IPO Report: Adamas Pharmaceuticals (ADMS)

Adamas Pharmaceuticals  (ADMS) is a specialty pharmaceutical company driven to improve the lives of those affected by chronic disorders of the central nervous system headquartered in Emeryville, CA.

Twelve other companies are scheduled for the week of April 7, 2014.  The full IPO calendar is available at IPOpremium.

The manager and joint managers are Credit Suisse, Piper Jaffray.  The co-managers are William Blair, Needham.

ADMS scheduled a $51 million IPO with a market capitalization of $279 million at a price range midpoint of $17 for Thursday, April 10, 2014 on the Nasdaq.  SEC Filings

Overview
ADMS is a specialty pharmaceutical company driven to improve the lives of those affected by chronic disorders of the central nervous system, or CNS.

Valuation

Glossary

Conclusion
ADMS has an impressive collaboration with Forest Labs (FRX), $25 billion market capitalization.  See 'Forest Labs' below.

ADMS is priced at 2.2 times book and post IPO will have 47% of its market cap in cash.

The rating on ADMS is buy.

Business

ADMSis a specialty pharmaceutical company driven to improve the lives of those affected by chronic disorders of the central nervous system, or CNS.

ADMSachieves this by enhancing the pharmacokinetic profiles of proven drugs to create novel therapeutics for use alone and in fixed-dose combination products. ADMS is developing its lead wholly owned product candidate, ADS-5102, for a complication of Parkinson's disease known as levodopa induced dyskinesia, or LID, and as a treatment for chronic behavioral symptoms associated with traumatic brain injury.

Clinical trials

ADMShas successfully completed a Phase 2/3 clinical study in LID and intend to initiate a Phase 3 registration trial in 2014. ADMS’s late-stage therapeutics portfolio also includes an NDA-submitted product candidate, MDX-8704, being co-developed with Forest Laboratories (FRX and an approved product, Namenda XR, which Forest developed and is marketing in the United States under a license from ADMS.

Forest Laboratories (FRX), $25 billion market cap
Prior to November 2012, ADMS was developing ADS-8704, a fixed-dose combination of controlled-release memantine and donepezil.

Pursuant to its license agreement with Forest, ADMS exclusively licensed to Forest certain U.S. intellectual property rights relating to controlled-release memantine and therapies including memantine.

Forest has continued the ADS-8704 program under the name MDX-8704. Under its license agreement with Forest, ADMS received a $65 million upfront payment in November 2012 and two $20 million milestone payments in the fourth quarter of 2013.

ADMSis eligible to receive up to an additional $55 million in payments based upon the achievement of certain regulatory milestones prior to and including the first FDA approval of MDX-8704.

Dividend Policy

No dividends are planned.

Intellectual Property

As of March 25, 2014, ADMS owned 16 issued U.S. patents, eight U.S. patent applications and additional patents and patent applications in other jurisdictions.

Competition

ADMSmay face competition from large pharmaceutical and biotechnology companies, smaller pharmaceutical and biotechnology companies, specialty pharmaceutical companies, generic drug companies, academic institutions, government agencies and research institutions and others.

5% stockholders

Entities affiliated with Mohr Davidow Ventures   30.9%

aeris CAPITAL Equity Investments, L.P.              16%

Entities affiliated with DAG Ventures                    12%

NCD Investors, A Delaware Multiple Series LLC  6.3%

Gregory Went, Ph.D.                13.6%

William Ericson                          31.1%                      

Use of proceeds

ADMS expects to net $44 million from its IPO. Proceeds, along with cash on hand, are allocated as follows:

$30 million to fund its Phase 3 registration trial of ADS-5102 in LID and related activities;

$30 million to fund a Phase 2/3 study of ADS-5102 in a second CNS indication and related activities;

$30 million to fund additional product development, including clinical trials; and

the remainder for working capital, capital expenditures and other general corporate purposes, which may include acquiring or licensing products, businesses or technologies, although ADMS has no present commitments for any such acquisitions or licenses.