Avadel Pharmaceuticals Under Fire? Investor Reportedly Demands Board Ouster, Sale Talks, $1B In Damages

ASL Strategic Value Fund is calling for shareholders of Avadel Pharmaceuticals to vote out the company’s entire board of directors.

According to a letter viewed by The Wall Street Journal, ASL alleges that Avadel mishandled the launch of its key drug, Lumryz, resulting in the company missing out on hundreds of millions of dollars in potential revenue. 

The investment firm reportedly plans to vote its $15 million stake against all of Avadel’s director nominees at the company’s annual meeting scheduled for late July.

The company has been involved in litigation with its main competitor in narcolepsy, Jazz Pharmaceuticals, over patent disputes.

In the letter, ASL called on Avadel to issue contingent-value rights (CVRs) to shareholders, which are future payouts tied to possible legal settlements or damages. 

One of Avadel’s ongoing cases seeks damages in excess of $1 billion.

ASL further reiterates its previous demand, first made in February, that Avadel hire an investment bank to explore strategic alternatives, including a potential sale of the company.

In response, a spokesperson for Avadel said the board proactively engages with shareholders and that its directors have made personal investments in the company. 

The company spokesperson further noted that the company continues to focus on “unlocking the full value of Lumryz.”

In May, Avadel reported better-than-expected first-quarter sales and raised full-year revenue guidance due to improving demand for Lumryz.

The pressure on Avadel comes amid weak performance across the biopharma sector. 

The SPDR S&P Biotech ETF is down 9.3% over the past year, while the S&P 500 has gained 5.2%.

Avadel is a $900 million market cap stock that has seen its stock price rise by 16.4% over the past year. 

On Stocktwits, retail sentiment for Avadel was ‘neutral’ amid ‘low’ message volume.

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