Welcome to the Adamas Pharmaceuticals' Fourth Quarter and Full Year 2017 Financial Results and Corporate Update Conference Call. [Operator Instructions]. As a reminder, this call is being recorded. I would now like to turn the call over to your host, Ashleigh Barreto, Director of Investor Relations and Corporate Communications at Adamas. Please go ahead.

Thank you, operator, and good afternoon, everyone. Joining me on the call today are Dr. Greg Went, our Founder, Chairman and Chief Executive Officer; Alf Merriweather, our Chief Financial Officer; Richard King, our Chief Operating Officer; and Dr. Rajiv Patni, our Chief Medical Officer. Before we begin, I'd like to remind everyone that this call will contain forward-looking statements, which are subject to risks and uncertainties. Any statements regarding future events, results or expectations are forward-looking statements. Please note that these statements forward looking statements reflect our opinions only as of the date of this call. We undertake no obligation to revise or update these forward-looking statements in light of new information or future events. Information concerning factors that could cause actual results to differ materially from those contained in or implied by such forward-looking statements are discussed in greater detail in our Form 10-K filed with the SEC today. I'll now turn the call over to Greg.

Thank you, Ashley, and good afternoon to everyone, and thank you for joining us today. Let me begin by saying, I'm incredibly proud of the accomplishments made by the Adamas team in 2017, especially the approval and commercialization of GOCOVRI, the first and only FDA-approved medicine for the treatment of dyskinesia in patients with Parkinson's disease receiving levodopa-based therapy. This medicines represents the most important proof point today of our time-depended biology approach. Parkinson's disease is the second largest neurodegenerative disorder and is particularly burdensome and costly, not only to patients and care partners but also, to the health care system. This is why it was so important for us to bring to market a medicine that had a substantial benefits to patients. Through our understanding of the temporal patterns of the mechanisms underlying Parkinson's disease, the disease systems and the biological response of amantadine, we discovered and developed GOCOVRI. Use of GOCOVRI is supported by a robust NCE-like development program required by the FDA, which included nonclinical studies, three controlled clinical studies and a soon-to-be-completed, two-year open-label safety study. GOCOVRI is clinically proven to deliver significant and durable effects in both dyskinesia as well as OFF time to provide Parkinson's patients with a four-hour daily improvement in functional time or ON time without troublesome dyskinesia. We are proud that we are now providing help to these patients in need. Before I hand the call over to Alf to review the results of the quarter, I would like to address the recent approval of OSMOLEX ER label. We are continuing to evaluate the approval, which was a surprise to us and others in the Parkinson's disease community. First, its regulatory approval was based on data from bioavailability studies in healthy volunteers with no new clinical data. Based on this and…

Thanks, Greg. I'm pleased to report that in the fourth quarter of 2017, we recorded our first revenue from the sale of GOCOVRI. This amounted to $568,000 in net product revenue, which is recorded on the selling method with revenue recognized upon delivery to our specialty pharmacy. GOCOVRI was placed in our distribution channel in October without promotion, we should not begin through our 59-person strong sales force till January 2018. I'll briefly cover some additional aspects of our financials and then return to our reporting framework for revenue. Net loss for the quarter was $29.4 million compared to a net loss of $15 million for the same period in 2016. For the full year, we reported a net loss of $89.5 million compared to $60.1 million in 2016. Research and development expenses were $6.4 million during the fourth quarter of 2017 and $27.2 million for the year. R&D for the year reflects ongoing costs for the GOCOVRI open-label study, preapproval manufacturing costs for GOCOVRI as well as costs related to our programs in MS walking and epilepsy. Expense in 2017 was reduced from 2016 level of $31.2 million. In 2018, we will complete the GOCOVRI open-label study with a data readout in the second quarter, initiate the MS walking Phase III study and prepare for the initiation of the ADS-4101 Phase III study. Accordingly, R&D expense in 2018 will increase, and we are providing guidance of $45 million to $50 million for the year. With respect to selling, general and administrative, or SG&A expenses, these were $23 million for the fourth quarter of 2017 and $61.3 million for the full year. The fourth quarter spend includes the costs of the sales force for just one month, based on the hiring at the end of November. Also included our cost…

Thank you, Alf. With the approval and launch of GOCOVRI, people were Parkinson's disease now hand FDA have been approved, clinically proven specifically to dyskinesia. In clinical trials, GOCOVRI not only significantly reduces dyskinesia by approximately 30% compared to placebo, it also reduced OFF time by approximately 40% and increase functional time by about four hours a day, as measured in patient diaries, as ON time without troublesome dyskinesia. This means that for the first time, physicians treating people with Parkinson's disease don't have to choose between managing dyskinesia and treating OFF symptoms. Importantly, we believe it will allow them to more fully - to more fully utilize levodopa, the gold-standard treatment for Parkinson's disease, to control the underlying Parkinson's disease symptoms, as evidenced from our development program. We see strong interest from physicians in GOCOVRI, so let me now turn to the progress that we have made as we launch the product. As you recall - as you will recall, we had recruited our 59 neurology account specialists and tracking a highly qualified team, averaging 17 years of pharma industry experience, nine years of neurology experience and with more than 75% of the appointed neurologic account specialists having specific movement disorder experience. We completed training of the sales team, and a launch meeting in January at the center of which, we focused on the daily challenges that dyskinesia can pose for people with Parkinson's disease. We look forward to have to have two of the participants in our clinical trials attend the launch meeting and is extremely moving and pointing to hear from their direct experience how treatment with GOCOVRI had impacted their daily lives. Their prior daily experiences were similar, as each would alternate between OFF and disconnected episodes 4 or 5 times a day, in conjunction with…

Thanks, Richard, and good afternoon. We continue to demonstrate our commitment to discovery, development and advancing the education of the medical community with our recently published manuscripts and upcoming presentations at medical conferences. These publications and presentations will enforce how we at Adamas in collaboration with our clinical and preclinical expert advisors are expanding awareness of how time-dependent biology applies to neuroscience. Let's start with the recent publication in Movement Disorders Clinical Practice. In this publication, we report the efficacy and safety data in a subgroup of patients taking amantadine-immediate release and switched to open-label GOCOVRI. It is important to recall the average dose of amantadine-immediate release for this subgroup of patients was 274 milligrams of amantadine hydrochloride-immediate release, which is higher than the typical dose of 100 milligrams twice daily of amantadine hydrochloride used in clinical practice. In this amantadine IR subgroup, there was a 35% reduction in motor complications after switching to GOCOVRI, which was comparable to the effects seen in patients previously treated with blinded placebo. We are very excited about this publication, because it provides that neurology community with open-label clinical efficacy data that differentiates GOCOVRI from even higher-than-average doses of amantadine-immediate release. In addition, we published our placebo-controlled, proof-of-concept study with ADS-5102 in multiple sclerosis patients with walking impairment in the Multiple Sclerosis Journal. This four-week, 60-patient study demonstrated an effect on several walking measures, including a statistically significant 17% improvement in walking speed from baseline and a greater proportion of ADS-5102-treated patients experienced at least a 20% improvement in walking speed from baseline. We are pleased with this timely publication, as we progressed towards enrollment into the Phase III study of ADS-5102 in MS patients with walking impairment. On the American Academy of Neurology meeting, I am happy to announce that all of our…

Thanks, Rajiv. At Adamas, it is our mission to improve the lives of patients and their care partners suffering from neurological diseases. We pride ourselves in our discovering of our time differences that enable us that yield large, meaningful clinical benefits, because we think that is what's in the best interest of patients. Through GOCOVRI, we are delivering on the promise of medicines that are changing people's lives based upon our time-depended biology approach. As Alf and Richard both noted, we are very pleased with how the GOCOVRI launch is gaining momentum. We look forward to updating you on other clinical development events during the quarter, seeing many of you at AAN in April and reporting on our first full quarter of GOCOVRI's launch on our Q1 call in early May. With that, I would like to open up the call for questions. Operator?

[Operator Instructions]. And our first question comes from the line of Josh Schimmer from Evercore ISI.

One serious, just on the GOCOVRI launch, whether you're able to give us an estimate for the number of prescriptions written as well under metrics, such as average turnaround time from when the prescription's written to when it's filled, or filled rates or rejection rate at this point.

Josh, thanks for the call. I'm going to allow Richard to handle that one.

So at this stage, what we prevent to talk about is, obviously, the number of prescribers. We're still very early in our launch phase, I think, relative to all the information you're thinking there. George, as we come to our May call, we'll update some of those parameters accordingly.

Okay. And then as you think about label expansion opportunities for GOCOVRI, does the availability of the OSMOLEX ERCOT your product change your path forward? It sounds like Osmotica is positioning more around, perhaps, dyskinesia. Does that change your approach to specifically going after that indication?

Josh, I'll take that. It's Greg. I don't think so. It's still early days in evaluating that. But recall from my comments, the label that OSMOLEX has is very much based upon that of the new immediate-release amantadine. And I think all of our attempts to look at indications for GOCOVRI are in light of the available - the light of spread availability of immediate-release amantadine as potential treatment. The data for which that label is based is from the '60s and early '70s. And so I really don't see it affecting it at this instance. But it's still too early to declare what that - those indications will be and what effect it would have. But it will definitely put it into the mix of the competitive landscape with the other products that are - for treating products.

And then last question, in terms of the declared judgment timelines for the case, what can we expect, and should we also expect other patent infringement litigation to be initiated?

With respect to the declared judgment, that's - cases is in its early days. We've been served, and we don't comment on active litigation. So there really won't much of an update. But it's a standard process. And to be clear, this is a case where not challenging the patents for GOCOVRI, or GOCOVRI itself, it is one to get a decision rendered with regards to infringement of Adamas' patents out of a separate product. So no expectations of any of the other ones at this point in time, certainly can't rule it out. But we will always evaluate, carefully, any - in the marketplace, where our infringers are patents and defend our patent statement.

And our next question comes from the line of Ken Cacciatore from Cowan and Company.

Just wanted drill down a little bit deeper. I was really fast in terms of some of the details on managed care. So can you give us a sense, again, on some of these plans, whether there's been prior authorizations or not, and how we're dealing with that? And maybe, again, drilling down on some of the discussions on where the coverage actually stands in terms of covered lives, if you can give us any sense. And then on the spending, probably, my mis-modeling, but spending seems a lot higher. If I think about the 60 reps and then add in, kind of, the divisional managers and even given $300,000 per, it's about $20 million to $25 million. Can you help drilling turn on where all the spending is going? Are you going to be buying down some of these prescriptions, or maybe a little bit of new ones there as well?

Let me deal first with the managed care side of things, Ken. The - I think people do traditionally think very much of coverage or not coverage. And that's a black-and-white situation. What I think is really important to realize is that black-and-white situation, we're not experiencing that black-and-white situation. We do have formal coverage. I'm going to define formal coverage for you here as a situation in which plans have made a decision, a public decision as to how they will handle GOCOVRI and manage approval of GOCOVRI prescriptions, when presented. That's - we'll call that coverage for the sake of argument. And there are good number of plans that have actually made that decision and presented those conclusions publicly and then at handling the GOCOVRI prescriptions according to that pathway. But we are seeing, across all of the payers that we've addressed and dealt with, responsiveness, regardless of whether they have published set of criteria or not to manage GOCOVRI. And yes, in some cases, that results in the prior authorization request, which then leads to, ultimately, prescription fulfillment. But we're seeing prescription fulfillment across most every plan. There's very few that are not fulfilling. We have a handful of filed decisions where people are not fulfilling prescriptions. But in general, people are all fulfilling, whether they have a published plan or not.

And a follow-up with regards to the plans?

Yes, Ken, with regard to the spend. I mean, you're right in how you frame the sales force cost. There's also a reasonably significant marketing set of programs and dollars, people under program dollars behind that, which is fairly significant. And of course, SG&A also includes our administration functions, finance, legal, et cetera, would include our patent cost and the like. So there's a fair amount of things into, and the specific sales force is included in that.

And our next question comes from the line of Jason Butler from JMP Securities.

It's Ryan for Jason. I had a couple questions about the MS walking Phase III. Are you using a couple of doses that are lower than what you used in Phase II? Can you describe what drove the decision to use a lower dose?

So we're testing the same dosing as in Phase II, which is the 274 milligram dose, which is also the 340 milligrams when you express it as a salt. So that's the same dose. And in consultation with the FDA, they encouraged us to also explore a lower dose, which is the 137 milligrams dose of amantadine or a 170 milligrams when expressed as the amantadine salt. So that is why we're testing the dose we tested in Phase II as well as testing the lower dose, all based on FDA feedback.

Okay, got it. And can you also tell us any assumption around powering, assumptions around the placebo response that you expect for the for the Phase III? Do you expect the placebo response to plateau at four weeks? Is it possibly due in Phase II?

So what I will say is that the power for the Phase III trial is what it needs to be for Phase III, number 1. Number 2, it's based on what we observed in Phase II. Number three, it's based on our understanding of the Phase III program done with [indiscernible] and most importantly, it's been confirmed with our FDA interaction.

And our next question comes from the line of Tim Lugo from William Blair.

For the majority of patients who do not need a QuickStart product, is that because the reimbursement is going relatively smooth for them? And can you give us some kind of defining feature of these patients?

It is, because it's going relatively smoothly, and we're getting to a point where we get reimbursement before we need to move towards a QuickStart. I'm not sure I can give you any more characteristic than that other than, there's no - I can't say, they're all commercial. They're all Medicare. We're seeing across all different characteristics of the payer environment, and there's no particular patient environment that I can point you even at this stage.

Okay. And then maybe for the patients who did need a QuickStart Program, how many of those have needed two QuickStarts? And then what's the - what's kind of the ultimate capture rate you believe you'll get for those patients?

So very few are new to QuickStart. The capture rate, it will be too early for me to speculate at this stage.

Right. And maybe one last question on the pipeline. For 4101, what line of therapy are you developing by that end, again? And how many doses, and will it be competitor arm in any of your clinical trials?

So we've talked about this before, and - so we just remind you that as we've reported, we're going to have an FDA meeting where we will review all this. Our thinking is to test versus placebo, a high dose of 4101, 600 milligrams as well as 400 milligrams. And in addition and most importantly, we will also have an arm of VIMPAT 200 milligrams twice a day. So our approach to the development of ADS-4101 is to really have two superiority trials or two superiority analyses. One of 4101 versus placebo and the other versus VIMPAT.

And our next question comes from the line of Serge Belanger from Needham & Company.

Chris, a question on OSMOLEX. Greg, you mentioned you were taken by surprise with the approval of the product. Was it - I guess, was it the path to approval or the actual label that caught you by surprise?

Well, as you know, Serge, we've been following and tracking what they were developing the product for levodopa-induced dyskinesia. So really, the surprise comes from the pathway. And the appearance of the approved product, absent any clinical trials going on, to support its indication and to support indication of the drug in light of the use parent, of the amantadine IR and its label, which is pretty absent in any clinical data, or modern clinical data, to support its use in Parkinson's and drug-induced extraparameter symptoms. So those other things are soft guard and - at the community.

Okay. And then I know, it's still early, but the - do you think that your GOCOVRI promotional campaign right now is well designed to address any OSMOLEX threat at this point?

Let me start by answering and see which ones to chime in. Some - the start of Adamas, back in 2004, there were was immediate-release amantadine available with a use pattern that, frankly, hasn't changed much in the last 15 to 20 years. And so we understood the biology of the disease, the biology of the drug, how those two things interact, how those two timing patterns interact to figure out that you needed to give amantadine at night, allowed to rise slowly during the night to be high prior to taking the first dose of levodopa in the morning. How high? We've begun - we began to establish that back in the mid-2000s, and Rajiv's team began to publish papers on the, really, the requirements to hit a target in the range of 1,500 nanograms per ml before the patient wakes up in order to have any benefit, when levodopa comes on board. And then to have it significantly lower than that and descending when the patient is heading into their evening hours and going to sleep. The situation at this point, looking at the label, has not changed, because we've been preparing to promote GOCOVRI with that profile into a marketplace, which is accustomed to immediate-release amantadine, which is given in the morning, given twice a day, 90% of the time, with a plasma level that accumulates and gives rise to a certain therapeutic profile, which is not particularly durable and as reflected by the use pattern we see. We just don't see a very wide use of it. So at the moment, I don't see a significant adjustment other than being prepared for the confusion that another amantadine immediate-release like product could pose to the market. Richard, any..

I'll only add that the use of GOCOVRI in Parkinson's dyskinesia is very clearly supported by a very robust safety and efficacy data package, which clearly demonstrates the package on dyskinesia and OFF in that patient population. And for about the four, five months right now, we've been presenting to the payer community and the physician community, the value proposition that's derived from that dataset. And that's in the environment in which amantadine IR is available. And that's been resulting in very strong resident support for GOCOVRI at both the physician and the payer level. So if you believe that Cosmo ICR is basically an equivalency to IR amantadine, then I don't think that value proposition to even to the payer or to the physician committee changes in that light.

Just couple of questions on 4101. Has your meeting with the FDA been scheduled at this point?

We don't typically comment on the scheduling of meetings, but we will report back when we have minutes.

Okay. And the initiation of the Phase III program here, it's still scheduled for early '19?

Pending outcome of that FDA meeting. Yes, Serge.

And our next question comes from the line of Carl Byrnes from Northland Securities.

Just a couple real quick questions. How is it possible for OSMOLEX to be marketed for LID, given the morning administration, which is clear in the PI and obviously history, given the work that you've done with the respect to time-dependent release and your PI of administrating GOCOVRI in the evening. What I'm going with this, specifically, is how can Medicare reimburse off-label and the company not be at risk for substantial fines for marketing and off-label indication? So that's the first item. And then the second item, just given the nature of the declamatory judgement, which really isn't forceable, what might be the next steps be in just - for working the assumption that it didn't come back favorable to you, what will be the next course of action? I mean, in general, these things aren't enforceable. They're sort of preemptive strikes, if you will.

You had three questions embedded in your two questions. So I'll try to give quick answers and throw it over to Richard for substances. So first of all, on your first question, it's not indicated, OSMOLEX is not indicated for treatment of dyskinesia. It varies with it now the indications that amantadine-immediate release had, which are not and do not overlap with levodopa - dyskinesia in Parkinson's patients. So that's number one. Number two is regards to the declamatory, you've read and as you know, this is, really, them seeking decision from a court that they don't infringe our patents. And these are patents that are separate and distinct in many cases from patents that protect GOCOVRI. So we're evaluating the complaint and our course of action and will proceed on that basis. With respect to how the Medicare is going to respond, Richard, do you want to just comment on that at this point?

It's a great question. Obviously, we will be approaching Medicare in the late spring of this year regarding GOCOVRI, regarding the unique indications that GOCOVRI. And Medicare, traditionally, manages projects with unique indications in a very specific way. So we will work that through with CMS and Medicare in general. And then we'll get through it at the plan level following up on that.

If I could just make one more point, because I think you raised it very nicely. What these two products have in common is a very active ingredient. Everything past that is actually very different. Full efficacy package, very NCE-like label that was written primarily by Adamas, based upon our data. The OSMOLEX is inheriting a majority from a - labels from the '60s and '70s attributed to the amantadine IR. And we do expect, and we hope, that all participants in the health care system are going to understand through our efforts and respect those distinctions and what those labels permit them to do.

And our next question comes from the line of Josh Schimmer from Evercore ISI.

Got a bunch of questions in terms of the revenue that was recognized in the fourth quarter, and how we interpret the sell-in revenue recognition model. What - can you just outline what the criteria are to recognize revenue? And at least, how we might think about the gross-to-net discount in the fourth quarter relative to what we might see in subsequent quarters?

The selling method, which is what we're using, in Q4. And as you may know, Josh, the rules are changing. Everyone is required to use sell- in 2018. There's no flexibility. In the past, there was flexibly, you had to prove you're able to use [indiscernible], which was a transition we've been able to do. So the sell-in method means that we take revenue when the product is delivered to Walgreens who will maintain some inventory, but primary inventory is really held by ourselves. So there is a difference, which as we go forward, won't be particularly significant, but it will be at a small incremental piece of revenue to the extent that there is inventory been built at Walgreens. So there will always be an element of revenue that comprises that. But we won't be getting into details on how much that difference is. And with regard to gross-to-net - with regard to gross-to-that, I mean, there will certainly be variability quarter-to-quarter from - on a quarterly basis, the [indiscernible] for sort of is not entirely, but it's more a Q1 issue than later in the year, as people work through that. So there will certainly will be variability quarter-to-quarter and we consciously left our suggestion of 25% to 35% fairly general. You would expect perhaps, a higher level in the first quarter and lower level at the end of the year with transitions in between.

Okay. So there are no other unique, kind of, a large-related rebates for discounts and factor into that?

No.

And then products delivered to Walgreens on a patient by patient basis, that's ...

No, they maintain some inventory. And that's based on their expectations, based on the level of prescriptions they see coming through. the order fairly quickly. And at this - not like a monthly or quarterly order, they order as needed on a fairly short-term basis.

Okay. So then I guess, as we adjust for inventory as in some investors are wondering, whether the number of prescriptions that were written in the fourth quarter, but for whatever reason, product was not shipped and wondering if that turnaround time of prescription to actually ship that shipment?

Well, there will certainly be some delays, Josh. But I don't think the timing of the shipment that shipments to Walgreen is a little bit of independent of the prescriptions coming through. So they're filling up their inventory as they see, as needed.

Any way to estimate the amount of inventory in that?

You should think of it being measured in weeks, not months.

And our next question comes from the line of Caroline Paula Meek from Noble capital.

And was just wondering if there were any other updates on the formulary adoption. And I think - I know, you had originally said that GOCOVRI will go off in mid-2018. And I just wondered if you could just elaborate on that a little bit. It seems like any other updates?

So we continue to see progress in terms of formal high formally coverage, as I referenced early on. I just think coverage being a published vehicle for the win, in which appear will - as announced that will handle a GOCOVRI prescription. And we have an increasing - almost 80 number of those, but I want to be sure that you realize that outside of that, where there is not actually a published formulary process for handling GOCOVRI, we're still seeing prescriptions filled. And we're seeing prescriptions filled, roughly the same place in time from implants that have formalized procedure for GOCOVRI as well. So I want to make sure that that distention, while it's important, is not their critical defining distinction for access to GOCOVRI.

Okay, that's helpful. And then just a quick follow up, a question on the regulatory judgment for something. Now can you just tell us a little bit more - like the back story or where all this began? I believe there was a letter back in 2015? And if you could just, tell us a little bit more about that. And then I think that would really help me, sort of, frame the whole situation there.

Sure. So again, what's in the complaint, that the letter we sent the company at the time that we were in a competitive recruitment dynamic, with regards to dyskinesia. That was one of the letter was sent. And so what they're looking for right now is a declaratory judgment that the sale of their product does not infringe our patent's. And we are evaluating that, obviously, we have an obligation to enforce. Our IP and we take that seriously and we will - we are reviewing the complaint.

Thank you. And that concludes our question-and-answer session today. I would like to turn the call back over to Dr. Went for closing remarks.

So a very exciting time for Adamas, as we closed out the year last year and as we entered into this year to bring GOCOVRI to patients. I thank you for your time today. We look forward to seeing you, as I said, during the quarter, at the AAN meeting, if you're attending and to an update in May, when we have a more full-some update on you on the first quarter of commercialization of GOCOVRI. Thank you very much.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, and you may now disconnect. Everyone, have a great day.