Avadel Pharmaceuticals at Morgan Stanley Conference: Strategic Growth in Sleep Disorders

On Tuesday, 09 September 2025, Avadel Pharmaceuticals (NASDAQ:AVDL) presented at the Morgan Stanley 23rd Annual Global Healthcare Conference, highlighting its strategic focus on expanding its narcolepsy treatment offerings. The company shared positive developments such as a transition to cash flow positivity, alongside challenges like ongoing litigation.

Key Takeaways

• Avadel has achieved a cash flow positive state, driven by the growth of LUMRYZ, which now serves over 3,100 patients.
• The company is expanding its pipeline with the acquisition of VLX-OF, aiming to enhance its portfolio of extended-release oxybate products.
• Avadel is leveraging AI and focusing on domestic manufacturing to mitigate supply chain risks.
• Revenue guidance for LUMRYZ has been raised to $265 million - $275 million for the year.
• The company is actively exploring geographic expansion opportunities for LUMRYZ and VLX-OF.

Financial Results

• LUMRYZ revenue guidance increased, reflecting sustainable business improvements.
• The company reported cash flow, operating income, and net income profitability in Q2.
• Avadel maintains a strong balance sheet with $82 million in cash and no debt.
• VLX-OF acquisition involves a $20 million upfront investment and $30 million in milestone payments.

Operational Updates

• LUMRYZ patient base has grown to 3,100, with 1,600 writers accounting for 80% of oxybate use.
• Initial PK studies for VLX-OF are set to begin later this year, targeting NDA filing in 2027.
• The idiopathic hypersomnia trial is on track for completion by the end of this year, with top-line data expected by the end of Q2 next year.

Future Outlook

• Avadel is focused on expanding its extended-release oxybate offerings to meet diverse patient needs.
• The company is evaluating international expansion for LUMRYZ and VLX-OF while ensuring U.S. market supply.
• Upcoming catalysts include completing the idiopathic hypersomnia trial and filing an NDA by the second half of next year.

Q&A Highlights

• Management views orexin receptor agonists as complementary to LUMRYZ, enhancing its value proposition.
• Despite the presence of Xyrem generics, LUMRYZ’s growth potential remains robust.
• An antitrust suit seeks over $1 billion in damages from a competitor, with a decision on LUMRYZ’s royalty rate pending.

For further insights, readers are encouraged to refer to the full transcript.

Full transcript - Morgan Stanley 23rd Annual Global Healthcare Conference:

Greg Divis, Avadel: Thanks for having us here and the opportunity to participate in your conference. It’s much appreciated. Avadel is a growing biotech company that has really transformed itself in the last five-plus years. We’re now in our ninth quarter of our launch of LUMRYZ, a first and only once-at-bedtime oxybate for the treatment of narcolepsy for patients suffering from EDS and cataplexy, both adults and pediatrics. It’s a very dynamic and exciting time for us right now as we’re in the middle of our ninth quarter of continuing adding more patients and growing our business and growing prescribers with over 3,100 patients on LUMRYZ. We’ve moved into the cash flow positive state as a commercial stage organization. We’re in the back end of our pivotal Phase 3 trial for an indication expansion in idiopathic hypersomnia, which we expect to complete enrollment by the end of this year.

Just last week, we announced an acquisition, a licensing deal for a new program to expand our oxybate portfolio with a development stage compound called VLX-OF (Vyllory Oxybate). There are a lot of catalysts, a lot of milestones, and a lot of great momentum going on with the business today.

Sean: Awesome. Thank you. That’s a great jumping-off point. I have some macro considerations for you. With China’s rising biotech innovation, how are you thinking about the competitive position here for Avadel Pharmaceuticals, and will this influence your R&D and business development strategy?

Greg Divis, Avadel: I think for us, in the spaces where we’re focused in, the therapeutic areas of where we’re of greatest interest, we search the globe for opportunities. From that perspective, we look for places and opportunities and programs that could bolster our portfolio and address the unmet needs of patients who we’re trying to serve every day. For us, geographic location is less important than finding the right sort of novel, innovative developments that can truly make a difference in patients and help continue to build our business, much like the transaction we announced last week, which was with an Asian company. We certainly are searching everywhere for those opportunities.

Sean: Wonderful. Thank you. Are you leveraging AI as part of your business strategy, and how do you think about AI as a potential disruptive force?

Greg Divis, Avadel: I think today it’s the price of entry in many ways, right? For us, you’re always looking for ways where we can deploy AI or breakthrough disruptive technologies to advance our business in all aspects of our business, whether that’s commercially from an analytics standpoint. We have reams of data within our ecosystem that enable us to deploy large language learning models to be more predictive in what may occur in the future, to deploy the right intervention at the right time to serve the patient or whichever stakeholder the best possible way. It’s really across all aspects of our business, be it clinical, commercial, manufacturing, quality, CNC. It’s here to stay, and we’re probably just scratching the surface.

Sean: Thank you. On the regulatory side, you know, a lot of discussion in biotech on FDA, MFN, tariffs. Any things that you’d like to call out there?

Greg Divis, Avadel: Yeah, it’s something we obviously pay close attention to, taking those in some order. From an FDA perspective, our engagement has been quite productive and responsive and on time. We had an orphan drug designation for our idiopathic hypersomnia indication, which was on time. Our engagement with the FDA has been quite responsive and productive, both telephonically, in writing, and in-person meetings. From an FDA perspective, we haven’t seen any issues. From an MFN standpoint, our business is really in the U.S. LUMRYZ is not available ex-U.S., so there’s really no issues for us relative to MFN. From a tariff perspective, over four years ago, we began the process to onshore our manufacturing to the U.S.

where we could serve all of our customers and all of our patients through a solely domestic source, which gave us both the benefit of redundancy in our supply chain going back four years ago, but also the benefit to source all of our API from the domestic sources here in the U.S.

Sean: Great answer. Thank you. In a study with LUMRYZ, can you give us an overview of the narcolepsy treatment landscape? Give us the differentiation of pathologies between NT1, NT2, and idiopathic hypersomnia, and maybe how you size the patient populations in those baskets?

Susan Swain, Avadel: Yeah, so overall, we estimate there are about 160,000 patients suffering from narcolepsy, of which about 80% of them are on treatment. The majority of them are on wake-promoting agents for the daytime symptoms that they’re experiencing and excessive sleepiness. About two-thirds of the patients actually also suffer from nighttime symptoms, and that’s where these patients then need additional therapy. We estimate that around 50,000 patients are eligible for oxybate therapy, of which within that context, so that would be our total available market at this time for LUMRYZ, at which around 15,000 are currently on an older oxybate therapy. Around 15,000 are previously discontinued. The remainder are potential new to oxybate patients, which is about 25,000 patients, which we see on average 4,000 to 5,000 new patients starting oxybate therapy every year. This is the total available market for LUMRYZ.

What we’re finding in terms of the opportunity for LUMRYZ is that as we grow a writer base and may advance through the adoption cycle, we’re sourcing from all of those patient segments.

Sean: Thank you. I guess just to hone in on oxybate in promotion of a healthy sleep architecture, can you talk through that and how it compares to other therapies?

Susan Swain, Avadel: Yeah, as I mentioned, two-thirds of narcolepsy patients experience nighttime symptoms, and this is disrupted nighttime sleep, hallucinations. The wake-promoting agents really do not address these nighttime symptoms. That’s where, as a 24-hour condition, narcolepsy, what you see with oxybate, which is highly differentiated, is that not only do they address those nighttime symptoms and promote healthy sleep architecture, but they also are associated with very high levels of daytime efficacy. A 24-hour condition, nighttime and daytime effects of oxybate.

Greg Divis, Avadel: I think it’s one of the things that makes LUMRYZ so unique is that it’s really the only treatment today that doesn’t disrupt the night. It actually improves the night. Wake-promoting agents are twice nightly oxybate, either insomnia or forcibly awaken someone to take a dose in the middle of the night. LUMRYZ doesn’t require that to happen. In a 24-hour condition, as Susan noted, between daytime and nighttime, the LUMRYZ value proposition and in the future the LUMRYZ value proposition is quite compelling.

Sean: Sure. Sounds like it. Maybe just to move on to the XWPharma series of questions. You recently announced your pipeline addition with VLX-OF. Can you walk us through your decision to add to your pipeline and how does this align with your overall vision for the sleep space?

Greg Divis, Avadel: Yeah, I think first and foremost, it is very strategic for us in terms of where we are today and the incredibly strong foundation we have built in the rare sleep disorder space with LUMRYZ and what we’ve been able to do. We are very bullish and believe that the future of oxybate use is migrating to extended-release oxybate. That’s what LUMRYZ is, a real first extended-release innovation to the oxybate category from that standpoint. Being able to add to that foundation with VLX-OF (Vyllory Oxybate) is something that was quite attractive to us. When you think about it, we’re not doing this at the end of the life of our product where I’m trying to extend, we’re trying to extend the tail as kind of an end-of-life lifecycle management strategy.

This is a portfolio strategy that’s happening at the beginning of the life of LUMRYZ to build a portfolio of extended-release oxybate that can address all the needs for all patients and provide the opportunity to treat more patients with an Avadel oxybate. Strategically, it makes great sense from that standpoint. If you then think about the development pathway forward, it’s highly capital efficient from a development standpoint. It’s highly time efficient from a clinical standpoint and from a regulatory standpoint. It really checks all the boxes for us in terms of a strategic fit and really works well in terms of where the company is today and provides a significant opportunity for patients as well as for our company and, of course, our shareholders.

Sean: Sure. Can you talk a little bit about working with XWPharma? Give us a bit of familiarity with the business, you know, how you came across this opportunity, giving business a bit of a sense about the genesis of the relationship.

Greg Divis, Avadel: Yeah, to cover that, I got to go back maybe four and a half plus years ago when we first reached out to them to talk about a potential collaboration. There was a different management team at that time with the company, and there wasn’t interest to want to collaborate at that point. We proceeded forward with our business, including beginning to do our own development work on our own in-house novel formulation to potentially develop a once extended-release, once-at-bedtime, low and no sodium oxybate. As we went through that process, I would describe it in two phases. We did a lot of development in terms of trying, starting with sodium oxybate, the original API, and modifying it inside of our manufacturing process. At the same time, over time, we decided to add a different pathway, which was to start developing a novel API.

Just starting with a novel stable API gave us a lot more of an ability to modify that API from a release profile over time. As we began that pathway, it took us back to XWPharma. There were some new people there, and that is really where the genesis of the discussion picked up. I would say the best thing about the last number of months of our due diligence is that we’ve been able to spend some time not only looking at all of the data they’ve generated in-house and get very comfortable with what they’ve developed, but also all of their interactions with the FDA.

We even had for the last couple of months an opportunity to get our hands on their product and do a little work with it and see how it’s made and see how it works, which, the combination of all those things gave us a lot of conviction in terms of the high probability of success by entering into this partnership that now we’re entered into and we’re off and running.

Sean: Great, great. What are the next steps for the asset? What are the next steps for the regulatory piece and opening up the market?

Greg Divis, Avadel: Yeah, the way we see that moving forward is the next step for us is what we’ll characterize as our initial PK study and our initial PK work, which will begin a little later this year. There are some steps we have to take, make some clinical trial supply and whatnot, but that should begin by the end of this year and carry on into Q1 of next year. Our expectations is, and our goal and our target is to have our final formulation by the end of Q1, which will then put us on really two paths. The first path is to take that formulation and make our registration batches, which will both supply our registration pivotal PK trial, as well as begin to prepare for our NDA.

In parallel, we’ll engage with the FDA, looking at all the previous correspondence between FDA and XWPharma to then map out our course to run our registrational pivotal PK trial, which will take us a bit of time. By the time that product comes off at 12 months of stability, our target is to be in a position sometime in 2027 to file this NDA.

Sean: Wonderful. Maybe finish this line of questioning just by talking through some of the deal economics.

Greg Divis, Avadel: Yeah, so it’s, you know, not only was the product and where it’s fit in this development and how synergistic it was and strategic it was for our business, the deal structure was equally as compelling for us because, you know, the team at XWPharma is firmly believers of the potential of VLX-OF longer term. Our goal was to want to do this deal off our balance sheet. It is, you know, we’ll pay what amounts to $20 million in upfront investments to acquire the rights. There is $30 million in success-based clinical development milestones that tie to key milestones heading toward a potential NDA approval. Everything else is commercially post-approval, commercial back-end milestones that are, you know, obviously highly attractive as the more successful the product can become. We believe in all of our research with physicians, which we just finished a large project researching this with physicians.

The possibility of LUMRYZ and VLX-OF certainly should be the oxybate portfolio of choice. VLX-OF’s product profile in and of itself is quite compelling for prescribers.

Sean: Thank you. Maybe onto LUMRYZ. You’ve recently raised guidance to $265 million to $275 million for the year. I think you had 3,100 patients on drug at the end of Q2. Maybe talk through some of the planks of the raised guidance and what underpins your confidence that you’re going to hit that number.

Greg Divis, Avadel: I think let’s start with just what’s happening inside the business and from a demand and all the key attributes. Maybe Susan can cover them.

Susan Swain, Avadel: Yeah, sure. It’s really our confidence in the underlying growth drivers that have propelled us to that 3,100 patient number. First, we have significant penetration across the writer base. 1,600 writers account for 80% of total oxybate use, and we actually had them writing LUMRYZ very early in the launch. Now that we’re nine quarters post-launch, we have an opportunity to track their writing longitudinally. What we see is quite consistent: they adopt LUMRYZ for what they see as their problem patients early on and were waiting for a better solution for the patients who are not doing well on the older therapies. Based on the results that they saw in that first bolus of patients where they switched them to LUMRYZ, they rapidly expand their use to previously discontinued patients, to new to oxybate patients.

We’re sourcing patients from all patient types across all writers, growing the depth of writing. In addition, at the end of that adoption cycle, they revisit patients who are on the older therapies that they thought were doing well, and they actually now see that better is possible given their LUMRYZ experience. We continue to fill that funnel with switch patients. Broad writer base, growing depth of writing across all patient types in parallel with the investments we’ve made in our salesforce capacity, we can maintain that intensity of coverage on those high writers and at the same time continue to add writers and capture the rest of the opportunity in the oxybate space. What we see is that these lower volume offices that only treat a small number of patients are actually quite receptive to the LUMRYZ message, the LUMRYZ profile.

They see it as an easier drug to use. They really appreciate the service from Avadel and the time that you spend in their office. Our growth is being driven not only from depth of writing across the writer base, but also continuing to bring on new writers persistently. That’s the demand side. On the other side, the presence that we have in the office to actually drive those enrollments through to a conversion, a conversion to a reimbursed patient, working hand in hand with the office to make sure they submit the documentation they need as quickly as possible so that patient gets approved and becomes a reimbursed LUMRYZ patient.

The engagement with the patient when you’re initiating therapy, our specialty pharmacy engagement, our nursing engagement with that patient through the initiation process, all of these fulfillment services that we provide the office and the patient drive this % to reimburse conversion rate, drive increased persistency, not just in new to oxybate patients, but actually all of our patient types. The growth that we’ve been seeing quarter over quarter is being driven by that continued productivity of expanding use of LUMRYZ across all patients. At the same time, these revenue drivers, which are around % to reimburse patients, increase persistency. We see all of that continuing with the investments we’ve made, really paying off even earlier than we expected. Much of this was accomplished at the end of the fourth quarter.

We saw an immediate result in the first quarter, and then we saw even better results in the second quarter, and we anticipate that persisting. I’d like to just make one more comment if that’s not enough to drive growth momentum. What we’re seeing is increasing requests for LUMRYZ. Patients are coming in and requesting LUMRYZ. Because we have that presence across the broad writer base, they’re familiar with the drug. They’re happy to put them on LUMRYZ upon request. That’s a result of our direct-to-patient efforts, which we’ve also recently, last quarter, even further expanded our investment there. That’s another lever that’s clearly another growth driver for LUMRYZ.

Sean: Wonderful. Thank you. Very full answer. In terms of penetration levels, I guess, or maybe I’m jumping too far ahead, but where do you think you’ll be at the end of the year on that 265 to 275 number, you know, whether it’s sort of market share, patient share, gives us a sense of the runway beyond that point?

Greg Divis, Avadel: First of all, from a runway, we think it’s quite long and quite high from a runway perspective. We haven’t guided specifically to patients. We have obviously guided to revenue. I think all the things that Susan talked about that have transposed into really durable improvements in our business is what gives us a lot of confidence in terms of being able to achieve our uplifting guidance that we provided at the end of Q2. From that standpoint, the business is growing, the improvements are sustainable, and every patient now that gets added is really just dropping to free cash flow.

Sean: Fantastic. Do you give us any sort of sense of what the discontinuation or persistency rates are in terms of numbers and how much sort of headroom you’ve got to go to improve upon that, and how that dosing frequency might feed into that?

Susan Swain, Avadel: As an innovator in this space, it’s been fascinating to see now nine quarters post-launch, like once at bedtime, the extended release technology enables once at bedtime delivery of a full therapeutic dose, and it’s released aligned to the patient’s natural sleep cycle and affords the patient the opportunity for uninterrupted sleep and daytime efficacy. This whole profile of LUMRYZ is really driving the uptake. What we’re actually seeing is that the extended release profile and the benefits it affords is increasingly seen as an efficacy benefit. When we talk about persistency, if you think about the favorable profile of the drug, how well the patient is feeling on the drug, that clearly contributes to a forward momentum on persistency.

The level of sophistication on our patient engagement, not only did we expand nursing capacity, but we really elevated the level of service with credentialed nurses, experienced in chronic conditions, behavioral health, predictive analytics on more customized engagement with each patient. All of these things are continuing to move the persistency in a good direction. The last time we spoke about it was at the end of the fourth quarter. We mentioned a 14% discontinuation rate. Since then, we haven’t been specific on what the rates are, but I can tell you that in the first quarter, we felt better than 14%. In the second quarter, we continued to see improvements. We are continuing to execute this in a market-leading manner where we will hope to drive that persistency to a level the market’s never seen before. We’ll see, but we certainly have every indication that it will continue.

Sean: Great, thank you. Moving to a couple of questions I have on the IH delegation. In May, you announced a favorable ruling that lifted the injunction on the FDA review of LUMRYZ outside of narcolepsy. Can you provide more color here and any updates and what the next steps are?

Greg Divis, Avadel: Yeah, sure, I’ll take that. It was an important outcome and a good outcome for us in that decision. It allows us to pursue clinical studies, open label extension studies, study other indications for LUMRYZ, and importantly, build FDA approval for any of those. Other things that happen on the litigation front, there’s two decisions we would expect this year. One is a decision around the ongoing royalty rate on LUMRYZ. This relates to patent litigation from last year. That decision, we’re expecting anytime now. The other, which is more near-term and much more focused, is the antitrust suit where we’ve sued our competitor for being delayed for approval and entry into the market. This relates to a REMS patent that was improperly listed in the Orange Book. That patent trial is scheduled to begin November 3rd.

We expect a decision very soon thereafter, maybe within a few days of that trial concluding. In that case, we’re seeking over $1 billion of damages. It’s very important to us. It’s certainly an area of shareholder focus.

Sean: Thank you. Thank you. Moving to LUMRYZ in IH, the clinical trial, I think they’re expected to complete enrollment this year. Can you give us a sense on maybe future timelines or the construct of the design of the clinical trial?

Greg Divis, Avadel: Yeah, taking those in reverse order, Sean. The construct of the clinical trial design is really exactly the same as it was for the mixed salt oxybate, which demonstrated a statistically significant improvement and was the basis of their approval in idiopathic hypersomnia. The trial design is well established and strong precedent at the FDA. As you noted, we expect to complete enrollment by the end of this year. If you just forward that out from a timeline standpoint, we would expect if the last patient comes in before the end of the year, the last patient out will come in before the end of Q1. We should have top-line data by the end of Q2 and be heading toward an NDA submission in the back half of 2026 and then a subsequent action date in 2027.

Sean: Got you. Thank you. Moving on to the competitive landscape. World Sleep just over the weekend, a couple of data releases from Takeda and Alkermes on the orexin receptor agonist front. You know, just give us a sense of how you see the competitive position of LUMRYZ and with the potential new drug class like the orexin receptor agonist coming to market.

Susan Swain, Avadel: Yeah, so overall, you know, we think that the excitement around the novel mechanism of the orexin receptor agonists as a wakefulness agent is excellent. You know, we were the first innovator in this space with our extended-release LUMRYZ after decades of just, you know, one single player in the space. As a part of this innovation moving forward, we could see, you know, the durability of oxybate. I mean, their proven efficacy and safety on the 24-hour condition. As I mentioned to you before, there’s a subset of patients, you know, two-thirds of patients have nighttime symptoms. The orexin receptor agonists are really being studied for their daytime effects. Today, we have patients that are, most patients are on some kind of wake-promoting agent and then a subset are put on oxybate.

Where the orexin receptor agonists play in this space is a novel mechanism for another wake-promoting agent, one that seems to be very effective. You know, we’ll see how things continue to pan out. We have persistently heard in working with our physicians that we talk to every day, our treating physicians who are, you know, increasingly adopting LUMRYZ, our opinion leaders. We heard panels yesterday post the orexin receptor agonist data releases where it’s really quite consistent that these two classes of therapy are complementary. Therapeutically, they’re used for different intended purposes. While orexin receptor agonists may be, you know, an excellent advancement for daytime symptoms and wake-promoting, you know, effects, the role of oxybate therapies and the efficacy they bring on the 24-hour condition will remain a very critical part of the whole therapeutic picture.

Sean: Thank you. That’s on the orexin receptor agonist. What about the competitive positioning versus mixed salt oxybate like Xywav or even branded generic high sodium competitors?

Susan Swain, Avadel: Yeah, so really, Sean, we are an innovator in this space. Introducing our proprietary extended release technology allows for this once at bedtime delivery of a full therapeutic dose with uninterrupted sleep and proven daytime efficacy. As I mentioned, what we’re seeing in the marketplace is evidenced by the broader uptake and the increased depth of use across all patient types. They’re seeing that patients who are put on LUMRYZ are actually doing better. Just at the Sleep Conference this week, we actually had a poster presentation with a real-world study that was conducted post-approval looking at switch patients. What the baseline of those patients showed them to be within somewhat of a normal ESS range. When they were switched to LUMRYZ, they got better.

That study actually proves what we were hearing from physicians in the real world in terms of LUMRYZ now being an advance in how you can deliver oxybate therapy to patients. We are really very strongly positioned advancing the care for these patients. When we in our research ask physicians to project their use of LUMRYZ 12 months from now, the projections are quite healthy and continuing to expand use given the way the drug has delivered in the real world with their patients and the extent to which Avadel supports them in their office for fulfillment services as well as the patient services that we deliver. All of these things are driving the landscape towards extended release LUMRYZ use and then ultimately our oxybate portfolio of extended release options.

Sean: How much of your growth do you think is coming at the moment from taking share from Xywav and Xywav versus Naive Starts?

Susan Swain, Avadel: I mean, physicians are increasingly selecting LUMRYZ over the older agents. Obviously, as it switched, patients are directly coming from those agents, but previously discontinued patients, so they exhausted their opportunity on the older therapies. Now there’s a new option and they’re being put on LUMRYZ. What we’re seeing then in need of oxybate patients, increasingly, we are the drug selected for those patients instead of the older therapies. We’re also seeing that writers who actually never used oxybate before are now prescribing LUMRYZ. That’s because it’s an easier product to initiate with patients. As a result, we’re getting need of oxybate writers as well. We are becoming the increasingly preferred agent as well as growing the marketplace.

Greg Divis, Avadel: Maybe one point on top of that. If you look at our mix of business today, right, the 3,100 you referenced earlier, half of those patients are switched and the other half are somewhere between the other two patient segments, need oxybate and return oxybate.

Sean: Thank you. How are you thinking about next process generics, high sodium alternatives become more available in the coming years?

Greg Divis, Avadel: Yeah, you know, I mean, it’s something we have looked at and have studied what potentially could happen with Xyrem generics full stop potentially coming into the market and what impact it may have on both the demand and on the pricing side of things. I think from our viewpoint, we’ve got a great proxy from a demand perspective of what may or may not occur, which is from a demand perspective, we’ve seen an authorized generic in the market before we ever launched. We launched into a market with a generic in it already, and it has really had no impact on our business at all. Furthermore, there are some plans today that require a patient to step through an authorized generic for a new patient before they can get to a branded oxybate, LUMRYZ, or the mixed salt product as examples.

In those plans, we perform as well, if not better, than in plans where we have a co-preferred position with. We’re quite confident that in the presence of Xyrem generics, LUMRYZ’s growth and potential will continue to be there from that perspective. From a net pricing standpoint, there’s no doubt that payers will use every opportunity to try to increase their discounts and reduce their net cost. You know, we feel quite confident in the value proposition of LUMRYZ. It’s not substitutable. What that may mean if a Xyrem generic is preferred for new patient starts is that the switch market just gets bigger, right? When it comes to the switch landscape, if you will, for patients coming off of a twice nightly oxybate, LUMRYZ is well positioned to capture the substantial majority of that.

Sean: Sure. How do you think about oxybate fitting into a polypharmacy approach for narcolepsy, particularly if the orexin receptor agonists are indeed successful? Do you think it will require studies? What will potentially happen there, one away from agent, one to knock you out?

Susan Swain, Avadel: As I mentioned, if you look at the continuum of narcolepsy patients, 80% of them are on some kind of wake-promoting agent. In many cases, they’re not taken off the wake-promoting agent depending on the results for the patient. Polypharmacy is not unusual because of the 24-hour nature of the condition and the fact that there is a possibility for patients that aren’t well managed on their daytime agents to actually be able to be treated with oxybate with very, very, very strong results. That clearly is what happens today. We anticipate that happening going forward. With the innovation of extended-release oxybate like LUMRYZ, VLX-OF, and then orexin receptor agonists for the daytime, it’ll just be an innovative space that will continue to offer patients options both for monotherapy and polypharmacy.

Greg Divis, Avadel: What I would add to that is that if you research it with physicians, whether it’s with a single key opinion leader or 200 physicians in a panel of research, which we’ve done both, they all want to use them together. They want to use LUMRYZ or VLX-OF with an orexin receptor agonist, they believe they’re complementary and should be the standard of care in the future. That’s something we’re interested in and certainly wanting to explore and see how we can establish that both in terms of data generation and collaboration.

Sean: Right. Okay. You’ve just recently done a deal. If you look at maybe reminding investors, you know, your cash flow and your balance sheet position, how do you think about going beyond the potentially oxybate franchise?

Greg Divis, Avadel: Yeah, so maybe I’ll start with, you know, where we were. If we reported Q2, we had about $82 million in cash on the balance sheet. Cash flow positive for the quarter. It was a good quarter for us. Profitable in almost any measure: cash flow, operating income, net income. For the year, we expect to be cash flow positive for the year. That takes into account the upfront payment we have for VLX-OF, as well as any additional development costs we may incur. As we’re looking, again, as we look ahead and we think about profitability in the future, as we think about capital deployment in the future, we’re focused on revenue growth, driving patient demand. We’ll always be disciplined about our operating expenses, but always with an eye towards maximizing operating leverage.

On capital deployment in the future, as we think about this, it’s obviously the lens of what’s going to maximize shareholder value. The good news for us is we’re cash flow positive. We have no debt in the balance sheet. We have a lot of different optionality for us and expectation of continued strong cash flow from LUMRYZ to support our activities.

Sean: Sure. How do you think about, you know, geographic expansion?

Greg Divis, Avadel: Yeah, there’s been a lot of inbound interest in LUMRYZ ex-U.S. from that standpoint by third parties. As we announced in our VLX-OF deal, except for a few countries in Asia, we have global rights through VLX-OF as well. We’ve evaluated, we’ll continue to evaluate those opportunities through the lens of, you know, what I would describe as first, do no harm to our opportunity in the U.S. from that perspective. You know, the active pharmaceutical ingredient for LUMRYZ or for VLX-OF in the future potentially is DEA regulated. You get quota, you only have so much product you can get. We need to make sure that there’s enough adequate product to more than meet the demands in the U.S. market from that perspective. That’s really the lens at which we look at it.

We will continue to evaluate those opportunities to make sure we can serve patients globally as appropriate, with, of course, you know, through the lens of what we’re doing here in the U.S. now.

Sean: That’s fantastic. We’ve got just over a minute left, but is there anything I haven’t asked that I should have asked, or any message that you’d like to leave investors today to wrap up the session?

Greg Divis, Avadel: No, I’m comprehensive on the questions. I think as we think about where we are today in the next 12 to 15 months, we’re in a very unique position not only to continue to, you know, deliver on the launch and build the foundation of LUMRYZ that we’ve been building, but there’s a number of other key catalysts and milestones coming up, whether it’s completing the idiopathic hypersomnia trial by the end of this year, completing final formulation work on VLX-OF by Q1, reading out the idiopathic hypersomnia trial mid-next year, filing the idiopathic hypersomnia NDA second half of next year, and of course, you know, conducting a potential registration pivotal PK study for VLX-OF. A lot of catalysts, a lot of milestones, and a lot of opportunities for us to, you know, serve more patients and build more value.

Sean: Great. We might call a close to proceedings there. Thank you, Greg, Susan, and Tom.

Susan Swain, Avadel: Thank you, Sean.

Sean: Appreciate you coming.

Greg Divis, Avadel: Yeah, thank you, Sean.

Sean: Welcome.

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