- The stock price of Adamas Pharmaceuticals Inc (NASDAQ: ADMS) increased by over 70% pre-market today. This is why it happened.
The stock price of Adamas Pharmaceuticals Inc (NASDAQ: ADMS) increased by over 70% pre-market today. Investors are responding positively to Supernus Pharmaceuticals, Inc. (Nasdaq: SUPN) and Adamas Pharmaceuticals, Inc. (Nasdaq: ADMS) today announcing a definitive agreement for Supernus to buy Adamas through a tender offer for $8.10 per share in cash (or an aggregate of approximately $400 million), payable at closing plus two non-tradable contingent value rights (CVR) collectively worth up to $1.00 per share in cash (or an aggregate of approximately $50 million), for a total consideration of $9.10 per share in cash (or an aggregate of approximately $450 million).
The first CVR, worth $0.50 per share, is payable upon achieving net sales of GOCOVRI of $150 million in any four consecutive quarters between closing and the end of 2024. And the second CVR, worth $0.50 per share, is payable upon achieving net sales of GOCOVRI of $225 million in any four consecutive quarters between closing and the end of 2025. The transaction is expected to close in the late fourth quarter of 2021 or in the early first quarter 2022.
The deal will provide Supernus with two marketed products: GOCOVRI (amantadine) extended-release capsules, the first and only U.S. Food and Drug Administration (FDA)-approved medicine indicated for the treatment of both OFF and dyskinesia in patients with Parkinson’s disease receiving levodopa-based therapy; and Osmolex ER (amantadine) extended-release tablets, approved for the treatment of Parkinson’s disease and drug-induced extrapyramidal reactions in adult patients.
Strategic and Financial Benefits
— Strengthens Parkinson’s disease portfolio with GOCOVRI (amantadine) extended-release capsules, the first and only FDA-approved medicine indicated for the treatment of both OFF and dyskinesia in patients with Parkinson’s disease receiving levodopa-based therapy.
— Diversifies and increases revenue base and cash flow
a.) Net sales of GOCOVRI were $71.2 million and $37.7 million in 2020 and for the first six months of 2021, respectively.
b.) Combined with the acquisition of US WorldMeds CNS products in 2020, this transaction significantly reduces the reliance on net sales of Trokendi XR. And in the first half of 2021 and on a combined proforma basis (including revenue from US WorldMeds and Adamas transactions), net sales of Trokendi XR® represent 48% of Supernus revenues down from 72% (excluding revenue from these transactions).
— Potential synergies of $60 million to $80 million in year one due to strong overlap with existing infrastructure.
— The acquisition is expected to be significantly accretive in 2022.
Terms and Financing
Under the terms of the deal, Supernus will commence a tender offer to acquire all outstanding shares of Adamas Pharmaceuticals for a purchase price of $8.10 per share in cash (or an aggregate of approximately $400 million) payable at closing plus two non-tradable CVRs. All-cash consideration will be funded through existing balance sheet cash.
The CVR entitles Adamas stockholders to receive up to an additional $1 per share in cash (or an aggregate of approximately $50 million) payable upon GOCOVRI achieving certain net sales milestones within specified periods (subject to the terms and conditions contained in a Contingent Value Rights Agreement detailing the terms of the CVRs). And these milestones include (i) $0.50 per share payable if in any 4 consecutive quarters between closing and the end of 2024, net sales of GOCOVRI achieving $150 million, and (ii) another $0.50 per share payable if in any four consecutive quarters between closing and the end of 2025, net sales of GOCOVRI achieving $225 million. There can be no assurance any payments will be made with respect to the CVR.
Approvals and Timing of Close
The deal, which has been approved by the boards of directors of both companies, is expected to close in late fourth quarter 2021 or in early first quarter 2022, subject to customary closing conditions, including receipt of required regulatory approvals and the tender of a majority of the outstanding shares of Adamas’ common stock. And following the successful closing of the tender offer, Supernus will acquire any shares of Adamas that are not tendered in the tender offer through a second-step merger at the same consideration as paid in the tender offer.
Full Year Financial Guidance
Supernus is going to provide full year 2022 financial guidance during the company’s fourth quarter 2021 financial results conference call in February 2022.
“This acquisition represents a significant step to further build a strong and diverse Parkinson’s disease portfolio, and aligns with our focus of acquiring value-enhancing, clinically-differentiated medicines to treat CNS diseases. We have a proven track record of strong commercial execution, and look forward to building on GOCOVRI’s growth momentum so that more patients can benefit from access to Adamas’ innovative neurological therapies.”
— Jack Khattar, President and CEO of Supernus Pharmaceuticals
“We are pleased that Supernus recognized the value created at Adamas and firmly believe this path forward is an excellent outcome for not only our shareholders, but all our stakeholders. With their shared commitment to helping patients affected by neurological diseases and their extensive resources, Supernus can continue to advance our mission and reach. I am extremely proud of Team Adamas for their hard work and dedication to get us to this point and am confident that partnering with Supernus will maximize the potential of our innovative therapies.”
— Neil F. McFarlane, Chief Executive Officer of Adamas Pharmaceuticals, Inc
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