×

Avadel Pharmaceuticals Reports Second Quarter 2017 Results

Total Revenues Increased 19% on a Year-Over-Year Basis to $46.3 Million

Strong Year-to-Date Operating Cash Flow of $33.5 Million

DUBLIN, Ireland, Aug. 08, 2017 (GLOBE NEWSWIRE) -- Avadel Pharmaceuticals plc (NASDAQ:AVDL) today announced its financial results for the second quarter of 2017.

Highlights Include:

  • Total revenues for the second quarter 2017 were $46.3 million, compared to $38.9 million in the second quarter 2016.

  • GAAP net income for the second quarter of 2017 was $28.9 million, or $0.68 per diluted share, compared to GAAP net loss of $20.0 million, or $0.48 per diluted share, in the second quarter of 2016.

  • Adjusted net income for the second quarter of 2017 was $8.2 million, or $0.19 per diluted share, compared to an adjusted net loss of $1.0 million, or $0.02 per diluted share, in the second quarter of 2016.(1)

  • Cash and marketable securities at June 30, 2017 were $173.8 million, up from $154.2 million at December 31, 2016.

  • Cash used for share repurchases totaled $13.1 million for the six months ended June 30, 2017.

Mike Anderson, Avadel's Chief Executive Officer, said, "We continued to generate strong revenues of $46.3 million during the second quarter, led by our hospital products, and again exceeded street expectations on both the top and bottom lines. Overall, we had a solid financial performance for the second quarter and reiterate our expectations of being both cash flow positive and profitable in 2017. During the quarter we also continued to make progress in a number of areas, most importantly, the continued initiation of clinical sites and enrollment of patients in our REST-ON Phase III trial of FT218, Micropump® sodium oxybate.”

Second Quarter 2017 Results

Revenues during the second quarter of 2017 were $46.3 million, compared to $38.9 million during the same period last year. The increase in revenues was due to Akovaz®, which was not yet in the market during the second quarter of 2016. This increase was partially offset by a decline in Bloxiverz® revenues, primarily as a result of additional competition to neostigmine in the form of an alternative molecule, sugammadex, and the approval of a third generic neostigmine product. On a GAAP basis, net income was $28.9 million during the second quarter of 2017, or $0.68 per diluted share, compared to a net loss of $20.0 million, or $0.48 per diluted share, for the same period last year. This increase in net income on a year-over-year basis was attributed to $13.2 million of gains related to changes in the fair value of related party contingent consideration for the second of quarter 2017, compared to $23.9 million of expense in the same period last year. Changes in the fair value of related party contingent consideration are non-cash items, and do not reflect the cash amount paid to related parties. Cash payments can be found in the Consolidated Statement of Cash Flows. Also, included in GAAP net income in the second quarter of 2017 are $1.1 million in restructuring costs related to the reduction of the Company's workforce in France, which consist of employee severance, benefits and other costs.

Research and Development expenses totaled $6.8 million for the second quarter of 2017, compared to $7.6 million for the same period last year. The decrease on a year-over-year basis is primarily attributed to lower incurred contract research organization (CRO) expenses as a result of aligning spend with the progress of the REST-ON clinical trial. The Company expects R&D expenses to increase significantly for the balance of 2017 as recruitment and enrollment at the existing and additional clinical sites in the United States increase.

Selling, General and Administrative expenses were $12.4 million in the second quarter of 2017, compared to $11.3 million in the same period last year. This increase was largely due to higher costs associated with certain business development activities, audit fees and pre-launch market research studies for FT218.

Adjusted net income for the second quarter of 2017 was $8.2 million, or $0.19 per diluted share, compared to an adjusted net loss of $1.0 million, or $0.02 per diluted share, in the same period last year.(1) The increase in adjusted net income is largely attributable to an increase in revenues from Akovaz® and a lower adjusted effective tax rate of 43% compared to 111% in the prior year period. Please see the Supplemental Information section within this document for a reconciliation of adjusted net income and adjusted diluted EPS to the respective GAAP amounts.

2017 Guidance

As a result of continued pricing pressure in the ephedrine market and increased competition in the neostigmine market, the Company is revising its revenue guidance to between $165 and $175 million, compared to previous guidance of between $170 and $185 million. As a result of lower than expected spending during the first two quarters of 2017, R&D is now expected to be in the range of $30 to $40 million compared to previous guidance of $40 to $50 million. Diluted adjusted EPS is unchanged from previous guidance of $0.30 to $0.45.

Conference Call

A conference call to discuss these results has been scheduled for Tuesday, August 8, 2017 at 10:00 a.m. EDT. A question and answer period will follow management's prepared remarks. To access the conference call, investors are invited to dial (844) 388-0559 (U.S. and Canada) or (216) 562-0393 (International). The conference ID number is 56707554. A live audio webcast and accompanying slides can be accessed by visiting the “News & Events” page of the Company’s Investors website at www.avadel.com. A replay of the webcast will be archived on Avadel’s website for 90 days following the event.

About REST-ON Phase III Clinical Trial

REST-ON is a double-blind, randomized, placebo controlled study of 264 patients to assess the efficacy and safety of a once nightly formulation of sodium oxybate for extended-release oral suspension for the treatment of excessive daytime sleepiness and cataplexy in patients suffering from narcolepsy. For more information, please visit www.rethinknarcolepsy.com.

About Avadel Pharmaceuticals plc:

Avadel Pharmaceuticals plc (NASDAQ:AVDL) is a specialty pharmaceutical company that seeks to develop differentiated pharmaceutical products that are safe, effective and easy to take through formulation development, by utilizing its proprietary drug delivery technology and in-licensing / acquiring new products; ultimately, helping patients adhere to their prescribed medical treatment and see better results. Avadel currently markets products in the hospital and primary care spaces. The Company is headquartered in Dublin, Ireland with operations in St. Louis, Missouri, United States and Lyon, France. For more information, please visit www.avadel.com.

Safe Harbor: This release may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements herein that are not clearly historical in nature are forward-looking, and the words “anticipate, “assume,” “believe,” “expect,” “estimate,” “plan,” “will,” “may,” and the negative of these and similar expressions generally identify forward-looking statements. All forward-looking statements involve risks, uncertainties and contingencies, many of which are beyond Avadel's control and could cause actual results to differ materially from the results contemplated in such forward-looking statements. These risks, uncertainties and contingencies include the risks relating to: our dependence on a small number of products and customers for the majority of our revenues; the possibility that our Bloxiverz®,Vazculep® and Akovaz® products, which are not patent protected, could face substantial competition resulting in a loss of market share or forcing us to reduce the prices we charge for those products; the possibility that we could fail to successfully complete the research and development for pipeline products we are evaluating for potential application to the FDA pursuant to our “unapproved-to-approved” strategy, or that competitors could complete the development of such product and apply for FDA approval of such product before us; our dependence on the performance of third parties in partnerships or strategic alliances for the commercialization of some of our products; the possibility that our products may not reach the commercial market or gain market acceptance; our need to invest substantial sums in research and development in order to remain competitive; our dependence on certain single providers for development of several of our drug delivery platforms and products; our dependence on a limited number of suppliers to manufacture our products and to deliver certain raw materials used in our products; the possibility that our competitors may develop and market technologies or products that are more effective or safer than ours, or obtain regulatory approval and market such technologies or products before we do; the challenges in protecting the intellectual property underlying our drug delivery platforms and other products; our dependence on key personnel to execute our business plan; the amount of additional costs we will incur to comply with U.S. securities laws as a result of our ceasing to qualify as a foreign private issuer; and the other risks, uncertainties and contingencies described in the Company's filings with the U.S. Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2016, all of which filings are also available on the Company's website. Avadel undertakes no obligation to update its forward-looking statements as a result of new information, future events or otherwise, except as required by law.

Non-GAAP Disclosures and Adjustments

Avadel discloses certain non-GAAP financial measures, including adjusted net income and loss and adjusted net income and loss per diluted share, as management believes that a comparison of its current and historical results would be difficult if the disclosures were limited to financial measures prepared only in accordance with generally accepted accounting principles (GAAP) in the U.S. In addition to reporting its financial results in accordance with GAAP, Avadel reports certain non-GAAP results that exclude, if any, fair value remeasurements of its contingent consideration, impairment of intangible assets, amortization of intangible assets, restructuring costs, foreign exchange gains and losses on assets and liabilities denominated in foreign currencies, but includes the operating cash flows plus any unpaid accrued amounts associated with the contingent consideration, in order to supplement investors' and other readers' understanding and assessment of the Company's financial performance. The Company's management uses these non-GAAP measures internally for forecasting, budgeting and measuring its operating performance. Investors and other readers should review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most closely applicable GAAP measure set forth below and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP. The table provided within the following “Supplemental Information” section reconciles GAAP net income and loss and diluted earnings or loss per share to the corresponding adjusted amounts.

______________________________

(1) Non-GAAP financial measure: Descriptions of Avadel’s non-GAAP financial measures are included under the caption Non-GAAP Disclosures and Adjustments included within this press release and reconciliations of such non-GAAP financial measures to their most closely applicable GAAP financial measures are found in the Supplemental Information section herein.


AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Revenues:
Product sales and services $47,105 $38,165 $98,862 $73,518
License and research revenue (794) 693 (44) 1,556
Total 46,311 38,858 98,818 75,074
Operating expenses:
Cost of products and services sold 4,561 3,907 8,463 7,813
Research and development expenses 6,792 7,604 13,998 12,992
Selling, general and administrative expenses 12,429 11,290 24,241 20,751
Intangible asset amortization 564 3,702 1,128 7,216
Changes in fair value of related party contingent consideration (13,230) 23,898 (20,201) 32,141
Restructuring costs 1,069 3,722
Total operating expenses 12,185 50,401 31,351 80,913
Operating income (loss) 34,126 (11,543) 67,467 (5,839)
Investment income, net 527 390 1,579 590
Interest expense, net (263) (263) (526) (438)
Other income (expense) - changes in fair value of related party payable 1,670 (2,773) 2,220 (4,307)
Foreign exchange gain (loss) 237 1,680 6 (1,261)
Income (loss) before income taxes 36,297 (12,509) 70,746 (11,255)
Income tax provision 7,370 7,449 15,909 14,761
Net income (loss) $28,927 $(19,958) $54,837 $(26,016)
Net income (loss) per share - basic $0.70 $(0.48) $1.33 $(0.63)
Net income (loss) per share - diluted 0.68 (0.48) 1.29 (0.63)
Weighted average number of shares outstanding - basic 41,091 41,241 41,233 41,241
Weighted average number of shares outstanding - diluted 42,487 41,241 42,625 41,241


AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30, 2017 December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents $43,507 $39,215
Marketable securities 130,290 114,980
Accounts receivable 19,285 17,839
Inventories 5,747 3,258
Prepaid expenses and other current assets 5,522 5,894
Total current assets 204,351 181,186
Property and equipment, net 3,328 3,320
Goodwill 18,491 18,491
Intangible assets, net 21,709 22,837
Research and development tax credit receivable 3,039 1,775
Income tax deferred charge 10,342
Other 8,242 7,531
Total assets $259,160 $245,482
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $291 $268
Current portion of long-term related party payable 40,615 34,177
Accounts payable 12,321 7,105
Deferred revenue 2,455 2,223
Accrued expenses 30,339 17,222
Income taxes 1,455 1,200
Other 1,233 226
Total current liabilities 88,709 62,421
Long-term debt, less current portion 594 547
Long-term related party payable, less current portion 86,844 135,170
Other 6,285 5,275
Total liabilities 182,432 203,413
Shareholders' equity:
Preferred shares, $0.01 nominal value; 50,000 shares authorized; none issued or outstanding at June 30, 2017 and December 31, 2016, respectively
Ordinary shares, nominal value of $0.01; 500,000 shares authorized; 41,435 and 41,371 issued and outstanding at June 30, 2017 and December 31, 2016, respectively 414 414
Treasury shares, at cost, 1,351 and 0 shares held at June 30, 2017 and December 31, 2016, respectively (14,338)
Additional paid-in capital 389,451 385,020
Accumulated deficit (276,119) (319,800)
Accumulated other comprehensive loss (22,680) (23,565)
Total shareholders' equity 76,728 42,069
Total liabilities and shareholders' equity $259,160 $245,482


AVADEL PHARMACEUTICALS PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended June 30,
2017 2016
Cash flows from operating activities:
Net income (loss) 54,837 (26,016)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 1,611 7,681
Loss on disposal of property and equipment 110
Loss (gain) on sale of marketable securities (81) 455
Foreign exchange loss 1,304 1,261
Grants recognized in research and development expenses (70)
Remeasurement of related party acquisition-related contingent consideration (20,201) 32,141
Remeasurement of related party financing-related contingent consideration (2,220) 4,307
Change in deferred tax and income tax deferred charge 322 (5,028)
Stock-based compensation expense 4,055 4,913
Increase (decrease) in cash from:
Accounts receivable (1,446) (1,689)
Inventories (2,489) 2,345
Prepaid expenses and other current assets (264) 546
Research and development tax credit receivable (1,175) (1,630)
Accounts payable & other current liabilities 4,931 (348)
Deferred revenue 232 (1,461)
Accrued expenses 12,747 777
Accrued income taxes 255 6,285
Earn-out payments for related party contingent consideration in excess of acquisition-date fair value (16,515) (7,769)
Royalty payments for related party payable in excess of original fair value (2,287) (1,159)
Other long-term assets and liabilities (80) 270
Net cash provided by operating activities 33,536 15,921
Cash flows from investing activities:
Purchases of property and equipment (321) (760)
Acquisitions of businesses 161
Proceeds from sales of marketable securities 51,820 26,013
Purchases of marketable securities (67,743) (75,528)
Net cash used in investing activities (16,244) (50,114)
Cash flows from financing activities:
Earn-out payments for related party contingent consideration (665) (6,572)
Royalty payments for related party payable (816)
Reimbursement of loans 12
Cash proceeds from issuance of ordinary shares and warrants 376
Share repurchases (13,081)
Net cash used in financing activities (13,358) (7,388)
Effect of foreign currency exchange rate changes on cash and cash equivalents 358 416
Net increase (decrease) in cash and cash equivalents 4,292 (41,165)
Cash and cash equivalents at January 1, 39,215 65,064
Cash and cash equivalents at June 30, $43,507 $23,899


AVADEL PHARMACEUTICALS PLC
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
Revenues by Product: 2017 2016 2017 2016
Bloxiverz $13,719 $25,620 $27,621 $50,367
Vazculep 10,154 10,421 20,334 19,827
Akovaz 20,912 46,549
Other 2,320 2,124 4,358 3,324
Total product sales and services 47,105 38,165 98,862 73,518
License and research revenue (794) 693 (44) 1,556
Total revenues $46,311 $38,858 $98,818 $75,074


GAAP to Non-GAAP adjustments for the three-months ended June 30, 2017
Exclude Include
GAAP Intangible
asset
amortization
Foreign
exchange
(gain)/loss
Restructuring
impacts
License
revenue
adj.
Contingent
related party
payable fair
value
adjustment
Contingent
related party
payable
paid/accrued
Total
adjustments
Adjusted
GAAP
Revenues:
Product sales and services $47,105 $ $ $ $ $ $ $ $47,105
License and research revenue (794) 1,100 1,100 306
Total 46,311 1,100 1,100 47,411
Operating expenses:
Cost of products and services sold 4,561 4,561
Research and development 6,792 6,792
Selling, general and administrative 12,429 12,429
Intangible asset amortization 564 (564) (564)
Changes in fair value of related party contingent consideration (13,230) 13,230 8,516 21,746 8,516
Restructuring costs 1,069 (1,069) (1,069)
Total 12,185 (564) (1,069) 13,230 8,516 20,113 32,298
Operating income (loss) 34,126 564 1,069 1,100 (13,230) (8,516) (19,013) 15,113
Investment and other income 527 527
Interest expense (263) (263)
Other expense - changes in fair value of related party payable 1,670 (1,670) (1,166) (2,836) (1,166)
Foreign exchange gain 237 (237) (237)
Income (loss) before income taxes 36,297 564 (237) 1,069 1,100 (14,900) (9,682) (22,086) 14,211
Income tax provision (benefit) 7,370 201 (909) (616) (1,324) 6,046
Net income (loss) $28,927 $363 $(237) $1,069 $1,100 $(13,991) $(9,066) $(20,762) $8,165
Net income (loss) per share - diluted(1) 0.68 $0.01 $(0.01) $0.03 $0.03 $(0.33) $(0.21) $(0.49) $0.19
Weighted average number of shares outstanding - diluted 42,487 42,487 42,487 42,487 42,487 42,487 42,487 42,487 42,487

(1) Net income (loss) per share - diluted is calculated by dividing Net income (loss) by the Weighted average number of shares outstanding - diluted. Note, when recalculated using this method, the balances in the Total adjustment and Adjusted GAAP columns may not cross-foot as a result of rounding to full precision.

GAAP to Non-GAAP adjustments for the three-months ended June 30, 2016
Exclude Include
GAAP Intangible
asset
amortization
Foreign
exchange
(gain)/loss
Purchase
accounting
adjustments
- FSC
Contingent
related party
payable fair
value
adjustment
Contingent
related party
payable
paid/accrued
Total
adjustments
Adjusted
GAAP
Revenues:
Product sales and services $38,165 $ $ $ $ $ $ $38,165
License and research revenue 693 693
Total 38,858 38,858
Operating expenses:
Cost of products and services sold 3,907 (762) (762) 3,145
Research and development 7,604 7,604
Selling, general and administrative 11,290 11,290
Intangible asset amortization 3,702 (3,702) (3,702)
Changes in fair value of related party contingent consideration 23,898 (23,898) 6,992 (16,906) 6,992
Total 50,401 (3,702) (762) (23,898) 6,992 (21,370) 29,031
Operating income (loss) (11,543) 3,702 762 23,898 (6,992) 21,370 9,827
Investment and other income 390 390
Interest expense (263) (263)
Other expense - changes in fair value of related party payable (2,773) 2,773 (941) 1,832 (941)
Foreign exchange gain 1,680 (1,680) (1,680)
Income (loss) before income taxes (12,509) 3,702 (1,680) 762 26,671 (7,933) 21,522 9,013
Income tax provision (benefit) 7,449 1,329 274 1,413 (461) 2,555 10,004
Net income (loss) $(19,958) $2,373 $(1,680) $488 $25,258 $(7,472) $18,967 $(991)
Net income (loss) per share - diluted(1) (0.48) $0.06 $(0.04) $0.01 $0.61 $(0.18) $0.46 $(0.02)
Weighted average number of shares outstanding - diluted 41,241 41,241 41,241 41,241 41,241 41,241 41,241 41,241

(1) Net income (loss) per share - diluted is calculated by dividing Net income (loss) by the Weighted average number of shares outstanding - diluted. Note, when recalculated using this method, the balances in the Total adjustment and Adjusted GAAP columns may not cross-foot as a result of rounding to full precision.

GAAP to Non-GAAP adjustments for the six-months ended June 30, 2017
Exclude Include
GAAP Intangible
asset
amortization
Foreign
exchange
(gain)/loss
Restructuring
impacts
Purchase
accounting
adjustments
- FSC
License
revenue
adj.
Contingent
related party
payable fair
value
adjustment
Contingent
related party
payable
paid/accrued
Total
adjustments
Adjusted
GAAP
Revenues:
Product sales and services $98,862 $ $ $ $ $ $ $ $ $98,862
License and research revenue (44) 1,100 1,100 1,056
Total 98,818 1,100 1,100 99,918
Operating expenses:
Cost of products and services sold 8,463 (46) (46) 8,417
Research and development 13,998 13,998
Selling, general and administrative 24,241 24,241
Intangible asset amortization 1,128 (1,128) (1,128)
Changes in fair value of related party contingent consideration (20,201) 20,201 18,132 38,333 18,132
Restructuring charges 3,722 (3,722) (3,722)
Total 31,351 (1,128) (3,722) (46) 20,201 18,132 33,437 64,788
Operating income (loss) 67,467 1,128 3,722 46 1,100 (20,201) (18,132) (32,337) 35,130
Investment and other income 1,579 1,579
Interest expense (526) (526)
Other expense - changes in fair value of related party payable 2,220 (2,220) (2,465) (4,685) (2,465)
Foreign exchange gain 6 (6) (6)
Income (loss) before income taxes 70,746 1,128 (6) 3,722 46 1,100 (22,421) (20,597) (37,028) 33,718
Income tax provision (benefit) 15,909 402 17 (1,269) (1,307) (2,157) 13,752
Net income (loss) $54,837 $726 $(6) $3,722 $29 $1,100 $(21,152) $(19,290) $(34,871) $19,966
Net income (loss) per share - diluted(1) 1.29 $0.02 $ $0.09 $ $0.03 $(0.50) $(0.45) $(0.82) $0.47
Weighted average number of shares outstanding - diluted 42,625 42,625 42,625 42,625 42,625 42,625 42,625 42,625 42,625 42,625

(1) Net income (loss) per share - diluted is calculated by dividing Net income (loss) by the Weighted average number of shares outstanding - diluted. Note, when recalculated using this method, the balances in the Total adjustment and Adjusted GAAP columns may not cross-foot as a result of rounding to full precision.

GAAP to Non-GAAP adjustments for the six-months ended June 30, 2016
Exclude Include
GAAP Intangible
asset
amortization
Foreign
exchange
(gain)/loss
Purchase
accounting
adjustments
- FSC
Contingent
related party
payable fair
value
adjustment
Contingent
related party
payable
paid/accrued
Total
adjustments
Adjusted
GAAP
Revenues:
Product sales and services $73,518 $ $ $ $ $ $ $73,518
License and research revenue 1,556 1,556
Total 75,074 75,074
Operating expenses:
Cost of products and services sold 7,813 (1,525) (1,525) 6,288
Research and development 12,992 12,992
Selling, general and administrative 20,751 20,751
Intangible asset amortization 7,216 (7,216) (7,216)
Changes in fair value of related party contingent consideration 32,141 (32,141) 13,437 (18,704) 13,437
Total 80,913 (7,216) (1,525) (32,141) 13,437 (27,445) 53,468
Operating income (loss) (5,839) 7,216 1,525 32,141 (13,437) 27,445 21,606
Investment and other income 590 590
Interest expense (438) (438)
Other expense - changes in fair value of related party payable (4,307) 4,307 (1,833) 2,474 (1,833)
Foreign exchange gain (1,261) 1,261 1,261
Income (loss) before income taxes (11,255) 7,216 1,261 1,525 36,448 (15,270) 31,180 19,925
Income tax provision (benefit) 14,761 2,591 548 1,964 (782) 4,321 19,082
Net income (loss) $(26,016) $4,625 $1,261 $977 $34,484 $(14,488) $26,859 $843
Net income (loss) per share - diluted(1) (0.63) $0.11 $0.03 $0.02 $0.84 $(0.35) $0.65 $0.02
Weighted average number of shares outstanding - diluted 41,241 41,241 41,241 41,241 41,241 41,241 41,241 41,241

(1) Net income (loss) per share - diluted is calculated by dividing Net income (loss) by the Weighted average number of shares outstanding - diluted. Note, when recalculated using this method, the balances in the Total adjustment and Adjusted GAAP columns may not cross-foot as a result of rounding to full precision.

Contacts: Michael F. Kanan Chief Financial Officer Phone: (636) 449-1844 Email: mkanan@avadel.com Lauren Stival Sr. Director, Investor Relations & Corporate Communications Phone: (636) 449-5866 Email: lstival@avadel.com

Source:Avadel Pharmaceuticals plc