Ladies and gentlemen, thank you for standing by and welcome to the Avadel Pharmaceuticals' First Quarter 2022 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker, Ms.

Brandi Robinson, Senior Vice President of Corporate Affairs. Please go ahead..

Good morning and thank you for joining us on our conference call. This morning, we issued our press release providing a corporate update and financial results for the first quarter ended March 31, 2022. The release can be found on our website, www.avadel.com.

As a reminder, before we begin, the following presentation includes several matters that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements.

These risks include information regarding products in the development stage that may not achieve scientific objectives or milestones or meet stringent regulatory requirement, uncertainties regarding market entry and acceptance of products and the impact of competitive products and pricing.

These and other risks are described more fully in Avadel's public filings under the Exchange Act included in the Form 10-K for the year ended December 31, 2021 which was filed on March 16, 2022, as well as subsequent SEC filings.

Except as required by law, Avadel undertakes no obligation to update or revise any forward-looking statements contained in this presentation to reflect new information, future events, or otherwise. On the call today are Greg Divis, Chief Executive Officer; Dr.

Doug Williamson, Chief Medical Officer; Tom McHugh, Chief Financial Officer; and Richard Kim, Chief Commercial Officer. Dr. Jennifer Gudeman, our Vice President of Medical and Clinical Affairs, will be available for Q&A following the call. At this time, I'll turn the call over to Greg..

Thank you, Brandi. Good morning, everyone and thank you for joining us for our call. I'll start off by providing an update on our business and specifically providing additional commentary on the process and current status of the potential FDA approval and launch of FT218.

I'll then turn the call over to Doug to give an overview of the data we have recently presented. Tom will review the financial results for the quarter and Richard will share updates regarding our launch readiness plans. We will conclude with a Q&A session, where we will be joined by Jennifer.

Since the beginning of 2022, across many critical areas of the company, we have made significant and important progress. Our launch readiness has been exceptional. Our customer insights have informed us that the commercial opportunity for FT218 is significantly larger than the current oxybate treated narcolepsy patient population.

And the clinical data we have presented continues to be incredibly well received and confirmatory of the benefits of a once at bedtime oxybate treatment. With that said, we fully appreciate the progress that everyone is most interested in is with the status of our NDA review and the potential FDA approval for FT218.

And although we'll cover launch readiness and clinical data during our call today, we will begin with providing an update on the status of the FDA's ongoing review. We detailed in March 2022 -- on our call in March of 2022 the actions we have taken as of mid-March, including escalating the matter to more senior FDA staff.

And as a result, we learned a number of important things, including, there were not any additional questions or information request for us. And as such, we believe that the substantive review of the NDA is complete. But the remaining matter under review were communicated to us by FDA as administrative and internal to the agency.

And we've been assured by FDA officials that work was occurring on our application and that we should expect to hear from them soon, including providing us further updates to our label and any associated questions they may have.

Since our public commentary in March, we have had consistent communication and additional follow-up with the FDA which has included further edits to and harmonization of the current draft FT218 label and associated medication guide.

Based on where we are today, if the label comes back to us from the FDA in its most recent form or even close, we would be very pleased with that result.

Furthermore, as a result of our ongoing efforts and persistent engagement, we now have clarity on who we believe are involved with the remaining administrative and internal matter to complete the review of FT218.

This includes not only senior members of the review division but also FDA leadership and staff from the Office of Regulatory Policy and the Office of Chief Counsel. We are engaging directly with these staff.

And based on very recent interactions, we expect further follow-up within this month in response to our repeated outreach regarding specificity on the remaining administrative review and timing to a final decision.

Once again, the FDA has continued to inform us that at this time there are no additional questions, information request, or data needed from us to help them complete the review. My final commentary on the status of the NDA before we move on to the other company updates is very straightforward. We've worked directly with the review team.

We've escalated to more senior FDA staff and have worked very urgently, diligently, proactively and professionally to advance FT218. As we have moved forward, we've not only escalated our direct engagement with the FDA. We've also escalated our related actions.

This includes our expanded advocacy support and activation, broader key FDA stakeholder outreach and engagement and all potential regulatory and legal actions as well. We are using all available options to advance FT218 and address the current unmet needs of all eligible patients seeking a new treatment option within the narcolepsy community.

We understand and live the frustration all stakeholders have regarding the status of our NDA as we continue our efforts to bring FT218 to a full approval. As we have shared with the FDA, every day we disappoint patients who are contacting us wanting to know when FT218 will be approved and available.

The significant interest in once at bedtime FT218 continues to remind us every day of how important and how valuable FT218 is for patients, the company and our shareholders.

And to be clear, we will not relent in our pursuit to bring FT218 to a full approval, nor will we relent upon approval in our commercialization efforts to build a blockbuster treatment for those we serve.

First, the opportunity for all oxybate eligible patients, treated or untreated, is too important in helping them potentially live a more normal life. And second, the opportunity to build significant shareholder value is also too important to not use every internal and external resource available to us in our pursuit of approval and launch.

Before I turn it over to Doug, I would like to extend my sincerest gratitude to our employees. I'm extremely proud of their dedication, their resilience and their tenacity during this period of time.

I'm excited for what is to come for Avadel and as importantly, excited about the prospect of providing a once at bedtime FT218 to people living with narcolepsy. With that, I will now turn the call over to Doug.

Doug?.

Well, thank you, Greg and good morning, everyone. I'd like to spend a few minutes detailing the growing body of evidence we continue to generate and communicate to support the overall value proposition of FT218.

First, at the World Sleep Congress in Rome in March, we presented eight posters on FT218, more than any other sleep company and generating a high degree of interest from attendees.

In the last couple of months, we published two key peer-reviewed manuscripts; a discrete choice experiment, highlighting the single dose at bedtime as the number one driver of patient choice; and a plain language summary of a review of 20 years of published data which found that the sodium in sodium oxybate was not linked to increased cardiovascular risks in narcolepsy patients and concluded that people who take sodium oxybate are unlikely to need to change their sodium oxybate medicine because of the sodium.

Additionally, we were thrilled to announce the publication in CNS Drugs, a peer-reviewed medical journal focusing on the treatment of psychiatric and neurological disorders, of positive secondary endpoint data from our pivotal Phase III REST-ON trial.

In these published data, once at bedtime FT218 at all doses demonstrated clinically meaningful improvement in assessments of disrupted nighttime sleep and significantly improved sleep quality and refreshing nature of sleep compared to placebo in adults with narcolepsy.

Post-hoc analyses showed that significant improvements in disrupted nighttime sleep were observed regardless of concomitant stimulant use and that there were also improvements in sleep architecture.

These published clinical data demonstrate that FT218 had a positive impact on both daytime and nighttime symptoms of narcolepsy and further bolsters the existing body of evidence for FT218. Recently, at the American Academy of Neurology, we presented interim data from the RESTORE open-label extension switch study of FT218.

These data included results from a questionnaire from 35 participants, who switched from twice nightly oxybates to once at bedtime FT218, assessing their preference for dosing regimen. three months after switching to FT218, 94.3% of participants reported a preference for the once at bedtime dosing regimen.

This overwhelming preference is an integral part of our value proposition and continues to give us confidence in our market research as well as supporting our strategy.

Additionally, at AAN, we presented details from a nocturnal adverse event questionnaire completed by 60 participants who switched to once a bedtime FT218 from twice nightly oxybates, assessing their experiences with the second nightly dose.

Of these participants, 63% had unintentionally missed their second twice-nightly oxybate dose, with 84% of those indicating that their narcolepsy symptoms were worse the next day. 40% of all participants reported they've taken their second dose more than four hours after the first dose.

And of those, 42% reported feeling groggy or unsteady the next morning. For 73% of participants, taking a second nighttime dose was characterized as inconvenient, with 90% reporting they rose from bed after the second dose, three reporting associated falls and two actually reporting injuries.

The data we presented so far not only gives a clear picture of the unmet needs that exist for narcolepsy patients but also an equally clear indication of the ways in which FT218 can play an important role in meeting those needs. Our data also aligns with the feedback we hear from other stakeholders, most notably, payers and sleep specialists.

We will continue to generate a constant flow of relevant information on the use and benefits of FT218 as we move through our potential launch and beyond. With that, I will now turn the call over to Tom to detail our financial results.

Tom?.

Thank you, Doug. I'll provide a few highlights for the quarter. And also note that full financial results are available in the press release and the 10-Q. I'll start with the balance sheet, where we reported $123.5 million of cash, cash equivalents and marketable securities as of March 31, 2022.

Also, as a reminder, we recently completed an exchange, an eight month maturity extension of approximately 80% of the $143.8 million of convertible notes. As a result, $117.4 million now matures in October of 2023 and $26.4 million will mature in February of 2023.

Total operating expenses in the quarter ended March 31, 2022, were approximately $28.6 million which is a $13.8 million increase compared to the first quarter of 2021. The year-over-year increase is due to the increases in SG&A of $10.6 million and R&D of $3.1 million.

R&D expenses were $7 million in the quarter ended March 31, 2022, compared to $3.9 million for the same period in 2021. The year-over-year increase resulted primarily from the purchase of active pharmaceutical ingredients used in the production and R&D activities of FT218.

SG&A expenses were $21.6 million in the quarter ended March 31, 2022, compared to $11 million for the same period in 2021.

The year-over-year increase is attributable to a number of factors, including FT218 commercial launch preparation costs, higher legal and professional fees and higher compensation costs associated with higher headcount, primarily in the areas of commercial and medical affairs.

Net loss for the first quarter of 2022 was approximately $26.4 million or $0.45 per diluted share, compared to a net loss of approximately $13.4 million or $0.23 per diluted share in the same period in 2021. The year-over-year increase in net loss and loss per share results primarily from the increase in operating expenses.

As the review of our NDA for FT218 progresses and our preparations for launch continue, we believe we're in a strong financial position with $123.5 million of cash on hand, coupled with the eight month maturity extension on $117.4 million of convertible notes to fund the financial investments needed to complete the review of the NDA and prepare for the potential launch of FT218.

I'll now turn the call over to Richard for an update on Avadel's commercial progress this quarter.

Richard?.

Thank you, Tom. I'll provide an update on Avadel's continued progress towards our launch readiness. For launch preparations, it's been a really exciting start to the year. First, our insights and beliefs about the significant unmet need that once at bedtime FT218 will be able to address continues to grow.

When we look at the current twice-nightly oxybate narcolepsy market, we see that even with the launch of the mixed salt formulation, that the total market has not shown growth over the last year. And that product switches from the twice-nightly sodium oxybate to the twice-nightly mixed salt version has slowed significantly.

The current total narcolepsy oxybate market is flat. And we believe, based on our research, the community is really looking for a truly innovative and novel oxybate that will address key unmet needs for people with narcolepsy.

From our patient research, we know that people previously treated with oxybate as well as those currently on twice-nightly formulation have self-reported as being interested or significantly interested in learning about a once at bedtime option like FT218.

Now this also includes those who have recently switched to the twice-monthly mixed salt formulation as well. Beyond the current oxybate market, we also believe the introduction of once at bedtime FT218, if approved, can significantly grow the overall oxybate market, predominantly to the benefit of FT218.

In previous research, as many as 40% of patients stated that when they were offered twice nightly oxybate, that they refused, in large part due to the complexity of dosing.

So upon our full launch, we see the opportunity to grow the overall utilization of oxybate with current oxybate prescribers and in a focused manner, gain more new oxybate prescribers over time.

This year, we increased our disease state messaging to address key unmet needs in narcolepsy treatment by focusing on the impact that disrupted sleep-wake cycles can prevent people with narcolepsy from getting refreshing and restorative sleep and thus, have a disrupted life.

This has been primarily executed through our Narcolepsy Disrupts disease state campaign. Through our targeted digital messaging and narcolepsydisrupts.com, customer engagement has seen a significant increase in patient and health care provider digital opt-ins, with over 4,000 patients having already enrolled in our program since the end of last year.

From our initial assessments of these opt-ins based on patient self-reporting, we are seeing current oxybate patients represented in our database. And we are also seeing a very large portion of oxybate-naive people who are engaging through our campaign.

Now this is an early sign that our disease state and medical messaging is reaching both oxybate-experienced and oxybate-naive people. Our team has made great progress in advancing all launch readiness deliverables.

Across the key components of distribution, including REMS, patient services and specialty pharmacy partnerships, we are fully on track with our progress and are ready for an FDA decision that would allow us to advance to the final stages to be launch-ready.

Another important example of our launch readiness has been our enhanced customer engagement to raise awareness about Avadel and our disease education about the impact of disruptive sleep-wake cycles.

We have had significant representation at key sleep specialists and payer meetings and will have a major presence at the biggest sleep medical meeting of the year, the SLEEP 2022 meeting in Charlotte, North Carolina, in early June.

We have had a very busy and productive start to the year and are pleased with the continued launch readiness progress, with a clear focus on understanding, engaging with and prioritizing the needs of people with narcolepsy and the sleep specialists who manage them.

I will now turn the call back to Greg for closing comments before we open the line for Q&A..

Thank you, Richard and thank you all for taking the time to join us today and for your continued support of Avadel. As you have heard, we're laser-focused on getting FT218 approved and preparing to launch as soon as possible thereafter. Our top priority is to advance FT218 to a full approval.

And we will use all resources and strategies, both internal and external, to achieve this.

The combination of our clinical profile and the clear unmet need, with over 90% of patients who have switched preferring once at bedtime FT218, coupled with a market opportunity that our research has continued to inform us, is potentially significantly larger than the currently treated patient pool only continues to support why FT218, upon approval of launch, has we believe blockbuster potential to command a meaningful share of the narcolepsy market.

We look forward to providing additional updates and remain committed to keeping you informed as appropriate. We thank you for your time today and your support. And with that, let's open the line for Q&A..

[Operator Instructions] Our first question comes from Francois Brisebois with Oppenheimer..

So just one that I think we touched on a little bit here but maybe just a little more color on, any comments or thoughts on the oxybate market here, especially based on the recent results from JS here?.

Thanks, Frank.

Maybe Richard, I'll maybe turn that over to you?.

Yes. Sure. Frank, nice to hear from you. So yes, I guess when we look at the current oxybate marketplace, we really see it very flat. Over the last four quarters, there has been no growth in the overall oxybate narcolepsy marketplace. And this is despite the fact that the mix salt oxybate has joined the marketplace as well.

So what we really read into that is there is a clear and unmet need for a once at bedtime FT218. And people are really looking for something that will make a meaningful clinical difference to the way their narcolepsy is managed. So we clearly see the opportunity to grow well beyond this current oxybate marketplace.

We know there are folks who have previously tried and discontinued twice nightly oxybates. And we also know that there are physicians within oxybate prescribers who are likely willing to try once at that time and also our ability to grow beyond the current oxybate treater base.

So despite the fact that the marketplace is currently flat, we see the introduction of FT218 really having the chance to grow well beyond where the current marketplace is today..

Okay.

Anything, Greg, you're all set on your side, too?.

Yes, I'm all set. Yes. Thanks, Richard..

Okay. Okay, great. And then, just maybe a last question here. In terms of the data that's been coming out, a lot of very interesting data, especially interim recently.

Does this help maybe build a case for superiority? Or what is the ultimate goal of having this data continuously come out?.

So maybe I'll let Doug and Jen comment on that.

Doug?.

Yes. I mean I think the point of the data, if that's your question, is we really believe that the profile of FT218 lends itself not just to a convenience or preference but also results in meaningful differences to the patient through the effect it has on nighttime symptoms as well as daytime symptoms.

So there's clearly a safety issue with the twice-nightly dosing of forms of oxybate. So that's an advantage that we will have. And we will continue to explore meaningful differences in outcome from the once nightly regime, not just preference.

Jen, do you have anything to add to that?.

Yes. Maybe I'll just add that part of our strategy in continuing to publish these data is the great interest that we have from key opinion leaders. There is a tremendous amount of data that they're interested in seeing beyond just the conversations that we're having with them one-on-one via scientific exchange or via advisory board.

And so we've gotten great advice from these KOLs that there is a benefit to externalizing the type of data that you see coming out, whether it's the improvements in disruptive nighttime sleep, responding to questions about sodium, with the Plain Language Summary affirming the [indiscernible] discrete choice experiment that again shows that the number one driver of choice is once nightly versus twice nightly.

So we've only just begun and we expect to continue with more relevant data to come in the months and years looking forward..

Our next question will come from David Amsellem with Piper Sandler..

This is Isaac [ph] on for David. Just two for me. So we wanted to get your latest thinking on really the overall opportunity for FT218, given that at this point you'll presumably be launching the product with the AG of Xyrem already on the market.

So I mean, do you envision the payer landscape becoming more challenging in response to the evolving market? And I mean, do you envision a dynamic where payers will force patients through the AG before FT218, specifically oxybate-naive patients? And then I have a follow-up..

Yes. Thanks, Isaac.

Richard, do you want to start?.

Yes. Isaac, thanks for the question. So yes, first, we're very excited to get FT218 to the market as quickly as possible. When we really think about the AG, we really do not see the AG as significantly impacting the potential for once at bedtime FT218. Consider that this is an AG that the current company will actually mostly benefit from.

And at the end of the day, it's still a twice-nightly sodium oxybate as well. So we don't really see many of the step edits coming through to force people through, mainly because we also don't anticipate there to be much of a price difference.

So for the payers themselves, there's not a huge motivation for them to actually consider a step through an AG at this stage. So we really feel like we're still very well poised with the payers even if an AG comes to the marketplace before us..

Yes. I think it's short. Isaac, it doesn't change our opportunity at all. So unlike the mixed salt product which is predominantly getting its volume from the other twice-nightly formulations, all 16,000 of those patients or 15,900 who are treated with narcolepsy are all options for us.

But for us, the good news about the opportunity for FT218 is it's not restricted to just those 16,000, as Richard noted. The market is much larger than that.

And our research has told us that whether it's previously treated patients or those who are sitting on the sideline but are oxybate eligible, all of those are potential opportunities for us to expand the oxybate patient pool to almost exclusively to our benefit..

Okay. I mean, that's helpful. And I think you kind of touched on this but I just kind of wanted to clarify. So I mean, with all of that in mind, do you see your overall approach to pricing and strategy changing? I think you touched on pricing briefly but I just wanted some clarity on this..

Yes. I think our thoughts on pricing haven't changed. We've done a tremendous amount of research in this regard and have engaged with payers for quite some time. And our expectation as we sit here today is that our pricing will likely be in the zone of the branded oxybate products. That's how we think about it today.

It's where we think the AG is going to land. It's where we -- and obviously, where the current oxybates are. So there's been no change to our strategy from that standpoint. And of course, access is what is key.

And our access strategy really centers around parity access, because based upon our research, we believe when it comes to physician choice and patient choice, as we've communicated to you, it's pretty clear to us that once at bedtime dosing is by far the preferred option and thus, we believe we can be successful in the market..

Our next question will come from Marc Goodman with SVB Securities..

So I guess, Greg, my question is, obviously, everybody is frustrated and probably a little confused on what's going on. But can you just talk about like what's changed in the past three months? Like just give us a sense of, is the label done? Are we done with labeling.

Are we just sitting on an administrative issue? It seems like months ago you were talking about an administrative issue. So it's a little confusing.

Like what could be this administrative issue? And why is it taking so long?.

Well, I think the most -- I'm not sure why there's echo. But the most important comment that I can make relative to [indiscernible] feedback that we should follow up specifically on this within this month.

Hello? Marc, are you still there?.

His line needed to be closed because it was causing an echo. Okay, so we'll move on to the next participant. It's Paul Matteis with Stifel..

This is James on for Paul. You mentioned that the Office of Regulatory Policy and Chief Counsel are among the stakeholders that still need to review the application.

Does that suggest that it's related to Xywav's ODE? And I guess, if so, what would be the time line to a resolution there?.

Well, as it relates to time line, as we've just discussed and disclosed, that we would expect follow-up on this administrative matter within this month.

So our expectation is we're going to gain more clarity and advance the NDA, right? As it relates to your comment, James, about orphan drug exclusivity, again, there hasn't been a week that hasn't gone by that we haven't requested specificity on timing and on where the administrative review sits from that standpoint.

What we can say is that we've had numerous interactions with the agency on every section within the NDA, including orphan drug exclusivity.

And although we can't speculate on what's happening behind the scenes, so to speak but this review division in particular has certainly demonstrated when ODE is the matter in question, they certainly aren't shy to communicate that directly to the sponsor because we've seen that be communicated publicly by at least one other company in this regard.

They've confirmed there's no questions around ODE from us. They've confirmed there's no data they needed from us regarding orphan drug, because we continue to generate data to make your decision. So again, I guess, until we have the final piece of paper that says, here's your approval and your orphan drug exclusivity, we can't rule it out in totality.

But at this point, from our standpoint, given the nature of the exchange we've had to date and kind of the history of this review division relative to ODE, we certainly believe that there aren't any questions that are pending in this regard..

Okay. And maybe just one other quick question. I think it was last month, Jazz got new patents listed in the Orange Book around drug-drug interactions. And I know you mentioned you were going to -- your plan was to carve them out.

And just curious, has that already happened and that carving out and that process of dealing with the new patents has already kind of happened and you've moved on from that? Or is that still kind of in play? Just curious there..

No, it's complete. Again, it was much more procedural in nature than anything. And it took us a matter of hours to complete that on our end..

Our next question will come from Ami Fadia with Needham..

This is Amin [ph] asking for Ami.

I wanted to know a little bit more on building the REMS and how long do you think it will take from the approval until you build the REMS and get to the commercialization side?.

Yes. Thanks, Amin [ph].

Richard, maybe I'll turn that over to you?.

Sure. Great question, Amin [ph]. So yes, as far as timing -- in terms of timing of building out the REMS, REMS is complicated. It's a very important program to support the launch of once at bedtime FT218. And for us, as everything we do, it's really important that we get it done right.

So because it's going to become the first entry point for physicians and obviously for patients on their journey to be able to get access to FT218. So we have partnered with the leading REMS provider in the industry and they've been with us on this journey for well over a year at this point.

So once we get the label, it will be clear the final steps that we'll have to take. That will be built into the program. And then beyond just building the program, after that, then we obviously need to go out there and get physicians trained and certified in our program as well. That will be supported a lot by our field force.

Also, we'll have to make sure that the specialty pharmacy is onboard as well. So that will take a few months -- at least a couple of months to get that going. And then from that point forward, post the approval, then we can actually go out there, begin this training and then get people certified in our program.

So overall, it will take us several months to get that going. But at the same time, that gives us a chance to really engage with and interact with the HCPs. And as I said, as always, it's really important that we get this done right because this will be the cornerstone to make sure that the safe and effective use of FT218 is done from Day 1 as well..

Thanks, Richard. The only thing I would add to Richard's comment is nobody has more of an incentive to get it done right and get it done as fast as they can than us. So we certainly will do it right but we have every sense -- all the necessary sense of urgency as well because of what we see as the clear, clear need in the marketplace.

And we want to be able to serve that need as soon as we possibly can..

Our next question will come from Oren Livnat with H.C. Wainwright..

I can hear the frustration in your voice. And it's not lost on me a couple of times in this script that you've mentioned that you are or will use all internal and external resources available to you.

So I'm wondering if you could -- maybe you can't but I'm wondering if you can expand on what sort of pressures you can or cannot bring to bear on this process, or if it's really just -- until you hear something, it's wait and see. And just to follow up, I think, on what Francois was asking upfront regarding orphan and data.

Can you confirm, have there been any information requests, I guess, from regulatory affairs or counsel, I guess, since you filed that might relate to orphan? Or have you submitted any -- can you make unsolicited submissions of all this interesting data you've been publishing to support your case regarding your major contribution to patient care or safety advantages? Sorry about the multipart question..

No. Oren, thanks. I appreciate the question. I think to your first comment, I think most importantly is, we're directing all of our energy, sparing no effort and deploying whatever resources we need to, to bring 218 to an approval as quickly as we can. We do expect to gain insight and make progress this month.

And where we go from here will, in some part, be predicated by what we learn. And we won't talk specifics about what we will or won't consider doing.

But rest assured that whatever options are out there for us, we have done our work and are prepared to pull those as necessary, recognizing that we're doing everything we think we should be doing right now to continue to move this forward.

As it relates to your comment about ODE, we haven't talked specifically about what areas of the NDA we've gotten IRs on or not. We can say, we have said we haven't had any questions on orphan drug.

But even more relevant, I think, in that regard is we had an opportunity to ask very specific questions about -- to your exact point, there is an opportunity to provide more data if we so choose to.

And as we probed about providing more data, it was made clear to us that -- we're happy to provide more data, we can provide more data, that option exists for us but we also learned that more data wasn't necessary for a decision to be made.

So from that standpoint, based on the time period that has passed and the consistent engagement we've had with the FDA and the fact that we continue to be told that there's no outstanding IRs, that we should expect to get a turn on the label and that we expect to get this administrative review more clarity and insight within this month, we remain highly confident based upon all of this exchange we've had on the full approvability of FT218 and the commercial opportunity that it can bring for patients and for the company and our shareholders..

Our next question will come from Matt Kaplan with Laddenburg..

Just a quick follow-up from a prior question.

With your expectation in terms of follow-up expected in May, what do you think this follow-up will be? Will this be the kind of the final turn of the label? Or will this put to rest the outstanding administrative issues at this point?.

Yes. I think to speculate or speak on behalf of the FDA, I don't think is appropriate from that point. We can only base our view of what they've communicated to us. And we have specifically requested clarity on this matter and on timing. And that's what we expect to get.

And yes, the short answer is that it could be -- it's also been told to us that this is the final matter. So we're looking forward to gain more insight and have this follow-up to be able to advance to the next stage from that standpoint. And again, they continue to communicate it to us that we should expect a follow-up labeling as well.

So again, we're encouraged that we should gain more insight this month for sure. And we believe that we see it as progress and we'll certainly update as appropriately as that advances..

Perfect. And then I guess a market question.

What do you think FT218 will take market share, I guess? Will it be from new patient starts or from, do you expect, a significant amount of patients switching from the twice-nightly forms?.

Maybe I'll -- aside from the short answer, yes. I'll turn it over to Richard and let him weigh in on..

Greg and Matt, I'll confirm that, yes as well. So no, Matt, I think with us, with FT218, we have a very unique opportunity to clearly grow significant share within the current oxybate marketplace. But clearly, there's a lot of patients and physicians who have been sitting on the sidelines because the current oxybates haven't met their current needs.

So we're quite fortunate to sort of see the opportunity within the current oxybate marketplace, to grow share within those who discontinued over the last couple of years of twice nightly formulations and also potentially really accelerate the growth of de novo patients who have just not been satisfied with the options available.

So we definitely sort of see a three-pronged approach to sort of gain share and grow this market well beyond the current oxybate market today..

Our next question will come from Robin Garner with Craig Hallum..

Just a question on the market opportunity, perhaps as a follow-up to the last question.

How do you quantify the oxybate naive group and I asked because it seems that your messaging has deviated a little bit from years past where the focus was more on the commercial opportunity in that low-hanging fruit of patients already on oxybate therapy? So it seems that this is really encouraged by recent data.

And it seems to be just kind of more comfort by management to expand into some of these new areas, specifically those de novo patients..

Thanks. Thanks, Robin. Go ahead, Richard..

Robin, really insightful. So yes, you're spot on. So I think, clearly, we will be focused really around driving the opportunity within the current oxybate marketplace. We know that there are less than 5,000 prescribers who prescribe all oxybates on an annual basis here as well.

But to your point, as we've grown in our market research and just engagement through various forums with HCPs, we definitely sort of see a lot of the physicians sort of, a, who have been lower-volume prescribers of oxybates and who haven't prescribed oxybates telling us that the value proposition of FT218 would either get them into the game more or get them into the game to finally prescribe an oxybate.

We also sort of see from our patient research those patients who are currently not on oxybates who are narcolepsy patients today being very intrigued by the FT218 value proposition as well.

So I think very astute observation that we have grown in our confidence that our market opportunity goes well beyond the current oxybate marketplace in narcolepsy and we'd absolutely sort of see those other growth opportunities.

Now we're going to balance those to make sure that we don't lose too much focus at the beginning of launch, because we obviously see our base to grow within that oxybate marketplace and then grow well beyond it for years to come as well. So thanks for the question..

Okay.

And as a quick follow-up, should we expect to see new data at the SLEEP meeting in June?.

There will be some encoring of some of the data that's been presented earlier this year and one new data set out of the RESTORE data, yes..

Our next question will come from Adam Evertts with LifeSci Capital..

Great. Quick one for me. Just a reminder on the approval time line and how that might impact any hearing procedures, preliminary injunction and so forth..

Yes. I guess, the first question in there, Adam, is will there be a PI? That's a question for the other party than it is for us at this stage, although we clearly have to be prepared for that.

I would say, as it relates to the PI, if there is a PI motion, based on the court scheduling order, our expectation is that actual process will occur relatively quickly post approval, right? So we don't think that the timing of the potential PI, if there is one, will be rate limiting in any way for us relative to coming to market, both from a timing perspective and/or a legal barrier perspective.

So we continue to prepare. And if it's something we have to deal with, then we're certainly well prepared to deal with it..

And we do have a follow-up from Francois Brisebois with Oppenheimer..

So I was just wondering, in terms of the patients -- on the market side, in terms of the patients that are treated and diagnosed, clearly, there's been kind of a flatness in terms of the oxybate market, at least from a competitor but is it that -- do you ever quantify the amount of patients maybe that are okay and happy with the generic stimulants or wake-promoting agents that they currently are on? Or is this just a fear of different products that maybe aren't generic here?.

Richard, do you want to start there?.

Yes. Francois, it's a great question. I think we're continuing to grow and learn about the marketplace. What we can sort of say is if you look right now, there is an opportunity for pretty much any -- a lot more patients who are not on oxybate but being treated with stimulants wake-promoting agents to potentially consider the benefit of an oxybate.

So we actually sort of see all those patients who are on either branded or generics as good growth opportunities for us in the future. We know that from REST-ON that patients either with or without simulants had about the same sort of effectiveness from the clinical study across all three end points.

So I think right now we're still in the midst of starting to quantify some of those opportunities. But what we do see is physicians managing those patients showing an interest in considering using oxybate where in the past they hadn't on a twice-nightly oxybate before..

Yes. I think the only thing I would add to that is to just -- in the simplest terms, is that there's really three opportunities for us to grow FT218 in the market. One is obviously those a little under 16,000 patients who are on the twice-nightly products.

Two, is those have been previously treated which is measured in the thousands and thousands of patients. Some of which have discontinued because of dosing-related issues or compliance-related issues or perhaps adverse event-related issues, all potentially are opportunities maybe we can help with.

And then there's the de novo patient population, right? And clearly, our research has told us there is a subset of patients sitting on the sideline due to dosing-related issues and as Richard noted, the opportunity to bring more patients and prescribers into the mix by bringing to market a once at bedtime FT218.

So all three of those combined create a much larger opportunity than just having to convert existing treated patients, yet we hear in our research and in our SWITCH study that those who have switched, over 90% said they prefer the once at bedtime.

So again, we feel really good about the opportunity and to make a tremendous difference in the lives of a lot of patients, people living with narcolepsy and as a platform to drive significant market penetration and associated revenue and financial performance of the company..

And ladies and gentlemen, thank you for participating in today's question-and-answer session. I would now like to turn the call back over to Mr. Greg Davis for any closing remarks..

Yes. Thank you. And again, thank you, everybody, for joining us and the opportunity for us to provide this update. Well, certainly and in the spirit, we've always been continuing to be as transparent as we can, be on where things sit and the progress we're making. We certainly will do so as appropriate in that regard.

And again, we remain highly confident in the full approvability of FT218 and on the opportunity to serve a lot of patients and make a difference in their lives and obviously create a tremendous amount of value for our shareholders. So with that, we will certainly look forward to future updates and we thank you for your time today..

Ladies and gentlemen, this concludes today's conference call. Thanks for your participation. You may now disconnect..