Press Releases
View printer-friendly version << Back
Avadel Pharmaceuticals Reports First Quarter 2019 Financial Results
- REST-ON 63% enrolled; 98 patients remain to be enrolled
Jordon Dubow , M.D., appointed as Chief Medical Officer
- Noctiva™-related assets sold; all operational activities have ceased
“We have made substantial progress on restructuring the company, since our announcement in February to make development of FT218 the core focus of the company,” said
Dr. Dubow added, “Having had the opportunity to review findings from the third-party diagnostic of the REST-ON clinical trial and the FT218 development program more broadly, I am confident in the status of the program overall and in our ability to complete trial enrollment in the second half of 2020. I believe that FT218 is a highly promising product candidate with clear differentiation over standard-of-care in a large addressable market and could provide significant clinical benefit to patients suffering from narcolepsy.”
First quarter and recent company highlights
- The REST-ON clinical trial has enrolled 166 patients, which is 63% of the target enrollment; 98 patients remain to be enrolled; based on current trends, enrollment is expected to be completed in the second half of 2020;
- The Company has been issued new intellectual property covering FT218’s novel once nightly formulation; the patent issued from the U.S. Patent and Trademark Office has an expiry date in 2037;
Jordan Dubow , M.D., was appointed Chief Medical Officer; Dr. Dubow will lead the development of FT218;
- The assets of
Avadel Specialty Pharmaceuticals, LLC , a subsidiary solely responsible for the sales, marketing and distribution of Noctiva™, have been sold; there are no Noctiva-related personnel or activities remaining at the Company;
- Restructuring actions already completed will result in
$50 to $60 million of annual cost savings; actions underway, and expected to conclude beforeDecember 31, 2019 , are expected to realize the full$80-$90 million of cost reductions previously announced; and
- Revenues of
$16.4 million in the first quarter of 2019 exceeded the top of end of the Company’s previous guidance of$13 to $15 million ; annual revenue is now expected to exceed$30 million (vs. the prior expectation of annual revenue possibly below$30 million ).
Overview of first quarter 2019 financial results:
Revenues for the first quarter of 2019 were $16.4 million, compared to $33.3 million in the first quarter of 2018. The decline on a year-over-year basis was primarily attributed to lower net selling prices across all of the Company’s hospital products as a result of increased market competition. Revenue for the first quarter of 2019 exceeded the top end of the guided range provided in March of
Three Months Ended March 31, | |||||||
Revenues by Product: ($ in 000s) | 2019 | 2018 | |||||
Bloxiverz | $ | 2,568 | $ | 7,491 | |||
Vazculep | 9,473 | 12,961 | |||||
Akovaz | 3,792 | 10,217 | |||||
Other (1) | 604 | 2,492 | |||||
Total product sales | 16,437 | 33,161 | |||||
License revenue | - | 132 | |||||
Total revenues | $ | 16,437 | $ | 33,293 |
- Noctiva revenue included in “Other”; Noctiva revenue for the three months ended
March 31, 2019 represents revenue earned fromJanuary 1, 2019 throughFebruary 5, 2019 , prior to the deconsolidation ofAvadel Specialty Pharmaceuticals, LLC .
Research and development (R&D) expense was $7.3 million in the first quarter of 2019 compared to
Selling, general and administrative (SG&A) expense was
Net loss for the first quarter of 2019 was
Cash, cash equivalents and marketable securities were
2019 Guidance:
Based on recent hospital products sales performance and continuing to factor in increased competition from products launched, expected to be launched in 2019, and possible market price actions, which have not yet occurred, hospital product revenue for 2019 is now expected to exceed
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,” “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 2018 net loss and recent 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 dependent upon 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 that may not be granted;
- the Chapter 11 bankruptcy filing by our subsidiary
Avadel Specialty Pharmaceuticals LLC may have unexpected adverse results; and - a management-directed third-party evaluation of our FT218 development program could result in changes that increase the cost of the program and further delay its completion;
(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, produce a majority 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
FDA approval; or we could fail to develop future potential UMD product candidates, or competitors could develop such products and market such products withFDA approval before us; - we could experience failure or further delay in completing the Phase III clinical trial for FT218, and if the
FDA ultimately approves such product, the approval may not include any period of market exclusivity; - we may not have sufficient cash or the ability to raise sufficient cash to service our
$143.75 million Exchangeable Senior Notes due 2023, including cash necessary to repay such Notes at maturity, to settle exchanges of such Notes in cash or to repurchase such Notes as required following a “fundamental change” event described in the indenture governing such Notes; - our products may not reach the commercial market or gain market acceptance;
- we must invest substantial sums in research and development in order to remain competitive;
- we depend on one or a limited number of providers to develop certain of our products and drug delivery technologies, to manufacture certain of our products and to provide certain raw materials used in our products;
- our competitors may develop and market technologies or products that are more effective or safer than ours, or obtain regulatory approval and market such technologies or products before we do;
- we face challenges in protecting intellectual property underlying our products and drug delivery technologies; and
- we depend on key personnel to execute our business plan.
(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 | |
Alex Gray | |
Burns McClellan | |
Phone: (212) 213-0006 | |
Email: agray@burnsmc.com |
AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Revenues: | ||||||||
Product sales | $ | 16,437 | $ | 33,161 | ||||
License revenue | — | 132 | ||||||
Total revenues | 16,437 | 33,293 | ||||||
Operating expenses: | ||||||||
Cost of products | 3,266 | 6,592 | ||||||
Research and development expenses | 7,329 | 9,951 | ||||||
Selling, general and administrative expenses | 10,446 | 24,487 | ||||||
Intangible asset amortization | 201 | 1,767 | ||||||
Gain - changes in fair value of related party contingent consideration | 2,134 | 2,968 | ||||||
Restructuring costs | 1,228 | 153 | ||||||
Total operating expenses | 24,604 | 45,918 | ||||||
Operating loss | (8,167 | ) | (12,625 | ) | ||||
Investment and other income, net | 817 | 54 | ||||||
Interest expense | (3,062 | ) | (1,597 | ) | ||||
Loss on deconsolidation of subsidiary | (2,673 | ) | — | |||||
Other income - changes in fair value of related party payable | (307 | ) | (395 | ) | ||||
Loss before income taxes | (13,392 | ) | (14,563 | ) | ||||
Income tax benefit | (374 | ) | (2,327 | ) | ||||
Net loss | $ | (13,018 | ) | $ | (12,236 | ) | ||
Net loss per share - basic | $ | (0.35 | ) | $ | (0.32 | ) | ||
Net loss per share - diluted | (0.35 | ) | (0.32 | ) | ||||
Weighted average number of shares outstanding - basic | 37,354 | 38,559 | ||||||
Weighted average number of shares outstanding - diluted | 37,354 | 38,559 | ||||||
AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
March 31, 2019 | December 31, 2018 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 9,630 | $ | 9,325 | ||||
Marketable securities | 70,221 | 90,590 | ||||||
Accounts receivable | 11,772 | 11,330 | ||||||
Inventories | 4,258 | 4,770 | ||||||
Prepaid expenses and other current assets | 6,556 | 8,836 | ||||||
Total current assets | 102,437 | 124,851 | ||||||
Property and equipment, net | 1,749 | 1,911 | ||||||
Operating lease right-of-use assets | 5,802 | — | ||||||
Goodwill | 18,491 | 18,491 | ||||||
Intangible assets, net | 1,428 | 1,629 | ||||||
Research and development tax credit receivable | 7,591 | 7,272 | ||||||
Other non-current assets | 36,124 | 36,146 | ||||||
Total assets | $ | 173,622 | $ | 190,300 | ||||
LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 104 | $ | 106 | ||||
Current portion of long-term related party payable | 9,391 | 9,439 | ||||||
Current portion of operating lease liability | 982 | — | ||||||
Accounts payable | 4,150 | 3,503 | ||||||
Deferred revenue | 115 | 114 | ||||||
Accrued expenses | 14,689 | 21,695 | ||||||
Other current liabilities | 1,927 | 3,526 | ||||||
Total current liabilities | 31,358 | 38,383 | ||||||
Long-term debt, less current portion | 117,178 | 115,734 | ||||||
Long-term related party payable, less current portion | 18,202 | 19,401 | ||||||
Long-term operating lease liability | 3,889 | — | ||||||
Other non-current liabilities | 12,577 | 14,002 | ||||||
Total liabilities | 183,204 | 187,520 | ||||||
Shareholders’ (deficit) equity: | ||||||||
Preferred shares, nominal value of $0.01 per share; 50,000 shares authorized; none issued or outstanding at March 31, 2019 and December 31, 2018, respectively | — | — | ||||||
Ordinary shares, nominal value of $0.01 per share; 500,000 shares authorized; 42,762 issued and 37,355 outstanding at March 31, 2019 and 42,720 issued and 37,313 outstanding at December 31, 2018 | 427 | 427 | ||||||
Treasury shares, at cost, 5,407 shares held at March 31, 2019 and December 31, 2018, respectively | (49,998 | ) | (49,998 | ) | ||||
Additional paid-in capital | 434,199 | 433,756 | ||||||
Accumulated deficit | (371,007 | ) | (357,989 | ) | ||||
Accumulated other comprehensive loss | (23,203 | ) | (23,416 | ) | ||||
Total shareholders’ (deficit) equity | (9,582 | ) | 2,780 | |||||
Total liabilities and shareholders’ (deficit) equity | $ | 173,622 | $ | 190,300 | ||||
AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, Unaudited)
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (13,018 | ) | $ | (12,236 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 369 | 1,985 | ||||||
Amortization of premiums on marketable securities | 9 | 518 | ||||||
Remeasurement of related party acquisition-related contingent consideration | 2,134 | 2,968 | ||||||
Remeasurement of related party financing-related contingent consideration | 307 | 395 | ||||||
Amortization of debt discount and debt issuance costs | 1,445 | 657 | ||||||
Change in deferred tax and income tax deferred charge | (222 | ) | (2,851 | ) | ||||
Stock-based compensation expense | 351 | 2,134 | ||||||
Loss on deconsolidation of subsidiary | 1,750 | — | ||||||
Other adjustments | (550 | ) | 139 | |||||
Net changes in assets and liabilities | ||||||||
Accounts receivable | (1,021 | ) | (1,891 | ) | ||||
Inventories | 467 | (466 | ) | |||||
Prepaid expenses and other current assets | (3,228 | ) | (2,285 | ) | ||||
Research and development tax credit receivable | (449 | ) | (494 | ) | ||||
Accounts payable & other current liabilities | 752 | 6,374 | ||||||
Accrued expenses | (4,750 | ) | (5,854 | ) | ||||
Accrued income taxes | (46 | ) | 32 | |||||
Earn-out payments for related party contingent consideration in excess of acquisition-date fair value | (3,181 | ) | (5,790 | ) | ||||
Royalty payments for related party payable in excess of original fair value | (507 | ) | (825 | ) | ||||
Other assets and liabilities | (1,818 | ) | (518 | ) | ||||
Net cash used in operating activities | (21,206 | ) | (18,008 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (30 | ) | (41 | ) | ||||
Proceeds from sales of marketable securities | 34,864 | 194,400 | ||||||
Purchases of marketable securities | (13,444 | ) | (275,098 | ) | ||||
Net cash provided by (used in) investing activities | 21,390 | (80,739 | ) | |||||
Cash flows from financing activities: | ||||||||
Earn-out payments for related party contingent consideration | — | (402 | ) | |||||
Proceeds from debt issuance | — | 143,750 | ||||||
Payments for debt issuance costs | — | (5,391 | ) | |||||
Share repurchases | — | (18,000 | ) | |||||
Proceeds from the exercise of warrants | — | 2,911 | ||||||
Other financing activities, net | 92 | 47 | ||||||
Net cash provided by financing activities | 92 | 122,915 | ||||||
Effect of foreign currency exchange rate changes on cash and cash equivalents | 29 | 179 | ||||||
Net change in cash and cash equivalents | 305 | 24,347 | ||||||
Cash and cash equivalents at January 1, | 9,325 | 16,564 | ||||||
Cash and cash equivalents at March 31, | $ | 9,630 | $ | 40,911 |
Source: Avadel Pharmaceuticals plc