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 Avadel Pharmaceuticals Reports Fourth Quarter and Full Year 2018 Financial Results
   Friday, March 15, 2019 7:00:00 AM ET

DUBLIN, Ireland, March 15, 2019 (GLOBE NEWSWIRE) -- Avadel Pharmaceuticals plc (Nasdaq: AVDL), a company focused on developing FT218 for sleep disorders, today announced its financial results for the fourth quarter and full year of 2018.

“We have recently announced a restructuring and other activities to focus our efforts and resources toward advancing our lead clinical-stage asset, FT218,” said Greg Divis, Interim Chief Executive Officer of Avadel. “Cost savings generated by the restructuring, along with hospital product cash flow, are expected to extend our cash runway into 2021.  In conjunction with the restructuring, we have engaged a third-party to review the FT218 development program with the goal of identifying opportunities to enhance the FT218 FDA submission.  With a focused commitment to advancing FT218 and building shareholder value, we look forward to keeping you updated on our progress."



Overview of fourth quarter and full year 2018 financial results:

Revenues for the fourth quarter 2018 were $20.9 million, compared to $34.8 million in the fourth quarter 2017. The decline on a year-over-year basis was primarily attributed to lower net selling prices across all of the Company’s hospital products as a result of increased market competition. Noctiva revenues for the three and twelve months ended December 31, 2018 include an adjustment of $1.4 million to account for higher estimated product returns largely due to Avadel Specialty Pharmaceutical, LLC’s intention to exit the Noctiva product as announced on February 7, 2019.

 Three Months Ended December 31, Twelve Months Ended December 31,
 Revenues by Product: ($ in 000s)2018 2017 2018 2017
        
Bloxiverz$4,159  $8,055  $20,850  $45,596 
Vazculep9,819  8,281  42,916  38,187 
Akovaz5,676  15,507  33,759  80,617 
Noctiva(798) —  1,204  — 
Other464  2,989  2,694  8,441 
Total product sales19,320  34,832  101,423  172,841 
License revenue1,600  (80) 1,846  404 
Total revenues$20,920  $34,752  $103,269  $173,245 

Research and development (R&D) expense was $6.1 million in the fourth quarter of 2018 compared to $11.3 million in the fourth quarter of 2017. For the full year 2018, R&D expense was $39.3 million compared to $33.4 million in 2017. The increase was primarily due to costs associated with the Phase 3 REST-ON clinical trial for FT218. A portion of the higher R&D spending, when compared to 2017, was due to R&D costs of approximately $1.1 million associated with Noctiva. The Company continues to invest a substantial portion of its R&D budget on the FT218 development program.

Selling, general and administrative (SG&A) expense was $23.2 million in the fourth quarter of 2018 compared to $23.1 million for the fourth quarter of 2017. For the full year 2018, SG&A was $100.4 million compared to $58.9 million in 2017. This increase for the full year was primarily due to $47.6 million of sales and marketing costs associated with the May 2018 launch of Noctiva, partially offset by $8.7 million of lower SG&A expense related to the February 2018 divestiture of the Company’s pediatric assets.

During the fourth quarter of 2018, the Company recorded an impairment charge of $66.1 million to write-off the carrying value of the Noctiva intangible asset.  The Company evaluated the long-term sales outlook of Noctiva and concluded that the associated cash flows did not support its carrying value.  The February 6, 2019 Chapter 11 Bankruptcy filing of Avadel Specialty Pharmaceuticals, LLC, the subsidiary which markets, sells and distributes Noctiva, confirmed management’s conclusion that the intangible asset was fully impaired as of December 31, 2018.  

GAAP net loss for the fourth quarter of 2018 was $63.9 million or $1.72 per share compared to a net loss of $8.2 million or $0.21 per share for the same period in 2017. For the full year, 2018 GAAP net loss was $95.3 million or $2.55 per share compared to a net income of $68.3 million or $1.63 per diluted share in 2017.

The decrease in net income is largely attributable to lower revenues from the Company’s hospital products, higher SG&A due to the 2018 launch of Noctiva, increased R&D spending on the Phase 3 REST-ON trial and the 2018 impairment charge related to the Noctiva intangible asset. 

Non-GAAP1 adjusted net loss for the fourth quarter of 2018 was $17.0 million or $0.46 per share compared to a non-GAAP adjusted net loss of $10.0 million or $0.25 per share in the same period last year. For the full year, 2018 non-GAAP adjusted net loss was $74.2 million or $1.99 per share compared to non-GAAP adjusted net income of $13.8 million or $0.33 per diluted share in 2017. Please see the Supplemental Information section within this document for a reconciliation of adjusted net income and adjusted per share amounts to the respective GAAP amounts.

Cash, cash equivalents and marketable securities were $99.9 million as of December 31, 2018, compared to $94.1 million as of December 31, 2017.

(1) Descriptions of Avadel’s non-GAAP financial measures are included under the caption Non-GAAP Disclosures and Adjustments included within this press release and reconciliations of such non-GAAP financial measures to their most closely applicable GAAP financial measures are found in the Supplemental Information section herein.

2019 Guidance:

As a result of the Company’s recently announced restructuring, cash is anticipated to be sufficient to fund operations into 2021.  The hospital products business is expected to generate revenues of between $13 and $15 million in the first quarter of 2019. However, due to increased competition from products launched, expected to be launched in 2019, and possible market price actions, revenues for 2019 could be below $30 million. This possibility is incorporated into the cash runway guidance. Additionally, the Company anticipates submitting an NDA in March of 2019 on a fourth Hospital Product, AV001, which, if approved, could contribute revenues to Avadel in 2020.

Conference Call:

A conference call to discuss these results has been scheduled for Friday, March 15, 2019 at 8:30 a.m. EDT. A question and answer period will follow management's prepared remarks. To access the conference call, investors are invited to dial (844) 388-0559 (U.S. and Canada) or (216) 562-0393 (International). The conference ID number is 6799356. A live audio webcast can be accessed by visiting the investor relations section of the Company’s website, www.avadel.com . A replay of the webcast will be archived on Avadel’s website for 90 days following the event.

About Avadel Pharmaceuticals plc:

Avadel Pharmaceuticals plc (Nasdaq: AVDL) is a branded specialty pharmaceutical company.  The Company’s primary focus is on the development and potential FDA approval for FT218, which is in a Phase 3 clinical trial for the treatment of narcolepsy patients suffering from excessive daytime sleepiness (EDS) and cataplexy.  In addition, Avadel markets three sterile injectable drugs used in the hospital setting, which were developed under the Company’s “unapproved marketed drug” (UMD) program.  Avadel is headquartered in Dublin, Ireland with operations in St. Louis, Missouri and Lyon, France. For more information, please visit www.avadel.com .

Cautionary Disclosure Regarding Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements relate to our future expectations, beliefs, plans, strategies, objectives, results, conditions, financial performance, prospects, or other events. In some cases, forward-looking statements can be identified by the use of words such as “will,” “may,” “believe,” “expect,” “guidance,” “anticipate,” “estimate,” “project” and similar expressions, and the negatives thereof (if applicable).

Our forward-looking statements are based on estimates and assumptions that are made within the bounds of our knowledge of our business and operations and that we consider reasonable.  However, our business and operations are subject to significant risks and as a result there can be no assurance that actual results of our research, development and commercialization activities and the results of our business and operations will not differ materially from the results contemplated in such forward-looking statements.  Factors that could cause actual results to differ from expectations in our forward-looking statements include:

(a) risks relating to our 2018 net loss and recent restructuring plan, including risks relating to the following:

 •       our ability to fully pursue our business strategy is limited due to a decrease in our available liquid assets;
   
 •   our recent restructuring plan may not be as effective as we anticipate and may have unintended negative impacts;
   
 • further restructuring actions, if needed, may require third-party consents that may not be granted;
   
 • the Chapter 11 bankruptcy filing by our subsidiary Avadel Specialty Pharmaceuticals LLC may have unexpected adverse results; and
   
 • a management-directed third-party evaluation of our FT218 development program could result in changes that increase the cost of the program and further delay its completion;
   

(b) risks relating to the following:

 •             our three products Bloxiverzฎ, Vazculepฎ and Akovazฎ, which are not patent protected, and have a small number of customers for such products, produce a majority of our revenues, and such products could face further competition resulting in a loss of market share and/or forcing us to further reduce our prices for those products;
   
 •             we could fail to develop our current “unapproved marketed drug” (UMD) product candidate, AV001, or future potential UMD product candidates, or competitors could develop such products and apply for FDA approval of such products before us;
   
 •             we could experience failure or delay in completing the Phase III clinical trial for our FT-218 product, and if the FDA ultimately approves such product, the approval may not include any period of market exclusivity;
   
 •             Servicing our $143.75 million Exchangeable Senior Notes due 2023 may require a significant amount of cash, and we may not have sufficient cash or the ability to raise the funds necessary to settle exchanges of the 2023 Notes in cash, repay the Notes at maturity, or repurchase the 2023 Notes as required following a “fundamental change” event described in the indenture governing the 2023 Notes;
   
 •             our products may not reach the commercial market or gain market acceptance;
   
 • we must invest substantial sums in research and development in order to remain competitive;
   
 •     we depend on one or a limited number of providers to develop certain of our products and drug delivery technologies, to manufacture certain of our products and to provide certain raw materials used in our products;
   
 •     our competitors may develop and market technologies or products that are more effective or safer than ours, or obtain regulatory approval and market such technologies or products before we do;
   
 •     we face challenges in protecting intellectual property underlying our products and drug delivery technologies; and
   
 •   we depend on key personnel to execute our business plan.

(c) the other risks and uncertainties described in the “Risk Factors” section of Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017 which we filed with the Securities and Exchange Commission on March 16, 2018.

Forward-looking statements speak only as of the date they are made and are not guarantees of future performance.  Accordingly, you should not place undue reliance on forward-looking statements.  We do not undertake any obligation to publicly update or revise the forward-looking statements contained in this Annual Report.

Non-GAAP Disclosures and Adjustments

In addition to reporting its financial results in accordance with generally accepted accounting principles in the U.S.("GAAP"), Avadel discloses certain non-GAAP financial measures, including adjusted net income and loss and adjusted net income and loss per diluted share.  Management believes that such non-GAAP financial measures can enhance an overall understanding of the Company’s financial performance when considered together with financial measures prepared in accordance with GAAP.  The non-GAAP results disclosed herein (a) exclude, in each case to the extent applicable, fair value remeasurements of its contingent consideration, amortization of debt discount and debt issuance costs attributable to our  exchangeable notes, impairment of intangible assets, amortization of intangible assets, restructuring costs, foreign exchange gains and losses on assets and liabilities denominated in foreign currencies, unrealized gains/losses on marketable equity securities,  but (b) include the cash payments plus any unpaid accrued cash payment obligations associated with the contingent consideration and cash interest payments or related accruals on the exchangeable notes. Our management uses these non-GAAP measures internally for forecasting, budgeting and measuring the Company's operating performance. Investors and other readers should review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most closely comparable GAAP measure set forth below and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP. The table provided within the following “Supplemental Information” section reconciles GAAP net income and loss and diluted earnings or loss per share to the corresponding adjusted (i.e., "non-GAAP") amounts.

Contacts:Michael F. Kanan
 Chief Financial Officer
 Phone: (636) 449-1844
 Email: mkanan@avadel.com  
  
 Alex Gray
 Burns McClellan
 Phone: (212) 213-0006
 Email: agray@burnsmc.com  

AVADEL PHARMACEUTICALS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In thousands, except per share data)

  Three Months Ended December 31, Twelve months ended December 31,
  2018 2017 2018 2017
         
Revenues:        
Product sales $19,320  $34,832  $101,423  $172,841 
License revenue 1,600  (80) 1,846  404 
Total revenues 20,920  34,752  103,269  173,245 
Operating expenses:        
Cost of products 4,292  4,048  17,516  16,301 
Research and development expenses 6,086  11,325  39,329  33,418 
Selling, general and administrative expenses 23,200  23,056  100,359  58,860 
Intangible asset amortization 1,623  1,967  6,619  3,659 
(Gain) loss - changes in fair value of related party contingent consideration (5,695) (933) (22,731) (31,040)
Impairment of intangible asset 66,087  —  66,087  — 
Restructuring costs 748  (631) 1,016  2,542 
Total operating expenses 96,341  38,832  208,195  83,740 
Operating (loss) income (75,421) (4,080) (104,926) 89,505 
Investment and other income, net (393) (426) 452  2,136 
Interest expense (3,045) (263) (10,622) (1,052)
Other income (expense) - changes in fair value of related party payable 467  (917) 1,899  2,071 
(Loss) income before income taxes (78,392) (5,686) (113,197) 92,660 
Income tax (benefit) provision (14,533) 2,559  (17,893) 24,389 
Net (loss) income $(63,859) $(8,245) $(95,304) $68,271 
         
Net (loss) income per share - basic $(1.72) $(0.21) $(2.55) $1.69 
Net (loss) income per share - diluted (1.72) (0.21) (2.55) 1.63 
         
Weighted average number of shares outstanding - basic 37,073  39,350  37,325  40,465 
Weighted average number of shares outstanding - diluted 37,073  39,350  37,325  41,765 



AVADEL PHARMACEUTICALS PLC

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

  December 31, 2018 December 31, 2017
     
ASSETS    
Current assets:    
Cash and cash equivalents $9,325  $16,564 
Marketable securities 90,590  77,511 
Accounts receivable 11,330  14,785 
Inventories, net 4,770  6,157 
Prepaid expenses and other current assets 8,836  8,958 
Total current assets 124,851  123,975 
Property and equipment, net 1,911  3,001 
Goodwill 18,491  18,491 
Intangible assets, net 1,629  92,289 
Research and development tax credit receivable 7,272  5,272 
Other non-current assets 36,146  10,249 
Total assets $190,300  $253,277 
     
LIABILITIES AND SHAREHOLDERS’ EQUITY    
Current liabilities:    
Current portion of long-term debt $106  $111 
Current portion of long-term related party payable 9,439  25,007 
Accounts payable 3,503  7,477 
Deferred revenue 114  2,007 
Accrued expenses 21,695  50,926 
Income taxes 73  414 
Other current liabilities 3,453  597 
Total current liabilities 38,383  86,539 
Long-term debt, less current portion 115,734  156 
Long-term related party payable, less current portion 19,401  73,918 
Other non-current liabilities 14,002  7,084 
Total liabilities 187,520  167,697 
     
Shareholders’ equity:    
Preferred shares, nominal value of $0.01 per share; 50,000 shares authorized; none issued or outstanding at December 31, 2018 and December 31, 2017, respectively —  — 
Ordinary shares, nominal value of $0.01 per share; 500,000 shares authorized; 42,720 issued and 37,313 outstanding at December 31, 2018, and 41,463 issued and 39,346 outstanding at December 31, 2017 427  414 
Treasury shares, at cost, 5,407 and 2,117 shares held at December 31, 2018 and December 31, 2017, respectively (49,998) (22,361)
Additional paid-in capital 433,756  393,478 
Accumulated deficit (357,989) (262,685)
Accumulated other comprehensive loss (23,416) (23,266)
Total shareholders’ equity 2,780  85,580 
Total liabilities and shareholders’ equity $190,300  $253,277 


AVADEL PHARMACEUTICALS PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

  Twelve months ended December 31,
  2018 2017
     
Cash flows from operating activities:    
Net (loss) income $(95,304) $68,271 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:    
Depreciation and amortization 7,430  4,883 
Impairment of intangible asset 66,087  — 
Amortization of premiums on marketable securities 2,823  732 
Remeasurement of related party acquisition-related contingent consideration (22,731) (31,040)
Remeasurement of related party financing-related contingent consideration (1,899) (2,071)
Amortization of debt discount and debt issuance costs 4,830  — 
Change in deferred tax and income tax deferred charge (19,153) 3,556 
Stock-based compensation expense 7,852  8,072 
Other adjustments 1,365  (968)
Net changes in assets and liabilities    
Accounts receivable 3,452  3,054 
Inventories, net 711  (2,899)
Prepaid expenses and other current assets 3,577  (3,741)
Research and development tax credit receivable (2,545) (3,141)
Accounts payable & other current liabilities (2,032) 595 
Deferred revenue (1,892) (216)
Accrued expenses (10,640) 13,187 
Accrued income taxes (341) (786)
Earn-out payments for related party contingent consideration in excess of acquisition-date fair value (19,468) (31,636)
Royalty payments for related party payable in excess of original fair value (2,838) (4,429)
Other assets and liabilities (2,000) (4,761)
Net cash (used in) provided by operating activities (82,716) 16,662 
     
Cash flows from investing activities:    
Purchases of property and equipment (178) (591)
Purchase of intangible assets (20,000) (53,111)
Proceeds from sales of marketable securities 359,507  189,009 
Purchases of marketable securities (376,310) (151,005)
Net cash used in investing activities (36,981) (15,698)
     
Cash flows from financing activities:    
Proceeds from debt issuance 143,750  — 
Payments for debt issuance costs (6,190) — 
Earn-out payments for related party contingent consideration (645) (1,246)
Exercise of warrants 2,911  — 
Proceeds from issuance of ordinary shares and warrants 577  404 
Share repurchases (27,637) (22,361)
Other financing activities, net (107) (115)
Net cash provided by (used in) financing activities 112,659  (23,318)
Effect of foreign currency exchange rate changes on cash and cash equivalents (201) (297)
Net change in cash and cash equivalents (7,239) (22,651)
Cash and cash equivalents at January 1 16,564  39,215 
Cash and cash equivalents at December 31 $9,325  $16,564 


AVADEL PHARMACEUTICALS PLC

UNAUDITED SUPPLEMENTAL INFORMATION

(In thousands, except per share data)

  Three Months Ended December 31, Twelve Months Ended December 31,
 Revenue by Product: 2018 2017 2018 2017
         
Bloxiverz $4,159  $8,055  $20,850  $45,596 
Vazculep 9,819  8,281  42,916  38,187 
Akovaz 5,676  15,507  33,759  80,617 
Noctiva (798) —  1,204  — 
Other 464  2,989  2,694  8,441 
Total product sales 19,320  34,832  101,423  172,841 
License revenue 1,600  (80) 1,846  404 
Total revenues $20,920  $34,752  $103,269  $173,245 


    GAAP to Non-GAAP adjustments for the three-months ended December 31, 2018    
    Exclude Include    
  GAAP Intangible
asset amortization
 Foreign
exchange (gain)/loss
 Restructuring impacts Equity
securities
unrealized
(gain)/loss impact
 Amortization
of debt
discount
and debt
issuance costs
 Impairment
of intangible
asset
 Contingent
related party
payable
fair
value remeasurements
 Contingent
related
party
payable paid/accrued
 Total adjustments Adjusted
GAAP
                       
Revenues:                      
Product sales $19,320  $—  $—  $—  $—  $—  $—  $—  $—  $—  $19,320 
License revenue 1,600  —  —  —  —  —  —  —  —  —  1,600 
Total revenues 20,920  —  —  —  —  —  —  —  —  —  20,920 
Operating expenses:                      
Cost of products 4,292  —  —  —  —  —  —  —  —  —  4,292 
Research and development expenses 6,086  —  —  —  —  —  —  —  —  —  6,086 
Selling, general and administrative expenses 23,200  —  —  —  —  —  —  —  —  —  23,200 
Intangible asset amortization 1,623  (1,623) —  —  —  —  —  —  —  (1,623) — 
(Gain) loss - changes in fair value of related party contingent consideration (5,695) —  —  —  —  —  —  5,695  3,193  8,888  3,193 
Impairment of intangible asset 66,087  —  —  —  —  —  (66,087) —  —  (66,087) — 
Restructuring costs 748  —  —  (748) —  —  —  —  —  (748) — 
Total operating expenses 96,341  (1,623) —  (748) —  —  (66,087) 5,695  3,193  (59,570) 36,771 
Operating (loss) income (75,421) 1,623  —  748  —  —  66,087  (5,695) (3,193) 59,570  (15,851)
Investment and other income, net (393) —  (60) —  822  —  —  —  —  762  369 
Interest expense (3,045) —  —  —  —  1,428  —  —  —  1,428  (1,617)
Other income (expense) - changes in fair value of related party payable 467  —  —  —  —  —  —  (467) (518) (985) (518)
(Loss) income before income taxes (78,392) 1,623  (60) 748  822  1,428  66,087  (6,162) (3,711) 60,775  (17,617)
Income tax (benefit) provision (14,533) 340  —  —  —  —  13,879  (175) (151) 13,893  (640)
Net (loss) income $(63,859) $1,283  $(60) $748  $822  $1,428  $52,208  $(5,987) $(3,560) $46,882  $(16,977)
                       
Net income (loss) per share - diluted(1) $(1.72) $0.03  $—  $0.02  $0.02  $0.04  $1.41  $(0.16) $(0.10) $1.26  $(0.46)
Weighted average number of shares outstanding - diluted 37,073  37,073  37,073  37,073  37,073  37,073  37,073  37,073  37,073  37,073  37,073 

(1)  Net income (loss) per share - diluted is calculated by dividing Net income (loss) by the Weighted average number of shares outstanding - diluted. Note, when recalculated using this method, the balances in the Total adjustment and Adjusted GAAP columns may not cross-foot as a result of rounding to full precision.

    GAAP to Non-GAAP adjustments for the three-months ended December 31, 2017    
    Exclude Include    
  GAAP Intangible
asset amortization
 Foreign
exchange (gain)/loss
 Restructuring impacts License
revenue adjustment
 US
tax
reform impact
 Contingent
related
party
payable
fair value remeasurements
 Contingent
related
party
payable paid/accrued
 Total adjustments Adjusted
GAAP
                     
Revenues:                    
Product sales $34,832  $—  $—  $—  $—  $—  $—  $—  $—  $34,832 
License revenue (80) —  —  —  342  —  —  —  342  262 
Total revenues 34,752  —  —  —  342  —  —  —  342  35,094 
Operating expenses:                    
Cost of products 4,048  —  —  —  —  —  —  —  —  4,048 
Research and development expenses 11,325  —  —  —  —  —  —  —  —  11,325 
Selling, general and administrative expenses 23,056  —  —  —  —  —  —  —  —  23,056 
Intangible asset amortization 1,967  (1,967) —  —  —  —  —  —  (1,967) — 
(Gain) loss - changes in fair value of related party contingent consideration (933) —  —  —  —  —  933  6,067  7,000  6,067 
Restructuring costs (631) —  —  631  —  —  —  —  631  — 
Total operating expenses 38,832  (1,967) —  631  —  —  933  6,067  5,664  44,496 
Operating (loss) income (4,080) 1,967  —  (631) 342  —  (933) (6,067) (5,322) (9,402)
Investment and other income, net (426) —  587  —  —  —  —  —  587  161 
Interest expense (263) —  —  —  —  —  —  —  —  (263)
Other income (expense) - changes in fair value of related party payable (917) —  —  —  —  —  917  (831) 86  (831)
(Loss) income before income taxes (5,686) 1,967  587  (631) 342  —  (16) (6,898) (4,649) (10,335)
Income tax (benefit) provision 2,559  706  —  —  —  (3,513) 307  (438) (2,938) (379)
Net (loss) income $(8,245) $1,261  $587  $(631) $342  $3,513  $(323) $(6,460) $(1,711) $(9,956)
                     
Net income (loss) per share - diluted(1) $(0.21) $0.03  $0.01  $(0.02) $0.01  $0.09  $(0.01) $(0.16) $(0.04) $(0.25)
Weighted average number of shares outstanding - diluted 39,350  39,350  39,350  39,350  39,350  39,350  39,350  39,350  39,350  39,350 

(1) Net income (loss) per share - diluted is calculated by dividing Net income (loss) by the Weighted average number of shares outstanding - diluted. Note, when recalculated using this method, the balances in the Total adjustment and Adjusted GAAP columns may not cross-foot as a result of rounding to full precision.

    GAAP to Non-GAAP adjustments for the twelve-months ended December 31, 2018    
    Exclude Include    
  GAAP Intangible
asset amortization
 Foreign
exchange (gain)/loss
 Restructuring impacts Equity
securities
unrealized (gain)/loss
impact
 Amortization
of debt
discount
and debt issuance
costs
 Impairment
of intangible asset
 Contingent
related
party
payable
fair value remeasurements
 Contingent
related
party
payable paid/accrued
 Total adjustments Adjusted
GAAP
                       
Revenues:                      
Product sales $101,423  $—  $—  $—  $—  $—  $—  $—  $—  $—  $101,423 
License revenue 1,846  —  —  —  —  —  —  —  —  —  1,846 
Total revenues 103,269  —  —  —  —  —  —  —  —  —  103,269 
Operating expenses:                      
Cost of products 17,516  —  —  —  —  —  —  —  —  —  17,516 
Research and development expenses 39,329  —  —  —  —  —  —  —  —  —  39,329 
Selling, general and administrative expenses 100,359  —  —  —  —  —  —  —  —  —  100,359 
Intangible asset amortization 6,619  (6,619) —  —  —  —  —  —  —  (6,619) — 
(Gain) loss - changes in fair value of related party contingent consideration (22,731) —  —  —  —  —  —  22,731  17,225  39,956  17,225 
Impairment of intangible asset 66,087  —  —  —  —  —  (66,087) —  —  (66,087) — 
Restructuring costs 1,016  —  —  (1,016) —  —  —  —  —  (1,016) — 
Total operating expenses 208,195  (6,619) —  (1,016) —  —  (66,087) 22,731  17,225  (33,766) 174,429 
Operating (loss) income (104,926) 6,619  —  1,016  —  —  66,087  (22,731) (17,225) 33,766  (71,160)
Investment and other income, net 452  —  (213) —  955  —  —  —  —  742  1,194 
Interest expense (10,622) —  —  —  —  4,830  —  —  —  4,830  (5,792)
Other income (expense) - changes in fair value of related party payable 1,899  —  —  —  —  —  —  (1,899) (2,550) (4,449) (2,550)
(Loss) income before income taxes (113,197) 6,619  (213) 1,016  955  4,830  66,087  (24,630) (19,775) 34,889  (78,308)
Income tax (benefit) provision (17,893) 1,390  —  —  (1) —  13,879  (709) (769) 13,790  (4,103)
Net (loss) income $(95,304) $5,229  $(213) $1,016  $956  $4,830  $52,208  $(23,921) $(19,006) $21,099  $(74,205)
                       
Net income (loss) per share - diluted(1) $(2.55) $0.14  $(0.01) $0.03  $0.03  $0.13  $1.40  $(0.64) $(0.51) $0.57  $(1.99)
Weighted average number of shares outstanding - diluted 37,325  37,325  37,325  37,325  37,325  37,325  37,325  37,325  37,325  37,325  37,325 

(1) Net income (loss) per share - diluted is calculated by dividing Net income (loss) by the Weighted average number of shares outstanding - diluted. Note, when recalculated using this method, the balances in the Total adjustment and Adjusted GAAP columns may not cross-foot as a result of rounding to full precision.

    GAAP to Non-GAAP adjustments for the twelve-months ended December 31, 2017    
    Exclude Include    
  GAAP Intangible
asset amortization
 Foreign exchange (gain)/loss Restructuring impacts Purchase
accounting adjustments - FSC
 License revenue adjustment US
tax reform adjustment
 Contingent
related
party
payable
fair value remeasurements
 Contingent
related
party
payable paid/accrued
 Total adjustments Adjusted GAAP
                       
Revenues:                      
Product sales $172,841  $—  $—  $—  $—  $—  $—  $—  $—  $—  $172,841 
License revenue 404  —  —  —  —  1,442  —  —  —  1,442  1,846 
Total revenues 173,245  —  —  —  —  1,442  —  —  —  1,442  174,687 
Operating expenses:                      
Cost of products 16,301  —  —  —  (46) —  —  —  —  (46) 16,255 
Research and development expenses 33,418  —  —  —  —  —  —  —  —  —  33,418 
Selling, general and administrative expenses 58,860  —  —  —  —  —  —  —  —  —  58,860 
Intangible asset amortization 3,659  (3,659) —  —  —  —  —  —  —  (3,659) — 
(Gain) loss - changes in fair value of related party contingent consideration (31,040) —  —  —  —  —  —  31,040  31,463  62,503  31,463 
Restructuring costs 2,542  —  —  (2,542) —  —  —  —  —  (2,542) — 
Total operating expenses 83,740  (3,659) —  (2,542) (46) —  —  31,040  31,463  56,256  139,996 
Operating (loss) income 89,505  3,659  —  2,542  46  1,442  —  (31,040) (31,463) (54,814) 34,691 
Investment and other income, net 2,136  —  714  —  —  —  —  —  —  714  2,850 
Interest expense (1,052) —  —  —  —  —  —  —  —  —  (1,052)
Other income (expense) - changes in fair value of related party payable 2,071  —  —  —  —  —  —  (2,071) (4,259) (6,330) (4,259)
(Loss) income before income taxes 92,660  3,659  714  2,542  46  1,442  —  (33,111) (35,722) (60,430) 32,230 
Income tax (benefit) provision 24,389  1,309  —  —  17  —  (3,513) (1,469) (2,260) (5,916) 18,473 
Net (loss) income $68,271  $2,350  $714  $2,542  $29  $1,442  $3,513  $(31,642) $(33,462) $(54,514) $13,757 
                       
Net income (loss) per share - diluted(1) $1.63  $0.06  $0.02  $0.06  $—  $0.03  $0.08  $(0.76) $(0.80) $(1.31) $0.33 
Weighted average number of shares outstanding - diluted 41,765  41,765  41,765  41,765  41,765  41,765  41,765  41,765  41,765  41,765  41,765 

(1)  Net income (loss) per share - diluted is calculated by dividing Net income (loss) by the Weighted average number of shares outstanding - diluted. Note, when recalculated using this method, the balances in the Total adjustment and Adjusted GAAP columns may not cross-foot as a result of rounding to full precision.

AVDL Pharma TM.PNG

Source: Avadel Pharmaceuticals plc


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