Market Overview

Avadel Pharmaceuticals Reports Third Quarter 2019 Financial Results and Raises Revenue Guidance for FY2019

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  • Enrollment currently at 200 patients for the pivotal REST-ON Phase 3 study (97.5% complete); the Company currently expects to complete patient enrollment by end of 2019, with data readout expected in Q2 2020
     
  • Revenue of $48.2 million for first nine months of 2019; increasing revenue guidance to be at or above $55 million for full year 2019
     
  • Restructuring and other cost reduction actions on track to realize $80 to $90 million in annualized cost savings
     
  • Cash, cash equivalents and marketable securities as of September 30, 2019 totaled $72.5 million
     
  • Management to host a conference call today at 8:30 a.m. ET

DUBLIN, Ireland, Nov. 12, 2019 (GLOBE NEWSWIRE) -- Avadel Pharmaceuticals plc (NASDAQ:AVDL), a company focused on developing FT218, an investigational, once-nightly formulation of sodium oxybate for treating narcolepsy, today announced its financial results for the third quarter of 2019 and provided a company update.

"In the third quarter of 2019, Avadel achieved several milestones that were established as part of our focused business strategy announced earlier this year," said Greg Divis, Chief Executive Officer of Avadel. "Appointments to the clinical and medical teams during the second and third quarters of 2019 strengthened our R&D focus and quickly made meaningful contributions to the clinical development of our lead asset, FT218. The team's most important recent activities include amendments to the statistical analysis plan for our pivotal Phase 3 REST-ON trial for FT218 that were accepted by the FDA in September. As a result of these amendments, the study is now targeting the enrollment of 205 patients, reducing the estimated time for completion by up to 12 months, with enrollment expected to be completed by the end of 2019 and topline data available in the second quarter of 2020."

"Our sterile injectable hospital business has continued to outperform our expectations in the third quarter of 2019, and we have raised our annual revenue guidance for 2019 to be at or above $55 million. We look forward to the potential launch of AV001, our fourth hospital product, pending the outcome of the FDA's Prescription Drug User Fee Act (PDUFA) target action date of December 15, 2019. If approved, AV001 is expected to contribute to our 2020 revenue and support the development of FT218," stated Mr. Divis.

"We have made significant progress over the first nine months of 2019 in strengthening the company financially, while primarily focusing on the clinical development of FT218. We believe these actions have put the company on a path toward long-term success and re-building shareholder value," concluded Mr. Divis.  

Third quarter and recent company highlights

  • The FDA agreed to the Company's amendments to the statistical analysis plan, ultimately resulting in a reduced sample size for the ongoing pivotal Phase 3 study for once-nightly FT218 while retaining our Special Protocol Assessment (SPA) agreement; full enrollment now expected by end of 2019 and top-line data on track to be announced in the second quarter of 2020;
     
  • Announced pharmacokinetic (PK) data for once-nightly FT218 from four Phase 1 studies in an oral presentation at the World Sleep 2019 Congress;
     
  • Data presented at the World Sleep 2019 Congress from four Phase 1 studies demonstrate that FT218 exhibits a pharmacokinetic profile desirable for once-nightly dosing with equivalent exposure to twice-nightly sodium oxybate at the 4.5 g and 6 g dosing levels;
     
  • Received a new Prescription Drug User Fee Act (PDUFA) target action date of December 15, 2019 for AV001 from the U.S. Food and Drug Administration;
     
  • Cost reductions and restructuring actions have resulted in approximately $63 million of lower SG&A and R&D spending; the Company is on track to realize $80 to $90 million of cost reductions in 2019 compared to 2018, as previously announced;
     
  • Cash, cash equivalents and marketable securities as of September 30, 2019 totaled $72.5 million, compared to $79.3 million as of June 30, 2019 and $99.9 million as of December 31, 2018; and
     
  • Reported revenues of $14.2 million in the third quarter of 2019; annual revenue is now expected to be at or above $55 million for 2019.

Overview of third quarter 2019 financial results

Revenues for the third quarter of 2019 were $14.2 million, compared to $19.8 million in the third quarter of 2018. The decline on a year-over-year basis was primarily attributed to lower net selling prices across the Company's hospital products as a result of increased market competition.

In thousands (Unaudited)   Three Months Ended September 30,   Nine Months Ended September 30,
Revenues by Product:   2019   2018   2019   2018
                 
Bloxiverz   $ 1,466     $ 3,656     $ 6,392     $ 16,691  
Vazculep   8,786     8,759     27,669     33,097  
Akovaz   4,208     5,991     13,946     28,083  
Other   (231 )   1,420     213     4,232  
Total product sales   14,229     19,826     48,220     82,103  
License revenue               246  
Total revenues   $ 14,229     $ 19,826     $ 48,220     $ 82,349  

Research and development (R&D) expenses were $7.5 million in the third quarter of 2019, compared to $11.4 million in the third quarter of 2018. The Company continues to invest a substantial portion of R&D spend in its FT218 development program.

Selling, general and administrative (SG&A) expenses were $5.3 million in the third quarter of 2019, compared to $24.8 million in the third quarter of 2018 and $6.8 million in the second quarter of 2019. The year-over-year and sequential quarterly declines are primarily the result of realized cost reductions resulting from the exit of Noctiva™ and the Company's cost reduction and restructuring actions.

Net loss for the third quarter of 2019 was $8.9 million, or $0.24 per share, compared to a net loss of $15.8 million or $0.43 per share for the same period in 2018. 

Cash, cash equivalents and marketable securities were $72.5 million as of September 30, 2019, compared to $79.3 million as of June 30, 2019 and $99.9 million as of December 31, 2018.  Based on Avadel's current FT218 clinical development plan, anticipated cost structure improvements and hospital products revenue projections, the Company expects its cash to be sufficient to fund operations well into 2021. The Company believes that the commercial launch of AV001, pending regulatory approval, could further fund operations and support the development of FT218. The Company has convertible debt of $144 million due in 2023.

2019 Guidance:
Based on recent hospital products sales performance, increased competition from additional products launched in 2019, and recent market price actions, annual revenue for 2019 is now expected to be at or above $55 million.

The U.S. Food and Drug Administration (FDA) is reviewing an NDA for a fourth hospital product, AV001, with a PDUFA target action date of December 15, 2019. If approved, AV001 is expected to contribute to revenues in 2020 and beyond.

Conference Call:
A conference call to discuss these results has been scheduled for Tuesday, November 12, 2019 at 8:30 a.m. EST. To access the conference call, investors are invited to dial (877) 407-9716 (U.S. and Canada) or (201) 493-6779 (International). The conference ID number is 13696031. A live audio webcast can be accessed by visiting the investor relations section of the Company's website, www.avadel.com. A replay of the webcast will be archived on Avadel's website for 90 days following the event.

About Avadel Pharmaceuticals plc:
Avadel Pharmaceuticals plc (NASDAQ:AVDL) is an emerging biopharmaceutical company. The Company's primary focus is the development and potential FDA approval of FT218, which is in a Phase 3 clinical trial for the treatment of narcolepsy patients suffering from excessive daytime sleepiness (EDS) and cataplexy. In addition, Avadel develops and markets a portfolio of sterile injectable drugs used in the hospital setting. For more information, please visit www.avadel.com.

Cautionary Disclosure Regarding Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements relate to our future expectations, beliefs, plans, strategies, objectives, results, conditions, financial performance, prospects, or other events. In some cases, forward-looking statements can be identified by the use of words such as "will," "may," "believe," "expect," "look forward," "on track," "could," "guidance," "anticipate," "estimate," "project" and similar expressions, and the negatives thereof (if applicable).

Our forward-looking statements are based on estimates and assumptions that are made within the bounds of our knowledge of our business and operations and that we consider reasonable. However, our business and operations are subject to significant risks and as a result there can be no assurance that actual results of our research, development and commercialization activities and the results of our business and operations will not differ materially from the results contemplated in such forward-looking statements. Factors that could cause actual results to differ from expectations in our forward-looking statements include:

(a) risks relating to our recent net losses and restructuring plan, including risks relating to the following:
due to a decrease in our available liquid assets, our business strategy has been refocused and is now substantially directed to development of a single product, FT218; our recent restructuring plan may not be as effective as we anticipate and may have unintended negative impacts; further restructuring actions, if needed, may require third-party consents (including consents under the indenture governing our convertible debt), and such consents may not be granted; and the Chapter 11 bankruptcy filing by our subsidiary Avadel Specialty Pharmaceuticals, LLC may have unexpected adverse results. While our financial resources are currently anticipated to be sufficient to finance our operations well into 2021, it may be necessary for us to seek additional financial resources to continue our operations, and such financial resources may not be available to us on reasonable terms or at all.

b) risks relating to the following: our three products Bloxiverz®, Vazculep® and Akovaz®, which are not patent protected and have a small number of customers, currently produce substantially all of our revenues and could face further competition resulting in a further loss of market share and/or forcing us to further reduce our prices for those products; our current "unapproved marketed drug" (UMD) product candidate, AV001, could fail to achieve FDA approval; we could fail to develop future potential UMD product candidates, or competitors could develop such products and market such products with FDA approval before us; we could experience failure or further delay in completing the Phase III clinical trial for FT218, and if the FDA ultimately approves such product, the approval may not include any period of market exclusivity; we may not have sufficient cash or the ability to raise sufficient cash to service our $143.75 million Exchangeable Senior Notes due 2023 ("Notes"), including cash necessary to repay such Notes at maturity, to settle exchanges of such Notes in cash, or to repurchase such Notes as required following a "fundamental change" event described in the indenture governing such Notes; we depend on a limited number of third parties to manufacture certain of our products and to provide certain raw materials used in our products; 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; we may face challenges in obtaining intellectual property protecting our products and drug delivery technologies; and we depend on key personnel to execute our business plan.

(c) the other risks and uncertainties described in the "Risk Factors" section of Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018, which we filed with the Securities and Exchange Commission on March 15, 2019.

Forward-looking statements speak only as of the date they are made and are not guarantees of future performance. Accordingly, you should not place undue reliance on forward-looking statements. We do not undertake any obligation to publicly update or revise the forward-looking statements contained in this Annual Report.

Contacts:
 
  Michael F. Kanan  
  Chief Financial Officer  
  Phone: (636) 449-1844  
  Email: mkanan@avadel.com   
     
  Tim McCarthy  
  LifeSci Advisors, LLC  
  Phone: (212) 915.2564  
  Email: tim@lifesciadvisors.com  



AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(In thousands, except per share data)
(Unaudited)

    Three Months Ended September 30,   Nine Months Ended September 30,
    2019   2018   2019   2018
                 
Revenues:                
Product sales   $ 14,229     $ 19,826     $ 48,220     $ 82,103  
License revenue               246  
Total revenues   14,229     19,826     48,220     82,349  
Operating expenses:                
Cost of products   2,823     3,120     9,711     13,224  
Research and development expenses   7,539  
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