Avadel Pharmaceuticals (AVDL) is facing mounting pressure from activist investor ASL Strategic Value, which has launched a challenge to the company’s leadership and corporate governance. According to a letter reviewed by the Wall Street Journal, ASL plans to urge shareholders to replace Avadel’s full board, intensifying pressure on the company’s leadership. Year-to-date, AVDL stock has lost over 12%.
Don’t Miss TipRanks’ Half Year Sale
- Take advantage of TipRanks Premium for 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
- Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week.
Avadel is a biopharmaceutical company that develops innovative therapies for chronic conditions.
Boardroom Battle Looms at Avadel
ASL Strategic Value is pushing for changes at the board level, citing concerns over strategic direction and oversight. According to the letter, ASL is urging shareholders to vote against all of Avadel’s director nominees at the company’s annual meeting, scheduled for late July. The firm plans to vote its approximately $15 million stake against the current board.
Moreover, it alleges that Avadel mishandled the launch of its key drug, Lumryz, causing the company to miss out on hundreds of millions of dollars in potential revenue.
For context, Lumryz is the first and only FDA-approved treatment for cataplexy or excessive daytime sleepiness (EDS) in adults with narcolepsy. Lumryz received its FDA approval in 2023 and now faces the critical challenge of expanding its patient base. Nonetheless, Avadel expects to generate between $255 million and $265 million in net product revenue in 2025, driven by a projected 3,400 to 3,600 patients on Lumryz.
ASL Pushes for Major Changes
Apart from board changes, ASL is urging Avadel to issue contingent-value rights to shareholders. This will entitle them to potential future payments tied to legal outcomes, including a case where Avadel is seeking over $1 billion in damages.
ASL also plans to renew its call for Avadel to hire an investment bank to explore strategic alternatives, including a potential sale of the company. ASL previously made a similar request in February, which temporarily boosted AVDL stock.
In response, a spokesperson for Avadel said the board actively engages with shareholders and noted that directors have made personal investments in the company. He also emphasized that the company remains focused on unlocking the full value of Lumryz.
Is Avadel a Good Stock to Buy?
According to TipRanks, AVDL stock has received a Strong Buy consensus rating based on three Buys assigned in the last three months. The average Avadel Pharmaceuticals share price target is $18, suggesting a potential upside of 95.6% from the current level.
