Adamas Pharma's Gocovri Approved, A Welcome Addition To Parkinson's Treatments

Adamas Pharmaceuticals Inc ADMS shares were on a tear Friday following that the FDA has approved its GOCOVRI extended release capsules for dyskinesia in patients with Parkinson's disease receiving levodopa-based therapy, with or without dopaminergic medications.

At the time of writing, the shares of Adamas were up 43.43 percent at $20.41.

The Therapy

Gocovri is an extended-release amantadine hydrochloride to treat levodopa-induced dyskinesia in patients with Parkinson's disease. LID occurs at the later stages of Parkinson's disease, with patients suffering from involuntary non-purposeful movements as well as reduced control over voluntary movements.

The company indicated that Gocovri is likely to be made available in the fourth quarter, and would be formally launched with the full deployment of Adamas' sales force in January 2018.

A Welcome Addition

Commenting on the development, Cowen said GOCOVRI is a very welcome addition to the Parkinson's disease paradigm, as it believes the product is differentiated and addresses an unmet need.

With the de-risking event behind, Cowen maintained its Outperform rating on the shares of the company but upped its price target from $ to $55. Despite the initial move higher expected at the open, the firm said it would still add to the strength.

Cowen analysts Ken Cacciatore, Tyler Van Buren and Bill Maughan termed Gocovri as the only therapeutic currently available to directly address LID. While noting that the company indicated the pricing for Gocovri will fall between $10,000 and $30,000 per year, the analysts said they model a price of $15,000.

Cowen feels pricing anywhere within the indicated range should be reasonable and secure broad coverage/access. This compares to $22,000/year pricing of ACADIA Pharmaceuticals Inc. ACAD's Nuplazid and the $60,000 pricing of Tardive Dyskinesia treatments from Teva Pharmaceutical Industries Ltd (ADR) TEVA and Neurocrine Biosciences, Inc. NBIX.

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Cowen expects a U.S. launch in early 2018. Additionally, the firm expects a 15 percent, plus, penetration in the treatable moderate/severe LID patient population by 2025, fetching the company annual sales of over $400 million.

By 2021, the firm expects very modest contribution from either Europe or MS Gait, potentially yielding an additional $200 million, plus, from this program. Also, the firm estimates that Adamas will get low-to-mid-teens royalties for Namzaric, peaking at $35 million per year for a total consideration $160 million.

"Using the sales estimates provided above, we arrive at a DCF valuation of $55 per share," the firm said.

Adjusting The Model

Meanwhile, JMP Securities' Jason Butler and Roy Buchanan reiterated their Market Perform rating on Adamas and increased their price target from $29 to $33.

"The approved label is broad and consistent with our expectations, including results supporting the drug's benefit not only in reducing dyskinesia, but also reducing OFF time and increasing On time without troublesome dyskinesia," the analysts said.

Announcing several adjustments to its model, JMP Securities said it is increasing the probability of approval from 75 percent to 100 percent. Accordingly, the firm raised its price target to $33, which is derived from a risk-adjusted, NPV analysis of Gocovri's U.S. sales and Namzaric royalties, with pipeline program presenting potential upside.