Q3 2024 Summary
Published Jan 15, 2025, 11:11 PM UTC- Strong and growing patient demand for LUMRYZ, with continued interest from both switch patients and an increasing number of new-to-oxybate patients, indicating market expansion. The company reports that demand remains very strong in the current quarter, and the value proposition continues to be compelling for switch patients from twice-nightly oxybate.
- Solid reimbursement coverage, with 85% commercial coverage and expectations of improved coverage going into 2025, including gaining more Medicare lives. This positions the company well for sustainable growth as they anticipate being in a very strong position regarding overall coverage.
- Positive legal developments, including the FDA granting orphan exclusivity twice for LUMRYZ and the District of Columbia court affirming the FDA's decision, reducing legal uncertainties and strengthening their market position.
- Increasing Discontinuation Rates Among New-to-Oxybate Patients Could Hinder Growth: The company reported that new-to-oxybate patients, while representing a growing segment of initiations, exhibit lower persistency rates compared to switch patients, leading to higher discontinuation rates. This trend may negatively impact the rate of quarter-over-quarter growth in net patient additions and revenues. Despite making additional investments to address this issue, there is uncertainty about the effectiveness of these measures. , ,
- Rising Operational Expenses Due to Increased Investments Might Impact Profitability: To combat lower persistency rates and support a wider range of prescribers, Avadel is doubling the number of nurse care navigators and expanding their field sales team by over 10%. These increased expenditures could significantly raise operating expenses, potentially affecting the company's profitability and cash flow in the near term. ,
- Potential Future Competition from Orexin Agonists Could Erode Market Share: The looming entry of orexin agonists from competitors like Takeda poses a threat to Avadel's market position. These new therapies, targeting similar symptoms in narcolepsy patients, could reduce LUMRYZ's market share and limit its growth potential, especially if physicians opt for these alternatives over oxybate treatments.
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Revenue Expectations and Q4 Growth
Q: Can you comment on revenue expectations for Q4?
A: Management is pleased with the progress to date and anticipates continued patient demand for LUMRYZ across all segments. They are evaluating the growth in new to oxybate patients and considering seasonality factors that may affect Q4 expectations. -
Discontinuation Rates Among New Patients
Q: Why are new patients discontinuing more?
A: New patients often lack experience with oxybate and may not know what to expect, leading to higher discontinuation rates. To address this, the company emphasizes setting expectations and providing support through nurse navigators from RYZUP. They've expanded their nursing staff to offer more personalized assistance, aiming to improve persistency. -
Net Revenue per Patient and Coverage
Q: What's the annualized net revenue per patient?
A: The average net revenue per patient is around $100,000 per year, including patients on free drug, though it may fluctuate quarter to quarter. Management is pleased with payer coverage and expects strong coverage to continue into 2025, anticipating additional Medicare lives. -
Litigation Updates
Q: What's the status of ongoing litigation?
A: Management is pleased with the DC court decision affirming the FDA's grant of orphan exclusivity. Ongoing matters include a patent trial with pending post-trial motions and a briefing on future royalty rates. An injunction appeal is scheduled for February 2025, and an antitrust action against Jazz Pharmaceuticals is progressing, with a jury trial set for November 2025. -
Market Expansion and Oxybate Growth
Q: How is LUMRYZ impacting the oxybate market?
A: LUMRYZ is adding new patients to the oxybate pool, including prescribers who have never written oxybate before. There are clear indicators that the overall narcolepsy market is growing, with approximately 150 new to oxybate prescribers. The company sees opportunities to continue expanding the market beyond where it has been with twice-nightly oxybate. -
Sales Force Expansion Strategy
Q: How is the sales force being expanded?
A: The company is adding over 10% to its field force to reach moderate and low oxybate prescribers. Initially focusing on high-volume prescribers—with 90% having written through the third quarter—they are now increasing reach to new providers, including about 150 who have never written oxybate before. -
Impact of Future Competitors
Q: How will orexin agonists affect oxybate use?
A: Management acknowledges that orexin agonists may impact wake-promoting agents but believes there is potential for combination therapy with oxybate. They note that LUMRYZ addresses nighttime symptoms and has published data demonstrating consistent efficacy in both narcolepsy type 1 and type 2.