CHESTERFIELD — Five years ago, struggling in the wake of a disappointing drug rollout, a small Chesterfield pharmaceutical firm made a bold bet.
Avadel Pharmaceuticals trimmed tens of millions in expenses from its budget. It cut jobs. It made an investigational narcolepsy drug its sole focus.
That bet is beginning to pay off. The company secured the Food and Drug Administration’s approval for the drug last spring, began selling it in summer, and in the first quarter of this year logged $27 million in sales.
The journey was fraught, marked by overhauls at the company, regulatory delays and a patent battle with a rival drugmaker. The next few years will show whether the company can sustain its newfound momentum.
“In reality, we’re just getting started,” said CEO Greg Divis.
People are also reading…
Rebuilding Avadel
In 2018, Avadel launched a drug called Noctiva, which it billed as a first-of-its-kind product to reduce nighttime urination.
Doctors were slow to adopt the drug, and within six months of the launch, another company released a competing product. About a year after the rollout, the Avadel subsidiary responsible for the drug filed for bankruptcy, and its attorneys wrote in filings that the program had suffered losses “since its inception.”
As a business, Avadel was unfocused. It still sold lines of hospital and pediatric drugs, and Divis said its most promising prospect — an investigational narcolepsy drug that he viewed as the “crown jewel in the organization” — was lagging in clinical trial enrollment. Some were beginning to doubt the drug, Lumryz, would ever reach the market.
“It became a discussion around, as a small company with finite resources, we have to decide the best place to invest our time, to achieve the mission to serve patients to the best of our ability,” Divis said. “But also to begin to rebuild the company.”
Former CEO Mike Anderson resigned in January 2019. Divis took on the role at first on an interim basis, then permanently.
The company’s leaders considered their options, and decided Lumryz deserved to take priority. Lumryz required only one nightly dose, while other narcolepsy drugs on the market require patients to take one dose before sleeping and another in the middle of the night.
So they knocked tens of millions in annual expenses off the budget. They cut their staff to 30 people, from about 200. They made that drug Avadel’s sole focus. Everything within Avadel would “fuel or fund” its progress, Divis said.
The company finished its drug study within a year.
“That was really the build-back, the catalyst that moved the company forward,” Divis said. “Our data read out really well. We were then able to finance the company, to go to the next step.”
The company sold its portfolio of sterile, injectable drugs for $42 million, a move that afforded Avadel needed resources without raising more equity or diluting its shares, Divis said.
And at the end of 2020, Avadel applied for FDA approval for Lumryz. The agency told the company it would decide in October of 2021.
The review period, Divis said, was ordinary. The agency asked questions. The company responded. But the decision date came and went.
“They needed more time,” Divis said. “They have no questions for us, at that point in time. … It was very vague.”
By May of 2022, stock analysts peppered Divis with questions about the FDA delay.
“Obviously everybody’s frustrated, and probably a little confused about what’s going on,” one analyst told Divis during an earnings call. “What could be this administrative issue, and why is it taking so long?”
Near the end of that month, Divis said, the company got word from the FDA.
Avadel had a patent problem.
One month to launch
By that point, Avadel had already been in court for about a year with Jazz Pharmaceuticals, a Dublin, Ireland-based firm that makes a two-dose narcolepsy medication.
Jazz had sued Avadel in May of 2021, claiming Lumryz would infringe on a patent Jazz held for the safety monitoring program for its narcolepsy drug. Avadel argued that the patent shouldn’t exist in the first place — it covered a safety monitoring program, not a pharmaceutical product or method.
The FDA granted Avadel’s drug tentative approval, but said it had to resolve the patent dispute.
In late 2022, a Delaware district court ordered Jazz to delist the patent. In early 2023, a federal appeals court upheld the decision.
On May 1, 2023, Avadel announced that it had secured final FDA approval.
The company had already taken steps to prepare to launch Lumryz. Its workforce had grown to around 120 people.
“People joined us during this period of time, right? With a bit of uncertainty. And it’s something that I will never forget,” Divis said. “People took a risk, to say, ‘You don’t have your approval. You’re embroiled with a legal battle with Jazz.’ And yet said ‘yes’ to us, to want to come join us.”
Those investments paid off. A launch that might have normally taken four or five months happened in one. On June 5, 2023, the company shipped the first batch of Lumryz.
Over the summer the company reported its first revenues in more than two years. Later this year Avadel plans to begin a clinical trial studying Lumryz as a possible treatment for another sleep disorder, called idiopathic hypersomnia.
And Divis said Avadel will investigate whether the technology behind Lumryz could be used to create other medications.
The company has now grown to more than 160 employees. Divis believes it could be profitable by the end of the year.
“The real work begins now,” Divis said.