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1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2024 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the
2、 transition period _ to _ Commission file number:001-37977AVADEL PHARMACEUTICALS PLC(Exact name of registrant as specified in its charter)Ireland 98-1341933State or other jurisdiction of incorporation or organization(I.R.S.Employer Identification No.)10 Earlsfort TerraceDublin 2,IrelandD02 T380 Not
3、Applicable(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code:+353-1-901-5201Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of exchange on which registeredOrdinary Shares,nominal value$0.01 per shareAV
4、DLThe Nasdaq Global MarketSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Se
5、ction 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or forsuch shorter period that the registrant was required to file such re
6、ports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically,every Interactive Data File required to be submitted and pursuant to Rule 405 of Regulation S-T(232.405 of thischapter)during the preceding
7、 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company or an emerging growth company.See thedefinitions of“
8、large accelerated filer”,“accelerated filer”,“smaller reporting company”,and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mar
9、k if the registrant has elected not to use the extended transition period for complying with any new or revised financial accountingstandards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements a
10、ssessment of the effectiveness of its internal control over financial reporting under Section404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by
11、check mark whether the financial statements of the registrant included in the filing reflect the correction of an error topreviously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compens
12、ation received by any of the registrants executiveofficers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No The aggregate market value of voting stock held by non-affiliates of th
13、e registrant as of the last business day of the registrants most recently completed second fiscal quarter was$1,342,171,790based on the closing sale price of the registrants ordinary shares as reported by the Nasdaq Global Market on June 28,2024.Such market value excludes 743,475 ordinary shares,$0.
14、01 per sharenominal value held by each officer and director and by shareholders that the registrant concluded were affiliates of the registrant on that date.Exclusion of such shares should not be construed toindicate that any such person possesses the power,direct or indirect,to direct or cause the
15、direction of the management or policies of the registrant or that such person is controlled by or undercommon control with the registrant.The number of the registrants ordinary shares,$0.01 per share nominal value,outstanding as of February 26,2025 was 96,629,435.TABLE OF CONTENTS Page#Summary Of Th
16、e Material Risks Associated With Our Business3Cautionary Disclosure Regarding Forward-Looking Statements4 PART I Item 1.Business6Item 1A.Risk Factors21Item 1B.Unresolved Staff Comments56Item 1C.Cybersecurity56Item 2.Properties56Item 3.Legal Proceedings56Item 4.Mine Safety Disclosures56 PART II Item
17、5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities57Item 6.Reserved59Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations60Item 7A.Quantitative and Qualitative Disclosures About Market Risks70Item 8.Fina
18、ncial Statements and Supplementary Data72Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure103Item 9A.Controls and Procedures103Item 9B.Other Information103Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections103 PART III Item 10.Directo
19、rs,Executive Officers and Corporate Governance104Item 11.Executive Compensation107Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters121Item 13.Certain Relationships and Related Transactions,and Director Independence123Item 14.Principal Accounting F
20、ees and Services124 PART IV Item 15.Exhibits126 SIGNATURES130-2-SUMMARY OF THE MATERIAL RISKS ASSOCIATED WITH OUR BUSINESSOur business is subject to numerous material and other risks and uncertainties,including those described in Part I,Item 1A“Risk Factors”in this AnnualReport on Form 10-K.The prin
21、cipal risks and uncertainties affecting our business include the following:Our business depends heavily on our ability to successfully commercialize LUMRYZ(sodium oxybate),our lead product,in the United States(“U.S.”)and in other jurisdictions where we may obtain marketing approval.There is no assur
22、ance that our commercialization efforts with respectto LUMRYZ will be successful or that we will be able to generate revenues at the levels or on the timing we expect,or at levels or on the timingnecessary to support our goals.Coverage and reimbursement may be limited or unavailable in certain marke
23、t segments for LUMRYZ or any future products,if approved,whichcould make it difficult for us to sell LUMRYZ or any future products profitably.LUMRYZ may not maintain regulatory exclusivities,including orphan drug exclusivity,or the benefits of such exclusivities,which may adverselyaffect the sales o
24、f the product.LUMRYZ is subject to ongoing enforcement of post-marketing requirements and we could be subject to substantial penalties,includingwithdrawal of LUMRYZ from the market,if we fail to comply with all regulatory requirements.In addition,the terms of the marketing approvalof LUMRYZ and ongo
25、ing regulation of our product may limit how we manufacture and market LUMRYZ and compliance with such requirementsmay involve substantial resources,which could materially impair our ability to generate revenue.We incurred a net loss in 2024 and may incur a net loss in 2025;if we are not able to achi
26、eve profitability in the future,the value of our ordinaryshares may fall.We may require additional financing,which may not be available on favorable terms or at all,and which may result in dilution of the equityinterest of the holders of our ordinary shares.The distribution and sales of LUMRYZ are s
27、ubject to significant regulatory restrictions,including the requirements of a Risk Evaluation andMitigation Strategy(“REMS”)and safety reporting requirements,and these regulatory requirements subject us to risks and uncertainties,any ofwhich could negatively impact sales of LUMRYZ.Disruptions at the
28、 U.S.Food and Drug Administration(“FDA”),the U.S.Drug Enforcement Administration and other government agenciescaused by funding shortages,global health concerns or recent changes in administration could hinder their ability to hire and retain key leadershipand other personnel,prevent new products an
29、d services from being developed or commercialized in a timely manner or otherwise prevent thoseagencies from performing normal business functions on which the operation of our business may rely,which could negatively impact our business.We rely,and intend to continue to rely,on a limited number of s
30、uppliers for the manufacture and supply of LUMRYZ,and if we experienceproblems with those suppliers,or they fail to comply with applicable regulatory requirements or to supply sufficient quantities at acceptablequality levels or prices,or at all,our business would be materially and adversely affecte
31、d.If we cannot adequately protect our intellectual property and proprietary information,we may be unable to effectively compete.If we are unable to maintain effective sales,marketing and distribution capabilities,or maintain agreements with third parties to market,sell anddistribute LUMRYZ,our busin
32、ess,results of operations,financial condition and prospects will be materially and adversely affected.We cannot be certain that any product candidates will receive marketing approval.Without marketing approval,we will not be able tocommercialize any product candidates.We may become involved in lawsu
33、its to protect our products and/or enforce our patents or other intellectual property,which could be expensive,time consuming and/or unsuccessful.The price of our ordinary shares has been volatile and may continue to be volatile.-3-Cautionary Disclosure Regarding Forward-Looking StatementsThis Annua
34、l Report on Form 10-K includes“forward-looking statements”within the meaning of Section 27A of the Securities Act of 1933,as amended(the“Securities Act”),and Section 21E of the Securities Exchange Act of 1934,as amended(the“Exchange Act”).Any statements about our expectations,beliefs,plans,objective
35、s,assumptions or future events or performance are not historical facts and may be forward-looking.These statements are often,butare not always,made through the use of words or phrases such as“may,”“will,”“could,”“should,”“expects,”“intends,”“plans,”“anticipates,”“believes,”“estimates,”“predicts,”“pr
36、ojects,”“potential,”“continue,”and similar expressions,or the negative of these terms,or similar expressions.Accordingly,these statements involve estimates,assumptions,risks and uncertainties which could cause actual results to differ materially from those expressed in them.Any forward-looking state
37、ments are qualified in their entirety by reference to the factors discussed throughout this prospectus,and in particular thosefactors referenced in the section“Risk Factors”in Part I,Item 1A of this Annual Report on Form 10-K.This Annual Report on Form 10-K contains forward-looking statements that a
38、re based on our managements beliefs and assumptions and on informationcurrently available to our management.These statements relate to future events or our future financial performance,and involve known and unknown risks,uncertainties and other factors that may cause our actual results,levels of act
39、ivity,performance or achievements to be materially different from any futureresults,levels of activity,performance or achievements expressed or implied by these forward-looking statements.Forward-looking statements include,butare not limited to,statements about:Our ability to successfully commercial
40、ize LUMRYZ in the U.S.for the treatment of cataplexy or excessive daytime sleepiness(“EDS”)in patientsseven years of age and older with narcolepsy;Our plans with respect to our commercial infrastructure and marketing,market access and commercial activities;Our ability to maintain and receive additio
41、nal regulatory approvals for LUMRYZ in any other jurisdictions outside the U.S.,and any relatedrestrictions,limitations,and/or warnings in the label of LUMRYZ;Our expectations regarding the rate and degree of market acceptance for LUMRYZ;Our ability to enter into strategic partnerships for the comme
42、rcialization,manufacturing and distribution of LUMRYZ in the U.S.;Our reliance on a single product,LUMRYZ;Our expectations regarding timing of and our ability to execute the pivotal REVITALYZ trial of LUMRYZ in idiopathic hypersomnia(“IH”);Our ability to seek,maintain and receive additional U.S.regu
43、latory approvals as well as commercialize LUMRYZ for indications beyondnarcolepsy;Our dependence on a limited number of suppliers for the manufacturing of LUMRYZ and certain raw materials used in LUMRYZ and any failureof such suppliers to produce LUMRYZ or deliver sufficient quantities of such raw m
44、aterials,which could have a material adverse effect on ourbusiness,including commercialization of LUMRYZ in the U.S.;Our ability to finance our operations on acceptable terms,either through the raising of capital including the incurrence of convertible or otherindebtedness,issuance of equity or roya
45、lty-based financings,or through strategic financing or commercialization partnerships;Our expectations regarding the pricing and reimbursement and the extent to which patient financial assistance programs are utilized for LUMRYZ;Our expectations about the potential market size and market participati
46、on for LUMRYZ;Our expectations regarding litigation related to LUMRYZ;Our expectations regarding our cash runway to support the commercialization of LUMRYZ in the U.S.;The potential impacts of inflation and rising interest rates on our business and future operating results;Our ability to hire and re
47、tain key members of our leadership team and other personnel;The potential impacts due to global political instability and conflicts,such as terrorism,civil unrest,war and natural disasters in foreign countrieson our business,financial condition and results of operations;andCompetition existing today
48、 or that may arise in the future.These forward-looking statements are neither promises nor guarantees of future performance due to a variety of risks and uncertainties and other factorsmore fully discussed in the“Risk Factors”section in Part I,Item 1A of this Annual Report on Form 10-K and the risk
49、factors and cautionary statementsdescribed in other documents that we file from time to time with the SEC.Given these uncertainties,readers should not place undue reliance on ourforward-looking statements.These forward-looking statements speak only as of the date on which the statements were made an
50、d are not guarantees offuture performance.Except as may be required by applicable law,we do not undertake to update any forward-looking statements after the date of thisAnnual Report or the respective dates of documents incorporated by reference herein or therein that include forward-looking stateme
51、nts,even if newinformation becomes available in the future.-4-NOTE REGARDING TRADEMARKSWe own various trademark registrations and applications,and unregistered trademarks,including,but not limited to,AVADEL,LUMRYZ,RYZUP,REST-ON,RESTORE and REVITALYZ.Trade names,trademarks and service marks of other
52、companies appearing in this Annual Report are theproperty of their respective holders.Solely for convenience,the trademarks and trade names in this Annual Report may be referred to without the and symbols,but such references should not be construed as any indicator that their respective owners will
53、not assert,to the fullest extent under applicable law,their rights thereto.We do not intend to use or display other companies trademarks and trade names to imply a relationship with,or endorsement orsponsorship of us by,any other companies.From time to time,we may use our website,LinkedIn or our X a
54、ccount(AvadelPharma)to distribute material information.Our financial and othermaterial information is routinely posted to and accessible on the Investors section of our website,available at .Investors are encouraged toreview the Investors section of our website because we may post material informati
55、on on that site that is not otherwise disseminated by us.Information thatis contained in and can be accessed through our website,our LinkedIn posts or our X posts are not incorporated into,and does not form a part of,thisAnnual Report.TMTMTMTMTMTM-5-PART I Item 1.Business.(Dollar amounts in thousand
56、s,except per-share amounts,information set forth under Part III,and as otherwise noted)General OverviewAvadel Pharmaceuticals plc(Nasdaq:AVDL)(“Avadel,”the“Company,”“we,”“our,”or“us”)is a biopharmaceutical company.LUMRYZ is an extended-release formulation of sodium oxybate indicated to be taken once
57、 at bedtime for the treatment of cataplexy or EDS in patients seven years of age and olderwith narcolepsy.As of the date of this Annual Report,LUMRYZ is the only commercial product in our portfolio.We continue to evaluate opportunities to expand ourproduct portfolio.LUMRYZLUMRYZ was approved by the
58、FDA on May 1,2023 for the treatment of cataplexy or EDS in adults with narcolepsy.The FDA also granted seven years ofOrphan Drug Exclusivity(“ODE”)to LUMRYZ for the treatment of cataplexy or EDS in adults with narcolepsy due to a finding of clinical superiority ofLUMRYZ relative to currently markete
59、d oxybate treatments.In particular,the FDA found that LUMRYZ makes a major contribution to patient care overcurrently marketed,twice-nightly oxybate treatments by providing a once-nightly dosing regimen that avoids nocturnal arousal to take a second dose.TheODE will continue until May 1,2030.In June
60、 2023,we announced the U.S.commercial launch of LUMRYZ for the treatment of cataplexy or EDS inadults living with narcolepsy.LUMRYZ was approved by the FDA for use in the treatment of cataplexy or EDS in the pediatric narcolepsy populationseven years of age and older on October 16,2024,and was grant
61、ed ODE for this patient population through October 16,2031.The FDA has required implementation of a REMS to help ensure the benefits of the drug outweigh the risks of serious adverse outcomes resulting frominappropriate prescribing,misuse,abuse,and diversion of the same.Under the LUMRYZ REMS,healthc
62、are providers who prescribe the drug must bespecially certified,pharmacies that dispense the drug must be specially certified,and the drug must be dispensed only to patients who have enrolled in theLUMRYZ REMS and completed all REMS requirements,including documentation of safe use conditions.Numerou
63、s LUMRYZ-related U.S.patents have been issued having expiration dates spanning from mid-2037 to early-2042,and there are additional patentapplications currently in development and/or pending at the U.S.Patent and Trademark Office(“USPTO”),as well as foreign patent offices.We currentlyhave 30 U.S.pat
64、ents listed for LUMRYZ in FDAs Orange Book.With respect to clinical data generated for LUMRYZ,we conducted a Phase 3 clinical trial of LUMRYZ(the“REST-ON trial”),which was a randomized,double-blind,placebo-controlled study that enrolled 212 patients who received at least one dose of LUMRYZ or placeb
65、o,and was conducted in clinicalsites in the U.S.,Canada,Western Europe and Australia.Positive top line data from the REST-ON trial were announced on April 27,2020.REST-ON trialresults have been published by Kushida et al.Additionally,our open-label extension/switch study of LUMRYZ(“RESTORE”)examined
66、 the long-term safety and maintenance of efficacy of LUMRYZin patients with narcolepsy who participated in the REST-ON trial,as well as dosing and preference data for patients who switched from twice-nightlysodium oxybate to once-at-bedtime LUMRYZ,regardless of whether they participated in the REST-
67、ON trial.In May 2021,inclusion criteria wereexpanded to allow for oxybate nave patients to enter the study.The last patient visit occurred in October 2023.RESTORE results for the largest cohort,those who switched from twice-nightly oxybates,have been published,which include the 94%preference for the
68、 once-nightly dosing regimen thatLUMRYZ provides.We believe LUMRYZ has the potential to demonstrate improved dosing compliance,safety,and patient satisfaction over other treatment options forcataplexy or EDS in patients seven years of age and older with narcolepsy.Avadel has initiated a pivotal tria
69、l in IH,REVITALYZ,which is a double-blind,placebo-controlled,randomized withdrawal,multicenter Phase 3 studydesigned to evaluate the efficacy and safety of LUMRYZ,in treating IH.We expect to enroll approximately 150 adults in the study who are diagnosed withIH.On July 31,2024,we announced that the f
70、irst patient was dosed in this study.The primary objective of REVITALYZ is to demonstrate reduction in daytime sleepiness as measured by the primary endpoint,change in total score of theEpworth Sleepiness Scale at week 14.Secondary endpoints will evaluate the effect of LUMRYZ on-6-additional efficac
71、y parameters including patient and clinician global impression of change,IH severity,and a measure of the functional outcomes of sleep.Our Drug Delivery TechnologiesWe own drug delivery technologies that address formulation challenges,potentially allowing the development of differentiated drug produ
72、cts foradministration in various forms(e.g.,capsules,tablets,powders or liquid for oral use;or injectables for subcutaneous administration)that could be appliedto a broad range of drugs.A brief discussion of each of our drug delivery technologies is set forth below.MICROPUMP.Our MICROPUMP technology
73、 allows for the development of modified release solid,oral dosage formulations of drugs.A versionof our MICROPUMP technology is being employed in LUMRYZ.LIQUITIME.Our LIQUITIME technology allows for development of modified release oral products in a liquid suspension formulation,whichmay make such f
74、ormulations particularly well suited for children and/or patients having issues swallowing tablets or capsules.Although we ownthis technology,we are currently not pursuing any commercial pharmaceutical drug development opportunities using it.MEDUSA.Our MEDUSA technology allows for the development of
75、 modified-release injectable dosage formulations of drugs(e.g.,peptides,polypeptides,proteins,and small molecules).Although we own this technology,we are currently not pursuing any commercial pharmaceuticaldrug development opportunities using it.CompetitionCompetition in the pharmaceutical and biote
76、chnology industry continues to be intense and is expected to increase.We compete with academic laboratories,research institutions,universities,joint ventures,and other pharmaceutical and biotechnology companies,including other companies who have approved,or who are developing,niche branded or generi
77、c specialty pharmaceutical products or drug delivery platforms.Furthermore,major technological changescan happen quickly in the pharmaceutical and biotechnology industries.Such rapid technological change,or the development by our competitors oftechnologically improved or differentiated products,coul
78、d render our products,product candidates,or drug delivery platforms obsolete or noncompetitive.LUMRYZ competes with twice-nightly oxybate formulations,as well as a number of daytime wake promoting agents including lisdexamfetamine,dextroamphetamine,methylphenidate,amphetamine,modafinil,and armodafin
79、il,which are widely prescribed,as well as solriamfetol and pitolisant.Generic pharmaceutical products will continue to play a large role in the U.S.healthcare system.LUMRYZ may face competition from manufacturers ofgeneric twice-nightly oxybate formulations.In January 2023,Hikma Pharmaceuticals plc,
80、announced that it launched an authorized generic version of JazzPharmaceuticals plcs(“Jazz”)Xyrem(sodium oxybate).In July 2023,Amneal Pharmaceuticals,Inc.announced that it launched an authorized genericversion of Jazzs Xyrem(sodium oxybate).In addition,there are other products in development that ma
81、y be approved in the future that could have an impact on the narcolepsy treatment market,including,for example,reboxetine,orexin 2 receptor agonists,flecainide/modafinil combination,histamine H3 antagonists/inverse agonists,or GABABagonists.Corporate InformationThe Company was incorporated on Decemb
82、er 1,2015 as an Irish private company limited by shares,and re-registered as an Irish public limited company,or plc,on November 21,2016.Our registered address is at 10 Earlsfort Terrace,Dublin 2,D02 T380,Ireland and our phone number is+353-1-901-5201.We file annual,quarterly and current reports,prox
83、y statements and other documents with the SEC under the Securities Exchange Act of 1934,as amended(the“Exchange Act”).Our website is ,where we make available free of charge our reports(and any exhibits and amendments thereto)onForms 10-K,10-Q and 8-K as soon as reasonably practicable after they are
84、electronically filed with or furnished to the SEC.These filings are also availableto the public at www.sec.gov.We do not incorporate the information on or accessible through our website into this Annual Report on Form 10-K.We currently have five direct wholly-owned subsidiaries:(a)Avadel US Holdings
85、,Inc.,(b)Flamel Ireland Limited,which conducts business under thename Avadel Ireland,(c)Avadel Investment Company Limited,(d)Avadel Finance Ireland Designated Activity Company and(e)Avadel France HoldingSAS.Avadel US Holdings,Inc.,a Delaware corporation,is the holding entity of(i)Avadel Management,L
86、LC,and(ii)Avadel CNS Pharmaceuticals,LLC.Avadel Finance Ireland-7-Designated Activity Company is the holding entity of Avadel Finance Cayman Limited.Avadel France Holding SAS is the holding entity of AvadelResearch SAS.A complete list of our subsidiaries can be found in Exhibit 21.1 to this Annual R
87、eport on Form 10-K.Intellectual PropertyParts of our product pipeline and strategic alliances utilize our drug delivery platforms and related products of which certain features are the subject ofpatents or patent applications.We seek patent protection for our inventions and also rely upon trade secr
88、ets,know-how,continuing technologicalinnovations and licensing opportunities to maintain and develop competitive positions.Numerous LUMRYZ-related U.S.patents have been issued having expiration dates spanning from mid-2037 to early-2042,and there are additional patentapplications currently in develo
89、pment and/or pending at the USPTO,as well as foreign patent offices.The patent positions of biopharmaceutical companies like us are generally uncertain and involve complex legal,scientific and factual questions.Inaddition,the coverage claimed in a patent application can be significantly reduced befo
90、re the patent is issued,and patent scope can be reinterpreted by thecourts after issuance.Moreover,many jurisdictions permit third parties to challenge issued patents in administrative proceedings,which may result infurther narrowing or even cancellation of patent claims.We cannot predict whether th
91、e patent applications we are currently pursuing will issue as patents inany particular jurisdiction or whether the claims of any of our licensed or owned patents will provide sufficient protection from competitors.Any of ourlicensed or owned patents may be challenged,circumvented,or invalidated by t
92、hird parties.For more information,please see the information set forthunder the caption“Risks Related to Our Intellectual Property If we cannot adequately protect our intellectual property and proprietary information,wemay be unable to effectively compete”in the“Risk Factors”included in Part I,Item
93、1A of this Annual Report on Form 10-K.Supplies and ManufacturingThe active pharmaceutical ingredient(“API”)in LUMRYZ,sodium oxybate,is a Schedule I controlled substance in the U.S.,and the finished FDA-approved formulation of LUMRYZ is a Schedule III controlled substance in the U.S.per current feder
94、al regulations.As a result,LUMRYZ is subject toregulation by the U.S.Drug Enforcement Administration(“DEA”)under the Controlled Substances Act(“CSA”),and its manufacturing and distributionare highly restricted.Quotas from the DEA are required in order to manufacture both sodium oxybate and LUMRYZ in
95、 the U.S.Similar rules,restrictionsand controls would apply to LUMRYZ in the event LUMRYZ is marketed outside of the U.S.We attempt to maintain multiple suppliers in order to mitigate the risk of shortfall and inability to supply market demand.The API for LUMRYZ iscurrently manufactured by two outso
96、urced contract development and manufacturing organizations(“CDMOs”)in the U.S.The LUMRYZ drug product forcommercial lots is manufactured by one outsourced CDMO in the U.S.and one outsourced CDMO outside of the U.S.We expect to continue to outsourcethe production of sodium oxybate and drug product fo
97、r LUMRYZ to current good manufacturing practices(“cGMP”)-compliant,DEA-and FDA-auditedCDMOs pursuant to supply agreements.We may establish supply relationships with additional CDMOs to manufacture API and/or LUMRYZ in the future.Government RegulationGovernment authorities in the U.S.at the federal,s
98、tate,and local level and in other countries extensively regulate,among other things,the research andclinical development,testing,manufacture,quality control,approval,labeling,packaging,storage,record-keeping,promotion,advertising,distribution,post-approval monitoring and reporting,marketing,pricing,
99、and export and import of drug products,such as those we are developing and marketing.Generally,before a new drug can be marketed,considerable data demonstrating its quality,safety,and efficacy must be obtained,organized into a formatspecific to each regulatory authority,submitted for review,and appr
100、oved by the regulatory authority.Drugs are also subject to other federal,state,and local statutes and regulations.The process of obtaining regulatory approvals and the subsequentcompliance with appropriate federal,state,local,and foreign statutes and regulations require the expenditure of substantia
101、l time and financial resources.Failure to comply with the applicable regulatory requirements at any time during the product development process,approval process,or after approval,maysubject an applicant to administrative or judicial sanctions.These sanctions could include,among other actions,the reg
102、ulatory authoritys refusal to approvepending applications,withdrawal of an approval,clinical holds,untitled or warning letters,voluntary product recalls or withdrawals from the market,product seizures,total or partial suspension of production or distribution,injunctions,debarment,fines,-8-refusals o
103、f government contracts,restitution,disgorgement,or civil or criminal penalties.Any agency or judicial enforcement action could have a materialadverse effect on us.U.S.Drug DevelopmentIn the U.S.,the FDA regulates drugs under the Federal Food,Drug,and Cosmetic Act(“FDCA”)and its implementing regulati
104、ons.Drugs are also subjectto other federal,state,and local statutes and regulations.Drug candidates must be approved by the FDA through the New Drug Application(“NDA”)process before they may be legally marketed in the U.S.The process required by the FDA before a drug may be marketed in the U.S.gener
105、ally involves thefollowing:completion of extensive preclinical,sometimes referred to as nonclinical,laboratory tests,animal studies,and formulation studies all performed inaccordance with applicable regulations,including the FDAs good laboratory practice(“GLP”)regulations;submission to the FDA of an
106、 Investigational New Drug Application(“IND”),which must become effective before human clinical trials may beginand must be updated annually;performance of adequate and well-controlled human clinical trials in accordance with applicable IND and other clinical trial-related regulations,sometimes refer
107、red to as good clinical practices(“GCPs”)to establish the safety and efficacy of the proposed drug for its proposed indication;submission to the FDA of an NDA for a new drug;a determination by the FDA to file the NDA for review;satisfactory completion of an FDA pre-approval inspection of the manufac
108、turing facility or facilities at which the API and finished drug productare produced to assess compliance with the FDAs cGMP requirements;potential FDA audit of the clinical trial sites that generated the data in support of the NDA;payment of user fees for FDA review of the NDA;andFDA review and app
109、roval of the NDA prior to any commercial marketing or sale of the drug in the U.S.The data required to support an NDA are generated in two distinct development stages:preclinical and clinical.The preclinical development stagegenerally involves synthesizing the active component,developing the formula
110、tion,and determining the manufacturing process,as well as carrying out non-human toxicology,pharmacology,and drug metabolism studies in the laboratory,which support subsequent clinical testing.The conduct of the preclinicaltests must comply with federal regulations,including GLPs.The sponsor must su
111、bmit the results of the preclinical tests,together with manufacturinginformation,analytical data,any available clinical data or literature,and a proposed clinical protocol,to the FDA as part of the IND.An IND is a requestfor authorization from the FDA to administer an investigational drug product to
112、 humans.The central focus of an IND submission is on patient safety andthe general investigational plan and the protocol(s)for human trials.The IND automatically becomes effective 30 days after receipt by the FDA,unless theFDA raises concerns or questions regarding the proposed clinical trials and p
113、laces the IND on clinical hold within that 30-day time period.In such a case,the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical trial can begin.The FDA also may impose a partialclinical hold that would limit a trial,for example,to certain doses,for a c
114、ertain length of time or to a certain number of subjects.The FDA may also imposeclinical holds on a drug candidate at any time before or during clinical trials due to safety concerns or non-compliance.Accordingly,we cannot be sure thatsubmission of an IND will result in the FDA allowing clinical tri
115、als to begin,or that,once begun,issues will not arise that could cause the trial to besuspended or terminated.The clinical stage of development involves the administration of the drug candidate to human subjects under the supervision of qualified investigators,generally physicians not employed by or
116、 under the trial sponsors control,in accordance with GCPs,which include the requirement that all researchsubjects provide their informed consent for their participation in any clinical trial.Clinical trials are conducted under protocols detailing,among otherthings,the objectives of the clinical tria
117、l,dosing procedures,subject selection,and exclusion criteria,and the parameters to be used to monitor subjectsafety and assess efficacy.Each protocol,and any subsequent amendments to the protocol,must be submitted to the FDA as part of the IND.Further,eachclinical trial must be reviewed and approved
118、 by an independent institutional review board(“IRB”)at or servicing each institution at which the clinical trialwill be conducted.An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether the risks to individualsparticipating in the clinical t
119、rials are minimized and are-9-reasonable in relation to anticipated benefits.The IRB also approves the informed consent form that must be provided to each clinical trial subject or his orher legal representative and must monitor the clinical trial until completed.There are also requirements governin
120、g the reporting of ongoing clinical trialsand completed clinical trial results to public registries.Clinical trials are generally conducted in three sequential phases that may overlap or be combined,known as Phase 1,Phase 2,and Phase 3 trials.Phase 1trials generally involve a small number of healthy
121、 volunteers who are initially exposed to a single dose and then multiple doses of the drug candidate.Theprimary purpose of these clinical trials is to assess the metabolism,pharmacologic action,side effects,tolerability,and safety of the drug.Phase 2 clinicaltrials typically involve studies in disea
122、se-affected patients to determine the dose required to produce the desired benefits.At the same time,safety andfurther pharmacokinetics and pharmacodynamics information is collected,as well as identification of possible adverse effects and safety risks andpreliminary evaluation of efficacy.Phase 3 t
123、rials generally involve large numbers of patients at multiple sites(from several hundred to several thousandsubjects)and are designed to provide the data necessary to demonstrate the efficacy of the drug for its intended use,its safety in use,and to establish theoverall benefit/risk relationship of
124、the drug and provide an adequate basis for physician labeling.The duration of treatment is often extended to mimic theactual use of a drug during marketing.Generally,two adequate and well-controlled Phase 3 trials are required by the FDA for approval of an NDA.Post-approval trials,sometimes referred
125、 to as Phase 4 clinical trials,may be conducted after initial marketing approval.These trials are used to gain additionalexperience from the treatment of patients in the intended therapeutic indication.In certain instances,the FDA may mandate the performance of Phase 4clinical trials.Progress report
126、s detailing the results of the clinical trials must be submitted at least annually to the FDA.Additionally,written IND safety reports must besubmitted to both the FDA and the qualified investigators for serious and unexpected adverse reactions,any findings from other clinical studies,tests inlaborat
127、ory animals,in vitro testing that suggests a significant risk for human subjects,or any clinically important increase in the rate of a serious suspectedadverse reaction over that listed in the protocol or investigator brochure.The sponsor must submit an IND safety report within 15 calendar days afte
128、r thesponsor determines that the information qualifies for reporting.The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspectedadverse reaction within seven calendar days after the sponsors initial receipt of the information.Phase 1,Phase 2,and Phase 3 trials may not
129、be completedsuccessfully within any specified period,if at all.There also are requirements governing the reporting of ongoing clinical trials and completed clinical trialresults to public registries.Information about certain clinical trials,including clinical trial results,must be submitted within s
130、pecific timeframes forpublication on the www.clinicaltrials.gov website.The FDA,the IRB,or the clinical trial sponsor may suspend or terminate a clinical trial at any time on various grounds,including a finding that theresearch subjects or patients are being exposed to an unacceptable health risk.Si
131、milarly,an IRB can suspend or terminate approval of a clinical trial at itsinstitution if the clinical trial is not being conducted in accordance with the IRBs requirements or if the drug has been associated with unexpected seriousharm to patients.Additionally,some clinical trials are overseen by an
132、 independent group of qualified experts organized by the clinical trial sponsor,knownas a data safety monitoring board or committee.This group provides authorization for whether or not a trial may move forward at designated check pointsbased on access to certain data from the trial.We may also suspe
133、nd or terminate a clinical trial based on evolving business objectives and/or competitiveclimate.Concurrent with clinical trials,companies usually complete additional animal studies and must also develop additional information about thechemistry and physical characteristics of the drug as well as fi
134、nalize a process for manufacturing the drug in commercial quantities in accordance withcGMP requirements.The manufacturing process must be capable of consistently producing quality batches of the drug candidate and,among other things,cGMPs impose extensive procedural,substantive,and recordkeeping re
135、quirements to ensure and preserve the long-term stability and quality of the finaldrug product.Additionally,appropriate packaging must be selected and tested,and stability studies must be conducted to demonstrate that the drugcandidate does not undergo unacceptable deterioration over its shelf life.
136、NDA and the FDA Review ProcessFollowing trial completion,trial data are analyzed to assess safety and efficacy.The results of preclinical studies and clinical trials are then submitted to theFDA as part of an NDA,along with proposed labeling for the drug and information about the manufacturing proce
137、ss and facilities that will be used toensure drug quality,results of analytical testing conducted on the chemistry of the drug,and other relevant information.The NDA is a request for approvalto market the drug and must contain adequate evidence of safety and efficacy,which is demonstrated by extensi
138、ve preclinical and clinical testing.Data maycome from company-sponsored clinical trials intended to test the safety and efficacy of a use of a drug,or from a number of alternative sources,includingstudies initiated by investigators.To support marketing approval,the data submitted must be sufficient
139、in quality and quantity to establish the safety andefficacy of the investigational drug product for a particular indication or indications to the satisfaction of the FDA.FDA approval of an NDA must beobtained before a drug may be offered for sale in the U.S.-10-Under the Prescription Drug User Fee A
140、ct(“PDUFA”),as amended,each NDA must be accompanied by a user fee known as an application fee.The FDAadjusts the PDUFA user fees on an annual basis.PDUFA also imposes an annual prescription drug product program fee for human drugs.Fee waivers orreductions are available in certain circumstances,inclu
141、ding a waiver of the application fee for the first application filed by a small business.Additionally,no user fees are assessed on NDAs for products designated as orphan drugs,unless the product also includes a non-orphan indication.Within 60 days following submission of an original NDA,the FDA revi
142、ews the application to determine if it is substantially complete before the agencyaccepts it for filing.The FDA may refuse to file any NDA that it deems incomplete or not properly reviewable at the time of submission,including forfailure to pay required fees,and may request additional information.In
143、 this event,the application must be resubmitted with the additional information.Theresubmitted application also is subject to review before the FDA accepts it for filing.The FDA typically makes a decision on whether to accept an NDA forfiling within 60 days of receipt.Once the submission is accepted
144、 for filing,the FDA begins an in-depth,substantive review of the NDA.Under theperformance goals established under the PDUFA,the FDA has agreed to review 90%of standard NDAs for new molecular entities(“NMEs”)in tenmonths from the filing date and 90%of priority NME NDAs in six months from the filing d
145、ate.The goals for reviewing standard and priority non-NMENDAs are ten months and six months,respectively,measured from the receipt date of the application.The FDA does not always meet its PDUFA goaldates for standard and priority NDAs,and the review timeline may be formally extended by submission of
146、 a major amendment in response to an FDArequest or by submission of an unsolicited amendment.After the NDA submission is accepted for filing,the FDA reviews the NDA to determine,among other things,whether the proposed drug is safe andeffective for its intended use,and whether the drug is being manuf
147、actured in accordance with cGMP to assure and preserve the drugs identity,strength,quality,and purity.The FDA may refer applications for novel drugs or drug candidates that present difficult questions of safety or efficacy to an advisorycommittee,typically a panel that includes clinicians and other
148、experts,for review,evaluation,and a recommendation as to whether the application shouldbe approved and under what conditions.The FDA is not bound by the recommendations of an advisory committee,but it considers such recommendationscarefully when making decisions.In the course of its review,the FDA m
149、ay re-analyze the clinical trial data,which could result in extensive discussionsbetween the FDA and the applicant during the review process.Before approving an NDA,the FDA typically conducts a pre-approval inspection of the manufacturing facilities for the new drug to determine whetherthey comply w
150、ith cGMPs.The FDA will not approve the drug unless it determines that the manufacturing processes and facilities are in compliance withcGMP requirements and adequate to assure consistent production of the drug within required specifications.In addition,before approving an NDA,theFDA may also audit d
151、ata from clinical trials to ensure compliance with GCP requirements.After the FDA evaluates the application,manufacturing process,and manufacturing facilities where the drug product and/or its API will be produced,it may issue an approval letter or a Complete Response Letter.Anapproval letter author
152、izes commercial marketing of the drug with specific prescribing information for specific indications.A Complete Response Letterindicates that the review cycle of the application is complete and the application is not ready for approval.A Complete Response Letter usually describesall of the specific
153、deficiencies in the NDA identified by the FDA.The Complete Response Letter may require additional clinical data and/or additionalpivotal clinical trial(s),and/or other significant,expensive and time-consuming requirements related to clinical trials,preclinical studies,or manufacturing.If a Complete
154、Response Letter is issued,the applicant may either resubmit the NDA,addressing all of the deficiencies identified in the letter,challenge thedetermination set forth in the letter by requesting a hearing,or withdraw the application.Even if such data and information are submitted,the FDA mayultimately
155、 decide that the NDA does not satisfy the criteria for approval.Data obtained from clinical trials are not always conclusive and the FDA mayinterpret the same data differently than the applicant.There is no assurance that the FDA will ultimately approve a drug product for marketing in the U.S.If a d
156、rug receives marketing approval,the approvalmay be significantly limited to specific diseases,dosages,or patient subgroups,or the indications for use may otherwise be limited,which could restrict thecommercial value of the drug.Further,the FDA may require that certain contraindications,warnings,prec
157、autions,or adverse events be included in the druglabeling or may condition the approval of the NDA on other changes to the proposed labeling,development of adequate controls and specifications,or acommitment to conduct post-marketing testing or clinical trials,and surveillance to monitor the effects
158、 of approved drugs.For example,the FDA mayrequire Phase 4 testing which involves clinical trials designed to further assess a drugs safety and may require testing and surveillance programs to monitorthe safety of approved drugs that have been commercialized.The FDA may also place other conditions on
159、 approvals including the requirement for a REMSto assure the safe use of the drug.If the FDA concludes a REMS is needed,the sponsor of the NDA must submit a proposed REMS.The FDA will notapprove the NDA without an approved REMS,if required.A REMS could include medication guides,physician communicati
160、on plans,or elements toassure safe use,such as restricted distribution methods,patient registries,and other risk minimization tools.Any of these limitations on approval ormarketing could restrict the commercial promotion,distribution,-11-prescription,or dispensing of drugs.Drug approvals may be with
161、drawn for non-compliance with regulatory standards or if problems occur following initialmarketing.Pediatric Information and ExclusivityUnder the Pediatric Research Equity Act(“PREA”),as amended,an NDA or supplement to an NDA for a drug that includes a new active ingredient,newindication,new dosage
162、form,new dosing regimen,or new route of administration must contain data to assess the safety and efficacy of the drug for theclaimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the drug issafe and effective
163、.The FDA may grant deferrals for submission of data or full or partial waivers.A sponsor who is planning to submit a marketing application for a drug subject to PREA must submit an initial Pediatric Study Plan(“PSP”)within 60days of an end-of-Phase 2 meeting or as may be agreed between the sponsor a
164、nd the FDA.The initial PSP must include an outline of the pediatric study orstudies that the sponsor plans to conduct,including study objectives and design,age groups,relevant endpoints,and statistical approach,or a justificationfor not including such detailed information,and any request for a defer
165、ral of pediatric assessments or a full or partial waiver of the requirement to providedata from pediatric studies along with supporting information.The FDA and the sponsor must reach agreement on the PSP.A sponsor can submitamendments to an agreed-upon initial PSP at any time if changes to the pedia
166、tric plan need to be considered based on data collected from preclinicalstudies,early phase clinical trials,and/or other clinical development programs.A drug product can also obtain pediatric exclusivity in the U.S.,which is another type of regulatory market exclusivity in the U.S.Pediatric exclusiv
167、ity,ifgranted,adds an additional six months to existing exclusivity periods and patent terms.This six-month exclusivity,which runs from the end of otherexclusivity protection or patent term,may be granted based on the voluntary completion of a pediatric trial that fairly responds to an FDA-issued wr
168、ittenrequest for such a trial.Orphan Drug Designation and ExclusivityThe FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the U.S.,orif it affects 200,000 or more individuals in the U.S.,there is no reasonable
169、 expectation that the cost of developing and marketing the drug for this type ofdisease or condition will be recovered from sales in the U.S.Orphan drug designation entitles a party to potential financial incentives such as opportunitiesfor grant funding towards clinical trial costs,tax advantages,a
170、nd user-fee waivers.In addition,if a product receives the first FDA approval for theindication for which it has orphan designation,the product is entitled to orphan drug exclusivity,which means the FDA may not approve any otherapplication to market the same drug for the same indication for a period
171、of seven years,except in limited circumstances,such as a showing of clinicalsuperiority over the product with orphan exclusivity.Orphan drug exclusivity may be lost if the FDA determines that the request for designation was materially defective or if the manufacturer is unable toassure sufficient qu
172、antity of the drug to meet the needs of patients with the rare disease or condition.Orphan drug designation must be requested beforesubmitting an application for marketing approval.Orphan drug designation does not convey any advantage in,or shorten the duration of,the regulatoryreview and approval p
173、rocess.505(b)(2)New Drug ApplicationsAs an alternative path to FDA approval for modifications to formulations or uses of a product previously approved by the FDA pursuant to an NDA,known as a“reference drug”,an applicant may submit an NDA under Section 505(b)(2)of the FDCA.Section 505(b)(2)was enact
174、ed as part of the Hatch-Waxman Amendments and permits the filing of an NDA where at least some of the information required for approval comes from studies not conducted by,or for,the applicant,and for which the applicant has not obtained a right of reference.If the 505(b)(2)applicant can establish t
175、hat reliance on the FDAsprevious findings of safety and effectiveness for a reference drug is scientifically and legally appropriate,it may eliminate the need to conduct certainpreclinical studies or clinical trials of the new product.The FDA may require the applicant to perform additional bridging
176、studies or measurements,including clinical trials,to support the change from the previously approved reference drug.The FDA may then approve the new drug candidate for all,orsome,of the label indications for which the reference drug has been approved,as well as for any new indication sought by the 5
177、05(b)(2)applicant.Post-Marketing RequirementsFollowing approval of a new drug,a pharmaceutical company and the approved drug are subject to continuing regulation by the FDA,including,amongother things,establishment registration and drug listing,monitoring and recordkeeping activities,reporting to th
178、e applicable regulatory authorities ofadverse events with the drug,providing the regulatory authorities with-12-updated safety and efficacy information,drug sampling and distribution requirements,and complying with promotion and advertising requirements,whichinclude,among others,standards for direct
179、-to-consumer advertising,restrictions on promoting drugs for uses or in patient populations that are not describedin the drugs approved labeling(known as off-label promotion),limitations on industry-sponsored scientific and educational activities,and requirements foronline promotional activities.Alt
180、hough physicians may prescribe drugs for off-label uses,the FDA takes the position that manufacturers may not market orpromote such off-label uses.Modifications or enhancements to the drug or its labeling or changes of the site or process of manufacture are often subject tothe prior approval of the
181、FDA and other regulators,which may or may not be received after undergoing review.Any distribution of pharmaceutical samples must comply with the U.S.Prescription Drug Marketing Act(“PDMA”),a part of the FDCA.The Drug SupplyChain Security Act(“DSCSA”)was enacted in 2013 with the aim of building an e
182、lectronic system to identify and trace certain prescription drugsdistributed in the U.S.The DSCSA mandates resource-intensive obligations for pharmaceutical manufacturers,wholesale distributors,and dispensersincluding the quarantine and prompt investigation of a suspect product to determine if it is
183、 illegitimate,and notifying trading partners and the FDA of anyillegitimate product.Drug manufacturers and other parties involved in the supply chain for prescription drug products must also comply with producttracking and tracking requirements,such as placing a unique product identifier on prescrip
184、tion drug packages.This identifier consists of the National DrugCode,serial number,lot number,and expiration date,in the form of a 2-dimensional data matrix barcode that can be read by humans and machines.In the U.S.,once a drug is approved,its manufacture is subject to comprehensive and continuing
185、regulation by the FDA.FDA regulations require that drugsbe manufactured in specific facilities per the NDA approval and in accordance with cGMP.We rely,and expect to continue to rely,on third parties for theproduction of clinical and commercial quantities of our approved drug and drug candidates in
186、accordance with cGMP regulations.cGMP regulationsrequire among other things,quality control and quality assurance as well as the corresponding maintenance of records and documentation and theobligation to investigate and correct any deviations from cGMP.Drug manufacturers and other entities involved
187、 in the manufacture and distribution ofapproved drugs are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections bythe FDA and certain state agencies for compliance with cGMP and other laws.Accordingly,manufacturers must
188、continue to expend time,money,andeffort in the area of production and quality control to maintain cGMP compliance.These regulations also impose certain organizational,procedural,anddocumentation requirements with respect to manufacturing and quality assurance activities.NDA holders using contract ma
189、nufacturers,laboratories,orpackagers are responsible for the selection and monitoring of qualified firms,and,in certain circumstances,qualified suppliers to these firms.These firmsand,where applicable,their suppliers are subject to inspections by the FDA at any time,and the discovery of violative co
190、nditions,including failure toconform to cGMP,could result in enforcement actions that interrupt the operation of any such facilities or the ability to distribute drugs manufactured,processed,or tested by them.The FDA may issue enforcement letters or withdraw the approval of the product if compliance
191、 with regulatory requirements and standards is notmaintained or if problems occur after the drug reaches the market.Corrective action could delay drug distribution and require significant time and financialexpenditures.Later discovery of previously unknown problems with a drug,including adverse even
192、ts of unanticipated severity or frequency,or withmanufacturing processes,or failure to comply with regulatory requirements,may require revisions to the approved labeling to add new safety information,including the addition of new warning and contraindications;imposition of post-market studies or cli
193、nical trials to assess new safety risks;or imposition ofdistribution or other restrictions under a REMS program.Other potential consequences include,among other things:mandated corrective advertising or communications with doctors;restrictions on the marketing or manufacturing of the drug,suspension
194、 of the approval,complete withdrawal of the drug from the market orproduct recalls;fines,warning letters or holds on post-approval clinical trials;refusal of the FDA to approve applications or supplements to approved applications,or suspension or revocation of drug approvals;drug seizure or detentio
195、n,or refusal to permit the import or export of drugs;orinjunctions or the imposition of civil or criminal penalties.U.S.Marketing Exclusivity-13-Marketing exclusivity provisions under the FDCA can delay the submission or the approval of certain marketing applications for competing products.TheFDCA p
196、rovides a five-year period of non-patent marketing exclusivity within the U.S.to the first applicant to obtain approval of an NDA for a newchemical entity.A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety,which isthe molecule
197、or ion responsible for the action of the drug substance.During the exclusivity period,the FDA may not accept for review an abbreviated newdrug application(“ANDA”)or a 505(b)(2)NDA submitted by another company for another drug based on the same active moiety,regardless of whetherthe drug is intended
198、for the same indication as the original innovator drug or for another indication.However,an application may be submitted after fouryears if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the FDA by the innovator NDA holder.TheFDCA also provides
199、 three years of marketing exclusivity for an NDA,or supplement to an existing NDA,if new clinical investigations,other thanbioavailability studies,that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application,forexample new indications,dos
200、ages,or strengths of an existing drug.This three-year exclusivity covers only the modification for which the drug receivedapproval on the basis of the new clinical investigations and does not prohibit the FDA from approving ANDAs or 505(b)(2)applications for drugscontaining the active agent for the
201、original indication or condition of use.Five-year and three-year exclusivity will not delay the submission or approval ofa full NDA.However,an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies andadequate and well-controlled
202、 clinical trials necessary to demonstrate safety and effectiveness.Controlled Substances RegulationsNarcotics and other APIs,such as sodium oxybate,are“controlled substances”under the CSA.The CSA,regulates the manufacture and distribution ofnarcotics and other controlled substances,including stimula
203、nts,depressants and hallucinogens in the U.S.The CSA is administered by the DEA,a divisionof the U.S.Department of Justice,and is intended to prevent the abuse or diversion of controlled substances into illicit channels of commerce.The DEAclassifies controlled substances into five schedules.Schedule
204、 I substances by definition have a high potential for abuse,have no currently“acceptedmedical use”in the U.S.,lack accepted safety for use under medical supervision,and may not be prescribed,marketed or sold in the U.S.Pharmaceuticalproducts approved for use in the U.S.may be listed as Schedule II,I
205、II,IV or V,with Schedule II substances considered to present the highest potential forabuse or dependence and Schedule V substances the lowest relative risk of abuse.The API in LUMRYZ,sodium oxybate,is a Schedule I controlledsubstance in the U.S.,and the FDA-approved LUMRYZ product is a Schedule III
206、 controlled substance in the U.S.For drugs manufactured in the U.S.,the DEA establishes annually an aggregate quota for the amount of substances within Schedules I and II that may bemanufactured or produced in the U.S.based on the DEAs estimate of the quantity needed to meet legitimate medical,scien
207、tific,research and industrialneeds.The quotas apply equally to the manufacturing of the API and production of dosage forms.The DEA may adjust aggregate production quotas a fewtimes per year,and individual manufacturing or procurement quotas from time to time during the year,although the DEA has subs
208、tantial discretion inwhether to make such adjustments for individual companies.The DEA limits the quantity of certain Schedule I controlled substances that may be manufactured and procured in the U.S.in any given calendar yearthrough a quota system and,as a result,quotas from the DEA are required in
209、 order to manufacture sodium oxybate in the U.S.The FDA-approved LUMRYZ product is classified as a Schedule III controlled substance and subject to DEA quota requirements as well as state andfederal regulations relating to manufacturing,storage,distribution and physician prescription procedures,incl
210、uding limitations on prescription refills.Inaddition,the third parties who perform our clinical and commercial manufacturing,distribution,dispensing and clinical studies for LUMRYZ are requiredto maintain necessary DEA registrations and state licenses.Any person or firm that manufactures,distributes
211、,dispenses,imports,or exports any controlled substance(or proposes to do so)must register with theDEA.The applicant must register for a specific business activity related to controlled substances,including manufacturing or distributing,and may engagein only the activity or activities for which it is
212、 registered.The DEA conducts periodic inspections of registered establishments that handle controlledsubstances for compliance with its rules and regulations.Failure to comply with relevant DEA regulations,particularly as manifested in the loss ordiversion of controlled substances,can result in regu
213、latory action including civil penalties,refusal to renew necessary registrations,or proceedings torevoke those registrations.In certain circumstances,violations can lead to criminal prosecution.In addition to these federal statutory and regulatoryobligations,there may be state and local laws and reg
214、ulations relevant to the handling of controlled substances or listed chemicals.Governments outside ofthe U.S.have similar controlled substance laws,regulations and requirements in their respective jurisdictions.-14-Other Regulatory MattersManufacturing,sales,promotion,and other activities following
215、drug approval are also subject to regulation by numerous regulatory authorities in additionto the FDA,including,in the U.S.,the Centers for Medicare&Medicaid Services(“CMS”),other divisions of the U.S.Department of Health and HumanServices(“HHS”),the DEA for controlled substances,the Consumer Produc
216、t Safety Commission,the Federal Trade Commission,the Occupational Safety&Health Administration,the Environmental Protection Agency,and state and local governments.In the U.S.,sales,marketing,and scientific/educationalprograms must also comply with state and federal fraud and abuse laws.Pricing and r
217、ebate programs must comply with the Medicaid rebate requirementsof the U.S.Omnibus Budget Reconciliation Act of 1990 and more recent requirements in the Patient Protection and Affordable Care Act as amended by theHealth Care and Education Reconciliation Act of 2010(or collectively,the“ACA”).If drugs
218、 are made available to authorized users of the Federal SupplySchedule of the General Services Administration,additional laws and requirements apply.The handling of any controlled substances must comply with theU.S.Controlled Substances Act and Controlled Substances Import and Export Act.Drugs must m
219、eet applicable child-resistant packaging requirementsunder the U.S.Poison Prevention Packaging Act.Manufacturing,sales,promotion,and other activities are also potentially subject to federal and stateconsumer protection and unfair competition laws.We are subject to numerous foreign,federal,state,and
220、local environmental,health,and safety laws and regulations,including those governing laboratoryprocedures and the handling,use,storage,treatment,and disposal of hazardous materials and wastes.In addition,our leasing and operation of real propertymay subject us to liability pursuant to certain U.S.en
221、vironmental laws and regulations,under which current or previous owners or operators of realproperty and entities that disposed or arranged for the disposal of hazardous substances may be held strictly,jointly,and severally liable for the cost ofinvestigating or remediating contamination caused by h
222、azardous substance releases,even if they did not know of and were not responsible for the releases.The distribution of pharmaceutical drugs is subject to additional requirements and regulations,including extensive record-keeping,licensing,storage,andsecurity requirements intended to prevent the unau
223、thorized sale of pharmaceutical drugs.The failure to comply with regulatory requirements subjects firms to possible legal or regulatory action.Depending on the circumstances,failure to meetapplicable regulatory requirements can result in criminal prosecution,fines,or other penalties,injunctions,volu
224、ntary recall or seizure of drugs,total orpartial suspension of production,denial or withdrawal of product approvals,or refusal to allow a firm to enter into supply contracts,including governmentcontracts.In addition,even if a firm complies with the FDA and other requirements,new information regardin
225、g the safety or efficacy of a product couldlead the FDA to modify or withdraw product approval.Prohibitions or restrictions on sales or withdrawal of our approved drug or any future productsmarketed by us could materially affect our business in an adverse way.Changes in regulations,statutes,or the i
226、nterpretation of existing regulations could impact our business in the future by requiring,for example:(i)changesto our manufacturing arrangements;(ii)additions or modifications to product labeling;(iii)the recall or discontinuation of our product;or(iv)additionalrecord-keeping requirements.If any s
227、uch changes were to be imposed,they could adversely affect the operation of our business.Healthcare LawsHealthcare providers and third-party payors in the U.S.and elsewhere play a primary role in the recommendation and prescription of pharmaceuticalproducts.Arrangements with third-party payors and c
228、ustomers can expose pharmaceutical manufactures to broadly applicable fraud and abuse and otherhealthcare laws and regulations,including,without limitation,the federal Anti-Kickback Statute and the federal False Claims Act(“FCA”),which mayconstrain the business or financial arrangements and relation
229、ships through which companies research,sell,market and distribute pharmaceutical products.In addition,transparency laws and patient privacy laws can apply to the activities of pharmaceutical manufactures.The applicable federal,state and foreignhealthcare laws and regulations that can affect a pharma
230、ceutical companys operations include without limitation:The federal Anti-Kickback Statute,which prohibits,among other things,knowingly and willfully soliciting,receiving,offering or paying anyremuneration(including any kickback,bribe,or rebate),directly or indirectly,overtly or covertly,in cash or i
231、n kind,to induce,or in return for,either the referral of an individual,or the purchase,lease,order or recommendation of any good,facility,item or service for which payment maybe made,in whole or in part,under the Medicare and Medicaid programs,or other federal healthcare programs.A person or entity
232、can be foundguilty of violating the statute without actual knowledge of the statute or specific intent to violate it.In addition,the government may assert that aclaim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim f
233、orpurposes of the FCA.Violations are subject to civil and criminal fines and-15-penalties for each violation,plus up to three times the remuneration involved,imprisonment,and exclusion from government healthcare programs.In addition,the government may assert that a claim including items or services
234、resulting from a violation of the federal Anti-Kickback Statuteconstitutes a false or fraudulent claim for purposes of the federal False Claims Act or federal civil monetary penalties.The Anti-Kickback Statutehas been interpreted to apply to arrangements between pharmaceutical manufacturers on the o
235、ne hand and prescribers,purchasers,and formularymanagers on the other.There are a number of statutory exceptions and regulatory safe harbors protecting some common activities fromprosecution,but such exceptions and safe harbors are drawn narrowly and require strict compliance in order to offer prote
236、ction;The federal civil and criminal false claims laws,including the FCA,and civil monetary penalty laws,which prohibit any person or entity from,among other things,knowingly presenting,or causing to be presented,a false,fictitious or fraudulent claim for payment to,or approval by,thefederal governm
237、ent or knowingly making,using or causing to be made or used a false record or statement,including providing inaccurate billingor coding information to customers or promoting a product off-label,material to a false or fraudulent claim to the federal government.As a resultof a modification made by the
238、 Fraud Enforcement and Recovery Act of 2009,a claim includes“any request or demand”for money or propertypresented to the federal government.In addition,manufacturers can be held liable under the FCA even when they do not submit claims directly togovernment payors if they are deemed to“cause”the subm
239、ission of false or fraudulent claims.The FCA also permits a private individual acting asa“whistleblower”to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery;The federal Health Insurance Portability and Accountability Act of 1996(“H
240、IPAA”),which created federal criminal statutes that prohibit,amongother things,knowingly and willfully executing,or attempting to execute,a scheme to defraud any healthcare benefit program or obtain,by meansof false or fraudulent pretenses,representations,or promises,any of the money or property own
241、ed by,or under the custody or control of,anyhealthcare benefit program,regardless of the payor(e.g.,public or private)and knowingly and willfully falsifying,concealing or covering up byany trick or device a material fact or making any materially false statements in connection with the delivery of,or
242、 payment for,healthcarebenefits,items or services relating to healthcare matters.Similar to the federal Anti-Kickback Statute,a person or entity can be found guilty ofviolating HIPAA without actual knowledge of the statute or specific intent to violate it;HIPAA,as amended by the Health Information T
243、echnology for Economic and Clinical Health Act of 2009(“HITECH”),and their respectiveimplementing regulations,which impose,among other things,specified requirements relating to the privacy,security and transmission ofindividually identifiable health information held by covered entities and their bus
244、iness associates as well as their covered subcontractors.HITECHalso created new tiers of civil monetary penalties,amended HIPAA to make civil and criminal penalties directly applicable to business associates,and gave state attorneys general new authority to file civil actions for damages or injuncti
245、ons in U.S.federal courts to enforce the federal HIPAAlaws and seek attorneys fees and costs associated with pursuing federal civil actions;The federal legislation commonly referred to as the Physician Payments Sunshine Act,created under the ACA,and its implementing regulations,which requires certai
246、n manufacturers of drugs,devices,biologics and medical supplies for which payment is available under Medicare,Medicaidor the Childrens Health Insurance Program(with certain exceptions)to report annually to CMS,information related to payments or other transfersof value made to physicians(defined to i
247、nclude doctors,dentists,optometrists,podiatrists and chiropractors),certain other licensed health carepractitioners and teaching hospitals,as well as ownership and investment interests held by physicians and their immediate family members;Federal government price reporting laws,which require us to c
248、alculate and report complex pricing metrics in an accurate and timely manner togovernment programs;Federal consumer protection and unfair competition laws,which broadly regulate marketplace activities and activities that potentially harmconsumers;andAnalogous state laws and regulations,including:sta
249、te anti-kickback and false claims laws,which may apply to our business practices,including,but not limited to,research,distribution,sales and marketing arrangements and claims involving healthcare items or services reimbursed by anythird-party payor,including private insurers;state laws that require
250、 pharmaceutical companies to comply with the pharmaceutical industrysvoluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S.federal government,or otherwise restrictpayments that may be made to healthcare providers and other potential referral sources;state and lo
251、cal laws that require drug-16-manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketingexpenditures;state laws that require the reporting of information related to drug pricing;state and local laws requiring the reg
252、istration ofpharmaceutical sales representatives;and state laws governing the privacy and security of health information in some circumstances,many ofwhich differ from each other in significant ways and often are not preempted by HIPAA,thus complicating compliance efforts.For example,Washington stat
253、es My Health My Data Act,which took effect in March 2024,affords consumers with privacy rights with respect to certainconsumer heath information and creates a private right of action which could increase the risk of litigation.The distribution of pharmaceutical products is subject to additional requ
254、irements and regulations,including extensive record-keeping,licensing,storageand security requirements intended to prevent the unauthorized sale of pharmaceutical products.In the U.S.,to help patients afford our approved product,we may utilize programs to assist them,including patient financial assi
255、stance programs and co-pay coupon programs for eligible patients.Government enforcement agencies have shown increased interest in pharmaceutical companies product andpatient financial assistance programs,including reimbursement support services,and a number of investigations into these programs have
256、 resulted insignificant civil and criminal settlements.In addition,at least one insurer has directed its network pharmacies to no longer accept co-pay coupons forcertain specialty drugs the insurer identified.Our co-pay coupon programs could become the target of similar insurer actions.In addition,i
257、n November2013,the CMS issued guidance to the issuers of qualified health plans sold through the ACAs marketplaces encouraging such plans to reject patient cost-sharing support from third parties and indicating that the CMS intends to monitor the provision of such support and may take regulatory act
258、ion to limit it inthe future.The CMS subsequently issued a rule requiring individual market qualified health plans to accept third-party premium and cost-sharing paymentsfrom certain government-related entities.In September 2014,the Office of Inspector General(“OIG”)of the HHS issued a Special Advis
259、ory Bulletinwarning manufacturers that they may be subject to sanctions under the federal anti-kickback statute and/or civil monetary penalty laws if they do not takeappropriate steps to exclude Part D beneficiaries from using co-pay coupons.Accordingly,companies exclude these Part D beneficiaries f
260、rom using co-paycoupons.It is possible that changes in insurer policies regarding co-pay coupons and/or the introduction and enactment of new legislation or regulatoryaction could restrict or otherwise negatively affect these patient support programs,which could result in fewer patients using affect
261、ed products,andtherefore could have a material adverse effect on our sales,business,and financial condition.Third party patient financial assistance programs that receive financial support from companies have become the subject of enhanced government andregulatory scrutiny.The OIG has established gu
262、idelines that suggest that it is lawful for pharmaceutical manufacturers to make donations to charitableorganizations who provide co-pay assistance to Medicare patients,provided that such organizations,among other things,are bona fide charities,are entirelyindependent of and not controlled by the ma
263、nufacturer,provide aid to applicants on a first-come basis according to consistent financial criteria and do notlink aid to use of a donors product.However,donations to patient financial assistance programs have received some negative publicity and have been thesubject of multiple government enforce
264、ment actions,related to allegations regarding their use to promote branded pharmaceutical products over other lesscostly alternatives.Specifically,in recent years,there have been multiple settlements resulting out of government claims challenging the legality of theirpatient financial assistance pro
265、grams under a variety of federal and state laws.It is possible that we may make grants to independent charitable foundationsthat help financially needy patients with their premium,co-pay,and co-insurance obligations.If we choose to do so,and if we or our vendors or donationrecipients are deemed to f
266、ail to comply with relevant laws,regulations or evolving government guidance in the operation of these programs,we could besubject to damages,fines,penalties,or other criminal,civil,or administrative sanctions or enforcement actions.We cannot ensure that our compliancecontrols,policies,and procedure
267、s will be sufficient to protect against acts of our employees,business partners,or vendors that may violate the laws orregulations of the jurisdictions in which we operate.Regardless of whether we have complied with the law,a government investigation could impact ourbusiness practices,harm our reput
268、ation,divert the attention of management,increase our expenses,and reduce the availability of foundation support for ourpatients who need assistance.Coverage and ReimbursementSales of any product depend,in part,on the extent to which such product will be covered by third-party payors,such as federal
269、,state,and foreigngovernment healthcare programs,commercial insurance and managed healthcare organizations,and the level of reimbursement for such product by third-party payors.Decisions regarding the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis.Thes
270、e third-partypayors are increasingly reducing coverage and reimbursement for medical products,drugs and services.For products administered under the supervision ofa physician,obtaining coverage and adequate reimbursement may be particularly difficult because of the higher prices often associated wit
271、h such drugs.Additionally,separate reimbursement for the product itself or the treatment or procedure in which the product is used may not be available,which mayimpact physician utilization.-17-In order to secure coverage and reimbursement for any product that might be approved for sale,a company ma
272、y need to conduct expensivepharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product,in addition to the costs required to obtainFDA or other comparable regulatory approvals.Additionally,companies may also need to provide discounts to purchasers,priv
273、ate health plans orgovernment healthcare programs.Nonetheless,product candidates may not be considered medically necessary or cost effective.A decision by a third-partypayor not to cover a product could reduce physician utilization once the product is approved and have a material adverse effect on s
274、ales,operations andfinancial condition.Factors that payors consider in determining reimbursement are based on whether the product is(i)a covered benefit under its healthplan;(ii)safe,effective,and medically necessary;(iii)appropriate for the specific patient;(iv)cost-effective;and(v)neither experime
275、ntal norinvestigational.Additionally,a third-party payors decision to provide coverage for a product does not imply that an adequate reimbursement rate will beapproved.Further,one payors determination to provide coverage for a product does not assure that other payors will also provide coverage andr
276、eimbursement for the product and the level of coverage and reimbursement can differ significantly from payor to payor.The containment of healthcare costs has become a priority of federal,state and foreign governments and the prices of products have been a focus in thiseffort.Governments have shown s
277、ignificant interest in implementing cost-containment programs,including price controls,restrictions on reimbursementand requirements for substitution of generic products.Adoption of price controls and cost-containment measures and adoption of more restrictive policiesin jurisdictions with existing c
278、ontrols and measures,could further limit a companys revenue generated from the sale of any approved products.Coveragepolicies and third-party payor reimbursement rates may change at any time.Even if favorable coverage and reimbursement status is attained for one ormore products for which a company o
279、r its collaborators receive regulatory approval,less favorable coverage policies and reimbursement rates may beimplemented in the future.Decreases in third-party reimbursement for any product or a decision by a third-party payor not to cover a product could reducephysician usage and patient demand f
280、or the product and also have a material adverse effect on sales.Healthcare ReformIn both the U.S.and certain foreign jurisdictions,there have been,and continue to be,a number of legislative and regulatory changes to the health caresystem.Among policy makers and payors in the U.S.and elsewhere,there
281、is significant interest in promoting changes in healthcare systems with the statedgoals of containing healthcare costs,improving quality and/or expanding access.In the U.S.,the pharmaceutical industry has been a particular focus ofthese efforts and has been significantly affected by major legislativ
282、e initiatives.In particular,in 2010,the ACA was enacted,which,among other things,increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program,extended the Medicaid Drug RebateProgram to utilization of prescriptions of individuals enrolled in Medicaid manag
283、ed care organizations,subjected manufacturers to new annual fees andtaxes for certain branded prescription drugs,and provided incentives to programs that increase the federal governments comparative effectivenessresearch.In addition,other legislative and regulatory changes have been proposed and ado
284、pted in the U.S.since the ACA was enacted:The U.S.Budget Control Act of 2011,among other things,included aggregate reductions of Medicare payments to providers of 2%per fiscal year.These reductions went into effect on April 1,2013 and,due to subsequent legislative amendments to the statute,will rema
285、in in effect through2031.On January 2,2013,the U.S.American Taxpayer Relief Act of 2012 was signed into law,which,among other things,further reduced Medicarepayments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providersf
286、rom three to five years.On April 13,2017,CMS published a final rule that gives states greater flexibility in setting benchmarks for insurers in the individual and smallgroup marketplaces,which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through
287、 suchmarketplaces.On May 30,2018,the Right to Try Act,was signed into law.The law,among other things,provides a federal framework for certain patients toaccess certain investigational new drug products that have completed a Phase 1 clinical trial and that are undergoing investigation for FDAapproval
288、.Under certain circumstances,eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDApermission under the FDA expanded access program.There is no obligation for a pharmaceutical manufacturer to make its drug products availableto eligible patients as a resul
289、t of the Right to Try Act.On May 23,2019,CMS published a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginningJanuary 1,2020.-18-On March 11,2021,President Biden signed the American Rescue Plan Act of 2021 into law,which eliminated the statutory dru
290、g rebate cap,set at100%of a drugs average manufacturer price,for single source and innovator multiple source drugs,beginning January 1,2024.These laws and regulations may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain forour pro
291、duct and any of our product candidates for which we may obtain regulatory approval or the frequency with which any such product or productcandidate is prescribed or used.There has been heightened governmental scrutiny in the U.S.of pharmaceutical pricing practices in light of the rising cost of pres
292、cription drugs andbiologics.In August 2022,the Inflation Reduction Act of 2022,or the IRA,was signed into law.The IRA includes several provisions that may impact ourbusiness,depending on how various aspects of the IRA are implemented.Provisions that may impact our business include a$2,000 out-of-poc
293、ket cap forMedicare Part D beneficiaries,the imposition of new manufacturer financial liability on most drugs in Medicare Part D,permitting the U.S.government tonegotiate Medicare Part B and Part D pricing for certain high-cost drugs and biologics without generic or biosimilar competition,requiring
294、companies topay rebates to Medicare for drug prices that increase faster than inflation,and delay until January 1,2032 the implementation of the HHS rebate rule thatwould have limited the fees that pharmacy benefit managers can charge.Further,under the IRA,orphan drugs are exempted from the Medicare
295、 drug pricenegotiation program,but only if they have one orphan designation and for which the only approved indication is for that disease or condition.If a productreceives multiple orphan designations or has multiple approved indications,it may not qualify for the orphan drug exemption.The implemen
296、tation of theIRA is currently subject to ongoing litigation challenging the constitutionality of the IRAs Medicare drug price negotiation program.The effects of theIRA on our business and the healthcare industry in general is not yet known.In addition,President Trump reversed some of President Biden
297、s executive orders including rescinding Executive Order 14087 entitled“LoweringPrescription Drug Costs for Americans”.President Trump may issue new executive orders designed to impact drug pricing.A number of these and otherproposed measures may require authorization through additional legislation t
298、o become effective.Congress and the Trump administration have indicatedthat they will continue to seek new legislative measures to control drug costs.Individual states in the U.S.have also increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing,
299、including price or patient reimbursement constraints,discounts,restrictions on certain product access and marketing cost disclosure and transparencymeasures,and,in some cases,designed to encourage importation from other countries and bulk purchasing.Human Capital ResourcesAt Avadel,the way we work i
300、s as important as the results we achieve.Our global organization fosters an entrepreneurial environment,where purpose,innovation,integrity,and collaboration come together to transform medicines to transform lives.Our organization fosters our culture based on beingrelentless for patients,having confi
301、dence with humility,being courageous,taking insight to impact and togetherness(the“Avadel Values”).In everythingwe do,we live the Avadel Values so we can be the best for our patients,our community,and each other.Success for us is defined through how we improvethe lives of patients and how we achieve
302、 our objectives as one team.We are committed to offering employees a rewarding and entrepreneurial work experience where patients are at the center of everything we do.Our peopleare our greatest competitive advantage,and our values serve as the foundation of our culture.We consider our relations wit
303、h our employees to be good andare focused on maintaining a highly engaged and motivated workforce.Employee DemographicsAs of December 31,2024,we had 188 full-time employees.None of our employees are subject to a union or other collective bargaining agreement.Inaddition to our employees,we contract w
304、ith third parties in certain areas of the business such as clinical,regulatory,and manufacturing.We expect tocontinue to build and grow our organizational capabilities with a focus on talent attraction,development,engagement,and retention.InclusionAvadel is committed to fostering a culture of inclus
305、ion.Avadel pursues fair employment practices in every aspect of its business and is committed to aproductive work environment for its employees.We strive to create a level of connectivity that-19-goes beyond working together.Rooted in the trust we earn every day,our team is inclusive and works every
306、 day to lift each other up in pursuit ofimproving the lives of the patients we serve.Avadel is committed to facilitating an open,honest,inclusive,transparent,and productive work environment where we work together as ONE team andONE culture to be our best for patients,customers,and each other.We beli
307、eve that all employees and applicants should be treated with courtesy,dignity,and respect.It is our intent to comply with federal,state,and local laws,regulations,and guidelines in our employment practices and in our service to ourclients.This policy applies to all terms and conditions of employment
308、 including,but not limited to,hiring,placement,promotion,termination,layoff,recall,transfer,leaves of absence,compensation,and training.Compensation and BenefitsAt Avadel,we prioritize the well-being of our employees by offering a comprehensive benefits package.We know that benefits play an importan
309、t role inhelping to ensure the health and financial security of our employees.Our commitment to our employees includes benefit and compensation programs that value the contributions our employees make.We strive to provide pay,benefits,and services that are competitive and create incentives to attrac
310、t and retain employees.In addition to competitive pay,we offer bonus and share-based compensation packages for all levels of employees within the organization as well as a company match for employee retirement programs.Health and WellnessOur healthcare plans allow employees to choose what works best
311、 for them and their families.We offer competitive health,dental,vision and life insurancefor all employees as well as competitive vacation packages along with time off for holidays and other forms of leave for all employees.Further,we offer avariety of tools allowing employees to prioritize wellness
312、,including retirement planning,employee stock purchase program,legal services,employeeassistance programs,and more.Career Growth and DevelopmentWe are invested in the development of each of our employees.We provide opportunities to lead and participate in cross-functional teams,coaching,leadership d
313、evelopment,and more.We provide reimbursement to our employees for professional seminars,conferences and training.In alignment with ourbusiness strategy,it is our goal to empower all employees to take full advantage of their professional growth opportunities,to lead them to long-term jobsatisfaction
314、and organizational success.Through professional development,our employees can broaden their skills for their current and future roles.-20-Item 1A.Risk Factors.An investment in Avadel involves a high degree of risk.You should carefully consider the risks described below,as well as the other informati
315、on included orincorporated by reference in this Annual Report on Form 10-K,before making an investment decision.Avadels business,financial condition,results ofoperations and cash flows could be materially adversely affected by any of these risks.The market or trading price of Avadels securities coul
316、d decline dueto any of these risks.In addition,please read“Cautionary Disclosure Regarding Forward-Looking Statements”in this Annual Report on Form 10-K,where we describe additional uncertainties associated with Avadels business and with the forward-looking statements included or incorporated byrefe
317、rence in this Annual Report on Form 10-K.Please note that additional risks not presently known to us or that we currently deem immaterial may alsoimpair Avadels business and operations.Risks Related to the Commercialization of Our Lead ProductOur business depends heavily on our ability to successful
318、ly commercialize LUMRYZ in the U.S.and in other jurisdictions where we may obtainmarketing approval.There is no assurance that our commercialization efforts with respect to LUMRYZ will be successful or that we will be able togenerate revenues at the levels or on the timing we expect,or at levels or
319、on the timing necessary to support our goals.In May 2023,LUMRYZ was approved by the FDA,and in June 2023,we announced the U.S.commercial launch of LUMRYZ for treatment of cataplexyor EDS in adults with narcolepsy.LUMRYZ was also approved by the FDA for use in the treatment of cataplexy or EDS in the
320、 pediatric narcolepsypopulation seven years of age and older in October 2024.Our business currently depends heavily on our ability to successfully commercialize LUMRYZ inthe U.S.We may never be able to meet our expectations with respect to our ongoing LUMRYZ commercialization activities or revenues.
321、There is noguarantee that the infrastructure,systems,processes,policies,relationships,and materials we have built for the commercialization of LUMRYZ in the U.S.,or that we may build for other jurisdictions where we may obtain marketing approval,will be sufficient for us to achieve success at the le
322、vels we expect.Ifwe are unable to establish adequate sales,marketing and distribution capabilities,whether independently or with third parties,or if we are unable to do soon commercially reasonable terms,our business,results of operations,financial condition and prospects will be materially adversel
323、y affected.We may encounter issues and challenges in generating sufficient revenues to result in a profit.We may also encounter challenges related to reimbursementof LUMRYZ,including potential limitations in the scope,breadth,availability,or amount of reimbursement covering LUMRYZ.Similarly,healthca
324、resettings or patients may determine that the financial burdens of treatment are not acceptable.We may face other limitations or issues related to the price ofLUMRYZ.Our results may also be negatively impacted if we have not adequately sized our field teams or our physician segmentation and targetin
325、gstrategy is inadequate or if we encounter deficiencies or inefficiencies in our infrastructure or processes.Other factors that may hinder our ability tosuccessfully commercialize LUMRYZ and generate sufficient revenues to result in a profit,include:the acceptance of LUMRYZ by patients and the medic
326、al community;the differentiation of LUMRYZ from other available approved or investigational drugs and treatments for cataplexy or EDS in patients seven yearsof age and older with narcolepsy;the availability of coverage and adequate reimbursement from managed care plans,private insurers,government pa
327、yors(such as Medicare andMedicaid and similar foreign authorities)and other third-party payors for LUMRYZ;patients ability and willingness to pay out-of-pocket for LUMRYZ in the absence of coverage and/or adequate reimbursement from third-partypayors;the ability of our third-party manufacturer(s)to
328、manufacture commercial supplies of LUMRYZ in sufficient quantities at acceptable costs,toremain in good standing with regulatory agencies,to maintain applicable registrations and licenses,and to maintain commercially viablemanufacturing processes that are,to the extent required,compliant with cGMP r
329、egulations;our ability to remain compliant with laws and regulations that apply to us and our commercial activities;FDA-or other foreign regulatory agency-mandated package insert requirements and successful completion of any related FDA or other foreignregulatory agency post-marketing requirements,i
330、ncluding a REMS;the prevalence,duration and severity of potential side effects or other safety or tolerability issues that patients may experience with LUMRYZ;the actual market size for LUMRYZ,which may be different than expected;the length of time that patients who are prescribed our drug remain on
331、 treatment;the sufficiency of our drug supply to meet commercial demand which could be negatively impacted if our projections regarding the potentialnumber of patients are inaccurate,we are subject to unanticipated regulatory requirements,or our current drug supply is damaged,destroyed,orotherwise n
332、egatively impacted at our manufacturing sites,storage sites,or in transit;and-21-our ability to maintain,enforce,and defend third party challenges to our intellectual property rights in and to LUMRYZ.Any of these issues could impair our ability to generate sufficient revenues to result in a profit o
333、r to meet our expectations with respect to the amount ortiming of revenues or profits.Any issues or hurdles related to our commercialization efforts may materially adversely affect our business,results ofoperations,financial condition,and prospects.There is no guarantee that we will be successful in our ongoing commercialization efforts with respect toLUMRYZ.We may also experience significant fluc
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