ASL Strategic Value Fund Letter to Avadel Pharmaceuticals (AVDL: NASDAQ) Board of Directors

The following is a letter that ASL Strategic Value Fund sent to the Board of Directors of Avadel Pharmaceuticals (NASDAQ:AVDL):

February 10, 2025

Mr. Geoff Glass

Chairman, Board of Directors Avadel Pharmaceuticals Plc

16640 Chesterfield Grove Road, Suite 200

Chesterfield, Mo 63005

Dear Geoff: As you are aware, the ASL Strategic Value Fund has been a long-term investor in Avadel Pharmaceuticals. Our ownership predates most of the directors on the current Board. We have been big believers in Lumryz, a drug that the FDA has found on numerous occasions to be clinically superior to all other formulations of sodium oxybate. Lumryz brings significant benefits to narcolepsy patients. The launch of this superior drug should have allowed the company to rapidly dominate the narcolepsy market against its competitors. This launch should have been the catalyst for the company to finally create significant shareholder value for its investors. Unfortunately, the current management team has failed to capitalize on this opportunity. Additionally, they seem incapable of conveying a coherent investment case to investors. These mis-steps with the roll out of Lumryz and the constant mis-communication over the past year with investors has destroyed significant shareholder value and management's credibility. As a result, our stock continues to underperform against its peers and against the popular market indexes as it has for the past five years. The Board has failed in its duty to hold this management team responsible for their continued failures and dismal performance. It is beyond time that this Board acts upon its fiduciary duty and maximize the values for the benefit of all shareholders. This can only be accomplished by immediately retaining an investment bank to explore all possible alternatives including the outright sale of the company and distributing to existing shareholders a contingent value right which will receive the recovery from the numerous pending lawsuits against Jazz Pharmaceuticals.

Avadel Stock Performance Against NASDAQ

The company currently has two principal assets. The first being Lumryz, a revolutionary once a night formulation of sodium oxybate. The second asset is the potential recovery from a number of law suits filed against Jazz Pharmaceuticals for delaying and obstructing the launch of Lumryz. These damage claims are quite significant and the most important suit will go to trial November of 2025. This suit alleges that Jazz placed their REMS patent in the Orange Book to delay the launch of Lumryz, and was able to do so for eighteen months. Avadel claims that this action by Jazz will prevent it from generating eighteen months of peak revenues, or approximately $1.5 billion. This law suit was brought under the Sherman Anti-Trust Act, any damages granted by the jury (if the company is successful) will be automatically trebled. This could result in damages of approximately $4.5 billion, or approximately $45 per share. In addition to this suit, there are a number of other suits pending (two of which have been filed in the last sixty days over Jazz's launch of Xywav into the IH market). Each of these additional suits could result in hundreds of millions of dollars of additional damages paid to Avadel.

It is time for the Board of Directors to take action to maximize the values inherent in this company for the benefit of its long-suffering shareholders. The Board must immediately retain an investment bank to find a buyer for the company. During the latest investor call on January 8^th 2025, management continued to state that they believe that peak sales from Lumryz in just the narcolepsy market should be north of $1 billion dollars annually. Management also stated that $1 billion of revenues would result in earning per share of over $6 dollars per share.

On this same call, management also stated that its current Phase III trial for a new indication, Idiopathic Hypersomnia (IH) should be completed during the second half of 2025. An FDA approval (when and if granted) for IH would allow the company to market Lumryz to an additional 40,000 patients. If the company were successful in capturing 20% of this market, it would translate into an additional $1 billion of revenues and an additional $7 dollars per share of earnings.

In addition to monetizing the value of our business, the company should issue to existing shareholders a contingent value right (CVR) for the potential recovery from the outstanding litigation that is ongoing against Jazz Pharmaceuticals. Any potential recovery from these litigations should be distributed to the shareholders. The current launch has failed in delivering a significant return to the company's shareholders. It is now time to monetize these two significant assets to create value for the owners of this company.

As always, I am available to discuss these matters.

Steven Braverman

Managing Partner

View source version on businesswire.com: https://www.businesswire.com/news/home/20250210373964/en/

Steven Braverman

Managing Partner

ASL Strategic Value Fund

203/738-5836