AVDL - Here's Why Avadel Pharmaceuticals Stock Jumped Higher Today
Shares of Avadel Pharmaceuticals (NASDAQ: AVDL) are up 30% at 2:24 p.m. EST after the biotech sold 8,680,225 American depositary shares and 487,614 shares of Series A nonvoting convertible preferred shares for $7.09 each in a private placement, grossing the company $65 million. Shares of Avadel closed at $7.12 yesterday, so the investors didn't request much of a discount.
Avadel is developing FT218, a controlled-release formula of sodium oxybate, as a treatment for narcolepsy. The drug is being tested in the phase 3 Rest-On clinical trial comparing FT218 to Xyrem, a sodium oxybate product from Jazz Pharmaceuticals (NASDAQ: JAZZ) that has to be dosed twice a night. As a controlled-release formula, FT218 only has to be taken once a night.
Avadel didn't really need the cash right now. The biotech ended the third quarter with $72.5 million in the bank, which Avadel estimated would "fund operations well into 2021." Nevertheless, smart companies raise capital when they can, not when they have to, and the added cash will give Avadel more firepower to launch FT218, assuming it's approved by the Food and Drug Administration.