Avadel Pharmaceuticals Reports First Quarter 2017 Results

DUBLIN, Ireland, May 09, 2017 (GLOBE NEWSWIRE) -- Avadel Pharmaceuticals plc AVDL today announced its financial results for the first quarter of 2017.

Highlights Include:

  • Total revenues for the first quarter 2017 were $52.5 million, compared to $43.1 million in the fourth quarter 2016 and $36.2 million in the first quarter 2016.
  • GAAP net income for the first quarter 2017 was $25.4 million, or $0.59 per diluted share, compared to GAAP net income of $4.7 million, or $0.11 per diluted share, in the fourth quarter 2016 and a GAAP net loss of $6.1 million, or $0.15 per diluted share, in the first quarter 2016.
  • Adjusted net income for the first quarter 2017 was $11.3 million, or $0.26 per diluted share, compared to an adjusted net income of $0.1 million, or $0.00 per diluted share, in the fourth quarter 2016 and $1.8 million, or $0.04 per diluted share, in the first quarter 2016. (1)
  • Cash and marketable securities at March 31, 2017 were $179.2 million, up from $154.2 million at December 31, 2016. 

Michael Anderson, Avadel's Chief Executive Officer, remarked, "This was a strong start to the year for us, producing record quarterly revenues of $52.5 million, driven largely by the continued durability of our hospital products. We saw strong performance from Akovaz® and continued to maintain stable share and pricing for our other two hospital products, Bloxiverz® and Vazculep®.  In addition, we began site initiations for our REST-ON Phase III clinical trial of once nightly sodium oxybate in the United States, where we expect to enroll a large portion of patients."

First Quarter 2017 Results

Revenues during the first quarter 2017 of $52.5 million, compared to $36.2 million during the same period last year. The increase in revenues is due to Akovaz, which was not yet in the market during the first quarter of 2016. On a GAAP basis, net income was $25.4 million during the first quarter 2016, or $0.59 per diluted share, compared to a net loss of $6.1 million, or $0.15 per diluted share, for the same period last year.   Included in GAAP net income for the first quarter 2017 were $7.0 million of gains related to changes in the fair value of related party contingent consideration, compared to charges of $8.2 million in the same period last year. Changes in the fair value of related party contingent consideration are non-cash items, and do not reflect the cash amount paid to related parties. Cash payments can be found in the Consolidated Statement of Cash Flows. Also, included in GAAP net income in the first quarter 2017 are $2.7 million in restructuring costs related to the reduction of the Company's workforce in France, which consist of employee severance, benefits and other costs.

Research and Development expenses totaled $7.2 million for the first quarter, compared to $5.4 million for the same period last year. The increase in spending is due to the Company's Phase III REST-ON trial to assess the safety and efficacy of a once-nightly version of sodium oxybate for the treatment of excessive daytime sleepiness and cataplexy in patients suffering from narcolepsy. The Company expects spending on Research and Development to increase in the coming quarters and remain in line with initial expectations of total spend between $40 and $50 million for the full year 2017. Selling, General and Administrative expenses were $11.8 million in the first quarter 2017, compared to $9.5 million in the same period last year.   This increase was primarily due to higher sales and marketing expenses resulting from the acquisition of FSC Pediatrics, which incurred three months of expenses during the three months ended March 31, 2017 compared to only two months in the prior year due to the February 2016 acquisition.

Adjusted net income for the first quarter 2017 was $11.3 million, or $0.26 per diluted share, compared to $1.8 million, or $0.04 per diluted share, in the same period last year.(1)  The increase in adjusted net income is largely attributable to an increase in revenues from Akovaz and a lower adjusted effective tax rate of 41% compared to 83% in the prior year period. Please see the Supplemental Information section within this document for a reconciliation of adjusted net income and adjusted diluted EPS to the respective GAAP amounts.

2017 Guidance

The Company is increasing its full year adjusted EPS guidance to a range of $0.30 to $0.45 per diluted share, up from its previous range of between $0.20 and $0.35 per diluted share, on stronger than anticipated first quarter results.  The Company is narrowing its full year revenue guidance to be in the range of $170 - $185 million as a result of a second competitor for Akovaz entering the market earlier than anticipated and a shift in market conditions for neostigmine. R&D spend is expected to be in the range of $40 to $50 million, and the full year adjusted tax rate is now expected to be in the range of 60% to 70%, down from previous guidance of 70% - 80%.

Conference Call

A conference call to discuss these results has been scheduled for Tuesday, May 9, 2017 at 10:00 a.m. ET. A question and answer period will follow management's prepared remarks. To access the conference call, investors are invited to dial (844) 388-0559 (U.S. and Canada) or (216) 562-0393 (International). The conference ID number is 9368017. A live audio webcast and accompanying slides can be accessed by visiting the "News & Events" page of the Company's Investors website at www.avadel.com. A replay of the webcast will be archived on Avadel's website for 90 days following the event.

About REST-ON Phase III Clinical Trial

REST-ON is a double-blind, randomized, placebo controlled study of 264 patients to assess the efficacy and safety of a once nightly formulation of sodium oxybate for extended-release oral suspension for the treatment of excessive daytime sleepiness and cataplexy in patients suffering from narcolepsy. For more information, please visit www.clinicaltrial.avadel.com.

About Avadel Pharmaceuticals plc:

Avadel Pharmaceuticals plc AVDL is a specialty pharmaceutical company that seeks to develop differentiated pharmaceutical products that are safe, effective and easy to take through formulation development, by utilizing its proprietary drug delivery technology and in-licensing / acquiring new products; ultimately, helping patients adhere to their prescribed medical treatment and see better results. Avadel currently markets products in the hospital and primary care spaces. The Company is headquartered in Dublin, Ireland with operations in St. Louis, Missouri, United States and Lyon, France. For more information, please visit www.avadel.com.

Safe Harbor: This release may include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements herein that are not clearly historical in nature are forward-looking, and the words "anticipate, "assume," "believe," "expect," "estimate," "plan," "will," "may," and the negative of these and similar expressions generally identify forward-looking statements. All forward-looking statements involve risks, uncertainties and contingencies, many of which are beyond Avadel's control and could cause actual results to differ materially from the results contemplated in such forward-looking statements. These risks, uncertainties and contingencies include the risks relating to: our dependence on a small number of products and customers for the majority of our revenues; the possibility that our Bloxiverz®,Vazculep® and Akovaz® products, which are not patent protected, could face substantial competition resulting in a loss of market share or forcing us to reduce the prices we charge for those products; the possibility that we could fail to successfully complete the research and development for pipeline products we are evaluating for potential application to the FDA pursuant to our "unapproved-to-approved" strategy, or that competitors could complete the development of such product and apply for FDA approval of such product before us; our dependence on the performance of third parties in partnerships or strategic alliances for the commercialization of some of our products; the possibility that our products may not reach the commercial market or gain market acceptance; our need to invest substantial sums in research and development in order to remain competitive; our dependence on certain single providers for development of several of our drug delivery platforms and products; our dependence on a limited number of suppliers to manufacture our products and to deliver certain raw materials used in our products; the possibility that our competitors may develop and market technologies or products that are more effective or safer than ours, or obtain regulatory approval and market such technologies or products before we do; the challenges in protecting the intellectual property underlying our drug delivery platforms and other products; our dependence on key personnel to execute our business plan; the amount of additional costs we will incur to comply with U.S. securities laws as a result of our ceasing to qualify as a foreign private issuer; and the other risks, uncertainties and contingencies described in the Company's filings with the U.S. Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2016, all of which filings are also available on the Company's website. Avadel undertakes no obligation to update its forward-looking statements as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Disclosures and Adjustments

Avadel discloses certain non-GAAP financial measures, including adjusted net income and loss and adjusted net income and loss per diluted share, as management believes that a comparison of its current and historical results would be difficult if the disclosures were limited to financial measures prepared only in accordance with generally accepted accounting principles (GAAP) in the U.S.  In addition to reporting its financial results in accordance with GAAP, Avadel reports certain non-GAAP results that exclude, if any, fair value remeasurements of its contingent consideration, impairment of intangible assets, amortization of intangible assets, restructuring costs, foreign exchange gains and losses on assets and liabilities denominated in foreign currencies, but includes the operating cash flows plus any unpaid accrued amounts associated with the  contingent consideration, in order to supplement investors' and other readers' understanding and assessment of the Company's financial performance.  The Company's management uses these non-GAAP measures internally for forecasting, budgeting and measuring its operating performance.  Investors and other readers should review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most closely applicable GAAP measure set forth below and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP. The table provided within the following "Supplemental Information" section reconciles GAAP net income and loss and diluted earnings or loss per share to the corresponding adjusted amounts.

_________________________

1
Non-GAAP financial measure: Descriptions of Avadel's non-GAAP financial measures are included under the caption Non-GAAP Disclosures and Adjustments included within this press release and reconciliations of such non-GAAP financial measures to their most closely applicable GAAP financial measures are found in the Supplemental Information section herein.

 
AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per share data)
 
  Three Months Ended March 31,
  2017 2016
     
Revenues:    
Product sales and services $51,757  $35,353 
License and research revenue 750  863 
Total 52,507  36,216 
Operating expenses:    
Cost of products and services sold 3,902  3,906 
Research and development expenses 7,206  5,388 
Selling, general and administrative expenses 11,812  9,461 
Intangible asset amortization 564  3,514 
Changes in fair value of related party contingent consideration (6,971) 8,243 
Restructuring costs 2,653   
Total operating expenses 19,166  30,512 
Operating income 33,341  5,704 
Investment income, net 529  200 
Interest expense, net (263) (175)
Other income (expense) - changes in fair value of related party payable 550  (1,534)
Foreign exchange loss (231) (2,941)
Income before income taxes 33,926  1,254 
Income tax provision 8,525  7,312 
Net income (loss) $25,401  $(6,058)
     
Net income (loss) per share - basic $0.61  $(0.15)
Net income (loss) per share - diluted 0.59  (0.15)
     
Weighted average number of shares outstanding - basic 41,374  41,241 
Weighted average number of shares outstanding - diluted 42,810  41,241 
       



 
AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
 
  March 31, 2017 December 31, 2016
     
ASSETS    
Current assets:    
Cash and cash equivalents $32,236  $39,215 
Marketable securities 146,978  114,980 
Accounts receivable 13,463  17,839 
Inventories 5,406  3,258 
Prepaid expenses and other current assets 6,529  5,894 
Total current assets 204,612  181,186 
Property and equipment, net 3,382  3,320 
Goodwill 18,491  18,491 
Intangible assets, net 22,274  22,837 
Research and development tax credit receivable 2,396  1,775 
Income tax deferred charge   10,342 
Other 7,533  7,531 
Total assets $258,688  $245,482 
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities:    
Current portion of long-term debt $272  $268 
Current portion of long-term related party payable 43,699  34,177 
Accounts payable 7,962  7,105 
Deferred revenue 1,617  2,223 
Accrued expenses 19,936  17,222 
Income taxes 9,723  1,200 
Other 825  226 
Total current liabilities 84,034  62,421 
Long-term debt, less current portion 555  547 
Long-term related party payable, less current portion 109,514  135,170 
Other 5,488  5,275 
Total liabilities 199,591  203,413 
     
Shareholders' equity:    
Preferred shares, $0.01 nominal value; 50,000 shares authorized at March 31, 2017 and December 31, 2016,respectively; none issued or outstanding at March 31, 2017 and December 31, 2016, respectively    
Ordinary shares, nominal value of $0.01; 500,000 shares authorized; 41,380 and 41,371 issued and outstanding at March 31, 2017 and December 31, 2016, respectively 414  414 
Additional paid-in capital 387,105  385,020 
Accumulated deficit (305,555) (319,800)
Accumulated other comprehensive loss (22,867) (23,565)
Total shareholders' equity 59,097  42,069 
Total liabilities and shareholders' equity $258,688  $245,482 
 



 
AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
  Three Months Ended March 31,
  2017 2016
     
Cash flows from operating activities:    
Net income (loss) 25,401  (6,058)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation and amortization 837  3,754 
Loss on disposal of property and equipment   102 
Loss on sale of marketable securities 236  285 
Foreign exchange loss   2,941 
Grants recognized in research and development expenses   (2)
Remeasurement of related party acquisition-related contingent consideration (6,971) 8,243 
Remeasurement of related party financing-related contingent consideration (550) 1,534 
Change in deferred tax and income tax deferred charge   (1,682)
Stock-based compensation expense 2,047  2,475 
Increase (decrease) in cash from:    
Accounts receivable 4,376  2,093 
Inventories (2,148) 723 
Prepaid expenses and other current assets (1,354) (131)
Research and development tax credit receivable (716) (363)
Accounts payable & other current liabilities 1,456  6,119 
Deferred revenue (606) (758)
Accrued expenses 2,714  (2,888)
Accrued income taxes 8,523  5,616 
Earn-out payments for related party contingent consideration in excess of acquisition-date fair value (7,166) (1,566)
Royalty payments for related party payable in excess of original fair value (1,003) (561)
Other long-term assets and liabilities 232  493 
Net cash provided by operating activities 25,308  20,369 
     
Cash flows from investing activities:    
Purchases of property and equipment (334) (460)
Acquisitions of businesses   161 
Proceeds from sales of marketable securities 14,419  9,766 
Purchase of marketable securities (46,074) (50,454)
Net cash used in investing activities (31,989) (40,987)
     
Cash flows from financing activities:    
Earn-out payments for related party contingent consideration (444) (6,448)
Royalty payments for related party payable   (531)
Cash proceeds from issuance of ordinary shares and warrants 38   
Net cash used in financing activities (406) (6,979)
     
Effect of exchange rate changes on cash and cash equivalents 108  403 
     
Net decrease in cash and cash equivalents (6,979) (27,194)
Cash and cash equivalents at January 1, 39,215  65,064 
Cash and cash equivalents at March 31, $32,236  $37,870 
 



 
AVADEL PHARMACEUTICALS PLC
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except per share data)
   
  Three Months Ended March 31,
Revenues by Product: 2017 2016
     
Bloxiverz $13,902  $24,747 
Vazculep 10,179  9,406 
Akovaz 25,638   
Other 2,038  1,200 
Total product sales and services 51,757  35,353 
License and research revenue 750  863 
Total revenues $52,507  $36,216 
 



 
    GAAP to Non-GAAP adjustments for the three-months ended March 31, 2017    
    Exclude Include    
  GAAP Intangible

asset

amortization
 Foreign

exchange

(gain)/loss
 Restructuring

impacts
 Purchase

accounting

adjustments

- FSC
 Contingent

related party

payable fair

value

remeasurements
 Contingent

related party

payable

paid/accrued
 Total

adjustments
 Adjusted

GAAP
                   
Revenues:                  
Product sales and services $51,757  $  $  $  $  $  $  $  $51,757 
License and research revenue 750                750 
Total 52,507                52,507 
Operating expenses:                  
Cost of products and services sold 3,902        (46)     (46) 3,856 
Research and development 7,206                7,206 
Selling, general and administrative 11,812                11,812 
Intangible asset amortization 564  (564)           (564)  
Changes in fair value of related party contingent consideration (6,971)         6,971  9,616  16,587  9,616 
Restructuring costs 2,653      (2,653)       (2,653)  
Total 19,166  (564)   (2,653) (46) 6,971  9,616  13,324  32,490 
Operating income (loss) 33,341  564    2,653  46  (6,971) (9,616) (13,324) 20,017 
Investment and other income 529                529 
Interest expense (263)               (263)
Other expense - changes in fair value of related party payable 550          (550) (1,299) (1,849) (1,299)
Foreign exchange gain (231)   231          231   
Income (loss) before income taxes 33,926  564  231  2,653  46  (7,521) (10,915) (14,942) 18,984 
Income tax provision (benefit) 8,525  201      17  (360) (691) (833) 7,692 
Net income (loss) $25,401  $363  $231  $2,653  $29  $(7,161) $(10,224) $(14,109) $11,292 
                   
Net income (loss) per share - diluted(1) $0.59  $0.01  $0.01  $0.06  $  $(0.17) $(0.24) $(0.33) $0.26 
Weighted average number of shares outstanding - diluted 42,810  42,810  42,810  42,810  42,810  42,810  42,810  42,810  42,810 
                            

(1)  Net income (loss) per share - diluted is calculated by dividing Net income (loss) by the Weighted average number of shares outstanding - diluted. Note, when recalculated using this method, the balances in the Total adjustment and Adjusted GAAP columns may not cross-foot as a result of rounding to full precision.

 
    GAAP to Non-GAAP adjustments for the three-months ended December 31, 2016    
    Exclude Include    
  GAAP Intangible

asset

amortization
 Foreign

exchange

(gain)/loss
 Cross -

border

merger

impacts
 Purchase

accounting

adjustments

- FSC
 Contingent

related party

payable fair

value

remeasurements
 Contingent

related party

payable

paid/accrued
 Total

adjustments
 Adjusted

GAAP
                   
Revenues:                  
Product sales and services $42,364  $  $  $  $  $  $  $  $42,364 
License and research revenue 721                721 
Total 43,085                43,085 
Operating expenses:                  
Cost of products and services sold 2,591        1,019      1,019  3,610 
Research and development 13,476                13,476 
Selling, general and administrative 10,688                10,688 
Intangible asset amortization 2,970  (2,970)           (2,970)  
Changes in fair value of related party contingent consideration (3,704)         3,704  7,645  11,349  7,645 
Total 26,021  (2,970)     1,019  3,704  7,645  9,398  35,419 
Operating income (loss) 17,064  2,970      (1,019) (3,704) (7,645) (9,398) 7,666 
Investment and other income 555                555 
Interest expense (261)               (261)
Other expense - changes in fair value of related party payable (413)         413  (1,018) (605) (1,018)
Foreign exchange gain 1,135    (1,135)         (1,135)  
Income (loss) before income taxes 18,080  2,970  (1,135)   (1,019) (3,291) (8,663) (11,138) 6,942 
Income tax provision (benefit) 13,346  1,066    (6,754) (366) 82  (499) (6,471) 6,875 
Net income (loss) $4,734  $1,904  $(1,135) $6,754  $(653) $(3,373) $(8,164) $(4,667) $67 
                   
Net income (loss) per share - diluted(1) $0.11  $0.04  $(0.03) $0.16  $(0.02) $(0.08) $(0.19) $(0.11) $ 
Weighted average number of shares outstanding - diluted 42,808  42,808  42,808  42,808  42,808  42,808  42,808  42,808  42,808 
                            

(1)  Net income (loss) per share - diluted is calculated by dividing Net income (loss) by the Weighted average number of shares outstanding - diluted. Note, when recalculated using this method, the balances in the Total adjustment and Adjusted GAAP columns may not cross-foot as a result of rounding to full precision.

 
    GAAP to Non-GAAP adjustments for the three-months ended March 31, 2016    
    Exclude Include    
  GAAP Intangible

asset

amortization
 Foreign

exchange

(gain)/loss
 Purchase

accounting

adjustments

- FSC
 Contingent

related party

payable fair

value

remeasurements
 Contingent

related party

payable

paid/accrued
 Total

adjustments
 Adjusted

GAAP
                 
Revenues:                
Product sales and services $35,353  $  $  $  $  $  $  $35,353 
License and research revenue 863              863 
Total 36,216              36,216 
Operating expenses:                
Cost of products and services sold 3,906      (763)     (763) 3,143 
Research and development 5,388              5,388 
Selling, general and administrative 9,461              9,461 
Intangible asset amortization 3,514  (3,514)         (3,514)  
Changes in fair value of related party contingent consideration 8,243        (8,243) 6,445  (1,798) 6,445 
Total 30,512  (3,514)   (763) (8,243) 6,445  (6,075) 24,437 
Operating income (loss) 5,704  3,514    763  8,243  (6,445) 6,075  11,779 
Investment and other income 200              200 
Interest expense (175)             (175)
Other expense - changes in fair value of related party payable (1,534)       1,534  (892) 642  (892)
Foreign exchange gain (2,941)   2,941        2,941   
Income (loss) before income taxes 1,254  3,514  2,941  763  9,777  (7,337) 9,658  10,912 
Income tax provision (benefit) 7,312  1,262    274  551  (321) 1,766  9,078 
Net income (loss) $(6,058) $2,252  $2,941  $489  $9,226  $(7,016) $7,892  $1,834 
                 
Net income (loss) per share - diluted(1) $(0.15) $0.05  $0.07  $0.01  $0.22  $(0.17) $0.19  $0.04 
Weighted average number of shares outstanding - diluted 41,241  41,241  41,241  41,241  41,241  41,241  41,241  41,241 
                         

(1)  Net income (loss) per share - diluted is calculated by dividing Net income (loss) by the Weighted average number of shares outstanding - diluted. Note, when recalculated using this method, the balances in the Total adjustment and Adjusted GAAP columns may not cross-foot as a result of rounding to full precision.

Contacts:

Michael F. Kanan
Chief Financial Officer
Phone: (636) 449-1844
Email: mkanan@avadel.com

Lauren Stival
Sr. Director, Investor Relations & Corporate Communications
Phone: (636) 449-5866
Email: lstival@avadel.com

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