Jazz’s Toehold on Sleep Market Slips with Tentative Avadel FDA Approval

Shares of Avadel Pharma climbed nearly 10% in morning trading Tuesday after the company announced it had received tentative approval for Lumryz, a formulation of sodium oxybate for the treatment of excessive daytime sleepiness.

Although it met the safety and efficacy standards set by the U.S. Food and Drug Administration, Avadel’s Lumryz still has another hurdle to pass before it can hit the commercial market – a legal one. Avadel and Jazz Pharma, a leader in treating sleep disorders, are locked in a patent dispute.

Last year, Jazz accused Avadel of infringing on five patents related to its narcolepsy drug, Xyrem. Like Lumryz, Jazz’s Xyrem uses the same active ingredient, sodium oxybate. Last month, Avadel countersued over one of the patents, Patent No. 8,731,963, which is listed in the regulatory agency’s Orange Book.

Tentative approval for Lumryz was based on data from the Phase III REST-ON trial that showed the drug demonstrated statistically significant and clinically meaningful results in patients with excessive daytime sleepiness (EDS).

Avadel Approval could Challenge Jazz’s Market Dominance

Unlike Xyrem, which is taken in two doses per night, Lumryz only requires a single dose, which could give it an advantage should it gain a toehold in the market. Greg Divis, chief executive officer of Ireland-based Avadel, said the once-at-bedtime treatment could transform the lives of patients living with narcolepsy.

“Our extensive market research indicates Avadel is well-positioned to capture significant share of the oxybate eligible patient population which we estimate to be in excess of 30,000 patients. We are pursuing all options to accelerate final approval on or before June 2023 and prepare for commercial launch,” Divis said in a statement.

But, until the patent dispute is settled, Jazz’s Xyrem, alongside Xywav, a low-sodium treatment option approved by the FDA in 2020, will continue to dominate the market. Xywav contains 92% less sodium per nightly dose than sodium oxybate. A low sodium option has been seen as critical for EDS patients due to an increased risk of comorbid conditions, including hypertension and cardiovascular disease.

Jazz CEO Bruce Cozadd has predicted that the oxybate franchise will eventually generate about $2 billion in revenue. In its first quarterly report in May, Xywav sales increased 147% to $186.1 million. Sales of Xyrem decreased 26% as more prescribers switched patients to Xywav, the company said at the time. In 2020, Xyrem generated $1.8 billion in annual revenue.

Potential $3B Opportunity

If Avadel wins its patent dispute, Divis predicted that Lumryz could receive final approval within 11 months. Avadel said it is doing what it can to shorten the timeline between that approval and commercial launch. The company believes its formulation could quickly cut into Xyrem’s market share.

Avadel said it estimates that over the past three years, up to 15,000 patients have discontinued use of Xyrem due to dosing complications. However, the company added that it believes that each year approximately 3,000 patients initiate oxybate treatment for the first time and expects this to grow by 25-50% over time with the introduction of Lumryz. Based on that, Avadel said the potential market opportunity for its drug could exceed $3 billion annually.

A hearing is scheduled for Aug. 31. Avadel is seeking to delist the Xyrem patent from the FDA’s Orange Book, which is a list of approved drugs. A court order requiring the patent holder to delist the REMS patent from the Orange Book could provide a pathway for final approval of Lumryz by June 2023, the company said.