After a leading hedge fund reported it bought shares last month and in the wake of industry watcher upgrades, shares in Adamas Pharmaceuticals (ADMS) rallied more than 10% higher earlier today.
As fellow Motley Fool Brian Orelli pointed out on October 30, legendary hedge fund guru Steven Cohen recently reported a 5.1% equity stake in Adamas Pharmaceuticals.
The news his Point72 fund owned 1,144,000 shares sparked a rally that gained additional momentum thanks to Evercore ISI issuing an outperform rating with a sky-high $85 price target earlier this week.
Today, investors got additional good news when Kerrisdale Advisors, LLC reported it now owned enough shares to give it a 6.5% ownership position. As of June, Kerrisdale reported equity holdings valued at $114 million. For comparison, Point72's equity portfolio totaled more than $15 billion.
Hedge funds have to disclose when they accumulate large positions in public companies, but that doesn't mean that they plan on holding those shares for long. It could be that Adamas Pharmaceuticals drops out of these portfolios as quickly as it appeared.
Having said that, Adamas Pharmaceuticals' success or failure over the coming year rests heavily on its recently FDA-approved Parkinson's disease drug, Gocovri. Gocovri won an FDA green light on August 24, and management had said it plans a fourth-quarter launch, followed by a ramp upward in its sales force in 2018.
Gocovri is the first drug approved to treat dyskinesia, or involuntary movements, in Parkinson's disease patients. Dyskinesia occurs in about 90% of patients receiving levodopa-based treatment to increase dopamine levels. In trials, Gocovri successfully reduced dyskinesia and off-time, the period during which Parkinson's symptoms return.
Investors interested in adding Adamas Pharmaceuticals to their portfolio might want to wait until third-quarter financials are reported before buying. During the earnings conference call, management's likely to provide an update on the timeline for Gocovri's launch.