Avadel Pharmaceuticals plc Q2 FY2024 earnings call

• LUMRYZ marked its one-year anniversary of launch, with over 1,900 patients on therapy as of June 30 and $41.5 million in net revenue in Q2 2024.
• The company saw strong uptake from patients switching from twice-nightly first-generation oxybate products, new-to-oxybate patients, and new prescribers of oxybates.
• Initiated Phase 3 REVITALYZ trial for LUMRYZ in adult idiopathic hypersomnia (IH) population.
• Anticipates a potential approval decision by the FDA for LUMRYZ's use in the pediatric narcolepsy population on September 7.
• Continues development of a no- or low-sodium, once-at-bedtime oxybate formulation with a target of bioequivalence to LUMRYZ, expecting an update by end of 2024.

In the second quarter of 2024, Avadel Pharmaceuticals reported net revenue of $41.5 million. The primary product segment is LUMRYZ, which contributed the majority of the revenue. The absolute net revenue for the quarter was $41.5 million, and LUMRYZ is the key driver of revenue in this segment.

• Expect to generate operating income in Q3 2024, an important financial milestone in the first full calendar year of LUMRYZ's launch.
• Current revenue consensus for full year 2024 is approximately $168 million, with possibility of being higher if actual results outperform assumptions.
• Expect adjusted operating income to be positive beginning in Q3 2024 and continue positive for remainder of 2024, based on factors like number of reimbursed patients on LUMRYZ, net pricing, and recurring cash operating expenses.

• Intellectual property litigation risks, including cases like Jazz versus FDA, with uncertainty around timing and potential outcomes that could impact LUMRYZ's market position.

Q: If we take a look at data cut as of July or early August, how does the slope of uptake look and any summer seasonality?

A: Greg Divis characterized trends as consistent, noting it's the first summer in the marketplace and they would assess seasonality as they go through the period.

Q: Regarding pediatric approval in a month, is there a bolus from approval and uptake speed?

A: Greg Divis said it's an important addition to the label, a relatively small patient population, modestly incremental in 2024 but important longer term.

Q: In terms of reimbursement, where stand and impact on revenue per patient?

A: Richard Kim said about 85% of commercially covered lives have LUMRYZ policy, Tom McHugh mentioned revenue per patient improved in Q2, and Greg Divis noted noncommercial segment like Medicare and Medicaid will be evaluated in 2025.

Q: On new prescribers to oxybate not before, how approached and reason?

A: Richard Kim said vast majority of providers not called on, value proposition of LUMRYZ is key, and Greg Divis noted positive sign and evaluating more promotion.

Q: Sense of percent of patients on LUMRYZ from switch, discontinued, never on oxybate before and GPO pull-through?

A: Richard Kim said biggest chunk still switch patients from first-generation oxybate, new-to-oxybate patients increasing, and GPO representation consistent with contract sizing.

Q: Cadence of IP case decisions, Jazz versus FDA case upside downside?

A: Greg Divis said next decisions likely from APA case in D.C. followed by patent case in Delaware, confident in position, prepared to ensure LUMRYZ stays on market even in downside scenario.

Q: IP situation on low-sodium formulation, development pathway for IH?

A: Greg Divis said navigating patent landscape appropriately, bioequivalence pathway viable assuming FDA agreement, and LUMRYZ offers option for IH patients with unmet needs.

Q: Free goods, total number of oxybate patients growth?

A: Richard Kim said free goods in 20%-25% range, Greg Divis said market growing with switch, new-to-oxybate, and new prescriber segments.

Q: Discontinuation persistence rates, impact of Xyrem removal from formularies?

A: Richard Kim said LUMRYZ has lower discontinuation rates than first-generation oxybates, benefited from Xyrem formulary changes with switch patients remaining important.

Q: Reason for pushing into IH now, IP for IH?

A: Greg Divis said unmet need in IH, confident in IP, and Jennifer Gudeman said enthusiasm from investigators for LUMRYZ in IH.

Q: Phase 3 IH trial timeline, regulatory pathway?

A: Greg Divis said early in trial, proxy for other oxybate products' Phase 3 is 15-18 months, Jennifer Gudeman said supplemental New Drug Application with prior precedent of one pivotal trial for NDA filing.

Q: Pediatric educational awareness, sales force focus for pediatric?

A: Richard Kim said sales force coverage for pediatric mostly by physicians treating both adults and pediatric, Greg Divis said opportunity to discuss LUMRYZ during regular patient follow-ups and marketing campaigns for pediatric population.

Q: Discontinuation rate, IH market share from Xywav?

A: Richard Kim said discontinuations earlier in launch may be higher, Greg Divis said Xywav has 23% of patients on single dose, LUMRYZ has opportunity in both twice-nightly and once-nightly IH patients