Regardless of the outcome, we don't expect the pending jury decision in the patent trial to impact our ongoing commercial launch or our belief in the potential of LUMRYZ. Given this is an active litigation, we will not provide any further commentary or answer any questions on the trial, the underlying dispute, or the pending decision at this time. However, as we have with all key matters, we will provide an update when the trial concludes, and we appreciate your understanding on this point. 2023 was truly a monumental year for Avadel. With final FDA approval, we were able to bring LUMRYZ through the narcolepsy community and execute our initial launch plan, both of which have been transformational for the company and that we have worked towards for many years.

In addition to the unmatched achievement of launching LUMRYZ within approximately one month of final FDA approval, since launch last June LUMRYZ has seen strong uptake among patients and prescribers, which has been supported by the positive feedback we've received from the broader narcolepsy community. Our early launch momentum throughout 2023 has continued into this year, as demonstrated by progress being made across physicians, patients and payers, all of which Richard will provide further details on shortly. Our team's nearly decade long dedication to advancing LUMRYZ and to the sleep medicine space overall has allowed us to build a foundation for continued growth and the potential expansion of LUMRYZ. And, as such, our priorities as a company remain very crystal clear.

First and foremost continues to be our focus on executing our launch strategy and delivering on the promise and the potential of LUMRYZ across the multibillion dollar oxybate market opportunity. We are proud of the momentum we are building and all we have accomplished thus far, and this is evidenced by the $19.5 million in LUMRYZ net revenue in the fourth quarter and the $28 million for the seven months ended December 31, 2023. Our second and near term opportunity is our potential expansion into the pediatric narcolepsy population. The FDA accepted our supplemental New Drug Application for LUMRYZ for the treatment of cataplexy, or excessive daytime sleepiness, in patients between the ages of 7 to 17 with narcolepsy, and provided us an action date of September 7, 2024.

We believe approval in the pediatric population will allow LUMRYZ to provide further positive impact to the narcolepsy community and caregivers at large. We have heard directly from parents about the challenges associated with the middle of the night dosing and the burden a twice nightly dosing regimen may create for the entire family. We believe LUMRYZ, if approved for the pediatric population, can offer the potential of reducing that treatment burden, while also providing an effective treatment for children living with narcolepsy. We look forward to the potential approval and launch later this year. The next growth opportunity we're pursuing is LUMRYZ for the treatment of idiopathic hypersomnia, or IH. When speaking with key opinion leaders in the field, there is a significant need for the use of once at bedtime LUMRYZ for many suffering from the deep sleep inertia associated with IH.

With a current estimated uniquely diagnosed IH patient population of greater than 30,000, we believe LUMRYZ, if approved for the IH indication, will be an important addition to the treatment options for those suffering from this rare sleep disorder, while also providing potentially meaningful upside to the future value of LUMRYZ. We are currently well advanced in the planning stages to initiate a multicenter randomized controlled trial for IH in the second half of this calendar year, and we intend to provide updates as we reach various important milestones, including when our first patient is enrolled. And, lastly, we're continuing the preclinical development work of a potential no or low sodium once at bedtime oxybate formulation with a target product profile that is bioequivalent to LUMRYZ, and we intend to provide those updates as appropriate as well.

In closing, we ended this year in a strong position with a healthy balance sheet to support our operations and our continued growth. Coupled with the progress already made this year, we believe we're well positioned to expand our reach and impact within the sleep medicine space and, most importantly, continue executing the launch of LUMRYZ. I am proud of the significant accomplishments and progress our team has delivered over the past year and remain highly confident that we will continue that during the year ahead. We believe we are well positioned to advance LUMRYZ to command a meaningful share of the multibillion dollar oxybate market and maintain our view that LUMRYZ offers a greater than $1 billion potential market opportunity. With that, I'll turn the call over to Richard for details on our commercial progress.

Richard?

Richard Kim: Hi, thanks, Greg; and good morning, everyone. I'm excited to share our launch progress and provide some insight into the trends we saw develop as we ended 2023 and early into this year. Now taking a step back and looking at what we achieved this past year, we are so proud to be part of a team that has been able to bring a life changing treatment to the narcolepsy community. The positive feedback we hear from both people with narcolepsy and healthcare providers every day continues to be an inspiration for us. Greg touched on this earlier, but our LUMRYZ commercial results continue to be strong since we launched last June, and we remain laser focused on keeping the momentum growing in 2024. Starting with patients, RYZUP enrollments are an important indicator of early launch demand, as it is really the first step in the process for patients to receive their LUMRYZ prescription.

We previously stated that as of December 31, there were over 1,900 patients enrollment to RYZUP. Since that time, we've continued to see strong demand with now greater than 2,200 patient enrollments through the end of January. Turning to patients who have initiated therapy, as of December 31st, there were 1,000 patients who had initiated the LUMRYZ treatment and that number grew to greater than 1,200 by the end of January. Typically, the start of the year can be more complicated to initiate new therapies, so we were pleased to see that we did not lose any momentum in getting new LUMRYZ patients started. Importantly, the majority of these patients are commercially reimbursed. When we look at our available RYZUP data, we continue to see all three patient segments switch patients from first generation oxybates, patients who previously tried and discontinued a first generation oxybate, and oxybate naive patients being well represented.

We are seeing the majority of initiations come from patients switching from a first generation oxybate with more patients coming from the twice nightly mixed salts product compared to the twice nightly sodium oxybate products. For new to oxybate patients, we saw an increase in their overall representation of all RYZUP patients in Q4 compared to Q3. We're also excited that in the next few weeks we will be rolling out our LUMRYZ brand ambassador program, where people with narcolepsy will begin to tell their stories of how LUMRYZ has transformed their lives. These stories and messages will come out through various forms of media to get these personal messages about LUMRYZ out to the narcolepsy community. Turning to healthcare providers, as of January 31st, there were approximately 1,900 HCPs who are REM certified.

As previously stated, although we covered the 4,500 plus HCPs who make up the entire oxybate prescribing universe, we have been spending more time with the 1,600 high volume prescribers who make up 80% of the total oxybate market. Of these prescribers, we have focused more of our early efforts on the almost 500 most experienced prescribers who account for 50% of the overall oxybate market and greater than 70% of these top tier HCPs have now written a prescription for LUMRYZ. Every week, we have been consistently adding more new and repeat writers. Additionally, in the fourth quarter, we began our KOL led speaker programs as they are a key tactic to drive HCP peer-to-peer LUMRYZ education. For product fulfillment, we continue to make strong progress demonstrated by the greater than 1,200 patients who have initiated therapy as of January 31st.

As our overall reimbursement has grown significantly, we are focused on continuing to have more HCPs leverage RYZUP and our field reimbursement team to get more patients initiated onto LUMRYZ and support them longer term on their LUMRYZ journey. In February, we saw continued improvement in progress with our trends. That's a nice segue for me to provide an update on our payer progress. We announced that with the signing of the MSR contract, we secured all three GPO contracts last year within the first seven months of launch. Now, to start 2024, LUMRYZ is now also covered by Anthem and the United Healthcare national formulary. LUMRYZ now has coverage policies with greater than 80% of commercially covered lives or over 140 million lives. With the recent payer wins in hand, positive feedback from sleep specialists and people with narcolepsy, growing momentum and product fulfillment, and strong execution from our team, we believe we are well positioned for long term LUMRYZ growth and ultimately for LUMRYZ to become the preferred oxybate for people with narcolepsy and HCPs. With that, I look forward to providing more updates on future calls.

And, now, I will turn the call over to Tom to discuss our financials. Tom?

Thomas McHugh: Thank you, Richard. Before we begin, I'll note that full financial results are available in the press release issued this morning and the 10-K that was filed last week. We are pleased to report that we generated $19.5 million in net revenue for the quarter ended December 31, 2023, and $28 million of revenue for the seven months ended December 31, 2023. And as of December 31st, we estimate that there was approximately one month of demand in the channel. Turning to operating expenses, we reported $43.7 million of total GAAP operating expenses for the fourth quarter of 2023 compared to $28.3 million in the fourth quarter of 2022. Total operating expenses in the fourth quarter of 2023 includes $4.6 million of non-cash charges comprised of stock based compensation of $3.5 million and depreciation and amortization of $1.1 million.

After adjusting for these items, cash operating expenses were approximately $39 million for the quarter. For the full year of 2023, GAAP operating expenses were $165 million compared to $98.6 million in 2022. Excluding stock based compensation of $15.8 million and depreciation and amortization of $4.3 million, cash operating expenses for the full year of 2023 were approximately $145 million. The increase in year-over-year operating expenses for both the fourth quarter and full year is primarily attributable to launch related costs, higher compensation costs related to increased headcount and legal costs. These were offset by lower R&D costs. Prior to FDA approval on May 1, 2023, inventory expenses -- inventory purchases were expensed as R&D.

With respect to the balance sheet. As of December 31st, we had $105 million of cash, cash equivalents and marketable securities compared to $153 million at September 30, 2023. The $48 million decrease in cash during the fourth quarter is primarily due to net cash used in operations of $26 million, which is net of cash received from sales of LUMRYZ and $22 million to pay off the remainder of the convertible notes. As a result of paying off the notes, we are now effectively debt free. During 2024, we currently expect that cash operating expenses before consideration of cash receipts from sales of LUMRYZ will be in the range of $40 million to $45 million per quarter. We believe that net cash used for operations will be materially lower after taking into account expected cash receipts from continuing sales of LUMRYZ.

As we look ahead based on current trends, plans and assumptions, we believe we can achieve operating breakeven when there are approximately 1,300 to 1,500 commercially reimbursed patients on therapy and that we can achieve this during 2024. In addition to the number of reimbursed patients on therapy, our expectations regarding breakeven take into account a number of other assumptions, including how quickly patient demand grows, net pricing of LUMRYZ, and operating expenses to support the launch of LUMRYZ. Now, I'll wrap up with some commentary regarding 2024 revenue. While we are not providing formal guidance at this point, we pay close attention to the sell-side estimates and at this time we are comfortable with the current consensus of approximately $155 million for the full year, including the possibility the 2024 revenue could be higher if actual results for LUMRYZ, such as the rate of increase in commercially reimbursed patients, the total number of reimbursed patients who are treated with LUMRYZ, and net pricing outperform the assumptions currently used by the sell-side.

And, with that, I will turn the call back to Greg for closing remarks.

Gregory Divis: Thank you, Tom. With the strong foundation our team has built and the tenacity in bringing LUMRYZ to the narcolepsy community, we are pleased to see the momentum we created last year has continued as we've entered 2024. Our 2024 priorities are clear and we remain intently focused on our launch execution, while bridging to cash flow breakeven and the near term expansion opportunities for Avadel with our lifecycle management strategy. We thank you for your support. We look forward to providing future updates on our progress. And, with that, we will open the call for questions. Operator?

See also 20 Best River Towns for Retirement in the US and 13 Best Pharma Dividend Stocks To Buy in 2024.

To continue reading the Q&A session, please click here.