Here's Why Adamas Pharmaceuticals' Stock Soared Today

What: Adamas Pharmaceuticals ,a specialty pharmaceutical company developing treatments for chronic disorders of the central nervous system, saw its shares climb by more than 55% Wednesday on sky-high volume after the company announced that its lead experimental product,ADS-5102, met its primary endpoint of reducinglevodopa-induced dyskinesia (LID) associated with Parkinson's disease in a late-stage study.

So what: The Street presently has ADS-5102's peak sales ranging from $200 million to $500 million if the drug is eventually approved as a treatment for LID. Although this wide range implies a high level of uncertainty over the drug's commercial potential, Adamas only sports a market cap of around $480 million, meaning thatADS-5102 shouldn't even need to reach the higher end of these projections to be a major value driver for the company moving forward.

Now what: Per the press release, Adamas is now planning on approaching the U.S. Food and Drug Administration about filing for the drug's approval in the near future, putting it on track to become the first approved treatment for LID in the U.S., according to the company. However,the main reason there is so much uncertainty surrounding ADS-5102's commercial potential is because thereare a handful of other experimental treatments in development for LID right now. As such, investors may want to keep a close eye on the clinical progress of these potential competitive threats.

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