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Avadel Pharmaceuticals Reports Third Quarter 2019 Financial Results and Raises Revenue Guidance for FY2019
- Enrollment currently at 200 patients for the pivotal REST-ON Phase 3 study (97.5% complete); the Company currently expects to complete patient enrollment by end of 2019, with data readout expected in Q2 2020
- Revenue of
$48.2 million for first nine months of 2019; increasing revenue guidance to be at or above$55 million for full year 2019
- Restructuring and other cost reduction actions on track to realize
$80 to $90 million in annualized cost savings
- Cash, cash equivalents and marketable securities as of
September 30, 2019 totaled$72.5 million
- Management to host a conference call today at
8:30 a.m. ET
“In the third quarter of 2019, Avadel achieved several milestones that were established as part of our focused business strategy announced earlier this year,” said
“Our sterile injectable hospital business has continued to outperform our expectations in the third quarter of 2019, and we have raised our annual revenue guidance for 2019 to be at or above
“We have made significant progress over the first nine months of 2019 in strengthening the company financially, while primarily focusing on the clinical development of FT218. We believe these actions have put the company on a path toward long-term success and re-building shareholder value,” concluded Mr. Divis.
Third quarter and recent company highlights
- The
FDA agreed to the Company’s amendments to the statistical analysis plan, ultimately resulting in a reduced sample size for the ongoing pivotal Phase 3 study for once-nightly FT218 while retaining our Special Protocol Assessment (SPA) agreement; full enrollment now expected by end of 2019 and top-line data on track to be announced in the second quarter of 2020;
- Announced pharmacokinetic (PK) data for once-nightly FT218 from four Phase 1 studies in an oral presentation at the World Sleep 2019
Congress ;
- Data presented at the World Sleep 2019
Congress from four Phase 1 studies demonstrate that FT218 exhibits a pharmacokinetic profile desirable for once-nightly dosing with equivalent exposure to twice-nightly sodium oxybate at the 4.5 g and 6 g dosing levels;
- Received a new Prescription Drug User Fee Act (PDUFA) target action date of
December 15, 2019 for AV001 from theU.S. Food and Drug Administration ;
- Cost reductions and restructuring actions have resulted in approximately
$63 million of lower SG&A and R&D spending; the Company is on track to realize$80 to $90 million of cost reductions in 2019 compared to 2018, as previously announced;
- Cash, cash equivalents and marketable securities as of
September 30, 2019 totaled$72.5 million , compared to$79.3 million as ofJune 30, 2019 and$99.9 million as ofDecember 31, 2018 ; and
- Reported revenues of
$14.2 million in the third quarter of 2019; annual revenue is now expected to be at or above$55 million for 2019.
Overview of third quarter 2019 financial results
Revenues for the third quarter of 2019 were $14.2 million, compared to $19.8 million in the third quarter of 2018. The decline on a year-over-year basis was primarily attributed to lower net selling prices across the Company’s hospital products as a result of increased market competition.
In thousands (Unaudited) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
Revenues by Product: | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Bloxiverz | $ | 1,466 | $ | 3,656 | $ | 6,392 | $ | 16,691 | ||||||||
Vazculep | 8,786 | 8,759 | 27,669 | 33,097 | ||||||||||||
Akovaz | 4,208 | 5,991 | 13,946 | 28,083 | ||||||||||||
Other | (231 | ) | 1,420 | 213 | 4,232 | |||||||||||
Total product sales | 14,229 | 19,826 | 48,220 | 82,103 | ||||||||||||
License revenue | — | — | — | 246 | ||||||||||||
Total revenues | $ | 14,229 | $ | 19,826 | $ | 48,220 | $ | 82,349 |
Research and development (R&D) expenses were $7.5 million in the third quarter of 2019, compared to
Selling, general and administrative (SG&A) expenses were
Net loss for the third quarter of 2019 was
Cash, cash equivalents and marketable securities were
2019 Guidance:
Based on recent hospital products sales performance, increased competition from additional products launched in 2019, and recent market price actions, annual revenue for 2019 is now expected to be at or above
Conference Call:
A conference call to discuss these results has been scheduled for
About Avadel Pharmaceuticals plc:
Cautionary Disclosure Regarding Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements relate to our future expectations, beliefs, plans, strategies, objectives, results, conditions, financial performance, prospects, or other events. In some cases, forward-looking statements can be identified by the use of words such as “will,” “may,” “believe,” “expect,” “look forward,” “on track,” “could,” “guidance,” “anticipate,” “estimate,” “project” and similar expressions, and the negatives thereof (if applicable).
Our forward-looking statements are based on estimates and assumptions that are made within the bounds of our knowledge of our business and operations and that we consider reasonable. However, our business and operations are subject to significant risks and as a result there can be no assurance that actual results of our research, development and commercialization activities and the results of our business and operations will not differ materially from the results contemplated in such forward-looking statements. Factors that could cause actual results to differ from expectations in our forward-looking statements include:
(a) risks relating to our recent net losses and restructuring plan, including risks relating to the following:
due to a decrease in our available liquid assets, our business strategy has been refocused and is now substantially directed to development of a single product, FT218; our recent restructuring plan may not be as effective as we anticipate and may have unintended negative impacts; further restructuring actions, if needed, may require third-party consents (including consents under the indenture governing our convertible debt), and such consents may not be granted; and the Chapter 11 bankruptcy filing by our subsidiary
b) risks relating to the following: our three products Bloxiverz®, Vazculep® and Akovaz®, which are not patent protected and have a small number of customers, currently produce substantially all of our revenues and could face further competition resulting in a further loss of market share and/or forcing us to further reduce our prices for those products; our current “unapproved marketed drug” (UMD) product candidate, AV001, could fail to achieve
(c) the other risks and uncertainties described in the “Risk Factors” section of Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2018, which we filed with the Securities and Exchange Commission on March 15, 2019.
Forward-looking statements speak only as of the date they are made and are not guarantees of future performance. Accordingly, you should not place undue reliance on forward-looking statements. We do not undertake any obligation to publicly update or revise the forward-looking statements contained in this Annual Report.
Contacts: |
||
Michael F. Kanan | ||
Chief Financial Officer | ||
Phone: (636) 449-1844 | ||
Email: mkanan@avadel.com | ||
Tim McCarthy | ||
LifeSci Advisors, LLC | ||
Phone: (212) 915.2564 | ||
Email: tim@lifesciadvisors.com |
AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues: | ||||||||||||||||
Product sales | $ | 14,229 | $ | 19,826 | $ | 48,220 | $ | 82,103 | ||||||||
License revenue | — | — | — | 246 | ||||||||||||
Total revenues | 14,229 | 19,826 | 48,220 | 82,349 | ||||||||||||
Operating expenses: | ||||||||||||||||
Cost of products | 2,823 | 3,120 | 9,711 | 13,224 | ||||||||||||
Research and development expenses | 7,539 | 11,402 | 25,160 | 33,243 | ||||||||||||
Selling, general and administrative expenses | 5,316 | 24,829 | 22,520 | 77,159 | ||||||||||||
Intangible asset amortization | 205 | 1,620 | 610 | 4,996 | ||||||||||||
Changes in fair value of related party contingent consideration | 627 | (7,115 | ) | 2,384 | (17,036 | ) | ||||||||||
Restructuring costs | 1,866 | 65 | 4,600 | 268 | ||||||||||||
Total operating expenses | 18,376 | 33,921 | 64,985 | 111,854 | ||||||||||||
Operating loss | (4,147 | ) | (14,095 | ) | (16,765 | ) | (29,505 | ) | ||||||||
Investment and other income, net | 781 | 208 | 2,548 | 845 | ||||||||||||
Interest expense | (3,125 | ) | (3,000 | ) | (9,293 | ) | (7,577 | ) | ||||||||
Loss on deconsolidation of subsidiary | — | — | (2,840 | ) | — | |||||||||||
Other (expense) income - changes in fair value of related party payable | (139 | ) | 425 | (496 | ) | 1,432 | ||||||||||
Loss before income taxes | (6,630 | ) | (16,462 | ) | (26,846 | ) | (34,805 | ) | ||||||||
Income tax provision (benefit) | 2,234 | (691 | ) | 3,641 | (3,360 | ) | ||||||||||
Net loss | $ | (8,864 | ) | $ | (15,771 | ) | $ | (30,487 | ) | $ | (31,445 | ) | ||||
Net loss per share - basic | $ | (0.24 | ) | $ | (0.43 | ) | $ | (0.82 | ) | $ | (0.84 | ) | ||||
Net loss per share - diluted | (0.24 | ) | (0.43 | ) | (0.82 | ) | (0.84 | ) | ||||||||
Weighted average number of shares outstanding - basic | 37,436 | 36,904 | 37,382 | 37,410 | ||||||||||||
Weighted average number of shares outstanding - diluted | 37,436 | 36,904 | 37,382 | 37,410 |
AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
September 30, 2019 | December 31, 2018 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 12,867 | $ | 9,325 | ||||
Marketable securities | 59,587 | 90,590 | ||||||
Accounts receivable | 8,725 | 11,330 | ||||||
Inventories | 2,260 | 4,770 | ||||||
Prepaid expenses and other current assets | 5,163 | 8,836 | ||||||
Total current assets | 88,602 | 124,851 | ||||||
Property and equipment, net | 770 | 1,911 | ||||||
Operating lease right-of-use assets | 4,385 | — | ||||||
Goodwill | 18,491 | 18,491 | ||||||
Intangible assets, net | 1,019 | 1,629 | ||||||
Research and development tax credit receivable | 7,694 | 7,272 | ||||||
Other non-current assets | 34,927 | 36,146 | ||||||
Total assets | $ | 155,888 | $ | 190,300 | ||||
LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 35 | $ | 106 | ||||
Current portion of long-term related party payable | 7,588 | 9,439 | ||||||
Current portion of operating lease liability | 1,596 | — | ||||||
Accounts payable | 3,538 | 3,503 | ||||||
Accrued expenses | 17,017 | 21,695 | ||||||
Other current liabilities | 1,989 | 3,640 | ||||||
Total current liabilities | 31,763 | 38,383 | ||||||
Long-term debt, less current portion | 120,132 | 115,734 | ||||||
Long-term related party payable, less current portion | 14,118 | 19,401 | ||||||
Long-term operating lease liability | 2,866 | — | ||||||
Other non-current liabilities | 13,972 | 14,002 | ||||||
Total liabilities | 182,851 | 187,520 | ||||||
Shareholders’ (deficit) equity: | ||||||||
Preferred shares, nominal value of $0.01 per share; 50,000 shares authorized; none issued or outstanding at September 30, 2019 and December 31, 2018, respectively | — | — | ||||||
Ordinary shares, nominal value of $0.01 per share; 500,000 shares authorized; 42,857 issued and 37,450 outstanding at September 30, 2019 and 42,720 issued and 37,313 outstanding at December 31, 2018 | 428 | 427 | ||||||
Treasury shares, at cost, 5,407 shares held at September 30, 2019 and December 31, 2018, respectively | (49,998 | ) | (49,998 | ) | ||||
Additional paid-in capital | 434,055 | 433,756 | ||||||
Accumulated deficit | (388,476 | ) | (357,989 | ) | ||||
Accumulated other comprehensive loss | (22,972 | ) | (23,416 | ) | ||||
Total shareholders’ (deficit) equity | (26,963 | ) | 2,780 | |||||
Total liabilities and shareholders’ (deficit) equity | $ | 155,888 | $ | 190,300 |
AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (30,487 | ) | $ | (31,445 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 1,690 | 5,625 | ||||||
Loss on disposal of property and equipment | 478 | — | ||||||
Amortization of premiums on marketable securities | (275 | ) | 2,889 | |||||
Remeasurement of related party acquisition-related contingent consideration | 2,384 | (17,036 | ) | |||||
Remeasurement of related party financing-related contingent consideration | 496 | (1,432 | ) | |||||
Amortization of debt discount and debt issuance costs | 4,424 | 3,402 | ||||||
Change in deferred tax and income tax deferred charge | 1,333 | (4,675 | ) | |||||
Stock-based compensation expense | 177 | 7,190 | ||||||
Loss on deconsolidation of subsidiary | 1,750 | — | ||||||
Other adjustments | (392 | ) | 117 | |||||
Net changes in assets and liabilities | ||||||||
Accounts receivable | 2,026 | 5,059 | ||||||
Inventories | 2,465 | (548 | ) | |||||
Prepaid expenses and other current assets | (1,859 | ) | 2,194 | |||||
Research and development tax credit receivable | (749 | ) | (1,350 | ) | ||||
Accounts payable & other current liabilities | 259 | 4,312 | ||||||
Accrued expenses | (2,379 | ) | (11,660 | ) | ||||
Earn-out payments for related party contingent consideration in excess of acquisition-date fair value | (8,640 | ) | (16,254 | ) | ||||
Royalty payments for related party payable in excess of original fair value | (1,374 | ) | (2,362 | ) | ||||
Other assets and liabilities | (1,399 | ) | (2,216 | ) | ||||
Net cash used in operating activities | (30,072 | ) | (58,190 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (29 | ) | (167 | ) | ||||
Proceeds from the disposal of property and equipment | 154 | — | ||||||
Purchase of intangible asset | — | (20,000 | ) | |||||
Proceeds from sales of marketable securities | 57,242 | 308,015 | ||||||
Purchases of marketable securities | (23,814 | ) | (341,036 | ) | ||||
Net cash provided by (used in) investing activities | 33,553 | (53,188 | ) | |||||
Cash flows from financing activities: | ||||||||
Earn-out payments for related party contingent consideration | — | (645 | ) | |||||
Proceeds from debt issuance | — | 143,750 | ||||||
Payments for debt issuance costs | — | (6,190 | ) | |||||
Share repurchases | — | (27,637 | ) | |||||
Proceeds from issuance of ordinary shares and warrants | 123 | 3,488 | ||||||
Other financing activities, net | (109 | ) | (31 | ) | ||||
Net cash provided by financing activities | 14 | 112,735 | ||||||
Effect of foreign currency exchange rate changes on cash and cash equivalents | 47 | (84 | ) | |||||
Net change in cash and cash equivalents | 3,542 | 1,273 | ||||||
Cash and cash equivalents at January 1, | 9,325 | 16,564 | ||||||
Cash and cash equivalents at September 30, | $ | 12,867 | $ | 17,837 |
Source: Avadel Pharmaceuticals plc