Q4 2023 Summary
Published Jan 15, 2025, 11:11 PM UTC- Strong Commercial Momentum for LUMRYZ: As of January 31, over 2,200 patients have enrolled with RYZUP, and more than 1,200 patients have initiated LUMRYZ treatment, with the majority being commercially reimbursed. The company expects to achieve operating breakeven when there are approximately 1,300 to 1,500 commercially reimbursed patients on therapy, which they believe can be achieved during 2024.
- Significant Market Opportunity and Growth Potential: The oxybate market opportunity comprises upwards of 50,000 potential patients, including those currently treated, previously discontinued, and new starts. Avadel is pursuing expansion into the pediatric population, with a supplemental NDA accepted and an action date of September 7, 2024. They are also planning to initiate a multicenter randomized controlled trial for LUMRYZ in idiopathic hypersomnia (IH) in the second half of the year, addressing an estimated 30,000 uniquely diagnosed patients.
- Strong Financial Position and Revenue Growth: Avadel generated $19.5 million in net revenue for the quarter ended December 31, 2023, and $28 million for the seven months ended December 31, 2023. As of December 31, they had $105 million in cash, cash equivalents, and marketable securities, and have effectively become debt-free after paying off their convertible notes. The company is comfortable with current sell-side estimates of approximately $155 million in revenue for the full year 2024, with the possibility of outperforming these assumptions.
- Uncertainty due to ongoing litigation: The company is currently involved in an active patent dispute with a trial in Delaware and a pending jury decision that could impact their operations. Management has declined to comment on potential outcomes, stating, "we're just not going to comment on it at this stage... pending the jury's final decision." This lack of information adds to investor uncertainty about the company's future prospects.
- Future growth may be limited as initial patient conversions slow: While the company has experienced strong initial uptake from patients switching from existing oxybate therapies, there is concern that this growth may not be sustainable. Management acknowledges the challenge, stating they "haven't hit the flattening of our slope at this point," but they are "not going to guide specifically" on when growth may slow. This suggests future patient additions may become more difficult as they move beyond early adopters.
- Potential competition from new therapies: Emerging treatments, such as orexin receptor agonists, are in development and could pose a competitive threat to LUMRYZ in the future. Management noted that these therapies "look to be really fabulous wake-promoting agents," though there are "questions around the overall benefit-risk profile." The introduction of new treatment modalities may impact LUMRYZ's market share and growth potential.
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Conversion Rates & Market Growth
Q: Can high conversion rates and low discontinuation continue?
A: Management reported strong conversion to therapy and low discontinuation rates, below the historical 25% benchmark for twice-nightly oxybate. They believe the large market opportunity of up to 50,000 potential patients allows for continued growth without flattening the trajectory yet. -
Legal Proceedings & LUMRYZ Potential
Q: Can you comment on pending legal outcomes?
A: Management declined to comment on ongoing legal matters at this stage but expressed confidence in LUMRYZ's potential. -
Net Revenue per Patient Guidance
Q: Any updates on net pricing or gross-to-net?
A: They reiterate previous guidance of $120,000 net revenue per patient per year. They expect to achieve this as they reach a critical mass of patients continuing therapy over new starts and are rapidly approaching that point. -
Market Expansion Potential
Q: Will the oxybate market expand in coming years?
A: Market research indicates the introduction of LUMRYZ could expand the oxybate market by 30% to 50% with new patient starts. Management is seeing early signs of reaching patients beyond traditional oxybate users. -
Impact of Orexin-based Therapies
Q: Any concerns about upcoming orexin products?
A: Management is excited about new treatment modalities but notes that oxybate usage is currently less than 10% of diagnosed patients, leaving ample room for growth. They believe LUMRYZ is well-positioned due to its benefits in both NT1 and NT2 narcolepsy. -
Low Sodium Formulation Strategy
Q: How important is a low sodium formulation?
A: They hear fewer objections about sodium content and reference a 2020 publication showing no difference in cardiovascular outcomes with sodium oxybate. They continue to pursue a lower sodium version so all patients have the once-at-bedtime option. -
Pediatric and IH Opportunities
Q: What's the outlook for pediatric and IH markets?
A: Pediatric oxybate use is 3%–5% of the total market, and while small, they aim to meet these patients' needs. In idiopathic hypersomnia (IH), with over 30,000 diagnosed patients and less than 10% treatment penetration, they see significant opportunity. -
Switches from XYWAV vs. XYREM
Q: Are more switch patients from XYWAV or XYREM?
A: More patients are switching from XYWAV (mixed salts oxybate) than from twice-nightly sodium oxybate. Early adopters of newer therapies may be contributing to this trend. -
Reimbursement Impact on Timelines
Q: Does reimbursement affect patient access speed?
A: Yes, patients with coverage and meeting prior authorization receive therapy in under a month, sometimes faster. Coverage significantly affects how quickly patients can start treatment. -
Pull-Through and Growth Drivers
Q: How are you driving growth and formulary pull-through?
A: With coverage from Anthem and UnitedHealthcare, representing about 30% of their respective GPO lives, prescriptions are being processed faster. Growth initiatives include peer-to-peer education through speaker programs and patient outreach via brand ambassadors. -
KOL Speaker Programs
Q: Can you detail your KOL speaker initiatives?
A: They've trained experts nationwide conducting speaker programs to provide fair and balanced perspectives on LUMRYZ, which have been well received. -
Longer RYZUP Enrollment Durations
Q: Why do some patients stay in RYZUP longer?
A: These patients may not meet prior authorization criteria or lack coverage, requiring appeals. The team persistently works on these cases, sometimes achieving success months later.