Avadel Pharma (AVDL) a recent unusual large buy of 7500 January $10 calls at $1.90, a $1.5M position in a name down 50% the past six months. AVDL has seen short interest surge to 11.9% of the float from 9% in December.

Avadel Pharmaceuticals plc operates as a biopharmaceutical company. Its lead product is LUMRYZ, a formulation of sodium oxybate, which is in a Phase 3 clinical trial for the treatment of excessive daytime sleepiness or cataplexy in adults with narcolepsy. Management sees peak sales potential of $1B. Avadel Pharmaceuticals has seen an acceleration in new-to-oxybate patients, with one out of every five patients enrolled coming from physicians they do not actively target, which they see as a proxy for market expansion.

AVDL has a market cap of $781.5M trading 11.9X Cash, 5.65X Sales. AVDL recently plunged after preliminary sales disappointed but UBS still sees peak Lumryz sales of $522M making shares cheap at current levels. Lumryz’s momentum remains strong with 2,500 patients on therapy as of the end of 2024. Yhe company expects strong demand to continue, with 2,800-3,000 patients expected to initiate therapy in 2025. Lumryz has intellectual property runway into 2042.