Avadel Pharmaceuticals Reports Fourth Quarter and Full Year 2018 Financial Results

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DUBLIN, Ireland, March 15, 2019 (GLOBE NEWSWIRE) -- Avadel Pharmaceuticals plc (Nasdaq: AVDL), a company focused on developing FT218 for sleep disorders, today announced its financial results for the fourth quarter and full year of 2018.

“We have recently announced a restructuring and other activities to focus our efforts and resources toward advancing our lead clinical-stage asset, FT218,” said Greg Divis, Interim Chief Executive Officer of Avadel. “Cost savings generated by the restructuring, along with hospital product cash flow, are expected to extend our cash runway into 2021.  In conjunction with the restructuring, we have engaged a third-party to review the FT218 development program with the goal of identifying opportunities to enhance the FT218 FDA submission.  With a focused commitment to advancing FT218 and building shareholder value, we look forward to keeping you updated on our progress."

Revenues for the fourth quarter 2018 were $20.9 million, compared to $34.8 million in the fourth quarter 2017. 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. Noctiva revenues for the three and twelve months ended December 31, 2018 include an adjustment of $1.4 million to account for higher estimated product returns largely due to Avadel Specialty Pharmaceutical, LLC’s intention to exit the Noctiva product as announced on February 7, 2019.

Research and development (R&D) expense was $6.1 million in the fourth quarter of 2018 compared to $11.3 million in the fourth quarter of 2017. For the full year 2018, R&D expense was $39.3 million compared to $33.4 million in 2017. The increase was primarily due to costs associated with the Phase 3 REST-ON clinical trial for FT218. A portion of the higher R&D spending, when compared to 2017, was due to R&D costs of approximately $1.1 million associated with Noctiva. The Company continues to invest a substantial portion of its R&D budget on the FT218 development program.

Selling, general and administrative (SG&A) expense was $23.2 million in the fourth quarter of 2018 compared to $23.1 million for the fourth quarter of 2017. For the full year 2018, SG&A was $100.4 million compared to $58.9 million in 2017. This increase for the full year was primarily due to $47.6 million of sales and marketing costs associated with the May 2018 launch of Noctiva, partially offset by $8.7 million of lower SG&A expense related to the February 2018 divestiture of the Company’s pediatric assets.

During the fourth quarter of 2018, the Company recorded an impairment charge of $66.1 million to write-off the carrying value of the Noctiva intangible asset.  The Company evaluated the long-term sales outlook of Noctiva and concluded that the associated cash flows did not support its carrying value.  The February 6, 2019 Chapter 11 Bankruptcy filing of Avadel Specialty Pharmaceuticals, LLC, the subsidiary which markets, sells and distributes Noctiva, confirmed management’s conclusion that the intangible asset was fully impaired as of December 31, 2018.  

GAAP net loss for the fourth quarter of 2018 was $63.9 million or $1.72 per share compared to a net loss of $8.2 million or $0.21 per share for the same period in 2017. For the full year, 2018 GAAP net loss was $95.3 million or $2.55 per share compared to a net income of $68.3 million or $1.63 per diluted share in 2017.

The decrease in net income is largely attributable to lower revenues from the Company’s hospital products, higher SG&A due to the 2018 launch of Noctiva, increased R&D spending on the Phase 3 REST-ON trial and the 2018 impairment charge related to the Noctiva intangible asset. 

Non-GAAP adjusted net loss for the fourth quarter of 2018 was $17.0 million or $0.46 per share compared to a non-GAAP adjusted net loss of $10.0 million or $0.25 per share in the same period last year. For the full year, 2018 non-GAAP adjusted net loss was $74.2 million or $1.99 per share compared to non-GAAP adjusted net income of $13.8 million or $0.33 per diluted share in 2017. Please see the Supplemental Information section within this document for a reconciliation of adjusted net income and adjusted per share amounts to the respective GAAP amounts.

Cash, cash equivalents and marketable securities were $99.9 million as of December 31, 2018, compared to $94.1 million as of December 31, 2017.

As a result of the Company’s recently announced restructuring, cash is anticipated to be sufficient to fund operations into 2021.  The hospital products business is expected to generate revenues of between $13 and $15 million in the first quarter of 2019. However, due to increased competition from products launched, expected to be launched in 2019, and possible market price actions, revenues for 2019 could be below $30 million. This possibility is incorporated into the cash runway guidance. Additionally, the Company anticipates submitting an NDA in March of 2019 on a fourth Hospital Product, AV001, which, if approved, could contribute revenues to Avadel in 2020.

A conference call to discuss these results has been scheduled for Friday, March 15, 2019 at 8:30 a.m. EDT. A question and answer period will follow management's prepared remarks. To access the conference call, investors are invited to dial (844) 388-0559 (U.S. and Canada) or (216) 562-0393 (International). The conference ID number is 6799356. A live audio webcast can be accessed by visiting the investor relations section of the Company’s website, . A replay of the webcast will be archived on Avadel’s website for 90 days following the event.

Avadel Pharmaceuticals plc (Nasdaq: AVDL) is a branded specialty pharmaceutical company.  The Company’s primary focus is on the development and potential FDA approval for FT218, which is in a Phase 3 clinical trial for the treatment of narcolepsy patients suffering from excessive daytime sleepiness (EDS) and cataplexy.  In addition, Avadel markets three sterile injectable drugs used in the hospital setting, which were developed under the Company’s “unapproved marketed drug” (UMD) program.  Avadel is headquartered in Dublin, Ireland with operations in St. Louis, Missouri and Lyon, France. For more information, please visit .

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:

(b) risks relating to the following:

(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, 2017 which we filed with the Securities and Exchange Commission on March 16, 2018.

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.

In addition to reporting its financial results in accordance with generally accepted accounting principles in the U.S.("GAAP"), Avadel discloses certain non-GAAP financial measures, including adjusted net income and loss and adjusted net income and loss per diluted share.  Management believes that such non-GAAP financial measures can enhance an overall understanding of the Company’s financial performance when considered together with financial measures prepared in accordance with GAAP.  The non-GAAP results disclosed herein (a) exclude, in each case to the extent applicable, fair value remeasurements of its contingent consideration, amortization of debt discount and debt issuance costs attributable to our  exchangeable notes, impairment of intangible assets, amortization of intangible assets, restructuring costs, foreign exchange gains and losses on assets and liabilities denominated in foreign currencies, unrealized gains/losses on marketable equity securities,  but (b) include the cash payments plus any unpaid accrued cash payment obligations associated with the contingent consideration and cash interest payments or related accruals on the exchangeable notes. Our management uses these non-GAAP measures internally for forecasting, budgeting and measuring the Company's operating performance. Investors and other readers should review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most closely comparable GAAP measure set forth below and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP. The table provided within the following “Supplemental Information” section reconciles GAAP net income and loss and diluted earnings or loss per share to the corresponding adjusted (i.e., "non-GAAP") amounts.

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Globe Newswire: 11:00 GMT Friday 15th March 2019

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