Avadel Pharmaceuticals Q2 2025 Earnings Report

Avadel Pharmaceuticals EPS Results

• Actual EPS: $0.10
• Consensus EPS: $0.02
• Beat/Miss: Beat by +$0.08
• One Year Ago EPS: -$0.14

Avadel Pharmaceuticals Revenue Results

• Actual Revenue: $68.13 million
• Expected Revenue: $60.28 million
• Beat/Miss: Beat by +$7.85 million
• YoY Revenue Growth: +64.10%

Avadel Pharmaceuticals Announcement Details

• Quarter: Q2 2025
• Date: 8/7/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 8:30AM ET

Avadel Pharmaceuticals (NASDAQ:AVDL) plc operates as a biopharmaceutical company in the United States. Its lead product candidate is LUMRYZ, a formulation of sodium oxybate, which is in a Phase 3 clinical trial for the treatment of excessive daytime sleepiness or cataplexy in adults with narcolepsy. The company was formerly known as Flamel Technologies SA and changed its name to Avadel Pharmaceuticals plc in January 2017. Avadel Pharmaceuticals plc was incorporated in 2015 and is headquartered in Dublin, Ireland.

Avadel Pharmaceuticals Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Avadel reported 3,100 active patients on Loomrise as of June 30, driving $68.1 million in net revenue (up 64% year-over-year), $15 million in cash generation and its first quarterly net income of $9.7 million ($0.10 per share), prompting a full-year revenue guidance raise to $265–275 million.
• Positive Sentiment: The company expanded its commercial execution by adding new prescribers across all three patient segments, improving persistency and reimbursement rates, increasing direct-to-patient efforts, and boosting its sales force to 60 representatives to further drive Loomrise uptake.
• Positive Sentiment: In June, Avadel received orphan drug designation from the FDA for LUMRIZE in idiopathic hypersomnia (IH) and is enrolling patients in the Phase III REVITALIZE trial with data expected in 2026, aiming to expand its indication and address an underserved market.
• Positive Sentiment: A federal appeals court unanimously upheld the FDA’s determination that LUMRIZE is clinically superior to first-generation oxybates, and Avadel continues to defend its intellectual property through an antitrust case scheduled for November 3, seeking over $1 billion in damages.
• Neutral Sentiment: Avadel is investing in a bioequivalent, once-at-bedtime extended-release oxybate formulation with low or no sodium profile, reflecting increased operating expenses and a planned program update by year-end.

Presentation

[Operator]

and welcome to Avadel Pharmaceuticals Second Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. Accompanying slides for this call can be found on Avadel Investor Relations website. A question and answer session will follow the formal presentation. Please be advised that today's conference is being recorded.

[Operator]

I would now like to turn the conference over to your first speaker, Austin Murtagh with PrecisionAQ. You may begin.

[Austin Murtagh, Director of Investor Relations & External Communications at Precision AQ]

Good morning, and thank you for joining us on our conference call to discuss Avadel's second quarter twenty twenty five earnings. As a reminder, the following presentation includes several matters that constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward looking statements. These risks and uncertainties are described in Avadel's public filings under the Exchange Act included in the Form 10 ks for the year ended 12/31/2024, which was filed 03/03/2025, and subsequent SEC filings. Except as required by law, Avadel undertakes no obligation to update or revise any forward looking statements contained in this presentation to reflect new information, future events or otherwise.

[Austin Murtagh, Director of Investor Relations & External Communications at Precision AQ]

On the call today are Greg Divis, Chief Executive Officer Susan Rodriguez, Chief Operating Officer and Tom McHugh, Chief Financial Officer. I'll turn the call over to Greg.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Welcome, everyone, and thank you for joining us to discuss Avadel's second quarter twenty twenty five results. Following my opening remarks, Susan will provide an update on our continued commercial progress, Tom will review our financial results, and I will conclude with a Q and A session. We are incredibly pleased with the results we achieved in the second quarter, including growing patient demand with 3,100 active patients on Loomrise as of June 30, a 63% increase compared to the second quarter of last year, generating 68,100,000.0 in Loomrise net revenue, a 64% year over year increase and delivering quarter over quarter improvement in key patient metrics, including persistency, percent of reimbursed patients on therapy and patient mix. Additionally, the second quarter marked our eighth consecutive quarter where we added new patients from all three patient segments. We expanded use from repeat Lumerize prescribers and added new prescribers, both oxybate experienced and those who previously never prescribed an oxybate, which underscores how Loomrise is not only competing in the oxybate market, it is also expanding it.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

We also achieved important financial milestones in the second quarter, as we generated 15,000,000 in cash and for the first time since launch, net income of nearly $10,000,000 resulting in earnings per share of $0.10 Given the positive momentum and improving trends in the 2025, we are raising our full year 2025 revenue guidance to $265,000,000 to $275,000,000 reflecting our confidence in our continued commercial execution, combined with the positive impact the investments we've made are having. Additionally, to further support LoomRise's future growth opportunity, based on the positive return we have seen to date with our incremental investments, coupled with Susan's leadership and insights, we continue to identify new areas for targeted investments we believe can further propel patient demand for LUMRIZE and expand patients on therapy. Susan will discuss these dynamics shortly. We are pleased our 2025 launch investments are yielding tangible improvements as LUMRIs uptake remains robust, patient persistence continues to improve, while new patient starts are occurring more efficiently and being reimbursed at a higher rate. Furthermore, Lumeri's novel extended release profile provides additional significant growth opportunities with potential expanded indications across other hypersomnia disorders.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Specifically, based on physician and patient insights, we continue to be excited about Lumeri's significant potential in idiopathic hypersomnia, or IH, and view this if successful as a meaningful opportunity to amplify Lumeri's potential positive impact on even more patients. To recap our progress on IH, in June we received orphan drug designation from the FDA for Lumeris's use at IH on the hypothesis that Lumeris may be clinically superior to current approved therapies and provide a major contribution to patient care due to its once nightly dosing regimen. Specifically FDA stated for the third time LUMRIZ may provide a major contribution to patient care due to its once nightly dosing for patients with IH, a chronic sleep disorder that requires potentially lifelong treatment. This is an important milestone for us, as the unmet medical need in IH remains high with approximately forty two thousand diagnosed patients limited to a single FDA approved first generation oxybate therapy that is currently only reaching approximately eleven percent of that population. If approved for use in IH, LUMRIZE could potentially enable eligible patients to experience an extended release oxybate treatment for the first time, providing an important benefit for this population that struggles so significantly with sleep inertia.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

By offering an innovative novel therapeutic option that is specifically designed for the patient to receive a full therapeutic dose night after night with the added benefit of no forced awakenings, we believe could elevate the standard of care at IH and potentially unlock a significant expanded oxybate market opportunity for Loom Rise. That said enrollment in our Phase three REVITALIZE trial evaluating LUMRIZE NIH is ongoing and enrolling patients at approximately 40 leading US sleep centers. We are well on our way to completing enrollment in REVITALYZE by the 2025, followed by data readout in 2026 to support a potential future supplemental NDA filing during the 2026. If approved, we believe LUMERIZE could transform the treatment of IH, improve care for patients and further demonstrate its clinical and commercial potential in idiopathic hypersomnia. In addition to the pursuit of the IH indication, we continue to advance our efforts on the potential to expand our oxybate portfolio to include an extended release formulation, providing a once at bedtime dosing regimen with a low or no sodium profile.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

The target product profile for this formulation program continues to be bioequivalence to Lumerize. We believe that offering this expanded oxybate portfolio option could serve as an additional complementary treatment option that addresses the potential needs of all eligible patients suffering from our approved indications who deserve the proven efficacy of a consistent full therapeutic oxybate treatment night after night with a once at bedtime dosing regimen providing the potential added benefit of uninterrupted sleep. Our continued investment in this strategy is reflected in part by our increase in operating expenses and related guidance for the 2025. We currently expect to provide an update on this program by year end. Now touching briefly on our litigation, in June we were pleased with that the US Court of Appeals unanimously affirmed a prior decision in favor of the FDA in a suit brought by Jazz Pharmaceuticals.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

The appeals court ruling removes any doubt that Lumeri's will remain available for narcolepsy patients and affirmed the FDA's determination that extended release Lumeri's is clinically superior to all first generation immediate release oxybates and that it's once at bedtime dosing provides a major contribution to patient care. In addition to this important court victory, we're actively pursuing additional legal actions against Jazz to protect our rights and intellectual property, including, but not limited to our antitrust case, which is currently scheduled for a jury trial beginning on November 3, whereby we are seeking total potential recovery in excess of $1,000,000,000 To wrap up my opening remarks, we are encouraged by the progress made across all aspects of our business, and in particular, the execution of our commercial team, which is driving the strong performance of our LUMRIZE narcolepsy franchise. This combined with the work we are doing to expand potential future patient populations who could possibly benefit from Lumeri's, along with our continued progress on the litigation front, sets us up for a strong 2025 and continued positive momentum and growth into the future. With that, I'll now turn the call over to Susan for details on our commercial developments. Susan?

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

Thank you, Greg. Before I begin, I would like to thank the Avadel team for providing me with the opportunity to lead this impressive commercial organization and work together to transform the lives of patients living with hypersomnia disorders via innovative sleep technology. Our second quarter marks nearly two years of LoomRise's availability on the market, and our performance, represented by the roughly 3,100 patients now on therapy, reflects the robustness of our commercial foundation and the value next generation Lumeride brings to patients with narcolepsy. The impact of our launch can also be seen in the behavior of Lumerides prescribers. Since launch, we have seen HCPs who prescribe Lumerides for the first time demonstrate a rapid adoption of Lumerides, highlighting the drug's favorable profile and ability to treat patients in need of a new option despite being on first generation oxybate.

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

HCPs proceed to increasingly select Lumiride as their oxybate of choice and expand their prescribing to previously discontinued and new to oxybate patients in addition to switch patients. A growing number of oxybate writers are becoming Lumerize writers and are persistently expanding their use across all three patient types. Additionally, we are seeing writers who have not historically written for oxybate prescribe Loomrite. The impact we are making across the narcolepsy treatment paradigm is appearing in the real world comparable to what has been presented in the literature, as more and more patients are reporting positive Lewmarin's experiences back to their HCPs. This is consistent with the results captured in the open label Phase III extension switch restore study, where among the switch participants, ninety four percent preferred Lumeri over the older oxidates and ninety one percent reported easier adherence to the medication schedule for Lumeri.

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

It is clear that the novel option of once at bedtime dosing of a full therapeutic dose is driving robust patient uptake and favorable treatment experience with Loomrize. Additionally, our commercial focus and execution, including our additional twenty twenty five commercial investments, are further amplifying our success. In particular, our expanded investment to optimize the region frequency of office and patient services to our growing prescriber base has further accelerated uptake and is driving favorable enrollment conversion rates to reimburse patient starts and patient persistency improvements. Further, our direct to patient efforts combined with HCP's growing comfort level with LUMRIZE are driving patient requests for LUMRIZE and new enrollment. As such, we are expanding our investment in these programs in the 2025 to leverage this opportunity and further fuel growth momentum.

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

As commercial investments like these prove out and continue to catalyze our launch, we are pleased to leverage our learnings and invest in the launch even more so. As an example, we're further expanding our sales force to 60 representatives to support our continued focus on the growing provider base and to optimize reach and frequency to gain additional new prescribers. Additionally, we are increasing our investments in key HCP and patient centered programs based on the positive insights and return we've experienced in the 2025. Before I turn it over to Tom, I want to highlight our presence at the sleep twenty twenty five meeting where we hosted multiple oral presentations and published more than a dozen abstracts. Our team had a productive team in Seattle connecting with the broader sleep community across all levels, scientific, clinical, and commercial.

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

In summary, q two was a strong quarter for Avenel, reflecting LoomRise's advancing market position across the oxybate space. We will continue to drive our promotional and operational execution intensity to capitalize on this momentum and maximize the potential for LUMRI. With that, let me turn the call over to Tom to walk through our Q2 financial results.

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

Thanks, Susan. Before I begin, note that full financial results are available in the press release issued this morning and the 10 Q. I will also be referencing non GAAP financial results, which can be found on our Investor Relations website at investors.avadel.com. There are a number of positive financial results to report for the second quarter, and I'll start with an update to revenue guidance. We are raising full year guidance to $265,000,000 to $275,000,000 from prior guidance of $255,000,000 to $265,000,000 which reflects our confidence in the continued growth of Lumerize.

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

We expect to generate 71,000,000 to $75,000,000 in net revenue in the third quarter, which at the midpoint represents a 46% increase over the prior year. We believe we have clear visibility to deliver on the updated guidance, which is based on the favorable trends in the 2025, including growing patient demand and improvements in key patient metrics such as persistency and patient mix. We expect these improvements to continue and are reflected in our expectations for second half revenue contribution. In terms of top line results, for the quarter ending 06/30/2025, net revenue was $68,100,000 reflecting sequential growth of 30% versus Q1 and 64% compared to the same period last year. Gross profit was $61,800,000 reflecting sequential growth of 32% versus Q1 and sixty percent compared to the same period last year.

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

I'll also note that gross profit in the current year includes a non cash adjustment in cost of goods sold for a potential 3.5% royalty on numerous net revenue related to the Delaware court memorandum and opinion issued in September 2024. A ruling from the Delaware court regarding a future ongoing royalty rate is pending and while we intend to appeal the underlying jury decision regarding the validity of the patent from an accounting standpoint we have included an accrual and cost of goods sold. Turning to operating expenses. Total GAAP operating expenses for the second quarter were $52,900,000 versus $51,500,000 in the prior year. The current quarter includes $6,100,000 of non cash charges, and after adjusting for these, cash operating expenses for the quarter were $46,800,000 As we enter the 2025, given the successful results from the LoomRise investments made at the start of the year, we're making further investments in our sales force and direct to patient and physician marketing programs to continue propelling patient demand.

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

We are also continuing our investments in the low or no sodium extended release formulation. We currently expect that cash operating expenses in the third quarter will be in the range of 50,000,000 to $55,000,000 and non cash expenses will be in the range of 6,000,000 to $8,000,000 With respect to operating income, the second quarter marks the fourth consecutive quarter of positive operating income as adjusted for the company. Adjusted operating income calculated gross profit of 61,800,000.0 minus cash operating expenses of 46,800,000.0 was $15,000,000. As patients on therapy continue to increase, we expect incremental revenue complemented by a highly leverageable cost structure to increasingly flow through to operating income. And turning to the bottom line, the quarter ended 06/30/2025 marks the first time the company has generated net income since Loomerize's launch.

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

Net income for the quarter was 9,700,000.0 or $0.10 per diluted share compared to net loss of 13,800,000.0 or $0.14 per diluted share for the same period in 2024. And the current quarter includes a 3,200,000.0 non cash tax benefit resulting from a change in estimated tax liabilities. I'll conclude with a few comments on cash and cash flow. We generated $15,000,000 of cash during the second quarter and ended the quarter with $81,500,000 of cash, cash equivalents and marketable securities. We believe cash on hand and our expectations of sustainable positive cash flow provides ample runway to fund our commercial plans and the IE's clinical program.

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

With that, I'll turn the call back to Greg for closing remarks.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Thank you, Tom. Before we open the call for Q and A, I'd like to summarize the opportunities we believe can unlock value for Avadel in 2025 and beyond. First, oxybate market momentum behind Loomrise is strong. With our commercial investments accelerating our impact and further advancing Loomrise's pursuit of being the oxybate of choice. We delivered strong results during the 2025 and expect continued execution and growth throughout the remainder of the year, supported by targeted investments in the commercialization of BloomRise.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

We are well positioned to generate sustainable cash flow based on the trends we are seeing, which is further underscored by our highly leverageable cost structure and our increased 2025 revenue guidance. We're pursuing opportunities to maximize the potential of our unique ONES at Bedtime formulation with pursuit of an expanded indication in idiopathic hypersomnia and are confident in our team's ability to turn the promise of our innovative science into reality that could possibly benefit even more eligible patients. And finally, underpinning our progress lies a robust and growing intellectual property portfolio that protects Loomrise and its unique innovation until 02/1942. This innovation and the oxybate market potential of Loomrise are foundational strengths we will continue to protect and defend as we advance toward the currently scheduled antitrust jury trial, which is set to begin in just under three months. As always, we thank you for your time and your continued support.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

And we will now open the line for Q and A. Operator?

[Operator]

Thank you. As a reminder, to ask a question, please press star one, 1 on your telephone and wait for your name to be announced. Our first question is going to come from the line of Andrew Tye with Jefferies. Your line is open. Please go ahead.

[Andrew Tsai, SVP at Jefferies]

Hey, good morning. Congrats on the execution and hitting profitability and thanks for taking my questions. So first question on the overall guidance raise. It looks like it does imply Q3, Q4 will certainly grow but maybe moderate a little bit compared to Q2 over Q1. Is it because your guidance is conservative or is it because maybe Q1 was seasonally soft hence a strong Q2 or could Q3 Q4 have some kind of seasonality as well so some color on the quarterly trajectory would be helpful behind the guidance.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Yeah thanks Andrew for the question. I think as we look forward and on the backs of what we've learned in the first half and the progress we've made in a number of areas, when we think about the guide, you know, we have to add more patients, we have to continue to grow patients to be able to achieve to achieve the even the low end of the guide from that perspective. So our assumptions in that guide is that we'll continue to grow and that the improvements we've seen throughout the process and throughout the first half, whether that's in, you know, our efficiency of getting patients started or, you know, persistency or, you know, percent reimbursed all continue to perform at or better levels than what we've seen in the first half. So our guidance based upon those metrics, know, sustaining themselves and improving. And if they do better than what we're currently projecting, we'll have an opportunity to revisit that in the future.

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

Yeah Andrew it's Tom just as a follow-up you know we always take a very thoughtful approach to the guidance provide and you know and how it can be seen. So if you you know are looking at the second half of the year as evidence of durability of the investments we made in the first half of the year particularly in the first quarter. And always you know never forget of course that you know going from Q1 to Q2 you get a lift from the gross to net impact from Q1. So we're going to get a lift from Q1 to Q2 just as a result of that.

[Andrew Tsai, SVP at Jefferies]

Right thank you. And second question follow-up is, would you be willing to share how many patients initiated therapy during Q2? I think that can help us determine the intra quarter dropout rate. And going forward, would you expect that intra quarter dropout rate to decline further or stabilize from here? And would that be driven by more patient education or more oxybate switch patients entering your overall mix? Thank you.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Yeah, inherent in your question, Andrew, thank you is, how are things happening on a persistency basis? The primary KPIs we'll talk about will be patients on therapy at the end of the quarter and therefore solving for net patient adds and of course revenue. In terms of the progress we've seen in Q2 versus Q1, we were very pleased in Q1 in terms of what we would describe as almost the immediate impact of the interventions we deployed around persistency. And that progress in Q1 continued into Q2, and we saw some improvements in Q2 as well. As we go forward, our assumptions are that that progress is durable and the opportunity to improve it is less dependent upon patient mix.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Although we've seen an improvement in patient mix as well because we've had such success in terms of impacting persistency during the first half of the year. And it's really more about executing and continuing to get even more tailored and specific to each individual patient to help them on their journey on LUMRIZE. All of which we've seen positive trends and durable trends so far through the first half of the year.

[Andrew Tsai, SVP at Jefferies]

Great. Thanks for the color.

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

Now that we've turned the quarter on profitability, every patient regardless of type is going contribute to the bottom line.

[Operator]

Thank you. And one moment for our next question. Our next question comes from the line of Amiya Fadia with Needham and Company. Your line is open. Please go ahead.

[Ami Fadia, Senior Analyst at Needham & Company]

Good morning. Thanks for taking my question and congratulations on the nice execution in the first half of the year. I have a few quick questions on the second quarter reported number. Could you give us a sense of what the implied annual price that was realized in the second quarter was and if there was any change in inventory stocking that impacted the quarter? And then I have a question on the guidance.

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

Yeah, so Ami, in terms of the annualized net revenue per patient you know we just worked through the math of net revenue and you know the number of patients we reported on therapy. It works out to about 92,000 annualized per year. Clearly an improvement over Q1 and again I refer back to the gross net improvement that we get you know heading from Q1 to Q2. And in terms of your question on inventory stocking there was really no impact you know quarter over quarter. It is something we monitor quite frequently, but there was really no impact on revenue quarter over quarter resulted inventory stocking on this.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Yeah, the only thing I would add to Tom's comments on price is that the nice uplift in price we've seen wasn't solely based on that gross to net. The execution of the initiatives we delivered and executed on the first half of the year have contributed to that improvement as well, which again we believe has demonstrated durability in Q2 and so far in the early parts of Q3.

[Ami Fadia, Senior Analyst at Needham & Company]

Understood. Okay. And then with regards to the guidance, what is your implied you know, maybe at the low end or the midpoint of the guidance? How many patients on treatment are you assuming by the end of the year? And if you could give us a sense of where you see the net price evolve by the end of the year? Thank you.

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

Yeah, mean, think in terms of the guidance, we're not commenting specifically on where we expect a year end in terms of patients on therapy, but clearly looking more granularly at Q3. Listen at the low end, we do use this work durability and the improvements we made and the investments we made sticking throughout the quarter. So at the low end, it implies about the same level of net patient adds that we saw in Q2. But clearly with an opportunity for improvement as we continue to focus on all the patient metrics, not just net patient adds, but also persistency, compliance and a number of other things.

[Ami Fadia, Senior Analyst at Needham & Company]

Thanks. And any color on price?

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

I'm sorry, what was

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

the question? Yeah, think when you think about pricing through the balance of the second half, I think we're at a place now that's probably a reasonable proxy as we go forward from here. We've gotten the, at least as a baseline, we've gotten the benefit of the gross to net evolution from Q1 to Q2. And we believe the progress we've made on other aspects of execution are durable to our net price and obviously opportunities we're focused on to try to make that better. For now, feel good about where the net price is today.

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

Yeah and again clearly you get the lift from Q1 to Q2. Echo Greg's comment that I think I would for lack of a better term I mean I'd describe a steady state you know from coming off of Q2 into the remainder of the year.

[Ami Fadia, Senior Analyst at Needham & Company]

Got it. Thank you so much.

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

Thanks, Ani.

[Operator]

Thank you. And one moment for our next question. Our next question comes from the line of David Amsellem with Piper Sandler. Your line is open. Please go ahead.

[David Amsellem, Senior Research Analyst at Piper Sandler Companies]

Hey, thanks. So two for me. One is, can you talk about how you're thinking about the impact of the orexin longer term on your narcolepsy business? And then secondly, regarding IH, do you anticipate a significant switch market from Xywav to Lumerize? Or do you think ultimately you can grow the pie overall? Thanks.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Yeah, David, thanks. On your first question relative to Orexin, it's obviously something we continue to spend a lot of time on to understand and really primarily through discussing and engaging with physicians and clinicians both key opinion leaders as well as the community and academic based prescribers. And I think there's been a number of themes that have emerged for us and pretty extensive work we've done trying to assess this landscape, this orexin if you will hypersomnia landscape. I think relative to oxybate, the most important things that we've heard from clinicians is that oxybate play an important role and will continue to play an important role now in the future. Narcolepsy is a twenty four hour condition and the nighttime related symptoms both today and in the future need to be addressed from that standpoint.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

And only oxybates have proven to be able to do that durably for nearly two decades now from that standpoint. I would say when it comes to the role of orexins and oxybates, physician feedback to us would say they see it as more complementary from that standpoint. And the opportunity to potentially use an Orexin with an Octavate could emerge as a new standard of care in the future. But there's equally questions that remain on Orexins as well, given the data is still pretty new and it's an evolving data set for sure over the next number of years that in some cases may not really materialize until it's in the real world. But I think in terms of where we see the future, we believe based upon physician insights that oxybates have an important role today, continue to have that important role to treat the nighttime and as an important treatment option for patients and that Lumeri's is well positioned in this regard to be both a standalone treatment option or a potential complementary treatment option with some of these emerging new therapies.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

In terms of your question on IH, today just a little over ten percent of the diagnosed, if you will, patients under care are treated by the only approved Octavate and the only approved products for IH at this point. In our view, we see a much larger greenfield than that for us. We think the opportunity to grow the pie is real and substantial. And that's how we view the IH potential for us, not through the lens of limited number of patients have been treated to date, but how many patients really need to be treated. And that's the opportunity for Lumra.

[Operator]

Thank you. And one moment for our next question. Our next question is going to come from the line of Mark Goodman with Leerink Partners. Your line is open. Please go ahead.

[Marc Goodman, Senior MD & Senior Research Analyst - Neuroscience & Ophthalmology at Leerink Partners]

Good morning, guys. Can you just talk about how you're thinking about the sizing of the oxybate market, the number of patients, just what the growth rate is, just first quarter, second quarter, how you're thinking about it going forward, if that's changed? I know you've talked about the three buckets of where you expected to get patients and stuff. I'm actually referring to more of what you've seen. Obviously, Jazz has reported, Harmony has reported, you have a good sense of what the market looks like.

[Marc Goodman, Senior MD & Senior Research Analyst - Neuroscience & Ophthalmology at Leerink Partners]

So what's going on out there? And just give us a sense of growth and stuff.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Yeah. I mean, think when we think about the oxybate market, in particular, Lumride, can point to very specific data points that tells us that the market through our lens is growing. We don't have complete visibility to every product and every product's use in the category. But clearly, there's a lot of promotional efforts going on in the category. And that drives higher diagnosis rates, that drives more awareness, that drives more patients potentially in to be treated.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

And that's a good thing for patients. And it's a good thing for the market from that perspective. But whether you're looking at it in the context of every quarter adding a prescriber who didn't previously run anoxabate or treating patients who have been off of anoxabate for quite some time, but have decided to come back in because of Lumerize's availability, these are all really good signs for us that the market, at least through the lens of what Lumerize is offering, is bringing new and more patients in relative to what's been there historically. I don't know, Susan, if there's anything you'd like to add to that.

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

Yeah, no, exactly. And overall, a perspective of potential for LUMRI, we are persistently drawing from previously discontinued patients as well as which patients represent within the current marketplace a significant growth momentum for LUMRI.

[Marc Goodman, Senior MD & Senior Research Analyst - Neuroscience & Ophthalmology at Leerink Partners]

Well, guess just as part of the question, obviously, you first launched, it really felt like there was an expansion of the market going on in number of patients. I was just curious if you still felt like what's your best expected oxybate number of patient growth rate for this year is? Mean, we talking 2%, 3%? Are we talking 5%, 6%?

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Yes, think being that precise is not so important to us because we don't see what's happening with some of the data around the AG or the original first generation oxybate from that standpoint. What we see is where we're sourcing business from and what that means in terms of the pie, if you will, that we're grabbing share from and grabbing starting new patients on therapy. And all that gives us confidence that BlueMind is attracting and bringing patients into the market that haven't been in either ever or haven't been in quite some time.

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

Exactly. And just since launch quarterly persistently, we've identified new prescribers that historically have not been oxybate writers. So there's clearly an opportunity given the profile of Lumeri physicians who treat a lot of narcolepsy patients, but haven't historically used oxybate to adopt lumrise. And what we're hearing from those physicians when we speak to them is that the simplification of the dosing profile really gives the HCP the opportunity to initiate oxybate therapy with their patients. So there's clearly opportunity there.

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

We've seen it persistently since launch, and we anticipate continuing to draw from that group.

[Marc Goodman, Senior MD & Senior Research Analyst - Neuroscience & Ophthalmology at Leerink Partners]

Thanks.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Thanks, Mark.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Ash Birma with UBS. Your line is open. Please go ahead.

[Analyst]

Hey, good morning. This is Dee on behalf of Ash, and congrats on the quarter. I have two questions on antitrust case if I may. The first one, how do you establish the time period that you were unable to enter the market as one half year as claim? There were, I think there were multiple factors that play beyond just the proper listing of competitors ramp pattern.

[Analyst]

Are you are you confident in the one half year time window or Canada shorter? My second question is, we did not see any resolution based off the summary judgment motion in June. So what do you make of that development? Thank you.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Yeah, thanks for the question. When it comes to those specific matters relative to any litigation, we're just not going to comment on it at this point.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

But I appreciate the questions and all of that will become more clear in under three months.

[Analyst]

All right. Thank you.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Raghuram Selvara with H. C. Wainwright. Your line is open. Please go ahead.

[Raghuram Selvaraju, MD - Healthcare Equity Research at H.C. Wainwright & Co., LLC]

Thanks very much for taking my question and congrats on the solid quarter. I just wanted to ask about how you are thinking about, in particular, and promotional strategies in support of Lumerai's in the idiopathic hypersomnia market versus you know, the market in which the product is currently labeled and how you are viewing the principal differences between these two indications, from a promotional strategy perspective? And if you can give us a sense of whether there are likely to be differences in marketing strategy as you position the product in this future new indication.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Yeah, thanks for the question. Think so maybe I'll make a couple of comments and then turn it over to the expert who we're really fortunate to have her on our team. I think as we think about the two different patient types, so to speak, where you have narcolepsy patients who generally have a hard time staying awake versus IH patients who have a hard time waking up. It's very different matters that we have to deal with from that perspective. The value proposition of LUMRIZE is we believe if if approved and all the things that we're doing on IH pan out will be an important treatment option for them.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

I think from a what's our go to market strategy, we'll talk about more that and much more in the future when those things when the time is right for that and appropriate for that. But I think most importantly in this regard is that there's a lot of synergy, if you will, or a lot of overlap in terms of the same prescribers, the same sleep specialists who are treating hypersomnia disorders in totality. IH is one of them for sure. So Susan can certainly provide more context you know, as appropriate, but appreciate the question. There'll be more to talk about that in the future.

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

Yeah, I would just add, as Greg mentioned, there's really a very large overlap in terms of the sleep specialists who see who are currently treating the narcolepsy patients who will become our targets with the launch of the IH indication. And what's really notable is that today we're seeing this incredible momentum and driving, you know, increased uptake of wound rights across these exact, you know, high narcolepsy patient doctors. And what they report back to us in terms of the reason for their expanded adoption across not just switch patients, but new patients and previously discontinued patients is the value of the extended release profile of Loomrite. The value of the extended release technology platform that Loomrite brings to the market, which enables once a fed time dosing for a full therapeutic dose. That's the reason, you know, from a product profile standpoint, that's what's driving the growth momentum today in narcolepsy.

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

And that very profile is extremely valuable to achieve your treatment objectives for an IH patient. So we will definitely have a running head start in terms of familiarity of the fit for Lumiride given its profile in the IH patient population. And we will customize our marketing and promotional approach to really drive expansion of that market, identify IH patients and any, you know, leveraging the profile that Blue Rise brings to actually treat those patients, which today are going broadly untreated.

[Raghuram Selvaraju, MD - Healthcare Equity Research at H.C. Wainwright & Co., LLC]

And just one other quick one, if I may. If you're looking ahead to the sleep conference, and in particular, what data might be presented with respect to the orexin pathway modulators at that event? Do you think that there may or may not be any information presented at that conference that might alter the competitive landscape dynamics picture?

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

I think everyone's looking forward to WorldSleep and seeing more details on both the phase three and phase two data that have at least provided kind of high level top line data so far from that perspective. And I think we'll be more equipped to answer that question in the future. We've done our research and continue to do our research on this landscape, if you will, even very recently in the last couple of weeks talking to dozens and dozens of physicians, post the top line readout of some of the data. And we're drawing our insights and our perspective based upon kind of real time off the real data. And we'll continue to do that over time and have us help think through what all this may mean.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

But the one thing that's been consistent as we've been working on this for the last number of quarters is that the role of oxybate is important and will continue to be important now and in the future.

[Raghuram Selvaraju, MD - Healthcare Equity Research at H.C. Wainwright & Co., LLC]

Thank you very much.

[Operator]

Thank you. And one moment for our next question. Our next question comes from the line of David Hong with Deutsche Bank. Your line is open. Please go ahead.

[David Hoang, Director & Senior Analyst - Biotechnology at Deutsche Bank]

Hi, good morning. Thanks for taking my questions and congrats on the strong quarter. So I had two. First, could you comment on the, I guess, the current mix of switch patients and naive patients? Is that still a focus for you?

[David Hoang, Director & Senior Analyst - Biotechnology at Deutsche Bank]

And where would you like to see that mix trend over the next few quarters? And then with your increased investment in the launch, can you just talk a little bit more about what exactly you're hoping to achieve with the prescribers? And is increasing the depth or the breadth of prescribing more important? Thanks.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Thanks, David. Susan?

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

Yeah. So today, as we look at our total patients on therapy, over half of them are switch patients, and we're actually quite encouraged with the whole adoption cycle across our prescriber base. We're rapidly growing our prescriber base, and what we found is that it's quite consistent in terms of how they adopt Lumeri, starting with patients that are on treatment that basically have been in need of new options. So we get some switch patients very early in the adopt cycle, and then what we're finding is that with their favorable experience of lumiride, they're rapidly expanding to new to oxybate discontinued patients. And then continuing to actually adopt lumiride for switch patients because they identify that patients that they thought may have been effectively managed, in fact, could be doing a lot better as they're seeing patients come back with their experience on LumRide.

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

So we are in a really, really positive steady state in terms of this adoption cycle where as we grow our prescriber base, they are continuously expanding their use of the drug and the use of Lumerise is increasingly reflecting just their patient population in terms of who they have currently on treatment and the new and the previously discontinued. And we are drawing from all of those patient groups, which is really speaking positively to the future for LumRite. In terms of the prescriber base, you know, we really have captured the majority of the highest prescribers, those highest volume doctors, and they are adopting across all of their patient types. So what we're seeing is what's growing the business is the expanded use of Lumrite in the existing prescriber base with consistent growth of new prescribers. And these new prescribers are in those lower volume offices that they're, so we're really getting to all of the narcolepsy patients.

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

And also we are growing new prescribers as we had mentioned before, physicians who see a lot of narcolepsy patients, but haven't necessarily used classobase historically. So we're in a very good balance of our growth coming evenly from depth of use as well as expanded rider base.

[Thomas McHugh, CFO at Avadel Pharmaceuticals]

And I think just to

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

tap into that, tag onto that, David, is the investments we're looking at is to continue to accelerate that both at the prescriber level, but also at the patient level as well. And continuing our efforts in an amped up manner, for lack of a better word, in our efforts to communicate and activate and educate patients.

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

Yeah, it's not surprising when we talk to patients. What they'll tell you is that they really prefer the profile on Loomrite. The profile of Loom Ride is really quite a patient friendly profile. So our direct to patient efforts to date has really been generating new enrollments. We're increasingly hearing from HCPs, our research has captured this, that more and more patients are coming in and asking for Loom Ride and what they're and they're happy to actually prescribe it because they're comfortable with the drug, they're comfortable with the servicing that Avadel provides the office and the patients.

[Susan Rodriguez, COO at Avadel Pharmaceuticals]

They're seeing the good results. So we have some strong momentum being driven by the patient driven requests. So our expanded investments are clearly focused on leveraging that opportunity.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Thanks, David.

[Operator]

Thank you. And one moment for our next question. Our next question is going to come from the line of Chase Knickerbocker with Craig Hallum. Your line is open. Please go ahead.

[Chase Knickerbocker, Senior Equity Research Analyst - Healthcare at Craig-Hallum Capital Group LLC]

Good morning. Congrats on the quarter. Most of my questions have been answered, but maybe just a bigger picture one for you, Greg. If we kind of think about kind of your balance sheet, obviously, now with your net cash position and going to get stronger, can you kind of speak to your guys' activity on the BD side? And any sort of commentary that you're willing to give on kind of the profile of something you'd be willing to look at, whether that's something that's mid or late stage clinical or whether or not you'd be more interested in kind of leveraging your commercial platform immediately with some sort of commercial acquisition.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

I think the most important answer to that question Chase is that is we're laser focused on what is most important to drive value today and in the near term for the company, which is the execution of our launch and fully maximizing and realizing the full potential of luminescent narcolepsy, executing our lifecycle management initiatives in particular IH and some of the other work or formulation work we're doing. But we have a team that evaluates things in the marketplace for which we'll be very disciplined about in that regard in terms of what would or wouldn't be something that would make sense for Avadel. Listen, our shareholders have enabled us the opportunity to build an infrastructure and a capability to commercialize in this space. And those are the things we're focused on and that's where we should be paying our attention to primarily as anything that may be inorganic from that perspective for lack of a better word. But I'll be very clear, our focus is on accelerating the launch moving our lifecycle management expanded indication efforts forward as our primary priorities.

[Chase Knickerbocker, Senior Equity Research Analyst - Healthcare at Craig-Hallum Capital Group LLC]

Very clear. Thank you.

[Operator]

Thank you. And I would now like to hand the conference back over to Craig Dibis for closing remarks.

[Gregory Divis, CEO & Director at Avadel Pharmaceuticals]

Thank you again, everyone, for joining us today and spending time. We look forward to any follow ups, and have a great day. Thank you.

[Operator]

This concludes today's conference call. Thank you for participating, and you may now disconnect.

Participants

Executives

• Gregory Divis, CEO & Director
• Susan Rodriguez, COO
• Thomas McHugh, CFO

Analysts

• Austin Murtagh, Director of Investor Relations & External Communications at Precision AQ
• Andrew Tsai, SVP at Jefferies
• Ami Fadia, Senior Analyst at Needham & Company
• David Amsellem, Senior Research Analyst at Piper Sandler Companies
• Marc Goodman, Senior MD & Senior Research Analyst - Neuroscience & Ophthalmology at Leerink Partners
• Analyst
• Raghuram Selvaraju, MD - Healthcare Equity Research at H.C. Wainwright & Co., LLC
• David Hoang, Director & Senior Analyst - Biotechnology at Deutsche Bank
• Chase Knickerbocker, Senior Equity Research Analyst - Healthcare at Craig-Hallum Capital Group LLC