Avadel at Needham Conference: Strategic Growth and Challenges

On Tuesday, 08 April 2025, Avadel Pharmaceuticals (NASDAQ: AVDL) presented at the 24th Annual Needham Virtual Healthcare Conference. The company highlighted the rapid market adoption of its product, LUMERIZE, while addressing strategic challenges. Positive developments included a growing patient base and financial improvements, though potential generic competition and legal matters posed challenges.

Key Takeaways

• Avadel's LUMERIZE has nearly tripled net patient numbers compared to its nearest competitor.
• The company is expanding its sales force and enhancing patient support to drive growth.
• Avadel expects to be cash flow positive by 2025, with revenue guidance between $240 million and $260 million.
• Legal matters, including a royalty rate dispute and antitrust trial, are ongoing.
• The company is confident in its regulatory filing for idiopathic hypersomnia.

Financial Results

Avadel reported a strong start to 2025, with improvements in patient demand and retention. The company's revenue guidance for the year is set between $240 million and $260 million, with the potential to achieve the upper end by adding 200-250 patients. Avadel ended Q4 2024 with over 1,800 reimbursed patients and expects to be $20 million to $40 million cash flow positive for 2025. The company holds $73 million in cash as of December 31 and was EBITDA positive in the latter half of last year.

Operational Updates

Avadel's commercial strategy for LUMERIZE focuses on accelerating patient growth and improving persistence. The company has expanded its sales force and increased investments in patient support programs. These efforts have resulted in a shift towards non-switch patients, with strategic adjustments showing positive results in Q1 2025. The expanded sales force now reaches over 5,000 physicians, contributing to a growing prescriber base.

Future Outlook

The company is awaiting a court decision on an injunction hearing related to idiopathic hypersomnia, with high confidence in a favorable outcome. The Phase 3 trial is progressing as planned, with completion expected in the second half of the year. Avadel is monitoring the impact of potential orexin-based therapies and generic versions of Xyrem, but remains confident in LUMERIZE's unique positioning. The development of a new low-sodium, once-nightly formulation of LUMERIZE is also underway.

Q&A Highlights

During the Q&A session, Avadel addressed concerns about tariffs, confirming that recent announcements do not impact LUMERIZE. The company's supply chain is predominantly US-based, ensuring stability. Intellectual property is based in Ireland, but manufacturing does not occur there. Executives reiterated confidence in LUMERIZE's growth potential despite potential generic competition.

In conclusion, Avadel Pharmaceuticals remains focused on strategic execution to drive growth and value creation. Readers can refer to the full transcript for more details.

Full transcript - 24th Annual Needham Virtual Healthcare Conference:

Ami Fadia, Biotech Analyst, Needham: Good afternoon, everyone. Welcome to the next session with Avadel. I'm Ami Fadia, biotech analyst here at Needham. It's my pleasure to be hosting Greg Divis, CEO of the company, and Todd Mayhew, who's the CFO. Greg and Tom, thank you so much for being here today with us, and thanks to all our listeners as well.

Maybe if I could just ask Greg to kick us off with some opening remarks and, we then dive into some questions.

Greg Divis, CEO, Avadel: Great. First of all, good afternoon. Thank you, Ami. We're certainly delighted to be here with you today and just share the progress we made with Lumerize in particular in Q1 and our priorities for 2025. Maybe just quickly before we get started, just a quick reminder, our remarks today may include some forward looking statements.

So to the extent that's the case, we just refer you to our most recent 10 k and subsequent SEC filings just to understand the risks associated with those statements. But, you know, maybe a quick summary. Since launching twenty one months ago, we've had a lot of substantial milestones from launching in kind of record time within four weeks to as of 12/31, I mean, 2,500 net patients on on Loomrise, which is nearly three times more than our nearest competitor during that same time period. And, you know, the rapid market of the adoption of LUMRIZ really underscores its clinical value proposition that we hear routinely from physicians and patients and the benefit of the once at bedtime dosing of of LUMRIZ. From from a launch perspective, we certainly continue to refine our commercial strategy, and we're focusing now on on 2025 really in accelerating, you know, patient growth and improving persistency.

And because of that, we've increased our investments around patient support. We've expanded our sales force. We've enhanced our engagement with health care providers, and, we're really pleased with what we've seen in the early part of this year so far. We've seen improvements in patient demand. We've seen improvements in patient retention, which really aligns and confirms that our focus and our commercial strategy is certainly on point and aligned with patient needs.

And and all of that is representing is being represented by our key patient metrics. All are tracking ahead of where we were in q four and certainly tracking at or above our internal expectations. So, we're excited about how the year started off. We see a lot of opportunity to continue to grow throughout the balance of 2025. And, you know, we believe in Loomri's transformative possibilities both for patients and for the company in totality.

Ami Fadia, Biotech Analyst, Needham: Okay. Thank you, Greg. Maybe just to get us started and tariffs is top of mind for everybody listening. So I wanted to maybe see if you could address any details about your supply chain for Loomrise and how a potential tariff environment could impact the cost of goods?

Todd Mayhew, CFO, Avadel: Yeah. Thanks, Avi. That is certainly the question of the day. For for us and with most recent announcements regarding tariffs, it does not impact Loomrise, you know, with these most recent announcements. And for us, again, with our supply chain, we've made quite a few investments over the past three years to create redundancy in our supply chain.

And the fact is that most of the, I'll say, the components that go into the manufacture of Loomerais are US based. So we have two API suppliers as an example, both of whom are US based. We have a domestic manufacturer. We also have a manufacturer in Europe. But for us, if we needed to, quite frankly, all of luminaires will be manufactured in The US where we've set up our supply chain.

Ami Fadia, Biotech Analyst, Needham: Okay. Alright. And another quick question that we get is where's the IP based for Loomrise?

Todd Mayhew, CFO, Avadel: Yeah. The IP is based in Ireland, but important to note that none of the manufacturing of Loomrise occurs in Ireland.

Ami Fadia, Biotech Analyst, Needham: Okay. Alright. That's helpful. So maybe let's talk about some of the sort of dynamics with regards to Lumerize. And, you know, over the past few months, particularly starting with, you know, kind of the third quarter earnings call, you talked about a shift in the mix of patients, which also impacted the discontinuation rates that we've been seeing.

And, you know, that seems to have become a an important topic of you know, in in investor conversations. Now can you talk about kind of what's driving that shift and whether this was something that completely surprised you or was that something that you kind of expected as well?

Todd Mayhew, CFO, Avadel: Yeah. Ami, the fact that there's a change in the mix of patients is not a surprise. There's always been a mix of patients for lumiride since the day we launched. But to your point, we did see that mix start to shift more heavily towards, I'll just call them non switch patients, in the second half of last year. And we've done a lot of after action review and analysis of this, why did that occur?

And so I think it comes down to a matter of focus and strategic execution. For, I'd the first eighteen months of launch, the focus of the commercial organization was on driving patient demand. Whether it was a new to oxybate patient or whether it was a switch patient, the focus was on driving patient demand. But we also thought that this was an opportunity for us as we head into 2025 to continue to improve that mix versus what we experienced in Q4, where about a third of this starts on Lumrise came from switch patients. And the investments we made across our sales force, the investments we made across our field support teams has yielded the improvements we hoped it would, which was to improve that mix.

So as we are evaluating the trends in the first quarter twenty twenty five, switch patients is one of the metrics we evaluate. And we've seen an improvement in that mix coming off of Q4 and certainly in line with our internal expectations.

Ami Fadia, Biotech Analyst, Needham: Well, that's good to hear. Can you sort of maybe drill a little bit deeper into kind of why that sort of mix of patients that was fish patients maybe started to peak or slow down in the back half of last year? And what specifically have you all done to really increase that mix this year?

Greg Divis, CEO, Avadel: Yeah. Yeah. Yeah. Yeah. So I think from that perspective, what we saw was, you know, a focus in kind of a core group of prescribers who adopted relatively quickly, and we had really high penetration across those early adopters.

And we're less consistent in our call and our execution on the broader group of the prescriber base that represented nearly, you know, 75% or so of the market opportunity. Right? So what we have some of the changes we've made was we've expanded our sales force. We've changed our our direction around, you know, physician reach and call plan execution. And we've modified our incentive plan to make sure that the appropriate incentive plan is designed to drive the sort of behavior and the sort of patient demand where with that we think is ideal for Loomrise at this stage in its launch.

And those are the sorts of things we've deployed from a top of the funnel perspective to really drive the drive the demand and see improvements across, you know, that aspect of of of our our launch. And as Tom noted and, you know, as we've shared, know, over the last few weeks, we've seen really good positive momentum across those metrics.

Ami Fadia, Biotech Analyst, Needham: Okay. Now let's sort of talk about the sales guidance for this year. It's 240 to $260,000,000. What does sort of the low end of the guidance range assume in terms of the number of new patient adds and the discontinuation rates that you expect to see relative to what you had seen in the back half of last year?

Todd Mayhew, CFO, Avadel: Yes. As we've put in place guidance range of $2.40 to $2.60, at the lower end of the range, Rami, we certainly have to evaluate the trends we were seeing in the second half of last year. And so at the low end of the guidance, we've assumed 800 net patient adds during the course of the year. We assumed overweighting in terms of new to oxidative patients versus switch patients, which come with different dynamics in terms of revenue and discontinuation rates. So we put in place assumptions that based on no small part of the trends we saw in the second half of last year.

As we move into the year and listen, we're certainly encouraged by the early trends we're seeing now in Q1. But to put it in context, how do you get to the upper end of the range of two sixty, it's really modest improvement. It's just the way I would characterize it. The easiest way to maybe express that is that another two hundred to two fifty patients on therapy you know, would clearly move us to the upper end of that range.

Ami Fadia, Biotech Analyst, Needham: Without any change in mix?

Todd Mayhew, CFO, Avadel: With with net without that's right. Without any sort of change in mix. But, you know, we're working on across a lot of fronts to improve ball metrics. And again, we're pleased with what we've seen so far in Q1.

Ami Fadia, Biotech Analyst, Needham: And just sort of remind me where the discontinuation rates are for lumirase for switch patients relative to what we've seen with the oxybates and historically? We know that new to oxybate certainly have a high discontinuation rate, but I'm just trying to understand for lumarize or switch patients, where is it currently?

Greg Divis, CEO, Avadel: Yeah. I mean, the disc the discontinuation rate for switch patients is very nominal. It is very low, especially early on in the treatment experience, you know, where the highest rates of discontinuation in totality occur. Most of the DCs that we've seen numerically have occurred over sixty percent within the first ninety days. And I would say in the switch patient, it is a very low, very, very low number that have discontinued during that period of time.

As such, another important reason why there are focus and emphasis for the company because, obviously, if we can continue to improve the growth of switch patients, those patients are are stickier. They obviously convert at a higher dose. And from a from a revenue standpoint, are higher revenue generating patients early on early on in the treatment. Obviously, a new to oxybate or previously treated ultimately grows to a similar value over time for sure, from that standpoint. But as Tom noted, in particular, where we've expanded our Salesforce execution, we've seen, nice improvements in switch uptake.

Ami Fadia, Biotech Analyst, Needham: Mhmm. Okay. Can you give us some more color on kind of, where, the switch patients are coming from? Are they switching from Xywav, or are you seeing patients switch from Xyrem or generic Xyrem?

Greg Divis, CEO, Avadel: Yeah. I think since launch and even most recently, we've seen it come from all patient types from that standpoint. You know? We've got a healthy percentage of patients from all from Xyrem or Xywav or the authorized generic. So, you know, from our viewpoint, we've seen consistency in that regard across all patient types most recently.

And it's something where we continue to focus on. And as we noted, we've continued to see that begin to improve this quarter as well, along with a lot of all of our other metrics.

Ami Fadia, Biotech Analyst, Needham: And when we think about the new to oxybate patients or the non switch patients, where are you sort of driving that patient volume from? Maybe help us sort of understand, are these physicians that you've been focused on, the the the 25% that, you know, have always been a big focus? Or is it sort of the broader physician group?

Greg Divis, CEO, Avadel: Yeah. The majority of our new to oxybate patients really since launch have come from existing oxybate prescribers. Right? That's been the our earliest doctors. They've they've represented approximately 60% of our total volume for sure.

And and so the majority of patients starts have come from within these high early adopters, high volume oxybate targets. That being said, about fifteen percent of all of our patient starts, Ami, have come from physicians who have previously never written an oxybate before. So for us, that's a very promising data point because it it accentuates the fact that Lumerize isn't just competing in the oxybate market. It has it is and has the opportunity to continue to grow the oxybate market. And much of that early, if you will, demand from physicians who have never written an oxalate before has really been organic.

It hasn't been as a result of us prospecting and calling on physicians trying to generate demand. We we it it happened organically by the physician and by the patient who wanted to go on Loomrise, which has opened up a very clear window in terms of the patient type and the physician type who could be candidates for us to expand that market even more so, which is something that's part and parcel to our our our current Salesforce execution plan. So, yeah, we're really pleased. We've seen our prescriber base continue to grow in q one. From that perspective, we've seen more enrollments coming in q one, and and we're getting it across the the the the the universe of prescribers.

Ami Fadia, Biotech Analyst, Needham: Mhmm. I just want to kind of try to quantify what it means when you have sort of indicated that you've, you know, sort of increase the number of your commercial team across, you know, the sales representatives, nurse and reimbursement managers. What does that mean in terms of the coverage that you're able to achieve in terms of the types of physicians that are being targeted? You mentioned earlier that previously, you know, or at least last year, the focus was on that kind of 25% of the prescriber base. How what does this expansion help you target?

Greg Divis, CEO, Avadel: Yeah. There's three component there's three components to that expansion. Our Salesforce expansion really allows us now, where we you know, when you think about, the size of our Salesforce at just a little over 50, you know, and the average representative have anywhere from, you know, 90 to a 10, you know, priority targets. We can reach over 5,000 physicians and their respective offices with with that reach and that footprint, recognizing that probably, you know, 25 to 30 of those targets are really the highest volume targets and the balance are really, you know, spread out fairly diffusely from that perspective. But it gives us the opportunity to reach all of them with this sort of frequency and that that we've lined out and targeted.

And, as we've expanded our focus across the universe in q one, we've seen that group of what I would characterize as dabblers, our marginal historical prescribers of gloom rinds or even those who haven't prescribed at all in q one with some commercial focus really be a major source of our growth in in q one from that perspective, which has been really great to see. When when when we translate that to our field support teams where we've doubled our field reimbursement and field support teams, that allows them to take on you know, to reduce their caseload and spend more time in the office, which gives us a chance to be in front of all of those priority offices as well in person with processing and and and generating patients who've been enrolled into our into our program to pull them through faster. And we've seen that happen in in in in q one as well where we've seen an increase in our patient starts. We've seen them come through the process quicker. And and to to us, that's directly correlated to more resources and and and more focus on that team in terms of what their their charge do and their ability to be out in front of customers as well.

Ami Fadia, Biotech Analyst, Needham: Okay. Now you've indicated that you believe Lumerize can reach sort of peak revenue potential of over a billion dollars. Can you, like, take us through kind of the bridge from where we are today and what would need to happen in order to be able to achieve that?

Todd Mayhew, CFO, Avadel: Yeah. So, you know, I guess to to achieve that, you know, we would need about 8,000 reimbursed patients on therapy, you know, just based on, you know, pricing assumptions. That would get us to a billion dollars of revenue. The path to get there, let's start with where we exited, the fourth quarter of twenty twenty four. We had over 1,800 reimbursed patients on therapy at that point in time.

So we're almost 25% of the way there, eighteen months into launch. In the past to get there, I'll say the remaining 6,200, right, it's really important to understand the three patient segments that we refer to, which in total about 50,000 patients we think are good candidates for Lumerize. And I have to characterize that as probably over the next five years. But there's today, we estimate there's about 14,000 patients who are currently treated twice nightly. That remains a robust opportunity for us.

It's a very dynamic market and it remains an opportunity to continue to get switched business. The other patient segment that we talk about is patients who had previously tried and discontinued the twice daily oxybate. And we estimate that over the last three years, about 15,000 patients have tried and discontinued. And for us, it's a very real patient segment. For our starts, about one out of every four patient starts comes from that segment.

And then the third segment, to round out the difference, is the annual starts. These are new to oxybate patients, never exposed to oxybate. It's about 4,000 to 5,000 patients per year that represent best segment. So again, over five years, that's 20,000 to 25,000 patients. So I mean, for us to get to 8,000 reimbursed patients on therapy, that's why it's important to understand these three patient segments.

Because quite frankly, I could could paint a scenario for you where all we get is new to oxybate patients that continue to get the previously tried discontinued. And we get to 8,000 patients that way. It's not our strategy, of course, all patients are important. We believe we'll continue to source patients from all three patient segments, but we can get there a lot of different ways.

Greg Divis, CEO, Avadel: Yeah. I think the only thing I would add to that is it's just an important consideration that where we're sourcing patients and where we're, for lack of a better word, competing for patients. We have our Lumris has its own unique market opportunity, of which 90% by and large is exclusive to Lumeris, whether it's those 14 or thousand or so currently twice nightly treated patients or the 15,000 or so previously treated and discontinued, which is a a pool of patients that continues to grow, every month, every year, every quarter, every year from that perspective, which are really exclusive to Loomri. So we feel very confident that the market opportunity is very robust to continue to grow quarter over quarter sequentially for for a long period of time.

Todd Mayhew, CFO, Avadel: Yeah, it's a large market, Ami. We're learning more about it, of course, every day that goes on. But it's a very large market opportunity for oxybates. And aside from we know the patients are today, to one of Greg's other comments, we're also extending the prescriber base. So it's not a we have what we have today.

We think the market is going to continue to grow and expand. And we have our own proof points of that, particularly with the new prescribers who've come in who have never been in a prescription before for inoxabate.

Ami Fadia, Biotech Analyst, Needham: Mhmm. Now these patients who've been who were previously discontinued patients, sounds like they they would have discontinued over a year prior to today. Where are these patients being treated? Are they treated by both oxybate and non oxybate REMS enrolled physicians? And and what drives them back to explore another treatment option?

How often are they going back to see the physicians that, you know, gives you the opportunity to tap into those patients?

Greg Divis, CEO, Avadel: Yeah. Based upon the data we can see, I mean, well over ninety, ninety five percent of patients who were previously on an oxybate and stop are still under care by that same physician who they who they were previously treated on. So they're still being seen by a sleep specialist from that perspective and and being managed according. The frequency of the of patient visits, would say on average is, you know, based upon this data we can see is anywhere from four to six months, every four to six months. Obviously, if you're newly, you know, being seen, maybe you see more frequently.

If you're a little bit more mature, maybe you see less frequently. But on average, it's likely four to six months. And if you're on an oxybate, you're getting some sort of engagement with your office at least every six months because of the need to do the refill. Right?

Ami Fadia, Biotech Analyst, Needham: Yeah. Okay. Understood. Okay. Let's shift gears to, idiopathic hypersomnia.

You're waiting for a court decision on the injunction hearing that was done in February. What is your confidence level around winning it? And what's the basis for that? And maybe talk to us about some of the scenarios with regards to the outcomes with that hearing and how that would impact your parts to regulatory filing.

Todd Mayhew, CFO, Avadel: Yeah. Ami, our comps level is very high, you know, that we that we the injunctions are returned, and we're able to proceed forward with seeking approval of lumarize for the treatment of idiopathic hypersomnia. That's one of the key questions that's pending. We expect a decision to occur during this quarter. As you noted, the appeals hearing was on February 7.

It's probably plus or minus ninety days from that date is the guidance we've received on when to expect the decision. So it puts us squarely into Q2. And whether it takes ninety days to get a decision or it takes nine months to get a decision, either one of those time frames puts us well ahead of when we'd be prepared to file an NDA in any event. The phase three trial is ongoing. We expect enrollment to be completed by the end of this year and data readout early part of next year, which the timing of the decision, not that it's irrelevant, of course, we want it done sooner than later, but it will whenever that decision comes, it should be well ahead of when we're prepared to file an NDA.

Ami Fadia, Biotech Analyst, Needham: Yeah. With regards to the phase three trial, perhaps talk about how the enrollment is ongoing, you know, where are the sites and, you know, just based on some of the surprises that we've seen in in in the IH space, how how have you sort of thought about managing the risk around the study?

Greg Divis, CEO, Avadel: Yeah. I mean, enrollment is tracking according to our plan. As we've noted, we would expect to complete enrollment in the second half of this year in top line data, as Tom noted earlier early next year. In terms of how we've chose to go about this, we certainly studied the prior trials and their respective sites. And and, of course, we have our own experience with a large number of domestic sites for our LUMRIZE pivotal trial in narcolepsy as well as our open label extension in ReStore.

For us, we've really tried to prioritize the the the robust experience research sites that and some of those come from community and private sites. Some of those are academic research based sites. But we feel really good about the cohort of sites we have, and we're continuing to add more sites as we go through some of these academic centers. Take a little longer to get through the contracting period, with their centers, but, we continue to add more sites from from that perspective. From from a management perspective or for lack of the terms, a probability of success perspective, we remain highly confident in in in in Lumerize's, you know, prospects in IH.

Right? Especially given the historical data of the first generation products, in terms of their pivotal study in NIH. And then, again, you consider that similar analysis of the statistically significant data for luminitis and narcolepsy and how that translates relative to the the, the first generation oxybates, their their studies in in narcolepsy, it gives us a a very high degree of confidence that LUMRIZE will, you know, all things being equal, should you know, has a high probability of clinical success in in in this study. Recognizing that you still have to run the study, and you have to run that study very well, which is obviously what we're focused on and and and believe our team is doing today.

Ami Fadia, Biotech Analyst, Needham: Mhmm. Can you comment on just the market opportunity there, relative to the opportunity in narcolepsy?

Greg Divis, CEO, Avadel: Yeah. It's different. Right? For sure. It's an emerging diagnosis in my perspective from my perspective over the last number of years.

It certainly is talked about a lot more when you're out talking to physicians. From a pure diagnosis perspective, you know, we know in narcolepsy, there's a hundred and fifty, hundred and sixty thousand patients diagnosed and maybe a 20 or 30,000 actively being treated. In IH, it's forty two thousand who are diagnosed and under care of which thirty thousand or so are uniquely IH patients and twelve thousand have had both an n t two diagnosis as well as an IH diagnosis, from that perspective. So it is in in that case, forty thousand patients is a a fairly robust orphan size condition from that perspective with only one FDA approved treatment today, right, who whose penetration is under ten percent of that market. And I will say because we talk to a lot of physicians all the time and we're we're we're out meeting with them, There's a lot of discussion that they bring up with us to us about IH and when will we get an approval and what's the status of the study.

And when you ask them why they're interested in, their answer is very clear. Like, they believe, like, the Loomrise clinical value proposition and eliminating the the the the the forced awakening in the middle of the night for for IH is, in there, some people's mind, arguably even more valuable for IH patients than it is in for narcolepsy patients, Predominantly because IH patients, as we all know, struggle with waking up, right, versus struggle with staying awake that you see with with with people with narcolepsy. So from that perspective, we think the value proposition is very clear. We're excited to be in a position to run the studies and and continuing to navigate the other things we need to navigate toward to be in a position to potentially prepare for an NDA filing at some point in the future.

Ami Fadia, Biotech Analyst, Needham: Mhmm. Now I want to talk about the Orexin to, you know, at this space. That's obviously question that I'm sure you get a lot. How are you thinking about that class impacting the oxybate market in the next couple of years. And, you know, I think the the the common sort of view commonly had views that the oxybates do help with nighttime sleep.

How well is that understood amongst the physician community? Is there something that you're doing in terms of thinking about sort of certifying that or building awareness around that that could, you know, help prepare for the entry of, you know, a new class?

Greg Divis, CEO, Avadel: Yeah. Well, you know, maybe some general comments first. There's clearly a lot of investor sentiment and excitement about the prospects of Orexin, which we totally understand and get. What we're most interested in is what our clinicians and prescribers thinking. Right?

So we wanna both interview kind of the thought leaders in this space and have a regular dialogue with them, but we also wanna match that up with large research cohorts of physicians where we interview them as well and get a broader sense, which is what we've done and what we'll continue to do. Certainly, you know, from a physician perspective, there's excitement about a new mechanism of action treating, you know, serious sleep disorder and particularly with the profound daytime benefit. I think when you talk to physicians, it's a little less clear, in terms of what they think the benefits or the implications may or may not be at night on the nighttime at at from that perspective. And because of that, the physicians, I think, very clearly believe there's a role for oxybates in particular because of its, its benefit to the night. And that is something that physicians who use oxybates clearly understand and and have a great appreciation for.

Some of some of the insights we've gained in a in in a recent research project with well over a hundred physicians, has told us the following. Right? One is that narcolepsy, as we know, is a polypharmacy treatment. Today, prescribers don't think orexins are gonna change that. Orexins may change the total patient pool and and and and how patients are treated and the amount of patients who are treated.

And what we hear from physicians as well is that from their view, the role of oxybates and where they're used and the impact of their, of oxybates in the nighttime and on sleep architecture is something that they believe will still play an important role, and a relevant role as they do today. And, again, which is something that's very well understood by the clinician community, especially those who use oxybates. And for us, you know, it's important we continue to learn and do more research and and and and gain more insight as we go forward. But most importantly for us is to make sure that as as these things emerge that LoomRise and the LoomRise family is well positioned as an oxybate of choice for those who are deemed to be oxybate eligible in in the marketplace today and into the future.

Ami Fadia, Biotech Analyst, Needham: Mhmm. Now aside from the orexins, there is another change that's expected in the market at the end of this year where it's possible that additional generic versions of Xyrem may enter the market. How do you see that impacting the overall market, the pricing dynamics, and particularly lumirize?

Greg Divis, CEO, Avadel: Yeah. Maybe at a high level, our view today is and again, I think our understanding is consistent with yours that there could potentially be, you know, if you will, multisource generics, for lack of a better word, are more than just the authorized generic in the marketplace as of, you know, as early as January 2026 potentially. We don't see the entry of of that having a material impact on Lumeri's pricing or on the branded oxybates overall. We've seen almost zero impact of an authorized generic on branded oxybates at all from from from that standpoint. They've really only kind of gotten business from within the business, so to speak, if you will, and switched the the obvious switch from Xyrem to to the authorized generic.

Right? From our perspective, we're highly confident that Loomrize growth potential doesn't end in the presence of additional generic entrants. Right? And in part because as we talked about, you know, the unique patient population that is uniquely, you know, and in many case, solely to the benefit of LUMRIs because we have 90% of our market that isn't really beholden to just the new to oxybate patient start. It is switches.

It's previously treated who discontinued. These are unique segments to to to to Loomrise. And and because of that, we we believe in it even in the presence of multisource generics, the opportunity to continue to grow, Luminance will still be there. Right? It's important for us to to to stay close to it.

And I think over time and as we get through the balance of this year, I think the first rounds of indication we may we may see or hear is, you know, what the payers tell us. Right? As they're seeking to make formulary decisions for 2026, is there a request for a contract that has changed from where we are today, right, from that perspective. I think we'll get those insights as we go through the summer. It'll give us a sense of what may or may not happen.

But I think from our viewpoint, even in the presence of multisearch generics who, you know, may be a preferred for new to oxybate patients or you have to step through a multisource generic for, new to oxybate patients for some plans, we think we're well positioned to capture that, as a switch patient with LUMRIZE as we are doing today.

Ami Fadia, Biotech Analyst, Needham: Now beyond LUMRIZE, you know, you've talked about a new formulation that you're pursuing, which potentially could be a low sodium once nightly. Any any update or latest thoughts that you can provide on that?

Greg Divis, CEO, Avadel: Yeah. It's been it it it it has been and continues to be a work in progress. Although our launch with LUMRIZE is in narcolepsy is our primary focus, our life cycle management efforts, whether it be IH or this are important for, you know, extending the the the runway of the franchise and being able to add more potential patients who could benefit from our innovation. And alternate formulations are are important in that regard as well. We've learned a lot, like, you know, over the last twelve plus months, we've been able to narrow, if you will, the scope of kind of the pathways we think are the the give us the the the the the the opportunity to accomplish what we're trying to accomplish, which is a bioequivalent form of Lumerize in a once nightly no or low sodium product.

And and so because of that our if you will, the the development work that we continue to go we continue to proceed on is is not as broad because we've learned a lot and can narrow down kind of the opportunities that we believe give us the path to the best chance to solve it with our partners. And that's what we're doing now. We're very focused in that regard. And we believe if we're successful, it certainly further enhances our position and and our ability to serve more patients. And we we would expect to continue to provide updates on that as we get through this year.

Ami Fadia, Biotech Analyst, Needham: Mhmm. Okay. Perhaps before, you know, maybe one one important just question I want to get out of the way is, as we think about litigations, just beyond, sort of the one in IH that we talked about, can you just highlight what are the key litigations that are in in play and when you might get the next sort of milestone or get through the next milestone on those?

Todd Mayhew, CFO, Avadel: Yeah. I mean, I think the, you know, the other, I'll say, two significant, you know, pending items aside from the injunction IH that we previously discussed, there's probably two other significant decisions we expect to hear about this year. One of them is the royalty rate on sale of the Lumrise. You may recall last year there was a jury trial and a royalty of about 3.5% was awarded to Jazz. What's left to decide now is for the judge to determine what if any royalty would apply to ongoing sales of low price.

So what the jury had decided was was past, you know, past damages. The judge has to decide, you know, a royalty rate on a go forward basis. That decision, I would just have to say, we expect it to come this year. All the briefings were done last fall. We're just waiting for the judge to make a decision at this point.

But to be clear, you know, while while this matter is pending and we would certainly intend to appeal it is there is no cash impact to the company. We are accruing at a rate for royalty, but this is going to go on for a little bit longer. But no cash is being paid at this point for royalty. The other item of significance is the antitrust trial, which we suggest for antitrust. It's a five day jury trial.

It's going to begin November 3. It'll wrap up November 7. We expect that the jury is going to make a pretty quick decision coming out of that. I don't think they're going to deliberate over this for months. So listen, decision on that could come as early as the Friday that the jury trial concludes or maybe a little bit of the following week.

Ami Fadia, Biotech Analyst, Needham: Sorry, I was on mute. Okay. Maybe the last question for me is just recapping for investors where you are with kind of the current profitability of the company given the number of patients on room rise, you know, sort of just balance sheets have become even more important in in sort of today's world. So maybe it's a good reminder for investors.

Todd Mayhew, CFO, Avadel: Yes. So we'll start with the balance sheet and, you know, you know, our capital structure and and cash flow. So, you know, we reported about 73,000,000 cash as of December 31. You know, we were cash flow positive during the fourth quarter. We've guided to being cash flow positive in the range of 20,000,000 to $40,000,000 for 2025.

So I think from a balance sheet standpoint and our ability to fund our operations, we will be able to do that with cash on hand and then continue sales of LUMERIZE. That includes obviously the continuing launch of LUMERIZE as well as the Phase three study going on in idiopathic hypersomnia. Your question on profitability, if I start with EBITDA, if you will, we were EBITDA positive above Q3 and Q4 of last year. We didn't quite get to the level of GAAP profitability, the difference being primarily stock based compensation. But we're rapidly approaching that point of being profitable on a sustainable basis during 2025.

Ami Fadia, Biotech Analyst, Needham: Okay. All right.

Greg Divis, CEO, Avadel: I guess I'll cover everything

Ami Fadia, Biotech Analyst, Needham: you want. Yeah. Go ahead.

Greg Divis, CEO, Avadel: If I may, maybe I'll just end with a couple of comments, if that's okay. And one is building on what Tom just shared, which is no, twenty twenty five for us is a year of growth, but it's also a year where we turn sustainably cash flow positive. We're pleased with the results we saw in early q one. And in q one in terms of the progress and the growth we've seen over q four, Our expectations will continue to grow throughout the balance of this year. And we think we're well positioned in a year with a lot of really positive catalysts for us, whether it's our growth and our launch metrics, whether it's finishing enrollment in our IH trial, what whether, it is turning cash flow positive, what what you know, or whether it's, you know, positive results in in in legal related matters.

I think this is the year where, you know, we're well positioned with a lot of catalysts that we think can, you know, continue to transform the company from that perspective. And in the world we're involved you know, we're we're we're we're in today with, you know, tariffs and whatnot, we think we're well positioned as Tom noted in the beginning. From a supply chain perspective, which we started working on three years ago, more of as a defensive strategy to make sure we're well support well secured from supply chain domestically, and that has put us in a good spot as we sit here today as well. So appreciate the opportunity to be here and and and share updates and, look forward to continuing to provide updates as we get through and the balance of this year and of course in our q one call and likely in early May.

Ami Fadia, Biotech Analyst, Needham: Okay. Thanks both for taking the time to do this and thanks to all our listeners for joining.

Greg Divis, CEO, Avadel: Thanks, Ali.

Todd Mayhew, CFO, Avadel: Thank you, Ali.

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