Avadel Pharmaceuticals has entered into an exclusive global licensing agreement with XWPharma to develop and commercialize valiloxybate, a GABAB receptor agonist designed as a once-at-bedtime, salt-free and artificial sweetener-free oxybate therapy for sleep disorders including narcolepsy and idiopathic hypersomnia (IH).
The Dublin-based biopharmaceutical company paid $20 million upfront for worldwide rights, excluding mainland China, Hong Kong, and Macau. XWPharma remains eligible for development milestone payments up to $30 million, performance-based sales milestones totaling $155 million for annual net sales up to $750 million, and tiered royalties ranging from high-single digit to mid-teens percentages of net sales.
Addressing Unmet Medical Needs
"The addition of valiloxybate, the only once-at-bedtime, salt-free and artificial sweetener-free, extended-release oxybate, into our portfolio further reflects Avadel's position as a leader in sleep medicine," said Greg Divis, Chief Executive Officer of Avadel Pharmaceuticals. "The broad adoption of LUMRYZ demonstrates the transformative benefits that a once-at-bedtime oxybate therapy can bring to patients and their families."
Valiloxybate's formulation represents a significant advancement over existing oxybate therapies. Traditional sodium oxybate products like Xyrem require twice-nightly dosing or carry high sodium content, which can impact patient adherence and pose cardiovascular risks for certain populations. Dr. Anne Marie Morse, Director of Pediatric Neurology at Geisinger Medical Center, emphasized the clinical significance: "While sodium sensitivity can affect a small proportion of these patients, all patients deserve the benefit of personalized care and the option of a no sodium once at bedtime dosing solution."
Development Timeline and Regulatory Strategy
Avadel expects to advance valiloxybate into an initial pharmacokinetic study in the fourth quarter of 2025, followed by a pivotal PK trial in the second half of 2026. The program is designed to benefit from Avadel's existing infrastructure and commercial capabilities, potentially enabling efficient clinical and regulatory advancement via a bioequivalence pathway.
Preliminary clinical data suggest the potential for bioequivalence to be established between valiloxybate and Avadel's LUMRYZ, the first and only once-at-bedtime treatment for cataplexy or excessive daytime sleepiness in patients seven years of age and older with narcolepsy. This bioequivalence approach could result in a streamlined and capital-efficient development pathway for valiloxybate.
Market Opportunity and Commercial Potential
The global sodium oxybate market segment is valued at $5.3 billion in 2024 and projected to grow at a 6.9% compound annual growth rate to $8.6 billion by 2033. Avadel's LUMRYZ, approved by the FDA in May 2023 for adults and extended to pediatric patients in October 2024, generated $169.1 million in projected 2024 sales and demonstrated 94% patient preference in the RESTORE study due to its simplified once-nightly regimen.
The licensing agreement includes additional milestone opportunities, with Avadel agreeing to pay XWPharma $10 million for each indication beyond narcolepsy and IH following FDA approval. For annual net sales exceeding $750 million and up to $3.5 billion, Avadel will pay performance-based sales milestone payments equal to 10% of those sales milestones.
Strategic Positioning
James Huang, Executive Chairman of XWPharma, noted: "We are pleased to enter into this licensing agreement with Avadel, a recognized leader in the clinical and commercial advancement of once-at-bedtime oxybate therapy and the ideal partner to progress valiloxybate to market."
The acquisition comes as Avadel faces competitive pressure in the oxybate market, with generic sodium oxybate competitors having pressured Xyrem's sales by 59% in 2024. Valiloxybate's differentiated profile as a salt-free formulation could help capture market share from existing therapies while addressing the needs of patients with hypertension or renal conditions who may be sensitive to sodium content.
LUMRYZ currently holds seven years of Orphan Drug Exclusivity for narcolepsy treatment due to FDA findings of clinical superiority over existing twice-nightly oxybate products, particularly for providing a once-nightly dosing regimen that avoids nocturnal arousal for a second dose.
