Sleep Well $AVDL stock holders

Dreaming of the 10 bagger!

Dreaming of the 10 bagger!

Wake up Narcolepsy! The Irish fight has begun: AVDL vs JAZZ

Remember the substack where I said a good stock idea usually can be described in an elevator pitch which usually lasts at most two minutes.  Here goes:  Avadel Pharma is about to eat industry heavyweight Jazz Pharmaceutical’s breakfast, lunch and dinner in the $2.5+ billion narcolepsy drug market.  Jazz got their FDA approval in 2002 for Xyrem, a high sodium oxybate oral 9 mg formulation taken twice a night by over 30,000 patients annually.  Jazz also introduced a low sodium version which now makes up 2/3 of their narcolepsy drug quarterly sales of around $500 million versus the original higher sodium version.  Avadel launched in June 2023 their once-a-night sodium oxybate extending release formulation which will effectively grow the overall market as well as crush Jazz’s cash flow machine. 

It is a no brainer for patients to switch over time to Jazz’s low sodium version, Xywav, from their high sodium, Xyrem, regardless of the patients propensity for hypertension.  With the same results, why wouldn’t you prefer the low sodium version?  But, they both require patients to wake up after a couple hours of sleep and take a second dose.  Obviously, this is highly disruptive but a necessary evil to solving the effects of narcolepsy.  With Avadel introducing Lumryz, a patented drug approved by the FDA which also has the Ophan Drug Designation, the company has at least 7 years exclusive for the once a night formulation along with patents that extend to the 2040s.  At first blush, I wondered if Lumryz would primarily kill the $180m per qtr revenue Xyrem business from Jazz.  The low sodium version Xywav might find its stronghold with patients who have or fear hypertension.  Oppenheimer, the brokerage house, recently commented on the launch of Lumryz as well as talking to key opinion leader doctors with a history of prescribing narcolepsy drugs.   

Here are their key findings:  (#3 is the biggest takeaway for us)