Avadel Pharmaceuticals plc Q4 FY2024 earnings call

• LUMRYZ has been launched with a commercial organization, adding over 2,500 net patients, 3x that of the nearest competitor. Nearly 75% of the 3,450 total net patients added since LUMRYZ's launch are on LUMRYZ as of December 31.
• Refined commercial strategy includes expanding sales, field support, and nurse support teams. Recently hired industry veterans to drive patient demand and support services.
• Phase III REVITALYZ trial in idiopathic hypersomnia (IH) is progressing, expected to complete enrollment in second half of 2024, topline data in first part of 2026, with potential NDA filing thereafter.
• Working on a once-nightly no or low sodium formulation bioequivalent to LUMRYZ.
• Confident in legal strategy related to ongoing litigation, including injunction case, antitrust case against Jazz, and patent infringement suits.

The only product segment discussed is LUMRYZ. In the quarter ended December 31, 2024, net revenue was $50.4 million. LUMRYZ is the primary revenue contributor, with the company having added over 2,500 net patients in the 18-plus months since launch, representing nearly 75% of the reported total net patients added to either LUMRYZ or the twice-nightly mixed salts product since LUMRYZ's launch as of December 31.

• Revenue projected to be in the range of $240 million to $260 million for 2025, representing nearly a 50% increase over 2024.
• Patients on therapy expected to increase by nearly 40% in 2025.
• Cash operating expenses for 2025 expected to be in the range of $180 million to $200 million.
• Cash flow for 2025 projected to be in the range of $20 million to $40 million.
• Q1 trends tracking in line with internal expectations, with early signs of significant year-over-year revenue growth and on track to achieve full-year guidance.

• Litigation risks including pending appellate court ruling on injunction case, jury trial in early November for antitrust case against Jazz, and patent infringement suits.
• Non-cash royalty accrual in cost of goods sold related to a potential 3.5% royalty on sales of LUMRYZ pending court resolution.

Q: In terms of the sales reps, can you just remind us maybe the evolution of numbers of sales reps and where you're at now? And then any thoughts about DTC?

A: In terms of customer-facing roles, sales team has a 15% increase fully effective as of 1/1/25, now at 53%; field support team doubled in size, now at 28%; nurse support team doubled, now at 28%. Made a significant increase in DTC and patient education through media investments beginning in Q1.

Q: Any additional color on the Q1 patient trends that you can share? And then how should we think about gross-to-net inventory for Q1 as it relates to your Q1 sales?

A: Early trends in Q1 across key metrics are tracking in line with internal expectations. Gross-to-net inventory is highest in Q1 due to patient dynamics like insurance deductibles resetting, but quantity of inventory in the channel has remained consistent from where it was at the end of 2024.

Q: Can you remind us of the pushes and pulls in your guidance range? What have you assumed for the low end of the guidance? And what do you believe needs to happen for you to get to the high end of the guidance range?

A: Key drivers are net patients on therapy, patient starts, and persistency. Favorable early trends in Q1, with upper end of guidance range achievable with more demand and favorable patient mix. Q1 is dynamic with higher gross-to-net, but early trends are positive and in line with expectations.

Q: Jazz has obviously switched a lot of their Xyrem franchise over to Xywav. Can you just talk about your messaging and the feedback you get from physicians with regards to switching patients?

A: Commercial coverage is greater than 90% of all commercial lives. Improvements in Medicare coverage. Perception of coverage is being addressed. Switch patients come in all forms, and commercial efforts are focused on promoting reasons to switch.

Q: Do you feel like with the sales organization initially after the launch, there was just a lot of low-hanging fruit in terms of pent-up demand and maybe a more robust switch market, and you found that the sales organization is just going to have to work harder to get that incremental patient or at least get more switch patients?

A: Proud of sales force embracing commercial strategy expansion. Early launch had some low-hanging fruit, but now expanding into broader oxybate prescriber base with early signs of expanded reach. Long-term, orexins are a consideration, but focus is on LUMRYZ being the oxybate of choice.

Q: As you're targeting the broader prescriber base, many are writing for oxybate for the first time, how are you thinking about converting these physicians to regular prescribes of LUMRYZ?

A: Well over 200 physicians who have never written an oxybate before now prescribe LUMRYZ. Sales force expansion is targeting physicians like those who have started prescribing LUMRYZ to generate more new oxybate prescribers.

Q: I just wanted to ask a little bit about your efforts to improve persistency in the naive or new-to-brand patients. So what specifically can you do there? And what would you expect the long-term persistency and discontinuation rates to look like for those patients?

A: Focused on direct engagement with patients through nurses, direct engagement with office staff around patients on therapy, and supporting persistency with pharmacy partners. Early signs of positive trends, with persistency rates better than legacy twice-nightly products but continuing to improve.