Adamas Pharmaceuticals, Inc. Class Action lawsuit
- Company Name
- Adamas Pharmaceuticals, Inc.
- Stock Symbol
- Class Period
- August 8, 2017 to September 30, 2019
- Northern District of California
On December 10, 2019, the Adamas Pharmaceuticals, Inc. class action lawsuit was filed charging Adamas and certain of its officers with violations of the Securities Exchange Act of 1934. The Adamas class action lawsuit was commenced in the Northern District of California on behalf of purchasers of Adamas securities between August 8, 2017 and September 30, 2019 (the “Class Period”) and is captioned Zaidi v. Adamas Pharmaceuticals, Inc., et al., No. 19-cv-08051.
Adamas is a commercial-stage pharmaceutical company that specializes in developing drug treatment therapies for chronic neurologic disorders. Adamas’s primary product is GOCOVRI, an extended-release formulation of amantadine, which has been approved by the U.S. Food and Drug Administration for the treatment of levodopa-induced dyskinesia and for which Adamas later tried to secure a follow-on indication to treat multiple sclerosis with walking impairment (“MSWI”).
The Adamas securities class action alleges that throughout the Class Period, defendants made materially false and misleading statements about managed care’s acceptance of GOCOVRI, the breadth of insurer coverage for GOCOVRI prescriptions, and the impact of Adamas’s commercialization efforts. In addition, defendants failed to disclose that health insurers were excluding GOCOVRI from their prescription formularies or requiring patients to use “step therapy,” i.e., make patients try immediate-release amantadine prior to covering GOCOVRI, and that the rapid increase in physicians prescribing GOCOVRI during the Class Period was not due to the drug’s efficacy. As a result of these misrepresentations and omissions, Adamas securities traded at artificially inflated prices during the Class Period, with Adamas’s stock price reaching a high of more than $42 per share.
On October 5, 2018, an analyst at Bank of America/Merrill Lynch downgraded Adamas, revealing that his survey of doctors showed a higher-than-expected dropout rate for GOCOVRI due to the high cost and difficulty in securing prior authorizations from payers. On this news, Adamas’s stock fell 8%, closing at $17.83.
Then, on November 1, 2018, Adamas revealed that the rate of new GOCOVRI prescribers was not as robust as expected. On this news, Adamas’s stock price fell nearly 30%.
Four months later, on March 4, 2019, Adamas walked back its previous prescription growth estimates for GOCOVRI, warned of a continued slow-down in GOCOVRI prescriptions, and refused to make further predictions about GOCOVRI’s ability to achieve a sizeable market share. On this news, the price of Adamas stock fell $3.99 per share, or more than 32%, to close at $8.16 per share on March 5, 2019.
Finally, on September 30, 2019, Bank of America/Merrill Lynch lowered its rating for Adamas shares to “Underperform,” noting “existing overhangs for ADMS: (1) Gocovri coverage: a number of national formularies exclude Gocovri. We expect reimbursement hurdles in MSWI space especially with generic Ampyra launch . . . .” On this news, the price of Adamas stock fell a further 42%, from $7.05 per share on September 26, 2019 to $4.03 per share by October 3, 2019.
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