An investor in Acorda Therapeutics Inc. claims he lost $3.3 million because two top executives persuaded him to hold on to his investment even as they were planning to take the Rockland County drugmaker into bankruptcy.
Paso Milak, of Dallas, accused Acorda founder and CEO Ron Cohen and CFO Michael A. Gesser of fraud, negligence and conspiracy, in a complaint filed on Aug. 8 in U.S. District Court, White Plains.
“Defendants deliberately kept Milak on the hook,” the complaint states, “so that he would vote for them to keep their positions and hold his substantial ownership position, preventing a collapse of Acorda’s stock price.”
Acorda was founded in 1995 and was based in Pearl River. It is best known for Ampyra, for treating multiple sclerosis, and Inbrija, for Parkinson’s disease.
On April 2, Acorda and five affiliates filed for Chapter 11 protection in White Plains bankruptcy court, declaring $109 million in assets and $266 million in liabilities.
Milak says he has held as much as 8% of Acorda’s stock worth about $8 million. He describes himself as an active and diligent shareholder, routinely participating in quarterly meetings and regularly speaking with Cohen and Gesser to discuss financial targets and strategies.
In May 2022, for instance, Milak says he insisted that Acorda needed to bring in $150 million for the year to become cash flow neutral. Gesser allegedly stated that the company was on track to do so, even as Gesser and Cohen “were secretly aware of key financial information indicating the practical impossibility of achieving this result.”
By June 2023, the executives were allegedly preparing for bankruptcy, but concealed the company’s vulnerability at the annual shareholder meeting.
This past January, they knew for certain that they were filing for bankruptcy, Milak claims, but continued to “string him along and keep him from divesting his ownership in Acorda.”
Milak says the executives needed to keep the share price above $1, so that Acorda would not be delisted on the Nasdaq exchange before filing for bankruptcy. He also alleges that the executives received multi-million payouts on a “backend deal they arranged for themselves.”
On July 10, Merz Therapeutics, of Frankfurt, Germany, announced that it had purchased the rights to Ampyra, Inbrija and other assets for $185 million, in a bankruptcy court sale.
Efforts to find contact information for Cohen and Gesser, to ask for their sides of the story, failed. Acorda’s bankruptcy attorney, Blaire Cahn, did not reply to an email asking for comment.