AVDL - Avadel Pharmaceuticals Reports Second Quarter 2020 Financial Results and Recent Business Update

August, 10 2020 08:00 AM Avadel Pharmaceuticals plc

Presented positive topline data from the pivotal Phase 3 REST-ON study
Announced today that results of the data analyses for the secondary endpoints of the REST-ON study were consistent with the primary analyses and further demonstrated the overall statistical significance of FT218 compared to placebo
Completed the pre-NDA meeting for FT218 with the Food and Drug Administration
First patient dosed in the open-label extension/switch study of investigational once-nightly FT218
Strengthened balance sheet through completion of $125 million public equity offering to support the company’s strategic priorities
Completed sale of the sterile injectable drug portfolio for $42.0 million
Management to host a conference call today at 8:30 a.m. ET

DUBLIN, Ireland, Aug. 10, 2020 (GLOBE NEWSWIRE) -- Avadel Pharmaceuticals plc (Nasdaq: AVDL), a company focused on developing FT218, an investigational, once-nightly formulation of sodium oxybate designed to treat excessive daytime sleepiness and cataplexy in patients with narcolepsy, today announced its financial results for the second quarter ended June 30, 2020 and provided a company update.

“We are at a pivotal point in Avadel’s transformation, as we recently completed our pre-NDA meeting with the FDA and are currently focused on completing our NDA submission and filing for FT218. A key component of the planned NDA for FT218 is the positive data from the Phase 3 REST-ON study of FT218, which was first announced in April. These data show that the three dose levels of FT218 that were tested demonstrated statistically significant (p<0.001) and clinically meaningful improvement for all three co-primary endpoints. In addition, FT218 was highly significant for the secondary endpoints that tested additional measures of daytime sleepiness, sleep architecture, and other narcolepsy symptoms compared to placebo at all three doses and all sensitivity analyses of the primary endpoint. If approved, FT218 could be the first once-nightly therapy to address both excessive daytime sleepiness and cataplexy in patients with narcolepsy,” said Greg Divis, Chief Executive Officer of Avadel.

“In May, we strengthened our balance sheet with the completion of a public equity offering for gross proceeds of $125.0 million that will be used to support the development and plan for the go-to-market strategy of FT218. In June, we further bolstered our cash position with the sale of our legacy portfolio of sterile injectable drugs for $42.0 million. Divesting this product portfolio is in line with our overall strategy to focus the Company’s resources on FT218, thus streamlining and focusing Avadel while enabling the company to maintain optionality for creating shareholder value.”

“As we move forward for the balance of 2020, our highest priority remains the completion and filing of our once-nightly FT218 NDA. In addition, we are in the process of compiling additional supporting scientific data to position FT218 in the market which includes the ongoing open-label extension (OLE)/switch study of FT218,” concluded Mr. Divis.

Second quarter and recent company highlights

Presented an update on the development of FT218 and positive results from the Phase 3 Rest-On clinical trial for excessive daytime sleepiness and cataplexy in patients with narcolepsy, which were previously announced in April 2020:

_° FT218 at the 9 g dose demonstrated highly statistically significant (p<0.001) and clinically meaningful improvement across all three co-primary endpoints (Maintenance of Wakefulness Test, Clinical Global Impression-Improvement and Mean Weekly Cataplexy Attacks) compared to placebo.
_° FT218 at the 9 g dose was generally well-tolerated, with commonly known sodium oxybate adverse reactions occurring at low rates (nausea 1.3%, vomiting 5.2%, decreased appetite 2.6%, dizziness 5.2%, somnolence 3.9%, tremor 1.3%, enuresis 9%; discontinuation rate due to adverse reactions 3.9%).
_° FT218 at the 7.5 g and 6 g dose levels also achieved highly statistically significant (p<0.001), clinically meaningful improvements across all three co-primary endpoints compared to placebo, as soon as 3 weeks after initiating FT218.

Announced today additional data from the REST-ON study:

_° All three doses of FT218 studied were highly significant compared to placebo on secondary endpoints evaluating daytime sleepiness, sleep architecture, and other narcolepsy symptoms
_° FT218 was also significant compared to placebo for all sensitivity analyses of the three co-primary endpoints at all three doses
_° Detailed data for the secondary endpoints and sensitivity analyses will be presented at a scientific conference or in a peer-reviewed scientific publication

Held a successful pre-NDA meeting with the FDA and are on track to move forward with filing our NDA for FT218
First patient dosed in an OLE/switch study of FT218 as a potential treatment for excessive daytime sleepiness and cataplexy in patients with narcolepsy.
Completed a public equity offering with gross proceeds of $125.0 million to strengthen the Company’s balance sheet and provide capital to support its strategic priorities.
Completed the sale of the legacy portfolio of sterile injectable drugs used in the hospital setting to Exela Sterile Medicines LLC for a total of $42.0 million.

Overview of Second Quarter Results

Revenues for the second quarter of 2020 were $10.1 million, compared to $17.6 million in the second quarter of 2019. 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 $4.1 million in the second quarter of 2020, compared to $10.3 million in the second quarter of 2019. The decrease on a year-over-year basis was primarily attributed to the completion of the FT218 clinical study during the first quarter of 2020, as well as lower headcount due to the restructuring activities initiated during 2019.

SG&A expenses were $7.1 million in the second quarter of 2020, compared to $6.8 million in the second quarter of 2019. The year-over-year increase is primarily the result of higher professional fees and market research costs related to FT218.

A $45.8 million pre-tax gain from the sale of the portfolio of sterile injectable drugs was recorded in the second quarter of 2020. The gain reflects the $42.0 million transaction price adjusted for the net liabilities that were transferred to Exela Sterile Medicines LLC and transaction costs incurred by the company.

Income tax provision was $5.3 million in the second quarter of 2020, compared to $1.8 million in the second quarter of 2019.

Net income for the second quarter of 2020 was $30.9 million, or $0.49 per diluted share, compared to a net loss of $8.6 million, or ($0.23) per diluted share, for the same period in 2019.

Cash, cash equivalents and marketable securities were $238.6 million as of June 30, 2020. The Company has convertible debt of $143.8 million due in February 2023.

Conference Call:
A conference call to discuss these results has been scheduled for Monday, August 10, 2020 at 8:30 a.m. ET. 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 13707645. 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 FT218
FT218 is an investigational, once-nightly formulation of Micropump™ controlled-release (CR) sodium oxybate. In March of 2020, the Company completed the REST-ON study, a pivotal, 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, an investigational, once-nightly formulation of sodium oxybate designed to treat excessive daytime sleepiness and cataplexy in patients with narcolepsy. 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. Such forward-looking statements include, but are not limited to, the planned submission of the FT218 NDA to the FDA and commercial launch of FT218, if approved. In some cases, forward-looking statements can be identified by the use of words such as “will,” “may,” “could,” “believe,” “expect,” “look forward,” “on track,” “guidance,” “anticipate,” “estimate,” “project,” “next steps” 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 (including, without limitation, the continued advancement and development of FT218 and benefits and cost savings from the sale of our hospital products) 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 the risk that the impact of the current COVID-19 pandemic on our financial results and results of operations could be greater than we anticipate and the 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, 2019, which we filed with the Securities and Exchange Commission (SEC) on March 16, 2020 and subsequent SEC 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 our forward-looking statements, except as required by law.

Contacts:
Investor 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

Media Contact
Patrick Bursey
LifeSci Communications, LLC
Phone: (646) 970-4688
Email: pbursey@lifescicomms.com

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



Three Months Ended June 30,

Six Months Ended June 30,


2020

2019

2020

2019









Product sales

$
10,091


$
17,554


$
22,334


$
33,991

Operating expenses:








Cost of products

3,285


3,622


5,742


6,888

Research and development expenses

4,057


10,292


9,587


17,621

Selling, general and administrative expenses

7,095


6,758


15,008


17,204

Intangible asset amortization

203


204


406


405

Changes in fair value of contingent consideration

918


(377
)

3,396


1,757

Gain on sale of hospital business

(45,760
)

—


(45,760
)

—

Restructuring costs

24


1,506


183


2,734

Total operating (income) expense

(30,178
)

22,005


(11,438
)

46,609

Operating income (loss)

40,269


(4,451
)

33,772


(12,618
)
Investment and other (expense) income, net

(741
)

950


(1,119
)

1,767

Interest expense

(3,237
)

(3,106
)

(6,427
)

(6,168
)
Loss on deconsolidation of subsidiary

—


(167
)

—


(2,840
)
Other expense - changes in fair value of contingent consideration payable

(125
)

(50
)

(435
)

(357
)
Income (loss) before income taxes

36,166


(6,824
)

25,791


(20,216
)
Income tax provision (benefit)

5,292


1,781


(4,218
)

1,407

Net income (loss)

$
30,874


$
(8,605
)

$
30,009


$
(21,623
)









Net income (loss) per share - basic

$
0.57


$
(0.23
)

$
0.63


$
(0.58
)
Net income (loss) per share - diluted

0.49


(0.23
)

0.58


(0.58
)









Weighted average number of shares outstanding - basic

54,272


37,356


47,665


37,355

Weighted average number of shares outstanding - diluted

69,942


37,356


63,083


37,355

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



June 30, 2020

December 31, 2019


(unaudited)


ASSETS




Current assets:




Cash and cash equivalents

$
102,174


$
9,774

Marketable securities

136,380


54,384

Accounts receivable

5,692


8,281

Inventories

—


3,570

Research and development tax credit receivable

—


2,107

Prepaid expenses and other current assets

32,773


4,264

Total current assets

277,019


82,380

Property and equipment, net

407


544

Operating lease right-of-use assets

3,117


3,612

Goodwill

16,836


18,491

Intangible assets, net

—


813

Research and development tax credit receivable

6,407


6,322

Other non-current assets

37,615


39,274

Total assets

$
341,401


$
151,436






LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)




Current liabilities:




Current portion of long-term contingent consideration payable

$
1,914


$
5,554

Current portion of operating lease liability

563


645

Accounts payable

4,879


6,100

Accrued expenses

15,820


19,810

Income taxes

354


43

Other current liabilities

3,488


3,832

Total current liabilities

27,018


35,984

Long-term debt

124,879


121,686

Long-term contingent consideration payable, less current portion

—


11,773

Long-term operating lease liability

2,087


2,319

Other non-current liabilities

5,292


8,873

Total liabilities

159,276


180,635






Shareholders’ equity (deficit):




Preferred shares, nominal value of $0.01 per share; 50,000 shares authorized; 488 issued and outstanding at June 30, 2020 and none issued and outstanding at December 31, 2019, respectively

5


—

Ordinary shares, nominal value of $0.01 per share; 500,000 shares authorized; 63,536 issued and 58,129 outstanding at June 30, 2020 and 42,927 issued and 37,520 outstanding at December 31, 2019

635


429

Treasury shares, at cost, 5,407 shares held at June 30, 2020 and December 31, 2019, respectively

(49,998
)

(49,998
)
Additional paid-in capital

615,207


434,391

Accumulated deficit

(361,206
)

(391,215
)
Accumulated other comprehensive loss

(22,518
)

(22,806
)
Total shareholders’ equity (deficit)

182,125


(29,199
)
Total liabilities and shareholders’ equity (deficit)

$
341,401


$
151,436

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



Six Months Ended June 30,


2020

2019





Cash flows from operating activities:




Net income (loss)

$
30,009


$
(21,623
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:




Depreciation and amortization

975


1,064

Loss on disposal of property and equipment

—


478

Remeasurement of acquisition-related contingent consideration

3,396


1,757

Remeasurement of financing-related contingent consideration

435


357

Amortization of debt discount and debt issuance costs

3,193


2,918

Change in deferred tax and income tax deferred charge

161


1,900

Stock-based compensation expense

1,511


406

Gain on the disposition of the hospital business

(45,760
)

—

Loss on deconsolidation of subsidiary

—


1,750

Other adjustments

477


(995
)
Net changes in assets and liabilities




Accounts receivable

2,589


579

Inventories

(1,353
)

2,124

Prepaid expenses and other current assets

(1,149
)

(1,829
)
Research and development tax credit receivable

2,036


(593
)
Accounts payable & other current liabilities

(1,550
)

3,127

Accrued expenses

(6,906
)

(3,737
)
Accrued income taxes

321


(71
)
Earn-out payments for contingent consideration in excess of acquisition-date fair value

(3,736
)

(5,790
)
Royalty payments for contingent consideration payable in excess of original fair value

(608
)

(917
)
Other assets and liabilities

(3,458
)

(3,558
)
Net cash used in operating activities

(19,417
)

(22,653
)





Cash flows from investing activities:




Purchases of property and equipment

—


(29
)
Proceeds from the disposal of property and equipment

—


154

Proceeds from the disposition of the hospital business

14,500


—

Proceeds from sales of marketable securities

15,716


52,202

Purchases of marketable securities

(97,878
)

(21,991
)
Net cash (used in) provided by investing activities

(67,662
)

30,336






Cash flows from financing activities:




Proceeds from the February 2020 private placement

60,639


—

Proceeds from the May 2020 public offering

116,974


—

Proceeds from stock option exercises and ESPP

1,903


92

Other financing activities, net

—


(37
)
Net cash provided by financing activities

179,516


55






Effect of foreign currency exchange rate changes on cash and cash equivalents

(37
)

48






Net change in cash and cash equivalents

92,400


7,786

Cash and cash equivalents at January 1,

9,774


9,325

Cash and cash equivalents at June 30,

$
102,174


$
17,111

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



Three Months Ended June 30,

Six Months Ended June 30,
Revenues by Product:

2020

2019

2020

2019









Bloxiverz

$
800


$
2,358


$
2,201


$
4,926

Vazculep

4,915


9,410


10,429


18,883

Akovaz

4,196


5,946


9,545


9,738

Other

180


(160
)

159


444

Total product sales

$
10,091


$
17,554


$
22,334


$
33,991

Company Name:	Avadel Pharmaceuticals plc
Stock Symbol:	AVDL
Market:	NASDAQ
Website:	avadel.com

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