Adamas swaps royalties for cash at a high price

May 12, 2017   Suzanne Elvidge

Dive Brief: 

• Adamas Pharmaceuticals has entered into an agreement with HealthCare Royalty Partners (HCR) in an effort to get some quick cash so that it can continue development of its pipeline. 
• Under the terms of the agreement, Adamas will get $35 million upfront and then another $65 million when the Food and Drug Administration approves Parkinson's drug ADS-5102 and gives it orphan Drug exclusivity. The drug is currently under review and has a user fee action date of August 24. 
• Adamas will use the proceeds from the royalty deal to pay for general 
• expenses, as well as the commercialization of ADS-5102. 

Dive Insight:

Adamas Pharmaceuticals currently has all its eggs in three baskets – its two marketed drugs Namenda XR (memantine extended-release capsules) and Namzaric (memantine/donepezil extended-release capsules) licensed from Forest Laboratories, part of Allergan, and ADS-5102 (amantadine extended-release capsules). 

This much-needed cash isn't coming cheap; Adamas will pay 11% interest on the outstanding principal on a quarterly basis until it has paid back 200% of the principal. Interest and principal will be payable through a 12.5% royalty on the sales of ADS-5102, as well as up to $15 million annually of Adamas' royalties from Allergan from the sales of Namzaric until May 2020. The royalty rate on ADS-5102 would drop to 6.25% once the principal has been paid. On the flip side, the royalty rate increases to 22.5% in the event that Adamas doesn't keep up with payments. 

In Adamas' Pharmaceuticals first quarter results, the company announced a net loss of $16.0 million, with an almost 40% increase in general and administrative expenses, including increased headcount for the hoped-for launch of ADS-5102.

"We are thrilled to partner with HCR in this transaction, providing us with the resources to advance our business and commercialize ADS-5102, which we believe will create significant and sustainable value for all Adamas stakeholders." said Gregory T. Went, chair and CEO of Adamas Pharmaceuticals.

Adamas' stock value swooped down and then up on the day its earnings results came up, closing stable, but has fallen 5% on the news of the HealthCare Royalty Partners deal.

Touted earlier this year as a potential acquisition target, if it gains Food and Drug Administration approval, ADS-5102 could be the first drug for Parkinson's patients with levodopa-induced dyskinesia.

Elto Pharma, a spinout from Amarantus BioPharma, is developing its Phase 2 drug eltoprazine, for a number of indications, including levodopa-induced dyskinesia in Parkinson's disease.

Adamas has one other drug in clinical development in its rather sparse pipeline, ADS-4101 (lacosamide), for the treatment of partial-onset seizures in epilepsy. This is a timed-release (chrono-synchronous) formulation of an existing drug, Vimpat, and has completed a Phase 1 trial.

http://www.biopharmadive.com/news/adamas-swaps-royalties-for-cash-at-a-high-price/442590/