Group 1 - The biotech forum has seen significant discussions around profitable buy-write or covered call strategies on selected biotech stocks in recent months [1] - Avadel Pharmaceuticals (NASDAQ: AVDL) is being revisited due to increased interest and developments since it was last covered in June of the previous year [2] - The investing group, The Biotech Forum, offers a model portfolio featuring 12-20 high upside biotech stocks, along with live chat for trade discussions and weekly market commentary [2] Group 2 - The analyst has a beneficial long position in AVDL shares through various financial instruments [3] - Seeking Alpha emphasizes that past performance does not guarantee future results and that no specific investment advice is being provided [4]

Core Insights - Avadel Pharmaceuticals has appointed Sev Melkonian as Vice President of Patient Services, Distribution, and Reimbursement, bringing over 20 years of healthcare operations experience [1][2] - The company emphasizes the importance of patient support and experience with its product LUMRYZ, which is the first and only once-at-bedtime oxybate approved for narcolepsy treatment [2][3] - Mr. Melkonian's previous experience includes leadership roles at Takeda Pharmaceuticals and CVS Health, which will aid in accelerating LUMRYZ's adoption [2][3] Company Overview - Avadel Pharmaceuticals is focused on transforming medicines to improve patient lives, with a commitment to innovative solutions in medication development [3] - LUMRYZ is specifically approved for treating cataplexy or excessive daytime sleepiness (EDS) in patients aged 7 years and older with narcolepsy [3]

Group 1 - The biotech sector has seen significant discussions around buy-write or covered call opportunities, indicating a focus on trading strategies within this industry [1] - High beta stocks experienced a notable sell-off, with the Russell 2000 index declining approximately 3.5% as the yield on the 10-Year Treasury surpassed 4.75% [2] - A model portfolio featuring 12-20 high upside biotech stocks is being offered by an investment group, along with live chat discussions and weekly research updates [2] Group 2 - The investment group provides market commentary and portfolio updates every weekend, suggesting a proactive approach to market changes [2]

Growth Stock Forum Overview - The Growth Stock Forum focuses on identifying attractive risk/reward opportunities in growth stocks, particularly in the biotech sector [1] - The forum provides a model portfolio of 15-20 stocks that are updated regularly, along with a top picks list of up to 10 stocks expected to perform well in the current year [2] - Members have access to trading ideas targeting both short-term and medium-term moves, as well as community dialogue and Q&A [2] Avadel Pharmaceuticals Performance - Avadel Pharmaceuticals (NASDAQ: AVDL) shares hit new 52-week lows following the release of preliminary Q4 numbers and 2025 guidance [2] - The 2025 guidance was significantly below expectations due to changes in the patient mix [2] Analyst and Platform Disclosures - The analyst has no stock, option, or derivative positions in any mentioned companies and no plans to initiate such positions within the next 72 hours [3] - The article reflects the analyst's personal opinions and is not influenced by compensation or business relationships with mentioned companies [3] - Seeking Alpha emphasizes that past performance does not guarantee future results and does not provide personalized investment advice [4] - The platform's analysts include both professional and individual investors who may not be licensed or certified by any regulatory body [4]

Core Insights - Avadel Pharmaceuticals reported approximately $50.0 million in net revenue from LUMRYZ sales for Q4 2024, representing a greater than 150% increase compared to $19.5 million in Q4 2023 [1][5] - The company anticipates LUMRYZ net product revenue to be between $240 million and $260 million in 2025, indicating a 50% year-over-year growth at the midpoint [1][10] - As of December 31, 2024, there were 2,500 patients on LUMRYZ, a more than 275% increase from 900 patients on the same date in 2023 [1][5] Financial Highlights - Full year net product revenue for 2024 is approximately $169.0 million, up from $28.0 million in 2023 [5] - The company ended Q4 2024 with approximately $73.0 million in cash, cash equivalents, and marketable securities [5] - The fourth quarter revenue was impacted by an estimated $6.0 million due to approximately 1.5 fewer weeks of inventory in the channel compared to the previous quarter [5] Patient Adoption and Market Strategy - In Q4 2024, 600 patients initiated therapy with LUMRYZ, contributing to consistent demand across three patient segments: 38% switched from first-generation oxybates, 34% were new to oxybate, and 28% had previously tried and discontinued oxybates [1][5] - Approximately 74% of patients on therapy were reimbursed as of December 31, 2024 [5] - The company has expanded its field sales team by nearly 15% and doubled its field reimbursement team to enhance physician reach and patient fulfillment [5][10] Future Guidance - The company projects a net product revenue range of $240 million to $260 million for 2025, with cash flow expected between $20 million and $40 million [10] - The anticipated number of patients initiating therapy in 2025 is between 2,800 and 3,000, with total patients on therapy expected to reach between 3,300 and 3,500 by December 31, 2025 [10] - Ongoing patient enrollment in the REVITALYZ pivotal study, a Phase 3 trial for idiopathic hypersomnia, is expected to complete in the second half of 2025 [10]

Group 1 - Avadel Pharmaceuticals plc has granted non-statutory options to twelve new employees to purchase a total of 131,700 ordinary shares under its 2021 Inducement Plan [1] - The options have a ten-year term and will vest over four years, with 25% vesting on the one-year anniversary of each employee's start date and 25% vesting on the second, third, and fourth anniversaries thereafter [1] - The grants were made as an inducement material to the employees' acceptance of employment in accordance with Nasdaq Listing Rule 5635(c)(4) [1] Group 2 - Avadel Pharmaceuticals is focused on transforming medicines to improve patients' lives, applying innovative solutions to medication development [2] - The company's commercial product, LUMRYZ™, is the first and only once-at-bedtime oxybate approved by the FDA for treating cataplexy or excessive daytime sleepiness in patients aged 7 years and older with narcolepsy [2]

Company Update - Avadel Pharmaceuticals plc will host a conference call and live webcast on January 8, 2025, at 4:30 p.m. ET to provide a corporate update and discuss preliminary unaudited financial results for Q4 and the full year ended December 31, 2024 [1] - A live audio webcast of the call can be accessed through the investor relations section of the company's website, and a replay will be available for 90 days following the event [2] Company Overview - Avadel Pharmaceuticals plc is a biopharmaceutical company focused on transforming medicines to improve patients' lives [3] - The company's commercial product, LUMRYZ™, is the first and only once-at-bedtime oxybate approved by the FDA for treating cataplexy or excessive daytime sleepiness in patients aged 7 years and older with narcolepsy [3]

Company Overview - Avadel Pharmaceuticals plc is a biopharmaceutical company focused on transforming medicines to improve patients' lives [3] - The company has developed LUMRYZTM, the first and only once-at-bedtime oxybate approved by the U.S. FDA for treating cataplexy or excessive daytime sleepiness in patients aged 7 years and older with narcolepsy [3] Upcoming Events - Members of Avadel's management will participate in a fireside chat at the Jefferies London Healthcare Conference on November 20, 2024, at 7:30 a.m. GMT / 2:30 a.m. ET [1] - A live webcast of the fireside chat will be available on Avadel's Investor Relations website for 90 days following the conference [2]

Financial Data and Key Metrics Changes - For Q3 2024, the company reported net revenue of $50 million and gross profit of $43.9 million, with an estimated inventory level consistent with the previous quarter [33][34] - The operating loss was reported at $327,000 on a GAAP basis, while adjusted EBITDA was positive at $6.1 million [39][40] - Cash, cash equivalents, and marketable securities totaled approximately $66 million as of September 30, down from $71 million at the end of June [38] Business Line Data and Key Metrics Changes - The LUMRYZ launch saw 2,300 active patients on therapy as of September 30, with 700 new patients initiating therapy in Q3, contributing to the $50 million in net revenue [9][22] - The fastest-growing segment of new patients is those new-to-oxybate, indicating a shift in market dynamics [11][22] - The company is making investments to improve patient persistency, including doubling the number of nurse care navigators and increasing patient engagement efforts [26][70] Market Data and Key Metrics Changes - The company reported strong demand for LUMRYZ, with a notable increase in new-to-oxybate prescribers, now totaling around 150 [27][79] - The overall narcolepsy market is expanding, with indications that LUMRYZ is adding new patients who were previously untreated with oxybate [81] Company Strategy and Development Direction - The company is focused on executing the near-term value drivers, including the continued launch of LUMRYZ and lifecycle management efforts [21] - The recent FDA approval for LUMRYZ in pediatric patients and the initiation of the Phase 3 IH trial are key strategic developments [20][17] - The company aims to maximize LUMRYZ's potential as the preferred oxybate treatment among narcolepsy patients and providers [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued strong demand for LUMRYZ despite potential seasonality and higher gross-to-net deductions impacting Q4 [45][54] - The company is optimistic about its growth trajectory, particularly with the expansion into the pediatric market and the ongoing legal matters being resolved favorably [19][56] Other Important Information - The company is in the process of addressing legal matters, including ongoing patent trials and antitrust actions against Jazz, which are expected to progress in the coming months [57][59] - The company has received favorable court rulings affirming the clinical superiority of LUMRYZ, which is crucial for its market position [19][60] Q&A Session Summary Question: Can you talk about the patient trends you're seeing so far, including the month of October and the parts of November? - Management noted strong demand for LUMRYZ continues, with a shorter quarter affecting selling days but overall interest remains high [46] Question: Can you help us understand the role of AGs and how you're expanding your sales force? - The company has achieved 85% commercial coverage, making AGs rarely a step for LUMRYZ, and plans to increase the sales force by over 10% to reach moderate and low oxybate prescribers [49][51] Question: Can you provide an update on revenue expectations and litigation? - Management is pleased with progress and expects continued patient demand, while legal matters include ongoing patent trials and an antitrust action against Jazz [54][56] Question: Can you discuss the reasons for higher discontinuation rates among new patients? - Higher discontinuation rates are attributed to new patients not knowing what to expect, necessitating more frequent support and expectation management [64][68] Question: What is the current mix of NT1 and NT2 patients for LUMRYZ? - The prevalence is approximately 30% NT1 and 70% NT2, with LUMRYZ usage consistent with these proportions [83]

PART I – FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2024, including statements of loss, balance sheets, cash flows, and notes on accounting policies, revenue, and legal matters [Note 1: Summary of Significant Accounting Policies](index=11&type=section&id=Note%201%3A%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's operations, focusing on its sole commercial product LUMRYZ, its FDA approvals, Orphan Drug Exclusivity, and recent corporate actions including direct Nasdaq listing and an ATM offering program - The company's only commercialized product is **LUMRYZ**, an extended-release sodium oxybate for treating cataplexy or excessive daytime sleepiness (EDS) in adults and children (7+) with narcolepsy[26](index=26&type=chunk)[29](index=29&type=chunk) - **LUMRYZ** received FDA approval for adults on **May 1, 2023**, with **Orphan Drug Exclusivity (ODE)** until **May 1, 2030**. The pediatric indication was approved on **October 16, 2024**, with **ODE** through **October 16, 2031**[27](index=27&type=chunk) - Effective **April 15, 2024**, the company's ordinary shares were directly listed on **Nasdaq**, following a mandatory exchange of its American Depositary Shares (ADSs) A new At-the-Market (ATM) offering program for up to **$100 million** was established on **May 8, 2024**[31](index=31&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) [Note 2: Revenue Recognition](index=13&type=section&id=Note%202%3A%20Revenue%20Recognition) This note details that all net product revenue is from U.S. LUMRYZ sales, with **100%** of gross sales concentrated among three key customers: Caremark, Accredo, and Optum Gross Sales by Customer Concentration | Customer | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2024 | | :--- | :--- | :--- | | **Caremark** | 43% | 46% | | **Accredo** | 39% | 37% | | **Optum** | 18% | 17% | [Note 6: Royalty Financing Obligation](index=17&type=section&id=Note%206%3A%20Royalty%20Financing%20Obligation) This note details the royalty financing obligation with RTW, including the **$30 million** first tranche, **3.75%** quarterly royalty payments up to **$75 million**, a **$2 million** expiration fee, and an effective interest rate of **30.4%** - The company has a royalty financing obligation with RTW, requiring quarterly payments of **3.75%** of LUMRYZ worldwide net revenue until a total of **$75 million** is paid back[58](index=58&type=chunk) - The company received the first tranche of **$30 million** but allowed the second tranche to expire on August 31, 2024, incurring a one-time commitment fee of **$2 million**[57](index=57&type=chunk) Royalty Financing Obligation Activity (Nine Months Ended Sep 30, 2024) | Description | Amount (in K) | | :--- | :--- | | **Beginning Balance (Dec 31, 2023)** | $32,760 | | **Accretion of imputed interest** | $8,128 | | **Royalty payments made** | ($3,305) | | **One-time expiration payment** | ($2,000) | | **Ending Balance (non-current)** | $34,437 | [Note 11: Commitments and Contingencies](index=20&type=section&id=Note%2011%3A%20Commitments%20and%20Contingencies) This note details the company's complex legal proceedings, primarily with Jazz Pharmaceuticals, involving patent infringement lawsuits, Avadel's antitrust counterclaims, trade secret misappropriation claims, and Jazz's unsuccessful challenge to LUMRYZ's FDA approval - In the patent trial with Jazz, a jury found infringement of one patent (U.S. Patent No. 11147782) with damages of **$234** The court issued an injunction but excluded Avadel's ability to continue selling LUMRYZ for narcolepsy An ongoing royalty rate is pending, and Avadel is appealing the decision[87](index=87&type=chunk)[88](index=88&type=chunk) - Avadel has filed **antitrust counterclaims** against Jazz, alleging monopolization under the **Sherman Act** related to the improper listing of a patent in the FDA's Orange Book The court denied Jazz's motion to dismiss these claims[96](index=96&type=chunk)[97](index=97&type=chunk) - On **October 30, 2024**, the D.C. District Court ruled in favor of the **FDA and Avadel**, denying Jazz's motion for summary judgment that sought to overturn the FDA's approval of LUMRYZ[108](index=108&type=chunk) [Note 12: Subsequent Events](index=28&type=section&id=Note%2012%3A%20Subsequent%20Events) This note reports a significant post-period event: LUMRYZ received FDA approval on **October 16, 2024**, for pediatric narcolepsy (ages seven and older), with Orphan Drug Exclusivity granted until **October 16, 2031** - On **October 16, 2024**, LUMRYZ was approved by the FDA for pediatric narcolepsy patients aged seven and older, receiving **Orphan Drug Exclusivity** until **October 16, 2031**[110](index=110&type=chunk) Condensed Consolidated Statements of Loss (Unaudited) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | **Net product revenue** | $50,025 K | $7,014 K | $118,707 K | $8,510 K | | **Gross profit** | $43,870 K | $6,897 K | $108,242 K | $8,357 K | | **Operating loss** | ($327) K | ($35,110) K | ($39,102) K | ($112,949) K | | **Net loss** | ($2,625) K | ($36,274) K | ($43,789) K | ($131,490) K | | **Net loss per share - diluted** | ($0.03) | ($0.41) | ($0.46) | ($1.71) | Condensed Consolidated Balance Sheets (Unaudited) | Metric | September 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total current assets** | $127,258 K | $134,202 K | | **Total assets** | $158,253 K | $164,698 K | | **Total current liabilities** | $42,783 K | $36,855 K | | **Total liabilities** | $83,590 K | $76,959 K | | **Total shareholders' equity** | $74,663 K | $87,739 K | Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | **Net cash used in operating activities** | ($54,780) K | ($100,482) K | | **Net cash provided by (used in) investing activities** | $36,867 K | ($78,021) K | | **Net cash provided by financing activities** | $15,090 K | $156,446 K | | **Net change in cash and cash equivalents** | ($2,585) K | ($22,170) K | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, emphasizing significant revenue growth from LUMRYZ's commercial launch, increased operating expenses due to commercialization and clinical trials, and confirms sufficient liquidity for the next twelve months - **LUMRYZ** is the company's only commercial product It received FDA approval for adults in **May 2023** and for pediatrics in **October 2024**, with **Orphan Drug Exclusivity** through **2030** and **2031**, respectively[114](index=114&type=chunk)[115](index=115&type=chunk) - The company has initiated **REVITALYZ**, a **Phase 3** pivotal trial to evaluate LUMRYZ for the treatment of **Idiopathic Hypersomnia (IH)**, with the first patient dosed on **July 31, 2024**[124](index=124&type=chunk) Financial Performance Summary (Q3 2024 vs Q3 2023) | Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Net product revenue** | $50,025 K | $7,014 K | +$43,011 K | +613.2% | | **Gross profit** | $43,870 K | $6,897 K | +$36,973 K | +536.1% | | **Operating loss** | ($327) K | ($35,110) K | +$34,783 K | -99.1% | | **Net loss per share** | ($0.03) | ($0.41) | +$0.38 | -92.7% | - Management believes existing cash, cash equivalents, marketable securities, and anticipated cash from LUMRYZ sales provide **sufficient capital** to meet requirements for the **next twelve months**[155](index=155&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section addresses the company's exposure to various market risks, concluding that interest rate risk from short-term investments and foreign exchange risk from a euro-denominated subsidiary are immaterial, while acknowledging potential future impacts of inflation on operational costs - Interest rate risk is considered **low**, as a hypothetical **50 basis point** change in interest rates would not materially impact the fair value of the company's short-term investment portfolio[157](index=157&type=chunk) - Foreign exchange risk is primarily related to a subsidiary with a euro functional currency, but the potential impact of a **10%** currency fluctuation on net loss is considered **immaterial**[158](index=158&type=chunk) - Inflation has **not had a material effect** on operations, but the company acknowledges it could increase future costs for clinical trials, commercial launch, and labor[160](index=160&type=chunk)[161](index=161&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirms the effectiveness of disclosure controls and procedures as of September 30, 2024, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of **September 30, 2024**[162](index=162&type=chunk) - There were **no changes** in internal control over financial reporting during the third quarter of 2024 that have **materially affected**, or are reasonably likely to materially affect, these controls[163](index=163&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11 of the financial statements in Part I for detailed information on the company's legal matters, primarily ongoing litigation with Jazz Pharmaceuticals - Information regarding legal proceedings is incorporated by reference from **Note 11**: Commitments and Contingencies - Litigation in **Part I, Item 1** of this report[164](index=164&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 - There have been **no material changes** in risk factors from those disclosed in the **Annual Report on Form 10-K** filed on February 29, 2024[165](index=165&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities during the reporting period - The company reported **no unregistered sales** of equity securities for the period[165](index=165&type=chunk) [Other Information](index=39&type=section&id=Item%205.%20Other%20Information) This section discloses that no directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the third quarter of 2024 - During the three months ended September 30, 2024, **no directors or officers** adopted, terminated, or modified a **Rule 10b5-1** or non-Rule 10b5-1 trading arrangement[166](index=166&type=chunk)