Document
Adamas Pharmaceuticals Inc10-QSeptember 30, 2019false--12-31YesAccelerated Filertruetruetrue2019Q3false0001328143P5YP3YP3Y2.25xbrli:shares00013281432019-10-3100013281432019-01-012019-09-30iso4217:USD00013281432019-09-3000013281432018-12-31iso4217:USDxbrli:shares00013281432018-09-300001328143us-gaap:ProductMember2019-07-012019-09-300001328143us-gaap:ProductMember2018-07-012018-09-300001328143us-gaap:ProductMember2019-01-012019-09-300001328143us-gaap:ProductMember2018-01-012018-09-3000013281432019-07-012019-09-3000013281432018-07-012018-09-3000013281432018-01-012018-09-300001328143us-gaap:CommonStockMember2017-12-310001328143us-gaap:AdditionalPaidInCapitalMember2017-12-310001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2017-12-310001328143us-gaap:RetainedEarningsMember2017-12-3100013281432017-12-310001328143us-gaap:CommonStockMember2018-01-012018-03-310001328143us-gaap:AdditionalPaidInCapitalMember2018-01-012018-03-3100013281432018-01-012018-03-310001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-01-012018-03-310001328143us-gaap:RetainedEarningsMember2018-01-012018-03-310001328143us-gaap:CommonStockMember2018-03-310001328143us-gaap:AdditionalPaidInCapitalMember2018-03-310001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-03-310001328143us-gaap:RetainedEarningsMember2018-03-3100013281432018-03-310001328143us-gaap:AdditionalPaidInCapitalMember2018-04-012018-06-3000013281432018-04-012018-06-300001328143us-gaap:CommonStockMember2018-04-012018-06-300001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-04-012018-06-300001328143us-gaap:RetainedEarningsMember2018-04-012018-06-300001328143us-gaap:CommonStockMember2018-06-300001328143us-gaap:AdditionalPaidInCapitalMember2018-06-300001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-06-300001328143us-gaap:RetainedEarningsMember2018-06-3000013281432018-06-300001328143us-gaap:CommonStockMember2018-07-012018-09-300001328143us-gaap:AdditionalPaidInCapitalMember2018-07-012018-09-300001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-07-012018-09-300001328143us-gaap:RetainedEarningsMember2018-07-012018-09-300001328143us-gaap:CommonStockMember2018-09-300001328143us-gaap:AdditionalPaidInCapitalMember2018-09-300001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-09-300001328143us-gaap:RetainedEarningsMember2018-09-300001328143us-gaap:CommonStockMember2018-12-310001328143us-gaap:AdditionalPaidInCapitalMember2018-12-310001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310001328143us-gaap:RetainedEarningsMember2018-12-310001328143us-gaap:CommonStockMember2019-01-012019-03-310001328143us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-3100013281432019-01-012019-03-310001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-03-310001328143us-gaap:RetainedEarningsMember2019-01-012019-03-310001328143us-gaap:CommonStockMember2019-03-310001328143us-gaap:AdditionalPaidInCapitalMember2019-03-310001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-310001328143us-gaap:RetainedEarningsMember2019-03-3100013281432019-03-310001328143us-gaap:CommonStockMember2019-04-012019-06-300001328143us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-3000013281432019-04-012019-06-300001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-04-012019-06-300001328143us-gaap:RetainedEarningsMember2019-04-012019-06-300001328143us-gaap:CommonStockMember2019-06-300001328143us-gaap:AdditionalPaidInCapitalMember2019-06-300001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-300001328143us-gaap:RetainedEarningsMember2019-06-3000013281432019-06-300001328143us-gaap:CommonStockMember2019-07-012019-09-300001328143us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001328143us-gaap:RetainedEarningsMember2019-07-012019-09-300001328143us-gaap:CommonStockMember2019-09-300001328143us-gaap:AdditionalPaidInCapitalMember2019-09-300001328143us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300001328143us-gaap:RetainedEarningsMember2019-09-30adms:segment0001328143srt:RestatementAdjustmentMemberus-gaap:AccountingStandardsUpdate201602Member2019-01-0100013281432019-01-010001328143us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001328143us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001328143us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-09-300001328143us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-09-300001328143us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001328143us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001328143us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-09-300001328143us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-09-300001328143us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001328143us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001328143us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-09-300001328143us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-09-300001328143us-gaap:FairValueMeasurementsRecurringMember2019-09-300001328143us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-09-300001328143us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-09-300001328143us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-09-300001328143us-gaap:FairValueMeasurementsRecurringMemberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-09-300001328143us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-09-300001328143us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-09-300001328143us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-09-300001328143us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2019-03-310001328143us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2019-03-310001328143us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-03-310001328143us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-03-310001328143us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2019-03-310001328143us-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2019-03-310001328143us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-03-310001328143us-gaap:CorporateDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-03-310001328143us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2019-03-310001328143us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-03-310001328143us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-03-310001328143us-gaap:USTreasurySecuritiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-03-310001328143us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2019-03-310001328143us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2019-03-310001328143us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMember2019-03-310001328143us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel3Member2019-03-310001328143us-gaap:FairValueMeasurementsRecurringMember2019-03-310001328143us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-03-310001328143us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-03-310001328143us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-03-310001328143us-gaap:FairValueMeasurementsRecurringMemberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-03-310001328143us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-03-310001328143us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-03-310001328143us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-03-310001328143us-gaap:FairValueInputsLevel3Memberus-gaap:LongTermDebtMember2018-12-310001328143us-gaap:FairValueInputsLevel3Memberus-gaap:LongTermDebtMember2019-01-012019-09-300001328143us-gaap:FairValueInputsLevel3Memberus-gaap:LongTermDebtMember2019-09-300001328143us-gaap:CorporateDebtSecuritiesMember2019-09-300001328143us-gaap:USTreasurySecuritiesMember2019-09-300001328143us-gaap:ShortTermInvestmentsMember2019-09-300001328143adms:LongTermInvestmentsMember2019-09-300001328143us-gaap:CorporateDebtSecuritiesMember2018-12-310001328143us-gaap:USTreasurySecuritiesMember2018-12-310001328143us-gaap:CommercialPaperMember2018-12-310001328143us-gaap:ShortTermInvestmentsMember2018-12-310001328143adms:LongTermInvestmentsMember2018-12-310001328143adms:LongTermInvestmentsMembersrt:MaximumMember2019-01-012019-09-300001328143adms:LongTermInvestmentsMembersrt:MaximumMember2018-01-012018-12-310001328143us-gaap:LicensingAgreementsMember2012-11-012012-11-300001328143us-gaap:LicensingAgreementsMember2012-11-300001328143us-gaap:LicensingAgreementsMember2019-01-012019-09-300001328143us-gaap:LicensingAgreementsMember2019-07-012019-09-300001328143us-gaap:LicensingAgreementsMember2018-07-012018-09-300001328143us-gaap:LicensingAgreementsMember2018-01-012018-09-30utr:sqft0001328143adms:EmeryvilleCAMemberus-gaap:BuildingMember2018-01-31adms:option0001328143adms:EmeryvilleCAMemberus-gaap:BuildingMember2018-01-012018-01-310001328143us-gaap:EquipmentMember2018-06-300001328143us-gaap:EquipmentMember2018-06-012018-06-300001328143us-gaap:VehiclesMember2019-03-31adms:vehicle0001328143us-gaap:VehiclesMember2019-03-012019-03-31xbrli:pure0001328143us-gaap:UnfavorableRegulatoryActionMemberadms:QuiTamComplaintMemberus-gaap:PendingLitigationMember2019-09-30adms:claim0001328143adms:RoyaltyBackedLoanAgreementMemberadms:HealthCareRoyaltyPartnersMember2017-05-012017-05-310001328143adms:RoyaltyBackedLoanAgreementMemberadms:HealthCareRoyaltyPartnersMember2018-01-012018-03-310001328143adms:RoyaltyBackedLoanAgreementMemberadms:HealthCareRoyaltyPartnersMember2017-05-310001328143us-gaap:DebtInstrumentRedemptionPeriodOneMemberadms:RoyaltyBackedLoanAgreementMemberadms:HealthCareRoyaltyPartnersMember2017-05-310001328143us-gaap:DebtInstrumentRedemptionPeriodTwoMemberadms:RoyaltyBackedLoanAgreementMemberadms:HealthCareRoyaltyPartnersMember2017-05-310001328143adms:RoyaltyBackedLoanAgreementMemberadms:HealthCareRoyaltyPartnersMember2017-12-310001328143adms:RoyaltyBackedLoanAgreementMemberadms:HealthCareRoyaltyPartnersMember2019-07-012019-09-300001328143adms:RoyaltyBackedLoanAgreementMemberadms:HealthCareRoyaltyPartnersMember2019-01-012019-09-300001328143adms:RoyaltyBackedLoanAgreementMemberadms:HealthCareRoyaltyPartnersMember2018-07-012018-09-300001328143adms:RoyaltyBackedLoanAgreementMemberadms:HealthCareRoyaltyPartnersMember2018-01-012018-09-300001328143adms:RoyaltyBackedLoanAgreementMemberadms:HealthCareRoyaltyPartnersMember2019-09-300001328143adms:RoyaltyBackedLoanAgreementMemberadms:HealthCareRoyaltyPartnersMember2018-12-310001328143us-gaap:FairValueInputsLevel3Member2019-09-30adms:vote0001328143us-gaap:CommonStockMember2018-01-012018-01-310001328143us-gaap:CommonStockMemberus-gaap:OverAllotmentOptionMemberadms:EmployeeAndNonemployeeStockOptionMember2018-01-012018-01-310001328143us-gaap:CommonStockMember2018-01-310001328143adms:CowenandCompanyLLCMember2017-05-310001328143adms:EmployeeAndNonemployeeStockOptionMember2019-09-300001328143adms:EmployeeAndNonemployeeStockOptionMember2018-12-310001328143adms:EquityIncentivePlan2014Memberadms:EmployeeAndNonemployeeStockOptionMember2019-09-300001328143adms:EquityIncentivePlan2014Memberadms:EmployeeAndNonemployeeStockOptionMember2018-12-310001328143adms:EmployeeAndNonemployeeStockOptionMemberadms:InducementPlan2016Member2019-09-300001328143adms:EmployeeAndNonemployeeStockOptionMemberadms:InducementPlan2016Member2018-12-310001328143us-gaap:EmployeeStockMember2019-09-300001328143us-gaap:EmployeeStockMember2018-12-310001328143adms:EquityIncentivePlan2014Member2018-01-310001328143adms:EquityIncentivePlan2014Member2018-01-012018-01-310001328143adms:InducementPlan2016Member2016-03-310001328143adms:InducementPlan2016Member2017-01-012017-01-310001328143adms:InducementPlan2016Member2019-03-012019-03-310001328143adms:InducementPlan2016Member2017-11-012017-11-300001328143adms:InducementPlan2016Member2017-01-012019-03-310001328143adms:InducementPlan2016Member2019-03-310001328143adms:EmployeeStockPurchasePlanMember2019-01-310001328143adms:EmployeeStockPurchasePlanMember2019-01-012019-01-310001328143us-gaap:ResearchAndDevelopmentExpenseMember2019-07-012019-09-300001328143us-gaap:ResearchAndDevelopmentExpenseMember2018-07-012018-09-300001328143us-gaap:ResearchAndDevelopmentExpenseMember2019-01-012019-09-300001328143us-gaap:ResearchAndDevelopmentExpenseMember2018-01-012018-09-300001328143us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-07-012019-09-300001328143us-gaap:SellingGeneralAndAdministrativeExpensesMember2018-07-012018-09-300001328143us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-01-012019-09-300001328143us-gaap:SellingGeneralAndAdministrativeExpensesMember2018-01-012018-09-300001328143us-gaap:StockOptionMember2019-07-012019-09-300001328143us-gaap:StockOptionMember2019-01-012019-09-300001328143us-gaap:StockOptionMember2018-01-012018-09-300001328143us-gaap:StockOptionMember2018-07-012018-09-300001328143us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-09-300001328143us-gaap:RestrictedStockUnitsRSUMember2019-07-012019-09-300001328143us-gaap:RestrictedStockUnitsRSUMember2018-01-012018-09-300001328143us-gaap:RestrictedStockUnitsRSUMember2018-07-012018-09-30


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                 to                
Commission File Number: 001-36399
ADAMAS PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
 
42-1560076
(I.R.S. Employer Identification No.)
1900 Powell Street, Suite 1000
Emeryville, CA
(Address of principal executive offices)
 
94608
(Zip Code)
(510) 450-3500
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.001 per share
 
Trading Symbol(s)
ADMS
Name of each exchange on which registered
The Nasdaq Global Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  x   No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  x   No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer¨Accelerated filerx
Non-accelerated filer¨Smaller reporting companyx
Emerging growth companyx
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ¨  No  x
Number of shares outstanding of the issuer’s common stock, par value $0.001 per share, as of October 31, 2019, was 27,857,726.



Table of Contents
ADAMAS PHARMACEUTICALS, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
 
   Page
 
    
  
  
  
  
  
  
 
 
 
    
 
    
 
 
 
 
 
 
 

2

Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
ADAMAS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share and per share data)
 September 30,
2019
December 31,
2018
Assets  
Current assets  
Cash and cash equivalents$71,973  $56,605  
Available-for-sale securities78,267  154,265  
Accounts receivable, net5,536  5,511  
Inventory5,120  5,121  
Prepaid expenses and other current assets6,382  6,871  
Total current assets167,278  228,373  
Property and equipment, net2,705  3,652  
Operating lease right-of-use assets8,215  —  
Prepaid expenses and other non-current assets2,241  2,789  
Total assets$180,439  $234,814  
Liabilities and stockholders’ equity  
Current liabilities  
Accounts payable$6,775  $6,570  
Accrued liabilities16,007  15,530  
Current portion of long-term debt1,739  1,664  
Other current liabilities1,837  512  
Total current liabilities26,358  24,276  
Long-term debt124,078  117,457  
Long-term portion of operating lease liabilities8,607  —  
Other non-current liabilities1,639  3,196  
Total liabilities160,682  144,929  
Commitments and Contingencies (Note 8)
Stockholders’ equity  
Preferred stock, $0.001 par value — 5,000,000 shares authorized, and zero shares issued and outstanding at September 30, 2019 and December 31, 2018
    
Common stock, $0.001 par value — 100,000,000 shares authorized, 27,857,726 and 27,434,358 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
32  32  
Additional paid-in capital444,465  432,815  
Accumulated other comprehensive gain (loss)69  (264) 
Accumulated deficit(424,809) (342,698) 
Total stockholders’ equity19,757  89,885  
Total liabilities and stockholders’ equity$180,439  $234,814  
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

Table of Contents
ADAMAS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
 Three Months Ended
 September 30,
Nine Months Ended
 September 30,
 2019201820192018
Revenues:
Product sales$13,933  $10,613  $38,289  $20,731  
Costs and operating expenses:  
Cost of product sales929  100  2,027  198  
Research and development6,042  11,709  24,854  28,703  
Selling, general and administrative, net31,180  27,491  84,084  81,553  
Total costs and operating expenses38,151  39,300  110,965  110,454  
Loss from operations(24,218) (28,687) (72,676) (89,723) 
Interest and other income, net512  921  1,969  2,931  
Interest expense(3,876) (5,386) (11,404) (15,324) 
Net loss $(27,582) $(33,152) $(82,111) $(102,116) 
Net loss per share, basic and diluted$(0.99) $(1.22) $(2.97) $(3.82) 
Weighted average shares used in computing net loss per share, basic and diluted27,778  27,266  27,605  26,728  
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4

Table of Contents
ADAMAS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
(in thousands)
 Three Months Ended
 September 30,
Nine Months Ended
 September 30,
 2019201820192018
Net loss$(27,582) $(33,152) $(82,111) $(102,116) 
Unrealized gain (loss) on available-for-sale securities(34) (8) 333  (266) 
Comprehensive loss$(27,616) $(33,160) $(81,778) $(102,382) 
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

Table of Contents
ADAMAS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited)
(in thousands, except share data)
 Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity
 SharesAmount
Balances at December 31, 201723,320,551  $28  $277,964  $(167) $(211,699) $66,126  
Issuance of common stock in conjunction with Secondary Offering, net of commissions and issuance costs3,450,000  4  134,260  —  —  134,264  
Exercise of stock options136,154  —  590  —  —  590  
Restricted stock units vested51,309  —  —  —  —  —  
Net unrealized loss on available-for-sale securities—  —  —  (196) —  (196) 
Stock-based compensation—  —  3,790  —  —  3,790  
Net loss—  —  —  —  (34,971) (34,971) 
Balances at March 31, 201826,958,014  32  416,604  (363) (246,670) 169,603  
Issuance of common stock in conjunction with Secondary Offering, net of commissions and issuance costs—  —  4  —  —  4  
Exercise of stock options169,124  —  1,943  —  —  1,943  
Restricted stock units vested22,687  —  —  —  —  —  
Stock issued under employee stock purchase plan34,618  —  843  —  —  843  
Net unrealized loss on available-for-sale securities—  —  —  (62) —  (62) 
Stock-based compensation—  —  4,222  —  —  4,222  
Net loss—  —  —  —  (33,993) (33,993) 
Balances at June 30, 201827,184,443  32  423,616  (425) (280,663) 142,560  
Exercise of stock options138,176  —  806  —  —  806  
Restricted stock units vested12,914  —  —  —  —  —  
Net unrealized loss on available-for-sale securities—  —  —  (8) —  (8) 
Stock-based compensation—  —  4,190  —  —  4,190  
Net loss—  —  —  —  (33,152) (33,152) 
Balances at September 30, 201827,335,533  $32  $428,612  $(433) $(313,815) $114,396  
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

Table of Contents
 Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Gain (Loss)Accumulated DeficitTotal Stockholders’ Equity
 SharesAmount
Balances at December 31, 201827,434,358  $32  $432,815  $(264) $(342,698) $89,885  
Exercise of stock options18,230  —  49  —  —  49  
Restricted stock units vested67,391  —  —  —  —  —  
Net unrealized gain on available-for-sale securities—  —  —  230  —  230  
Stock-based compensation—  —  3,410  —  —  3,410  
Net loss—  —  —  —  (29,658) (29,658) 
Balances at March 31, 201927,519,979  32  436,274  (34) (372,356) 63,916  
Exercise of stock options65,064  —  99  —  —  99  
Restricted stock units vested12,860  —  —  —  —  —  
Stock issued under employee stock purchase plan112,304  —  449  —  —  449  
Net unrealized gain on available-for-sale securities—  —  —  137  —  137  
Stock-based compensation—  —  2,973  —  —  2,973  
Net loss—  —  —  —  (24,871) (24,871) 
Balances at June 30, 201927,710,207  32  439,795  103  (397,227) 42,703  
Exercise of stock options91,332  —  133  —  —  133  
Restricted stock units vested56,187  —  —  —  —  —  
Net unrealized loss on available-for-sale securities—  —  —  (34) —  (34) 
Stock-based compensation—  —  4,537  —  —  4,537  
Net loss—  —  —  —  (27,582) (27,582) 
Balances at September 30, 201927,857,726  $32  $444,465  $69  $(424,809) $19,757  
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

Table of Contents
ADAMAS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
 Nine Months Ended
 September 30,
 20192018
Cash flows from operating activities
Net loss$(82,111) $(102,116) 
Adjustments to reconcile net loss to net cash used in operating activities  
Depreciation958  1,095  
Stock-based compensation10,786  12,033  
Accretion of interest expense11,404  15,324  
Change in fair value of embedded derivative liability287  42  
Net accretion of discounts and amortization of premiums of available-for-sale securities(997) (701) 
Loss on disposal of fixed assets  122  
Provision for write-down of inventory618    
Changes in assets and liabilities  
Accrued interest of available-for-sale securities223  (174) 
Accounts receivable, net(25) (4,909) 
Inventory(570) (4,959) 
Prepaid expenses and other assets953  (3,052) 
Operating lease right-of-use assets681  —  
Accounts payable178  4,678  
Current portion of long-term debt(4,708) (1,302) 
Long-term portion of operating lease liabilities(791) —  
Accrued liabilities and other liabilities648  3,301  
Net cash used in operating activities(62,466) (80,618) 
Cash flows from investing activities  
Purchases of property and equipment(18) (1,677) 
Purchases of available-for-sale securities(56,645) (184,785) 
Maturities of available-for-sale securities133,750  94,080  
Net cash provided by (used in) investing activities77,087  (92,382) 
Cash flows from financing activities  
Proceeds from public offerings, net of offering costs  134,268  
Proceeds from issuance of common stock upon exercise of stock options298  3,339  
Proceeds from employee stock purchase plan449  843  
Net cash provided by financing activities747  138,450  
Net increase (decrease) in cash and cash equivalents15,368  (34,550) 
Cash and cash equivalents at beginning of period56,605  91,316  
Cash and cash equivalents at end of period$71,973  $56,766  
Supplemental disclosure of noncash activities  
Right-of-use assets obtained in exchange for operating lease liabilities$8,896  $—  
Property and equipment in accounts payable and accrued expense$  $478  
Stock-based compensation capitalized in inventory$134  $169  
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8

Table of Contents
ADAMAS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1.     DESCRIPTION OF BUSINESS
Adamas Pharmaceuticals, Inc. (the “Company”) focuses on pioneering time-dependent medicines to meaningfully enhance the daily living experience of those affected by CNS disorders. In August 2017, the U.S. Food and Drug Administration (FDA) approved GOCOVRI® (amantadine) extended release capsules (previously ADS-5102), the first and only FDA-approved medication indicated for the treatment of dyskinesia in patients with Parkinson’s disease receiving levodopa-based therapy, with or without concomitant dopaminergic medications. The Company is also advancing its Phase 3 development program of ADS-5102 in development for the treatment of walking impairment in patients with multiple sclerosis. The Company’s goal is to lessen the burden of chronic CNS disorders on patients, caregivers and society.
The Company was incorporated in the State of Delaware on November 15, 2000, and operates as one segment. The Company’s headquarters and operations are located in Emeryville, California.
2.     BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary for the fair presentation of the periods presented. The condensed consolidated balance sheet at December 31, 2018 was derived from the audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP.
These interim financial results are not necessarily indicative of results to be expected for the full fiscal year ending December 31, 2019, or any other future period. Readers should read these interim unaudited condensed consolidated financial statements in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2018, included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission, or SEC. The Company’s critical accounting policies are detailed in its Annual Report on Form 10-K for the year ended December 31, 2018. Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), using the modified retrospective method with a cumulative-effect adjustment as of January 1, 2019, in accordance with ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. Other than the adoption of the new accounting guidance, the Company’s critical accounting policies have not changed materially from December 31, 2018.
Use of Estimates
The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses in the consolidated financial statements and the accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition and variable consideration, lease assets and liabilities, clinical trial accruals, fair value of assets and liabilities including short-term and long-term classification, embedded derivatives, income taxes, inventory, and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates.
9

Table of Contents
Leases
The Company determines if an arrangement is, or contains, a lease at inception. An arrangement is, or contains, a lease if it conveys the right to control the use of identified property, plant or equipment (i.e., an identified asset) for a period of time in exchange for consideration. The Company’s arrangements determined to be or contain a lease include explicitly or implicitly identified assets where the Company has the right to substantially all of the economic benefits of the assets and has the ability to direct how and for what purpose the assets are used during the lease term. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities on its condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term and any amounts probable of being owed under a residual value guarantee (if applicable). In determining the incremental borrowing rate used to calculate the present value of lease payments, the Company uses the interest rate specified in the lease. If the rate is not readily determinable, which is generally the case for the Company, the Company uses its incremental borrowing rate based on the information available at the commencement date. The operating lease ROU assets also include any lease payments made (including any prepaid rents and initial direct costs) and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise any such options. Lease expense for lease payments is recognized on a straight-line basis over the expected lease term. The Company has lease agreements with lease components and non-lease components. For its facility and office equipment lease, the Company accounts for the lease and non-lease components separately. For its vehicle leases, the Company elected the practical expedient to not separate lease components, such as base rent payments, and non-lease components, such as interest, and also applies a portfolio approach to effectively account for the operating lease ROU assets and liabilities, given the volume of individual leases involved in the overall arrangement.
Reclassification
Certain prior period amounts in the accompanying consolidated financial statements have been reclassified to conform to current period presentation.
Recently Adopted Accounting Pronouncements
In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). The authoritative guidance significantly amends the current accounting for leases. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. All other leases will fall into one of two categories: (i) a financing lease or (ii) an operating lease. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842 (Leases), which amends narrow aspects of the guidance issued in the amendments in ASU 2016-02, and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which allows entities to recognize a cumulative-effect adjustment from the application of ASU 2016-02 to the opening balance of retained earnings in the period of adoption. Effective January 1, 2019, the Company adopted Topic 842 using the modified retrospective method as of January 1, 2019 and will not restate comparative periods. The Company elected the optional package of practical expedients, which allowed the Company to not reassess: (i) whether any expired or existing contracts are considered or contain leases; (ii) lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. The new standard also allows entities to make certain policy elections, including a policy to not separate lease and non-lease components, which the Company did not elect for its facility and office equipment lease. The adjustments due to the adoption of Topic 842 primarily related to the recognition of an operating lease right-of-use asset and operating lease liability for the lease. The impact on the condensed consolidated balance sheet as of January 1, 2019, was as follows (in thousands):
 December 31, 2018Adjustment due to the Adoption of Topic 842January 1, 2019
Operating lease right-of-use assets$—  $7,566  $7,566  
Other current liabilities512  768  1,280  
Long-term portion of operating lease liabilities—  8,643  8,643  
Other non-current liabilities3,196  (1,844) 1,352  
10

Table of Contents
In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Previously, accounting for share-based payments to employees was covered by ASC Topic 718 while accounting for such payments to non-employees was covered by ASC Subtopic 505-50. Under this new guidance, both sets of awards, for employees and non-employees, will essentially follow the same model, with small variations related to determining the term assumption when valuing a non-employee award as well as a different expense attribution model for non-employee awards as opposed to employee awards. This guidance is effective for fiscal years beginning after December 15, 2018. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
Recent Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments; in November 2018 the FASB issued a subsequent amendment ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses; in April 2019 the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments; and in May 2019 the FASB issued ASU No. 2019-05, Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief . The new guidance changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. This guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the effect the new guidance will have on its consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the effect the new guidance will have on its consolidated financial statements.
In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, which amends ASC 808 to clarify ASC 606 should apply in entirety to certain transactions between collaborative arrangement participants. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the effect the new guidance will have on its consolidated financial statements.
3.     FAIR VALUE MEASUREMENTS
In accordance with ASC 820-10, Fair Value Measurements and Disclosures, the Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows:
Level 1 inputs, which include quoted prices in active markets for identical assets or liabilities;
Level 2 inputs, which include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. For available-for-sale securities, the Company reviews trading activity and pricing as of the measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data; and
Level 3 inputs, which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies, or similar valuation techniques, as well as significant management judgment or estimation.
11

Table of Contents
The following table represents the fair value hierarchy for the Company’s financial assets and liabilities which require fair value measurement on a recurring basis (in thousands):
 September 30, 2019
 TotalLevel 1Level 2Level 3
Assets:    
Money market$20,315  $20,315  $  $  
Corporate debt8,050    8,050    
U.S. Treasury securities70,217    70,217    
Total assets measured at fair value$98,582  $20,315  $78,267  $  
Liabilities:
Embedded derivative liability$1,639  $  $  $1,639  
Total liabilities measured at fair value$1,639  $  $  $1,639  

 December 31, 2018
 TotalLevel 1Level 2Level 3
Assets:    
Money market$17,789  $17,789  $  $  
Corporate debt19,792    19,792    
U.S. Treasury securities131,512    131,512    
Commercial paper2,961    2,961    
Total assets measured at fair value$172,054  $17,789  $154,265  $  
Liabilities:
Embedded derivative liability$1,352  $  $  $1,352  
Total liabilities measured at fair value$1,352  $  $  $1,352  
Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments are readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.
Corporate debt, U.S. Treasury securities, and commercial paper are measured at fair value using Level 2 inputs. The Company reviews trading activity and pricing for these investments as of each measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs represent quoted prices for similar assets in active markets or these inputs have been derived from observable market data. This approach results in the classification of these securities as Level 2 of the fair value hierarchy. In certain cases where there is limited activity or less transparency around inputs to valuation, the related assets or liabilities are classified as Level 3. The Company classified an embedded derivative related to the Company's royalty-backed loan agreement (the “Royalty-Backed Loan”) with HealthCare Royalty Partners (“HCRP”) as a Level 3 liability.
The fair value of the embedded derivative as a result of a change in control was calculated using a probability-weighted discounted cash flow model. The model used in valuing this embedded derivative requires the use of significant estimates and assumptions including but not limited to: 1) expected cash flows the Company expects to receive on U.S. net sales of GOCOVRI and on royalties from Allergan on U.S. net sales of Namzaric; 2) the Company’s risk adjusted discount rates; and 3) the probability of a change in control occurring during the term of the note based on the percentage of similar companies that were acquired over the previous five year period. Changes in the estimated fair value of the bifurcated embedded derivative are reported as gains or losses in interest and other income, net, in the condensed consolidated statement of operations. In the periods presented, the Company evaluated the embedded derivative value as a result of an event of default and the value as a result of increased costs due to a regulatory change and considered both to have no material value based on current assessment of probability, but could become material in future periods if a specified event of default or regulatory change became more probable than is currently estimated. See Note 9 “Long-Term Debt” for further description.
12

Table of Contents
The following table sets forth a summary of the changes in the estimated fair value of the Company’s embedded derivative, which is measured at fair value as a Level 3 liability on a recurring basis (in thousands):
Balance as of December 31, 2018$1,352  
Change in fair value included in interest and other income, net287  
Balance as of September 30, 2019$1,639  
There were no transfers between any of the levels of the fair value hierarchy during the three and nine months ended September 30, 2019.
4.     INVESTMENTS 
The Company’s investments consist of corporate debt, U.S. Treasury securities, and commercial paper classified as available-for-sale securities.
The Company limits the amount of investment exposure as to institution, maturity, and investment type. To mitigate credit risk, the Company invests in investment grade corporate debt, U.S. Treasury securities, and commercial paper. Such securities are reported at fair value, with unrealized gains and losses excluded from earnings and shown separately as a component of accumulated other comprehensive loss within stockholders’ equity. Realized gains and losses are reclassified from other comprehensive loss to other income on the condensed consolidated statements of operations when incurred. The Company may pay a premium or receive a discount upon the purchase of available-for-sale securities. Interest earned and gains realized on available-for-sale securities and amortization of discounts received and accretion of premiums paid on the purchase of available-for-sale securities are included in investment income.
The following table is a summary of amortized cost, unrealized gain and loss, and the fair value of available-for-sale securities as of September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019
 Amortized CostGross Unrealized
Gains
Gross Unrealized
Losses
Fair Value
Investments:    
Corporate debt$8,035  $15  $  $8,050  
U.S. Treasury securities70,163  54    70,217  
Total$78,198  $69  $  $78,267  
Reported as:    
Short-term investments$78,198  $69  $  $78,267  
Long-term investments        
Total$78,198  $69  $  $78,267  

December 31, 2018
 Amortized CostGross Unrealized
Gains
Gross Unrealized
Losses
Fair Value
Investments:    
Corporate debt$19,833  $  $(41) $19,792  
U.S. Treasury securities131,735  10  (233) 131,512  
Commercial paper2,961      2,961  
Total$154,529  $10  $(274) $154,265  
Reported as:    
Short-term investments$154,529  $10  $(274) $154,265  
Long-term investments        
Total$154,529  $10  $(274) $154,265  
13

Table of Contents
Short-term investments include accrued interest of $0.3 million and $0.5 million as of September 30, 2019 and December 31, 2018, respectively. The Company has not incurred any realized gains or losses on investments for the three and nine months ended September 30, 2019 and 2018. Investments are classified as short-term or long-term depending on the underlying investment’s maturity date. The Company had no investments with a maturity date greater than 12 months as of September 30, 2019 and December 31, 2018. All investments with unrealized losses at September 30, 2019 have been in a loss position for less than twelve months or the loss is not material and were temporary in nature. The Company does not intend to sell the investments that are in an unrealized loss position before recovery of their amortized cost basis.
5.     INVENTORY
The Company began capitalizing inventory in August 2017 once the FDA approved GOCOVRI. Inventory consists of the following (in thousands):
September 30, 2019December 31, 2018
Raw materials$1,275