Market Overview

Avadel Pharmaceuticals Reports Fourth Quarter and Full Year 2019 Financial Results

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  • Completed enrollment for the pivotal REST-ON Phase 3 study in Q4 2019; data readout expected in Q2 2020

  • Raised $65 million in gross proceeds from private placement with leading biotech investment funds in February 2020

  • Realized over $80 million in cost savings from restructuring and other cost reduction actions

  • Reported revenue at the high end of the annual guidance at $59.2 million for full year 2019

  • Management to host a conference call today at 8:30 a.m. ET

DUBLIN, Ireland, March 12, 2020 (GLOBE NEWSWIRE) -- Avadel Pharmaceuticals plc (NASDAQ:AVDL), a company focused on developing FT218, an investigational, once-nightly formulation of sodium oxybate for the treatment of excessive daytime sleepiness and cataplexy in patients with narcolepsy, today announced its financial results for the fourth quarter and year ended December 31, 2019, and provided a company update.

"Throughout the past year we have successfully executed on our focused development strategy for FT218 and completed a corporate restructuring program that resulted in $82 million of cost savings year-over-year. We believe these activities have changed the course of the company and created a significant opportunity to drive long-term shareholder value," said Greg Divis, Chief Executive Officer of Avadel. "The opportunity presented by the development of FT218 is increasingly being recognized by the investment community, as we completed in February 2020 a $65 million private placement priced at-the-market with leading biotech investors, Vivo Capital, Avoro Capital Advisors, RTW Investments, Venrock Healthcare Capital Partners, Acuta Capital, and KVP Capital."

"Looking ahead, we have several near-term clinical milestones, including the last patient last visit for the pivotal Phase 3 REST-ON trial for FT218 scheduled to occur in the next two weeks, which will be followed by topline data from the study in the second quarter of 2020. In addition, we've announced plans to enhance the FT218 program by including an open-label extension study for REST-ON, and a switch study to evaluate patients switching from twice-nightly sodium oxybate to once-nightly FT218, which we plan to start by the end of the first quarter of 2020. This is an exciting time in Avadel's history, as we believe that FT218, if approved by the FDA, has the potential to take a significant share of the twice-nightly sodium oxybate market, which we estimated to be approximately $1.7 billion1 in 2019," concluded Mr. Divis.

Fourth quarter and recent company highlights

  • Completed enrollment for the REST-ON Phase 3 pivotal trial of FT218 for excessive daytime sleepiness and cataplexy in patients with narcolepsy for a total Phase 3 trial size of 212 patients, which exceeded the trial's enrollment target of 205 patients;
    • Last patient last visit for the REST-ON Phase 3 trial is expected to occur in the next two weeks, with topline data expected in the second quarter of 2020;
       
  • Completed a $65 million private placement with leading biotech investment funds in February 2020;
     
  • Strengthened the management team's financial and operational capabilities with the appointments of Thomas McHugh as Chief Financial Officer and Dr. Jason Vaughn to the newly created role of Senior Vice President of Technical Operations
     
  • Appointed Dr. Mark McCamish, an internationally recognized expert in drug development and manufacturing, to the Board of Directors
     
  • Achieved approximately $82 million of lower operating expenses for the full year 2019 compared to 2018 due to cost reductions and restructuring actions;
     
  • Received U.S. FDA approval for Nouress™, a cysteine hydrochloride injection for treating neonate patients requiring total parental nutrition, and the USPTO issued an Orange Book-listed patent for Nouress; and
     
  • Reported revenues of $11.0 million for the fourth quarter of 2019.

Overview of fourth quarter 2019 financial results

Revenues for the fourth quarter of 2019 were $11.0 million, compared to $20.9 million in the fourth quarter of 2018. The decline on a year-over-year basis was primarily attributed to lower overall sales volume across the Company's hospital products as a result of increased market competition.

R&D expenses were $7.8 million in the fourth quarter of 2019, compared to $6.1 million in the fourth quarter of 2018. The increase on a year-over-year basis was primarily attributed to the Company's investment in R&D spend in its FT218 development program.

SG&A expenses were $7.7 million in the fourth quarter of 2019, compared to $23.2 million in the fourth quarter of 2018. The year-over-year decline is 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 fourth quarter of 2019 was $2.7 million, or $0.07 per share, compared to a net loss of $63.9 million or $1.72 per share for the same period in 2018. 

Cash, cash equivalents and marketable securities were $64.2 million as of December 31, 2019. In February 2020, the Company completed a private placement with leading biotech investment funds receiving net proceeds of approximately $61.1 million. The Company has convertible debt of $143.8 million due in February 2023.

Based on recent hospital products sales performance, increased competition from additional products launched in 2019, and recent market price actions, revenue for the first quarter of 2020 is expected to be at or above $10 million.

Conference Call:
A conference call to discuss these results has been scheduled for Tuesday, March 12, 2020 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 13699575. 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.

Footnote:
1. Annualized Xyrem revenues from the Jazz Pharmaceuticals Full Year and Fourth Quarter 2019 Financial Results press release, February 25, 2020

About FT218
FT218 is an investigational, once-nightly formulation of Micropump™ controlled-release (CR) sodium oxybate. The company is currently conducting the REST-ON study, a double-blind, randomized, placebo-controlled Phase 3 trial, to assess the efficacy and safety of FT218 in the treatment of excessive daytime sleepiness and cataplexy in patients suffering from narcolepsy. FT218 has been granted Orphan Drug Designation from the U.S. Food and Drug Administration (FDA) for the treatment of narcolepsy. The designation was granted on the plausible hypothesis that FT218 may be clinically superior to the twice-nightly formulation of sodium oxybate already approved by the FDA for the same indication. In particular, FT218 may be safer due to ramifications associated with the dosing regimen of the previously approved product.

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 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. Actual results (including, without limitation, the timely completion and success of our Phase 3 REST-ON study and our ability to achieve FDA approval for FT218, our ability to achieve sales of our current marketed hospital products consistent with our current expectations, our ability to launch and commercialize Nouress, our ability to continue to service our Exchangeable Senior Notes due in 2023 and our ability to achieve continued cost savings from our restructuring plan) may differ materially from those set forth or implied in the forward-looking statements. These forward-looking statements involved certain risks and uncertainties that are subject to change based on various factors (many of which are beyond our control) including those set forth in our 2018 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission and subsequent filings.

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:
Tom McHugh
Chief Financial Officer
Phone: (636) 449-1843
Email: tmchugh@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 December 31,   Twelve Months Ended December 31,
    2019   2018   2019   2018
                 
Revenues:                
Product sales   $ 10,995     $ 19,320     $ 59,215     $ 101,423  
License revenue       1,600         1,846  
Total revenues   10,995     20,920     59,215     103,269  
Operating expenses:                
Cost of products   2,414     4,292     12,125     17,516  
Research and development expenses   7,757     6,086     32,917     39,329  
Selling, general and administrative expenses   7,663     23,200     30,183     100,359  
Intangible asset amortization   206     1,623     816     6,619  
Changes in fair value of related party contingent consideration   (1,539 )   (5,695 )   845     (22,731 )
Impairment of intangible asset       66,087         66,087  
Restructuring costs   1,841     748     6,441     1,016  
Total operating expenses   18,342     96,341     83,327     208,195  
Operating loss   (7,347 )   (75,421 )   (24,112 )   (104,926 )
Investment and other income, net   (1,479 )   (393 )   1,069     452  
Interest expense   (3,190 )   (3,045 )   (12,483 )   (10,622 )
Gain (loss) on deconsolidation of subsidiary   162         (2,678 )    
Other income (expense) - changes in fair value of related party payable   118     467     (378 )   1,899  
Loss before income taxes   (11,736 )   (78,392 )   (38,582 )   (113,197 )
Income tax benefit   (8,997 )   (14,533 )   (5,356 )   (17,893 )
Net loss   $ (2,739 )   $ (63,859 )   $ (33,226 )   $ (95,304 )
                 
Net loss per share - basic   $ (0.07 )   $ (1.72 )   $ (0.89 )   $ (2.55 )
Net loss per share - diluted   (0.07 )   (1.72 )   (0.89 )   (2.55 )
                 
Weighted average number of shares outstanding - basic   37,465     37,073     37,403     37,325  
Weighted average number of shares outstanding - diluted   37,465     37,073     37,403     37,325  



AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)

    December 31, 2019   December 31, 2018
    (unaudited)    
ASSETS        
Current assets:        
Cash and cash equivalents   $ 9,774     $ 9,325  
Marketable securities   54,384     90,590  
Accounts receivable   8,281     11,330  
Inventories, net   3,570     4,770  
Research and development tax credit receivable   2,107     283  
Prepaid expenses and other current assets   4,264     8,553  
Total current assets   82,380     124,851  
Property and equipment, net   544     1,911  
Operating lease right-of-use assets   3,612      
Goodwill   18,491     18,491  
Intangible assets, net   813     1,629  
Research and development tax credit receivable   6,322     7,272  
Other non-current assets   39,274     36,146  
Total assets   $ 151,436     $ 190,300  
         
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY        
Current liabilities:        
Current portion of long-term debt   $     $ 106  
Current portion of long-term related party payable   5,554     9,439  
Current portion of operating lease liability   645      
Accounts payable   6,100     3,503  
Accrued expenses   19,810     21,695  
Other current liabilities   3,875     3,640  
Total current liabilities   35,984     38,383  
Long-term debt, less current portion   121,686     115,734  
Long-term related party payable, less current portion   11,773     19,401  
Long-term operating lease liability   2,319      
Other non-current liabilities   8,873     14,002  
Total liabilities   180,635     187,520  
         
Shareholders' (deficit) equity:        
Preferred shares, nominal value of $0.01 per share; 50,000 shares authorized; none issued or outstanding at December 31, 2019 and December 31, 2018, respectively        
Ordinary shares, nominal value of $0.01 per share; 500,000 shares authorized; 42,927 issued and 37,520 outstanding at December 31, 2019, and 42,720 issued and 37,313 outstanding at December 31, 2018   429     427  
Treasury shares, at cost, 5,407 shares held at December 31, 2019 and December 31, 2018, respectively   (49,998 )   (49,998 )
Additional paid-in capital   434,391     433,756  
Accumulated deficit   (391,215 )   (357,989 )
Accumulated other comprehensive loss   (22,806 )   (23,416 )
Total shareholders' (deficit) equity   (29,199 )   2,780  
Total liabilities and shareholders' (deficit) equity   $ 151,436     $ 190,300  


AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

    Twelve Months Ended December 31,
    2019   2018
         
Net loss   $ (33,226 )   $ (95,304 )
Adjustments to reconcile net loss to net cash provided by operating activities:        
Depreciation and amortization   2,486     7,430  
Impairment of intangible asset       66,087  
Amortization of premiums on marketable securities   41     2,823  
Remeasurement of related party acquisition-related contingent consideration   845     (22,731 )
Remeasurement of related party financing-related contingent consideration   378     (1,899 )
Amortization of debt discount and debt issuance costs   5,995     4,830  
Changes in deferred tax   (6,334 )   (19,152 )
Stock-based compensation expense   519     7,852  
Loss on deconsolidation of subsidiary   1,750      
Other adjustments   (295 )   1,365  
Net changes in assets and liabilities        
Accounts receivable   2,471     3,452  
Inventories, net   1,155     711  
Prepaid expenses and other current assets   (1,187 )   3,577  
Research and development tax credit receivable   (1,014 )   (2,545 )
Accounts payable & other current liabilities   4,641     (2,032 )
Deferred revenue   (114 )   (1,892 )
Accrued expenses   357     (10,640 )
Accrued income taxes   (30 )   (341 )
Earn-out payments for related party contingent consideration in excess of acquisition-date fair value   (10,988 )   (19,468 )
Royalty payments for related party payable in excess of original fair value   (1,748 )   (2,838 )
Other assets and liabilities   (4,027 )   (2,001 )
Net cash used in operating activities   (38,325 )   (82,716 )
         
Cash flows from investing activities:        
Purchases of property and equipment   (29 )   (178 )
Proceeds from disposal of property and equipment   154      
Purchase of intangible assets       (20,000 )
Proceeds from sales of marketable securities   63,246     359,507  
Purchases of marketable securities   (24,648 )   (376,310 )
Net cash provided by (used in) investing activities   38,723     (36,981 )
         
Cash flows from financing activities:        
Proceeds from debt issuance       143,750  
Payments for debt issuance costs       (6,190 )
Earn-out payments for related party contingent consideration       (645 )
Exercise of warrants       2,911  
Proceeds from issuance of ordinary shares   118     577  
Share repurchases       (27,637 )
Other financing activities, net   (145 )   (107 )
Net cash (used in) provided by financing activities   (27 )   112,659  
Effect of foreign currency exchange rate changes on cash and cash equivalents   78     (201 )
Net change in cash and cash equivalents   449     (7,239 )
Cash and cash equivalents at January 1   9,325     16,564  
Cash and cash equivalents at December 31   $ 9,774     $ 9,325  


AVADEL PHARMACEUTICALS PLC
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except per share data)
(Unaudited)

    Three Months Ended December 31,   Twelve Months Ended December 31,
Revenues by Product:   2019   2018   2019   2018
                 
Bloxiverz   $ 1,087     $ 4,159     $ 7,479     $ 20,850  
Vazculep   5,483     9,819     33,152     42,916  
Akovaz   4,696     5,676     18,642     33,759  
Other   (271 )   (334 )   (58 )   3,898  
Total product sales   10,995     19,320     59,215     101,423  
License revenue       1,600         1,846  
Total revenues   $ 10,995     $ 20,920     $ 59,215     $ 103,269  

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