Drugmaker Files Ch. 11, Blames Low-Selling Urination Drug
By Rick Archer
Law360 (February 6, 2019, 10:10 PM EST) -- Specialty drugmaker Avadel Specialty Pharmaceuticals filed for Chapter 11 in Delaware bankruptcy court Wednesday, saying slow sales growth for its nighttime urination drug caused its parent company to cut off funding after investing $152 million with minimal returns.
In the company's Chapter 11 declaration, Avadel said its corporate parent and sole funding source, Avadel Group member Avadel U.S. Holdings Inc., has invested $152 million since September in their attempt to launch Noctiva, its sole commercial product, but that the drug so far has less than $3 million in net sales.
"In light of the Avadel Group's broader restructuring, and as a result of its own ongoing financial and capital constraints, AUSH determined that it could no longer continue to fund ASP," Avadel president Gregory Divis said in the declaration.
The declaration said the company is part of the Dublin, Ireland-based Avadel Group, which is itself undergoing out-of-court restructuring.
The company has no other secured or unsecured debt, except for about $1.7 million in unsecured claims from vendors and other third parties, the declaration said.
The declaration said the company's sole commercial product is Noctiva, a nasal spray that treats nocturnal polyuria, a condition that causes the body to make too much urine at night.
The drug was approved by the U.S. Food and Drug Administration in March 2017, but there has been "minimal market demand" for the drug, with physicians unwilling to prescribe it, the declaration said. Managed care companies have also placed restrictions on the drug, resulting in more than half of all prescriptions so far being dispensed for free, it said.
"Making matters worse, sales projections based on the current growth trend illustrate a substantially longer period of operating losses than originally assumed," Divis said.
The declaration said the company will pursue an asset sale followed by a wind-down and liquidation of any unsold operations and assets.
Representatives of Avadel did not immediately respond to requests for comment late Wednesday.
Avadel is represented by Dennis A. Meloro, Paul J. Keenan Jr., John R. Dodd and Sara A. Hoffman of Greenberg Traurig LLP.
The case is In re: Avadel Specialty Pharmaceuticals LLC, case number 19-10248, in the U.S. Bankruptcy Court for the District of Delaware.
