Avadel Pharmaceuticals Plc (AVDL:NASDAQ) is working to expedite final U.S. Food and Drug Administration (FDA) approval of FT218 ahead of June 2023, Oppenheimer's estimate of when it will happen, reported analyst Francois Brisebois in a July 1 research note. However, Avadel and Oppenheimer expect the FDA will grant tentative approval of the narcolepsy drug candidate in the interim.
"As we continue to anticipate tentative approval in the near term, we are reiterating our Outperform rating and $13 price target" on Avadel, Brisebois wrote, adding the drug developer is currently undervalued. Its share price now is around $2.87.
The FDA is currently reviewing Avadel's new drug application for FT218 to treat Ehlers Danlos syndrome and cataplexy in adults diagnosed with narcolepsy. The company "received and agreed to the expected final label" and is finalizing its risk evaluation and mitigation strategy (REMS), Brisebois wrote.
Oppenheimer expects final approval of FT218 to coincide with the REMS patent expiration of Jazz Pharmaceuticals' Xyrem (sodium oxybate), currently being used to treat narcolepsy symptoms.
However, Ireland-headquartered Avadel has filed a motion to delist the patent, for which a claim hearing is scheduled for Aug. 31, 2022. The outcome of this proceeding could favor Avadel, which "would represent upside to our base case," commented Brisebois.
Based on its interactions with the FDA, the biopharma expects the agency will give FT218 orphan drug exclusivity.
As for the market opportunity for FT218, it is "hard to overstate," Brisebois described. According to Avadel, the population for FT218 could be between 30,000 and 35,000 patients.
"Interestingly, Avadel highlighted that about 3,000 patients start oxybate annually with growth expectations of 25–50% with FT218," relayed Brisebois.
Given the delays in approval of FT218 (the PDUFA date was Oct. 15 of last year), Avadel started cutting operating costs, as expected, Brisebois wrote. The biotech anticipates having about $100 million ($100M) at the end of Q2/22. Two of its convertible notes mature next year, the $26.4M one in February and the $117.4M one in October.
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