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What changed in AVADEL PHARMACEUTICALS PLC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AVADEL PHARMACEUTICALS PLC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+413 added−414 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-29)

Top changes in AVADEL PHARMACEUTICALS PLC's 2024 10-K

413 paragraphs added · 414 removed · 340 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

78 edited+14 added−21 removed147 unchanged
Biggest changeAlthough a number of these and other proposed measures may require authorization through additional legislation to become effective, and the Biden administration may reverse or otherwise change these measures, both the Biden administration and Congress have indicated that they will continue to seek new legislative measures to control drug costs. -20- Individual states in the U.S. have also increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Biggest changeIndividual states in the U.S. have also increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Government Regulation Government authorities in the U.S. at the federal, state, and local level and in other countries extensively regulate, among other things, the research and clinical development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing, pricing, and export and import of drug products, such as those we are developing.
Government Regulation Government authorities in the U.S. at the federal, state, and local level and in other countries extensively regulate, among other things, the research and clinical development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing, pricing, and export and import of drug products, such as those we are developing and marketing.
Third party patient assistance programs that receive financial support from companies have become the subject of enhanced government and regulatory scrutiny.
Third party patient financial assistance programs that receive financial support from companies have become the subject of enhanced government and regulatory scrutiny.
HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in U.S. federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; • The federal legislation commonly referred to as the Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other licensed health care practitioners and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; • Federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs; • Federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and • Analogous state laws and regulations, including: state anti-kickback and false claims laws, which may apply to our business practices, including, but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state and local laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; state laws that require the reporting of information related to drug pricing; state and local laws requiring the registration of pharmaceutical sales representatives; and state laws governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in U.S. federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; • The federal legislation commonly referred to as the Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other licensed health care practitioners and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; • Federal government price reporting laws, which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs; • Federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and • Analogous state laws and regulations, including: state anti-kickback and false claims laws, which may apply to our business practices, including, but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by any third-party payor, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state and local laws that require drug -16- manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; state laws that require the reporting of information related to drug pricing; state and local laws requiring the registration of pharmaceutical sales representatives; and state laws governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Similar to the federal Anti-Kickback Statute, a person or entity can be found guilty of violating HIPAA without actual knowledge of the statute or specific intent to violate it; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and their respective implementing regulations, which impose, among other things, specified -17- requirements relating to the privacy, security and transmission of individually identifiable health information held by covered entities and their business associates as well as their covered subcontractors.
Similar to the federal Anti-Kickback Statute, a person or entity can be found guilty of violating HIPAA without actual knowledge of the statute or specific intent to violate it; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and their respective implementing regulations, which impose, among other things, specified requirements relating to the privacy, security and transmission of individually identifiable health information held by covered entities and their business associates as well as their covered subcontractors.
The OIG has established guidelines that suggest that it is lawful for pharmaceutical manufacturers to make donations to charitable organizations who provide co-pay assistance to Medicare patients, provided that such organizations, among other things, are bona fide charities, are entirely independent of and not controlled by the manufacturer, provide aid to applicants on a first-come basis according to consistent financial criteria and do not link aid to use -18- of a donor's product.
The OIG has established guidelines that suggest that it is lawful for pharmaceutical manufacturers to make donations to charitable organizations who provide co-pay assistance to Medicare patients, provided that such organizations, among other things, are bona fide charities, are entirely independent of and not controlled by the manufacturer, provide aid to applicants on a first-come basis according to consistent financial criteria and do not link aid to use of a donor's product.
Other potential consequences include, among other things: • mandated corrective advertising or communications with doctors; • restrictions on the marketing or manufacturing of the drug or biologic, suspension of the approval, complete withdrawal of the drug from the market or product recalls; • fines, warning letters or holds on post-approval clinical trials; • refusal of the FDA to approve applications or supplements to approved applications, or suspension or revocation of drug or biologic approvals; • drug or biologic seizure or detention, or refusal to permit the import or export of drugs; or • injunctions or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: • mandated corrective advertising or communications with doctors; • restrictions on the marketing or manufacturing of the drug, suspension of the approval, complete withdrawal of the drug from the market or product recalls; • fines, warning letters or holds on post-approval clinical trials; • refusal of the FDA to approve applications or supplements to approved applications, or suspension or revocation of drug approvals; • drug seizure or detention, or refusal to permit the import or export of drugs; or • injunctions or the imposition of civil or criminal penalties.
In particular, in 2010, the ACA was enacted, which, among other things, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations, subjected -19- manufacturers to new annual fees and taxes for certain branded prescription drugs, and provided incentives to programs that increase the federal government’s comparative effectiveness research.
In particular, in 2010, the ACA was enacted, which, among other things, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations, subjected manufacturers to new annual fees and taxes for certain branded prescription drugs, and provided incentives to programs that increase the federal government’s comparative effectiveness research.
Government enforcement agencies have shown increased interest in pharmaceutical companies' product and patient assistance programs, including reimbursement support services, and a number of investigations into these programs have resulted in significant civil and criminal settlements. In addition, at least one insurer has directed its network pharmacies to no longer accept co-pay coupons for certain specialty drugs the insurer identified.
Government enforcement agencies have shown increased interest in pharmaceutical companies' product and patient financial assistance programs, including reimbursement support services, and a number of investigations into these programs have resulted in significant civil and criminal settlements. In addition, at least one insurer has directed its network pharmacies to no longer accept co-pay coupons for certain specialty drugs the insurer identified.
Later discovery of previously unknown problems with a drug or biologic, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may require revisions to the approved labeling to add new safety information, including the addition of new warning and contraindications; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program.
Later discovery of previously unknown problems with a drug, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may require revisions to the approved labeling to add new safety information, including the addition of new warning and contraindications; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program.
Specifically, in recent years, there have been multiple settlements resulting out of government claims challenging the legality of their patient assistance programs under a variety of federal and state laws. It is possible that we may make grants to independent charitable foundations that help financially needy patients with their premium, co-pay, and co-insurance obligations.
Specifically, in recent years, there have been multiple settlements resulting out of government claims challenging the legality of their patient financial assistance programs under a variety of federal and state laws. It is possible that we may make grants to independent charitable foundations that help financially needy patients with their premium, co-pay, and co-insurance obligations.
These sanctions could include, among other actions, the regulatory authority's refusal to approve pending applications, withdrawal of an approval, clinical holds, untitled or warning letters, voluntary product recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution, injunctions, debarment, fines, refusals of government contracts, restitution, disgorgement, or civil or criminal penalties.
These sanctions could include, among other actions, the regulatory authority's refusal to approve pending applications, withdrawal of an approval, clinical holds, untitled or warning letters, voluntary product recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution, injunctions, debarment, fines, -8- refusals of government contracts, restitution, disgorgement, or civil or criminal penalties.
Orphan Drug Designation The FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the U.S., or if it affects 200,000 or more individuals in the U.S., there is no reasonable expectation that the cost of developing and marketing the drug for this type of disease or condition will be recovered from sales in the U.S.
Orphan Drug Designation and Exclusivity The FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the U.S., or if it affects 200,000 or more individuals in the U.S., there is no reasonable expectation that the cost of developing and marketing the drug for this type of disease or condition will be recovered from sales in the U.S.
The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products. In the U.S., to help patients afford our approved product, we may utilize programs to assist them, including patient assistance programs and co-pay coupon programs for eligible patients.
The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products. In the U.S., to help patients afford our approved product, we may utilize programs to assist them, including patient financial assistance programs and co-pay coupon programs for eligible patients.
Further, we offer a variety of tools allowing employees to prioritize wellness, including retirement planning, employee stock purchase program, legal services, employee assistance programs, and more. -21- Career Growth and Development We are invested in the development of each of our employees. We provide opportunities to lead and participate in cross-functional teams, coaching, leadership development, and more.
Further, we offer a variety of tools allowing employees to prioritize wellness, including retirement planning, employee stock purchase program, legal services, employee assistance programs, and more. Career Growth and Development We are invested in the development of each of our employees. We provide opportunities to lead and participate in cross-functional teams, coaching, leadership development, and more.
A REMS could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries, and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription, or dispensing of drugs.
A REMS could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries, and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, -11- prescription, or dispensing of drugs.
Manufacturing, sales, promotion, and other activities are also potentially subject to federal and state consumer protection and unfair competition laws. -15- We are subject to numerous foreign, federal, state, and local environmental, health, and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment, and disposal of hazardous materials and wastes.
Manufacturing, sales, promotion, and other activities are also potentially subject to federal and state consumer protection and unfair competition laws. We are subject to numerous foreign, federal, state, and local environmental, health, and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment, and disposal of hazardous materials and wastes.
We provide reimbursement to our employees for seminars, conferences and educational and professional training. In alignment with our business strategy, it is our goal to empower all employees to take full advantage of their professional growth opportunities, to lead them to long-term job satisfaction and organizational success.
We provide reimbursement to our employees for professional seminars, conferences and training. In alignment with our business strategy, it is our goal to empower all employees to take full advantage of their professional growth opportunities, to lead them to long-term job satisfaction and organizational success.
U.S. Marketing Exclusivity Marketing exclusivity provisions under the FDCA can delay the submission or the approval of certain marketing applications for competing products. The FDCA provides a five-year period of non-patent marketing exclusivity within the U.S. to the first applicant to obtain approval of an NDA for a new chemical entity.
U.S. Marketing Exclusivity -13- Marketing exclusivity provisions under the FDCA can delay the submission or the approval of certain marketing applications for competing products. The FDCA provides a five-year period of non-patent marketing exclusivity within the U.S. to the first applicant to obtain approval of an NDA for a new chemical entity.
The conduct of the preclinical tests must comply with federal regulations, including GLPs. The sponsor must submit the results of the preclinical tests, together with manufacturing information, -10- analytical data, any available clinical data or literature, and a proposed clinical protocol, to the FDA as part of the IND.
The conduct of the preclinical tests must comply with federal regulations, including GLPs. The sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature, and a proposed clinical protocol, to the FDA as part of the IND.
However, donations to patient assistance programs have received some negative publicity and have been the subject of multiple government enforcement actions, related to allegations regarding their use to promote branded pharmaceutical products over other less costly alternatives.
However, donations to patient financial assistance programs have received some negative publicity and have been the subject of multiple government enforcement actions, related to allegations regarding their use to promote branded pharmaceutical products over other less costly alternatives.
An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits.
An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical trials are minimized and are -9- reasonable in relation to anticipated benefits.
The Complete Response Letter may require additional clinical data and/or additional pivotal clinical trial(s), and/or other significant, expensive and time-consuming requirements related to clinical trials, preclinical studies, or -12- manufacturing.
The Complete Response Letter may require additional clinical data and/or additional pivotal clinical trial(s), and/or other significant, expensive and time-consuming requirements related to clinical trials, preclinical studies, or manufacturing.
Violations are subject to civil and criminal fines and penalties for each violation, plus up to three times the remuneration involved, imprisonment, and exclusion from government healthcare programs.
Violations are subject to civil and criminal fines and -15- penalties for each violation, plus up to three times the remuneration involved, imprisonment, and exclusion from government healthcare programs.
LUMRYZ competes with twice-nightly oxybate formulations, as well as a number of daytime wake promoting agents including lisdexamfetamine, detroamphetamine, methylphenidate, amphetamine, modafinil, and armodafinil, which are widely prescribed, as well as solriamfetol and pitolisant. Generic pharmaceutical products will continue to play a large role in the U.S. healthcare system. LUMRYZ may face competition from manufacturers of generic twice-nightly oxybate formulations.
LUMRYZ competes with twice-nightly oxybate formulations, as well as a number of daytime wake promoting agents including lisdexamfetamine, dextroamphetamine, methylphenidate, amphetamine, modafinil, and armodafinil, which are widely prescribed, as well as solriamfetol and pitolisant. Generic pharmaceutical products will continue to play a large role in the U.S. healthcare system. LUMRYZ may face competition from manufacturers of generic twice-nightly oxybate formulations.
Post-Marketing Requirements Following approval of a new drug, a pharmaceutical company and the approved drug are subject to continuing regulation by the FDA, including, among other things, establishment registration and drug listing, monitoring and recordkeeping activities, reporting to the applicable regulatory authorities of adverse events with the drug, providing the regulatory authorities with updated safety and efficacy information, drug sampling and distribution requirements, and complying with promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as off-label promotion), limitations on industry-sponsored scientific and educational activities, and requirements for promotional activities involving the internet.
Post-Marketing Requirements Following approval of a new drug, a pharmaceutical company and the approved drug are subject to continuing regulation by the FDA, including, among other things, establishment registration and drug listing, monitoring and recordkeeping activities, reporting to the applicable regulatory authorities of adverse events with the drug, providing the regulatory authorities with -12- updated safety and efficacy information, drug sampling and distribution requirements, and complying with promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as off-label promotion), limitations on industry-sponsored scientific and educational activities, and requirements for online promotional activities.
There is no obligation for a pharmaceutical manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act. • On May 23, 2019, CMS published a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020. • On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.
There is no obligation for a pharmaceutical manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act. • On May 23, 2019, CMS published a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020. -18- • On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminated the statutory drug rebate cap, set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.
Our Drug Delivery Technologies We own drug delivery technologies that address formulation challenges, potentially allowing the development of differentiated drug products for administration in various forms (e.g. , capsules, tablets, sachets or liquid suspensions for oral use; or injectables for subcutaneous administration) that could be applied to a broad range of drugs.
Our Drug Delivery Technologies We own drug delivery technologies that address formulation challenges, potentially allowing the development of differentiated drug products for administration in various forms (e.g. , capsules, tablets, powders or liquid for oral use; or injectables for subcutaneous administration) that could be applied to a broad range of drugs.
In particular, the FDA found that LUMRYZ makes a major contribution to patient care over currently marketed, twice-nightly oxybate treatments by providing a once-nightly dosing regimen that avoids nocturnal arousal to take a second dose. The orphan exclusivity will continue until May 1, 2030.
In particular, the FDA found that LUMRYZ makes a major contribution to patient care over currently marketed, twice-nightly oxybate treatments by providing a once-nightly dosing regimen that avoids nocturnal arousal to take a second dose. The ODE will continue until May 1, 2030.
Under this REMS, healthcare providers who prescribe the drug must be specially certified; pharmacies that dispense the drug must be specially certified; and the drug must be dispensed only to patients who have enrolled in the LUMRYZ REMS and completed all REMS requirements including documentation of safe use conditions, among other requirements.
Under the LUMRYZ REMS, healthcare providers who prescribe the drug must be specially certified, pharmacies that dispense the drug must be specially certified, and the drug must be dispensed only to patients who have enrolled in the LUMRYZ REMS and completed all REMS requirements, including documentation of safe use conditions.
Although physicians may prescribe legally available drugs for off-label uses, the FDA takes the position that manufacturers may not market or promote such off-label uses.
Although physicians may prescribe drugs for off-label uses, the FDA takes the position that manufacturers may not market or promote such off-label uses.
Corporate Information The Company was incorporated on December 1, 2015 as an Irish private limited company, and re-registered as an Irish public limited company, or plc, on November 21, 2016. Our registered address is at 10 Earlsfort Terrace, Dublin 2, Ireland and our phone number is +353-1-901-5201.
Corporate Information The Company was incorporated on December 1, 2015 as an Irish private company limited by shares, and re-registered as an Irish public limited company, or plc, on November 21, 2016. Our registered address is at 10 Earlsfort Terrace, Dublin 2, D02 T380, Ireland and our phone number is +353-1-901-5201.
Avadel US Holdings, Inc., a Delaware corporation, is the holding entity of (i) Avadel Legacy Pharmaceuticals, LLC, (ii) Avadel Management Corporation, and (iii) Avadel CNS Pharmaceuticals, LLC. Avadel Finance Ireland Designated Activity Company is the holding entity of Avadel Finance Cayman Limited. Avadel France Holding SAS is the holding entity of Avadel Research SAS.
Avadel US Holdings, Inc., a Delaware corporation, is the holding entity of (i) Avadel Management, LLC, and (ii) Avadel CNS Pharmaceuticals, LLC. Avadel Finance Ireland -7- Designated Activity Company is the holding entity of Avadel Finance Cayman Limited. Avadel France Holding SAS is the holding entity of Avadel Research SAS.
Our people are our greatest competitive advantage, and our values serve as the foundation of our culture. We consider our relations with our employees to be good and are focused on maintaining a highly engaged and motivated workforce. Employee Demographics As of December 31, 2023, we had 154 full-time employees.
Our people are our greatest competitive advantage, and our values serve as the foundation of our culture. We consider our relations with our employees to be good and are focused on maintaining a highly engaged and motivated workforce. Employee Demographics As of December 31, 2024, we had 188 full-time employees.
Additionally, with its approval, the FDA also granted seven years of orphan drug exclusivity to LUMRYZ for the treatment of cataplexy or EDS in adults with narcolepsy due to a finding of clinical superiority of LUMRYZ relative to currently marketed oxybate treatments.
The FDA also granted seven years of Orphan Drug Exclusivity (“ODE”) to LUMRYZ for the treatment of cataplexy or EDS in adults with narcolepsy due to a finding of clinical superiority of LUMRYZ relative to currently marketed oxybate treatments.
The FDA may also require companies to perform additional bridging studies or measurements, including clinical trials, to support the change from the previously approved reference drug.
The FDA may require the applicant to perform additional bridging studies or measurements, including clinical trials, to support the change from the previously approved reference drug.
Through professional development, our employees can broaden their skills for their current and future roles. -22-
Through professional development, our employees can broaden their skills for their current and future roles. -20-
Diversity, Equity, and Inclusion Avadel is committed to fostering a diverse workforce and a culture of inclusion. Avadel pursues fair employment practices in every aspect of its business and is committed to a productive work environment for its employees. We strive to create a level of connectivity that goes beyond working together.
Inclusion Avadel is committed to fostering a culture of inclusion. Avadel pursues fair employment practices in every aspect of its business and is committed to a productive work environment for its employees. We strive to create a level of connectivity that -19- goes beyond working together.
Avadel is committed to facilitating an open, honest, inclusive, transparent, and productive work environment where we work together as ONE team and ONE culture to be our best for patients, customers, and each other. Avadel is committed to equal employment opportunities and non-discrimination in employment. We believe that all employees and applicants should be treated with courtesy, dignity, and respect.
Avadel is committed to facilitating an open, honest, inclusive, transparent, and productive work environment where we work together as ONE team and ONE culture to be our best for patients, customers, and each other. We believe that all employees and applicants should be treated with courtesy, dignity, and respect.
Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. -13- 505(b)(2) New Drug Applications As an alternative path to FDA approval for modifications to formulations or uses of products previously approved by the FDA pursuant to an NDA, an applicant may submit an NDA under Section 505(b)(2) of the FDCA.
Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. 505(b)(2) New Drug Applications As an alternative path to FDA approval for modifications to formulations or uses of a product previously approved by the FDA pursuant to an NDA, known as a “reference drug”, an applicant may submit an NDA under Section 505(b)(2) of the FDCA.
In addition, if the 505(b)(2) applicant can establish that reliance on the FDA’s previous findings of safety and effectiveness is scientifically and legally appropriate, it may eliminate the need to conduct certain preclinical studies or clinical trials of the new product.
If the 505(b)(2) applicant can establish that reliance on the FDA’s previous findings of safety and effectiveness for a reference drug is scientifically and legally appropriate, it may eliminate the need to conduct certain preclinical studies or clinical trials of the new product.
We believe LUMRYZ has the potential to demonstrate improved dosing compliance, safety, and patient satisfaction over other treatment options for cataplexy or EDS in patients with narcolepsy.
We believe LUMRYZ has the potential to demonstrate improved dosing compliance, safety, and patient satisfaction over other treatment options for cataplexy or EDS in patients seven years of age and older with narcolepsy.
In January 2023, Hikma Pharmaceuticals plc, announced that it launched an authorized generic version of Jazz Pharmaceuticals plc’s (“Jazz”) Xyrem (sodium oxybate).
In January 2023, Hikma Pharmaceuticals plc, announced that it launched an authorized generic version of Jazz Pharmaceuticals plc’s (“Jazz”) Xyrem (sodium oxybate). In July 2023, Amneal Pharmaceuticals, Inc. announced that it launched an authorized generic version of Jazz’s Xyrem (sodium oxybate).
Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business. Additionally, no user fees are assessed on NDAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.
PDUFA also imposes an annual prescription drug product program fee for human drugs. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business. Additionally, no user fees are assessed on NDAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.
Rooted in the trust we earn every day, our team is inclusive, valuing diverse perspectives and work every day to lift each other up in pursuit of improving the lives of the patients we serve.
Rooted in the trust we earn every day, our team is inclusive and works every day to lift each other up in pursuit of improving the lives of the patients we serve.
The DEA -16- conducts periodic inspections of registered establishments that handle controlled substances. Failure to comply with relevant DEA regulations, particularly as manifested in the loss or diversion of controlled substances, can result in regulatory action including civil penalties, refusal to renew necessary registrations, or proceedings to revoke those registrations. In certain circumstances, violations can lead to criminal prosecution.
Failure to comply with relevant DEA regulations, particularly as manifested in the loss or diversion of controlled substances, can result in regulatory action including civil penalties, refusal to renew necessary registrations, or proceedings to revoke those registrations. In certain circumstances, violations can lead to criminal prosecution.
This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued written request for such a trial.
This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on the voluntary completion of a pediatric trial that fairly responds to an FDA-issued written request for such a trial.
The API in LUMRYZ, sodium oxybate, is a Schedule I controlled substance in the U.S., and the finished FDA-approved formulation of LUMRYZ is a Schedule III controlled substance in the U.S. per current federal regulations. As a result, LUMRYZ is subject to regulation by the U.S.
Supplies and Manufacturing The active pharmaceutical ingredient (“API”) in LUMRYZ, sodium oxybate, is a Schedule I controlled substance in the U.S., and the finished FDA-approved formulation of LUMRYZ is a Schedule III controlled substance in the U.S. per current federal regulations. As a result, LUMRYZ is subject to regulation by the U.S.
To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the investigational drug product for a particular indication or indications to the satisfaction of the FDA. FDA approval of an NDA must be obtained before a drug may be offered for sale in the U.S.
To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the investigational drug product for a particular indication or indications to the satisfaction of the FDA.
A Complete Response Letter indicates that the review cycle of the application is complete and the application is not ready for approval. A Complete Response Letter usually describes all of the specific deficiencies in the NDA identified by the FDA.
An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. A Complete Response Letter indicates that the review cycle of the application is complete and the application is not ready for approval. A Complete Response Letter usually describes all of the specific deficiencies in the NDA identified by the FDA.
In order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product, in addition to the costs required to obtain FDA or other comparable regulatory approvals.
Additionally, separate reimbursement for the product itself or the treatment or procedure in which the product is used may not be available, which may impact physician utilization. -17- In order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product, in addition to the costs required to obtain FDA or other comparable regulatory approvals.
Other Regulatory Matters Manufacturing, sales, promotion, and other activities following drug approval are also subject to regulation by numerous regulatory authorities in addition to the FDA, including, in the U.S., the Centers for Medicare & Medicaid Services (“CMS”), other divisions of the U.S.
Governments outside of the U.S. have similar controlled substance laws, regulations and requirements in their respective jurisdictions. -14- Other Regulatory Matters Manufacturing, sales, promotion, and other activities following drug approval are also subject to regulation by numerous regulatory authorities in addition to the FDA, including, in the U.S., the Centers for Medicare & Medicaid Services (“CMS”), other divisions of the U.S.
Concurrent with clinical trials, companies usually complete additional animal -11- studies and must also develop additional information about the chemistry and physical characteristics of the drug as well as finalize a process for manufacturing the drug in commercial quantities in accordance with cGMP requirements.
We may also suspend or terminate a clinical trial based on evolving business objectives and/or competitive climate. Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug as well as finalize a process for manufacturing the drug in commercial quantities in accordance with cGMP requirements.
In addition to these federal statutory and regulatory obligations, there may be state and local laws and regulations relevant to the handling of controlled substances or listed chemicals. Governments outside of the U.S. have similar controlled substance laws, regulations and requirements in their respective jurisdictions.
In addition to these federal statutory and regulatory obligations, there may be state and local laws and regulations relevant to the handling of controlled substances or listed chemicals.
In July 2023, Amneal Pharmaceuticals, Inc. announced that it launched an authorized generic version of Jazz’s Xyrem (sodium oxybate). -8- In addition, there are other products in development that may be approved in the future that could have an impact on the narcolepsy treatment market, including, for example, reboxetine, orexin 2 receptor agonists, flecainide / modafinil combination, histamine H3 antagonists/inverse agonists, or GABAB agonists.
In addition, there are other products in development that may be approved in the future that could have an impact on the narcolepsy treatment market, including, for example, reboxetine, orexin 2 receptor agonists, flecainide / modafinil combination, histamine H3 antagonists/inverse agonists, or GABAB agonists.
The implementation of the IRA is currently subject to ongoing litigation challenging the constitutionality of the IRA’s Medicare drug price negotiation program. The effects of the IRA on our business and the healthcare industry in general is not yet known. In addition, President Biden has issued multiple executive orders that have sought to reduce prescription drug costs.
The implementation of the IRA is currently subject to ongoing litigation challenging the constitutionality of the IRA’s Medicare drug price negotiation program. The effects of the IRA on our business and the healthcare industry in general is not yet known.
These firms and, where applicable, their suppliers are subject to inspections by the FDA at any time, and the discovery of violative conditions, including failure to conform to cGMP, could result in enforcement actions that interrupt the operation of any such facilities or the ability to distribute drugs manufactured, processed, or tested by them. -14- The FDA may issue enforcement letters or withdraw the approval of the product if compliance with regulatory requirements and standards is not maintained or if problems occur after the drug or biologic reaches the market.
These firms and, where applicable, their suppliers are subject to inspections by the FDA at any time, and the discovery of violative conditions, including failure to conform to cGMP, could result in enforcement actions that interrupt the operation of any such facilities or the ability to distribute drugs manufactured, processed, or tested by them.
Positive top line data from the REST-ON trial were announced on April 27, 2020.
Positive top line data from the REST-ON trial were announced on April 27, 2020. REST-ON trial results have been published by Kushida et al.
For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs. Additionally, separate reimbursement for the product itself or the treatment or procedure in which the product is used may not be available, which may impact physician utilization.
For products administered under the supervision of a physician, obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated with such drugs.
In approving LUMRYZ, the FDA required a REMS for LUMRYZ to help ensure that the benefits of the drug in the treatment of cataplexy and EDS in adults with narcolepsy outweigh the risks of serious adverse outcomes resulting from inappropriate prescribing, misuse, abuse, and diversion of the drug.
The FDA has required implementation of a REMS to help ensure the benefits of the drug outweigh the risks of serious adverse outcomes resulting from inappropriate prescribing, misuse, abuse, and diversion of the same.
The FDA will not approve the drug unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the drug within required specifications. In addition, before approving an NDA, the FDA may also audit data from clinical trials to ensure compliance with GCP requirements.
Before approving an NDA, the FDA typically conducts a pre-approval inspection of the manufacturing facilities for the new drug to determine whether they comply with cGMPs. The FDA will not approve the drug unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the drug within required specifications.
We expect to continue to outsource the production of sodium oxybate and drug product for LUMRYZ to current good manufacturing practices (“cGMP”) -compliant, DEA- and FDA-audited CDMOs pursuant to supply agreements. We may establish supply relationships with additional CDMOs to manufacture API and/or LUMRYZ.
The LUMRYZ drug product for commercial lots is manufactured by one outsourced CDMO in the U.S. and one outsourced CDMO outside of the U.S. We expect to continue to outsource the production of sodium oxybate and drug product for LUMRYZ to current good manufacturing practices (“cGMP”) -compliant, DEA- and FDA-audited CDMOs pursuant to supply agreements.
Healthcare Laws Healthcare providers and third-party payors in the U.S. and elsewhere play a primary role in the recommendation and prescription of pharmaceutical products.
If any such changes were to be imposed, they could adversely affect the operation of our business. Healthcare Laws Healthcare providers and third-party payors in the U.S. and elsewhere play a primary role in the recommendation and prescription of pharmaceutical products.
Under the Prescription Drug User Fee Act (“PDUFA”), as amended, each NDA must be accompanied by a user fee. The FDA adjusts the PDUFA user fees on an annual basis. PDUFA also imposes an annual prescription drug product program fee for human drugs.
FDA approval of an NDA must be obtained before a drug may be offered for sale in the U.S. -10- Under the Prescription Drug User Fee Act (“PDUFA”), as amended, each NDA must be accompanied by a user fee known as an application fee. The FDA adjusts the PDUFA user fees on an annual basis.
Any person or firm that manufactures, distributes, dispenses, imports, or exports any controlled substance (or proposes to do so) must register with the DEA. The applicant must register for a specific business activity related to controlled substances, including manufacturing or distributing, and may engage in only the activity or activities for which it is registered.
The applicant must register for a specific business activity related to controlled substances, including manufacturing or distributing, and may engage in only the activity or activities for which it is registered. The DEA conducts periodic inspections of registered establishments that handle controlled substances for compliance with its rules and regulations.
In June 2023, we announced the U.S. commercial launch of LUMRYZ for the treatment of cataplexy or EDS in adults living with narcolepsy . Numerous LUMRYZ-related U.S. patents have been issued having expiration dates spanning from mid-2037 to early-2042, and there are additional patent applications currently in development and/or pending at the U.S.
Numerous LUMRYZ-related U.S. patents have been issued having expiration dates spanning from mid-2037 to early-2042, and there are additional patent applications currently in development and/or pending at the U.S. Patent and Trademark Office (“USPTO”), as well as foreign patent offices. We currently have 30 U.S. patents listed for LUMRYZ in FDA’s Orange Book.
The law’s requirements include the quarantine and prompt investigation of a suspect product to determine if it is illegitimate, and notifying trading partners and the FDA of any illegitimate product.
The DSCSA mandates resource-intensive obligations for pharmaceutical manufacturers, wholesale distributors, and dispensers including the quarantine and prompt investigation of a suspect product to determine if it is illegitimate, and notifying trading partners and the FDA of any illegitimate product.
Moreover, many jurisdictions permit third parties to challenge issued patents in administrative proceedings, which may result in further narrowing or even cancellation of patent claims.
In addition, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and patent scope can be reinterpreted by the courts after issuance. Moreover, many jurisdictions permit third parties to challenge issued patents in administrative proceedings, which may result in further narrowing or even cancellation of patent claims.
The CSA Title II of the Comprehensive Drug Abuse Prevention and Control Act of 1970, regulates the manufacture and distribution of narcotics and other controlled substances, including stimulants, depressants and hallucinogens in the U.S. The CSA is administered by the DEA, a division of the U.S.
Controlled Substances Regulations Narcotics and other APIs, such as sodium oxybate, are “controlled substances” under the CSA. The CSA, regulates the manufacture and distribution of narcotics and other controlled substances, including stimulants, depressants and hallucinogens in the U.S. The CSA is administered by the DEA, a division of the U.S.
The Drug Supply Chain Security Act (“DSCSA”) was enacted in 2013 with the aim of building an electronic system to identify and trace certain prescription drugs distributed in the U.S. The DSCSA mandates phased-in and resource-intensive obligations for pharmaceutical manufacturers, wholesale distributors, and dispensers over a 10-year period that culminated in November 2023.
Prescription Drug Marketing Act (“PDMA”), a part of the FDCA. The Drug Supply Chain Security Act (“DSCSA”) was enacted in 2013 with the aim of building an electronic system to identify and trace certain prescription drugs distributed in the U.S.
Item 1. Business. (Dollar amounts in thousands, except per-share amounts and as otherwise noted) General Overview Avadel Pharmaceuticals plc (Nasdaq: AVDL) (“Avadel,” the “Company,” “we,” “our,” or “us”) is a biopharmaceutical company. LUMRYZ is an extended-release formulation of sodium oxybate indicated to be taken once at bedtime for the treatment of cataplexy or EDS in adults with narcolepsy.
Item 1. Business. (Dollar amounts in thousands, except per-share amounts, information set forth under Part III, and as otherwise noted) General Overview Avadel Pharmaceuticals plc (Nasdaq: AVDL) (“Avadel,” the “Company,” “we,” “our,” or “us”) is a biopharmaceutical company.
As of the date of this Annual Report, LUMRYZ is the only commercialized product in our portfolio. We continue to evaluate opportunities to expand our product portfolio . LUMRYZ LUMRYZ was approved by the FDA on May 1, 2023 for the treatment of cataplexy or EDS in adults with narcolepsy.
LUMRYZ LUMRYZ was approved by the FDA on May 1, 2023 for the treatment of cataplexy or EDS in adults with narcolepsy.
Modifications or enhancements to the drug or its labeling or changes of the site or process of manufacture are often subject to the approval of the FDA and other regulators, which may or may not be received or may result in a lengthy review process. Prescription drug advertising is subject to federal, state, and foreign regulations.
Modifications or enhancements to the drug or its labeling or changes of the site or process of manufacture are often subject to the prior approval of the FDA and other regulators, which may or may not be received after undergoing review. Any distribution of pharmaceutical samples must comply with the U.S.
Supplies and Manufacturing We attempt to maintain multiple suppliers in order to mitigate the risk of shortfall and inability to supply market demand. For LUMRYZ, we currently rely on two suppliers for sourcing our active pharmaceutical ingredient (“API”).
We attempt to maintain multiple suppliers in order to mitigate the risk of shortfall and inability to supply market demand. The API for LUMRYZ is currently manufactured by two outsourced contract development and manufacturing organizations (“CDMOs”) in the U.S.
In addition, the third parties who perform our clinical and commercial manufacturing, distribution, dispensing and clinical studies for LUMRYZ are required to maintain necessary DEA registrations and state licenses. The DEA periodically inspects facilities for compliance with its rules and regulations.
In addition, the third parties who perform our clinical and commercial manufacturing, distribution, dispensing and clinical studies for LUMRYZ are required to maintain necessary DEA registrations and state licenses. Any person or firm that manufactures, distributes, dispenses, imports, or exports any controlled substance (or proposes to do so) must register with the DEA.
After the FDA evaluates the application, manufacturing process, and manufacturing facilities where the drug product and/or its API will be produced, it may issue an approval letter or a Complete Response Letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.
In addition, before approving an NDA, the FDA may also audit data from clinical trials to ensure compliance with GCP requirements. After the FDA evaluates the application, manufacturing process, and manufacturing facilities where the drug product and/or its API will be produced, it may issue an approval letter or a Complete Response Letter.
We seek patent protection for our inventions and also rely upon trade secrets, know-how, continuing technological innovations and licensing opportunities to maintain and develop competitive positions. • Numerous LUMRYZ-related U.S. patents have been issued having expiration dates spanning from mid-2037 to early-2042, and there are additional patent applications currently in development and/or pending at the USPTO, as well as foreign patent offices.
Numerous LUMRYZ-related U.S. patents have been issued having expiration dates spanning from mid-2037 to early-2042, and there are additional patent applications currently in development and/or pending at the USPTO, as well as foreign patent offices. The patent positions of biopharmaceutical companies like us are generally uncertain and involve complex legal, scientific and factual questions.
The goals for reviewing standard and priority non-NME NDAs are ten months and six months, respectively, measured from the receipt date of the application. The FDA does not always meet its PDUFA goal dates for standard and priority NDAs, and the review process is often significantly extended by FDA requests for additional information or clarification.
The goals for reviewing standard and priority non-NME NDAs are ten months and six months, respectively, measured from the receipt date of the application.
Removed
Patent and Trademark Office (“USPTO”), as well as foreign patent offices. We currently have numerous Orange Book listed patents. We submitted a Supplemental New Drug Application (“sNDA”) for LUMRYZ in the pediatric narcolepsy population in November 2023. The sNDA was accepted by the FDA in January 2024 and an approval decision is expected in September 202 4.
Added
LUMRYZ is an extended-release formulation of sodium oxybate indicated to be taken once at bedtime for the treatment of cataplexy or EDS in patients seven years of age and older with narcolepsy. As of the date of this Annual Report, LUMRYZ is the only commercial product in our portfolio. We continue to evaluate opportunities to expand our product portfolio .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

188 edited+45 added−25 removed356 unchanged
Biggest changeIn addition to issues relating to the results generated in clinical trials, clinical trials can be delayed or halted for a variety of reasons, including delay or failure in: -33- • obtaining regulatory approval to commence a trial; • reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining institutional review board or ethics committee approval at each site; • recruiting suitable patients to participate in a trial; • having patients complete a trial or return for post-treatment follow-up; • clinical sites dropping out of a trial; • adding new sites; or • obtaining clinical materials or manufacturing sufficient quantities of our candidates for use in clinical trials.
Biggest changeProduct candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical testing. -31- In addition to issues relating to the results generated in clinical trials, clinical trials can be delayed or halted for a variety of reasons, including delays or failures in: • reaching agreement with regulatory authorities on acceptable clinical trial design, conduct or statistical analysis plan; • generating and submitting additional data required by regulatory authorities before we are permitted to initiate or resume a clinical trial; • obtaining regulatory approval to commence a trial; • reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • obtaining institutional review board or ethics committee approval at each site; • recruiting suitable patients to participate in a trial; • our third-party contractors’ ability to comply with regulatory requirements or contractual obligations; • having patients complete a trial or return for post-treatment follow-up; • clinical sites dropping out of a trial; • adding new sites; or • obtaining clinical materials or manufacturing sufficient quantities of our candidates for use in clinical trials.
Such rapid technological change, or the development by our competitors of technologically improved or different products, could render our product and any future product candidates or technologies obsolete or noncompetitive.
Such rapid technological change, or the development by our competitors of technologically improved or different products, could render our product and any future product candidates or our technologies obsolete or noncompetitive.
There has been increasing legislative and enforcement interest in the U.S. with respect to specialty drug pricing practices. Specifically, there have been several recent U.S.
There has been increasing legislative and enforcement interest in the U.S. with respect to specialty drug pricing practices. Specifically, there have been several recent U.S.
As required by the FDA, and similarly for other regulatory agencies, the adverse event information that we collect for LUMRYZ must be regularly reported to the FDA and could result in the FDA requiring changes to LUMRYZ’s labeling, including additional warnings or boxed warnings, or requiring us to take other actions that could have an adverse effect on patient and prescriber acceptance of LUMRYZ.
As required by the FDA, and similarly for other regulatory agencies, the adverse event information we collect for LUMRYZ must be regularly reported to the FDA and could result in the FDA requiring changes to LUMRYZ’s labeling, including additional warnings or boxed warnings, or requiring us to take other actions that could have an adverse effect on patient and prescriber acceptance of LUMRYZ.
Following any Paragraph IV certification that may be required, an applicant will be required to provide notice of that certification to the NDA holder and patent owner. Under the Hatch-Waxman Amendments, the patent owner may file a patent infringement lawsuit after receiving such notice.
Following any Paragraph IV certification, an applicant will be required to provide notice of that certification to the NDA holder and patent owner. Under the Hatch-Waxman Amendments, the patent owner may file a patent infringement lawsuit after receiving such notice.
Shareholders who are resident in the U.S., EU countries (other than Ireland) or other countries with which Ireland has signed a tax treaty (whether the treaty has been ratified or not) generally should not be subject to Irish withholding tax so long as the shareholder (a) where the shareholder is a body corporate, is not under the control of persons resident in Ireland and (b) has provided its broker, for onward transmission to our qualifying intermediary or other designated agent (in the case of shares held beneficially), or us or our transfer agent (in the case of shares held directly), with all the necessary documentation by the appropriate due date prior to payment of the dividend.
Shareholders who are resident in the U.S., EU countries (other than Ireland) or other countries with which Ireland has signed a tax treaty (whether the treaty has been ratified or not) generally should not be subject to Irish dividend withholding tax so long as the shareholder (a) where the shareholder is a body corporate, is not under the control of persons resident in Ireland and (b) has provided its broker, for onward transmission to our qualifying intermediary or other designated agent (in the case of shares held beneficially), or us or our transfer agent (in the case of shares held directly), with all the necessary documentation by the appropriate due date prior to payment of the dividend.
For purposes of these tests, passive income includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business.
For purposes of these tests, passive income includes dividends, interest, and gains from the sale or exchange of investment property, rents, and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business.
Our failure to comply with all regulatory requirements, and later discovery of previously unknown adverse events or other problems with our products, manufacturers, or manufacturing processes, may yield various results, including: -25- • litigation involving patients taking our products; • restrictions on such products, manufacturers, or manufacturing processes; • restrictions on the labeling or marketing of a product; • restrictions on product distribution or use; • requirements to conduct post-marketing studies or clinical trials; • warning or untitled letters; • withdrawal of the products from the market; • refusal to approve pending applications or supplements to approved applications that we submit; • voluntary recall of products; • fines, restitution, or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; • damage to relationships with any potential collaborators; • unfavorable press coverage and damage to our reputation; • refusal to permit the import or export of our products; • product seizure; or • injunctions or the imposition of civil or criminal penalties.
Our failure to comply with all regulatory requirements, or later discovery of previously unknown adverse events or other problems with our products, manufacturers, or manufacturing processes, may yield various results, including: • litigation involving patients taking our products; • restrictions on such products, manufacturers, or manufacturing processes; • restrictions on the labeling or marketing of a product; • restrictions on product distribution or use; • requirements to conduct post-marketing studies or clinical trials; • warning or untitled letters; • withdrawal of the products from the market; • refusal to approve pending applications or supplements to approved applications that we submit; • voluntary recall of products; • fines, restitution, or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; • damage to relationships with any potential collaborators; • unfavorable press coverage and damage to our reputation; • refusal to permit the import or export of our products; • product seizure; or • injunctions or the imposition of civil or criminal penalties.
The degree of market acceptance of LUMRYZ will depend on a number of factors, including, but not limited to: • the clinical indications for which LUMRYZ is approved and any restrictions placed upon the product in connection with its approval, including the REMS or any other equivalent obligation by other regulatory authorities, patient registry requirements or labeling restrictions; • the prevalence of narcolepsy-related EDS and cataplexy in adults in the U.S.; • scheduling classification of sodium oxybate as a controlled substance regulated by the DEA; • demonstration of the clinical safety and efficacy of LUMRYZ; • the absence of evidence of undesirable side effects of LUMRYZ that delay or extend trials for additional indications or in geographies outside the U.S.; • acceptance by physicians and patients of LUMRYZ as a safe and effective treatment; • availability of sufficient product inventory to meet demand; • physicians’ decisions relating to treatment practices based on availability; • physician and patient assessment of the burdens associated with obtaining or maintaining the certifications required under the LUMRYZ REMS; • the lack of regulatory delays or other regulatory actions; • its cost-effectiveness and related access to payor coverage; • its potential advantage over alternative treatment methods; • the availability of third-party reimbursement or other assistance for patients who are uninsured or underinsured; and • the marketing and distribution support it receives.
The degree of market acceptance of LUMRYZ will depend on a number of factors, including, but not limited to: • the clinical indications for which LUMRYZ is approved and any restrictions placed upon the product in connection with its approval, including the REMS or any other equivalent obligation by other regulatory authorities, patient registry requirements or labeling restrictions; • the prevalence of narcolepsy-related EDS and cataplexy in the U.S.; • scheduling classification of sodium oxybate as a controlled substance regulated by the DEA; • demonstration of the clinical safety and efficacy of LUMRYZ; • the absence of evidence of undesirable side effects of LUMRYZ that delay or extend trials for additional indications or in geographies outside the U.S.; • acceptance by physicians and patients of LUMRYZ as a safe and effective treatment; • availability of sufficient product inventory to meet demand; • physicians’ decisions relating to treatment practices; • physician and patient assessment of the burdens associated with obtaining or maintaining the certifications required under the LUMRYZ REMS; • the lack of regulatory delays or other regulatory actions; • its cost-effectiveness and related access to payor coverage; • its potential advantage over alternative treatment methods; • the availability of third-party reimbursement or other assistance for patients who are uninsured or underinsured; and • the marketing and distribution support it receives.
Our future effective tax rate may be adversely affected by a number of factors, many of which are outside of our control, including: • the jurisdictions in which profits are determined to be earned and taxed; -53- • changes in the valuation of our deferred tax assets and liabilities; • changes in share-based compensation expense; • changes in domestic or international tax laws or the interpretation of such tax laws; • changes in available tax credits; • adjustments to estimated taxes upon finalization of various tax returns; and • the resolution of issues arising from tax audits with various tax authorities.
Our future effective tax rate may be adversely affected by a number of factors, many of which are outside of our control, including: • the jurisdictions in which profits are determined to be earned and taxed; • changes in the valuation of our deferred tax assets and liabilities; • changes in share-based compensation expense; • changes in domestic or international tax laws or the interpretation of such tax laws; • changes in available tax credits; • adjustments to estimated taxes upon finalization of various tax returns; and • the resolution of issues arising from tax audits with various tax authorities.
For example, certain provisions of our articles of association: • permit our board of directors to issue preferred shares with such rights and preferences as they may designate, subject to applicable law; • impose advance notice requirements for shareholder proposals and director nominations to be considered at annual shareholder meetings; and • require the approval of a supermajority of the voting power of our shares entitled to vote at a general meeting of shareholders to amend or repeal any provisions of our articles of association.
For example, certain provisions of our articles of association: -49- • permit our Board of Directors to issue preferred shares with such rights and preferences as they may designate, subject to applicable law; • impose advance notice requirements for shareholder proposals and director nominations to be considered at annual shareholder meetings; and • require the approval of a supermajority of the voting power of our shares entitled to vote at a general meeting of shareholders to amend or repeal any provisions of our articles of association.
Generally, if a drug with orphan drug designation subsequently receives the first marketing approval for the disease or condition for which it has such designation, the drug is entitled to a period of marketing exclusivity, which precludes the FDA from approving another marketing application for the same drug for the same disease or condition for seven years, except in limited circumstances, such as if the FDA concludes that a subsequent same drug is clinically superior to the first approved orphan drug through greater safety, greater effectiveness, or a major contribution to patient care.
Generally, if a drug with orphan drug designation subsequently receives the first marketing approval for the disease or condition for which it has such designation, the drug is entitled to a -36- period of marketing exclusivity, which precludes the FDA from approving another marketing application for the same drug for the same disease or condition for seven years, except in limited circumstances, such as if the FDA concludes that a subsequent same drug is clinically superior to the first approved orphan drug through greater safety, greater effectiveness, or a major contribution to patient care.
In December 2019, former President Trump signed legislation intended to facilitate the development of generic and biosimilar products. The bill, previously known as the CREATES Act, authorizes sponsors of ANDAs and 505(b)(2) applications to file lawsuits against companies holding NDAs that decline to provide sufficient quantities of an approved reference drug on commercially reasonable, market-based terms.
In December 2019, President Trump signed legislation intended to facilitate the development of generic and biosimilar products. The bill, previously known as the CREATES Act, authorizes sponsors of ANDAs and 505(b)(2) applications to file lawsuits against companies holding NDAs that decline to provide sufficient quantities of an approved reference drug on commercially reasonable, market-based terms.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: -41- • reliance on the third party for regulatory compliance and quality assurance; • the possible breach of the manufacturing agreement by the third party; • the possible misappropriation of our proprietary information, including our trade secrets and know-how; and • the possible termination or non-renewal of the agreement by the third party at a time that is costly or inconvenient for us.
Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including: • reliance on the third party for regulatory compliance and quality assurance; • the possible breach of the manufacturing agreement by the third party; • the possible misappropriation of our proprietary information, including our trade secrets and know-how; and • the possible termination or non-renewal of the agreement by the third party at a time that is costly or inconvenient for us.
Risks Related to our Reliance on Third Parties We rely, and intend to continue to rely on a limited number of providers for the development, manufacture and supply of LUMRYZ, and if we experience problems with these suppliers, or they fail to comply with applicable regulatory requirements or to supply sufficient quantities at acceptable quality levels or prices, or at all, our business would be materially and adversely affected.
Risks Related to our Reliance on Third Parties We rely, and intend to continue to rely on a limited number of suppliers for the development, manufacture and supply of LUMRYZ, and if we experience problems with these suppliers, or they fail to comply with applicable regulatory requirements or to supply sufficient quantities at acceptable quality levels or prices, or at all, our business would be materially and adversely affected.
We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability, ongoing military conflicts, including the conflict between Russia and Ukraine and the conflict in Israel, and high inflation and rising interest rates, any of which could have a material adverse effect on our business, financial condition and results of operations.
We are currently operating in a period of political and economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability, ongoing military conflicts, including the conflict between Russia and Ukraine and the conflict in Israel, and high inflation and rising interest rates, any of which could have a material adverse effect on our business, financial condition and results of operations.
As an Irish-incorporated company, we are governed by Irish law, including the Irish Companies Act 2014 and the Irish Takeover Rules, which differs in some significant, and possibly material, respects from provisions set forth -51- in various U.S. state laws applicable to U.S. corporations and their shareholders, including provisions relating to interested directors, mergers and acquisitions, takeovers, shareholder lawsuits and indemnification of directors.
As an Irish-incorporated company, we are governed by Irish law, including the Irish Companies Act 2014 and the Irish Takeover Rules, which differs in some significant, and possibly material, respects from provisions set forth in various U.S. state laws applicable to U.S. corporations and their shareholders, including provisions relating to interested directors, mergers and acquisitions, takeovers, shareholder lawsuits and indemnification of directors.
Although we endeavor to ensure that our employees, consultants and independent contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employee’s former employer or other third parties.
Although we endeavor to ensure that our employees, consultants and independent contractors do not use the proprietary information or know-how of others in their work for us, we may be -47- subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employee’s former employer or other third parties.
We may incur significant liability if governmental authorities allege or determine that we are engaging in commercial activities or promoting LUMRYZ in a way that violates applicable regulations. Physicians have the discretion to prescribe drug products for uses that are not described in the product’s labeling and that differ from those approved by the FDA or other applicable regulatory agencies.
We may incur significant liability if governmental authorities allege or determine that we are engaging in commercial activities or promoting LUMRYZ in a way that violates applicable regulations. -29- Physicians have the discretion to prescribe drug products for uses that are not described in the product’s labeling and that differ from those approved by the FDA or other applicable regulatory agencies.
In addition, delays in approvals or rejections of marketing applications in the U.S. or other countries may be based upon many factors, including regulatory requests for additional analysis, reports, data, preclinical studies and clinical trials, regulatory questions regarding different interpretations of data and results, changes in regulatory policy during the period of product development and the emergence of new information regarding a product candidate.
Delays in approvals or rejections of marketing applications in the U.S. or other countries may be based upon many factors, including regulatory requests for additional analysis, reports, data, preclinical studies and clinical trials, regulatory questions regarding different interpretations of data and results, changes in regulatory policy during the period of product development and the emergence of new information regarding a product candidate.
We have limited personnel with experience in drug manufacturing, and we lack the capabilities to manufacture LUMRYZ on a clinical or commercial scale. There can be no assurance that our clinical development or commercial product supplies will not be limited, interrupted, or of satisfactory quality or continue to be available at acceptable quantities or prices to meet demand.
We have limited personnel with experience in drug manufacturing, and we lack the capabilities to manufacture LUMRYZ on a clinical or commercial scale. There can be no assurance that our clinical development or commercial product -38- supplies will not be limited, interrupted, or of satisfactory quality or continue to be available at acceptable quantities or prices to meet demand.
However, there are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business.
However, there are situations in which non-compliance can result in -45- abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business.
While a patent term extension can be requested under certain circumstances, the grant of such a request is not guaranteed. -44- Our partnerships with third parties expose us to risks that they will claim intellectual property rights on our inventions or fail to keep our unpatented inventions and proprietary information confidential.
While a patent term extension can be requested under certain circumstances, the grant of such a request is not guaranteed. Our partnerships with third parties expose us to risks that they will claim intellectual property rights on our inventions or fail to keep our unpatented inventions and proprietary information confidential.
Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, written description or non-enablement. Grounds for an unenforceability -48- assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO or made a misleading statement during prosecution.
Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, written description or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO or made a misleading statement during prosecution.
If we fail to comply with our reporting and payment obligations under U.S. governmental pricing programs, we could be subject to additional reimbursement requirements, penalties, sanctions and fines, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. We participate in the U.S.
If we fail to comply with our reporting and payment obligations under U.S. governmental pricing programs, we could be subject to additional reimbursement requirements, penalties, sanctions and fines, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. -28- We participate in the U.S.
Failure to obtain adequate supplies in a timely manner could have a material adverse effect on our business, financial condition and results of operations. -40- We contract with third parties for the manufacture of LUMRYZ for clinical testing and commercialization, and expect to continue to do so for any future products and product candidates.
Failure to obtain adequate supplies in a timely manner could have a material adverse effect on our business, financial condition and results of operations. We contract with third parties for the manufacture of LUMRYZ for clinical testing and commercialization, and expect to continue to do so for any future products and product candidates.
We may not be successful in entering into such collaborations on favorable terms, if at all, or our collaboration partners may not adequately perform under such arrangements, and as a result our ability to commercialize these products will be negatively affected and our prospects will be impaired. We face significant competition in seeking appropriate collaborators.
We may not be successful in entering into such collaborations on favorable terms, if at all, or our collaboration partners may not adequately perform under -41- such arrangements, and as a result our ability to commercialize these products will be negatively affected and our prospects will be impaired. We face significant competition in seeking appropriate collaborators.
Even if product candidates and drug delivery technologies appear promising during development, there may not be successful commercial applications developed for them for a number of reasons, including: • the FDA, the European Medicines Agency (“EMA”), the competent authority of a European Union (“EU”) Member State or an IRB, or an Ethics Committee (EU equivalent to IRB), or our partners may delay or halt applicable clinical trials; • we or our partners may face slower than expected rate of patient recruitment and enrollment in clinical trials, or may devote insufficient funding to the clinical trials; • drug delivery technologies and drug products may be found to be ineffective or to cause harmful side effects, or may fail during any stage of pre-clinical testing or clinical trials; • we or our partners may find that certain products cannot be manufactured on a commercial scale and, therefore, may not be economical or feasible to produce; • we or our partners may face delays in completing our clinical trials due to circumstances outside of our control, including natural disasters, labor or civil unrest, global health concerns or pandemics or acts of war or terrorism; or • product candidates could fail to obtain regulatory approval or, if approved, could fail to achieve market acceptance, could fail to be included within the pricing and reimbursement schemes of the U.S. or EU Member States, or could be precluded from commercialization by proprietary rights of third parties.
Even if product candidates and drug delivery technologies appear promising during development, there may not be successful commercial applications developed for them for a number of reasons, including: • the FDA, the European Medicines Agency (“EMA”), the competent authority of a EU Member State or an IRB, or an Ethics Committee (EU equivalent to IRB), or our partners may delay or halt applicable clinical trials; • we or our partners may face slower than expected rate of patient recruitment and enrollment in clinical trials, or may devote insufficient funding to the clinical trials; • drug delivery technologies and drug products may be found to be ineffective or to cause harmful side effects, or may fail during any stage of pre-clinical testing or clinical trials; • we or our partners may find that certain products cannot be manufactured on a commercial scale and, therefore, may not be economical or feasible to produce; -33- • we or our partners may face delays in completing our clinical trials due to circumstances outside of our control, including natural disasters, labor or civil unrest, global health concerns or pandemics or acts of war or terrorism; or • product candidates could fail to obtain regulatory approval or, if approved, could fail to achieve market acceptance, could fail to be included within the pricing and reimbursement schemes of the U.S. or EU Member States, or could be precluded from commercialization by proprietary rights of third parties.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry -56- generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems.
Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance.
Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors are critical to new product acceptance.
If we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by such third parties is compromised for any reason, our development activities may be extended, delayed or terminated which would have an adverse effect on our development program and our business.
If we are unable to effectively manage our outsourced activities or if the quality, accuracy, or availability of the services provided by such third parties is compromised for any reason, our development activities may be extended, delayed or terminated which would have an adverse effect on our development program and our business.
We would have little or no control over the marketing and sales efforts of such third parties, and our revenue from product sales may be lower than if we had commercialized LUMRYZ ourselves. We also face competition in our search for third parties to assist us with the sales and marketing efforts for our medicines.
We may have little or no control over the marketing and sales efforts of such third parties, and our revenue from product sales may be lower than if we had commercialized LUMRYZ ourselves. We may also face competition in our search for third parties to assist us with the sales and marketing efforts for our medicines.
Our estimates of the market opportunities for LUMRYZ are based on the estimated market size for the twice-nightly administration of sodium oxybate, and our expectations with regard to LUMRYZ’s potential to take -24- share of this market segment as well as attract oxybate-naïve patients and patients who have previously discontinued twice-nightly oxybate treatment.
Our estimates of the market opportunities for LUMRYZ are based on the estimated market size for the twice-nightly administration of sodium oxybate, and our expectations with regard to LUMRYZ’s potential to take share of this market segment as well as attract oxybate-naïve patients and patients who have previously discontinued twice-nightly oxybate treatment.
If any of the physicians or other providers or entities with whom we expect to do business are found to not be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs and imprisonment.
If any of the physicians or other -26- providers or entities with whom we expect to do business are found to not be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs and imprisonment.
If any of the above occur, our ability to operate our business and our results of operations could be adversely affected. -28- Coverage and reimbursement may be limited or unavailable in certain market segments for LUMRYZ or any future products, if approved, which could make it difficult for us to sell LUMRYZ or any future products profitably.
If any of the above occur, our ability to operate our business and our results of operations could be adversely affected. Coverage and reimbursement may be limited or unavailable in certain market segments for LUMRYZ or any future products, if approved, which could make it difficult for us to sell LUMRYZ or any future products profitably.
Other factors that will affect future capital requirements and may require us to seek additional financing include: • the development and acquisition of new products and drug delivery technologies; • the progress of our research and product development programs; and • the timing of, and amounts received from, future product sales, product development fees and licensing revenue and royalties.
Other factors that will affect future capital requirements and may require us to seek additional financing include: -34- • the development and acquisition of new products and drug delivery technologies; • the progress of our research and product development programs; and • the timing of, and amounts received from, future product sales, product development fees and licensing revenue and royalties.
In addition, competitors may obtain patents that may have an adverse effect on our ability to conduct business, or they may discover ways to circumvent our patents. The scope of any patent protection may not be sufficiently broad to cover our product or any future product or product candidate, or to exclude competing products.
In addition, competitors may obtain patents that may have an adverse effect on our ability to conduct business, or they may discover ways to circumvent our patents. The scope of any patent protection may not be sufficiently broad to cover our product or any future product or product -42- candidate, or to exclude competing products.
We designed our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules -55- and forms of the SEC.
We designed our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.
These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry.
These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets generally, or concerns or negative expectations about the prospects for companies in the financial services industry.
If we are not able to comply with post-approval regulatory requirements, we could have the marketing approvals for LUMRYZ withdrawn by regulatory authorities and our ability to market LUMRYZ could be limited, which could adversely affect our ability to achieve or sustain profitability and we could be subject to substantial penalties.
If we are not able to comply with post-approval regulatory requirements, we could have the marketing approvals for LUMRYZ withdrawn by regulatory authorities and our ability to market LUMRYZ could be limited, which could adversely affect our ability to achieve or sustain profitability and subject us to substantial penalties.
Such litigation -27- would subject us to additional costs, damages and reputational harm, which could lead to lower revenues. The CREATES Act may enable generic competition with LUMRYZ and any of our future product candidates, if approved, which could impact our ability to maximize product revenue.
Such litigation would subject us to additional costs, damages and reputational harm, which could lead to lower revenues. The CREATES Act may enable generic competition with LUMRYZ and any of our future product candidates, if approved, which could impact our ability to maximize product revenue.
We do not know if, when or how the FDA may change the orphan drug regulations and policies in the future, and it is uncertain how -38- any changes might affect our business. Depending on what changes, the FDA may make to its orphan drug regulations and policies, our business could be adversely impacted.
We do not know if, when or how the FDA may change the orphan drug regulations and policies in the future, and it is uncertain how any changes might affect our business. Depending on what changes, the FDA may make to its orphan drug regulations and policies, our business could be adversely impacted.
These products may compete with our product and any future products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. -47- Many companies have encountered significant problems in protecting and defending intellectual property rights in non-U.S. jurisdictions.
These products may compete with our product and any future products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in non-U.S. jurisdictions.
We currently do not intend to pay dividends and cannot assure the holders of our ADSs that we will make dividend payments in the future. We have never declared or paid a cash dividend on any of our ordinary shares or ADSs and do not anticipate declaring cash dividends in the foreseeable future.
We currently do not intend to pay dividends and cannot assure the holders of our ordinary shares that we will make dividend payments in the future. We have never declared or paid a cash dividend on any of our ordinary shares and do not anticipate declaring cash dividends in the foreseeable future.
Changes to applicable U.S. or foreign tax laws and regulations, or their interpretation and application (which changes may have retroactive application), including with respect to net operating losses and research and development tax credits, could adversely affect us or holders of our ordinary shares or ADSs.
Changes to applicable U.S. or foreign tax laws and regulations, or their interpretation and application (which changes may have retroactive application), including with respect to net operating losses and research and development tax credits, could adversely affect us or holders of our ordinary shares.
As a company, publicly-listed in the U.S., we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the listing rules of the Nasdaq Stock Market ("Nasdaq"), and incur significant legal, accounting and other expenses to comply with applicable requirements.
As a company, publicly listed in the U.S., we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the listing rules of the Nasdaq Stock Market ("Nasdaq"), and incur significant legal, -53- accounting and other expenses to comply with applicable requirements.
In addition, in the case of CDMOs that supply a product or product candidate, changes in manufacturers often involve changes in manufacturing procedures and processes, which could require that we conduct bridging studies between our supply from the prior CDMO and that of any new manufacturer.
In addition, in the case of CDMOs that supply a product or product candidate, changes in manufacturers often involve changes in -39- manufacturing procedures and processes, which could require that we conduct bridging studies between our supply from the prior CDMO and that of any new manufacturer.
The collaborator may also consider alternative products, product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with -43- us for LUMRYZ or any future product or product candidates.
The collaborator may also consider alternative products, product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for LUMRYZ or any future product or product candidates.
Accordingly, if these restrictions become applicable to us, we may be unable to take, or may be delayed in taking, certain actions, in connection with a financing, commercial or strategic transaction or otherwise, that we believe are in the best interest of the Company.
Accordingly, if these restrictions become applicable to us, we may be unable to take, -50- or may be delayed in taking, certain actions, in connection with a financing, commercial or strategic transaction or otherwise, that we believe are in the best interest of the Company.
Our future revenues will depend upon the size of any markets in which LUMRYZ and any future products receive approval, and our ability to achieve sufficient market acceptance, -35- reimbursement from third-party payors and adequate market share for our product and any future products in those markets.
Our future revenues will depend upon the size of any markets in which LUMRYZ and any future products receive approval, and our ability to achieve sufficient market acceptance, reimbursement from third-party payors and adequate market share for our product and any future products in those markets.
U.S. and global markets are experiencing volatility and disruption caused by economic uncertainty, including as a result of the ongoing Russia-Ukraine conflict and the effects of sanctions imposed on Russia as a result of the conflict, as well as the recent conflict in Israel and the Gaza Strip.
U.S. and global markets are experiencing volatility and disruption caused by political and economic uncertainty, including as a result of the ongoing Russia-Ukraine conflict and the effects of sanctions imposed on Russia as a result of the conflict, as well as the recent conflict in Israel and the Gaza Strip.
Holders that own 10 percent or more of the vote or value of ordinary shares or ADSs may suffer adverse U.S. tax consequences because our non-U.S. subsidiaries are expected to be classified as controlled foreign corporations.
Holders that own 10 percent or more of the vote or value of our ordinary shares may suffer adverse U.S. tax consequences because our non-U.S. subsidiaries are expected to be classified as controlled foreign corporations.
The successful pursuit of all components of our strategy will require substantial financial resources, and there can be no assurance that our existing cash and marketable securities assets and the cash generated by our operations will be adequate for these purposes.
The successful pursuit of all components of our strategy will require substantial financial resources, and there can be no assurance that our existing cash, cash equivalents and marketable securities assets and the cash generated by our operations will be adequate for these purposes.
If we or others identify undesirable side effects caused by LUMRYZ (or any other drug), a number of potentially significant negative consequences could result, including: • regulatory authorities may withdraw or limit their marketing approval of such drug; • regulatory authorities may require the addition of labeling statements, such as a “boxed” warning or additions to an existing boxed warning, or a contraindication, including as a result of inclusion in a class of drugs for a particular disease; • regulatory authorities may refuse to approve label expansions for additional indications for any approved drug; • we may be required to change the way such drugs are distributed or administered, conduct additional clinical trials or change the labeling of the drug; • regulatory authorities may require a modification of an existing REMS to mitigate risks; • we may be subject to regulatory investigations and government enforcement actions; • we may decide to remove the drug from the marketplace; • we could be sued and held liable for injury caused to individuals exposed to or taking the drug; and • our reputation may suffer.
If we or others identify undesirable side effects caused by LUMRYZ (or any other drug), a number of potentially significant negative consequences could result, including: • regulatory authorities may withdraw or limit their marketing approval of such drug; • regulatory authorities may require the addition of labeling statements, such as a “boxed warning” or additions to an existing boxed warning, or a contraindication, including as a result of inclusion in a class of drugs for a particular disease; • regulatory authorities may refuse to approve label expansions for additional indications for any approved drug; • we may be required to change the way such drugs are distributed or administered, conduct additional clinical trials or change the labeling of the drug; • regulatory authorities may require a modification of an existing REMS to mitigate risks; • we may be subject to regulatory investigations and government enforcement actions; • we may decide to remove the drug from the marketplace; • we could be sued and held liable for injury caused to individuals exposed to or taking the drug; and • our reputation may suffer.
In July 2023, Amneal Pharmaceuticals, Inc. announced that it launched an authorized generic version of Jazz’s Xyrem (sodium oxybate). There are other potential future competitive products that could impact the marketplace.
In July 2023, Amneal Pharmaceuticals, Inc. announced that it launched an authorized generic version of Jazz’s Xyrem (sodium oxybate). There are other potential future -24- competitive products that could impact the marketplace.
We cannot be sure whether additional legislative changes will be enacted, or -29- whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals or clearances of our products, if any, may be.
We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals or clearances of our products, if any, may be.
We cannot completely eliminate the risk of accidental contamination or injury from the use, storage, handling or disposal of these materials, including fires and/or explosions, storage tank leaks and ruptures and discharges or releases of toxic or hazardous substances.
We cannot completely eliminate the risk of accidental -48- contamination or injury from the use, storage, handling or disposal of these materials, including fires and/or explosions, storage tank leaks and ruptures and discharges or releases of toxic or hazardous substances.
As we expand our presence outside of the U.S. in key European markets, we must dedicate additional resources to comply with these laws, and such laws may preclude us from developing, manufacturing, or selling certain product candidates and products outside of the U.S., which could limit our growth potential and increase our development costs. -32- The failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and suspension or debarment from government contracting.
As we expand our presence outside of the U.S. in key European markets, we must dedicate additional resources to comply with these laws, and such laws may preclude us from developing, manufacturing, or selling certain product candidates and products outside of the U.S., which could limit our growth potential and increase our development costs. -30- The failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and suspension or debarment from government contracting.
These provisions may discourage potential takeover attempts or bids for our ordinary shares at a premium over the market price or they may adversely affect the market price of, and the voting and other rights of the holders of, ADSs.
These provisions may discourage potential takeover attempts or bids for our ordinary shares at a premium over the market price or they may adversely affect the market price of, and the voting and other rights of the holders of, our ordinary shares.
Pricing and rebate calculations are complex, varying across products and programs, and are often subject to interpretation by us, -30- governmental or regulatory agencies and the courts, which can change and evolve over time.
Pricing and rebate calculations are complex, varying across products and programs, and are often subject to interpretation by us, governmental or regulatory agencies and the courts, which can change and evolve over time.
DEA and state regulatory bodies may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to restrict, suspend or revoke those registrations. In certain circumstances, violations could lead to criminal penalties.
DEA and state -37- regulatory bodies may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to restrict, suspend or revoke those registrations. In certain circumstances, violations could lead to criminal penalties.
FDA regulations and other applicable regulations and policies provide incentives to manufacturers to create modified versions of a drug to facilitate the approval of an ANDA or other application for similar substitutes.
FDA regulations and other applicable regulations and policies provide incentives to manufacturers to create modified versions of a drug to facilitate the approval of an ANDA or other application for similar alternatives or substitutes.
These delays could be extensive and expensive, especially in situations where a substitution was not readily available or required variations of existing regulatory approvals and certifications or additional regulatory approval. Additionally, our third-party suppliers may not be required to, or may be unable to, provide us with any guaranteed minimum production levels or have sufficient dedicated capacity for our drug.
These delays could be extensive and expensive, especially in situations where a substitution is not readily available or required variations of existing regulatory approvals and certifications or additional regulatory approval. Additionally, our third-party suppliers may not be required to, or may be unable to, provide us with any guaranteed minimum production levels or have sufficient dedicated capacity for our drug.
The SEC also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA's accounting provisions. Governments outside of the U.S. tend to impose strict price controls, which may adversely affect our revenues, if any. In some countries, particularly the countries of Europe, the pricing of prescription pharmaceuticals is subject to governmental control.
The SEC also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA's accounting provisions. Governments outside of the U.S. tend to impose strict price controls, which may adversely affect our revenues, if any. In some countries, the pricing of prescription pharmaceuticals is subject to governmental control.
While these losses do not have an expiration date, substantial changes in the activities performed in these jurisdictions could have an impact on our ability to utilize these tax attributes in the future. U.S. Holders of ordinary shares or ADSs may suffer adverse U.S. tax consequences if we are classified as a passive foreign investment company.
While these losses do not have an expiration date, substantial changes in the activities performed in these jurisdictions could have an impact on our ability to utilize these tax attributes in the future. U.S. Holders of our ordinary shares may suffer adverse U.S. tax consequences if we are classified as a passive foreign investment company.
As a result, our ability to successfully commercialize LUMRYZ may involve more inherent risk, take longer, and cost more than it would if we were a company with substantial experience in launching medicines. We will have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train and retain marketing and sales personnel.
As a result, our ability to successfully commercialize LUMRYZ may involve more inherent risk, take longer, and cost more than it would if we were a company with substantial experience in commercializing medicines. We will have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train and retain marketing and sales personnel.
Healthcare providers, physicians and third-party payors in the U.S. and elsewhere play a primary role in the recommendation and prescription of biotechnology and biopharmaceutical products.
Healthcare providers, physicians and third-party payors in the U.S. and elsewhere play a primary role in the recommendation and prescription of biopharmaceutical products.
For example, our results may be negatively impacted if we have not adequately sized our field teams or if our targeting strategy is inadequate or if we encounter deficiencies or inefficiencies in our infrastructure or processes. We will be competing with many companies that currently have extensive and well-funded sales and marketing operations.
For example, our results may be negatively impacted if we have not adequately sized our field teams, if our targeting strategy is inadequate, or if we encounter deficiencies or inefficiencies in our infrastructure or processes. We will be competing with other companies that currently have extensive and well-funded sales and marketing operations.
The Foreign Corrupt Practices Act (“FCPA”) and its Irish equivalent, prohibits any individual or business from paying, offering, authorizing payment, or offering anything of value, directly or indirectly, to any foreign official, political party, or candidate for the purpose of influencing any act or decision of such third party in order to assist the individual or business in obtaining or retaining business.
The Foreign Corrupt Practices Act (“FCPA”) and its Irish equivalent prohibit any individual or business from paying, offering, authorizing payment, or offering anything of value, directly or indirectly, to any foreign official, political party, or candidate for the purpose of influencing any act or decision of such third party in order to assist the individual or business in obtaining or retaining business.
We currently maintain property, business interruption and casualty insurance with limits that we believe to be commercially reasonable but may be inadequate to cover any actual liability or damages. Risks Related to Ownership of Our Securities The price of ADSs representing our ordinary shares has been volatile and may continue to be volatile.
We currently maintain property, business interruption and casualty insurance with limits that we believe to be commercially reasonable but may be inadequate to cover any actual liability or damages. Risks Related to Ownership of Our Securities The price of our ordinary shares has been volatile and may continue to be volatile.
The portion due to the acquisition of FSC will expire in 2034 through 2035 and will not be fully utilized before they expire.
The portion due to the acquisition of FSC will expire in 2034 through 2035 and may not be fully utilized before they expire.
We may also experience ownership changes as a result of this offering or future issuances of our stock or as a result of subsequent shifts in our stock ownership, some of which are outside our control. We have completed an analysis to determine that no events have been triggered in the past.
We may also experience ownership changes as a result of this offering or future issuances of our stock or as a result of subsequent shifts in our stock ownership, some of which are outside our control. We have completed an analysis to determine that no events have triggered an ownership change in the past.
Our full-time employee base increased substantially in 2023 to advance the commercialization of LUMRYZ in the U.S. Our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities.
Our full-time employee base increased substantially in 2024 to advance the commercialization of LUMRYZ in the U.S. Our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities.
However, some shareholders may be subject to dividend withholding tax, which could adversely affect the price of ordinary shares and ADSs. General Risk Factors Provisions of our articles of association could delay or prevent a third-party’s effort to acquire us.
However, some shareholders may be subject to dividend withholding tax, which could adversely affect the price of ordinary shares. General Risk Factors Provisions of our articles of association could delay or prevent a third-party’s effort to acquire us.
We believe that we were not a PFIC for the taxable year ending December 31, 2023 and, based on the expected value of our assets, including any goodwill, and the expected nature and composition of our income and assets, we expect that we will not be a PFIC for our current taxable year.
We believe that we were not a PFIC for the taxable year ending December 31, 2024 and, based on the expected value of our assets, including any goodwill, and the expected nature and composition of our income and assets, we expect that we will not be a PFIC for our current taxable year.
The trading price of ADSs representing our ordinary shares has been, and is likely to continue to be, highly volatile. The market value of an investment in ADSs may fall sharply at any time due to this volatility.
The trading price of our ordinary shares has been, and is likely to continue to be, highly volatile. The market value of an investment in ordinary shares may fall sharply at any time due to this volatility.
If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third parties, or if we are unable to do so on commercially reasonable terms, our business, results of operations, financial condition and prospects will be materially adversely affected. We may encounter issues, delays or other challenges in commercializing LUMRYZ.
If we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with third part ies, or if we are unable to do so on commercially reasonable terms, our business, results of operations, financial condition and prospects will be materially adversely affected. We may encounter issues, delays or other challenges in commercializing LUMRYZ.
For example, we anticipate initiating a clinical trial for LUMRYZ in idiopathic hypersomnia in 2024. Our resource allocation decisions may cause us to fail to capitalize on profitable market opportunities. Our spending on current and future research and development programs, including evaluating LUMRYZ in additional indications, may not yield any commercially viable products or result in additional approvals for LUMRYZ.
For example, we initiated a clinical trial for LUMRYZ in idiopathic hypersomnia in 2024. Our resource allocation decisions may cause us to fail to capitalize on profitable market opportunities. Our spending on current and future research and development programs, including evaluating LUMRYZ in additional indications, may not yield any commercially viable products or result in additional approvals for LUMRYZ.
If we pay dividends, the dividends may be subject to Irish dividend withholding tax. In certain circumstances, as an Irish tax resident company, we may be required to deduct Irish dividend withholding tax (currently at the rate of 25%) from dividends paid to its shareholders.
If we pay dividends, the dividends may be subject to Irish dividend withholding tax. In certain circumstances, as an Irish tax resident company, we may be required to deduct Irish dividend withholding tax (currently at the rate of 25%) from dividends paid to our shareholders.
Moreover, despite our efforts, the possibility of these events occurring cannot be eliminated entirely and there can be no assurance that any measures we take will prevent cyber-attacks or security breaches that could adversely affect our business. We have broad discretion in the use of our cash and may not use it effectively.
Moreover, despite our efforts, the possibility of these events occurring cannot be eliminated entirely and there can be no assurance that any measures we take will prevent cyber-attacks, information security incidents, or data breaches that could adversely affect our business. We have broad discretion in the use of our cash and may not use it effectively.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeItem 1C. Cybersecurity. Cybersecurity Risk Management and Strategy -57- At Avadel, we recognize the importance of assessing, identifying, and managing risks from cybersecurity threats. We have implemented a cybersecurity risk management process in accordance with our risk profile and business that is informed by industry standards. We maintain cybersecurity policies and procedures as part of our overall risk management process.
Biggest changeItem 1C. Cybersecurity. Cybersecurity Risk Management and Strategy At Avadel, we recognize the importance of assessing, identifying, and managing risks from cybersecurity threats. We have implemented a cybersecurity risk management process in accordance with our risk profile and business that is informed by industry standards. We maintain cybersecurity policies and procedures as part of our overall risk management process.
We did not experience any material cybersecurity threats or incidents for the year ended December 31, 2023. Governance Related to Cybersecurity Risk Our Senior Director of Information Technology (“IT”), who reports to the Chief Financial Officer, is responsible for the strategic leadership and direction of the Company’s cybersecurity program.
We did not experience any material cybersecurity threats or incidents for the year ended December 31, 2024. Governance Related to Cybersecurity Risk Our Senior Director of Information Technology (“IT”), who reports to the Chief Financial Officer, is responsible for the strategic leadership and direction of the Company’s cybersecurity program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. We have commercial and administrative activities located in Chesterfield, Missouri. Our current office space consists of 24,236 square feet, and the lease expires in 2025.
Biggest changeItem 2. Properties. We have commercial and administrative activities located in Chesterfield, Missouri. In January 2025, our lease expired which consisted of 24,236 square feet of office space. Effective February 2025, we decreased our office space to consist of 17,065 square feet, and the amended lease expires in January 2029.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. For information regarding legal proceedings we are involved in, see Note 14: Contingent Liabilities and Commitments to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures. Not applicable. -58- PART II
Biggest changeItem 3. Legal Proceedings. For information regarding legal proceedings we are involved in, see Note 13: Contingent Liabilities and Commitments to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures. Not applicable. -56- PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 58 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 59 Item 6. Reserved 61 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 62 Item 7A. Quantitative and Qualitative Disclosures About Market Risks 72 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 56 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 57 Item 6. Reserved 59 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 60 Item 7A. Quantitative and Qualitative Disclosures About Market Risks 70 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn advance of payment of any dividends, we intend to seek confirmation from the Irish Revenue Commissioners that dividends on our ordinary shares that are owned by residents of the U.S. and held beneficially through the Depositary Trust Company (“DTC”) would not be expected to be subject to DWT provided that the address of the beneficial owner of the ordinary shares in the records of the broker is in the U.S. -59- Dividends on our ordinary shares that are owned by residents of the U.S. and held directly (outside of DTC) will not be subject to DWT provided that the shareholder (a) where the shareholder is a body corporate, is not under the control of persons resident in Ireland and (b) has completed the appropriate Irish DWT form and this form remains valid.
Biggest changeIn advance of payment of any dividends, we intend to seek confirmation from the Irish Revenue Commissioners that dividends on our ordinary shares that are owned by residents of the U.S. and held beneficially through the Depositary Trust Company (“DTC”) would not be expected to be subject to DWT provided that the address of the beneficial owner of the ordinary shares in the records of the broker is in the U.S.
In order for the share registrar to be satisfied as to the application of this Irish stamp duty treatment where relevant, the shareholder must confirm to us that the shareholder would be the beneficial -60- owner of the related book‑entry interest in those ordinary shares recorded in the systems of DTC, and in exactly the same proportions or vice‑versa, as a result of the transfer and there is no agreement for the sale of the related book‑entry interest or the ordinary shares or an interest in the ordinary shares, as the case may be, by the shareholder to a third party being contemplated.
In order for the share registrar to be satisfied as to the application of this Irish stamp duty treatment where relevant, the shareholder must confirm to us that the shareholder would be the beneficial owner of the related book‑entry interest in those ordinary shares recorded in the systems of DTC, and in exactly the same -58- proportions or vice‑versa, as a result of the transfer and there is no agreement for the sale of the related book‑entry interest or the ordinary shares or an interest in the ordinary shares, as the case may be, by the shareholder to a third party being contemplated.
The person accountable for payment of stamp duty is the buyer or, in the case of a transfer by way of a gift or for less than market value, all parties to the transfer.
The person accountable for payment of stamp duty is generally the buyer or, in the case of a transfer by way of a gift or for less than market value, all parties to the transfer.
Issuer Purchases of Equity Securities We did not repurchase any of our equity securities during the year ended December 31, 2023. Recent Sales of Unregistered Securities None. Irish taxes applicable to U.S. holders The following is a general summary of the main Irish tax considerations applicable to the purchase, ownership and disposition of our ordinary shares by U.S. holders.
Issuer Purchases of Equity Securities We did not repurchase any of our equity securities during the year ended December 31, 2024. Recent Sales of Unregistered Securities None. Irish taxes applicable to U.S. holders The following is a general summary of the main Irish tax considerations applicable to the purchase, ownership and disposition of our ordinary shares by U.S. holders.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Common Stock Data (per share): The principal trading market for our securities in ADSs is the Nasdaq Global Market under the symbol “AVDL”. There is no foreign trading market for our ordinary shares, ADSs or any other equity security issued by us.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Common Stock Data (per share): The principal trading market for our ordinary shares is the Nasdaq Global Market under the symbol “AVDL”. There is no foreign trading market for our ordinary shares or any other equity security issued by us.
Share Performance Graph The following graph compares the cumulative 5-year return provided to shareholders of Avadel’s ADSs relative to the cumulative total returns of the Nasdaq Composite Index and the Nasdaq Biotechnology Index. We believe these indices are the most appropriate indices against which the total shareholder return of Avadel should be measured.
Share Performance Graph The following graph compares the cumulative 5-year return provided to shareholders of Avadel’s ordinary shares relative to the cumulative total returns of the Nasdaq Composite Index and the Nasdaq Biotechnology Index. We believe these indices are the most appropriate indices against which the total shareholder return of Avadel should be measured.
It is based on existing Irish law and practices in effect on February 26, 2024, and on correspondence with the Irish Revenue Commissioners. Legislative, administrative or judicial changes may modify the tax consequences described below. The statements do not constitute tax advice and are intended only as a general guide.
It is based on existing Irish law and practices in effect on February 28, 2025, and on correspondence with the Irish Revenue Commissioners. Legislative, administrative or judicial changes may modify the tax consequences described below. The statements do not constitute tax advice and are intended only as a general guide.
The Nasdaq Biotechnology Index has been selected because it is an index of U.S. quoted biotechnology and pharmaceutical companies. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our ADSs and in each of the indexes on January 1, 2019 and our relative performance is tracked through December 31, 2023.
The Nasdaq Biotechnology Index has been selected because it is an index of U.S. quoted biotechnology and pharmaceutical companies. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our ordinary shares and in each of the indexes on January 1, 2020 and our relative performance is tracked through December 31, 2024.
However, a transfer of our ordinary shares from a seller who holds shares through DTC to a buyer who holds the acquired shares through DTC should not be subject to Irish stamp duty.
Stamp duty Irish stamp duty may become payable in respect of ordinary share transfers. However, a transfer of our ordinary shares from a seller who holds shares through DTC to a buyer who holds the acquired shares through DTC should not be subject to Irish stamp duty.
Children currently have a tax-free threshold of €335,000 in respect of taxable gifts or inheritances received from their parents. Our shareholders should consult their own tax advisers as to whether CAT is creditable or deductible in computing any domestic tax liabilities. Stamp duty Irish stamp duty may become payable in respect of ordinary share transfers.
As such, children have a tax-free threshold of €400,000 in respect of taxable gifts or inheritances received from their parents on or after October 2, 2024. Our shareholders should consult their own tax advisers as to whether CAT is creditable or deductible in computing any domestic tax liabilities.
Each ADS represents one ordinary share, nominal value $0.01. The Bank of New York Mellon is the Depositary for the ADSs. As of February 26, 2024, there were 90,577 ordinary shares outstanding, and our closing stock price was $12.99 per share.
As of February 26, 2025, there were 96,629 ordinary shares outstanding, and our closing stock price was $7.97 per share. Holders As of February 26, 2025, there were 130 holders of record of our ordinary shares.
Removed
Holders As of February 26, 2024, there were 58 holders of record of our ordinary shares and accounts registered with The Bank of New York Mellon, the Depositary of our ADS program, as holders of ADSs, one of which is registered to the Depositary Trust Corporation (“DTC”).
Added
Dividends on our ordinary shares that are owned by residents of the U.S. and held directly (outside of DTC) will not be subject to DWT provided that the shareholder (a) where the shareholder is a body corporate, is not under the control of persons resident -57- in Ireland and (b) has completed the appropriate Irish DWT form and this form remains valid.
Removed
Because our ADSs are generally held of record by brokers, nominees and other institutions as participants in DTC on behalf of the beneficial owners of such ADSs, we are unable to estimate the total number of beneficial owners of the ADSs held by these record holders.
Added
Prior to October 2, 2024, children had a tax-free threshold of €335,000 in respect of taxable gifts or inheritances received from their parents. This threshold has been increased in respect of gifts or inheritances received by children from their parents on or after October 2, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWhile the Company believes the judgments and assumptions used in the goodwill impairment assessment are reasonable, different assumptions or changes in general industry or market and macro-economic conditions could change the estimated fair values and, therefore, future impairment charges could be required, which could be material to the consolidated financial statements. -68- Results of Operations The following is a summary of our financial results (in thousands, except per share amounts): Years Ended December 31, Change 2023 vs. 2022 Comparative Statements of Loss: 2023 2022 $ % Net product revenue $ 27,963 $ — $ 27,963 n/a Cost of products sold 846 — 846 n/a Gross profit 27,117 — 27,117 n/a Operating expenses: — Research and development expenses 13,261 20,700 (7,439) (35.9) % Selling, general and administrative expenses 151,705 74,516 77,189 103.6 % Restructuring expense — 3,345 (3,345) (100.0) % Total operating expenses 164,966 98,561 66,405 67.4 % Operating loss (137,849) (98,561) (39,288) 39.9 % Investment and other income (expense), net 87 (536) 623 (116.2) % Interest expense (9,886) (12,342) 2,456 (19.9) % Loss on extinguishment of debt (13,129) — (13,129) n/a Loss before income taxes (160,777) (111,439) (49,338) 44.3 % Income tax (benefit) provision (501) 26,025 (26,526) (101.9) % Net loss $ (160,276) $ (137,464) $ (22,812) 16.6 % Net loss per share - diluted $ (2.00) $ (2.29) $ 0.29 (12.7) % Years Ended December 31, Change 2023 vs. 2022 Gross Profit: 2023 2022 $ % Net product revenue $ 27,963 $ — $ 27,963 n/a Cost of products sold 846 — 846 n/a Gross profit $ 27,117 $ — $ 27,117 n/a Gross profit as a percentage of net product revenue 97.0 % n/a 97.0 % n/a Net product revenue was $27,963 during the year ended December 31, 2023.
Biggest changeWhile the Company believes the judgments and assumptions used in the goodwill impairment assessment are reasonable, different assumptions or changes in general industry or market and macro-economic conditions could change the estimated fair values and, therefore, future impairment charges could be required, which could be material to the consolidated financial statements. -66- Results of Operations The following is a summary of our financial results (in thousands, except per share amounts): Years Ended December 31, Change 2024 vs. 2023 Comparative Statements of Loss: 2024 2023 $ % Net product revenue $ 169,117 $ 27,963 $ 141,154 504.8 % Cost of products sold 15,277 846 14,431 1,705.8 % Gross profit 153,840 27,117 126,723 467.3 % Operating expenses: Research and development expenses 15,196 13,261 1,935 14.6 % Selling, general and administrative expenses 181,043 151,705 29,338 19.3 % Total operating expenses 196,239 164,966 31,273 19.0 % Operating loss (42,399) (137,849) 95,450 (69.2) % Investment and other income, net 4,150 87 4,063 4,670.1 % Interest expense (10,830) (9,886) (944) 9.5 % Loss on extinguishment of debt — (13,129) 13,129 (100.0) % Loss before income taxes (49,079) (160,777) 111,698 (69.5) % Income tax benefit (247) (501) 254 (50.7) % Net loss $ (48,832) $ (160,276) $ 111,444 (69.5) % Net loss per share - diluted $ (0.51) $ (2.00) $ 1.49 (74.5) % Years Ended December 31, Change 2024 vs. 2023 Gross Profit: 2024 2023 $ % Net product revenue $ 169,117 $ 27,963 $ 141,154 504.8 % Cost of products sold 15,277 846 14,431 1,705.8 % Gross profit $ 153,840 $ 27,117 $ 126,723 467.3 % Gross profit as a percentage of net product revenue 91.0 % 97.0 % Net product revenue was $169,117 during the year ended December 31, 2024.
These adjustments include estimates of payment discounts, specialty pharmacy fees, patient financial assistance programs, rebates and product returns and are estimated based on contractual arrangements, historical trends, expected utilization of such products and other judgments and analysis.
These adjustments include estimates of payment discounts, specialty pharmacy fees, patient financial assistance programs, rebates and product returns and are estimated based on contractual arrangements, historical trends, expected utilization of such products and other judgments and analysis.
Reserves for these discounts and fees are established in the same period that the related revenue is recognized, resulting in a reduction of gross product sales and accounts receivable. Patient Assistance Programs We offer certain patient assistance programs. We have multiple programs to assist patients, including patient financial assistance programs.
Reserves for these discounts and fees are established in the same period that the related revenue is recognized, resulting in a reduction of gross product sales and accounts receivable. Patient Financial Assistance Programs We offer certain patient financial assistance programs. We have multiple programs to assist patients, including patient financial assistance programs.
If the need were to arise to raise additional capital, access to that capital may be difficult, expensive and/or dilutive and, as a result, could create liquidity challenges for us. • Continuing Net Loss from Operations: We have a recent history of generating losses from operations and expect to continue generating losses until we are able to generate revenues sufficient to generate positive cash flow from the commercialization of LUMRYZ.
If the need were to arise to raise additional capital, access to that capital may be difficult, expensive and/or dilutive and, as a result, could create liquidity challenges for us. • Continuing Net Loss from Operations: We have a recent history of generating losses from operations and expect to continue generating losses until revenues from the commercialization of LUMRYZ are sufficient to generate positive cash flow.
Our assumptions concerning the outcome of certain business conditions may prove to be wrong or other factors may adversely affect our business, and as a result we could exhaust or significantly decrease our available cash and marketable securities balances which could, among other things, force us to raise additional funds and/or force us to reduce our expenses, either of which could have a material adverse effect on our business.
Our assumptions concerning the outcome of certain business conditions may prove to be wrong or other factors may adversely affect our business, and as a result we could exhaust or significantly decrease our available cash, cash equivalents and marketable securities balances which could, among other things, force us to raise additional funds and/or force us to reduce our expenses, either of which could have a material adverse effect on our business.
We can test for goodwill impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary or we can elect to forgo the qualitative assessment and perform the quantitative goodwill test. We elected to perform a qualitative assessment of goodwill in 2023.
We can test for goodwill impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary or we can elect to forgo the qualitative assessment and perform the quantitative goodwill test. We elected to perform a qualitative assessment of goodwill in 2024 and 2023.
We estimate a reserve for these patient financial assistance programs primarily based on expected utilization by patients. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of gross product sales. Rebates -66- Rebates and other fees represent the estimated obligations resulting from agreements with payors.
We estimate a reserve for these patient financial assistance programs primarily based on expected utilization by patients. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of gross product sales. Rebates -64- Rebates and other fees represent the estimated obligations resulting from agreements with payors.
Given the weight of objectively verifiable historical losses from operations, the Company continues to record a full valuation allowance on its deferred tax assets in 2023. The Company will be able to reverse the valuation allowance when it has shown its ability to generate taxable income on a consistent basis in future periods.
Given the weight of objectively verifiable historical losses from operations, the Company continues to record a full valuation allowance on its deferred tax assets in 2024. The Company will be able to reverse the valuation allowance when it has shown its ability to generate taxable income on a consistent basis in future periods.
At December 31, 2023 and December 31, 2022, there were no contingent liabilities with respect to any litigation, arbitration or administrative or other proceeding that are reasonably likely to have a material adverse effect on our consolidated financial position, results of operations, cash flows or liquidity.
At December 31, 2024 and December 31, 2023 , there were no contingent liabilities with respect to any litigation, arbitration or administrative or other proceeding that are reasonably likely to have a material adverse effect on our consolidated financial position, results of operations, cash flows or liquidity.
It is not practicable to estimate the amount of deferred tax liability on such remittances, if any. We believe that our estimates for deferred income taxes and the amount of benefits recognized for uncertain tax positions are appropriate based on current facts and circumstances. -67- Goodwill.
It is not practicable to estimate the amount of deferred tax liability on such remittances, if any. We believe that our estimates for deferred income taxes and the amount of benefits recognized for uncertain tax positions are appropriate based on current facts and circumstances. -65- Goodwill.
Based on the results of the annual qualitative assessment of goodwill for 2023, we concluded it is not more likely than not that the fair value of the reporting unit is less than the carrying amount and therefore, did not perform a quantitative goodwill test or record an impairment.
Based on the results of the annual qualitative assessment of goodwill for 2024, we concluded it is not more likely than not that the fair value of the reporting unit is less than the carrying amount and therefore, did not perform a quantitative goodwill test or record an impairment.
In particular, the FDA found that LUMRYZ makes a major contribution to patient care over currently marketed, twice-nightly oxybate treatments by providing a once-nightly dosing regimen that avoids nocturnal arousal to take a second dose. The orphan exclusivity will continue until May 1, 2030.
In particular, the FDA found that LUMRYZ makes a major contribution to patient care over currently marketed, twice-nightly oxybate treatments by providing a once-nightly dosing regimen that avoids nocturnal arousal to take a second dose. The ODE will continue until May 1, 2030.
For information regarding legal proceedings we are involved in, see Note 14: Contingent Liabilities and Commitments to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K . -72-
For information regarding legal proceedings we are involved in , see Note 13: Contingent Liabilities and Commitments to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K .
Under this REMS, healthcare providers who prescribe the drug must be specially certified; pharmacies that dispense the drug must be specially certified; and the drug must be dispensed only to patients who have enrolled in the LUMRYZ REMS and completed all REMS requirements including documentation of safe use conditions, among other requirements.
Under the LUMRYZ REMS, healthcare providers who prescribe the drug must be specially certified, pharmacies that dispense the drug must be specially certified, and the drug must be dispensed only to patients who have enrolled in the LUMRYZ REMS and completed all REMS requirements, including documentation of safe use conditions.
Risk Management The adequacy of our cash resources depends on the outcome of certain business conditions including the cost of our LUMRYZ ongoing commercial launch, our cost structure, and other factors set forth in “Risk Factors” within Part I, Item 1A of this Annual Report on Form 10-K.
Risk Management The adequacy of our cash resources depends on the outcome of certain business conditions including the cost of our ongoing LUMRYZ commercialization activities, our cost structure, and other factors set forth in “Risk Factors” within Part I, Item 1A of this Annual Report on Form 10-K.
Net cash provided by financing activities for the year ended December 31, 2023 was a result of net proceeds of $134,151 received in exchange for issuing 12,205 ordinary shares and 4,706 Series B Preferred Shares in the April 3, 2023 public offering, proceeds of $30,000 received for the first tranche of the RPA, net proceeds of $11,913 from the sale of ADSs through the ATM Program and $2,293 of proceeds from stock option exercises and employee share purchase plan issuances, offset by settlement of the October 2023 Notes of $21,165, settlement of the February 2023 Notes of $17,500 and debt issuance costs of $4,357.
Net cash provided by financing activities for the year ended December 31, 2023 of $135,335 was a result of net proceeds of $134,151 received in exchange for issuing 12,205 ordinary shares and 4,706 Series B Preferred Shares in the April 3, 2023 public offering, proceeds of $30,000 received for the first tranche of the RPA, net proceeds from the issuance of shares off the at-the-market offering program of $11,913 and $2,293 of proceeds from stock option exercises and employee share purchase plan issuances, offset by settlement of the October 2023 Notes of $21,165, settlement of the February 2023 Notes of $17,500 and debt issuance costs of $4,357.
Information pertaining to fiscal year 2021 was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, on pages 69 through 82, under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on March 29, 2023. -62- Overview Nature of Operations Avadel Pharmaceuticals plc (Nasdaq: AVDL) (“Avadel,” the “Company,” “we,” “our,” or “us”) is a biopharmaceutical company.
Information pertaining to fiscal year 2022 was included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, on pages 62 through 72, under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on February 29, 2024. -60- Overview Nature of Operations Avadel Pharmaceuticals plc (Nasdaq: AVDL) (“Avadel,” the “Company,” “we,” “our,” or “us”) is a biopharmaceutical company.
We have a current obligation of $1,091 due within one year and a long-term obligation of $1,953 due between January 1, 2025 and December 31, 2028. See Note 9: Leases to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further details for further details.
We have a current obligation of $683 due within one year and a long-term obligation of $1,270 due between January 1, 2026 and December 31, 2028. See Note 9: Leases to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for further details for further details.
LUMRYZ may face competition from manufacturers of generic twice-nightly sodium oxybate formulations. In January 2023, Hikma Pharmaceuticals plc, announced that it launched an authorized generic version of Jazz Pharmaceuticals plc’s (“Jazz”) Xyrem (sodium oxybate).
LUMRYZ may face competition from manufacturers of generic twice-nightly sodium oxybate formulations. In January 2023, Hikma Pharmaceuticals plc, announced that it launched an authorized generic version of Jazz’s Xyrem (sodium oxybate).
Years Ended December 31, Change 2023 vs. 2022 Loss on Extinguishment of Debt: 2023 2022 $ % Loss on extinguishment of debt $ (13,129) $ — $ (13,129) n/a Over the course of April 3 and April 4, 2023, we completed an exchange of $96,188 of our $117,375 October 2023 Notes for $106,268 of a new series of 6.0% exchangeable notes due April 2027 (the “April 2027 Notes”).
Years Ended December 31, Change 2024 vs. 2023 Loss on Extinguishment of Debt: 2024 2023 $ % Loss on extinguishment of debt $ — $ (13,129) $ 13,129 (100.0) % Over the course of April 3 and April 4, 2023, we completed an exchange of $96,188 of our $117,375 4.50% exchangeable senior notes due October 2023 (the “October 2023 Notes”) for $106,268 of a new series of 6.0% exchangeable notes due April 2027 (the “April 2027 Notes”).
We believe LUMRYZ has the potential to demonstrate improved dosing compliance, safety, and patient satisfaction over other treatment options for cataplexy or EDS in patients with narcolepsy.
We believe LUMRYZ has the potential to demonstrate improved dosing compliance, safety, and patient satisfaction over other treatment options for cataplexy or EDS in patients seven years of age and older with narcolepsy.
As of December 31, 2023, we had unremitted earnings of $3,854 outside of Ireland as measured on a U.S. GAAP basis.
As of December 31, 2024, we had unremitted earnings of $3,755 outside of Ireland as measured on a U.S. GAAP basis.
LUMRYZ is an extended-release formulation of sodium oxybate indicated to be taken once at bedtime for the treatment of cataplexy or EDS in adults with narcolepsy. As of the date of this Annual Report, LUMRYZ is the only commercialized product in our portfolio. We continue to evaluate opportunities to expand our product portfolio .
LUMRYZ is an extended-release formulation of sodium oxybate indicated to be taken once at bedtime for the treatment of cataplexy or EDS in patients seven years of age and older with narcolepsy. As of the date of this Annual Report, LUMRYZ is the only commercial product in our portfolio. We continue to evaluate opportunities to expand our product portfolio .
Net cash used in operating activities for the year ended December 31, 2023 was driven by net loss of $160,276 and unfavorable changes in working capital of $2,999, offset by favorable non-cash adjustments of $34,764 due to the loss on extinguishment of debt and share-based compensation expense.
For the year ended December 31, 2023, net cash used in operating activities was driven by net loss of $160,276 and unfavorable changes in working capital of $2,999, offset by favorable non-cash adjustments of $34,764.
Investing Activities Net cash used in investing activities was $50,093 for the year ended December 31, 2023 compared to cash provided by investing activities of $79,698 in the prior year.
Investing Activities Net cash provided by investing activities was $51,780 for the year ended December 31, 2024 compared to net cash used in investing activities of $50,093 in the prior year.
Upon performing the qualitative assessment of goodwill, qualitative factors are assessed to determine whether it is more likely than not that the fair value is less than the carrying amount. We elected to perform a quantitative goodwill test in 2022.
Upon performing the qualitative assessment of goodwill, qualitative factors are assessed to determine whether it is more likely than not that the fair value is less than the carrying amount.
For the twelve month period ending December 31, 2024, we project that our fixed commitments will include (i) payments on our royalty financing obligation, (ii) capital commitments, and (iii) lease payments. We project that our long-term fixed commitments will include (i) payments on our royalty financing obligation, (ii) capital commitments, and (iii) lease payments.
We project that our long-term fixed commitments will include (i) payments on our royalty financing obligation, (ii) capital commitments, and (iii) lease payments.
Selling, general & administrative expenses increased $77,189 during the year ended December 31, 2023, driven by increased headcount and costs associated with the commercial launch of LUMRYZ and higher legal fees.
Selling, general & administrative expenses increased $29,338 during -62- the year ended December 31, 2024, driven by increased headcount and costs associated with the commercial launch of LUMRYZ, offset by lower legal costs.
Additionally, with its approval, the FDA also granted seven years of orphan drug exclusivity to LUMRYZ for the treatment of cataplexy or EDS in adults with narcolepsy due to a finding of clinical superiority of LUMRYZ relative to currently marketed oxybate treatments.
LUMRYZ LUMRYZ was approved by the FDA on May 1, 2023 for the treatment of cataplexy or EDS in adults with narcolepsy. The FDA also granted seven years of ODE to LUMRYZ for the treatment of cataplexy or EDS in adults with narcolepsy due to a finding of clinical superiority of LUMRYZ relative to currently marketed oxybate treatments.
Capital Commitments We have a five year commitment with a contract manufacturer of approximately $2,700 to $4,200 per year as determined by the terms of the agreement with the contract manufacturer. At December 31, 2023, we have leases for office space and a production suite.
Capital Commitments We have a four year commitment with a CDMO to manufacture the LUMRYZ drug product of approximately $3,000 to $4,200 per year as determined by the terms of the agreement with the CDMO. At December 31, 2024, we have leases for office space and a production suite.
(“RTW”) that could provide the Company up to $75,000 of royalty financing in two tranches. On August 1, 2023, the Company received the first tranche of $30,000. As a result of receiving the first tranche, we are required to make quarterly royalty payments calculated as 3.75% of worldwide net product revenue of LUMRYZ, up to a total payback of $75,000.
As a result of receiving the first tranche, we are required to make quarterly royalty payments calculated as 3.75% of worldwide net product revenue of LUMRYZ, up to a total payback of $75,000.
Net cash used in investing activities for the year ended December 31, 2023 was due to net purchases of marketable securities in excess of proceeds received from the excess of sales of $50,093. Net cash provided by investing activities for the year ended December 31, 2022 was driven by net proceeds from sales of marketable securities of $80,414.
Net cash provided by investing activities for the year ended December 31, 2024 was due to net proceeds received from the excess of sales over purchases of marketable securities of $51,780.
Key Business Trends and Highlights In operating our business and monitoring our performance, we consider a number of performance measures, as well as trends affecting our industry as a whole, which include the following: • Healthcare and Regulatory Reform: Various health care reform laws in the U.S. may impact our ability to successfully commercialize our products and technologies.
Secondary endpoints will evaluate the effect of LUMRYZ on additional efficacy parameters including patient and clinician global impression of change, IH severity, and a measure of the functional outcomes of sleep. -61- Key Business Trends and Highlights In operating our business and monitoring our performance, we consider a number of performance measures, as well as trends affecting our industry as a whole, which include the following: • Healthcare and Regulatory Reform: Various health care reform laws in the U.S. may impact our ability to successfully commercialize our products and technologies.
Positive top line data from the REST-ON trial were announced on April 27, 2020.
Positive top line data from the REST-ON trial were announced on April 27, 2020. REST-ON trial results have been published by Kushida et al.
In approving LUMRYZ, the FDA required a REMS for LUMRYZ to help ensure that the benefits of the drug in the treatment of cataplexy and EDS in adults with narcolepsy outweigh the risks of serious adverse outcomes resulting from inappropriate prescribing, misuse, abuse, and diversion of the drug.
The FDA has required implementation of a REMS to help ensure the benefits of the drug outweigh the risks of serious adverse outcomes resulting from inappropriate prescribing, misuse, abuse, and diversion of the same.
We believe our existing cash, cash equivalents and marketable securities, along with cash anticipated from sales of LUMRYZ, provides sufficient capital to meet our operating, royalty obligation and capital requirements for the next twelve months following the date of this Annual Report.
Additionally, we are unable to estimate the near or long term impacts of inflation, and rising interest rates, which may have a material adverse impact on our business. -68- We believe our existing cash, cash equivalents and marketable securities, along with cash anticipated from sales of LUMRYZ, provides sufficient capital to meet our operating, royalty obligation and capital requirements for the next twelve months following the date of this Annual Report.
Change Years Ended December 31, 2023 vs. 2022 Research and Development Expenses: 2023 2022 $ % Research and development expenses $ 13,261 $ 20,700 $ (7,439) (35.9) % Research and development expenses decreased $7,439 or 35.9% during the year ended December 31, 2023 as compared to the same period in 2022.
Change Years Ended December 31, 2024 vs. 2023 Research and Development Expenses: 2024 2023 $ % Research and development expenses $ 15,196 $ 13,261 $ 1,935 14.6 % Research and development expenses increased $1,935 or 14.6% during the year ended December 31, 2024 as compared to the same period in 2023.
In June 2023, we announced the U.S. commercial launch of LUMRYZ for the treatment of cataplexy or EDS in adults living with narcolepsy . Numerous LUMRYZ-related U.S. patents have been issued having expiration dates spanning from mid-2037 to early-2042, and there are additional patent applications currently in development and/or pending at the U.S.
Numerous LUMRYZ-related U.S. patents have been issued having expiration dates spanning from mid-2037 to early-2042, and there are additional patent applications currently in development and/or pending at the U.S. Patent and Trademark Office (“USPTO”), as well as foreign patent offices. We currently have 30 U.S. patents listed for LUMRYZ in FDA’s Orange Book.
LUMRYZ was approved by the FDA on May 1, 2023 and we began shipping product to our customers in June 2023. • Operating loss was $137,849 for the year ended December 31, 2023 compared to operating loss of $98,561 for the year ended December 31, 2022.
LUMRYZ was approved by the FDA on May 1, 2023 for the treatment of cataplexy or EDS in adults with narcolepsy and we began shipping product to our customers in June 2023. • Gross profit was $153,840 during the year ended December 31, 2024, compared to gross profit of $27,117 for the year ended December 31, 2023.
LUMRYZ was approved by the FDA on May 1, 2023 and we began shipping product to our customers in June 2023. Products sold during the year ended December 31, 2023 includes inventory that was expensed as research and development prior to FDA approval.
LUMRYZ was approved by the FDA on May 1, 2023 for the treatment of cataplexy or EDS in adults with narcolepsy and we began shipping product to our customers in June 2023. Cost of products sold increased $14,431 during the year ended ended December 31, 2024 as compared to the same period in the prior year.
LUMRYZ is the only commercialized product in our portfolio, and we will incur substantial expenses to continue our commercial launch of LUMRYZ. -64- Financial Highlights Highlights of our consolidated results for the year ended December 31, 2023 are as follows: • Net product revenue was $27,963 for the year ended December 31, 2023.
Financial Highlights Highlights of our consolidated results for the year ended December 31, 2024 are as follows: • Net product revenue was $169,117 for the year ended December 31, 2024, compared to net product revenue of $27,963 for the year ended December 31, 2023 .
For the year ended December 31, 2022, net cash used in operating activities was driven by net loss of $137,464, partially offset by favorable non-cash adjustments of $42,625 and favorable changes in working capital of $24,535.
Net cash used in operating activities for the year ended December 31, 2024 was driven by net loss of $48,832 and unfavorable changes in working capital of $20,315, offset by favorable non-cash adjustments of $22,240 comprised primarily of share-based compensation expense.
Consolidated Statement of Cash Flows Our cash flows from operating, investing and financing activities, as reflected in the consolidated statements of cash flows, are summarized in the following table: -71- Years Ended December 31, Change Net Cash (Used In) Provided By 2023 2022 $ % Operating activities $ (128,511) $ (70,304) $ (58,207) 82.8 % Investing activities (50,093) 79,698 (129,791) (162.9) % Financing activities 135,335 14,543 120,792 830.6 % Operating Activities Net cash used in operating activities was $128,511 for the year ended December 31, 2023, compared to cash used in operating activities of $70,304 in the prior year.
Consolidated Statement of Cash Flows Our cash flows from operating, investing and financing activities, as reflected in the consolidated statements of cash flows, are summarized in the following table: Years Ended December 31, Change Net Cash (Used In) Provided By 2024 2023 $ % Operating activities $ (46,907) $ (128,511) $ 81,604 (63.5) % Investing activities 51,780 (50,093) 101,873 (203.4) % Financing activities 15,970 135,335 (119,365) (88.2) % Operating Activities Net cash used in operating activities was $46,907 for the year ended December 31, 2024, compared to cash used in operating activities of $128,511 in the prior year.
On May 31, 2023, we exercised our option to exchange (the “Mandatory Exchange”) $106,268 of aggregate principal amount of the April 2027 Notes, which represents all of the April 2027 Notes outstanding under the Indenture.
On June 26, 2023, and in accordance with the terms of the Indenture, the Company completed the Mandatory Exchange of $106,268 of aggregate principal amount of the April 2027 Notes, which represents all of the April 2027 Notes outstanding under the Indenture.
This increase was driven primarily by higher costs associated with the commercial launch of LUMRYZ of $18,800, higher compensation costs of $18,700 due to increased headcount, higher marketing and market research activities of $17,000, and higher legal fees of $15,900.
This increase was primarily driven by higher costs associated with the commercial launch of LUMRYZ of $15,400 and higher compensation costs of $15,100 due to increased headcount, offset by lower legal fees of $6,600 and $1,300 of costs related to financing activities incurred in 2023 that did not recur in the current period.
LUMRYZ LUMRYZ was approved by the FDA on May 1, 2023 for the treatment of cataplexy or EDS in adults with narcolepsy.
In June 2023, we announced the U.S. commercial launch of LUMRYZ for the treatment of cataplexy or EDS in adults living with narcolepsy.
This was offset by an increase of $3,300 in pre-commercial product related costs for new research and development activity. -69- Change Years Ended December 31, 2023 vs. 2022 Selling, General and Administrative Expenses: 2023 2022 $ % Selling, general and administrative expenses $ 151,705 $ 74,516 $ 77,189 103.6 % Selling, general and administrative expenses increased $77,189 or 103.6% during the year ended December 31, 2023 as compared to the same period in 2022.
This increase was driven by new clinical work for LUMRYZ in treating IH during the period of $8,200 and higher compensation costs of $1,400 due to increased headcount, offset by lower pre-commercial related expenses for LUMRYZ for the treatment of cataplexy or EDS in adults living with narcolepsy of $7,700. -67- Change Years Ended December 31, 2024 vs. 2023 Selling, General and Administrative Expenses: 2024 2023 $ % Selling, general and administrative expenses $ 181,043 $ 151,705 $ 29,338 19.3 % Selling, general and administrative expenses increased $29,338 or 19.3% during the year ended December 31, 2024 as compared to the same period in 2023.
This was offset by an increase of $3,300 in pre-commercial product related costs for new research and development activity. • Net loss was $160,276 for the year ended December 31, 2023 compared to net loss of $137,464 in the same period last year. • Diluted net loss per share was $2.00 for the year ended December 31, 2023 compared to diluted net loss per share of $2.29 in the same period last year. • Cash, cash equivalents and marketable securities increased by $8,612 to $105,111 at December 31, 2023 from $96,499 at December 31, 2022.
R esearch and development expenses increased $1,935 during the year ended December 31, 2024 due to new clinical work to evaluate the efficacy and safety of LUMRYZ given as a once-at-bedtime dose in IH, offset by lower pre-commercial related expenses for LUMRYZ for the treatment of cataplexy or EDS in adults living with narcolepsy. • Operating loss was $42,399 for the year ended December 31, 2024 compared to operating loss of $137,849 in the same period last year. • Diluted net loss per share was $0.51 for the year ended December 31, 2024 compared to diluted net loss per share of $2.00 in the same period last year. • Cash, cash equivalents and marketable securities decreased to $73,777 at December 31, 2024 from $105,111 at December 31, 2023.
Change Years Ended December 31, 2023 vs. 2022 Interest Expense: 2023 2022 $ % Interest expense $ (9,886) $ (12,342) $ 2,456 (19.9) % Interest expense decreased $2,456 or 19.9% for the year ended December 31, 2023 as compared to the same period in 2022.
Change Years Ended December 31, 2024 vs. 2023 Investment and other income, net: 2024 2023 $ % Investment and other income, net $ 4,150 $ 87 $ 4,063 4670.1 % Investment and other income, net increased $4,063 or 4,670.1% for the year ended December 31, 2024 as compared to the same period in 2023.
The aggregate amount of ADSs and cash in respect of accrued and unpaid interest delivered to holders of Notes in the Mandatory Exchange was 12,347 ADSs and $1,470, respectively. The Mandatory Exchange closed on June 26, 2023. On March 29, 2023, we entered into a royalty purchase agreement (“RPA”) with RTW Investments, L.P.
Debt Arrangements On March 29, 2023, we entered into a royalty purchase agreement (“RPA”) with RTW Investments, L.P. (“RTW”) for up to $75,000 of royalty financing in two tranches. On August 1, 2023, the Company received the first tranche of $30,000.
Net cash provided by financing activities for the year ended December 31, 2022 was driven by net proceeds of $25,318 from the sale of ADSs through the ATM program and $2,682 of proceeds from stock option exercises and employee share purchase plan issuances, offset by the payment of $8,653 for the early extinguishment of a portion of the February 2023 Notes in November 2022 and payment of $4,804 of debt issuance costs.
Net cash used in investing activities for the year ended December 31, 2023 was due to net purchases of marketable securities over proceeds received from the excess of sales of $50,093 as a result of investing the proceeds of our financing activities. -69- Financing Activities Net cash provided by financing activities for the year ended December 31, 2024 of $15,970 was a result of net proceeds of $9,250 from the issuance of shares from the at-the-market offering program and $6,720 of proceeds from stock option exercises and employee share purchase plan issuances.
The change in the effective tax rate for the year ended December 31, 2023 when compared to the same period in 2022 is primarily driven by the valuation allowances recorded against net deferred tax assets established beginning in the second quarter of 2022. -70- Liquidity and Capital Resources Overview of Sources and Uses of Cash Our ability to generate revenue started following the launch of LUMRYZ in June 2023.
Liquidity and Capital Resources Overview of Sources and Uses of Cash Our ability to generate revenue started following the launch of LUMRYZ in June 2023. For the twelve month period ending December 31, 2025, we project that our fixed commitments will include (i) payments on our royalty financing obligation, (ii) capital commitments, and (iii) lease payments.
Removed
Patent and Trademark Office (“USPTO”), as well as foreign patent offices. We currently have numerous Orange Book listed patents. We submitted a Supplemental New Drug Application (“sNDA”) for LUMRYZ in the pediatric narcolepsy population in November 2023. The sNDA was accepted by the FDA in January 2024 and an approval decision is expected in September 202 4.
Added
LUMRYZ was approved by the FDA for use in the treatment of cataplexy or EDS in the pediatric narcolepsy population seven years of age and older on October 16, 2024, and was granted ODE for this patient population through October 16, 2031.
Removed
In May 2021, inclusion criteria were expanded to allow for oxybate naïve patients to enter the study. An interim safety analysis from the ongoing RESTORE study showed that LUMRYZ has generally been well-tolerated, with some patients receiving therapy for more than 18 months.
Added
In May 2021, inclusion criteria were expanded to allow for oxybate naïve patients to enter the study. The last patient visit occurred in October 2023. RESTORE results for the largest cohort, those who switched from twice-nightly oxybates, have been published, which include the 94% preference for the once-nightly dosing regimen that LUMRYZ provides.
Removed
In addition, interim data from RESTORE were presented demonstrating that a high proportion of patients switching from twice-nightly oxybate formulations had difficulty in taking the second dose, with a high proportion (92.5%) stating a preference for the once-at-bedtime dosing regimen and that most participants switching from twice-nightly oxybate formulations had a stable dose equal to their starting dose.
Added
Avadel has initiated a pivotal trial in IH, REVITALYZ, which is a double-blind, placebo-controlled, randomized withdrawal, multicenter Phase 3 study designed to evaluate the efficacy and safety of LUMRYZ, in treating IH. We expect to enroll approximately 150 adults in the study who are diagnosed with IH.
Removed
Subsequent interim data showed a preference (94.0%) for the once-at-bedtime dosing regimen. The last patient visit occurred in October 2023.
Added
On July 31, 2024, we announced that the first patient was dosed in this study. The primary objective of REVITALYZ is to demonstrate reduction in daytime sleepiness as measured by the primary endpoint, change in total score of the Epworth Sleepiness Scale at week 14.
Removed
A discrete choice experiment (“DCE”) showed that once-at-bedtime dosing, when compared to twice-nightly dosing, was the most important attribute driving both patient and clinician preference for overall oxybate product choice, as well as patient quality of life and reduction of patient anxiety/stress; dosing frequency (twice-nightly versus once-at-bedtime) was also viewed as a more important attribute as compared to other attributes assessed, including sodium content.
Added
LUMRYZ is the only commercialized product in our portfolio, and we will incur substantial expenses to continue our commercial launch of LUMRYZ.
Removed
Accompanying the DCE was a background survey for both patients and clinicians, which showed that dosing frequency was noted as a significant stressor by both patients and clinicians. -63- Additional peer-reviewed publications have included data on improvement on disturbed nocturnal sleep (“DNS”), the first DCE and a Plain Language Summary reviewing sodium oxybate and cardiovascular health, which did not identify a signal of cardiovascular disease in the over twenty years that sodium oxybate has been available.
Added
Cost of products sold increased during the year ended December 31, 2024 compared to the year ended December 31, 2023, due to higher sales of LUMRYZ and an estimated ongoing royalty on net product revenue in the current period.
Removed
At the 2023 SLEEP meeting, additional LUMRYZ data, including post-hoc analyses from the pivotal REST-ON trial, interim data from the open-label RESTORE study and real-world evidence regarding sodium oxybate utilization and co-morbidities were presented.
Added
Prior period cost of products sold included a greater portion of inventory purchased or produced that was expensed as research and development prior to FDA approval. • Total operating expense was $196,239 for the year ended December 31, 2024, compared to total operating expense of $164,966 for the year ended December 31, 2023.
Removed
At the World Sleep meeting in October 2023, these data were presented as encores, along with new post-hoc analyses from the REST-ON trial showing additional clinical efficacy data for LUMRYZ. A second DCE among clinicians was published in May 2023, showing the dosing regimen was the most important driver of choice, with once-nightly preferred.
Added
The $31,334 decrease in cash, cash equivalents and marketable securities during the year ended December 31, 2024 was driven primarily by net cash used in operating activities of $46,907, offset by net proceeds of $9,250 from the issuance of shares off the at-the-market offering program and $6,720 of proceeds from stock option exercises and employee share purchase plan issuances. -63- Critical Accounting Policies and Estimates The preparation of consolidated financial statements in conformity with U.S.
Removed
Post-hoc analyses of narcolepsy Type 1 (“ NT1”) and Type 2 (“NT2”) were also published, demonstrating consistent improvements regardless of narcolepsy type. A third plain language summary has been published; most recently evaluated the improvements of LUMRYZ on DNS.
Added
The increase in cost of products sold during the period was due to higher sales of LUMRYZ and an estimated ongoing royalty on net product revenue in the current period. Additionally, prior period cost of products sold included a greater portion of inventory purchased or produced that was expensed as research and development prior to FDA approval.
Removed
Research and development expenses decreased $7,439 during the year ended December 31, 2023, driven by lower pre-commercial LUMRYZ related costs of $11,500 that we began capitalizing to inventory in May 2023 upon FDA approval of LUMRYZ. Prior to FDA approval these costs were recorded as research and development expense.
Added
The increase in selling, general and administrative expense during the year ended December 31, 2024 also includes $5,500 of nonrecurring fees associated with terminating our ADSs.
Removed
This increase was driven primarily by net proceeds of $134,151 received in exchange for issuing 12,205 ordinary shares, nominal value $0.01 per share (“Ordinary Shares”) in the form of ADSs and 4,706 Series B Non-Voting Convertible Preferred Shares (“Series B Preferred Shares”) in the April 3, 2023 public offering, proceeds of $30,000 received for the first tranche of the royalty purchase agreement, net proceeds of $11,913 from the sale of ADSs through an Open Market Sale Agreement SM with Jefferies LLC (“Jefferies”) with respect to an at-the-market offering program (“ATM Program”) under which we may offer and sell our ADSs through Jefferies as our sales agent and $2,293 of proceeds from stock option exercises and employee share purchase plan issuances, offset by net cash used in operating activities of $128,511, cash settlement of $17,500 for our 4.50% exchangeable senior notes that matured in February 2023 (the “February 2023 Notes”), cash settlement of $21,165 for our 4.50% exchangeable senior notes that matured in October 2023 (the “October 2023 Notes”) and debt issuance costs of $4,357. -65- Critical Accounting Estimates The preparation of consolidated financial statements in conformity with U.S.
Added
This increase was driven primarily by higher net realized gains of approximately $3,400.
Removed
Upon performing the quantitative goodwill test, if the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of goodwill.
Added
The Company allowed the second tranche to expire on August 31, 2024 and paid a one-time commitment fee of $2,000 to RTW based on the terms of the RPA.
Removed
This decrease was driven by lower pre-commercial LUMRYZ related costs of $11,500 that we began capitalizing to inventory in May 2023 upon FDA approval of LUMRYZ. Prior to FDA approval these costs were recorded as research and development expense.
Removed
Selling, general, and administrative expenses during the year ended December 31, 2023 also includes a $7,800 cumulative adjustment for certain compensation awards tied to the achievement of performance conditions, which became probable during the year. We also incurred costs related to financing activities of approximately $1,300 in the current period.
Removed
In the prior period, we incurred costs of approximately $5,450 related to the exchange of $117,375 of our February 2023 Notes for a new series of October 2023 Notes that did not recur in the current period.
Removed
In the prior period, we realized benefit from the reversal of approximately $2,300 of previously recorded compensation costs for employees affected by our 2022 corporate restructuring plan that was implemented in June 2022 and did not recur in the current period.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+0 added−0 removed7 unchanged
Biggest changeAs of December 31, 2023, our primary exposure is to transaction risk related to euro net monetary assets and liabilities held by subsidiaries with a U.S. dollar functional currency. Realized and unrealized foreign exchange gains resulting from transactional exposure were immaterial for the year ended December 31, 2023.
Biggest changeAs of December 31, 2024, our primary exposure is to transaction risk related to euro net monetary assets and liabilities held by -70- subsidiaries with a U.S. dollar functional currency. Realized and unrealized foreign exchange gains resulting from transactional exposure were immaterial for the year ended December 31, 2024.
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect in the near future (especially if inflation rates continue to rise) due to an impact on the costs to conduct clinical trials, the costs to commercially launch LUMRYZ, labor costs we incur to attract and retain qualified personnel, and other operational costs.
Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect in the near future (especially if inflation rates rise) due to an impact on the costs to conduct clinical trials, the costs to commercially launch LUMRYZ, labor costs we incur to attract and retain qualified personnel, and other operational costs.
The cumulative foreign currency translation adjustment is recorded as a component of accumulated other comprehensive loss in shareholders’ equity (deficit). The reported results of this non-U.S. subsidiary will be influenced by their translation into U.S. dollars by currency movements against the U.S. dollar. Our primary currency translation exposure is related to one subsidiary that has functional currencies denominated in euro.
The cumulative foreign currency translation adjustment is recorded as a component of accumulated other comprehensive loss in shareholders’ equity. The reported results of this non-U.S. subsidiary will be influenced by their translation into U.S. dollars by currency movements against the U.S. dollar. Our primary currency translation exposure is related to one subsidiary that has functional currencies denominated in euro.
A 10% strengthening/weakening in the rates used to translate the results of our non-U.S. subsidiaries that have functional currencies denominated in euro as of December 31, 2023 would have had an immaterial impact on net loss for the year ended December 31, 2023. Transactional exposure arises where transactions occur in currencies other than the functional currency.
A 10% strengthening/weakening in the rates used to translate the results of our non-U.S. subsidiaries that have functional currencies denominated in euro as of December 31, 2024 would have had an immaterial impact on net loss for the year ended December 31, 2024. Transactional exposure arises where transactions occur in currencies other than the functional currency.
Inflation Risk Inflation generally affects us by increasing our costs of labor and supplies and the costs of our third parties we rely on for the development, manufacture and supply of our products. We do not believe that inflation had a material effect on our business, financial condition or results of operations during the year ended December 31, 2023.
Inflation Risk Inflation generally affects us by increasing our costs of labor and supplies and the costs of our third parties we rely on for the development, manufacture and supply of our products. We do not believe that inflation had a material effect on our business, financial condition or results of operations during the year ended December 31, 2024.
Inflationary costs could adversely affect our business, financial condition and results of operations. -73-
Inflationary costs could adversely affect our business, financial condition and results of operations. -71-

Other AVDL 10-K year-over-year comparisons