Avadel Pharmaceuticals Faces Shareholder Demands for Board Overhaul Amid Lumryz Disappointment

A shareholder group is calling for a complete overhaul of Avadel Pharmaceuticals' board, citing strategic failures and hundreds of millions in lost revenue tied to the company's narcolepsy treatment, Lumryz. The group accuses the board of failing to capitalize on Lumryz's market potential and urges shareholders to vote out the current board. Avadel defended its strategy, highlighting a recent legal win and ongoing litigation with Jazz Pharmaceuticals.

Avadel Pharmaceuticals (AVDL) is facing a significant challenge from its shareholder, ASL Strategic Value Fund, which is pushing for a complete overhaul of the company's board. The fund, which holds approximately $15 million in Avadel stock, has cited strategic failures related to the company's narcolepsy treatment, Lumryz, and the potential loss of hundreds of millions in revenue.

In a letter to shareholders, ASL accused Avadel of failing to convert a meaningful share of sodium oxybate users to Lumryz, a once-nightly treatment deemed "best-in-class" by the FDA. The fund estimates that Avadel missed out on $600 million to $800 million in potential revenue due to this delay [1]. ASL has urged shareholders to vote out the current board at the upcoming annual meeting scheduled for July 29, 2025.

Avadel responded to the allegations, stating that it has actively engaged with major shareholders and is focused on maximizing the value of Lumryz. The company also highlighted a recent legal win, where a U.S. court affirmed the FDA's position that Lumryz's once-nightly dosing is clinically superior to rivals [2]. However, ASL pointed to ongoing litigation with Jazz Pharmaceuticals, including six lawsuits, as another area where the board has underdelivered.

ASL has also cited governance issues, including uncounted shareholder votes and a lack of transparency around executive pay. Despite Avadel's falling market capitalization, from $2.5 billion to $900 million over two years, the company's CEO received $7.4 million in compensation in 2024, raising further concerns over accountability [3].

ASL Strategic Value Fund has called on Avadel to engage an investment bank to evaluate options for monetizing Lumryz, particularly given its recent Orphan Drug Designation for idiopathic hypersomnia (IH), which could generate an additional $500 million to $1 billion in annual revenue if approved [2].

The fund has urged shareholders to vote against all of Avadel's director nominees at the upcoming annual meeting and has proposed distributing a contingent value right (CVR) to shareholders from the six lawsuits currently pending against Jazz Pharmaceuticals [3].

References:
[1] https://www.hedgeweek.com/asl-demands-avadel-board-overhaul-over-missteps-in-lumryz-launch/
[2] https://www.benzinga.com/news/health-care/25/07/46203549/avadel-shareholder-seeks-board-shakeup-citing-millions-lost-on-lumryz
[3] https://www.businesswire.com/news/home/20250627862428/en/ASL-Strategic-Value-Fund-Issues-Open-Letter-to-Avadel-Shareholders