Ron Cohen is a well-known, successful and highly paid biotech CEO. But the company Cohen runs, Acorda Therapeutics (ACOR) - Get Report , lost a court fight over patents protecting its top-selling multiple sclerosis drug and now he has to fire 100 or more of his employees.
Not cut -- yet -- is Cohen's multi-million dollar compensation package.
"The decision to reduce headcount is extremely difficult, but is necessary to ensure that Acorda can continue to bring important therapies to the market. We are grateful for the dedication and hard work of all of Acorda's associates," Cohen said, in a company statement issued Wednesday.
Acorda is firing approximately 20% of its employees, between 100 and 120 people, because the company's lawyers were on the losing side of a court ruling that invalidated four patents protecting Ampyra, a drug that improves the walking ability of multiple sclerosis patients.
Ampyra sales were $493 million in 2016, or 95% of the Acorda's total revenue. The lost patents mean a cheap, generic version of Ampyra could reach the market next year, well before the company planned.
Terminating these employees will save Acorda $21 million per year, the company said.
In 2015 (the last year compensation figures were disclosed) Cohen earned $1.3 million in salary and "non-equity compensation," which everyone else calls an annual cash bonus. Adding in the value of stock and option grants bumps Cohen's total pay package for 2015 to $3.45 million.
I asked an Acorda spokeswoman if Cohen's pay -- and the compensation paid to the rest of his management team -- would be downsized to save the company money and reduce the number of lower-level employees fired.
"We're not commenting on that at this time," she said.
As a group, the top five Acorda executives earned $9.8 million, including $4 million in salary and cash bonuses, in 2015.
Acorda has not yet filed a 2016 proxy statement with the Securities and Exchange Commission.
Biotech is an inherently risky business, so restructurings and layoffs are an unfortunate consequence of bad things happening.
But Acorda's situation is a somewhat different because the company was extra risky from its founding. The active ingredient in Ampyra is an old organic compound, 4-Aminopyridine, that had limited patent protection. [4-Aminopyridine was used once used to repel birds by causing seizures.]
Under Cohen's stewardship, Acorda developed Ampyra knowing full well that the drug's patent life would be relatively short and that efforts to extend those patents would be fought in court. Acorda's legal efforts worked for a time, but ended last week with the judge's ruling. (Ampyra intends to appeal.)
Cohen played a legal game of chicken with Ampyra's patents and lost. One hundred or so his employees are paying the price with their jobs.
Cohen's only punishment is having to say that he's sorry.
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.