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Avadel Pharmaceuticals Reports Second Quarter 2020 Financial Results and Recent Business Update
- Presented positive topline data from the pivotal Phase 3 REST-ON study
- Announced today that results of the data analyses for the secondary endpoints of the REST-ON study were consistent with the primary analyses and further demonstrated the overall statistical significance of FT218 compared to placebo
- Completed the pre-NDA meeting for FT218 with the
Food and Drug Administration - First patient dosed in the open-label extension/switch study of investigational once-nightly FT218
- Strengthened balance sheet through completion of
$125 million public equity offering to support the company’s strategic priorities - Completed sale of the sterile injectable drug portfolio for
$42.0 million - Management to host a conference call today at
8:30 a.m. ET
“We are at a pivotal point in Avadel’s transformation, as we recently completed our pre-NDA meeting with the FDA and are currently focused on completing our NDA submission and filing for FT218. A key component of the planned NDA for FT218 is the positive data from the Phase 3 REST-ON study of FT218, which was first announced in April. These data show that the three dose levels of FT218 that were tested demonstrated statistically significant (p<0.001) and clinically meaningful improvement for all three co-primary endpoints. In addition, FT218 was highly significant for the secondary endpoints that tested additional measures of daytime sleepiness, sleep architecture, and other narcolepsy symptoms compared to placebo at all three doses and all sensitivity analyses of the primary endpoint. If approved, FT218 could be the first once-nightly therapy to address both excessive daytime sleepiness and cataplexy in patients with narcolepsy,” said
“In May, we strengthened our balance sheet with the completion of a public equity offering for gross proceeds of
“As we move forward for the balance of 2020, our highest priority remains the completion and filing of our once-nightly FT218 NDA. In addition, we are in the process of compiling additional supporting scientific data to position FT218 in the market which includes the ongoing open-label extension (OLE)/switch study of FT218,” concluded
Second quarter and recent company highlights
- Presented an update on the development of FT218 and positive results from the Phase 3 Rest-On clinical trial for excessive daytime sleepiness and cataplexy in patients with narcolepsy, which were previously announced in
April 2020 :
° FT218 at the 9 g dose demonstrated highly statistically significant (p<0.001) and clinically meaningful improvement across all three co-primary endpoints (Maintenance of Wakefulness Test, Clinical Global Impression-Improvement and Mean Weekly Cataplexy Attacks) compared to placebo.
° FT218 at the 9 g dose was generally well-tolerated, with commonly known sodium oxybate adverse reactions occurring at low rates (nausea 1.3%, vomiting 5.2%, decreased appetite 2.6%, dizziness 5.2%, somnolence 3.9%, tremor 1.3%, enuresis 9%; discontinuation rate due to adverse reactions 3.9%).
° FT218 at the 7.5 g and 6 g dose levels also achieved highly statistically significant (p<0.001), clinically meaningful improvements across all three co-primary endpoints compared to placebo, as soon as 3 weeks after initiating FT218.
- Announced today additional data from the REST-ON study:
° All three doses of FT218 studied were highly significant compared to placebo on secondary endpoints evaluating daytime sleepiness, sleep architecture, and other narcolepsy symptoms
° FT218 was also significant compared to placebo for all sensitivity analyses of the three co-primary endpoints at all three doses
° Detailed data for the secondary endpoints and sensitivity analyses will be presented at a scientific conference or in a peer-reviewed scientific publication
- Held a successful pre-NDA meeting with the FDA and are on track to move forward with filing our NDA for FT218
- First patient dosed in an OLE/switch study of FT218 as a potential treatment for excessive daytime sleepiness and cataplexy in patients with narcolepsy.
- Completed a public equity offering with gross proceeds of
$125.0 million to strengthen the Company’s balance sheet and provide capital to support its strategic priorities. - Completed the sale of the legacy portfolio of sterile injectable drugs used in the hospital setting to
Exela Sterile Medicines LLC for a total of$42.0 million .
Overview of Second Quarter Results
Revenues for the second quarter of 2020 were $10.1 million, compared to $17.6 million in the second quarter of 2019. The decline on a year-over-year basis was primarily attributed to lower overall sales volume across the Company’s hospital products as a result of increased market competition.
R&D expenses were $4.1 million in the second quarter of 2020, compared to
SG&A expenses were
A
Income tax provision was
Net income for the second quarter of 2020 was
Cash, cash equivalents and marketable securities were
Conference Call:
A conference call to discuss these results has been scheduled for
About FT218
FT218 is an investigational, once-nightly formulation of Micropump™ controlled-release (CR) sodium oxybate. In March of 2020, the Company completed the REST-ON study, a pivotal, double-blind, randomized, placebo-controlled Phase 3 trial, to assess the efficacy and safety of FT218 in the treatment of excessive daytime sleepiness and cataplexy in patients suffering from narcolepsy. FT218 has been granted Orphan Drug Designation from the
About
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. Such forward-looking statements include, but are not limited to, the planned submission of the FT218 NDA to the FDA and commercial launch of FT218, if approved. In some cases, forward-looking statements can be identified by the use of words such as “will,” “may,” “could,” “believe,” “expect,” “look forward,” “on track,” “guidance,” “anticipate,” “estimate,” “project,” “next steps” 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 (including, without limitation, the continued advancement and development of FT218 and benefits and cost savings from the sale of our hospital products) 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 the risk that the impact of the current COVID-19 pandemic on our financial results and results of operations could be greater than we anticipate and the 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
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 our forward-looking statements, except as required by law.
Contacts:
Investor Contacts
Chief Financial Officer
Phone: (636) 449-1843
Email: tmchugh@avadel.com
Phone: (212) 915.2564
Email: tim@lifesciadvisors.com
Media Contact
Phone: (646) 970-4688
Email: pbursey@lifescicomms.com
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per share data)
(Unaudited)
Three Months Ended |
Six Months Ended |
|||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Product sales | $ | 10,091 | $ | 17,554 | $ | 22,334 | $ | 33,991 | ||||||||
Operating expenses: | ||||||||||||||||
Cost of products | 3,285 | 3,622 | 5,742 | 6,888 | ||||||||||||
Research and development expenses | 4,057 | 10,292 | 9,587 | 17,621 | ||||||||||||
Selling, general and administrative expenses | 7,095 | 6,758 | 15,008 | 17,204 | ||||||||||||
Intangible asset amortization | 203 | 204 | 406 | 405 | ||||||||||||
Changes in fair value of contingent consideration | 918 | (377 | ) | 3,396 | 1,757 | |||||||||||
Gain on sale of hospital business | (45,760 | ) | — | (45,760 | ) | — | ||||||||||
Restructuring costs | 24 | 1,506 | 183 | 2,734 | ||||||||||||
Total operating (income) expense | (30,178 | ) | 22,005 | (11,438 | ) | 46,609 | ||||||||||
Operating income (loss) | 40,269 | (4,451 | ) | 33,772 | (12,618 | ) | ||||||||||
Investment and other (expense) income, net | (741 | ) | 950 | (1,119 | ) | 1,767 | ||||||||||
Interest expense | (3,237 | ) | (3,106 | ) | (6,427 | ) | (6,168 | ) | ||||||||
Loss on deconsolidation of subsidiary | — | (167 | ) | — | (2,840 | ) | ||||||||||
Other expense - changes in fair value of contingent consideration payable | (125 | ) | (50 | ) | (435 | ) | (357 | ) | ||||||||
Income (loss) before income taxes | 36,166 | (6,824 | ) | 25,791 | (20,216 | ) | ||||||||||
Income tax provision (benefit) | 5,292 | 1,781 | (4,218 | ) | 1,407 | |||||||||||
Net income (loss) | $ | 30,874 | $ | (8,605 | ) | $ | 30,009 | $ | (21,623 | ) | ||||||
Net income (loss) per share - basic | $ | 0.57 | $ | (0.23 | ) | $ | 0.63 | $ | (0.58 | ) | ||||||
Net income (loss) per share - diluted | 0.49 | (0.23 | ) | 0.58 | (0.58 | ) | ||||||||||
Weighted average number of shares outstanding - basic | 54,272 | 37,356 | 47,665 | 37,355 | ||||||||||||
Weighted average number of shares outstanding - diluted | 69,942 | 37,356 | 63,083 | 37,355 |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 102,174 | $ | 9,774 | ||||
Marketable securities | 136,380 | 54,384 | ||||||
Accounts receivable | 5,692 | 8,281 | ||||||
Inventories | — | 3,570 | ||||||
Research and development tax credit receivable | — | 2,107 | ||||||
Prepaid expenses and other current assets | 32,773 | 4,264 | ||||||
Total current assets | 277,019 | 82,380 | ||||||
Property and equipment, net | 407 | 544 | ||||||
Operating lease right-of-use assets | 3,117 | 3,612 | ||||||
16,836 | 18,491 | |||||||
Intangible assets, net | — | 813 | ||||||
Research and development tax credit receivable | 6,407 | 6,322 | ||||||
Other non-current assets | 37,615 | 39,274 | ||||||
Total assets | $ | 341,401 | $ | 151,436 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
Current liabilities: | ||||||||
Current portion of long-term contingent consideration payable | $ | 1,914 | $ | 5,554 | ||||
Current portion of operating lease liability | 563 | 645 | ||||||
Accounts payable | 4,879 | 6,100 | ||||||
Accrued expenses | 15,820 | 19,810 | ||||||
Income taxes | 354 | 43 | ||||||
Other current liabilities | 3,488 | 3,832 | ||||||
Total current liabilities | 27,018 | 35,984 | ||||||
Long-term debt | 124,879 | 121,686 | ||||||
Long-term contingent consideration payable, less current portion | — | 11,773 | ||||||
Long-term operating lease liability | 2,087 | 2,319 | ||||||
Other non-current liabilities | 5,292 | 8,873 | ||||||
Total liabilities | 159,276 | 180,635 | ||||||
Shareholders’ equity (deficit): | ||||||||
Preferred shares, nominal value of |
5 | — | ||||||
Ordinary shares, nominal value of |
635 | 429 | ||||||
(49,998 | ) | (49,998 | ) | |||||
Additional paid-in capital | 615,207 | 434,391 | ||||||
Accumulated deficit | (361,206 | ) | (391,215 | ) | ||||
Accumulated other comprehensive loss | (22,518 | ) | (22,806 | ) | ||||
Total shareholders’ equity (deficit) | 182,125 | (29,199 | ) | |||||
Total liabilities and shareholders’ equity (deficit) | $ | 341,401 | $ | 151,436 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended |
||||||||
2020 | 2019 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 30,009 | $ | (21,623 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 975 | 1,064 | ||||||
Loss on disposal of property and equipment | — | 478 | ||||||
Remeasurement of acquisition-related contingent consideration | 3,396 | 1,757 | ||||||
Remeasurement of financing-related contingent consideration | 435 | 357 | ||||||
Amortization of debt discount and debt issuance costs | 3,193 | 2,918 | ||||||
Change in deferred tax and income tax deferred charge | 161 | 1,900 | ||||||
Stock-based compensation expense | 1,511 | 406 | ||||||
Gain on the disposition of the hospital business | (45,760 | ) | — | |||||
Loss on deconsolidation of subsidiary | — | 1,750 | ||||||
Other adjustments | 477 | (995 | ) | |||||
Net changes in assets and liabilities | ||||||||
Accounts receivable | 2,589 | 579 | ||||||
Inventories | (1,353 | ) | 2,124 | |||||
Prepaid expenses and other current assets | (1,149 | ) | (1,829 | ) | ||||
Research and development tax credit receivable | 2,036 | (593 | ) | |||||
Accounts payable & other current liabilities | (1,550 | ) | 3,127 | |||||
Accrued expenses | (6,906 | ) | (3,737 | ) | ||||
Accrued income taxes | 321 | (71 | ) | |||||
Earn-out payments for contingent consideration in excess of acquisition-date fair value | (3,736 | ) | (5,790 | ) | ||||
Royalty payments for contingent consideration payable in excess of original fair value | (608 | ) | (917 | ) | ||||
Other assets and liabilities | (3,458 | ) | (3,558 | ) | ||||
Net cash used in operating activities | (19,417 | ) | (22,653 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | — | (29 | ) | |||||
Proceeds from the disposal of property and equipment | — | 154 | ||||||
Proceeds from the disposition of the hospital business | 14,500 | — | ||||||
Proceeds from sales of marketable securities | 15,716 | 52,202 | ||||||
Purchases of marketable securities | (97,878 | ) | (21,991 | ) | ||||
Net cash (used in) provided by investing activities | (67,662 | ) | 30,336 | |||||
Cash flows from financing activities: | ||||||||
Proceeds from the |
60,639 | — | ||||||
Proceeds from the |
116,974 | — | ||||||
Proceeds from stock option exercises and ESPP | 1,903 | 92 | ||||||
Other financing activities, net | — | (37 | ) | |||||
Net cash provided by financing activities | 179,516 | 55 | ||||||
Effect of foreign currency exchange rate changes on cash and cash equivalents | (37 | ) | 48 | |||||
Net change in cash and cash equivalents | 92,400 | 7,786 | ||||||
Cash and cash equivalents at |
9,774 | 9,325 | ||||||
Cash and cash equivalents at |
$ | 102,174 | $ | 17,111 |
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except per share data)
(Unaudited)
Three Months Ended |
Six Months Ended |
|||||||||||||||
Revenues by Product: | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Bloxiverz | $ | 800 | $ | 2,358 | $ | 2,201 | $ | 4,926 | ||||||||
Vazculep | 4,915 | 9,410 | 10,429 | 18,883 | ||||||||||||
Akovaz | 4,196 | 5,946 | 9,545 | 9,738 | ||||||||||||
Other | 180 | (160 | ) | 159 | 444 | |||||||||||
Total product sales | $ | 10,091 | $ | 17,554 | $ | 22,334 | $ | 33,991 |
Source: Avadel Pharmaceuticals plc