablets from Elan Pharmaceuticals, Inc (the Seller),
pursuant to an Asset Purchase Agreement.
The assets acquired included the FDA registration for each product (the
Capsules were approved under a separate NDA (New Drug Application) from the
tablets), a patent protecting the Capsules and two related patent applications,
and [***] of existing Zanaflex tablet inventory.  The acquisition did not include physical
facilities, sales force employees, any other employee base, working capital
accounts (e.g., accounts receivable and payable), customer base, production
techniques or a market distribution system.  The assets have not been previously managed by
the Seller as a stand-alone business.  We
have been advised by the Seller that it is impracticable to prepare complete financial
statements in accordance with Rules 3-01 and 3-02 of Regulation S-X relating to
the assets acquired due to the following reasons:

•                  The assets have not been
accounted for as a separate entity, subsidiary or division of the Seller’s
business.

•                  Stand-alone financial
statements relating to the assets have never previously been prepared, and
Seller’s independent auditors have never audited or reported separately on the
operations of the Zanaflex assets.

•                  The Seller cannot
objectively allocate certain expenses to the assets.  Any allocation would be subjective and would
not be relevant to investors given the differences between Seller’s corporate
structure and that of the Company’s (e.g., the Seller is a large pharmaceutical
company with multiple products that handles its operations almost entirely
through internal resources, while the Company is a small, biopharmaceutical
company that sells only Zanaflex that uses external resources (with very
different costs from internal resources) for a number of key components of its
operations.

•                  The Seller’s selling and
marketing expenses were halted in 2002.  There
were virtually no direct selling or marketing expenses attributable to the
tablets, and none for the Capsules, for most of the financial reporting period
covered by Rules 3-01 and 3-02.

•                  Capsule cost of
goods are completely distinct from tablet cost of goods, as they are a
different product made by a different manufacturer by means of a different
process.

Page
2

We believe the Seller’s historic tablet
financial information, even if it were available, is not relevant to the
Company’s Zanaflex Capsules business, as the product is different from the
tablet (as recognized by the FDA) and had not been sold by the Seller.  The Company itself has not actively marketed
the tablet product since acquisition, but has instead launched Zanaflex
Capsules and is focused on converting tablet sales to Capsules.  Zanaflex Capsules is a new, patent-protected
drug with product attributes that differentiate it from the tablets.  The key attribute is its different
pharmacokinetic profile.  Studies have
demonstrated that Zanaflex Capsules, when taken with food, reduce and prolong
peak levels of tizanadine in the patient’s blood.  Zanaflex tablets, in contrast, actually
increase peak levels when taken with food.
The FDA recognizes the importance of these differences in
pharmacokinetic profile, and has determined that Zanaflex Capsules are not
therapeutically equivalent to Zanaflex tablets and therefore, under state
pharmacy laws, pharmacists may not properly substitute the tablets when filling
a prescription for Zanaflex Capsules.
Thus, the products are not AB-rated in FDA’s Orange Book.

Historic tablet financial information would
provide limited and likely misleading operating information if applied to
predicting future tablet business, as:

(1)           It traces the last burst of
pre-generic business, followed by the dramatic and now substantially completed
downhill erosion from generic competition.
This was a unique, end-of-life period in the tablet’s lifecycle, for
both revenues and expenses.

(2)           It
does not include Zanaflex Capsules sales.

Accordingly, we respectfully request your
concurrence with our proposal to present the following financial information
relating to the assets in satisfaction of the requirements of Rule 3-05 of
Regulation S-X and Rules 3-01 and 3-02 of Regulation S-X as they relate
thereto:

•                  Zanaflex tablet product line
Satements of Direct Revenues, Discounts and Allowances, Cost of Goods Sold,
direct selling expenses and direct research and development expenses for all
periods for which financial information relating to the assets is required
pursuant to Rule 3-05 of Regulation S-X.  There will not be material direct expense
amounts to report after 2002.

•                  Disclosure of any other
sales information relating to the assets, to the extent available, in the
accompanying notes to the statements described above.

•                  A note to the
statements described above detailing the reasons for the presentation.

Conclusion

Because of the declining market for the
tablets due to the active conversion of the market to the Capsules, the absence
of direct sales and marketing expenses for the tablets post-2002 by both the
Seller and the Company, and the launch by the Company of the Capsules, we
believe that the proposed presentation of the financial information described
above would provide investors with all of the information material to their
understanding of our acquisition of the assets.

We understand that abbreviated financial
information has been acceptable to the SEC in certain situations where, as
here, the financial information proposed to be presented would provide
investors with more relevant information concerning the assets acquired and the
impact of the

Page
3

acquisition than complete financial
statements in accordance with Rules 3-01 and 3-02 of Regulation S-X.  We respectfully request your concurrence in
this case.

Page
4

If you require any further information,
please contact the undersigned at (914) 347-4300 x119.

  Sincerely,

  /s/ DAVID LAWRENCE

  David
  Lawrence

  Chief Financial Officer

Cc:          Ms. Amy Bruckner, SEC

Buck Phillips, Audit Committee Chairperson

Mark Thomas, Partner KPMG

Page
5

[LETTERHEAD
OF ACORDA THERAPEUTICS]

EXHIBIT
A

Ms. Mary K. Fraser, Esq.

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Fax (202) 772-9213

October 26, 2005

Dear Ms. Fraser,

In connection with our
filing on October 5, 2005 of a Form S-1, we have assessed whether historical
financial statements are required pursuant to Regulation S-X 210.3-05, Financial Statements of Businesses Acquired or to be Acquired
(“Rule 3-05”) regarding our acquisition of certain product assets.  The following provides background on our
Company, our evaluation of whether those product assets are an acquired
business pursuant to Rule 11-01(d) of Regulation S-X, and our conclusions as to
why they are not and, accordingly, historical financial statements are not
required.

Background

Company
Overview

Acorda Therapeutics, Inc.
(the “Company”) is a commercial-stage biopharmaceutical company dedicated to
the identification, development and commercialization of novel therapies that
improve neurological function in people with multiple sclerosis (“MS”), spinal
cord injury (“SCI”), and other disorders of the central nervous system, or
CNS.  Our lead marketed drug, Zanaflex
Capsules™, is FDA-approved for the management of spasticity.  Our lead product candidate, Fampridine-SR, is
in a Phase 3 clinical trial for the improvement of walking ability in people
with MS.  Our preclinical programs also
target MS and SCI, as well as other CNS disorders, including stroke and
traumatic brain injury.

Our marketed products,
Zanaflex Capsules and Zanaflex tablets, which we acquired in 2004, are
FDA-approved for the management of spasticity, a symptom of other conditions
such as MS and SCI that can cause stiffness and rigidity, restrict movement and
result in painful muscle spasms.  These
products contain tizanidine hydrochloride, or tizanidine, one of the two
leading treatments currently used for the management of spasticity.

Key
Terms of the Zanaflex Acquisition Agreement

The Company acquired the
U.S. sales, marketing and distribution rights to Zanaflex Capsules and Zanaflex
tablets in July 2004 from Elan Pharmaceuticals, Inc (“Seller”).  These products are approved for the
management of spasticity. Zanaflex tablets were approved by the FDA in 1996 and
lost compound patent protection in 2002.
There are currently 11 generic versions of Zanaflex tablets on the
market. Zanaflex Capsules were approved by the FDA in 2002, but were never
marketed by the Seller.  Zanaflex
Capsules are protected by a patent that expires in 2021.  The Company began marketing Zanaflex Capsules
in April 2005.

We acquired our Zanaflex
assets pursuant to an Asset Purchase Agreement entered into with the
Seller.  The assets acquired included the
FDA registration and FDA dossier for each product (the Capsules were approved
under a separate NDA (New Drug Application) from the tablets), a patent
protecting the Capsules and two related patent applications, and existing
Zanaflex tablet inventory.  We also
entered into a trademark license that allows us to buy the Zanaflex trademark
for a nominal sum once specific milestone and royalty payments have been
made.  In addition, we assumed the rights
and obligations under a license and supply agreement for Zanaflex tablets with
a third party contract manufacturer that expires in 2007.  Additionally, we entered into a five-year
supply arrangement with the Seller to manufacture Zanaflex Capsules for us.

We made an upfront payment
of $2 million at the time of closing and agreed to pay milestones potentially
totaling [***].  We also agreed to pay
total royalties [***] based on net sales of Zanaflex tablets and Zanaflex
Capsules.  The Company has calculated the
significance of the acquisition (as if it were a business) under the tests in
Rule 1-02(w) and determined that the greatest level of significance would
approximate 47% under the investment test.
It should be noted that this calculation includes the contingent
consideration described above, substantially all of which we would expect to be
allocated to Zanaflex Capsules.

Accounting Treatment

We have accounted for this
acquisition as an asset acquisition for accounting purposes.  We have considered the guidance in EITF 98-3,
Determining Whether a Nonmonetary Transaction
Involves Receipt of Productive Assets or of a Business, and
concluded that the assets, functions and operations that we did not acquire
(e.g. warehousing and distribution, accounting, sales and marketing,
manufacturing, strategic management, employees and human resources) cannot
generally be replaced with relative ease and without significant cost.  Accordingly, management concluded that it
would not have been able to conduct normal operations and sustain a revenue
stream based solely upon the acquired assets.

In connection with our
filing of a Form S-1, we have considered the application of Rule 3-05 to the
acquisition of Zanaflex Capsules and Zanaflex tablets and, more specifically,
whether this acquisition meets the definition of a business pursuant to
Regulation S-X 210.11-01(d) (“Rule 11(d)”).

Acorda’s Zanaflex Operations

We launched Zanaflex
Capsules in April 2005 and are working to convert all of the existing tablet
business to Zanaflex Capsules.  We also
have invested in a sales force and a marketing campaign

Page
2

aimed only at the Zanaflex
Capsules business.  We hired a 14-person
sales force, deployed a 162-person contract sales force, and have invested in
marketing plans, a sample program, a patient assistance program, continuing
medical education, promotional materials and a telemarketing campaign, all
aimed solely at building the Zanaflex Capsules business.  Although we cannot accurately predict exactly
how long it will take to convert our customer base to Zanaflex Capsules, it is
our intention to complete this process as soon as possible [***]

A key mo