Gocovri Stabilizes Adamas Stock, Secures Another Buy Rating

Adamas Pharmaceuticals Inc ADMS shares have been sensitive to recent news around Gocovri, the firm’s leading pipeline candidate.

The drug is a proven gateway to the stock and lured an industry analyst in Tuesday.

The Rating

Bank of America Merrill Lynch analyst Tazeen Ahmad initiated coverage of Adamas with a Buy rating and $39 price target.

The Thesis

Gocovri launched in January after securing the first U.S. Food and Drug Administration label for levodopa-induced dyskinesia, or involuntary muscle movements. A survey of neurologists revealed “a favorable level of satisfaction” in the treatment.

“More importantly, respondents rated Gocovri with superior efficacy over amantadine IR (7.5 versus 6.6/10),” Ahmad said in a note. “We note that the neurologists expect to see a significant ramp up (150 percent in one year) in their Gocovri use in the near-term.”

Considering the drug’s superior dosing frequency and pharmacokinetics, Ahmad anticipates peak penetration of 30 percent and sees a large addressable market for the LID indication meriting a $25 minimum valuation.

BofA expects a 50-percent probability of success for Gocovri in multiple sclerosis walking impairment, an indication expected to secure $206 million in sales in 2029.

The firm’s MS and epilepsy pipelines are forecast to provide additional upside potential, Ahmad said. 

“Risks to our estimate are visibility around payor tiering, heavy salesforce focus on community doctors who might be reluctant to adopt new therapies, potential shallow initial uptake due to generics competition and perceived lack of differentiation from amantadine IR." 

Price Action

Adamas shares were down 1.35 percent at the time of publication Tuesday.

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