What happened

Shares of the chronic-disease specialist Adamas Pharmaceuticals (ADMS) lost 13% of their value last month, according to data from S&P Global Market Intelligence. What went wrong for the drugmaker in September?

Investors are apparently nervous about the commercial prospects for the company's fairly new Parkinson's disease drug Gocovri. The U.S. Food and Drug Administration (FDA) approved Gocovri in August 2017 as the first medicine to treat dyskinesia (involuntary movements) in patients with Parkinson's disease and that are currently taking levodopa. However, this drug is entering a dynamic space that may lead to a slow adoption rate -- at least according to skeptics. 

A neuron in action.

Image source: Getty Images.

So what

The main issue that seems to be rattling investors is the FDA approval of Osmotica Pharmaceutical and Vertical Pharmaceuticals' Osmolex extended release (ER) tablets last February. As Osmolex and Gocovri share the same active ingredient in amantadine, Osmotica's drug could, in theory, pose a serious competitive threat to Gocovri moving forward.   

Now what

The good news, though, is that Gocovri's approval was based on a rigorous clinical trial program that gives it a major leg up over Osmolex ER. The approval of Osmolex ER, after all, came via the FDA's 505(b)(2) pathway.

This alternative regulatory route enables drugmakers to apply for approval based on efficacy data from prior clinical trials that only affirms the bioavailability of the drug in question. As a result, Adamas can easily make the argument to both payers and physicians alike that its drug is the only one with a clinically proven track record for this specific indication.  

Another key issue to keep in mind is that Osmolex ER has an entirely different label and dosing regimen than Gocovri. This putative competitive threat to Gocovri, therefore, might be wildly overblown. But until the company proves this is indeed the case, its shares may continue to struggle.