Avadel Pharmaceuticals plc (NASDAQ:AVDL) Q2 2025 Earnings Call Transcript

Avadel Pharmaceuticals plc (NASDAQ:AVDL) Q2 2025 Earnings Call Transcript August 8, 2025

Operator: Greetings, and welcome to at Avadel Pharmaceuticals Second Quarter 2025 Earnings Call. [Operator Instructions]. Accompanying slides for this call can be found on Avadel Investor Relations website. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to turn the conference over to your first speaker, Austin Murtagh with Precision AQ. You may begin.

Austin Murtagh: Good morning, and thank you for joining us on our conference call to discuss Avadel’s second quarter 2025 earnings. As a reminder, the following presentation includes several matters that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. These risks and uncertainties are described in Avadel’s public filings under the Exchange Act included in the Form 10-K for the year ended December 31, 2024, which was filed March 3, 2025, and subsequent SEC filings. Except as required by law, Avadel undertakes no obligation to update or revise any forward-looking statements contained in this presentation to reflect new information, future events or otherwise.

On the call today are Greg Divis, Chief Executive Officer; Susan Rodriguez, Chief Operating Officer; and Tom McHugh, Chief Financial Officer. I’ll turn the call over to Greg.

Gregory J. Divis: Welcome, everyone, and thank you for joining us to discuss Avadel’s second quarter 2025 results. Following my opening remarks, Susan will provide an update on our continued commercial progress, Tom will review our financial results, and I will conclude with a Q&A session. We are incredibly pleased with the results we achieved in the second quarter, including growing patient demand with 3,100 active patients on LUMRYZ as of June 30, a 63% increase compared to the second quarter of last year, generating $68.1 million in LUMRYZ net revenue, a 64% year-over-year increase and delivering quarter-over-quarter improvement in key patient metrics, including persistency, percent of reimbursed patients on therapy and patient mix.

Additionally, the second quarter marked our eighth consecutive quarter where we added new patients from all 3 patient segments. We expanded use from repeat LUMRYZ prescribers and added new prescribers, both oxybate experienced and those who previously never prescribed an oxybate, which underscores how LUMRYZ is not only competing in the oxybate market, it is also expanding it. We also achieved important financial milestones in the second quarter as we generated $15 million in cash and for the first time since launch, net income of nearly $10 million, resulting in earnings per share of $0.10. Given the positive momentum and improving trends in the first half of 2025, we are raising our full year 2025 revenue guidance to $265 million to $275 million, reflecting our confidence in our continued commercial execution, combined with the positive impact the investments we’ve made are having.

Additionally, to further support LUMRYZ’s future growth opportunity, based on the positive return we have seen to date with our incremental investments, coupled with Susan’s leadership and insights, we continue to identify new areas for targeted investments we believe can further propel patient demand for LUMRYZ and expand patients on therapy. Susan will discuss these dynamics shortly. We are pleased our 2025 launch investments are yielding tangible improvements as LUMRYZ uptake remains robust, patient persistence continues to improve, while new patient starts are occurring more efficiently and being reimbursed at a higher rate. Furthermore, LUMRYZ’s novel extended-release profile provides additional significant growth opportunities with potential expanded indications across other hypersomnia disorders.

Specifically, based on physician and patient insights, we continue to be excited about LUMRYZ’s significant potential in idiopathic hypersomnia, or IH, and view this, if successful, as a meaningful opportunity to amplify LUMRYZ’s potential positive impact on even more patients. To recap our progress on IH, in June, we received Orphan Drug Designation from the FDA for LUMRYZ’s use in IH on the hypothesis that LUMRYZ may be clinically superior to current approved therapies and provide a major contribution to patient care due to its once-nightly dosing regimen. Specifically, FDA stated for the third time, LUMRYZ may provide a major contribution to patient care due to its once-nightly dosing for patients with IH, a chronic sleep disorder that requires potentially lifelong treatment.

This is an important milestone for us as the unmet medical need in IH remains high with approximately 42,000 diagnosed patients limited to a single FDA-approved first-generation oxybate therapy that is currently only reaching approximately 11% of that population. If approved for use in IH, LUMRYZ could potentially enable eligible patients to experience an extended-release oxybate treatment for the first time, providing an important benefit for this population that struggles so significantly with sleep inertia. By offering an innovative novel therapeutic option that is specifically designed for the patient to receive a full therapeutic dose night after night with the added benefit of no forced awakenings, we believe could elevate the standard of care in IH and potentially unlock the significant expanded oxybate market opportunity for LUMRYZ.

That said, enrollment in our Phase III REVITALYZ trial evaluating LUMRYZ in IH is ongoing and enrolling patients at approximately 40 leading U.S. sleep centers. We are well on our way to completing enrollment in REVITALYZ by the end of 2025 followed by data readout in 2026 to support a potential future supplemental NDA filing during the second half of 2026. If approved, we believe LUMRYZ could transform the treatment of IH, improve care for patients and further demonstrate its clinical and commercial potential in idiopathic hypersomnia. In addition to the pursuit of the IH indication, we continue to advance our efforts on the potential to expand our oxybate portfolio to include an extended-release formulation, providing a once-at-bedtime dosing regimen with a low or no sodium profile.

The target product profile for this formulation program continues to be bioequivalent to LUMRYZ. We believe that offering this expanded oxybate portfolio option could serve as an additional complementary treatment option that addresses the potential needs of all eligible patients suffering from our approved indications who deserve the proven efficacy of a consistent full therapeutic oxybate treatment, night after night with a once-at-bedtime dosing regimen, providing the potential added benefit of uninterrupted sleep. Our continued investment in this strategy is reflected in part by our increase in operating expenses and related guidance for the second half of 2025. We currently expect to provide an update on this program by year-end. Now touching briefly on our litigation.

In June, we were pleased that the U.S. Court of Appeals unanimously affirmed a prior decision in favor of the FDA in a suit brought by Jazz Pharmaceuticals. The appeals court ruling removes any doubt that LUMRYZ will remain available for narcolepsy patients and affirmed the FDA’s determination that extended-release LUMRYZ is clinically superior to all first-generation immediate-release oxybates and that its once-at-bedtime dosing provides a major contribution to patient care. In addition to this important court victory, we’re actively pursuing additional legal actions against Jazz to protect our rights and intellectual property, including, but not limited to, our antitrust case, which is currently scheduled for a jury trial beginning on November 3 of this year, whereby we are seeking total potential recovery in excess of $1 billion.

To wrap up my opening remarks, we are encouraged by the progress made across all aspects of our business and in particular, the execution of our commercial team, which is driving the strong performance of our LUMRYZ narcolepsy franchise. This, combined with the work we are doing to expand potential future patient populations who could possibly benefit from LUMRYZ, along with our continued progress on the litigation front, sets us up for a strong second half of 2025 and continued positive momentum and growth into the future. With that, I’ll now turn the call over to Susan for details on our commercial developments. Susan?

Susan Rodriguez: Thank you, Greg. Before I begin, I would like to thank the Avadel team for providing me with the opportunity to lead this impressive commercial organization and work together to transform the lives of patients living with hypersomnia disorders via innovative sleep technology. Our second quarter marked nearly 2 years of LUMRYZ’s availability on the market and our performance represented by the roughly 3,100 patients now on therapy reflects the robustness of our commercial foundation and the value next-generation LUMRYZ brings to patients with narcolepsy. The impact of our launch can also be seen in the behavior of LUMRYZ prescribers. Since launch, we have seen HCPs who prescribe LUMRYZ for the first time, demonstrate a rapid adoption of LUMRYZ, highlighting the drug’s favorable profile and ability to treat patients in need of a new option despite being on first-generation oxybate.

HCPs perceive to increasingly select LUMRYZ as their oxybate of choice and expand their prescribing to previously discontinued and new to oxybate patients in addition to switch patients. A growing number of oxybate writers are becoming LUMRYZ writers and are persistently expanding their use across all 3 patient types. Additionally, we are seeing writers who have not historically written for oxybate prescribe LUMRYZ. The impact we are making across the narcolepsy treatment paradigm is appearing in the real world comparable to what has been presented in the literature as more and more patients are reporting positive LUMRYZ experiences back to their HCP. This is consistent with the results captured in the open-label Phase III extension/switch RESTORE study, where among the switch participants, 94% preferred LUMRYZ over the older oxybate and 91% reported easier adherence to the medication schedule for LUMRYZ.

It is clear that the novel option of once-at-bedtime dosing of a full therapeutic dose is driving robust patient uptake and favorable treatment experience with LUMRYZ. Additionally, our commercial focus and execution, including our additional 2025 commercial investments are further amplifying our success. In particular, our expanded investment to optimize the reach and frequency of office and patient services to our growing prescriber base has further accelerated uptake and is driving favorable enrollment conversion rates to reimburse patient starts and patient persistency improvements. Further, our direct-to-patient efforts, combined with HCP’s growing comfort level with LUMRYZ are driving patient requests for LUMRYZ and new enrollments. As such, we are expanding our investment in these programs in the second half of 2025 to leverage this opportunity and further fuel growth momentum.

As commercial investments like these prove out and continue to catalyze our launch, we are pleased to leverage our learnings and invest in the launch even more so. As an example, we’re further expanding our sales force to 60 representatives to support our continued focus on the growing provider base and to optimize reach and frequency to gain additional new prescribers. Additionally, we are increasing our investments in key HCP and patient-centered programs based on the positive insights and return we’ve experienced in the first half of 2025. Before I turn it over to Tom, I want to highlight our presence at the SLEEP 2025 meeting, where we hosted multiple oral presentations and published more than a dozen abstracts. Our team had a productive team in Seattle, connecting with the broader sleep community across all levels: scientific, clinical and commercial.

In summary, Q2 was a strong quarter for Avadel, reflecting LUMRYZ’s advancing market position across the oxybate space. We will continue to drive our promotional and operational execution intensity to capitalize on this momentum and maximize the potential for LUMRYZ. With that, let me turn the call over to Tom to walk through our Q2 financial results.

Thomas S. McHugh: Thanks, Susan. Before I begin, please note that full financial results are available in the press release issued this morning and the 10-Q. I will also be referencing non-GAAP financial results, which can be found on our Investor Relations website at investors.avadel.com. There are a number of positive financial results to report for the second quarter, and I’ll start with an update to revenue guidance. We are raising full year guidance to $265 million to $275 million from prior guidance of $255 million to $265 million, which reflects our confidence in the continued growth of LUMRYZ. We expect to generate $71 million to $75 million in net revenue in the third quarter, which at the midpoint represents a 46% increase over the prior year.

We believe we have clear visibility to deliver on the updated guidance, which is based on the favorable trends in the first half of 2025, including growing patient demand and improvements in key patient metrics such as persistency and patient mix. We expect these improvements to continue and are reflected in our expectations for second half revenue contribution. In terms of top line results, for the quarter ended June 30, 2025, net revenue was $68.1 million, reflecting sequential growth of 30% versus Q1 and 64% compared to the same period last year. Gross profit was $61.8 million, reflecting sequential growth of 32% versus Q1 and 60% compared to the same period last year. I’ll also note that gross profit in the current year includes a noncash adjustment in cost of goods sold or a potential 3.5% royalty on LUMRYZ net revenue related to the Delaware Court memorandum and opinion issued in September 2024.

A ruling from the Delaware Court regarding a future ongoing royalty rate is pending. And while we intend to appeal the underlying jury decision regarding the validity of the patent, from an accounting standpoint, we have included an accrual in cost of goods sold. Turning to operating expenses. Total GAAP operating expenses for the second quarter were $52.9 million versus $51.5 million in the prior year. The current quarter includes $6.1 million of noncash charges. And after adjusting for these, cash operating expenses for the quarter were $46.8 million. As we enter the second half of 2025, given the successful results from the LUMRYZ investments made at the start of the year, we are making further investments in our sales force and direct-to-patient and physician marketing programs to continue propelling patient demand.

We are also continuing our investments in the low or no sodium extended-release formulation. We currently expect that cash operating expenses in the third quarter will be in the range of $50 million to $55 million and noncash expenses will be in the range of $6 million to $8 million. With respect to operating income, the second quarter marks the fourth consecutive quarter of positive operating income as adjusted for the company. Adjusted operating income calculated as gross profit of $61.8 million minus cash operating expenses of $46.8 million was $15 million. As patients on therapy continue to increase, we expect incremental revenue complemented by a highly leverageable cost structure to increasingly flow through to operating income. And turning to the bottom line.

The quarter ended June 30, 2025 marks the first time the company has generated net income since LUMRYZ was launched. Net income for the quarter was $9.7 million or $0.10 per diluted share compared to net loss of $13.8 million or $0.14 per diluted share for the same period in 2024. And the current quarter includes a $3.2 million noncash tax benefit resulting from a change in estimated tax liabilities. I’ll conclude with a few comments on cash and cash flow. We generated $15 million of cash during the second quarter and ended the quarter with $81.5 million of cash, cash equivalents and marketable securities. We believe cash on hand and our expectations of sustainable positive cash flow provides ample runway to fund our commercial plans and the IH clinical program.

With that, I’ll turn the call back to Greg for closing remarks.

Gregory J. Divis: Thank you, Tom. Before we open the call for Q&A, I’d like to summarize the opportunities we believe can unlock value for Avadel in 2025 and beyond. First, oxybate market momentum behind LUMRYZ is strong, with our commercial investments accelerating our impact and further advancing LUMRYZ’s pursuit of being the oxybate of choice. We delivered strong results during the first half of 2025 and expect continued execution and growth throughout the remainder of the year, supported by targeted investments in the commercialization of LUMRYZ. We are well positioned to generate sustainable cash flow based on the trends we are seeing, which is further underscored by our highly leverageable cost structure and our increased 2025 revenue guidance.

We’re pursuing opportunities to maximize the potential of our unique once-at-bedtime formulation with pursuit of an expanded indication in idiopathic hypersomnia and are confident in our team’s ability to turn the promise of our innovative science into reality that could possibly benefit even more eligible patients. And finally, underpinning our progress lies our robust and growing intellectual property portfolio that protects LUMRYZ and its unique innovation until 2042. This innovation and the oxybate market potential of LUMRYZ are foundational strengths we will continue to protect and defend as we advance towards the currently scheduled antitrust jury trial, which is set to begin in just under 3 months. As always, we thank you for your time and your continued support, and we will now open the line for Q&A.

Operator?

Q&A Session

Operator: [Operator Instructions] Our first question is going to come from the line of Andrew Tsai with Jefferies.

Lin Tsai: Congrats on the execution and hitting profitability. So first question on the overall guidance raise. It looks like it does imply Q3, Q4 will certainly grow, but maybe moderate a little bit compared to Q2 over Q1. Is it because your guidance is conservative? Or is it because maybe Q1 was seasonally soft, hence, a strong Q2 or could Q3, Q4 have some kind of seasonality as well? So some color around the quarterly trajectory would be helpful behind the guidance.

Gregory J. Divis: Yes. Thanks, Andrew, for the question. I think as we look forward on the back of what we’ve learned in the first half and the progress we’ve made in a number of areas, when we think about the guide, we have to add more patients. We have to continue to grow patients to be able to achieve even the low end of the guide from that perspective. So our assumptions in that guide is that we’ll continue to grow and that the improvements we’ve seen throughout the process and throughout the first half, whether that’s in our efficiency of getting patients started or persistency or percent reimbursed, all continue to perform at or better levels than what we’ve seen in the first half. So our guide is based up on those metrics sustaining themselves and improving. And if they do better than what we’re currently projecting, we’ll have an opportunity to revisit that in the future.

Thomas S. McHugh: Yes. Andrew, it’s Tom. Just as a follow-up. We always take a very thoughtful approach to the guidance we provide and how it can be seen. So I view — we’re looking at the second half of the year as evidence of durability of the investments we made in the first half of the year, particularly in the first quarter. And always, never forget, of course, that going from Q1 to Q2, you get a lift from the gross- to-net impact in Q1. So we’re going to get a lift from Q1 to Q2 just as a result of that.

Lin Tsai: Right. And second question follow-up is, would you be willing to share how many patients initiated therapy during Q2? I think that can help us determine the intra-quarter dropout rate. And going forward, would you expect that intra-quarter dropout rate to decline further or stabilize from here? And would that be driven by more patient education or more oxybate switch patients entering your overall mix?

Gregory J. Divis: Yes. Inherent in your question, Andrew, thank you, is how are things happening on a persistency basis. The primary KPIs we’ll talk about will be patients on therapy at the end of the quarter and therefore, solving for net patient adds and, of course, revenue. In terms of the progress we’ve seen in Q2 versus Q1, we were very pleased in Q1 in terms of what we would describe as almost the immediate impact of the interventions we deployed around persistency. And that progress in Q1 continued into Q2, and we saw some improvements in Q2 as well. As we go forward, our assumptions are that, that progress is durable and the opportunity to improve it is less dependent upon patient mix, although we’ve seen an improvement in patient mix as well because we’ve had such success in terms of impacting persistency during the first half of the year.

And it’s really more about executing and continuing to get even more tailored and specific to each individual patient to help them on their journey on LUMRYZ, all of which we’ve seen positive trends and durable trends so far through the first half of the year.

Thomas S. McHugh: Now that we’ve turned the corner on profitability, every patient regardless of type, is going to contribute to the bottom line.

Operator: Our next question comes from the line of Ami Fadia with Needham & Company.

Ami Fadia: Congratulations on the nice execution in the first half of the year. I have a few quick questions on the second quarter reported number. Could you give us a sense of what the implied annual price that was realized in the second quarter was? And if there was any change in inventory stocking that impacted the quarter? And then I have a question on the guidance.

Thomas S. McHugh: Yes. So Ami, in terms of the annualized net revenue per patient, you just work through the math of net revenue and the number of patients we reported on therapy. It works out to about 92,000 annualized per year. Clearly, an improvement over Q1. And again, I’ll refer back to the gross-to-net improvement that we get from Q1 into Q2. And in terms of your question on inventory stocking, there was really no impact quarter-over-quarter. It is something we monitor quite frequently, but there was really no impact on revenue quarter-over-quarter as a result of inventory stocking levels.

Gregory J. Divis: Yes. The only thing I would add to Tom’s comments on price is that the nice uplift in price we’ve seen wasn’t solely based on that gross to net. The execution of the initiatives we delivered and executed on in the first half of the year have contributed to that improvement as well which, again, we believe is — has demonstrated durability in Q2 and so far in the early parts of Q3.

Ami Fadia: Understood. Okay. And then with regards to the guidance, what is your implied maybe at the low end or the midpoint of the guidance, how many patients on treatment are you assuming by the end of the year? And if you could give us a sense of where you see the net price evolve by the end of the year.

Thomas S. McHugh: Yes. I mean I think in terms of the guidance, we’re not commenting specifically on where we expect the year-end in terms of patients on therapy, but clearly looking more granularly at Q3. Look, at the low end, we do need to [indiscernible] durability and the improvements we made, the investments we made sticking throughout the quarter. So at the low end, it implies about the same level of net patient adds from — that we saw in Q2. But clearly, with an opportunity for improvement as we continue to focus on all the patient metrics, not just net patient adds, but also persistency, compliance and a number of other things.

Ami Fadia: And any color on price?

Thomas S. McHugh: I’m sorry, what was the question?

Gregory J. Divis: Yes. I think when you think about pricing through the balance of the second half, I think we’re at a place now that’s probably a reasonable proxy as we go forward from here. We’ve gotten the — at least as a baseline, we’ve gotten the benefit of the gross-to-net evolution from Q1 to Q2. And we believe the progress we’ve made on other aspects of our execution are durable to our net price and obviously, opportunities we’re focused on to try to make that better. So — but for now, we feel good about where the net price is today.

Thomas S. McHugh: Yes. And again, clearly, you get the lift from Q1 to Q2. I echo Greg’s comment that I think I would — for lack of a better term, I mean, I describe a steady state from coming off of Q2 into the remainder of the year.

Operator: Our next question comes from the line of David Amsellem with Piper Sandler.

David A. Amsellem: Two for me. One is, can you talk about how you’re thinking about the impact of the orexin longer term on your narcolepsy business? And then secondly, regarding IH, do you anticipate a significant switch market from Xywav to LUMRYZ? Or do you think ultimately, you can grow the pie overall?

Gregory J. Divis: Yes. David, thanks. On your first question relative to orexin, it’s obviously something we continue to spend a lot of time on to understand and really primarily through discussing and engaging with physicians and clinicians, both key opinion leaders as well as the community and academic-based prescribers, right? And I think there’s been a number of themes that have emerged for us and pretty extensive work we’ve done trying to assess this landscape, this orexin, if you will, hypersomnia landscape. I think relative to oxybate, the most important things that we’ve heard from clinicians is that oxybates play an important role and will continue to play an important role now in the future. Narcolepsy is a 24-hour condition and the nighttime-related symptoms, both today and in the future need to be addressed from that standpoint.

And only oxybates have proven to be able to do that with — durably for nearly 2 decades now from that standpoint. I would say when it comes to the role of orexins and oxybates, physician feedback to us would say they see it as more complementary from that standpoint and the opportunity to potentially use an orexin with an oxybate could emerge as a new standard of care in the future. But there’s equally questions that remain on orexins as well, given the data is still pretty new and it’s an evolving dataset for sure over the next number of years that, in some cases, may not really materialize until it’s in the real world. But I think in terms of where we see the future, we believe based upon physician insights that oxybates have an important role today.

We will continue to have that important role to treat the nighttime as an important treatment option for patients and that LUMRYZ is well positioned in this regard to be both a stand-alone treatment option or a potential complementary treatment option with some of these emerging new therapies. In terms of your question on IH, today, just a little over 10% of the diagnosed, if you will, patients under care are being treated by the only approved oxybate and the only approved product for IH at this point. In our view, we see a much larger greenfield than that for us. We think the opportunity to grow the pie is real and substantial. And that’s how we view the IH potential for us, not through the lens of what limited number of patients have been treated to date, but how many patients really need to be treated.

And that’s the opportunity for LUMRYZ.

Operator: Our next question is going to come from the line of Marc Goodman with Leerink Partners.

Marc Harold Goodman: Can you just talk about how you’re thinking about the sizing of the oxybate market, the number of patients, just what the growth rate is just first quarter, second quarter, how you’re thinking about it going forward, if that’s changed? I know you’ve talked about the 3 buckets of where you expected to get patients and stuff. I’m actually referring to more of what you’ve seen. Obviously, Jazz has reported, Harmony has reported. You have a good sense of what the market looks like. So what’s going on out there? And just give us a sense of growth and stuff.

Gregory J. Divis: Yes. I mean I think when we think about the oxybate market and in particular, LUMRYZ, we can point to very specific data points that tells us that the market through our lens is growing, right? We don’t have complete visibility to every product and every product’s use in the category. But clearly, there’s a lot of promotional efforts going on in the category. And that drives higher diagnosis rates, that drives more awareness, that drives more patients potentially in to be treated. And that’s a good thing for patients, and it’s a good thing for the market from that perspective. But whether you’re looking at it in the context of every quarter adding a prescriber who didn’t previously run an oxybate or treating patients who have been off of an oxybate for quite some time and have decided to come back in because of LUMRYZ’s availability, these are all really good signs for us that the market at least through the lens of what LUMRYZ is offering is bringing new and more patients in relative to what’s been there historically.

I don’t know, Susan, if there’s anything you’d like to add to that.

Susan Rodriguez: Yes. No, exactly. And overall, from a perspective of potential for LUMRYZ, we are persistently drawing from previously discontinued patients as well as switch patients, which represent within the current marketplace, a significant momentum for LUMRYZ.

Marc Harold Goodman: I guess just as part of the question, obviously, when you first launched, it really felt like there was an expansion of the market going on in number of patients. I was just curious if you still felt like — what’s your best expected oxybate number of patient growth rate for this year is? I mean are we talking 2%, 3%? Are we talking 5%, 6%?

Gregory J. Divis: Yes. I think being that precise is not so important to us because we don’t see what’s happening with some of the data around the AD or the original first-generation oxybate from that standpoint. What we see is where we’re sourcing business from and what that means in terms of the pie, if you will, that we’re grabbing share from and grabbing — starting new patients on therapy, and all that gives us confidence that LUMRYZ is attracting and bringing patients into the market that haven’t been in either ever or haven’t been in quite some time.

Susan Rodriguez: Exactly. And just since launch quarterly, persistently, we’ve identified new prescribers that historically have not been oxybate writers. So there’s clearly an opportunity given the profile of LUMRYZ for physicians who treat a lot of narcolepsy patients that haven’t historically used oxybate to adopt LUMRYZ. And what we’re hearing from those physicians when we speak to them is that the simplification of the dosing profile really gives the HCP the opportunity to initiate oxybate therapy with their patients. So there’s clearly opportunity there. We’ve seen it persistently since launch, and we anticipate continuing to draw from that group.

Operator: Our next question comes from the line of Ash Verma with UBS.

Unidentified Analyst: This is [ Steve ] on behalf of Ash and congrats on the quarter. I have two questions on antitrust case, if I may. The first one, how do you establish the time period that you were unable to enter the market at 1 half year as claim? There were — I think there were multiple factors at play beyond just improper listing of competitors’ rent pattern. Are you confident in the 1 half year time window? Or can it be shorter? My second question is, we did not see any resolution based on the summary judgment motion in June. So what do you make of that development?

Gregory J. Divis: Yes. Thanks for the question. When it comes to those specific matters relative to any litigation, we’re just not going to comment on it at this point. But I appreciate the questions. And all of that will become more clear in under 3 months.

Operator: Our next question comes from the line of Raghuram Selvaraju with H.C. Wainwright.

Raghuram Selvaraju: Congrats on the solid quarter. I just wanted to ask about how you are thinking about, in particular, marketing and promotional strategies in support of LUMRYZ in the idiopathic hypersomnia market versus the market in which the product is currently labeled. And how you are viewing the principal differences between these 2 indications from a promotional strategy perspective? And if you can give us a sense of whether there are likely to be differences in marketing strategy as you position the product in this future new indication?

Gregory J. Divis: Yes. Thanks for the question. I think — so maybe I’ll make a couple of comments and then turn it over to the expert who we’re really fortunate to have her on our team. I think as we think about the 2 different patient types, so to speak, where you have narcolepsy patients who generally have a hard time staying awake versus IH patients who have a hard time waking up, it’s very different matters that we have to deal with from that perspective. And the value proposition of LUMRYZ is, we believe, if — again, if approved and all the things that we’re doing on IH pan out, will be an important treatment option for them. I think from a what’s our go-to-market strategy, we’ll talk about more that much more in the future when those things — when the time is right for that and appropriate for that.

But I think most importantly in this regard is that there’s a lot of synergy, if you will, or a lot of overlap in terms of the same prescribers, the same sleep specialists who are treating — they’re treating hypersomnia disorders in totality, and IH is one of them for sure. So Susan can certainly provide more context as appropriate. But I appreciate the question. There’ll be more to talk about that in the future.

Susan Rodriguez: Yes. I would just add, as Greg mentioned, there is really a very large overlap in terms of the sleep specialists who see who are currently treating narcolepsy patients who will become our targets with the launch of the IH indication. And what’s really notable is that today, we’re seeing this incredible momentum and driving increased uptake of LUMRYZ across these exact high narcolepsy patient doctors. And what they report back to us in terms of the reason for their expanded adoption across not just switch patients, but new patients and previously discontinued patients is the value of the extended-release profile of LUMRYZ, the value of the extended-release technology platform that LUMRYZ brings to the market, which enables once-at-bedtime dosing for a full therapeutic dose.

That’s the reason — from a product profile standpoint, that’s what’s driving the growth momentum today in narcolepsy, and that very profile is extremely valuable to achieve your treatment objectives for an IH patient. So we will definitely have a running head start in terms of familiarity of the fit for LUMRYZ given its profile in the IH patient population, and we will customize our marketing and promotional approach to really drive expansion of that market, identifying IH patients and leveraging the profile that LUMRYZ brings to actually treat those patients, which today are going broadly untreated.

Raghuram Selvaraju: And just one other quick one, if I may. If you’re looking ahead to the SLEEP conference and in particular, what data might be presented with respect to the orexin pathway modulators at that event, do you think that there may or may not be any information presented at that conference that might alter the competitive landscape dynamics picture?

Gregory J. Divis: I think everyone is looking forward to World Sleep and seeing more details on both the Phase III and Phase II data that have at least provided kind of high-level top line data so far from that perspective. And I think we’ll be more equipped to answer that question in the future. We’ve done our research and continue to do our research on this landscape, if you will, even very recently in the last couple of weeks talking to dozens and dozens of physicians post the top line readout of some of the data. And we’re drawing our insights and our perspective based upon kind of real time of the real data, and we’ll continue to do that over time and have us help think through what all this may mean. But the one thing that’s been consistent as we’ve been working on this for the last number of quarters is that the role of oxybate is important and will continue to be important now and in the future.

Operator: Our next question comes from the line of David Hoang with Deutsche Bank.

David Timothy Hoang: Congrats on the strong quarter. So I had two. First, could you comment on the, I guess, the current mix of switch patients and naïve patients? Is that still a focus for you? And where would you like to see that mix trend over the next few quarters? And then with your increased investment in the launch, can you just talk a little bit more about what exactly you’re hoping to achieve with the prescribers? And is increasing the depth or the breadth of prescribing more important?

Gregory J. Divis: Thanks, David. Susan?

Susan Rodriguez: Yes. So today, if we look at our total patients on therapy, over half of them are switch patients. And we’re actually quite encouraged with the whole adoption cycle across our prescriber base. We’re rapidly growing our prescriber base. And what we found is that it’s quite consistent in terms of how they adopt LUMRYZ, starting with patients that are on treatment that they have been in need of new options. So we get some switch patients very early in the adoption cycle. And then what we’re finding is that with their favorable experience of LUMRYZ, they are rapidly expanding to new to oxybate discontinued patients and then continuing to actually adopt LUMRYZ for switch patients because they identify that patients that they thought may have been effectively managed, in fact, could be doing a lot better as they’re seeing patients come back with their experience on LUMRYZ.

So we are in a really, really positive steady state in terms of this adoption cycle where as we grow our prescriber base, they are continuously expanding their use of the drug. And the use of LUMRYZ is increasingly reflecting just their patient population in terms of who they have currently on treatment and the new and the previously discontinued, and we are drawing from all of those patient groups, which is really speaking positively to the future for LUMRYZ. In terms of the prescriber base, we really have captured the majority of the highest prescribers, those highest volume doctors, and they are adopting LUMRYZ across all of their patient types. So what we’re seeing is what’s growing the business is the expanded use of LUMRYZ in the existing prescriber base with consistent growth of new prescribers.

And these new prescribers are in those lower-volume offices that we’re really getting to all of the narcolepsy patients. And also, we are growing new prescribers, as we had mentioned before, physicians who see a lot of narcolepsy patients that haven’t necessarily used oxybate historically. So we’re in a very good balance of our growth coming evenly from depth of use as well as expanded writer base.

Gregory J. Divis: And I think just to tap into that, tag on to that, David, is the investments we’re looking at is to continue to accelerate that, both at the prescriber level, but also at the patient level as well, right? And continuing our efforts in an amped-up manner, for lack of a better word, in our efforts to communicate and activate and educate patients.

Susan Rodriguez: Yes, it’s not surprising when we talk to patients, what they’ll tell you is that they really prefer the profile of LUMRYZ. The profile of LUMRYZ is really quite a patient-friendly profile. So our direct-to-patient efforts to date has really been generating new enrollments. We’re increasingly hearing from HCPs. Our research has captured this that more and more patients are coming in and asking for LUMRYZ and what — and they’re happy to actually prescribe it because they’re comfortable with the drug. They’re comfortable with the servicing that Avadel provides the office and the patient. They’re seeing the good results. So we have some strong momentum being driven by the patient-driven request. So our expanded investments are clearly focused on leveraging that opportunity.

Operator: Our next question is going to come from the line of Chase Knickerbocker with Craig Hallum.

Chase Richard Knickerbocker: Congrats on the quarter. Most of my questions have been answered, but maybe just a bigger-picture one for you, Greg. If we kind of think about kind of your balance sheet, obviously, now with your net cash position and going to get stronger. Can you kind of speak to your guys’ activity on the BD side? And any sort of commentary that you’re willing to give on kind of the profile of something you’d be willing to look at, whether that’s something that’s mid- or late-stage clinical or whether or not you’d be more interested in kind of leveraging your commercial platform immediately with some sort of commercial acquisition?

Gregory J. Divis: I think the most important answer to that question, Chase, is that is we’re laser-focused on what is most important to drive value today and in the near term for the company, which is the execution of our launch and fully maximizing and realizing the full potential of LUMRYZ in narcolepsy, executing our life cycle management initiatives, in particular, IH and some of the other work or formulation work we’re doing. But we have a team that evaluates things in the marketplace for which we’ll be very disciplined about in that regard in terms of what would or wouldn’t be something that would make sense for Avadel. Listen, our shareholders have enabled us the opportunity to build an infrastructure and a capability to commercialize in this space.

And those are the things we’re focused on, and that’s where we should be paying our attention to primarily as anything that may be inorganic from that perspective, for lack of a better word. But I’ll be very clear, like our focus is on accelerating the launch and moving our life cycle management and expanded indication efforts forward as our primary priorities.

Operator: Thank you. And I would now like to hand the conference back over to Greg Divis for closing remarks.

Gregory J. Divis: Thank you again, everyone, for joining us today and spending time. We look forward to any follow-ups and have a great day. Thank you.

Operator: This concludes today’s conference call. Thank you for participating, and you may now disconnect.