Welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff Hung, one of the biotech analysts. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have from Avadel, CEO Greg Divis and CFO Tom McHugh. Welcome, Greg and Tom. Thanks, Jeff. Appreciate the opportunity to be here. For those who may not be familiar with Avadel, can you provide a brief introduction? Yeah. Avadel is a biopharmaceutical company that is focused on developing, as our lead asset, our once-at-bedtime treatment for narcolepsy. That is our sodium oxybate treatment. We're very excited. We're about 35 days away from our PDUFA date of October 15th, and after our development program, we're excited about heading toward the next key milestone here relative to being able to bring a potentially once-at-bedtime treatment for patients who suffer from the debilitating neurological condition of narcolepsy. Great. Well, let's start with FT218. Can you remind us of what you saw on efficacy and safety with the phase III REST-ON study? How does that compare with what has been seen with Xyrem? We've recently published in a peer-reviewed journal our primary manuscript and data, authored by Dr. Kushida out of Stanford in the SLEEP Journal for FT218. In that article, in that paper, it describes our highly statistically significant and clinically meaningful results that were demonstrated at all three doses, 6 g, 7.5 g, and 9 g, for all three co-primary endpoints, MWT or maintenance of wakefulness test, the Clinical Global Impression scale or CGI, and the reduction of number of cataplexy attacks. In addition, we share data on the Epworth Sleepiness Scale as well, which was a secondary endpoint. On that specifically, which is an important measurement, the mean score for the 9 g dose was 10.4, meaning close to half of all participants had a score that is considered normal, which is under 10. I think what also is interesting and compelling and different for FT218 is that we saw the statistically significant and clinically meaningful benefit across all these endpoints as early as week three of treatment as well. You put on top of that from a safety perspective, that FT218 was generally well-tolerated with the highest dose of 9 g, normally associated with the highest adverse reactions. We demonstrated low single-digit rates of the most commonly known sodium oxybate adverse reactions, such as nausea and vomiting. In summary, we believe our data is very much unequivocal on its potential to provide a new treatment option for patients suffering from narcolepsy, while eliminating this burden of waking up in the middle of the night to take a medication for patients suffering from a sleep disorder already characterized by disturbed nocturnal sleep. Last quarter, you presented additional data from the trial at the SLEEP Meeting. Can you remind us of what you saw, and how do you expect that data to play into your commercial strategy? Might parts of it be included in the label, or is it expectation that it will be in a scientific publication? The new data we showed was really a series of additional post hoc analysis of our pivotal REST-ON trial, which is something we'll continue to do. The data we presented, again, continued to reaffirm and show that FT218 significantly improved excessive daytime sleepiness symptoms regardless of patient type, so whether they were with or without cataplexy. We're looking at different patient cohorts in this data. Furthermore, we looked at the same cohort for patients, whether they use stimulants or not. Whether with or without cataplexy, with or without the use of a stimulant, we saw significant improvement in excessive daytime sleepiness. As an ancillary potential benefit, we also published data that showed FT218 demonstrated a statistically significant reduction in weight loss and BMI or body mass index, with approximately 18% of patients achieving a 5% or greater reduction in weight. Again, strong tolerability profile with seeing this clinical effect as early as week three. To your question about the label, given it's post hoc data, we don't expect it to be in our primary label, but we're also pleased and very focused on continuing to disseminate this sort of additional data that's important for the clinical community and subsequent analyses through our pivotal trial through these scientific congresses and publications today. Great, thanks. You mentioned your upcoming PDUFA date, maybe a few questions on launch preparations. Can you provide an update on the launch preparations and the commercial strategy? We're making really significant progress here ensuring we're ready to launch FT218 and are developing all the requisite programs and initiatives to bring the sort of world-class launch that these patients and physicians deserve. A couple of key highlights in that regard. Let's talk about REMS and patient hub and services and distribution as a group. We've made a lot of progress here. Some of this we started on well before we ever filed our NDA. We've got our key partners in place who will be key partners in building out certain aspects of this part of our strategy to make sure that we deliver the sort of customer-focused support that HCPs and patients really deserve when they want to get access to once-at-bedtime FT218. We continue to make progress with payers. We've been engaging with payers for quite some time now under the FDA's guidance regarding pre-approval information exchange. Really to support all of these and many other activities, we've grown our commercial organization quite a bit. We've put our leadership team in place. We put in key operational roles underneath that leadership team, including marketing, commercial operation, patient services and distribution, market access, sales leadership. The last, I would say, major personnel commitment that we still need to build out is our sales force that we will bring on board in the latter part of Q4 following PDUFA and a subsequent approval. I think in some substance, Jeff, we've made a lot of progress. We've got more work to do. We're on track for our commercial readiness plan. We'll continue to update the market as we go forward. Mentioning of the sales force, how are you thinking about the size of that sales force? Are you still thinking 50, 60 reps? What portion of prescribers do you think you can target with such a sales force? Yeah, great question. It's a very interesting marketplace from a prescriber standpoint because it's very concentrated, right? When you think about the fact that approximately 450-500 physicians write 50% of the current sodium oxybate marketplace, and only 1,600 physicians write approximately 80% of the sodium oxybate market. Really probably 4,000 or less in total. We've completed our planning and analysis on the size and structure of where we're going to place our sales force. We believe we can reach all of those physicians, and that will be a priority for us. With that as our objective and our goal, we would expect our field sales force to be in alignment with what you've referenced in the 50-60 headcount range. Great. You said on your Q2 call that you have not been asked by the FDA to certify Paragraph IV against any of the Orange Book listed patents. Is that still the case? In short, it is the case. We have not been asked to Paragraph IV certify against P4 against any Orange Book listed patents, and we remain confident in our regulatory filing strategy in this regard with just a little more than a month to go. We stated previously that our NDA does not include a P4 certification, and again, based on our data package and our proposed labeling, we don't believe there's a basis to request such a certification. We did get a question from the audience. Has the FDA done a review of your manufacturing facility yet? It's an excellent question and one we get routinely, and we're not going into specifics about details around the NDA and certain aspects of the NDA, but what we can say is that the NDA has gone, in our mind, exceptionally well. It's been pretty much as we've expected, and from our view and our experience and our advisors' experience, would say that it's on track accordingly. As it relates to our manufacturing facility, what we can say about that is this is a facility that within the last two years, just prior to the pandemic actually, had a full PAI inspection on the same equipment train, all the quality systems with no observations whatsoever. We're obviously very confident and bullish in our partner in that regard. We haven't said whether or not they've had or will be required to do a PAI. Clearly, the agency has set some guidance around how they're handling those things, and we feel really good and confident about our partner in this regard. Great. Jazz has accused Avadel of infringing on patents. Can you walk us through the timing of the litigation and the next things that we should be watching for? Yeah, great question. Something, again, we get asked routinely now. I think before we get into timeline, maybe just a couple of points. When it comes to this litigation, we remain highly confident in our intellectual property portfolio and the fact that we are the first and only company to develop a once-nightly extended-release oxybate formulation that delivered both the PK release profile and the subsequent clinical results, as demonstrated in over 10 phase I studies and our highly statistically significant phase III REST-ON trial. I won't comment on our legal strategy. It goes without saying that we have and will continue to protect, expand, and defend this innovation that Avadel discovered, and we're excited about bringing it to patients. To specifically address your question about litigation timing, the court has issued a scheduling order that sets forth all the dates related to this litigation, including a potential motion for a preliminary injunction should the other party decide to pursue one. Let me cover a few of those. From an overall patent litigation timing, the court has set the main trial date to commence in late October of 2023. The court has also said that should FT218 be approved on October 15th, the other party has three days until October 18th to decide if they intend to file a preliminary injunction. If they do, they must have those papers filed with the court by October 22nd, and the court has already set a date to hear that preliminary injunction of November 23rd, 2021. That's when all the oral arguments on the potential PI would be heard. We're pleased that it will happen relatively soon. Lastly, I think it's important to note that as it relates to this potential preliminary injunction motion, the court has limited what the other party can assert to just one claim from one patent and nothing else. We at Avadel can defend ourselves based on non-infringement and one invalidity defense to that one claim from that one patent. Again, a very streamlined process, very efficient schedule that will come to, we believe, a resolution fairly quickly. Based on what we know today and how we view this litigation and what we know about our patents and where we are today, we do not believe this litigation will be a barrier to us coming to market should we be approved. Okay, thanks. There is another question coming from the audience. Maybe you can talk a little bit about how you're thinking about raising capital, and maybe you can comment on debt. I think first and foremost, from a balance sheet perspective, at our Q2 earnings call, we reported over $200 million of cash on the balance sheet. We certainly have put ourselves in a good position from a cash perspective, and we certainly have adequate liquidity to continue to prepare and lead us up to the launch of FT218, right? We do have a little under $144 million of debt on the balance sheet in the form of a convertible note that matures in February of 2023. In early 2022, it becomes current, and again, it's something that we certainly are on our radar screen to effectively address. As it relates to capital raises, we're always doing the appropriate planning and cash flow modeling in terms of where we are and what the future of Avadel really looks like. For us, when we think about capital raises, obviously, we want to make sure we're adequately funding the launch. We need to make sure that we effectively deal with our convertible notes in the relatively near term, given it's February of 2023. We also need to consider the future growth of Avadel as well. As we sit here today, we're always evaluating those opportunities. As we head forward now, we have, again, as last reported, over $200 million of cash on the balance sheet. We feel really good about our cash position today, and we'll continue to make sure we position ourselves for long-term growth, both in the launch of FT218 and for future growth opportunities as well. 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 pulled from the Orange Book, and maybe you can talk about what would happen if you won that and any timing on the motion. 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 a listable Orange Book patent from that standpoint. 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. We'll continue to do that as aggressively as we need 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. How are you positioning FT218 to payers? 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. Again, although it's early and we're very fortunate to be able to do this under FDA guidance, under this Pre-Approval 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 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. I think the progress to date, although early, is promising in that we have no problems getting meetings with the largest payers and insurance companies. They're very interested in our product and the innovation it potentially brings to patients. 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. 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. With FT218, we're bringing all that to the table and 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. 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 two scenarios? There really isn't any difference, 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. We've been long aware of that. We've prepared that accordingly 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? When you talk with payers about authorized generics and pricings 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%-20% less than perhaps the branded product that is the AG too. In that scenario, assuming that's the case, it will certainly, for 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, will really be viewed as an extension to the brand, in this case, Jazz's original twice-nightly product. 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. 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? In 2018, FT218 received orphan drug designation. Maybe if you can walk through the different aspects of your potential for OD and the XYWAV OD that we should think about. 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 the 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. 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? 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. All of this is in support of our orphan drug exclusivity request. To be clear, we don't believe that the orphan drug exclusivity for the mixed-salt product impacts our orphan drug designation and should not prevent us from obtaining 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 15th. 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 discontinue treatment within a year. What do these patients do after? 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. 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. Interestingly enough, is that half of them, or 25%, discontinue within the first four weeks of treatment. The reasons for that are primarily either dosing related or adverse event related. There's 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. 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 a twice-nightly sodium oxybate product refuse treatment primarily due to dosing. 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. We hear patients have reported to us that roughly 60% of patients report negative treatment experiences associated with the middle of the night dosing. Again, there's a lot of interesting data, but all of it speaks to these patients and 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, 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. 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 that the mixed-salt product can solve, but potentially could be solutions that once at bedtime FT218 can. 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? 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? 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 three of those patient segments. Patients on therapy today, patients who were previously on therapy and discontinued, and patients who are de novo or have refused oxybate treatment all sit within the same tightly cohort of prescribers, highly concentrated. We can not only focus our efforts 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. The short answer is that we expect to get patients from all three 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. I don't want to say easy, but switches that can occur shortly thereafter. As we go forward, the ability to mine those patients who have previously treated, offer the opportunity to patients who have refused treatment because of the dosing issues are all opportunities for us 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 a potential narcolepsy market opportunity that goes well beyond just the currently treated oxybate patient pool. 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? From a RESTORE perspective, I think that's the question that is being asked is, RESTORE is a 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, in this open-label extension study, which provides very useful clinical data on switching from twice-nightly oxybates to our once-at-bedtime 218. It's capturing patient experience, patient preference, and again, all information that's 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. 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. 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 switch from Xyrem to Xywav? How do patients rank lower sodium versus once nightly? Are there any learnings from the feedback that you can apply to your launch? Yeah, I think first and foremost, when it comes to understanding the basis for patient switches, you got to really take a step back and understand the behavior of these patients and why they do what they do. 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? It 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 mixed-salt 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. I think it's the dynamic nature of this market that what we see 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 with over 20 years of utilization, that there's been no demonstrated additional or associated cardiovascular risk with the use of the original twice nightly formulation. Great. Maybe in the last minute, one last question on the future of Avadel beyond FT218. What kinds of things are you contemplating? Yeah, it's an important question, one we've spent some time focusing on for sure. When we think about what's next for Avadel, we really consider kind of three 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 lifecycle management strategy. We would consider additional indications, broadening target patient populations, offering alternative formulations that leverage our proprietary technology platform, with all of that designed to fully maximize FT 218 opportunity at large. Second would be to maximize and leverage the infrastructure we have and will continue to build in 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. Lastly, I would say, again, not 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. I would say the first two really would be the priorities in that regard. We would certainly expect to discuss more of this in the future. Right now, with 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. Appreciate it. Thank you, Jeff.