Avadel Pharmaceuticals plc (AVDL) Earnings Call Transcript & Summary

And just a couple more investor questions in terms of follow-up on the litigation. Maybe you can talk a little bit more about -- you've asked in your suit to have Jazz's patent hold from the Orange Book. And maybe you can talk about what would happen if you won that. And any timing on the motion?

Yes. Again, we're not going to talk specifics about the litigation from that standpoint. I think the court papers we filed describes what we're willing to talk about publicly at this stage. Again, we believe that in this case that when we think about what an Orange Book-listed patent should be from that standpoint, we don't believe it should be enlisted on the Orange Book patent from that standpoint. So again, we're taking all the necessary steps from our perspective to defend our position and ensure that we have the opportunity to come forward and bring once-at-bedtime FT218 to the market, and we'll continue to do that as aggressively as we need to, to protect our intellectual property and our opportunity in this marketplace.

Okay. How are your conversations going with payers? You said that messaging has been clear, that this is not a convenience play. So how are you positioning FT218 to payers? And just curious how payers are viewing the benefits of once nightly sodium oxybate and feedback that you're hearing.

Well, we have been having ongoing discussions with payers and really prioritizing those based upon their reach and their position in the marketplace, for sure. And again, although it's early, and we're very fortunate to be able to do this under FDA guidance under this preapproval information exchange, we've been out making clinical presentations, engaging with payers about the clinical benefits of FT218 and the benefits of once-at-bedtime sodium oxybate product. I would say, from a strategic standpoint, our overall objective here is to really secure access for patients. As we're heading to a launch in the future, we want to make sure we've done the work to position ourselves such that patients have access. We've built a great team that have demonstrated and done this in the past. And again, I think the progress to date, although early, is promising and that we have no problems getting meetings with the largest payers and insurance companies, they're very interested in our product and the innovation that potentially brings to patients. But payers also like to know that what they're paying for is valuable, and it's being used properly and providing the right results for patients and for the payer from a value perspective. And lastly, I would say that we haven't met a payer that doesn't like additional optionality or other new entrants in the marketplace, for sure. So with FT218, we're bringing all that to the table with more in our initial discussions and really focused on clinical presentations and initial discussions as we head toward a potential launch in the first part of 2022. Again, early but favorable insights to date.

And you said that you plan to launch in 2022 with assumptions that there will be one or there will not be one authorized generic by the time you reach the market. Can you talk about the differences in preparing for those 2 scenarios?

There really isn't any different, Jeff, because we've always known that an AG was going to be there, whether it was before, at or shortly thereafter, given as we think we understand those settlement agreements that are in place based on public information. So we've been long aware of that. So we've prepared that accordingly and been ready and will be ready for it all along. As we sit here today and think about the authorized generic availability whenever it comes, it doesn't change what we're doing. It doesn't change the fact that our product will still be highly differentiated versus the twice nightly products from a clinical value proposition. And it doesn't solve the significant unmet need that we hear from patients in the marketplace explicitly around the middle of the night dosing. Furthermore, in a lot of our payer discussions, we've done a lot of discussions around this topic specifically to really understand because, ultimately, it's about access, right? And when you talk to payers about authorized generics and pricing and specifically the uniqueness of this one where, per public information, the innovator product here is keeping some majority of the margin through some sort of royalty, and other AG distributors have fixed volumes from a percentage basis, it certainly seems to indicate talking to payers that they expect this to be typically priced, if you will, as typical AGs, 15% to 20% less than perhaps the branded product that is the AG, too. So in that scenario, assuming that's the case, it will certainly, per payers, be treated with similar coverage policies as an extension to the brand, right, same utilization management tools, same step edits that exist for current oxybate treatments and will really be viewed as an extension to the brand, in this case, Jazz's original twice nightly product. So from -- assuming we're approved and come to market, we don't see the AG impacting our ability to launch, to gain market share, to expand the treated patient population. And let's not forget, again, it still requires patients to disturb their nocturnal sleep to take the middle of the night dosing, which we're excited about the prospects of bringing FT218 to those patients.

Great. Does the Xywav orphan drug exclusivity have any impact on FT218? And then in 2018, FT218 received orphan drug designation, so maybe if you can walk through the different aspects of your potential for OD and the Xywav OD like -- that we should think about.

Yes. Again, I think your reference to 2018 is an important one, right? In 2018, the FDA granted us orphan drug designation for the treatment of narcolepsy based on plausible hypothesis that FT218 may be clinically superior to the twice nightly formulation already approved for narcolepsy due to the ramifications explicitly associated with the middle of the night dosing of the approved product, right? That hasn't changed, right? It's still a twice nightly product. That plausible hypothesis still exists. We have put together a robust exclusivity claim to support our propositions that FT218 is not only safer and potentially clinically superior than the twice nightly oxybate products, but also it makes a major contribution to patient care on a number of fronts, right? And we believe the whole story in totality is quite robust, and FT218 in and of itself can provide an improved quality of life for patients with narcolepsy. And all of this is in support of our orphan drug exclusivity request. But to be clear, we don't believe that the orphan drug exclusivity for the mix salt product impacts our orphan drug designation and should not prevent us from obtaining FDA -- a full FDA approval of FT218. We're under review now. That review has gone, we think, pretty well to date. And we're not going to talk specifically about what our data says yet or what our strategy has been relative to our own orphan drug exclusivity. We'll let the FDA speak first on that, hopefully, on or around October 15, but we remain highly confident in our regulatory filing strategy.

Maybe a few questions on just the market in general. You've indicated about half of new patients on twice nightly sodium oxybate discontinued treatment within a year. So what do these patients do after? And then with Xywav on the market, do they switch to that?

Well, it's an interesting data point. There's a lot of research we've done in really studying a large cohort, over 14,000 twice nightly patients over a number of years, really understanding what's happening to currently treated, newly diagnosed and newly treated patients. And our research tells us a lot of things, one of which you shared, which is that within 12 months, 50% of patients discontinue as a new patient. And -- but interestingly enough is that half of them or 25% discontinue within the first 4 weeks of treatment. And the reasons for that are primarily either dosing related or adverse event related and some others -- there are some other reasons, payer related or cost related reasons. But predominantly, it's dosing related followed by adverse event related, all of which we think our once-at-bedtime 218 could potentially help those patients. But there's other additional insights we've learned about these patients as well that almost half of eligible oxybate patients who are offered treatment with the twice nightly sodium oxybate product refuse treatment primarily due to dosing. We hear -- we've learned that 60% of patients report their own personal dose adjusting to try to use more oxybate at bedtime and less in the middle of the night, which is really what our PK curve really looks like, quite frankly. And we hear patients -- have reported to us that roughly 60% of patients report negative treatment experiences associated with the middle of the night dosing. So again, there's a lot of interesting data, but all of it speaks to these patients in their search for improving their treatment and looking for options to help them not only control their daytime symptoms, but help them impact their nighttime symptoms as well. What they're moving to are they're going on different stimulants, they're trying different options to try to manage their disease the best they can, recognizing that when they discontinue, it's just not working for them. But the basis for that not working for them, primarily driven off of both adverse events and middle-of-the-night dosing issues, aren't necessarily solutions at the mix salt product can solve, but potentially could be solutions that once-at-bedtime FT218 can.

So given the proportion of new patients who end up discontinuing treatment, do you expect early in your potential launch that patients will come more from newly diagnosed patients, untreated sodium oxybate eligible patients or oxybate treated patients? And I guess, based on your conversations with physicians and your market research, what proportion of patients do you think will be untreated sodium oxybate eligible patients?

Yes. I think it's a great question, and I think what's great about that question and what's unique about this market is all 3 of those patient segments, patients on therapy today, patients who were previously on therapy and discontinued and patients who were de novo or have refused oxybate treatment, all sit within the same tightly cohort of prescribers, highly concentrated. So we cannot only focus our efforts in -- on existing patients who are on therapy, but we can also expand our target market opportunity for us to previously treated patients as well as de novo naive to oxybate patients all within the same concentrated cohort. And the short answer is that we expect to get patients from all 3 sources. Clearly, there is low-hanging fruit that exists in patients who are on therapy today, who are having problems with the middle of the night dosing that can be logical and easy, and I don't want to say easy, but switches that can occur shortly thereafter. But as we go forward, the ability to mine those patients who have previously treated, to offer the opportunity to patients who have refused treatment because of the dosing issues are all opportunities for us. And in either case, in this highly concentrated prescriber audience, which allows us to be very surgical and very customer specific in our approach, all of which for us creates a unique opportunity for Avadel and the potential narcolepsy market opportunity that goes well beyond just the currently treated oxybate patient pool.

And we actually have another question from the audience. About how many patients are on your REST-ON continuing program? And have there been any dropouts?

So from a RESTORE perspective, I think that's the question that's being asked, is RESTORE is an open-label extension study and, if you will, a switch study that isn't necessary for NDA approval. It's something we decided to do to ensure that patients who wanted to come back into treatment on our once-nightly FT218 would be allowed to and be able to as well as generate long-term safety, tolerability and efficacy data. We've added a switch arm into that study as well with -- in this open-label extension study, which provides very useful clinical data on switching from twice nightly oxybate to or our once-at-bedtime 218. It's capturing patient experience, patient preference and, again, all information that's been -- have been very positive. I don't know the specifics in terms of how many have dropped out. There's been very, very few. I do know that in terms of what our dropout rates have been in the open-label extension, very, very few. I do know that. And I think our currently treated number is north of 80 and approaching 90 patients in the trial, for which nearly most of them are switch patients coming from both forms of the twice nightly product.

Okay. And I guess, back on the topic of market research. Based on your market research and conversations with physicians and patients, what are the biggest reasons patients switched from Xyrem to Xywav? And how do patients rank lower sodium versus once nightly? Are there any learnings from the feedback that you can apply to your launch?

Yes. I think, first and foremost, when it comes to understanding the basis for patient switches, you've got to really take a step back and understand the behavior of these patients and why they do what they do because these patients, although they feel better when they're on treatment, they don't feel normal, right? They're in search of opportunities to improve their treatment experience, right, which excites us because we know that once-at-bedtime FT218 has the potential to improve their narcolepsy treatment experience, right? As it relates explicitly to the mix salts product, clearly, the other company has a captive audience within their specialty pharmacy and distribution network, and patients certainly in the presence of no other options are certainly being offered opportunities to switch to see what that experience could be. Some of that is based on lower out-of-pocket cost as one example. But I think it's the dynamic nature of this market that what we've seen and that what we've come to understand deeply is that when success for a patient is measured how they feel, we believe that's a tremendous opportunity for us to help these patients living with narcolepsy because we do believe that we will help both their daytime and their nighttime symptoms. This is something we commonly hear from patients in our open-label extension. It's not uncommon for us to hear from patients that, "Boy, we hope you get approved because we don't ever want to go back to a twice-nightly product, right?" It's anecdotal, but it's still an important consideration because what we do know is that by eliminating the middle of the night dosing, we have the opportunity to potentially improve their nighttime experience. What we do know is that changing the salt formulation doesn't necessarily impact their narcolepsy treatment, especially for a chronic condition where -- with over 20 years of utilization, there's been no demonstrated additional or associated cardiovascular risk with the use of the original twice nightly formulation.

Great. And maybe in the last minute, one last question on the future of Avadel beyond FT218. What kinds of things are you contemplating?

Yes. It's an important question, one we spent some time focusing on, for sure. And when we think about what's next for Avadel, we really consider kind of 3 critical legs to our strategy, if you will. Although not necessarily sequential in nature, there are certain priorities that we'll focus on, right? First is how do we maximize the opportunity for FT218. This is clearly a life cycle management strategy. We would consider additional indications, broadening target patient populations, offering alternative formulations that leverage our proprietary technology platform with all of the -- all of that designed to fully maximize the FT218 opportunity at large. Second would be to maximize and leverage the infrastructure we have and will continue to build on sleep and commercial rare diseases overall. This likely puts us into a position of more business development and our licensing focus where we can expand our portfolio through collaboration, leveraging those investments and capabilities across the organization for sleep or related adjacencies, such as CNS. And then lastly, I would say, again, that sequential is, let's not forget, we have our proprietary drug delivery technology platform and fully leveraging that in search of what I'll just describe as the next FT218 like opportunity. In this case, given the fairly concentrated use of therapeutics in the rare sleep medicine space, I would say this third leg of the strategy stool likely moves us into other adjacencies that bring some synergy, but not complete synergy. So I would say the first 2 really is -- would be the priorities in that regard, and we would certainly expect to discuss more of this in the future. But right now, we're just over 30 days away from our PDUFA date. Our mandate is very clear, and we're laser-focused on our upcoming approval and the preparations for launch as soon as possible thereafter.

Great. Well, looks like we'll have to leave it there. Thanks so much for your time, Greg. I appreciate it.

Thank you, Jeff.