AVDL Stock Forecast: FDA Decision Soon, Is It a Buy?
With an FDA decision right around the corner, is it time to buy AVDL stock? The pharmaceutical firm is making swift progress on its lead drug candidate for excessive daytime sleepiness, a disorder affecting up to 20% of the population. Avadel Pharmaceuticals (Nasdaq: AVDL) also develops innovative drug delivery tech to improve how current medication is taken.
In February 2021, the FDA accepted Avadel’s New Drug Application (NDA) for faster approval with a target date of October 15, 2021. But, instead of a decision, the drugmaker received a notice the review is still under review.
At this time, Avadel has yet to hear back from the FDA. Should you consider AVDL stock with a decision coming soon? Keep reading to learn more about Avadel and what to expect next going forward.
AVDL Stock Drops 36%, Then Gains 20%
Last week, AVDL stock made headlines after falling over 35% intraday on Monday. The move came as a surprise with no apparent news to note. The only Avadel Pharmaceutical news released on April 25 was a patient survey from an open-label study.
Presenting author Asim Roy, M.D. highlights the “burden that the second dose (from twice nightly oxybates) places on some patients.” Furthermore, he notes a “once-at-bedtime option like FT218 would ease this burden and potentially be a major advance for the entire narcolepsy community.”
Given these points, does a 35% selloff sound warranted? For this reason, CEO Greg Divis released a statement the next day (Tuesday, April 26). Davis claims Avadel is “unaware of any new information” about the FDA’s decision on FT218, causing share prices to bounce.
As a result, AVDL shares rallied on heavy volume but have yet to find support. Since the rally, AVDL stock is falling to near yearly lows, around $4.4 per share.
At the same time, many growth stocks are down since then, with the iShares Russell 1000 Growth ETF giving up 5%.
Is this the buying opportunity you have been waiting for? If the FDA approves FT218, it could be an immediate market upgrade.
A Treatment for Excessive Daytime Sleepiness?
If you find yourself falling asleep behind your desk, it could be due to several reasons. Maybe you didn’t sleep well the night before, or have a lot of stress on your mind.
But, when it happens consistently, it can be a serious disorder known as Excessive Daytime Sleepiness (EDS). More importantly, it can be caused by a neurological disorder called Narcolepsy. With this in mind, Narcolepsy affects about 3 million worldwide, with hard-to-diagnose symptoms.
Currently, medication for Narcolepsy is available in twice-nightly formulas. However, the issue is that users need to take the second dose in the middle of the night. So, the routine can cause more problems on top of the original diagnosis.
So, Avadel’s FT218 uses the company’s superior drug release tech to allow for a single dose. The product’s NDA is still under FDA review while the company prepares for launch.
- Jan 2018: FDA grants FT218 orphan status.
- Jul 2020: The first patient dosed.
- Dec 2020: Avadel submits NDA to FDA.
- Feb 2021: FDA accepts NDA.
- April 2021: Positive top-line data from Phase 3 Trials.
- Oct 2021: Avadel announces ongoing FDA review.
- April 2022: Avadel releases a patient study, indicating patients prefer FT218.
At this point, AVDL stock is awaiting approval from the FDA while preparing to launch the drug. So far, data suggests FT218 may have an opportunity, with one study claiming almost 95% of patients prefer it.
AVDL Stock Analysis
With a major FDA decision looming, AVDL stock is sitting right above its lowest price since the pandemic. In fact, after soaring to highs over $13 a share in April 2020, AVDL stock has yet to reach those levels.
Shares of AVDL were essentially stuck in a channel, floating between $5 to $11 a share. The channel held support and resistance levels until now, but that changed last week. After falling to $4.2, AVDL stock sits below all major trendlines with heavy distribution.
Meanwhile, most stocks are selling off with the Federal Reserve raising interest rates again yesterday. Though stocks bounced yesterday after the announcement, all sectors are in the red today.
Despite the gloomy outlook, AVDL stock may be positioned for growth in 2022. If they receive FDA approval, it will be an immediate market upgrade. As of right now, the market value is around $1.8 billion, with Avadel estimating only 40% of eligible patients. With positive data and patient support so far, FT218 looks like a win for Avadel.
Not So Fast
Although this seems like an easy win, the drug approval process is never easy. First, nobody knows how long the FDA will take to approve. With the FDA focusing on the pandemic, several approval dates are pushed back.
Until we hear more, AVDL stock is likely dead weight. Furthermore, suppose the FDA, for some reason, denies the approval or requests more information. In that case, it can put further pressure on AVDL shares.
We’ve seen it too many times before, new drug makers with promising new treatments losing significant market value. But, with Avadel Pharmaceuticals stock already down over 45% this year, will we see some relief? At the same time, we saw a glimpse of how fast AVDL stock can fall last week after rumors of an FDA decision.
AVDL Stock Forecast: Boom or Bust?
A major part of Avadel’s success hinges on the FDA decision for FT218. The results look promising so far. Patients like it, and it has a market. AVDL stock looks cheap at these levels with a multi-billion dollar market if everything goes according to plan.
Although an FDA rejection would be a significant blow to the company, I wouldn’t necessarily say Avadel is a boom or bust. Another key thing to consider is the firm’s drug delivery technology.
If Avadel can apply it to Narcolepsy treatments, what else could they use it for? It may have a more prominent role to play in the healthcare industry.
About Pete Johnson
Pete Johnson is an experienced financial writer and content creator who specializes in equity research and derivatives. He has over ten years of personal investing experience. Digging through 10-K forms and finding hidden gems is his favorite pastime. When Pete isn’t researching stocks or writing, you can find him enjoying the outdoors or working up a sweat exercising.