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Avadel Pharmaceuticals plc (NASDAQ:AVDL)
Q2 2020 Earnings Call
Aug 10, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Avadel Pharmaceuticals Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. And it is now my pleasure to introduce your host, Tom McHugh, Chief Financial Officer.

Thank you, Mr. McHugh, you may begin.

Thomas S. McHugh -- Chief Financial Officer

Good morning and thank you for joining us on our conference call. This morning, we issued our second quarter financial results news release. The release can be accessed on our website www.avadel.com. As a reminder, before we begin, the following presentation includes several matters that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. These risks include risks that products in the development stage may not achieve scientific objectives, milestones, or meet stringent regulatory requirements, uncertainties regarding market acceptance of products, and the impact of competitive products and pricing. These and other risks are described more fully in Avadel's public filings under the Exchange Act including Form 10-K for the year ended December 31, 2019, which was filed on March 16, 2020 and subsequent SEC filings. Except as required by law, Avadel undertakes no obligation to update or revise any forward-looking statements contained in this presentation to reflect new information, future events, or otherwise.

On the call with me today are, Greg Divis, our Chief Executive Officer and Dr. Jordan Dubow, our Chief Medical Officer.

At this time, I will turn the call over to Greg Divis.

Gregory J. Divis -- Chief Executive Officer

Thank you, Tom. Good morning, everyone, and thank you for joining us on our second quarter 2020 conference call. I'll begin with a brief update on our business outlook, highlighting the significant progress made and the key milestones achieved as we continue to transform Avadel. I will then turn the call over to Jordan to give an update on the FT218 program, followed by Tom, who will review the financial results for the quarter, and will conclude with a Q&A session. So with that, let's get started.

Our team is leading Avadel through its most dynamic period in its history as we move even closer to the NDA filing, potential FDA approval, and launch of FT218, our investigational once-nightly formulation of sodium oxybate designed to treat excessive daytime sleepiness and cataplexy in patients with narcolepsy. We recently completed a successful pre-NDA meeting with the FDA. Post this critical milestone, our team remains confident that the highly clinically meaningful and statistically significant results from the REST-ON clinical trial, combined with the additional development plans and actions we have taken, place us on a direct path to advance FT218 to NDA submission. Jordan will touch more on the FT218 program during his remarks.

We believe, and our market research with physicians and patients confirm, that the clinical data collected to date support the potential for FT218 to provide a valuable advancement in the treatment of both excessive daytime sleepiness and cataplexy for patients with narcolepsy. As such, we've taken very deliberate actions to ensure that Avadel has the resources in place to deliver on our strategy while also building long-term value for our shareholders.

In that context, let me dive a little deeper into our actions over the past several months. During the first half of 2020, the Avadel team has executed against the strategy we have in place for FT218. This includes completing the pivotal Phase 3 REST-ON study earlier than most had projected. The positive topline data from this study was announced in late April and showed that the three dose levels of FT218 that were tested demonstrated statistically significant p-values of less than 0.001, and clinically meaningful improvement for all three co-primary endpoints compared to placebo.

What was at one time a question mark is no longer. FT218's data is unequivocal and the announcement today highlighting the secondary endpoints only continues to build our confidence in the clinically meaningful benefits we believe FT218 can potentially offer patients. Since the announcement of the very positive topline data, we've executed additional steps in line with our overall strategic plan that will support the development strategy for FT218, ensure we maintain optionality for FT218, with the goal of creating meaningful shareholder value.

As such, we have delivered on the following. First, in May, we completed a public offering with net proceeds of $117 million, which is an addition to the $60 million of net proceeds from the pipe we completed in February. This cash infusion has further strengthened our balance sheet and positioned us to financially support FT218's remaining development and regulatory process as well as plan and execute its necessary market preparation work.

Second, on June 30, we completed the sale of our legacy portfolio of sterile injectable drugs used in the hospital setting for a total of $42 million to Exela Sterile Medicines LLC. The completion of this transaction improved both our overall cash position and further simplified and focused the Company. We believe this transaction is in alignment with our strategy, which is all geared toward ensuring we drive maximum value of FT218 for all stakeholders.

Third, in July, we announced the initiation of an open-label extension study for REST-ON, and a switch study to evaluate patients switching from twice-nightly sodium oxybate to once-nightly dosing of FT218. Although this study is just getting started, we are all in the middle of this pandemic, we are pleased with the high level of interest in our investigational once-nightly FT218.

With the completion of the equity offering and the sale of the hospital products, we ended the quarter with $239 million of cash. And based on current plans and timelines, we believe our cash-on-hand along with the remaining $27.5 million to collect from the sale of the hospital products, provides us with sufficient liquidity to prepare for, and if approved, launch FT218, should we decide to launch the product on our own.

This brings us to the next important steps in our strategic plans for FT218. As I mentioned just a moment ago, today, we announced that the analyses of the full REST-ON data set is now complete, and we are quite pleased with the resulting data. Our recent analysis of the full REST-ON data set has demonstrated as FT218 was also highly significant compared to placebo on other measures of daytime sleepiness, sleep architecture, and other narcolepsy symptoms at all three doses. Jordan will elaborate more on these findings. With this data and now post the pre-NDA meeting, we are full speed ahead toward NDA submission. While there -- although there is still some additional work to complete in the preparation of our submission, I want to be very clear that filing the NDA for FT218 is our most immediate and single highest priority. We have built a world-class team, which has demonstrated the ability to consistently execute and deliver on or ahead of expectations. As such, I'm confident we have the right team and the right plans to deliver a robust and comprehensive NDA package.

Furthermore, to ensure we are positioned to continue to maximize the full value of FT218, we are executing across many different work streams as we plan, build, and execute our market preparation efforts. To support this, we've engaged with industry-leading advisors to assist us in critical areas such as medical affairs, scientific communications, patient services, distribution, commercial analytics, and REMS to name a few. This market preparation work is critical to build readiness for FT218 across all stakeholders and is both necessary and valuable for us and/or any potential partner.

If approved, FT218 could be the first once-nightly therapy to address both excessive daytime sleepiness and cataplexy in patients with narcolepsy. This has been a tremendous opportunity for the Company, our shareholders, and as important, a new treatment option for the tens of thousands of narcolepsy patients who could potentially benefit from FT218.

As I conclude my opening remarks, I want to express how proud I am of every team members' contributions to this effort, especially over the past several months, as the world has faced COVID-19. The actions taken and the level of execution has purposefully positioned the Company at this point in time. We are confident the Company has the resource in terms of data, people, and capital to support FT218 to the regulatory process, and to take the necessary actions to ensure we build and sustain shareholder value, while maintaining strategic options for FT218 and the Company at large. If approved, we believe FT218 can make a meaningful difference for patients and providers, and our shareholders deserve to be rewarded accordingly.

I'm going to now turn the call over to Dr. Jordan Dubow, our Chief Medical Officer, to provide an update on the FT218 program. Jordan?

Jordan Dubow -- Chief Medical Officer

Thank you, Greg, and good morning, everyone. As Greg mentioned, in April, we announced positive topline data from our pivotal Phase 3 REST-ON study. In this study, we had three co-primary endpoints, the Maintenance of Wakefulness Test, Clinical Global Impression-Improvement, and Mean Weekly Cataplexy Attacks. While most studies are required to win on one primary endpoint, the REST-ON study had to win on all three of these co-primary endpoints.

These three co-primary endpoints are important and that there are measures of both the underlying phenomenology of the disease, i.e., excessive daytime sleepiness and cataplexy as well as an overall functional outcome, the CGI, which serves as an anchor, to show the clinical meaningfulness of the other two endpoints. We were excited by the results of this topline data, which showed that the three doses tested demonstrated statistically significant all p-values less than 0.001, and clinically meaningful improvement for all three co-primary endpoints compared to placebo.

I would also like to mention that as we continue to evaluate the data, we've been increasingly pleased by the results from this study, especially as it pertains to the secondary endpoints in sensitivity analyses of the three co-primary endpoints. We now have analyzed the full Rest-on dataset and FT218's performance and tolerability were consistent with the topline data released in April.

For all planned sensitivity analysis of the three primary endpoints, FT218 was highly significant compared to placebo for all three doses tested on all three co-primary endpoints. Additionally, FT218 was highly significant compared to placebo with the following secondary endpoints at all three doses tested. The Epworth Sleepiness Scale, disturbed nocturnal sleep, and number of nocturnal arousals as measured by polysomnography, patient-rated sleep quality, patient-rated refreshing nature of sleep, and sleep paralysis. FT218 did not differentiate from placebo in change in the number of hypnagogic hallucinations, which is consistent with previous sodium oxybate data, and likely reflected the very low baseline numbers.

We're excited that FT218 generated positive data for these underlying measures of sleep architecture, as well as other patient reported outcomes, reflecting excessive daytime sleepiness and sleep quality. From a safety perspective, all doses were generally well tolerated. Across the three doses tested, the most common adverse reactions were nausea, dizziness, enuresis, headache, decreased appetite, and vomiting. Approximately 5% of subjects had serious adverse events on FT218 compared to 2% on placebo. Only one serious adverse event on FT218 was deemed related to study drug. With that said, in order to preserve our ability to present these data at an upcoming medical conference or peer-reviewed publication, we are not able to offer more specific data at this time. However, we look forward to presenting this data in detail as well as interesting post hoc data at upcoming conferences.

Most importantly, we believe that clinical data generated for FT218 to date will serve as a strong basis for a complete regulatory package. In fact, we already had our pre-NDA meeting with the FDA to discuss the format and content of our submission, and are working diligently to expeditiously file our NDA and bring this drug to patients. The takeaway from that meeting is that my team and I are confident we are on track to move forward in line with our internal timeline.

Looking beyond the NDA submission, we also just announced in July the initiation of an open-label extension study for REST-ON and a switch study to evaluate patients switching from twice-nightly sodium oxybate to once-nightly FT218. These studies are important because they enable us to provide those patients who participate in the REST-ON study with continued access to FT218 in order to gather long-term data, as well as generate data for physicians on both extended use of FT218 and patients switching from twice-nightly sodium oxybate to once-nightly FT218.

I want to again thank all the patients, investigators, and study staff, who have participated in the REST-ON study, as well as the Avadel team for getting us to this exciting and pivotal time for the Company and for the patients we serve.

With that, I would like to turn the call over to Tom, to review the financials.

Thomas S. McHugh -- Chief Financial Officer

Thank you, Jordan. I'll summarize a few financial highlights for the second quarter and then turn the call back to Greg for closing comments. Our hospital products business generated revenue of $10.1 million compared to $17.6 million in the second quarter of 2019. The decline on a year-over-year basis was primarily attributed to lower overall sales volume across the Company's hospital products as a result of increased market competition.

As previously announced on June 30, we completed the sale of the hospital sterile injectable drug portfolio, and as a result, we will not report sales for these products starting in the third quarter of 2020. In conjunction with the sale, we recorded a pre-tax gain of $45.8 million, which is comprised of the $42 million transaction value adjusted for transaction fees and net liabilities that transferred to Exela.

R&D expenses were $4.1 million in the second quarter of 2020, compared to $10.3 million in the second quarter of 2019. The decrease on a year-over-year basis was primarily attributed to the completion of the FT218 clinical study during the first quarter of 2020, as well as lower headcount due to the restructuring activities initiated during 2019.

SG&A expenses were $7.1 million in the second quarter of 2020, compared to $6.8 million in the second quarter of 2019. The year-over-year increase is primarily the result of higher professional fees and market research costs related to FT218. Income tax provision was $5.3 million in the second quarter of 2020, compared to [Technical Issues] 2019.

And net income in the second quarter of 2020 was $30.9 million, which includes the gain on the sale of the hospital products or $0.49 per diluted share, compared to a net loss of $8.6 million or a loss of $0.23 per diluted share, for the same period in 2019.

Cash, cash equivalents, and marketable securities were $238.6 million as of June 30, 2020, which includes net proceeds of approximately $117 million related to follow-on offering completed in May, as well as a $14.5 million upfront payment associated with the sale of the hospital products portfolio. We expect to collect the remaining $27.5 million for the sale of the hospital products by June of 2021. We believe our current cash on hand, along with that $27.5 million, will support our expected financial requirements to complete the NDA submission to pile additional supporting scientific data to position FT218 in the market, and ramp up our market preparation of FT218, which includes both preparing FT218 for the market and preparing the market for FT218.

Now, I'll turn the call back to Greg for closing remarks.

Gregory J. Divis -- Chief Executive Officer

Thanks, Tom. In closing, we're pleased with the progress we've made in the transformation of Avadel in the current position of the Company as we're prepared to submit the NDA for FT218. As such, we remain fully focused on and committed to achieving the regulatory and market preparation milestones for FT218 that will maximize shareholder value and bring a potentially meaningful treatment option with the tens of thousands of narcolepsy patients who could benefit from FT218. I too want to thank our investigators, patients, shareholders, and fellow employees for the contributions to our progress and support of our strategy. We look forward to providing investors and all stakeholders with further updates in the future.

So with that, I think we're ready to open the line for Q&A. Operator?

Questions and Answers:

Operator

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Ami Fadia, with Leerink. Please proceed with your question.

Ami Fadia -- SVB Leerink -- Analyst

Hi, good morning. Thanks for taking my question. A couple of questions I had. Firstly, just with regards to your recent meeting with the FDA, can you characterize any feedback from the FDA, any changes in direction that you may need to consider with the application or was it very much in line with your prior discussions with the FDA?

Secondly, with regards to the switch study, what are some of the endpoints of that we'd be able to measure, would we be able to look at things like sleep architecture, etc. in the switch study? And then, maybe just remind us of some of the timing for the data readouts next year? Thank you.

Gregory J. Divis -- Chief Executive Officer

Thanks, Ami. Jordan, you want to tackle those?

Jordan Dubow -- Chief Medical Officer

Yeah, sure. Yeah, thanks for the questions. In first with -- in terms of the pre-NDA meeting, I think what we've said prior to the meeting is that, many of our questions related to a lot of the strategy we've asked and been answered. So, we felt very comfortable with it. I think as we said in the script that we just discussed that we will discuss the format, the content of the NDA. We asked questions again in terms of -- we showed them the data of the Phase 3 trial. We got confirmation that the data from this trial is sufficient for us to file with. We asked about certain things in terms of what we need to integrate, what we don't need to integrate. So, I think, the meeting was very straightforward. We felt very confident with all the answers we've gotten. But again, most of the questions that we kind of have, we already had answered going into the meeting.

In terms of the second question about the switch study or the extension study, yeah, so with the extension patients, we're capturing really just long-term maintenance of efficacy data. We're keeping it simple, looking at really just daytime sleepiness as well as cataplexy data. For the switch patients, we're really looking at just preference, right. So, the main endpoint of the study is preference for which dosing regimen of sodium oxybate they prefer, the once-nightly regimen versus the twice-nightly regimen. We did not -- we decided we do not want to make a double-blind double-dummy study because that obviously takes away from the benefits of the once-nightly product. So, that's the type of information that we're capturing.

In terms of your last question about what data we intend to present next year, I think as we move forward to the main conferences next year, obviously the big neurology meeting, which again to be determined whether these will be in person or not. In late April time frame, we have Neurology meeting, we intend to present data. The ASM meeting, actually the big sleep meeting in the U.S., we intend to present data. At the World Sleep Meeting next year, we intend to present data as well as other meetings throughout the year.

Ami Fadia -- SVB Leerink -- Analyst

Got it. Thank you. I'll jump back in the queue.

Operator

Thank you. Our next question comes from the line of Paul Matteis with Stifel. Please proceed with your question.

Nate Tower -- Stifel -- Analyst

Hey, thanks guys for taking the questions. This is Nate on for Paul. Maybe just one on the pre-NDA meeting. Do you -- I'm assuming you touched at some point on the REMS and DDI. I'm just wondering if you have any updated thoughts. I know it's nothing finalized on the carve-out strategy, and if you could elaborate on that at all?

Gregory J. Divis -- Chief Executive Officer

Yeah. Thanks. This is Greg. Again, I think Jordan characterized the context and the content of the pre-NDA meeting very well, and that most -- really all of what we would characterize as a substantive issues that we felt needed to be addressed well in advance of a pre-NDA meeting, we have already engaged with the FDA on prior to a pre-NDA meeting. So, the exchange, if you will, around those topics have occurred and have been ongoing well in advance of a pre-NDA meeting.

So, in that regard, the pre-NDA meeting didn't -- I would say wasn't a requisite or a prerequisite for us to gain or learn anything new only because we have already and had been already engaged with the FDA. And whether, if there's anything different around that, I would say we've been pretty transparent and clear around that exchange -- those exchanges with the FDA in terms of our strategy and our approach, and that remains the course forward.

Nate Tower -- Stifel -- Analyst

Thanks. Thanks, Greg. That's helpful. And maybe one more, what exactly is the bridging study, the last thing that's gating to the NDA or should we be paying attention to anything else?

Gregory J. Divis -- Chief Executive Officer

No, I think that the longest pole in the tent if you will, it's just integrating all the data and putting it all together, right? So that's if you will, the longest pole in the tent. As we've described, there's a few things we need to complete. We described those as much more as kind of perfunctory in terms of nature, in terms of what we need to do. So, we're confident we're going to get it done and -- but I think the longest pole is just integrating and pulling all of the information together in the proper format as we now we have clarity on that post the pre-NDA meeting.

Nate Tower -- Stifel -- Analyst

Makes sense. Thanks guys.

Operator

Thank you. Our next question comes from the line of Francois Brisebois with Laidlaw. Please proceed with your question.

Francois Brisebois -- Oppenheimer & Co. Inc. -- Analyst

Hey, guys. Thanks for the -- thanks for taking the question. It's now with Oppenheimer. So, I just had a couple of ones here. In terms of the pre-NDA meeting, it seems like there is discussions before that and then they went according to plan. Can you help just remind us the timeline in terms of NDA and then potentially launch and just kind of an update there, so we have a better idea when these things could happen?

Gregory J. Divis -- Chief Executive Officer

Yeah. Franc, thanks. And, we haven't to date guided to our NDA timing really for what we would characterize as market-based reasons. We certainly know the window of our expected filing and appreciate the importance of this type of information for investors, while we balance other considerations. So, I believe it will be a topic that we'll discuss more and have more to say on it as time progresses.

But at this time, I would say that the way we describe timing-wise is that if you think about what may be standard in the industry or of post-data readout and complete data set between that point in time and a submission, which in a really accelerated fashion is, six to maybe nine months on the longer-end of an accelerated fashion for up to 12-plus months. We would expect to be better than average overall from that perspective. We're confident that we're progressing in the right -- at the right pace and we'll get everything done and we have every incentive to get it done as fast as we can.

Francois Brisebois -- Oppenheimer & Co. Inc. -- Analyst

Okay. Great. And then just lastly, I was just wondering in terms of the new secondary endpoints that Jordan talked about a little bit more in detail today, is there anything there that could potentially help differentiate on labels that kind of prevent some of that freedom to operate situation? Or -- and just a little more discussion may be on the sleep architecture, the importance of that, and the fact that it hit at 6 grams and 7.5 grams as well in terms of real world setting, what that means to hit at all doses? Thank you.

Gregory J. Divis -- Chief Executive Officer

Jordan, you want to tackle that?

Jordan Dubow -- Chief Medical Officer

Yeah. I mean, I can address the part. Yeah, I mean, again that's related to freedom to operate, which is related to the data at large. So, obviously, we were extremely pleased with all of the data, right? The primary data, all of our secondary endpoints as well as all the sensitivity analyses. I think the sleep architecture is critically important, right? I mean, I think we all know [Indecipherable] believe that waking up in the middle of the night is not great. It's better not to wake up in the middle of the night than to wake up in the middle of the night every night.

And our sleep architecture data looks great, right? So, looking at disturbed nocturnal sleep, which is clearly a problem in patients with narcolepsy, which really looks at transitions from kind of deep sleep to light sleep from sleep to wake, which really lead to that fragmented sleep, which directly makes people sleepy. So, our data was unequivocally positive at all three doses with that. And importantly too, we've mentioned, and again, I don't want to get too much into the data, that's the one where you clearly see placebo responses in the data we presented and expect to see the responses.

When you really look at our sleep architecture data, the really interesting thing with that -- in this, the placebo response actually worsened for sleep architecture, which one could argue is it's less impacted by placebo response and just reflects the underlying disease and what sodium oxybate does to that disease. And FT218 clearly and robustly really, really improves the architecture. And so I think that's really important.

And in total, which is really important, it's sleep architecture, it's subjective measures, it's objective measures, it's doctor-related, it's patient-related. Every single one of those measures, FT218 improved. So that's what we feel really, really good about.

Gregory J. Divis -- Chief Executive Officer

Thanks, Jordan. I think, Franc, thank you for [Indecipherable] question on freedom operate. It doesn't change our strategy or our approach in that regard.

Francois Brisebois -- Oppenheimer & Co. Inc. -- Analyst

Okay, got you. Thank you very much.

Gregory J. Divis -- Chief Executive Officer

Thanks.

Operator

Thank you. Our next question comes from the line of Oren Livnat with H.C. Wainwright. Please proceed with your question.

Oren Livnat -- H.C. Wainwright & Co., LLC -- Analyst

Thanks. Congrats also on all the recent progress. So obviously, Jazz got Xywav, they're low sodium version-approved, and they seem to be very clear in their script, highlighting the importance of low sodium, also flexible dosing, which is clearly trying to differentiate from your fixed-dose sachet. And so I'm just wondering, what does your latest research tell you about both physician and patient preference on the sodium front versus once-nightly? And also, how important do you think that flexible dosing really is? And also, just, I guess speaking about sort of head-to-head, when you look at the market and you think about where your patients are going to come from, I'm sure you're obviously targeting existing oxybate prescribers. But do you think you're going to get patients from new starts or from switches? Would new starts, you think, primarily be naive patients or perhaps people that have prior failed or not being compliant on twice-nightly dosing of Xyrem? Thanks.

Gregory J. Divis -- Chief Executive Officer

Yeah. So thanks, Oren. Maybe I'll make a few comments and see if Jordan has anything he wishes to add to it. But I mean, listen, our research tells us, and when we do our research, we tested against all competitors in the space from that standpoint. And we feel very bullish and confident in the physician's reaction and patient reactions to our product profile that has now become much more precise relative to the data readout, which in and of itself, gives us a lot of confidence on the potential for FT218 regardless of what other products are in the marketplace or what other formulations of sodium oxybate or other product for narcolepsy.

There was a clear interest and a high level of interest of a once-nightly sodium oxybate product. I'll let Jordan talk about the salt aspect of this. We certainly are aware of the 258 product that's been approved as expected from that standpoint and with regards to the flexible dosing, positioning that's been taken in the marketplace to date relative to their label. Again, I'll let Jordan make comments, but I think our reaction to that is that their way of trying to make it a once-nightly product, right? In other words, give a little bit more at bedtime and a little less in the middle of the night, it sounds a lot like trying to emulate our once-nightly PK curve.

That being said, where our focus is on building the readiness for FT218, executing toward an NDA submission and doing all we can to ensure in the best interest of our shareholders and patients to get FT218 to the market as fast as we can.

So Jordan, is there anything else you want to add to that?

Jordan Dubow -- Chief Medical Officer

Yeah. Just a couple of comments. I mean, I'd just add, let's not forget that the low-sodium, twice-nightly sodium oxybate product is twice-nightly, right? There's clear benefit. There's still -- there's clear benefits of not waking up in the middle of night, which we've spoken a lot to in terms of safety, compliance, waking your bed partner or your caregiver every night. So clearly, there's benefit that outweigh any theoretical risk of lower sodium, which I'll get to in a second.

And the fact is when you talk to our constituents, I mean, I think between our investigators, between the industry groups, not once during the REST-ON trial or during the open-label study has any of them even asked what our sodium content is. So I think in our view, that tells us what they view the theoretical risk of salt or not salt. And I think, as I've said to many of you before, we've obviously studied the research extensively on salt, on the risk of salt. You can look at the published data, there's many years now of data of sodium oxybate. And there's just no clear association. There's no association, right, with sodium oxybate in hypertension, risk of cardiovascular disease.

When you look at the salt literature, which again, I mentioned this before, we've studied at [Indecipherable], you look at the newer data that suggests there's a U-shape curve with the risk of salt and cardiovascular disease. [Indecipherable] less than 2 grams a day is actually associated with a worse outcome and greater than 6 grams a day is associated with the worse outcome.

So, in our view, we don't think salt is a big issue. When you actually look at our data, our baseline demographics, we did not exclude people for hypertension. We did not exclude people for hyperlipidemia. We did not exclude people with diabetes. And then we had about, I think, 7.5% of our patients at baseline had the diagnosis of hypertension, diabetes, and hyperlipidemia put together. The average age of our study was 31. The average blood pressure baseline was 120/77. So I mean, I think that's already correct. I mean, clearly, the benefits of once-nightly outweigh any theoretical risk, which we don't believe even exist for whatever the salt content is.

Gregory J. Divis -- Chief Executive Officer

Yeah. And just to answer your last question, Oren, around source of business, although we haven't been precise in that regard in terms of our public disclosures, what we have said is that when we research this, we research it by patient segment. We test propositions for newly diagnosed naive, current patients on therapy, previously treated patients who have discontinued because we do know that 44% of all twice-nightly patients who initiate discontinue within the first 12 months and approximately half of those patients are explicit in their description as due to dosing.

So when you think about that, the answer to your question is, yes, we think we're going to get patients from all segments and including those who were previously on, including those who are currently on, including those who are newly diagnosed. I think some of those are easier to find than others from that standpoint, but nonetheless, all are really important, and obviously, something we are and we'll remain very focused on.

Oren Livnat -- H.C. Wainwright & Co., LLC -- Analyst

Thanks. Appreciate it.

Gregory J. Divis -- Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from David Amsellem with Piper Jaffray. Please proceed with your question.

David Amsellem -- Piper Jaffray -- Analyst

So, just a couple. I wanted to pick your brain, Greg, on your thoughts on Jazz's decision to price Xywav, low-sodium oxybated parity with Xyrem? Were you surprised by that? And how does that play into your thinking regarding pricing of FT218? And I joined late, so I apologize if you may have addressed this in the prior Q&A, but I wanted to get your thoughts there. So that's number one.

And then number two is sort of a longer-term question, as the narcolepsy, EDS cataplexy space becomes more varied with other entrants. Do you think that the pie in terms of the number of oxybate patients is going to be rather static? Or do you think you can grow the pie? Help us understand how you're thinking about it. Right now, we're at sort of this 15,000 patients. Do you think it gets a lot bigger? Do you think it stays largely the same over the long term? Thanks.

Gregory J. Divis -- Chief Executive Officer

Yeah. I don't -- David, thank you. I don't really have a view of Jazz's pricing strategy, that's for them to consider. From that standpoint, it hasn't changed the way we've thought about it and what we've talked about consistently that we think that there's an opportunity here to bring an important treatment to patients who -- for these tens of thousands of narcoleptic patients. And our pricing -- our pricing strategy hasn't changed in terms of how we think -- what we thought about.

Unequivocally, we won't be priced at a premium. I think we view pricing as something as kind of in the zone of where the sodium oxybate products are netting out at the point in time when we come to the marketplace from that standpoint. But nonetheless, as for Jazz, I really don't have a comment about what their strategy is.

Regarding the pie, so to speak, again -- and I'll let Jordan, if he has any additional comments, but clearly, more treatments and more promotion likely has the result of filling more at the top of the funnel, right? So, in a category that predominantly for a long time had one company promoting, will now have more. Not only has the opportunity to yield more at the top of the funnel. And in the therapeutic category, where sodium oxybate to date is unequivocally the standard of care, although it's used third line, we think that just bodes well for creating more treatment options for patients with sodium oxybate. And products like once-nightly FT218, we think will also create an opportunity for more potential patients who could go on sodium oxybate treatment as well.

When you think about the static market today, let's just say, 15,000 sodium oxybate patients, just by having an influx of previously treated patients automatically expands the market of what today's market is, right? That's not to factor in what it means for newly diagnosed, the number of newly diagnosed patients or patients who otherwise wouldn't have gone on sodium oxybate because of other reasons that now may be candidates.

So yeah, I do think the pie has the opportunity to grow from that standpoint. And more noise in the marketplace, I think, kind of fills more at the top of the funnel and the high tide, so to speak, will lift boats, if you will.

David Amsellem -- Piper Jaffray -- Analyst

Okay, that's helpful. Thanks, Greg.

Gregory J. Divis -- Chief Executive Officer

Thanks, David.

Operator

Thank you. Our next question comes from the line of Matt Kaplan, with Ladenburg Thalmann. Please proceed with your question.

Raymond Wu -- Ladenburg Thalmann -- Analyst

Hi, this is Raymond in for Matt. Congrats on the quarter and thanks for taking my question. Just -- perhaps just two quick questions. I was wondering perhaps maybe the first one would be, what kind of factors would you think would favor perhaps a partnership or versus marching your own?

And my second question is, if -- I know you're presenting data on upcoming medical meetings, would you have any at the Sleep 2020 Conference by any chance? Thanks.

Gregory J. Divis -- Chief Executive Officer

Yeah. So for Sleep 2020, which has been -- which was originally scheduled for early June and is now a virtual conference later this month, we're presenting some PK data and some information around our switch and REST-ON study in terms of design. The dates, if you will, to be able to get the more recent data published in that venue had passed by the time our data read out. But we will have a presence there. We will have a virtual booth, we will be engaging with healthcare professionals and others virtually during that conference.

With regards to your comments about what are the factors that may or may not lead us to a partnership or not, I think we've been pretty clear and transparent publicly around our communication around this, and that we have an obligation to ensure we're in a position to maximize or pursue any optionality as it relates to FT218. And the lens that, that has to be looked through was really, what's in the best interest of shareholders and how do we get this drug to patients faster, right, and in the fastest way possible.

So, from that standpoint, if those opportunities present themselves with the right strategic partner in some form or fashion, we are certainly open to those discussions. And we won't talk about whether we or will or have or haven't in that regard. But nonetheless, I think what's most important to take away from this is that our wins is value creation for shareholders and bringing this important treatment to patients as fast as we can.

Raymond Wu -- Ladenburg Thalmann -- Analyst

Okay. Thanks. That's all. Thanks.

Operator

We've reached the end of our question-and-answer session. I'd like to turn the floor back over to management for closing comments.

Gregory J. Divis -- Chief Executive Officer

Thank you, operator, and thank you everyone for joining us on our call today. We wish you all to stay safe and be healthy, and all the best. Thank you. Have a great rest of the day, and we'll look forward to any follow-ups with you individually. Take care. Thank you.

Operator

[Operator Closing Remarks]

Duration: 42 minutes

Call participants:

Thomas S. McHugh -- Chief Financial Officer

Gregory J. Divis -- Chief Executive Officer

Jordan Dubow -- Chief Medical Officer

Ami Fadia -- SVB Leerink -- Analyst

Nate Tower -- Stifel -- Analyst

Francois Brisebois -- Oppenheimer & Co. Inc. -- Analyst

Oren Livnat -- H.C. Wainwright & Co., LLC -- Analyst

David Amsellem -- Piper Jaffray -- Analyst

Raymond Wu -- Ladenburg Thalmann -- Analyst

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