Avadel Pharmaceuticals plc (NASDAQ:AVDL) Q4 2022 Earnings Conference Call March 30, 2023 8:30 AM ET Company Participants Austin Murtagh – Stern Investor Relations Greg Divis – Chief Executive Officer Jennifer Gudeman – Senior Vice President-Medical and Clinical Affairs Richard Kim – Chief Commercial Officer Tom McHugh – Chief Financial Officer Conference Call Participants Chris Howerton – Jefferies Adam Evertts – LifeSci Capital David Amsellem – Piper Sandler Matt Kaplan – Ladenburg Thalmann Operator Greeti ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period ____________ to ____________ Commission file number: 001-37977 AVADEL PHARMACEUTICALS PLC (Exact name of registrant as specified in its charter) Ireland 98-1341933 Registrant's te ...

Avadel Pharmaceuticals plc (NASDAQ:AVDL) Q3 2022 Earnings Conference Call November 9, 2022 8:00 AM ET Company Participants Gregory Divis - Chief Executive Officer Jennifer Gudeman - Vice President of Medical & Clinical Affairs Richard Kim - Chief Commercial Officer Tom McHugh - Senior Vice President & Chief Financial Officer Conference Call Participants Francois Brisebois - Oppenheimer Ami Fadia - Needham Chris Howerton - Jefferies Adam Evertts - LifeSci Capital Marc Goodman - SVB Matt Kaplan - Ladenburg Th ...

Avadel Pharmaceuticals plc (NASDAQ:AVDL) Q2 2022 Earnings Conference Call August 9, 2022 8:00 AM ET Company Participants Brandi Robinson - Senior Vice President of Corporate Affairs Gregory Divis - Chief Executive Officer Jennifer Gudeman - Vice President of Medical & Clinical Affairs Richard Kim - Chief Commercial Officer Tom McHugh - Senior Vice President & Chief Financial Officer Conference Call Participants Francois Brisebois - Oppenheimer Oren Livnat - H.C. Wainwright David Amsellem - Piper Sandler Ada ...

Avadel Pharmaceuticals plc (NASDAQ:AVDL) Q1 2022 Earnings Conference Call May 9, 2022 8:30 AM ET Company Participants Brandi Robinson - Senior Vice President of Corporate Affairs Douglas Williamson - Chief Medical Officer Gregory Divis - Chief Executive Officer Jennifer Gudeman - Vice President of Medical & Clinical Affairs Richard Kim - Chief Commercial Officer Tom McHugh - Senior Vice President & Chief Financial Officer Conference Call Participants Francois Brisebois - Oppenheimer Marc Goodman - SVB Secur ...

[Filing Information](index=1&type=section&id=Filing%20Information) Details the company's registrant information, Nasdaq-listed securities, and accelerated filer status with outstanding shares [Registrant Details](index=1&type=section&id=Registrant%20Details) Avadel Pharmaceuticals PLC, an Irish public limited company, filed its Form 10-Q for Q1 2022, with its principal office in Dublin, Ireland - Registrant: Avadel Pharmaceuticals PLC, an Irish public limited company[1](index=1&type=chunk) - Filing Type: Quarterly Report on Form 10-Q for the period ended March 31, 2022[1](index=1&type=chunk) [Securities and Filer Status](index=1&type=section&id=Securities%20and%20Filer%20Status) The company's AVDL shares are listed on Nasdaq, classified as an accelerated filer with 59,038,237 ordinary shares outstanding Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | American Depositary Shares* | AVDL | The Nasdaq Global Market | | Ordinary Shares, nominal value $0.01 per share** | N/A | | - Filer Status: Accelerated filer[5](index=5&type=chunk) - Outstanding Shares: **59,038,237** ordinary shares as of May 4, 2022[5](index=5&type=chunk) [Cautionary Disclosure Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Disclosure%20Regarding%20Forward-Looking%20Statements) Outlines inherent risks and uncertainties in forward-looking statements, emphasizing that actual results may differ materially from projections [Nature of Forward-Looking Statements](index=4&type=section&id=Nature%20of%20Forward-Looking%20Statements) Forward-looking statements are not historical facts, involving risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are based on management's beliefs and assumptions, relating to future events or financial performance[11](index=11&type=chunk) - These statements are neither promises nor guarantees of future performance due to various risks and uncertainties[12](index=12&type=chunk) [Specific Risks and Uncertainties](index=4&type=section&id=Specific%20Risks%20and%20Uncertainties) Key risks include reliance on FT218, regulatory approval challenges, supplier dependence, financing ability, COVID-19 impact, and intense competition - Reliance on a single lead product candidate, FT218[11](index=11&type=chunk) - Ability to obtain regulatory approval and successfully commercialize FT218, including any delays[11](index=11&type=chunk) - Dependence on a limited number of suppliers for FT218 manufacturing and raw materials[11](index=11&type=chunk) - Ability to finance operations on acceptable terms, including through capital raising or partnerships[11](index=11&type=chunk) - Potential impact of COVID-19 on business and future operating results[11](index=11&type=chunk) - Competition existing today or that will likely arise in the future[11](index=11&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for Q1 2022 [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements for Q1 2022 and 2021, detailing losses, cash, and debt changes [Condensed Consolidated Statements of Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Loss) Details the company's net and operating losses for Q1 2022 and 2021, indicating a significant increase year-over-year Condensed Consolidated Statements of Loss (Three Months Ended March 31) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | | :------------------------------------ | :----------------- | :----------------- | | Research and development expenses | | 3,852 | | Selling, general and administrative expenses | | 11,012 | | Restructuring income | | (53) | | Total operating expense | | 14,811 | | Operating loss | | (14,811) | | Investment and other (expense) income, net | | 610 | | Interest expense | | (1,929) | | Gain from release of certain liabilities | | 78 | | Loss before income taxes | | (16,052) | | Income tax benefit | | (2,607) | | Net loss | (26,424) | (13,445) | | Net loss per share - basic | (0.45) | (0.23) | | Net loss per share - diluted | (0.45) | (0.23) | - Net loss increased by **96.5%** from **$(13,445) thousand** in Q1 2021 to **$(26,424) thousand** in Q1 2022[16](index=16&type=chunk)[120](index=120&type=chunk) - Operating loss increased from **$(14,811) thousand** in Q1 2021 to **$(28,626) thousand** in Q1 2022[16](index=16&type=chunk)[114](index=114&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Presents total comprehensive loss for Q1 2022 and 2021, detailing foreign currency translation and other comprehensive loss impacts Condensed Consolidated Statements of Comprehensive Loss (Three Months Ended March 31) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | | :--------------------------- | :----------------- | :----------------- | | Net loss | (26,424) | (13,445) | | Foreign currency translation loss | (185) | (718) | | Net other comprehensive loss | (917) | (537) | | Total other comprehensive loss | (1,102) | (1,255) | | Total comprehensive loss | (27,526) | (14,700) | - Total comprehensive loss increased from **$(14,700) thousand** in Q1 2021 to **$(27,526) thousand** in Q1 2022[19](index=19&type=chunk) [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position as of March 31, 2022, and December 31, 2021, detailing assets, liabilities, and equity changes Condensed Consolidated Balance Sheets (As of March 31, 2022 vs. December 31, 2021) | Asset/Liability/Equity | March 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :--------------------------------- | :--------------------------- | :------------------------------ | | **ASSETS** | | | | Cash and cash equivalents | 60,873 | 50,708 | | Marketable securities | 62,608 | 106,513 | | Total current assets | 160,741 | 192,490 | | Total assets | 221,127 | 247,265 | | **LIABILITIES** | | | | Current portion of long-term debt | 26,184 | — | | Total current liabilities | 44,023 | 21,000 | | Long-term debt | 116,525 | 142,397 | | Total liabilities | 165,895 | 169,021 | | **SHAREHOLDERS' EQUITY** | | | | Total shareholders' equity | 55,232 | 78,244 | - Total current assets decreased by **$31,749 thousand** (from **$192,490 thousand** to **$160,741 thousand**) from December 31, 2021, primarily due to a decrease in marketable securities[22](index=22&type=chunk) - Current portion of long-term debt increased significantly from **$0** to **$26,184 thousand**, reflecting reclassification of debt maturities[22](index=22&type=chunk) - Total shareholders' equity decreased by **$23,012 thousand** (from **$78,244 thousand** to **$55,232 thousand**) from December 31, 2021[22](index=22&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Outlines changes in shareholders' equity for Q1 2022, including net loss, other comprehensive loss, and stock-based compensation Condensed Consolidated Statements of Shareholders' Equity (Three Months Ended March 31, 2022) | Item | Shares | Amount ($ thousands) | | :---------------------------------- | :----- | :------------------- | | Balance, December 31, 2021 | 58,620 | 78,244 | | Net loss | — | (26,424) | | Other comprehensive loss | — | (1,102) | | Exercise of stock options | 275 | 1,906 | | Employee share purchase plan share issuance | 18 | 103 | | Stock-based compensation expense | — | 2,505 | | Balance, March 31, 2022 | 59,032 | 55,232 | - Accumulated deficit increased from **$(447,756) thousand** at December 31, 2021, to **$(474,180) thousand** at March 31, 2022, primarily due to the net loss[25](index=25&type=chunk) - Additional paid-in capital increased by **$4,510 thousand**, driven by stock-based compensation expense and stock option exercises[25](index=25&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Details the company's cash flow activities for Q1 2022 and 2021, covering operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31) | Cash Flow Activity | 2022 ($ thousands) | 2021 ($ thousands) | | :------------------------------ | :----------------- | :----------------- | | Net cash used in operating activities | (34,045) | (23,413) | | Net cash provided by investing activities | 42,251 | 11,191 | | Net cash provided by financing activities | 2,009 | 149 | | Net change in cash and cash equivalents | 10,165 | (12,550) | | Cash and cash equivalents at March 31 | 60,873 | 59,172 | - Net cash used in operating activities increased by **$10,632 thousand** (**45.4%**) year-over-year[30](index=30&type=chunk)[126](index=126&type=chunk) - Net cash provided by investing activities increased significantly by **$31,060 thousand** (**277.5%**) year-over-year, primarily due to net proceeds from sales over purchases of marketable securities[30](index=30&type=chunk)[126](index=126&type=chunk)[128](index=128&type=chunk) - Cash and cash equivalents increased by **$10,165 thousand** during Q1 2022, reaching **$60,873 thousand** at March 31, 2022[30](index=30&type=chunk) [Notes to the Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed notes to the financial statements, covering accounting policies, fair value, debt, taxes, litigation, and updates on FT218 FDA review [NOTE 1: Summary of Significant Accounting Policies](index=11&type=section&id=NOTE%201%3A%20Summary%20of%20Significant%20Accounting%20Policies) Outlines the company's primary focus on FT218 for narcolepsy and the ongoing FDA review of its New Drug Application - Avadel Pharmaceuticals plc is a biopharmaceutical company focused on its lead product candidate, FT218[33](index=33&type=chunk) - FT218 is an investigational once-nightly, extended-release formulation of sodium oxybate for the treatment of excessive daytime sleepiness or cataplexy in adults with narcolepsy[34](index=34&type=chunk) - The FDA's review of the New Drug Application (NDA) for FT218 remains ongoing beyond the previously assigned target action date of October 15, 2021[34](index=34&type=chunk) - As of the report date, the Company does not have any approved or commercialized products in its portfolio[35](index=35&type=chunk) [NOTE 2: Fair Value Measurement](index=11&type=section&id=NOTE%202%3A%20Fair%20Value%20Measurement) Describes the company's fair value measurements for assets and liabilities using a three-tier hierarchy, including a table of financial instruments Fair Value Measurements of Financial Instruments (As of March 31, 2022 vs. December 31, 2021) | Financial Instrument | March 31, 2022 (Level 1) | March 31, 2022 (Level 2) | December 31, 2021 (Level 1) | December 31, 2021 (Level 2) | | :------------------------------- | :----------------------- | :----------------------- | :-------------------------- | :-------------------------- | | Mutual and money market funds | $42,776 | $— | $78,098 | $— | | Corporate bonds | $— | $13,912 | $— | $16,479 | | Government securities - U.S. | $— | $3,988 | $— | $9,471 | | Other fixed-income securities | $— | $1,932 | $— | $2,465 | | Total assets | $42,776 | $19,832 | $78,098 | $28,415 | - The Company measures certain assets and liabilities at fair value using a three-tier hierarchy (Level 1, 2, 3) based on input observability[38](index=38&type=chunk)[40](index=40&type=chunk) - The estimated fair value of the February 2023 Notes at March 31, 2022, was **$145,547 thousand** (Level 2 input)[43](index=43&type=chunk) [NOTE 3: Marketable Securities](index=12&type=section&id=NOTE%203%3A%20Marketable%20Securities) Details the company's available-for-sale debt securities, recorded at fair market value, showing a decrease in total marketable securities from year-end 2021 to Q1 2022 Marketable Securities Fair Value (As of March 31, 2022 vs. December 31, 2021) | Category | March 31, 2022 (Fair Value) | December 31, 2021 (Fair Value) | | :------------------------------ | :-------------------------- | :----------------------------- | | Mutual and money market funds | $42,776 | $78,098 | | Corporate bonds | $13,912 | $16,479 | | Government securities - U.S. | $3,988 | $9,471 | | Other fixed-income securities | $1,932 | $2,465 | | Total | $62,608 | $106,513 | - The Company's investments in available-for-sale debt securities are recorded at fair market value[44](index=44&type=chunk) - Total marketable securities decreased by **$43,905 thousand** from December 31, 2021, to March 31, 2022[47](index=47&type=chunk) - Gross realized losses on marketable securities increased from **$68 thousand** in Q1 2021 to **$790 thousand** in Q1 2022[48](index=48&type=chunk) [NOTE 4: Long-Term Debt](index=14&type=section&id=NOTE%204%3A%20Long-Term%20Debt) Summarizes the company's long-term debt, including exchangeable senior notes, and details the recent exchange of February 2023 Notes Long-Term Debt Summary (As of March 31, 2022 vs. December 31, 2021) | Metric | March 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :----------------------------------------- | :--------------------------- | :------------------------------ | | Principal amount of 4.50% exchangeable senior notes due 2023 | 143,750 | 143,750 | | Net carrying amount of debt | 142,709 | 142,397 | | Current maturities, net | 26,184 | — | | Long-term debt | 116,525 | 142,397 | - Total interest expense for the three months ended March 31, 2022, was **$2,017 thousand**, up from **$1,929 thousand** in the prior year[53](index=53&type=chunk) - On April 5, 2022, the Issuer completed an exchange of **$117,375 thousand** of its February 2023 Notes for a new series of Exchangeable Senior Notes due October 2, 2023 (October 2023 Notes)[55](index=55&type=chunk) - The remaining **$26,375 thousand** aggregate principal amount of the February 2023 Notes were not exchanged and will maintain a maturity date of February 1, 2023[55](index=55&type=chunk) [NOTE 5: Income Taxes](index=17&type=section&id=NOTE%205%3A%20Income%20Taxes) Details the company's income tax benefit and effective tax rate for Q1 2022 and 2021, showing an increased benefit from higher net operating losses Income Tax Benefit (Three Months Ended March 31) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | | :------------------------- | :----------------- | :----------------- | | Income tax benefit | (4,323) | (2,607) | | Effective tax rate | 14.1% | 16.2% | - The income tax benefit increased by **$1,716 thousand** (**65.8%**) year-over-year, primarily due to an increase in net operating losses recognized in the United States[67](index=67&type=chunk)[124](index=124&type=chunk) [NOTE 6: Other Assets and Liabilities](index=17&type=section&id=NOTE%206%3A%20Other%20Assets%20and%20Liabilities) Presents selected other assets and liabilities as of March 31, 2022, and December 31, 2021, highlighting changes in prepaid expenses, deferred tax assets, and accrued fees Selected Other Assets and Liabilities (As of March 31, 2022 vs. December 31, 2021) | Category | March 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :-------------------------------- | :--------------------------- | :------------------------------ | | **Prepaid Expenses and Other Current Assets:** | | | | Income tax receivable | 29,122 | 29,097 | | Prepaid and other expenses | 5,317 | 3,179 | | Total | 34,873 | 32,826 | | **Other Non-Current Assets:** | | | | Deferred tax assets | 28,578 | 24,128 | | Right of use assets at contract manufacturing organizations | 10,082 | 8,549 | | Total | 39,635 | 33,777 | | **Accrued Expenses:** | | | | Accrued professional fees | 7,063 | 2,678 | | Accrued compensation | 1,755 | 3,167 | | Total | 9,432 | 7,151 | | **Other Current Liabilities:** | | | | Accrued interest | 1,094 | 4,920 | | Total | 1,442 | 5,270 | - Accrued professional fees increased significantly from **$2,678 thousand** to **$7,063 thousand**[69](index=69&type=chunk) - Accrued interest decreased from **$4,920 thousand** to **$1,094 thousand**[70](index=70&type=chunk) [NOTE 7: Net Loss Per Share](index=18&type=section&id=NOTE%207%3A%20Net%20Loss%20Per%20Share) Explains the calculation of basic and diluted net loss per share for Q1 2022 and 2021, and lists the weighted average shares outstanding Net Loss Per Share (Three Months Ended March 31) | Metric | 2022 ($) | 2021 ($) | | :------------------------------------ | :------- | :------- | | Net loss per share - basic | (0.45) | (0.23) | | Net loss per share - diluted | (0.45) | (0.23) | | Weighted average shares outstanding - basic | 58,824 | 58,443 | | Weighted average shares outstanding - diluted | 58,824 | 58,443 | - Basic and diluted net loss per share are calculated by dividing net loss by the weighted average number of shares outstanding[73](index=73&type=chunk) - Potential ordinary shares of **17,696 thousand** (2022) and **15,275 thousand** (2021) were excluded from diluted EPS calculation as their effect was anti-dilutive due to net loss[75](index=75&type=chunk) [NOTE 8: Comprehensive Loss](index=19&type=section&id=NOTE%208%3A%20Comprehensive%20Loss) Details the accumulated other comprehensive loss for Q1 2022 and 2021, including foreign currency translation and unrealized gains/losses on marketable securities Accumulated Other Comprehensive Loss (Three Months Ended March 31) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | | :------------------------------------------------------------------ | :----------------- | :----------------- | | Foreign currency translation adjustment: Beginning balance | (23,855) | (22,627) | | Foreign currency translation adjustment: Net other comprehensive loss | (185) | (718) | | Foreign currency translation adjustment: Balance at March 31 | (24,040) | (23,345) | | Unrealized (loss) gain on marketable debt securities, net: Beginning balance | (85) | 1,576 | | Unrealized (loss) gain on marketable debt securities, net: Net other comprehensive loss | (917) | (537) | | Unrealized (loss) gain on marketable debt securities, net: Balance at March 31 | (1,002) | 1,039 | | Accumulated other comprehensive loss at March 31 | (25,042) | (22,306) | - Accumulated other comprehensive loss increased from **$(22,306) thousand** in Q1 2021 to **$(25,042) thousand** in Q1 2022[76](index=76&type=chunk) [NOTE 9: Commitments and Contingencies](index=19&type=section&id=NOTE%209%3A%20Commitments%20and%20Contingencies) Outlines ongoing patent litigation with Jazz Pharmaceuticals regarding FT218, including Avadel's counterclaims, and notes no material contingent liabilities - Jazz Pharmaceuticals, Inc. filed multiple lawsuits (First, Second, and Third Complaints) against Avadel Parties, alleging patent infringement by Avadel's proposed product (FT218)[78](index=78&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk) - Avadel has denied the allegations, asserted affirmative defenses (non-infringement and invalidity), and filed counterclaims[79](index=79&type=chunk)[83](index=83&type=chunk)[85](index=85&type=chunk) - A revised scheduling order sets a claim construction date of August 31, 2022, and a trial date of October 30, 2023[81](index=81&type=chunk)[85](index=85&type=chunk) - As of March 31, 2022, there were no contingent liabilities reasonably likely to have a material adverse effect on the Company's financial position[77](index=77&type=chunk) [NOTE 10: Subsequent Events](index=21&type=section&id=NOTE%2010%3A%20Subsequent%20Events) Details subsequent events including the April 2022 exchange of February 2023 Notes and Avadel's lawsuit against Jazz Pharmaceuticals - On April 5, 2022, Avadel completed the exchange of **$117,375 thousand** of its February 2023 Notes for a new series of Exchangeable Senior Notes due October 2, 2023, incurring **$10,253 thousand** in fees[89](index=89&type=chunk) - On April 14, 2022, Avadel filed a lawsuit against Jazz Pharmaceuticals alleging breach of confidential disclosure agreements and misappropriation of trade secrets[90](index=90&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operations, highlighting FT218 development, business trends, COVID-19 impact, and financial performance, with increased losses [Overview](index=22&type=section&id=Overview) Provides an overview of Avadel's focus on FT218 for narcolepsy, its ongoing FDA review, positive Phase 3 data, orphan drug designation, and patient preference - Avadel is a biopharmaceutical company primarily focused on the development and potential FDA approval of FT218, a once-nightly, extended-release sodium oxybate for narcolepsy[93](index=93&type=chunk) - The NDA for FT218 was accepted by the FDA in February 2021, but the review is ongoing beyond the October 15, 2021, target action date[93](index=93&type=chunk)[96](index=96&type=chunk) - Positive top-line data from the Phase 3 REST-ON trial showed statistically significant and clinically meaningful improvement for FT218 (9g dose) across co-primary endpoints (MWT, CGI-I, mean weekly cataplexy attacks)[97](index=97&type=chunk) - FT218 received orphan drug designation for narcolepsy in January 2018, potentially offering seven years of U.S. market exclusivity[99](index=99&type=chunk) - New data presented at World Sleep 2022 confirmed once-nightly dosing as the most important attribute driving patient and clinician preference for oxybate products[105](index=105&type=chunk) [Key Business Trends and Highlights](index=25&type=section&id=Key%20Business%20Trends%20and%20Highlights) Outlines key business trends impacting the company, including healthcare reform, intense competition, pharmaceutical pricing, generic competition, and access to capital - Healthcare and Regulatory Reform: Laws may impact commercialization success and reimbursement[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - Competition and Technological Change: Intense and increasing competition, rapid technological changes could render products obsolete[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - Pricing Environment for Pharmaceuticals: Political spotlight on pricing, making it challenging to obtain and maintain appropriate pricing[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - Generics Playing a Larger Role in Healthcare: Expect generic competition for products, with FT218 potentially facing generic twice-nightly sodium oxybate competition from 2023[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - Access to and Cost of Capital: Difficult and potentially expensive to raise additional capital, leading to liquidity challenges or dilution[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - Net Loss from Operations in 2022: Substantial expenses expected for FT218 clinical development and commercial launch preparations, leading to future losses[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) [Impact of COVID-19](index=25&type=section&id=Impact%20of%20COVID-19) Discusses potential COVID-19 impacts on operations, including study delays, supply chain disruptions, and hindered sales efforts for FT218 - Potential delays to the ongoing RESTORE OLE/switch study[113](index=113&type=chunk) - Disruptions to the supply chain and third parties[113](index=113&type=chunk) - Extended work-from-home policy for employees[113](index=113&type=chunk) - Hindrance of sales efforts for FT218, if approved[113](index=113&type=chunk) - An extended period of global supply chain and economic disruption could materially affect the business, results of operations, access to liquidity, and financial condition[113](index=113&type=chunk) [Financial Highlights](index=26&type=section&id=Financial%20Highlights) Summarizes key financial metrics for Q1 2022, including operating loss, net loss, diluted net loss per share, and changes in cash and marketable securities Financial Highlights (Three Months Ended March 31) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | | :------------------------- | :----------------- | :----------------- | | Operating loss | (28,626) | (14,811) | | Net loss | (26,424) | (13,445) | | Diluted net loss per share | (0.45) | (0.23) | - Cash and marketable securities decreased by **$33,740 thousand** to **$123,481 thousand** at March 31, 2022, from **$157,221 thousand** at December 31, 2021, primarily due to cash used in operating activities[115](index=115&type=chunk) [Critical Accounting Estimates](index=26&type=section&id=Critical%20Accounting%20Estimates) Emphasizes that management's inherently uncertain estimates and assumptions affect reported amounts of assets, liabilities, revenues, and expenses - Management makes estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, which are inherently uncertain and unpredictable[116](index=116&type=chunk)[117](index=117&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Provides a comparative analysis of the company's statements of loss for Q1 2022 and 2021, detailing changes in expenses and net loss Comparative Statements of Loss (Three Months Ended March 31) | Metric | 2022 ($ thousands) | 2021 ($ thousands) | Change ($ thousands) | Change (%) | | :------------------------------------ | :----------------- | :----------------- | :------------------- | :--------- | | Research and development expenses | 6,991 | 3,852 | 3,139 | 81.5% | | Selling, general and administrative expenses | 21,635 | 11,012 | 10,623 | 96.5% | | Total operating expense | 28,626 | 14,811 | 13,815 | 93.3% | | Operating loss | (28,626) | (14,811) | (13,815) | (93.3)% | | Investment and other (expense) income, net | (137) | 610 | (747) | (122.5)% | | Net loss | (26,424) | (13,445) | (12,979) | (96.5)% | - Research and development expenses increased by **$3,139 thousand** (**81.5%**) due to higher active pharmaceutical ingredients (API) purchases[121](index=121&type=chunk) - Selling, general and administrative expenses increased by **$10,623 thousand** (**96.5%**) due to commercial preparations, launch readiness activities for FT218, increased marketing, and higher compensation costs from increased headcount[122](index=122&type=chunk) - Investment and other (expense) income, net, decreased by **$747 thousand** (**122.5%**) due to higher net realized losses on marketable securities and lower foreign currency gains[123](index=123&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Analyzes the company's net cash flows for Q1 2022 and 2021, and discusses its ability to meet operating requirements through March 2023 Net Cash Flows (Three Months Ended March 31) | Cash Flow Activity | 2022 ($ thousands) | 2021 ($ thousands) | Change ($ thousands) | Change (%) | | :------------------------------ | :----------------- | :----------------- | :------------------- | :--------- | | Operating activities | (34,045) | (23,413) | (10,632) | (45.4)% | | Investing activities | 42,251 | 11,191 | 31,060 | 277.5% | | Financing activities | 2,009 | 149 | 1,860 | 1,248.3% | - Net cash used in operating activities increased due to higher net loss and unfavorable changes in working capital[127](index=127&type=chunk) - Net cash provided by investing activities increased significantly due to net proceeds from sales over purchases of marketable securities[128](index=128&type=chunk) - Cash, cash equivalents, and marketable securities are expected to provide liquidity through March 31, 2023, to meet operating requirements for FT218 commercial launch[131](index=131&type=chunk) - Raising additional capital, if needed, may involve public or private debt/equity financings, royalty financings, or collaborations, with potential for shareholder dilution[131](index=131&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses the company's exposure to market risks, including interest rate, foreign exchange, and inflation, all deemed immaterial for Q1 2022 [Interest Rate Risk](index=30&type=section&id=Interest%20Rate%20Risk) Addresses the company's interest rate risk from its marketable securities portfolio, concluding a hypothetical 50 basis point change would not materially impact fair value - The company is subject to interest rate risk from its marketable securities portfolio, but a hypothetical **50 basis point** change in interest rates would not materially impact fair value due to the short-term nature of the portfolio[133](index=133&type=chunk) [Foreign Exchange Risk](index=30&type=section&id=Foreign%20Exchange%20Risk) Discusses the company's foreign currency exchange risk, primarily from a Euro-denominated subsidiary, deemed immaterial for Q1 2022 - The company is exposed to foreign currency exchange risk primarily from a non-U.S. subsidiary with a Euro functional currency[134](index=134&type=chunk) - A **10%** strengthening/weakening in Euro exchange rates would have had an immaterial impact on net loss for Q1 2022[134](index=134&type=chunk) - Realized and unrealized foreign exchange gains from transactional exposure were immaterial for Q1 2022[136](index=136&type=chunk) [Inflation Risk](index=31&type=section&id=Inflation%20Risk) States that while inflation generally increases costs, it did not materially affect the company's business, financial condition, or operations during Q1 2022 - Inflation generally increases costs of labor, supplies, and third-party services, but it did not have a material effect on the business, financial condition, or results of operations during Q1 2022[137](index=137&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of March 31, 2022, due to a material weakness in debt indenture controls, with a remediation plan underway [Evaluation of Disclosure Controls and Procedures](index=31&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) States that the CEO and CFO concluded disclosure controls were ineffective as of March 31, 2022, due to a material weakness in internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were not effective as of March 31, 2022[138](index=138&type=chunk) - The ineffectiveness was due to a material weakness in internal control over financial reporting[138](index=138&type=chunk) [Material Weakness and Remediation Plans](index=31&type=section&id=Material%20Weakness%20and%20Remediation%20Plans) Identifies a material weakness related to the February 2023 Notes indenture and details the implemented remediation plan for debt agreements and interest expense - A material weakness was identified related to the February 2023 Notes indenture, specifically concerning timely and periodic evaluation of debt agreement terms and associated interest expense calculation[139](index=139&type=chunk) - A remediation plan was implemented in Q1 2022, including additional control procedures for debt agreements and interest expense calculation[139](index=139&type=chunk) - Full remediation will be achieved when these controls have operated effectively for a sufficient period, as determined through testing[140](index=140&type=chunk) [PART II - OTHER INFORMATION](index=33&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) Covers other required disclosures, including legal proceedings, risk factors, unregistered sales, defaults, mine safety, exhibits, and signatures [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) Incorporates by reference detailed information on legal proceedings, including patent infringement lawsuits with Jazz Pharmaceuticals, as disclosed in Notes 9 and 10 - Information on legal proceedings is incorporated by reference from Note 9: Commitments and Contingencies - Litigation and Note 10: Subsequent Events - Jazz Litigation[143](index=143&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the 2021 Form 10-K, except for increased competition, especially anticipated generic sodium oxybate entry from 2023 - No material changes in risk factors from the Annual Report on Form 10-K for the year ended December 31, 2021, except as set forth in this section[144](index=144&type=chunk) - FT218 is expected to face competition from manufacturers of generic twice-nightly sodium oxybate formulations, with Hikma Pharmaceuticals expected to launch an authorized generic in 2023 or earlier[145](index=145&type=chunk) - Competitors often have substantially greater financial, technological, manufacturing, marketing, managerial, and R&D resources[147](index=147&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[147](index=147&type=chunk) [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[147](index=147&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[147](index=147&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - None[147](index=147&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) Lists the exhibits filed with the Form 10-Q, including indentures, exchange agreements, executive officer certifications, and XBRL taxonomy documents - Exhibit 4.1: Indenture, dated April 4, 2022, by and between Avadel Finance Cayman Limited, the Company and The Bank of New York Mellon, as Trustee[148](index=148&type=chunk) - Exhibit 10.1: Form of Exchange Agreement by and between Avadel Finance Cayman Limited, the Company and certain holders of the February 2023 Notes[148](index=148&type=chunk) - Exhibit 31.1* and 31.2*: Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a)[148](index=148&type=chunk) - Exhibit 32.1** and 32.2**: Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350[148](index=148&type=chunk) [Signatures](index=35&type=section&id=Signatures) The report is signed by Gregory J. Divis, CEO, and Thomas S. McHugh, SVP and CFO, on May 9, 2022, certifying its submission - Signed by Gregory J. Divis, Chief Executive Officer, and Thomas S. McHugh, Senior Vice President and Chief Financial Officer, on May 9, 2022[150](index=150&type=chunk)

Avadel Pharmaceuticals plc (NASDAQ:AVDL) Q4 2021 Earnings Conference Call March 17, 2022 8:30 AM ET Company Participants Brandi Robinson - Senior Vice President, Corporate Affairs Gregory Divis - Chief Executive Officer Douglas Williamson - Chief Medical Officer Tom McHugh - Chief Financial Officer Richard Kim - Chief Commercial Officer Conference Call Participants Christopher Howerton - Jefferies David Amsellem - Piper Sandler & Co. Ami Fadia - Needham & Co. Paul Matteis - Stifel Oren Livnat - H.C. Wainwri ...