Hi. Welcome back everybody. Next session at the SVB Leerink Healthcare Conference. I'm Marc Goodman, one of the biopharma analysts, and we're lucky enough to have Avadel join us, and we have their CEO, Greg Divis, who's been CEO for the past few years. Obviously, you know, this is a company where they have one product that is at FDA and everybody is, you know, eagerly waiting for this approval or to hear what's going on. Greg, I guess you got to start with, you know, with that. I'll give you some time for opening comments. You know, you got to tell us where we are and what's happening. Yeah. Thanks, Marc. First of all, thanks for the opportunity to be here and to update everybody on where we are today and really and all the exciting opportunities that we see in front of us as we continue this transformation of Avadel we've been on for the last few years, here. You know, as it relates to the NDA, there's been a number of things that we can update on, and there's been a lot of, you know, action taken over the last, you know, number of weeks. Maybe I just spend a few minutes catching everyone up to date on kind of where things sit at this point. Not to belabor, you know, the past too much, but, you know, I think as many are aware who follow us, our PDUFA date was October 15th. Just prior to that date, we were notified by FDA that there were no issues in the NDA cited, but that they weren't finished with the review, and they needed more time. That time carried us through the balance of really Q4 of last year, where we had some questions we continued to respond to, and we worked quite a bit on, I would say, matters that are typically addressed in the later stages of an NDA review process. As we exited 2021 and into last month and into January, we firmly believe that the substantive nature of the review was complete from our perspective. We provided earlier in January some what we thought were final minor edits to the label as that had continued to progress from that standpoint. At that point in time, back in January, we reached back out to the review division and to the Office of Orphan Products Development to really seek clarity as to whether there was any additional questions pending, any other information or data needed to support a decision. If not, could we get any clarity on timing? Although they did tell us there were no additional questions or information needed, they couldn't give us any more clarity on timing at that point in time. At that point, we made the decision to escalate the situation to higher up within the agency, which is what we did last month, in an attempt to gain clarity and most importantly, bring the FT218 NDA to what we hope to be a decision. Quite frankly, we were pleased with both the responsiveness of the nature of our outreach and the request we had to engage with those principals, both, you know, in the review team and above the review team, to really understand the situation at hand. What I would say is that we've been pleased with their responsiveness, with their level of engagement. We are very confident that the FDA understands the situation we're in now and is committed to completing this review. We took the opportunity in these discussions, in this exchange, to really probe deeply into just about every opportunity or potential, you know, matter that relates to our NDA, whether it's clinical related or CMC related or orphan drug matters or whatnot, to really understand what, if anything, is pending. You know, throughout the course of those discussions, it was made very clear to us there's no outstanding issues, there's no outstanding questions, there's nothing they need to us, but was described to us as what's left to remain was described as internal and administrative in nature within the agency. I think what's important to share with everyone is that as we've had these deep discussions, what we felt as productive and responsive engagements with the agency, you know, we did not learn anything in those discussions or those exchanges that compromises our belief in the approvability of FT218. I'm sure everybody wants to understand, you know, what does that mean from a timeline standpoint, and, you know, when do we think that's going to occur? That's clearly something we would have asked, and we did ask to try to frame that out. What we can say to you is that if we thought that this was going to be months and months longer, like if that was the indication we were receiving, that this was gonna be a substantially additionally longer delay, we would certainly be compelled to wanna contextualize that with all stakeholders and shareholders. That's just not the case. That's not the intent we believe we understood from the FDA. We believe the resources are shepherded to continue to move this forward. We believe they're fully committed to completing the review. As such, we continue to move forward with all of our commercial launch preparation, the conditional hiring of the majority of our commercial team, including our sales force. We just announced we added a very experienced neurosciences Chief Medical Officer just this week. We're very focused on getting FT218 approved. We're pleased with the responsiveness of the FDA. We believe in the approvability and look forward to sharing additional news as soon as we're able to. With that, I'll conclude those opening remarks there and answer any questions you have, Marc, or let you guide the rest of the discussion. Yeah. Thank you. I guess, first of all, when you elevated it up to higher levels at the FDA, did you hear anything different from them than you were hearing from the lower people that were day-to-day? Well, I feel like we were able to, you know, gain some additional. We were given an opportunity to really probe deeper into areas and ask very specific questions in a forum that allowed us to gain what we thought was some additional perspective and insight. What I would say is that you know, there's a clear understanding of the challenges that the delay has created for us, and that there was a certain, from our perspective, a commitment to wanting to get this completed, and that there were certainly no indications of any issues or concerns or anything needed from us to help them complete their work. Just to be clear, because you mentioned a few of these, but I still wanna kind of go through it. You asked if there were any clinical matters left, and they specifically said, "No. No, not at this moment. No. You said, "Are there any CMC sections?" They said, "No. Correct. Right. Everything obviously is at this moment. Obviously, anything can change. You know, I mean, like, I'm just okay. You said, "Are there any safety issues?" They said, "No." Okay. Those are kind of the three biggies, right? For now, we would move on to you mentioned Orphan. Did you specifically say, "Is there any reason to believe that we're being blocked by Orphan or something like that?" Did they say, "No, you're not?" Or did they respond to you on that Orphan issue? Yeah, we asked a few different questions in this regard, and without getting into, you know, the specifics in that regard, it was made clear to us that there isn't any questions, pending or any, information needed to help them continue to move forward, you know, with the review at large or finish it. Then again, what was described to us as to what's remaining, what was described as internal and administrative. Right. I don't know whether Orphan designation blocked me. Is that administrative? Like, I don't know if that falls into that. 'Cause one of the things that investors have been kind of bringing up is, oh, they're probably fine, except for one big problem. They're gonna be blocked by Orphan Drug. Like, maybe that's it. Maybe that's the problem. I just, you know. Well, we didn't learn anything, Marc, in this conversation that made us question our belief in the approvability of FT218. Okay. Any of those matters, period. Right. It came up, and they didn't give you any reason to believe that there's gonna be an issue there. Okay, good. What about- That's correct. Yeah. Then what about the whole idea of having to certify against any of the patents? I mean, I wanna talk about the whole litigation process in a second, but did that come up in the conversation and FDA said, "No, no, that's not an issue here," or what, where are we there? Yeah. Again, we probed in all the different areas, and I'll just stick with kinda our blanket statement that we didn't learn anything that makes us question our regulatory filing strategy or our belief in the approvability of FT218 through all of this interaction at this stage. Again, it was described to us that there's this final remaining item described as much more administrative and internal. But I don't wanna speak for them. I can tell you how we interpreted the discussion, and we don't believe there's anything that questions our belief in the approvability. We've always said that if we learn something that would question that belief, we would disclose it. What I'm telling you is we didn't learn anything- Right. That would require that disclosure. Just to give everyone a sense of the last time that you had some type of substantive interaction that you're basing your previous comments on, was this a week ago? Was this three weeks ago? Just, you know, a month ago? Yeah. I would certainly say it's certainly after the turn of the calendar year and. Okay. probably fair to characterize it within the last, you know, 30 days or less. Okay, fair enough. This is very recent. Correct. Your conclusion from that conversation, which we'll just say was a month ago, whatever, just for argument sake, was okay, team internally at your firm, we need to be thinking that this could get approved soon in the next month or so, right? I mean, that's your takeaway, although you don't really know. Yeah. Until we have a piece of paper, we don't have a decision. Yeah. Right? From that standpoint. Nothing has stopped us from continuing. We've always been very disciplined in our launch readiness work in terms of, you know, when we pull the trigger on what relative to, you know, the work that has to be done and the expansion of the organization that needs to be complete, with some of that triggered around the final approval, you know, from that standpoint. Yeah. You know, all of that has continued to go forward from our standpoint. Yeah. Could you just go through that a little bit, Greg? Where were you at the end of the year with respect to your commercialization infrastructure and what changed, you know, over the past month, and what are we still waiting on for the final approval? Just so we understand the different, you know, kind of ways it's moving. I think the best way to simply characterize it is when you think about major work streams in terms of launch readiness and being ready to launch, whether it's, you know, our medical communications and the externalization of our data. That's been going on for the better part of 15 months or 18 months and continue. We'll have more data generated and presented at World Sleep coming up in March. You've got all of our commercial kinda leadership and operational roles have been in place, you know, leading the execution of respective functions, whether that's marketing, sales operations, sales force size and structure, market access, payers, hub and patient services, REMS build, those REMS partnerships and those sorts of things. All of that has continued, including the necessary internal teams to be able to manage that. The biggest piece, and that includes engaging with payers, with our market access team and whatnot. The biggest piece what I'll just characterize as conditional, so to speak, is really the deployment of a larger cohort of our customer-facing roles, predominantly our sales force. That's where the biggest group of new colleagues join us. We've done a lot of work leading into the end of last year and has continued through the first, you know, month and a half of this year, which is a lot of interviewing, identifying candidates, making offers to them, you know, that are conditional to the final approval, but being able to find the right candidate, making a commitment to them and getting their agreement to join us upon an approval, from that standpoint, has also progressed. To the balance of, you know, at the end of last year, we were probably at around, you know, 50%-55% of our sales force hired in that regard. Now we're upwards of 80% of that, at least conditionally hired. As those folks come on board and some additional, you know, kind of field-based customer-facing roles, we'll obviously begin to add some additional, you know, internal folks to help kind of manage the onboarding of those additional headcount. That's the biggest piece at this point. Right. That where we sit today. Greg, just to be clear, everything that you just mentioned, we're 55% at year-end, we're 80%, you know, recently, those are conditional for the reps, though. It's still all conditional. Correct. You just, you found the people that you wanna hire. Correct. You've made them offers. As soon as we get approved, you've got a full offer. Yes. How many- They've got them, they've signed it, you know, committed to us and, you know. Just give us one more sense of how many reps you're thinking of doing. Right now the target is 50 reps. To start with 50 reps to launch with. Okay. That really gives us a footprint to cover the 4,000 positions that make up 100% of the oxybate business. I know we'll talk commercial here in a little bit. Yes. It's a very concentrated marketplace, and we believe that that gets us there. Just so we're clear, the other parts of the infrastructure that have actually been hired, how many people have actually been hired? Just the total. 10 people, 20 people, 30 people? Well, yeah, the best way for me to describe it is, you know, a little less than a year ago, we had 25 people to 30 people in the organization. Now we're at 66 or 67. The near majority of those are all commercially related. Yeah. That's close enough. We're just trying to. Yeah. Perfect. Okay. Talk a little bit about what you're seeing in the oxybate market, for a second, you know, just broadly, right? I mean, what is Jazz doing? What are you seeing them do well? What are you seeing as opportunities that are more or less for you? Has anything changed in your view of the message? You know, just in general, what's going on? Yeah, I think, you know, as we went through all of 2021, and as we enter this year and on the back of, you know, doing extensive research and landscape assessment and understanding, you know, what's important to clinicians, what's important to patients, how does the dynamics, you know, narcolepsy market that was really static for nearly 20 years, that's had a bit of a turn now with some new product entrants, including the mixed salt formulation. I think the headline statement I would make is that the opportunity for us, in our view, only continues to get bigger. In many ways, I think to a certain extent, it's either not appreciated or fully understood. Because the one thing we've learned in talking to hundreds and hundreds of patients and hundreds and hundreds of physicians is that the most important attribute of any oxybate therapy is once nightly dosing. If they can get the same clinical benefit and eliminate the middle of the night dosing and all the consequences or complications associated therein, it's highly attractive to them. That doesn't matter if they're on a mixed salt product, an original product, an AG in the future, you know, it's still twice nightly. Those 16,000 patients are opportunities for once at bedtime, FT218, should it be approved. What we've learned additionally to that is that the actual market for us isn't just those 16,000 patients. We've identified thousands of potential patients who have previously been on twice nightly and discontinued, right? For reasons, some of which are dosing related, some of which are adverse event related, both of which perhaps, you know, we can help improve their treatment experience in that regard. We've also uncovered an equally as large patient population of patients who have said no to the oxybates, who have decided not to go on it for a variety of reasons, some of which are dose related. When you think about that, you think about 16,000 patients or it's a $1.8 billion market in today's pricing, and you increase that by a magnitude of previously treated and untreated, that potentially could be market expansion opportunities almost exclusively to our benefit. We get more excited about the opportunity to help a lot of patients with a molecule that's been relatively flat in terms of patient, you know, growth generally over the last five years, and an opportunity to bring more patients in while also benefiting patients who are looking to potentially improve their treatment experience like many we have heard from who switched from the twice nightly in our switch study and have gone on to once a bed at a time FT218 and have reported back to us anecdotally just how good they feel at being able to sleep through the night or how their day is different because they can do things differently now. At the end of the day, I think the message we've learned is we haven't gotten any less bullish. We've only gotten more bullish on the market. We believe it's a multi-billion dollar opportunity for us, and at a price point in the marketplace today that and I'm not saying this is what our price will be, but, you know, every 1,000 patients produces $100 million, roughly a probably free cash flow for a $370 million market cap company. You don't need a lot of share to create a very meaningful opportunity. Most importantly, in addition to that, we've got a treatment that patients really want. They're really excited about it. Almost a day doesn't go by, we don't hear from one who asks, "When are you getting approved? When are you coming to market? We're so interested in what this could potentially do for me. You know, one of the questions that we always get is, well, once these patients switch from Xyrem to Xywav. You know, what's the likelihood that they're gonna wanna switch back to a high sodium, even though it's once versus the twice nightly? Like, will they do that, you know? What's your view? Well, we've done a lot of patient segmentation work in this regard, a lot of research to understand motivations for switch, you know, from that standpoint. In our view, this patient population who are moving from the original to the mixed salt product, are they moving because they think it's going to improve their treatment experience? Are they moving because they have cardiovascular risk? Clearly, the data doesn't support the other company's own data doesn't support an increase in cardiovascular risk as it relates to sodium intake. From our standpoint in our research with these patients, we believe that these patients are actually a very typical narcolepsy patient in a world of polypharmacy, in a therapeutic area of polypharmacy, although they feel better on therapy, are actually in search of trying to improve their treatment experience. We're not convinced that sticking to keeping it at twice nightly is necessarily the potential to improve their treatment experience from a narcolepsy standpoint, and therefore, our research would tell us that patients who have switched to the mixed salt product are every bit as potential candidates to switch to once nightly FT218. The fact of the matter is we've seen it happen in our switch study already. Right. What are your thoughts about the idiopathic hypersomnia indication, and does that do anything for what you're working on? Well, you know, that gets you to the question of kinda what's next and where else do we go beyond narcolepsy and the opportunity to really fulfill the promise of a once at bedtime oxybate treatment that all patients who could benefit, you know, from that treatment should have the opportunity to benefit from it. Idiopathic hypersomnia, you know, we've done a bit of research in this area to understand that opportunity. We've talked to a lot of KOLs who firmly believe a true once nightly treatment could be really, you know, significant for IH patients, you know, because it really will give them the full night's benefit of how our treatment works. So the short answer is yes, it's an interesting opportunity for us. It's something that's clearly on our radar screen. We, you know. I go back to, you know, a number of years ago where the company got itself sideways a bit because it was trying to do too much. We've been very focused on FT218 and narcolepsy. There's a tremendous opportunity here, and the opportunity, you know, in and of itself, IH just bolsters even more of that to benefit even more patients, you know, from that standpoint. As we go forward and advance our lifecycle management strategy, which goes beyond other indications, it also includes work we've started already on alternate formulations and our own version to bring, you know, treatment options to other patient populations who could benefit from a once nightly treatment as well. All of that bodes well for what the future could look like beyond FT218 and a very large valuable market for a patient population who for 20 years whose conditions have been hallmarked by disturbed nocturnal sleep have been forced to wake up in the middle of the night. We're proud of the fact that we're the first to really create an innovation that takes that issue away. Conclusion there, IH is a real market. You believe in it. It's certainly worthy of our time to get an additional indication. At this point, we certainly would love to get approved for this product, know we're gonna have a nice cash flow, then we can spend our money on other areas. Is that kind of a fair way of saying what you're not saying? Yeah. I think we've gotta do the planning that we've done already. We've begun to do or have gone quite a bit on in terms of what's next looks like. We've done some work already in certain areas of our lifecycle management, in particular on the formulation side. We've done some work in that regard that continues to progress, but we're excited about what that could mean for patients for sure. Yeah. From that standpoint. You know, but it's important for us to not lose focus on the approval- Yeah. and the execution of a launch. Yeah. That's the catalyst and the value creation in the near term that allows us to fuel the midterm and the long term. Just so we understand, what's the purpose of a new formulation? What kind of goals would you be trying to achieve? Well, I mean, the obvious one is something that works with the sodium content for those patients who truly have, you know, a cardiovascular risk situation and need to modify their treatment or can't go on treatment at all. We've done a lot of market research and understanding the untreated patient population in this category, and we have uncovered a cohort of patients who are on the sideline because of true cardiovascular risk or renal risk or whatnot. Again, whether it's those patients or any other patient who would like to try to move to it, we believe we've got the technology and the capability to deliver that in a once-nightly formulation, and we think that's meaningful as well for sure. Yeah. Yeah. Okay. That makes sense. Talk a little bit about litigation. Just give us a sense of where we are. I know that there's been a lot of back and forth, and then it just kinda went away in our minds. You know, just help us understand the progression here. Where are we? Yeah. It hasn't gone away in our minds, and it's, you know, a cost of doing business in our industry- Yes. that these sorts of things are gonna come up, for sure. You know, the court has laid out their schedule for the underlying patent case, right? There's a timeline for the trial to be heard, which is at the end of October 2023. There's a series of scheduled, you know, if you will, hearings that will occur up until that point in time. That will all be, you know, part of that overarching process. I would say it's on its path. You know, the underlying trial is on its path at this stage, and will continue to advance as we go forward and adhere to the court schedule accordingly. We're, you know, we're very proud of the fact that we're the first company to really deliver a clinically proven extended-release GHB formulation that can be taken once at bedtime, right? We're gonna defend it, we've protected it extensively, and we're going to aggressively defend it as you can expect we will. Although this litigation is something we have to deal with, we don't see it as a barrier should we get approved to be able to come to market, and most importantly, to help the patients who are looking for a once nightly, you know, oxybate treatment. Well, can you just expand a little bit? Like, what are you hearing about this case? I mean, what, you know, what are the lawyers saying? Like, I don't understand, like, where we are. Like, what's next? We're gonna have hearings on what? In the underlying case, you know, in the underlying trial, the next set of hearings, I believe, is the claim construction hearing in August. The question will be, post an approval, is there a preliminary injunction filed. There hasn't been one filed yet. There was a window to file one in November, but there was no approval, so there wasn't one filed. If there is an approval, there could potentially be a PI hearing in between approval and our launch. The court is already Greg, how soon after an approval do you expect, I mean, the PI will come very quickly, right? So that. Right. Let's just presume for a second that maybe you are blocked, right? The PI, the judge says, "You know what? We're gonna deal with this very quickly." How quickly will the judge deal with this? Is this a matter of weeks, or are we gonna have to wait longer? I just wanna make sure I understand the question, Marc. Are you asking when do we think the timing of the PI will be? Yeah. Well, I'm assuming that Jazz will file as soon as the approval comes, right? They'll file that night. Okay. What? When does that hearing? Yeah. Yeah. Again, I think the best analog we have at this stage, pending the court schedule availability, is what we know about the PI. The court has limited the basis of the PI to one claim from one patent, right? You get one claim from one patent they can assert. We get one invalidity defense and a non-infringement defense, right? It's a very narrow scope PI, right? If you look at the way the court had scheduled it previously in advance of our October 15th PDUFA date, the court had said that within, basically within five weeks or so, that they were gonna hear that PI, such that it didn't drag on and create issues, you know, you know, down the road or games were played to delay it, right? From that standpoint, we have no reason to believe that pending the court's schedule, that it's not gonna be acted on relatively soon. Right. We certainly have every incentive to want it, have it be acted on, but we also believe that it will be heard and dealt with in the window of the time for which we're building our REMS program and finishing all the rest of our commercial prep work such that we don't believe, again, it will be a barrier to us coming to market. Right. That makes sense. Fine. You're kind of assuming PI's filed, hopefully you hear this within five weeks, we win and we can launch the next day, so to speak, kind of thing. The judge should rule pretty quickly, I would think, right? Yeah. I don't, you know, I don't wanna speculate on that, but. They usually do. It's one claim from one patent. Yeah. They usually move pretty quickly on that. I guess the next thing is. We've been through that. You hire your reps with the approval. You're obviously waiting around for the PI to be resolved. If there is one, we all presume that Jazz will probably try to delay this a little bit. You launch. Then you will have the salespeople that you mentioned, so you've got that planned. Then that would all of a sudden trigger a much stronger, I guess, you know, confidence in the cash flows that are gonna be coming. Then you could start to work on these formulations that you were mentioning, a low salt formulation a little bit more. You can start to work on idiopathic hypersomnia and additional indication. In addition, you know, and stop me if I'm wrong, you, where do you know, see another product, a second product coming in? Yeah. I think if you think about the three legs of the stool of our kind of what's next strategy, you've got the lifecycle management, which work has begun, let me be clear, whether that's planning to figure out what we wanna do next or an actual work being done on formulation work to begin to, you know, look at ways to, you know, apply our technology and our innovation to serve that patient population. Like, that work has already begun from that standpoint. You know, the bigger aspects of that would actually occur, you know, down the road for sure, but I wanna be clear, like, you know, we're not waiting for that to happen and, you know, bringing Doug Williamson in, our CMO, is gonna be a key contributor to kind of our what's next strategy. A second leg of the stool, as you note, is really how do you leverage the infrastructure that we have as an organization and, you know, that could be business development. There's other companies in the narcolepsy space, but they all have another narcolepsy drug with a different mechanism of action than oxybate. We don't, right? Those who have products in development that's a different mechanism of action could be potential partners if those, if those sort of assets can mature. The third leg of the stool is really how do we apply our technology to other molecules and find the next FT218. I think that likely takes us out of sleep, so it becomes less synergistic. Nonetheless, it is a capability we have, and well we've built a team that has the distinct, you know, skill set to be able to evaluate those opportunities and see where we go next. Make no mistake about it, most importantly is, you know, the approval and the execution of the launch. Yeah. One of the questions that I got, which I guess I didn't really ask before, but I guess you kind of alluded to it is, have you officially started labeling negotiations? Do you feel like you're well into them? Do you feel like you've concluded them? Usually, everybody kind of feels like that's the last thing that, you know, and then you're done. Well, to answer that question, we did that before PDUFA started. Yeah. Before PDUFA. Yeah, we had that had initiated, initially started already, prior to PDUFA you know. That's right. Again, is it finished? We think the review is finished. It's never finished until you get your piece of paper, right? Thank you. Well, we're out of time. We appreciate you joining us. Thank you. And good luck. I mean, you know, we're all kinda wondering, where is it? I know you are too. I guess it could happen tomorrow, right? You know. Appreciate the opportunity to be here. Thanks, Marc. Thanks, Greg. Take care.