Avadel Pharmaceuticals exits Noctiva, reduces workforce by over 50%

Avadel Pharmaceuticals announced a corporate restructuring to assure the financial health required to maximize the value of FT218, currently in Phase III development for the treatment of excessive daytime sleepiness, or EDS, and Cataplexy in patients suffering from Narcolepsy. Avadel expects to realize $70M-$75M in cost reductions in 2019 as compared to 2018 as a result of the restructuring plan, driven primarily by exiting Noctiva. Noctiva’s performance since launch has been highly disappointing despite a substantial investment of resources. Once fully implemented, the plan will lower the company’s cost structure by $80M-$90M in 2020 and beyond when compared to 2018. Avadel estimates it will incur approximately $10M-$15M of one-time pre-tax charges for severance and other costs related to the restructuring, primarily during the first half of 2019. The company’s cash and marketable securities balance as of December 31, 2018 was approximately $100M. The company’s workforce will be downsized by more than 50% as part of the restructuring. The focus of the remaining company and corresponding resources include FT218 and hospital products related capabilities and functions. Separately, Avadel Specialty Pharmaceuticals, a subsidiary, responsible solely for the sales, marketing and distribution of Noctiva, has made a voluntary filing under Chapter 11 of the United States Bankruptcy Code. This action is not expected to materially impact any other aspect of the company’s business, including the ability to operate its sterile injectables hospital business and complete the FT218 Phase III clinical trial. As part of this action, Avadel expects to record in Q4 a pre-tax non-cash impairment charge of approximately $66M related to Noctiva intangible assets.
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