newly approved therapeutics. The commercial success of our products depends in part on the conditions under which products incorporating our technology are reimbursed. Adequate third-party reimbursement may not be available for such drug products to enable us to maintain price levels sufficient to realize an appropriate return on our investments in research and product development, which could materially and adversely affect our business. We cannot predict the effect that changes in the healthcare system, especially cost containment efforts, may have on our business. In particular, it is difficult to predict the effect of health care reform legislation enacted in the U.S. in 2010, certain provisions of which are still subject to regulatory implementation, further legislative change and ongoing judicial review. Any such changes or changes due to future legislation governing the pricing and reimbursement of healthcare products in the EU Member States may adversely affect our business.

~~Regulatory reforms may adversely affect our ability to sell our products profitably.~~

From time to time, the U.S. Congress, the Council of the European Union and the European Parliament, as well as the legislators of the EU Member States, adopt changes to the statutes that the FDA, the European Commission and the competent authorities of the EU Member States enforce in ways that could significantly affect our business. In addition, the FDA, the European Commission and the competent authorities of the EU Member States often issue new regulations or guidance, or revise or reinterpret their current regulations and guidance in ways that may significantly affect our business and our products. It is impossible to predict whether legislative changes will be enacted or FDA, EU or EU Member State’s regulations, guidance or interpretations changed, and what the impact of any such changes may be. Any such changes could have a significant impact on the path to approval of our proposed products or of competing products, and on our obligations and those of our pharmaceutical industry partners.

We and companies to which we have licensed, or will license our future products or drug delivery technologies and subcontractors we engage or may engage for services related to the development and manufacturing of our ~~products~~lead product candidate or future product candidates are subject to extensive regulation by the FDA and other regulatory authorities. Our and their failure to meet strict regulatory requirements could adversely affect our business.

We, and companies to which we will license our future products or drug delivery technologies, as well as companies acting as subcontractors for our product developments, including but not limited to non-clinical, pre-clinical and clinical studies, and manufacturing, are subject to extensive regulation by the FDA, other ~~domestic regulatory~~U.S. authorities and equivalent ~~foreign~~non-U.S. regulatory authorities, particularly the European Commission and the competent authorities of EU Member States. Those regulatory authorities may conduct periodic audits or inspections of the applicable facilities to monitor compliance with regulatory standards and we remain responsible for the compliance of our subcontractors. If the FDA or another regulatory authority finds failure to comply with applicable regulations, the authority may institute a wide variety of enforcement actions, including:

•warning letters or untitled letters;

•fines and civil penalties;

•delays in clearing or approving, or refusal to clear or approve, products;

•withdrawal, suspension or variation of approval of products; product recall or seizure;

•orders to the competent authorities of EU Member States to withdraw or vary national authorization;

•orders for physician notification or device repair, replacement or refund;

•interruption of production;

•operating restrictions;

•injunctions; and

•criminal prosecution.

Any adverse action by a competent regulatory agency could lead to unanticipated expenditures to address or defend such action and may impair our ability to produce and market applicable products, which could significantly impact our revenues and royalties that we would be eligible to receive from our potential customers.

We may face product liability claims related to clinical trials for our ~~products~~product candidate or future product candidates or their misuse.

The testing, including through clinical trials, manufacturing and marketing, and the use of our ~~products~~product candidate and future product candidates may expose us to potential product liability and other claims. If any such claims against us are successful, we may be required to make significant compensation payments. Any indemnification that we have obtained, or may obtain, from CROs or pharmaceutical and biotechnology companies or hospitals conducting human clinical trials on our behalf may not protect us from product liability claims or from the costs of related litigation. Insurance coverage is expensive and difficult to obtain, and we may be unable to obtain coverage in the future on acceptable terms, if at all. We currently maintain general liability insurance and product liability ~~and recall~~ insurance. We cannot be certain that the coverage limits of our insurance policies or those of our strategic partners will be adequate. If we are unable to obtain sufficient insurance at an acceptable cost, a product liability claim or recall could adversely affect our financial condition.

Similarly, any indemnification we have obtained, or may obtain, from pharmaceutical and biotechnology companies with whom we are developing, or will develop, our future products may not protect us from product liability claims from the consumers of those products or from the costs of related litigation.

If we use hazardous biological and/or chemical materials in a manner that causes injury, we may be liable for significant damages.

Our R&D activities involve the controlled use of potentially harmful biological and/or chemical materials, and are subject to U.S., state, EU, national and local laws and regulations governing the use, storage, handling and disposal of those materials and specified waste products. We cannot completely eliminate the risk of accidental contamination or injury from the use, storage, handling or disposal of these materials, including fires and/or explosions, storage tank leaks and ruptures and discharges or releases of toxic or hazardous substances. These operating risks can cause personal injury, property damage and environmental contamination, and may result in the shutdown of affected facilities and the imposition of civil or criminal penalties. The occurrence of any of these events may significantly reduce the productivity and profitability of a particular manufacturing facility and adversely affect our operating results.

We currently maintain property, business interruption and casualty insurance with limits that we believe to be commercially reasonable but may be inadequate to cover any actual liability or damages.

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Risks Related to Ownership of Our Securities

The price of ADSs representing our ~~American Depositary Shares (ADSs)~~ordinary shares has been volatile and may continue to be volatile.

The trading price of ~~our~~ American Depositary Shares ~~(ADSs)~~representing our ordinary shares (“ADSs”) has been, and is likely to continue to be, highly volatile. The market value of an investment in ~~our~~ ADSs may fall sharply at any time due to this volatility. During the year ended December 31, ~~2018,~~2020, the closing sale price of ~~our~~ ADSs as reported on the Nasdaq Global Market ranged from ~~$1.74~~$4.06 to ~~$11.70.~~$11.75. During the year ended December 31, ~~2017,~~2019, the closing sale price of ~~our~~ ADSs as reported on the ~~NASDAQ National~~Nasdaq Global Market ranged from ~~$8.03~~$1.09 to ~~$11.57.~~$7.70. The market prices for securities of drug delivery, specialty pharma, biotechnology and pharmaceutical companies historically have been highly volatile. Factors that could adversely affect our share price include, among others:

•fluctuations in our operating results;

•announcements of technological partnerships, innovations or new products by us or our competitors;

•actions with respect to the acquisition of new or complementary businesses;

•governmental regulations;

•developments in patent or other proprietary rights owned by us or others;

•public concern as to the safety of drug delivery technologies developed by us or drugs developed by others using our platform;

•the results of pre-clinical testing and clinical studies or trials by us or our competitors;

•adverse events related to our ~~products~~product candidate or ~~products developed by pharmaceutical and biotechnology company partners that use our drug delivery technologies;~~future product candidates;

•lack of efficacy of our ~~products;~~product candidate or future product candidates;

•litigation;

•decisions by our pharmaceutical and biotechnology company partners relating to the products ~~incorporating~~that may incorporate our technologies;

•the perception by the market of specialty pharma, biotechnology, and high technology companies generally;

•general market conditions, including the impact of the current financial environment; and

•the dilutive impact of any new equity or convertible debt securities we may issue or have issued.

Our largest shareholders own a significant percentage of the share capital and voting rights of the Company.

As of December 31, 2020, RTW Investments LP. owned approximately 9.3% of Avadel’s outstanding shares (in the form of ADSs), Avoro Capital Advisors LLC owned approximately 7.5% of our outstanding shares (in the form of ADSs) and Vivo Opportunity, LLC and certain of its affiliates owned approximately 6.1% of our outstanding shares (in the form of ADSs). To the extent these shareholders continue to hold a large percentage of our share capital and voting rights, they will remain in a position to exert heightened influence in the election of the directors of the Company and in other corporate actions that require shareholder approval, as well as change of control transactions.

Risks Related to Our Financial Condition

We ~~incurred a~~realized net ~~loss~~income in ~~2018 and~~2020 due to the gain on the sale of the Hospital Products, but we will likely incur a net loss in ~~2019,~~2021, and if we are not able to regain profitability in the future, the value of our shares may fall.

We reported net income of $7,028 and a net loss ~~of $95.3 million~~$33,226 for the ~~year~~years ended December 31, ~~2018~~2020 and ~~net income of $68.3 million for the year ended December 31, 2017.~~2019, respectively. In addition, ~~in part because we expect sales of our hospital products to suffer further substantial declines during 2019 and~~ we will incur substantial expenses to develop our ~~products,~~product candidate and we will likely incur a net loss in ~~2019~~2021 as well, the amount of which is not known to us at this time. We cannot predict if we will be able to regain profitability. If we are unable to earn a profit in future periods, the market price of our shares may fall. Our ability to operate profitably depends upon a number of factors, many of which are beyond our direct control. These factors include:

~~the demand for our drug delivery technologies and products;~~

~~the level of product and price competition;~~

•our ability to develop ~~new~~ partnerships and additional commercial applications for our future products;

•our ability to control our costs; and

~~our ability to broaden our customer base;~~

~~the effectiveness of our marketing strategy;~~

~~our effective tax rate;~~

~~the effectiveness of our partners’ marketing strategy for products that use our technology; and~~

•general economic conditions.

We may not be successful in our transition to a commercial company.

We do not know when, or if, we will generate any revenue from FT218. There can be no guarantee that the FDA will approve our NDA for FT218 by the target action PDUFA date of October 15, 2021, or if at all, and, if approved, there can be no guarantee that we will be able to launch and successfully commercialize FT218.

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We do not expect to generate significant revenue, or any revenue at all, unless or until we obtain marketing approval of, and begin to sell, FT218. Our ability to generate revenue depends on a number of factors, including, but not limited to, our ability to:

•obtain marketing approval for FT218;

•set an acceptable price for FT218;

•obtain commercial quantities of FT218 at acceptable cost levels;

•commercialize FT218 in the United States or in other key territories by entering into partnership or co-promotion arrangements with third parties;

•obtain third-party coverage or adequate reimbursement for FT218;

•achieve market acceptance of FT218 in the medical community and with third-party payers, including placement in accepted clinical guidelines for the conditions for which FT218 is intended to target; and

•lawfully prevent/delay the introduction by third parties of competitive once-nightly (e.g., generic) products to FT218.

If FT218 is approved by the FDA and becomes available for commercial sale, we expect to incur significant sales and marketing costs to both prepare for and support its commercialization. Even if we receive marketing approval and expend these costs, FT218 may not be commercially successful. We may not generate revenue from FT218 if approved. If we are unable to generate product revenue, we may be unable to continue operations without continued funding.

We may require additional financing, which may not be available on favorable terms or at all, and which may result in dilution of the equity interest of the holders of ~~our American Depositary Shares (ADSs).~~ADSs.

We may require additional financing to fund the development and possible acquisition of new products and businesses. We may consume available resources more rapidly than currently anticipated, resulting in the need for additional funding. If we cannot obtain financing when needed, or obtain it on favorable terms, we may be required to curtail our plans to continue to develop drug delivery technologies, develop new products, or acquire additional products and businesses. Other factors that will affect future capital requirements and may require us to seek additional financing include:

•the development and acquisition of new products and drug delivery technologies;

•the progress of our research and product development programs; and

•the timing of, and amounts received from, future product sales, product development fees and licensing revenue and royalties.

If adequate funds are not available, we may be required to significantly reduce or refocus our product development efforts, resulting in loss of sales, increased costs and reduced revenues. Alternatively, to obtain needed funds for acquisitions or operations, we may ~~choose~~seek to issue additional ADSs representing our ordinary shares, or issue equity-linked debt, or we may choose to issue preferred shares, in either case through public or private financings. Additional funds may not be available on terms that are favorable to us and, in the case of such equity financings, may result in dilution to the holders of ~~our~~ ADSs. See also the discussion elsewhere in these Risk Factors under the caption “Our net ~~loss~~income and use of cash in ~~2018 and the resulting decrease in our available liquid assets~~operating activities may limit our ability to fully pursue our business strategy.”

We have broad discretion in the use of our cash and may not use it effectively.

Our management has broad discretion in the use of our cash, and may not apply our cash in ways that ultimately increases the value of any investment in our securities. We currently intend to use our cash to fund marketing activities for ~~our~~any future commercialized products, to fund certain clinical trials for product candidates, to fund R&D activities for potential new product candidates, and for working capital, capital expenditures and general corporate purposes. As in the past we expect to invest our excess cash in available-for-sale marketable securities, including corporate bonds, U.S. government securities, other fixed income securities and equities; and these investments may not yield a favorable return. If we do not invest or apply our cash effectively, our financial position and the price of ~~our~~ ADSs may decline.

We currently do not intend to pay dividends and cannot assure the holders of our ADSs that we will make dividend payments in the future.

We have never declared or paid a cash dividend on any of our ordinary shares or ADSs and do not anticipate declaring cash dividends in the foreseeable future. Declaration of dividends will depend upon, among other things, future earnings, if any, the operating and financial condition of our business, our capital requirements, general business conditions and such other factors as our Board of Directors deems relevant.

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Our effective tax rate could be highly volatile and could adversely affect our operating results.

~~Provisions~~

Our future effective tax rate may be adversely affected by a number of factors, many of which are outside of our ~~articles~~control, including:

•the jurisdictions in which profits are determined to be earned and taxed;

•changes in the valuation of ~~association~~our deferred tax assets and liabilities;

•changes in share-based compensation expense;

•changes in domestic or international tax laws or the interpretation of such tax laws;

•changes in available tax credits;

•adjustments to estimated taxes upon finalization of various tax returns; and

•the resolution of issues arising from tax audits with various tax authorities.

Any significant increase in our future effective tax rates could ~~delay or prevent a third-party’s effort~~impact our results of operations for future periods adversely.

Our ability to ~~acquire us.~~use our net operating loss carryforwards and certain other tax attributes may be limited.

~~Our articles~~

As of ~~association could delay, defer or prevent a third-party from acquiring us, even where such a transaction would be beneficial~~December 31, 2020, we had $46,003 of net operating losses in the U.S. Of the $46,003 of net operating losses in the U.S., $10,365 were acquired due to the ~~holders~~acquisition of FSC and $35,638 are due to the losses at US Holdings. The portion due to the acquisition of FSC will expire in 2034 through 2035. The U.S. net operating losses acquired as part of the acquisition of FSC are subject to an annual limitation under Internal Revenue Code Section 382 and $1,473 of the $10,365 will not be fully utilized before they expire. The remaining $35,638 of net operating losses do not have an expiration date.

Under U.S. federal tax legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act (“Tax Act”), U.S. federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such U.S. federal net operating losses is limited. Under Sections 382 and 383 of the U.S. Internal Revenue Code of 1986 (the “Code”) if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage-point cumulative change (by value) in the equity ownership of certain shareholders over a rolling three-year period), the corporation’s ability to use its pre-change net operating losses and other pre-change tax attributes to offset its post-change taxable income or taxes may be limited. We may also experience ownership changes as a result of this offering or future issuances of our ~~ADSs,~~stock or ~~could otherwise adversely affect~~as a result of subsequent shifts in our stock ownership, some of which are outside our control. We have completed an analysis to determine that no events have been triggered in the ~~price of our ADSs. For example, certain provisions of our articles of association:~~

~~permit our board of directors to issue preferred shares with such rights and preferences as they may designate, subject to applicable law;~~

~~impose advance notice requirements for shareholder proposals and director nominations~~past. If any ownership changes are determined to be ~~considered at annual shareholder meetings; and~~

require the approval of a supermajority of the voting power of the shares of our share capital entitled to vote generally at a meeting of shareholders to amend or repeal certain provisions of our articles of association.

We believe these provisions may provide some protection to holders of our ADSs from coercive or otherwise unfair takeover tactics. These provisions are not intended to make us immune from takeovers. However, these provisions will apply even if some holders of our ADSs consider an offer to be beneficial and could delay or prevent an acquisition that our Board of Directors determines istriggered in the ~~best interest of the holders of~~future, our ~~ADSs. These provisions may also prevent~~ability to use our current net operating losses to offset post-change taxable income or ~~discourage attempts to remove and replace incumbent directors.~~

In addition, several mandatory provisions of Irish law could prevent or delay our acquisition by a third party. For example, Irish law does not permit shareholders of an Irish public limited company to take action by written consent with less than unanimous consent. In addition, an effort to acquire us maytaxes would be subject to ~~various provisions of Irish law relating~~limitation. We will be unable to ~~mandatory bids, voluntary bids, requirements to make a cash offer and minimum price requirements, as well as substantial acquisition rules and rules requiring the disclosure of interests in~~use our ~~ADSs in certain circumstances.~~

These provisions may discourage potential takeover attempts, discourage bids for our ordinary shares at a premium over the market price or adversely affect the market price of, and the voting and other rights of the holders of, our ADSs. These provisions could also discourage proxy contests and make it more difficult for holders of our ADSs to elect directors other than the candidates nominated by our board of directors, and could depress the market price of our ADSs.

~~Irish law differs from the laws in effect in the United States and might afford less protection to the holders of our ADSs.~~

~~Holders of our ADSs could have more difficulty protecting their interests than would the shareholders of a U.S. corporation. As an Irish company,~~net operating losses if we are governed by the Irish Companies Act 2014, which differs in some significant, and possibly material, respects from provisions set forth in various U.S. state laws applicable to U.S. corporations and their shareholders, including provisions relating to interested directors, mergers and acquisitions, takeovers, shareholder lawsuits and indemnification of directors.

~~The duties of directors and officers of an Irish company are generally owed to the company only. Therefore, under Irish law shareholders of Irish companies~~ do not ~~generally have a right~~attain profitability sufficient to ~~commence a legal action against directors or officers, and may only do so~~offset our available net operating losses prior to their expiration.

As of December 31, 2020, we had approximately $118,070 of net operating losses in limited circumstances. Directors of an Irish company must act with due care and skill, honestly and in good faith with a view to the best interests of the company. Directors must not put themselves in a position in which their duties to the company and their personal interests conflict and must disclose any personal interest in any contract or arrangement with the company or any of our subsidiaries. A director or officer can be held personally liable to the company in respect of a breach of duty to the company.

~~Judgments of United States courts, including those predicated on the civil liability provisions of the federal securities laws of the United States, may not be enforceable in Irish courts.~~

~~An investor in the U.S. may find it difficult to:~~

~~effect service of process within the U.S. against us and our non-U.S. resident directors and officers;~~

~~enforce United States court judgments based upon the civil liability provisions of the United States federal securities laws against us and our non-U.S. resident directors and officers in Ireland; or~~

~~bring an original action in an Irish court to enforce liabilities based upon the U.S. federal securities laws against us and our non-U.S. resident directors and officers.~~

~~Judgments of United States courts, including those predicated on the civil liability provisions of the federal securities laws of the United States, may not be enforceable in Cayman Islands courts.~~

~~We have been advised by our Cayman Islands legal counsel, Maples and Calder,~~Ireland that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us or Avadel judgments of courts of the United States predicated upon the civil liability provisions of the securities laws of the United States or any State; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us or Avadel predicated upon the civil liability provisions of the securities laws of the United States or any State, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

~~Holders of ADSs have fewer rights than shareholders and have to act through the Depositary to exercise those rights.~~

~~Holders of ADSs~~ do not have the same rights as shareholders and, accordingly, cannot exercise rights of shareholders against us. The Bank of New York Mellon, as depositary, or the “Depositary”, is the registered shareholder of the deposited shares underlying the ADSs. Therefore, holders of ADSs will generallyan expiration date. While these losses do not have to exercise the rights attached to those shares through the Depositary. We will use reasonable efforts to request that the Depositary notify the holders of ADSs of upcoming votes and ask for voting instructions from them. If a holder fails to return a voting instruction card to the Depositary by thean expiration date, ~~established by the Depositary for receipt of such voting instructions, or if the Depositary receives an improperly completed or blank voting instruction card, or if the voting instructions included~~substantial changes in the ~~voting instruction card are illegible or unclear, then such holder will be deemed~~activities performed in these jurisdictions could have an impact on our ability to have instructed the Depositary to vote its shares, and the Depositary shall vote such shares in favor of any resolution proposed or approved by our Board of Directors and against any resolution not so proposed or approved.

~~Our largest shareholders own a significant percentage of the share capital and voting rights of the Company.~~

As of January 25, 2019, Brandes Investment Partners L.P. owned approximately 19.1% of Avadel’s outstanding shares (in the form of ADRs), Broadfin Capital and certain of its affiliates beneficially owned approximately 8.3% of our outstanding shares (in the form of ADRs) and Deerfield Capital and certain of its affiliates beneficially owned approximately 7.3% of Avadel’s outstanding shares (in the form of ADRs). To the extentutilize these ~~shareholders continue to hold a large percentage of our share capital and voting rights, they will remain in a position to exert heightened influence~~tax attributes in the ~~election of the directors of the Company and in other corporate actions that require shareholder approval, including change of control transactions.~~future.

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Risks Related to the 2023 Notes

Servicing our 2023 Notes may require a significant amount of cash, and we may not have sufficient cash or the ability to raise the funds necessary to settle exchanges of the 2023 Notes in cash, repay the Notes at maturity, or repurchase the 2023 Notes as required following a fundamental change.

In February 2018, we issued ~~$143.75 million~~$143,750 aggregate principal amount of our Senior Exchangeable Notes. Prior to February 2023, the 2023 Notes are convertible at the option of the holders only under certain conditions or upon the occurrence of certain events. If holders of the 2023 Notes elect to exchange their 2023 Notes, unless we elect to deliver solely our ADSs to settle such exchanges, we will be required to make cash payments in respect of the 2023 Notes being exchanged. Holders of the 2023 Notes also have the right to require us to repurchase all or a portion of their 2023 Notes upon the occurrence of a fundamental change (as defined in the applicable indenture governing the 2023 Notes) at a repurchase price equal to 100% of the principal amount of the 2023 Notes to be repurchased, plus accrued and unpaid interest. If the 2023 Notes have not previously been exchanged or repurchased, we will be required to repay the 2023 Notes in cash at maturity. Our ability to make cash payments in connection with exchanges of the 2023 Notes, repurchase the 2023 Notes in the event of a fundamental change, or to repay or refinance the 2023 Notes at maturity will depend on market conditions and our future performance, which is subject to economic, financial, competitive, and other factors many of which are beyond our control. We ~~incurred significant~~had limited net ~~losses~~income in ~~2018~~2020 and we ~~may continue to~~will likely incur ~~significant losses.~~a net loss in 2021. As a result, we may not have enough available cash or be able to obtain financing at the time we are required to repurchase or repay the 2023 Notes or in the event we elect to pay cash with respect to 2023 Notes being exchanged.

The conditional exchange feature of the 2023 Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional exchange feature of the 2023 Notes is triggered, holders of 2023 Notes will be entitled to exchange the 2023 Notes at any time during specified periods at their ~~option (see the discussion under the caption “Recent Developments -- Issuance of Exchangeable Notes” in Item 1 of this Annual Report on Form 10-K).~~option. If one or more holders elect to exchange their 2023 Notes, unless we elect to satisfy our exchange obligation by causing to be delivered solely ADSs (other than paying cash in lieu of any fractional ~~ADS)~~ADSs), we would be required to settle a portion or all of our exchange obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to exchange their 2023 Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2023 Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

The accounting method for convertible and exchangeable debt securities that may be settled in cash, such as the 2023 Notes, could have a material effect on ~~Avadel’s~~our reported financial results.

Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options, which we refer to as ASC 470-20, an entity must separately account for the liability and equity components of the convertible or exchangeable debt instruments (such as the 2023 Notes) that may be settled entirely or partially in cash upon conversion or exchange in a manner that reflects the issuer’s economic interest cost. However, entities must first consider the guidance in ASC 815-15, Embedded Derivatives (“ASC 815-15”), to determine if an instrument contains an embedded feature that should be separately accounted for as a derivative. ASC 815 provides for an exception to this rule when convertible notes, as host instruments, are deemed to be conventional, as defined by ASC 815-40. Should this exception apply, the effect of ASC 470-20 on the accounting for the 2023 Notes is that the equity component would be required to be included in the additional paid-in capital section of ~~stockholders’~~shareholders’ equity on Avadel’s consolidated balance sheet, and the value of the equity component would be treated as original issue discount for purposes of accounting for the debt component of the 2023 Notes. As a result, Avadel would be required to record a greater amount of non-cash interest expense in current periods presented as a result of the amortization of the discounted carrying value of the 2023 Notes to their face amount over the term of the 2023 Notes. Avadel would report lower net income in its financial results because ASC 470-20 would require interest to include both the current period’s amortization of the debt discount and the instrument’s coupon interest, which could adversely affect Avadel’s reported or future financial results, the trading price of the ADSs and the trading price of the 2023 Notes.

In addition, under certain circumstances, convertible or exchangeable debt instruments (such as the 2023 Notes) that may be settled entirely or partly in cash are currently accounted for utilizing the treasury stock method, the effect of which is that the ADSs deliverable upon exchange of the 2023 Notes are not included in the calculation of diluted earnings per share except to the extent that the exchange value of the 2023 Notes exceeds their principal amount. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of ADSs that would be necessary to settle such excess, if we elected to settle such excess in ADSs, are issued. ~~Neither we nor Avadel can~~We cannot be sure that the accounting standards in the future will continue to permit the use of the treasury stock method. If Avadel is unable to use the treasury stock method in

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accounting for the ADSs deliverable upon exchange of the 2023 Notes, then Avadel’s diluted earnings per share would be adversely affected.

Exchanges of the 2023 Notes will dilute the ownership interest of Avadel’s existing shareholders and holders of the ADSs, including holders who had previously exchanged their 2023 Notes and received ADSs upon exchange, to the extent our exchange obligation includes ADSs.

The exchange of some or all of the 2023 Notes will dilute the ownership interests of Avadel’s existing shareholders and holders of the ADSs to the extent our exchange obligation includes ADSs. Any sales in the public market of the ADSs issuable upon such exchange of the 2023 Notes could adversely affect prevailing market prices of the ADSs and, in turn, the price of the 2023 Notes. In addition, the existence of the 2023 Notes may encourage short selling by market participants because the exchange of the 2023 Notes could depress the price of the ~~ADS.~~ADSs.

The fundamental change repurchase feature of the 2023 Notes may delay or prevent an otherwise beneficial takeover attempt of Avadel.

The indenture governing the 2023 Notes will require us to repurchase the 2023 Notes for cash upon the occurrence of a fundamental change and, in certain circumstances, to increase the exchange rate for a holder that exchanges its 2023 Notes in connection with a make-whole fundamental change. A takeover of Avadel may trigger the requirement that we repurchase the 2023 Notes and/or increase the exchange rate, which could make it more costly for a potential acquirer to engage in a combinatory transaction with

us or Avadel. Such additional costs may have the effect of delaying or preventing a takeover of Avadel that would otherwise be beneficial to investors.

~~Dividends paid by~~If we pay dividends, the ~~Parent~~dividends may be subject to Irish dividend withholding tax

In certain circumstances, as an Irish tax resident company, ~~Avadel will~~we may be required to deduct Irish dividend withholding tax (currently at the rate of 20%) from dividends paid to its shareholders. Shareholders that are resident in the U.S., EU countries (other than Ireland) or other countries with which Ireland has signed a tax treaty (whether the treaty has been ratified or not) generally should not be subject to Irish withholding tax so long as the shareholder has provided its broker, for onward transmission to ~~Avadel’s~~our qualifying intermediary or other designated agent (in the case of shares held beneficially), or ~~Avadel~~us or ~~its~~our transfer agent (in the case of shares held directly), with all the necessary documentation by the appropriate due date prior to payment of the dividend. However, some shareholders may be subject to withholding tax, which could adversely affect the price of ordinary shares and the value of their 2023 Notes.

~~Risks Related~~

General Risk Factors

Provisions of our articles of association could delay or prevent a third-party’s effort to ~~Recent Tax Legislation~~acquire us.

Our articles of association could delay, defer or prevent a third-party from acquiring us, even where such a transaction would be beneficial to the holders of ADSs, or could otherwise adversely affect the price of ADSs. For example, certain provisions of our articles of association:

•permit our board of directors to issue preferred shares with such rights and preferences as they may designate, subject to applicable law;

•impose advance notice requirements for shareholder proposals and director nominations to be considered at annual shareholder meetings; and

•require the approval of a supermajority of the voting power of our shares entitled to vote at a general meeting of shareholders to amend or repeal any provisions of our articles of association.

We believe these provisions, if implemented in compliance with applicable law, may provide some protection to holders of ADSs from coercive or otherwise unfair takeover tactics. These provisions are not intended to make us immune from takeovers. They will, however, apply even if some holders of ADSs consider an offer to be beneficial and could delay or prevent an acquisition that our Board of Directors determines is in the best interest of the holders of ADSs. Certain of these provisions may also prevent or discourage attempts to remove and replace incumbent directors.

In addition, mandatory provisions of Irish law could prevent or delay an acquisition of the Company by a third party. For example, Irish law does not permit shareholders of an Irish public limited company to take action by written consent with less than unanimous consent. In addition, an effort to acquire us may be subject to various provisions of Irish law relating to

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mandatory bids, voluntary bids, requirements to make a cash offer and minimum price requirements, as well as substantial acquisition rules and rules requiring the disclosure of interests in ADSs in certain circumstances.

These provisions may discourage potential takeover attempts or bids for our ordinary shares at a premium over the market price or they may adversely affect the market price of, and the voting and other rights of the holders of, ADSs. These provisions could also discourage proxy contests and make it more difficult for holders of ADSs to elect directors other than the candidates nominated by our board of directors and could depress affect the market price of ADSs.

Irish law differs from the laws in effect in the U.S. and might afford less protection to the holders of ADSs.

Holders of ADSs could have more difficulty protecting their interests than would the shareholders of a U.S. corporation. As an Irish company, we are governed by Irish law, including the Irish Companies Act 2014 and the Irish Takeover Rules, which differs in some significant, and possibly material, respects from provisions set forth in various U.S. state laws applicable to U.S. corporations and their shareholders, including provisions relating to interested directors, mergers and acquisitions, takeovers, shareholder lawsuits and indemnification of directors.

The duties of directors and officers of an Irish company are generally owed to the company only. Therefore, under Irish law shareholders of Irish companies do not generally have a right to commence a legal action against directors or officers and may only do so in limited circumstances. Directors of an Irish company must act with due care and skill, honestly and in good faith with a view to the best interests of the company. Directors must not put themselves in a position in which their duties to the company and their personal interests conflict and must disclose any personal interest in any contract or arrangement with the company or any of our subsidiaries. A director or officer can be held personally liable to the company in respect of a breach of duty to the company.

Judgments of U.S. courts, including those predicated on the civil liability provisions of the federal securities laws of the U.S., may not be enforceable in Irish courts.

An investor in the U.S. may find it difficult to:

•effect service of ~~comprehensive~~process within the U.S. against us and our non-U.S. resident directors and officers;

•enforce U.S. court judgments based upon the civil liability provisions of the U.S. federal securities laws against us and our non-U.S. resident directors and officers in Ireland; or

•bring an original action in an Irish court to enforce liabilities based upon the U.S. federal securities laws against us and our non-U.S. resident directors and officers.

Judgments of U.S. courts, including those predicated on the civil liability provisions of the federal securities laws of the United States, may not be enforceable in Cayman Islands courts.

We have been advised by our Cayman Islands legal counsel, Maples and Calder, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us or Avadel judgments of courts of the U.S. predicated upon the civil liability provisions of the securities laws of the U.S. or any State; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us or Avadel predicated upon the civil liability provisions of the securities laws of the U.S. or any State, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the U.S., the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

Holders of ADSs have fewer rights than shareholders and have to act through the Depositary to exercise those rights.

Holders of ADSs do not have the same rights as shareholders and, accordingly, cannot exercise rights of shareholders against us. The Bank of New York Mellon, as depositary (the “Depositary”), is the registered shareholder of the deposited shares underlying the ADSs. Therefore, holders of ADSs will generally have to exercise the rights attached to those shares through the Depositary. We will use reasonable efforts to request that the Depositary notify the holders of ADSs of upcoming votes and ask for voting instructions from them. If a holder fails to return a voting instruction card to the Depositary by the date established

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by the Depositary for receipt of such voting instructions, or if the Depositary receives an improperly completed or blank voting instruction card, or if the voting instructions included in the voting instruction card are illegible or unclear, then such holder will be deemed to have instructed the Depositary to vote its shares, and the Depositary shall vote such shares in favor of any resolution proposed or approved by our Board of Directors and against any resolution not so proposed or approved.

U.S. Holders of ordinary shares or ADSs may suffer adverse U.S. tax ~~reform legislation on us, whether adverse~~consequences if we are classified as a passive foreign investment company.

Generally, if, for any taxable year, at least 75% of our gross income is passive income, or ~~favorable,~~at least 50% of the value of our assets is ~~uncertain.~~

~~On December 22, 2017, President Trump signed into law~~attributable to assets that produce passive income or are held for the ~~Tax Cuts and Jobs Act (H.R. 1) (the “Tax Act”). Among~~production of passive income, including cash, we would be characterized as a ~~number of significant changes to the~~passive foreign investment company (“PFIC”) for U.S. federal income tax ~~rules,~~purposes. For purposes of these tests, passive income includes dividends, interest, and gains from the ~~Tax Act reduces~~sale or exchange of investment property and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the ~~marginal U.S. corporate~~active conduct of a trade or business. Our status as a PFIC depends on the composition of our income ~~tax rate from 35% to 21%, limits~~and the ~~deduction for net interest expense, shifts~~composition and value of our assets (for which purpose the ~~United States toward a more territorial tax system, and imposes new rules to combat erosion~~total value of our assets may be determined in part by the market value of the ordinary shares or ADSs, which are subject to change) from time to time. If we are characterized as a PFIC, U.S. Holders (as defined below under “Material U.S. Federal Income Tax Considerations for U.S. Holders”) of ordinary shares or ADSs may suffer materially adverse tax consequences, including having gains realized on the sale of ordinary shares or ADSs treated as ordinary income, rather than capital gain, the loss of the preferential rate applicable to dividends received on ordinary shares or ADSs by individuals who are U.S. Holders, and having interest charges apply to distributions by us and the proceeds of sales of ordinary shares or ADSs. See “Material U.S. Federal Income Tax Considerations for U.S. Holders—PFIC rules.”

We believe that we were not a PFIC for the taxable year ending December 31, 2020 and, based on the expected value of our assets, including any goodwill, and the expected nature and composition of our income and assets, we do not anticipate that we will be a PFIC for our current taxable year. However, our status as a PFIC is a fact-intensive determination subject to various uncertainties, and we cannot provide any assurances regarding our PFIC status for the current, prior or future taxable years.

Certain U.S. Holders that own 10 percent or more of the vote or value of ordinary shares or ADSs may suffer adverse U.S. tax consequences because our non-U.S. subsidiaries are expected to be classified as controlled foreign corporations.

Each ‘‘Ten Percent Shareholder’’ (as defined below) in a non-U.S. corporation that is classified as a ‘‘controlled foreign corporation,’’ or a CFC, for U.S. federal income tax ~~base.~~purposes generally is required to include in income for U.S. federal tax purposes such Ten Percent Shareholder’s pro rata share of the CFC’s ‘‘Subpart F income’’ and investment of earnings in U.S. property, even if the CFC has made no distributions to its shareholders. Subpart F income generally includes dividends, interest, rents, royalties, ‘‘global intangible low-taxed income,’’ gains from the sale of securities and income from certain transactions with related parties. In addition, a Ten Percent Shareholder that realizes gain from the sale or exchange of shares in a CFC may be required to classify a portion of such gain as dividend income rather than capital gain. A non-U.S. corporation generally will be classified as a CFC for U.S. federal income tax purposes if Ten Percent Shareholders own, directly or indirectly, more than 50% of either the total combined voting power of all classes of stock of such corporation entitled to vote or of the total value of the stock of such corporation. A ‘‘Ten Percent Shareholder’’ is a U.S. person (as defined by the Code) who owns or is considered to own 10% or more of the total combined voting power of all classes of stock entitled to vote or 10% or more of the total value of all classes of stock of such corporation.

We believe that we were not a CFC in the 2020 taxable year, but that our non-U.S. subsidiaries were CFCs in the 2020 taxable year. We anticipate that our non-U.S. subsidiaries will remain CFCs in the 2021 taxable year, and it is possible that we may become a CFC in the 2021 taxable year or in a subsequent taxable year. The ~~Internal Revenue Service (“IRS”) has issued limited regulations~~determination of CFC status is complex and ~~guidance under~~includes attribution rules, the ~~Tax Act, and is expected to issue additional guidance the impact~~application of which is uncertain but could differ from the interpretations and assumptions that we have made, which could have a material adverse effect on our cash tax liabilities, results of operations and financial condition. Investorsnot entirely certain. U.S. Holders should consult their own tax ~~advisers regarding~~advisors with respect to the ~~impact~~potential adverse U.S. tax consequences of becoming a Ten Percent Shareholder in a CFC, including the possibility and consequences of becoming a Ten Percent Shareholder in one or more of our non-U.S. subsidiaries that are anticipated to be treated as CFCs. If we are classified as both a CFC and a PFIC, we generally will not be treated as a PFIC with respect to those U.S. Holders that meet the definition of a Ten Percent Shareholder during the period in which we are a CFC, subject to certain exceptions.

A transfer of ordinary shares may be subject to Irish stamp duty.

Transfers of ordinary shares (as opposed to ADSs) could be subject to Irish stamp duty (currently at the rate of 1% of the ~~Tax Act~~higher of the price paid or the market value of the shares acquired). Payment of Irish stamp duty is generally a legal obligation of the transferee. Although transfers of ADSs are not subject to Irish stamp duty, the potential for stamp duty to arise on ~~their investments in Avadel securities.~~transfers of ordinary shares could adversely affect the price of our ordinary shares or ADSs.

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Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

~~(Amounts in thousands, except square foot amounts)~~

Avadel Research SAS, our research center, is located in Venissieux, France (a suburb of Lyon) in three adjacent leased facilities totaling approximately 51,600 square feet. One building of approximately 12,800 square feet houses administrative offices and analytical research laboratories. The lease on this facility expires in March 2022. A second facility comprising approximately 12,800 square feet houses equipment dedicated to our Micropump, LiquiTime and Trigger Lock platforms has a lease which expires in March 2022. The lease for the third facility of approximately 26,000 square feet houses research and biochemistry (Medusa) laboratories and quality/regulatory affairs was terminated on December 31, 2018.

We have commercial and administrative activities located in Chesterfield, Missouri. Our current office space consists of 24,236 square feet, and the lease expires in 2025. Additionally, we ~~still maintain~~maintained the lease on the former headquarters of FSC Laboratories, Inc. located in Charlotte, North Carolina. This office space ~~consists~~consisted of 6,300 square feet and the lease ~~expires in~~expired on December 31, 2020.

~~We have intellectual property, clinical, quality, regulatory, and supply chain activities located in Dublin, Ireland. The office space consists of 5,059 square feet and the lease expires in 2025.~~

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report on Form 10-K for more information regarding our investment activities and principal capital expenditures over the last ~~three~~two years.

Item 3. Legal Proceedings.

~~Voluntary Chapter 11 Bankruptcy Filing by Avadel Specialty Pharmaceuticals, LLC~~

On February 6, 2019, our indirect wholly owned subsidiary Avadel Specialty Pharmaceuticals, LLC (“Specialty Pharma”) filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy CodeWhile we may be engaged in various claims and legal proceedings in the ~~United States District Bankruptcy Court for the District~~ordinary course of ~~Delaware (the “Bankruptcy Court”), Case No. 19-10248 (CSS). The case has been assigned to Judge Christopher~~

Sontchi. Specialty Pharma is responsible solely for the sales, marketing and distribution of the Company’s Noctiva™ product for the treatment of nocturia. Specialty Pharma is the licensee under a license agreement with Serenity Pharmaceuticals LLC (“Serenity”) for the patents and other intellectual property relating to Noctiva™. Our direct wholly owned subsidiary Avadel US Holdings, Inc. (“US Holdings”) is the parent of Specialty Pharma. On February 8, 2019, the Bankruptcy Court approved, on an interim basis, a binding term sheet (the “Binding Term Sheet”) between US Holdings and Specialty Pharma pursuant to which US Holdings will provide debtor-in-possession financing to Specialty Pharma of up to a maximum amount of $2.7 million. The Binding Term Sheet received final approval by the Bankruptcy Court on March 11, 2019. The financing under the Binding Term Sheet is a non-amortizing revolving credit facility bearing interest at a rate of 5.0% per annum; advances will be used for purposes consistent with the budget approved by the Bankruptcy Court; the amounts loaned under the facility have the status of pre-petition unsecured claims and a ranking parri passu with other pre-petition unsecured claims that may be allowed by the Bankruptcy Court; and all such advances will be due on February 6, 2020 or earlier upon certain events specified in the Binding Term Sheet.

~~Specialty Pharma has also filed motions with the Bankruptcy Court for approval to sell its assets with bids due by April 1, 2019 and, if qualified bids~~business, we are received, an auction on April 3, 2019. If a bid is accepted at the auction, there will be a hearing in the Bankruptcy Court on April 10, 2019 to consider approval of the proposed sale. Specialty Pharma also moved to reject its supply contract with Renaissance Lakewood, LLC relating to the manufacture of certain specified quantities of Noctiva^TM. The rejection of the agreement with Renaissance was approved by the Bankruptcy Court over Serenity’s objection at a hearing on March 13, 2019. In addition, Ferring International Center S.A. has moved for relief from the automatic stay in bankruptcy so that it may proceed in its litigation against Specialty Pharma which is described below under the caption “Noctiva Patent Litigation.”

~~Noctiva Patent Litigation~~

Specialty Pharma is a party to Case No. 17-cv-9922 in the United States District Court for the Southern District of New York brought in April 2017 by Ferring B.V., Ferring International Center S.A., and Ferring Pharmaceuticals Inc. (collectively referred to hereafter as “Ferring”) against Serenity and Reprise Biopharmaceutics, LLC (“Reprise”). In this proceeding, Ferring is seeking a court judgment to declare as invalid and unenforceable three patents relating to Noctiva, which have been licensed to Specialty Pharma by Serenity, and a further court judgment that Ferring’s Nocdurna product does not ~~infringe those patents. In June 2018, Serenity and Reprise filed an answer, which Specialty Pharma joined~~involved (whether as a ~~party~~ defendant asserting defenses and counterclaims for, among other things, infringement by Nocdurna of certain of Serenity’s patents and seeking a declaratory judgment that the name “Noctiva” does not infringe any Ferring trademark for “Nocdurna”; subsequently, Ferring asserted a claim for alleged trademark infringement by Noctiva^TM ~~with respect Nocdurna. No date is set for a hearing~~ or ~~trial on the various pending motions or on the underlying claims. As noted above, Specialty Pharma is the debtor~~otherwise) in, a voluntary Chapter 11 bankruptcy case. If Ferring is successful on any of the claims it is asserting in its case in the U.S. District Court, the amount that Specialty Pharma may obtain for a sale of its assets would be limited.

By way of background, Noctiva™ is our brand name for the drug desmopressin acetate which is FDA-approved for treatment of nocturia due to nocturnal polyuria (overproduction of urine during the night) in adults. Noctiva™ is an emulsified low-dose vasopressin analog administered through a preservative-free nasal spray 30 minutes before bedtime. Ferring’s product Nocdurna is desmopressin acetate in the form of a sublingual tablet (i.e., to be dissolved under the tongue) which on June 21, 2018 received FDA approval for marketing in the U.S. for the treatment of nocturia.

A separate litigation (Case No. C.A. No. 12-cv 2650 in the United States District Court for the Southern District of New York) is pending between Ferring, on the one hand, and Serenity, Reprise and certain related parties, on the other hand. In this case, Ferring has alleged that certain Ferring employees should be the sole named inventors of the three patents relating to Noctiva, and has also alleged related claims that the defendants breached certain contractual and common law duties. The court in this case has dismissed Ferring’s claims, but Ferring may appeal the dismissals. Neither Specialty Pharma nor any other Avadel company is a party to this litigation. However, if the defendants are ultimately unsuccessful in defending Ferring’s allegations in this case, Specialty Pharma (or any person who might purchase its assets) would be required to seek a license for the patents from Ferring in order to continue to market Noctiva^TM, and, we ~~would not~~ have ~~the right to enforce~~no knowledge of any threat of, ~~the patents against competitors~~any litigation, arbitration or administrative or other ~~third parties.~~

~~Some of the patents covering our Noctiva~~^TM ~~product (the “Noctiva Patents”) are the subject of litigation initiated by Ferring Pharmaceuticals Inc. and two of its foreign affiliates, who manufacture~~proceeding that management believes will have a competing product known as Nocdurna. Nocdurna was approved by the FDA in June 2018 and commercially launched in the U.S. in November 2018. In this litigation (the “Ferring Litigation”), Ferring seeks to invalidate and disputes the inventorship of the Noctiva Patents, seeks damages for various alleged breaches of contractual and common law duties, and seeks damages for alleged infringement by Noctiva^TM of Ferring’s “Nocdurna” trademark. Avadel’s indirectly wholly owned subsidiary, Specialty Pharma and certain other parties including Serenity Pharmaceuticals, LLC (“Serentiy”) (the licensor of the Noctiva Patents) have been actively defending this litigation, and have made certain counterclaims against Ferring, including for infringement of the Noctiva Patents and a declaratory judgment of noninfringement with respect to Ferring’s “Nocdurna” trademark. The court has dismissed Ferring’s inventorship claim and its

claims for alleged breaches of contractual and common law duties, although these dismissals may be appealed by Ferring. On February 15, 2019, Specialty Pharma and its co-defendants moved to stay the litigation pending completion of the bankruptcy proceeding of Specialty Pharma. Adverse outcomes from this litigation could have material adverse ~~effects~~effect on ~~the value~~our consolidated financial position or results of ~~the Specialty Pharma’s license to Noctiva~~^TM.operations.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II


~~Item 5.~~	~~Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.~~

Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Common Stock Data (per share):

The principal trading market for ~~the Company’s~~our securities in ADSs is the ~~NASDAQ~~Nasdaq Global ~~Market.~~Market under the symbol “AVDL”. There is no foreign trading market for ~~the Company’s~~our ordinary shares, ADSs or any other equity security issued by ~~the Company.~~us. Each ADS represents one ordinary share, nominal value $0.01. Each ADS is evidenced by an ADR. The Bank of New York Mellon is the Depositary for the ADRs.

As of March ~~13, 2019,~~4, 2021, there were ~~37,355,511~~58,465,151 ordinary shares outstanding, and ~~the~~our closing stock price ~~of the Company~~ was ~~$1.98~~$7.56 per share.

The following table reports the high and low trading prices of the ADSs on the ~~NASDAQ~~Nasdaq Global Market for the periods indicated:


	2018 Price Range				2017 Price Range					2020 Price Range				2019 Price Range
	High		Low		High		Low			High		Low		High		Low

First quarter	$	11.70	$	6.76	$	12.30	$	8.87	First quarter	$	10.64	$	4.06	$	3.29	$	1.44
Second quarter	7.78		5.89		11.72		8.75		Second quarter	11.75		7.25		3.19		1.09
Third quarter	7.14		4.08		11.18		8.14		Third quarter	8.98		5.02		4.47		1.92
Fourth quarter	4.66		1.74		11.53		7.52		Fourth quarter	7.95		5.03		7.70		3.34

Holders

As of March ~~13, 2019,~~4, 2021, there were 7578 holders of record of our ordinary shares and 3265 accounts registered with The Bank of New York Mellon, the ~~depositary~~Depositary of our ADS program, as holders of ADSs, one of which ADS accounts is registered to the Depositary Trust Corporation (DTC). Because our ADSs are generally held of record by brokers, nominees and other institutions as participants in DTC on behalf of the beneficial owners of such ADSs, we are unable to estimate the total number of beneficial owners of the ADSs held by these record holders.

Dividends

~~The Company has~~We have never declared or paid a cash dividend on any of our ~~capital stock~~shares and ~~does~~do not anticipate declaring cash dividends in the foreseeable future.

Equity Compensation Plan

The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K.

Issuer Purchases of Equity Securities

~~In March 2017,~~We did not repurchase any of our equity securities during the ~~Board~~year ended December 31, 2020.

Recent Sales of ~~Directors approved an authorization~~Unregistered Securities

Securities Purchase Agreement

On February 21, 2020, we announced that we entered into a definitive agreement for the sale of our ADSs and Series A Non-Voting Convertible Preferred Shares (“Series A Preferred”) in a private placement to ~~repurchase up~~a group of institutional accredited investors. The private placement resulted in gross proceeds of approximately $65,000 before deducting placement agent and other offering expenses which resulted in net proceeds of $60,570.

Pursuant to ~~$25,000~~the terms of the private placement, we issued 8,680,225 ADSs and 487,614 shares of Series A Preferred at a price of $7.09 per share, priced at-the-market under Nasdaq rules. Each share of non-voting Series A Preferred is convertible into one ADS, provided that conversion will be prohibited if, as a result, the holder and its affiliates would own more than 9.99% of the

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total number of Avadel ~~ordinary shares represented by ADSs. Under this authorization, which has an indefinite duration, share repurchases may~~ADSs outstanding. The closing of the private placement occurred on February 25, 2020. Proceeds from the private placement will be ~~made in the open market, in block transactions on or off the exchange, in privately negotiated transactions, or through other means~~used to fund continued clinical and program development of FT218, including our open-label extension study for REST-ON, a switch study to evaluate patients switching from twice-nightly sodium oxybate to once-nightly FT218, as ~~determined by the Board of Directors and in accordance with the regulations~~well as for general corporate purposes.

The private placement was exempt from registration pursuant to Section 4(a)(2) of the Securities ~~and Exchange Commission. The timing and amount of repurchases, if any, will depend on~~Act as a variety of factors, including the price of our shares, cash resources, alternative investment opportunities, corporate and regulatory requirements and market conditions. This share repurchase program may be modified, suspended or discontinued at any time without prior notice. We may also from time to time establishtransaction by an issuer not involving a trading plan under Rule 10b5-1 of the Securities and Exchange Act of 1934 to facilitate purchases of our shares under this program. Additionally, on February 12, 2018, the Board of Directors approved an authorization to repurchase up to $18,000 of Avadel ordinary shares represented by American Depository Shares in connection with our Convertible Notes Offering completed on February 16, 2018. See ~~Note 10: Long-Term Debt~~. In March 2018, the Board of Directors approved an authorization to repurchase up to $7,000 of Avadel ordinary shares represented by American Depository Shares, bring the total authorization to $50,000. public offering.

~~The Company fully completed its authorized share buyback program. There were no shares repurchased during the three months ended December 31, 2018.~~

~~Stock~~Share Performance Graph

The following graph compares the cumulative 5-year return provided to shareholders of Avadel’s ADSs relative to the cumulative total returns of the ~~NASDAQ~~Nasdaq Composite Index and the ~~NASDAQ~~Nasdaq Biotechnology Index. We believe these indices are the most appropriate indices against which the total shareholder return of Avadel should be measured. The ~~NASDAQ~~Nasdaq Biotechnology Index has been selected because it is an index of U.S. quoted biotechnology and pharmaceutical companies. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our ADSs and in each of the indexes on January 1, ~~2013~~2016 and our relative performance is tracked through December 31, ~~2018.~~2020. The comparisons shown in the graph are based upon historical data and we caution that the stock price performance shown in the graph is not indicative of, or intended to forecast, the potential future performance of our stock.

This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act. Notwithstanding any statement to the contrary set forth in any of our filings under the Securities Act of 1933 or the Exchange Act that might incorporate future filings, including this Annual Report on Form 10-K, in whole or in part, this performance graph shall not be incorporated by reference into any such filings except as may be expressly set forth by specific reference in any such filing.

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Item 6. ~~Selected Financial Data (in thousands, except per share amounts).~~

~~Annual Financial Data:~~

The following selected financial data should be read in conjunction with our consolidated financial statements and related notes appearing in Item 8 “Financial Statements and Supplementary Data” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of this Annual Report on Form 10-K. The Company’s historical results are not necessarily indicative of the results to be expected in any future period.

Statement of (Loss) Income Data: 2018 2017 2016 2015 2014

Total revenues $ 103,269
$ 173,245
$ 150,246
$ 173,009
$ 14,975
Gross profit ^(a)
85,753
156,944
136,998
161,599
11,592
Operating (loss) income (104,926 ) 89,505
(4,965 ) 70,758
(93,657 )
Net (loss) income from continuing operations (95,304 ) 68,271
(41,276 ) 41,798
(89,487 )
Net income from discontinued operations —
—
—
—
4,018
Net (loss) income (95,304 ) 68,271
(41,276 ) 41,798
(85,469 )
Net (loss) income per share - basic:

Continuing operations (2.55 ) 1.69
(1.00 ) 1.03
(2.47 )
Discontinued operations —
—
—
—
0.11
Net (loss) income per share - basic (2.55 ) 1.69
(1.00 ) 1.03
(2.36 )
Net (loss) income per share - diluted:

Continuing operations (2.55 ) 1.63
(1.00 ) 0.96
(2.47 )
Discontinued operations —
—
—
—
0.11
Net (loss) income per share - diluted (2.55 ) 1.63
(1.00 ) 0.96
(2.36 )

Balance Sheet Data: 2018 2017 2016 2015 2014

Cash and cash equivalents $ 9,325
$ 16,564
$ 39,215
$ 65,064
$ 39,760
Marketable securities 90,590
77,511
114,980
79,738
53,074
Goodwill 18,491
18,491
18,491
18,491
18,491
Intangible assets, net 1,629
92,289
22,837
15,825
28,389
Total assets 190,300
253,277
245,482
215,081
174,382
Long-term debt (incl. current portion) 115,840
267
815
1,118
3,717
Long-term related party payable (incl. current portion) 28,840
98,925
169,347
122,693
114,750

^(a) ~~Gross profit is computed by subtracting cost of products from total revenues.~~

Quarterly Financial Data (Unaudited):

The following tables present certain unaudited consolidated quarterly financial information for each quarter of ~~2018~~2020 and ~~2017.~~2019. Year-to-date net income (loss) per share amounts may be different than the sum of the applicable quarters due to differences in weighted average shares outstanding for the respective periods.


2020:	March 31		June 30		September 30		December 31

Revenues	$	12,243	$	10,091	$	—	$	—
Gross profit (a)	9,786		6,806		—		—
Operating (loss) income (b)	(6,497)		40,269		(13,697)		(14,260)
Net (loss) income	(865)		30,874		(11,703)		(11,278)
Net (loss) income per share - basic	(0.02)		0.57		(0.20)		(0.19)
Net (loss) income per share - diluted	(0.02)		0.49		(0.20)		(0.19)

2018: March 31 June 30 September 30 December 31

Revenues $ 33,293
$ 29,230
$ 19,826
$ 20,920
Gross profit ^(a)
26,701
25,718
16,706
16,628
Operating loss ^(b)
(12,625 ) (2,785 ) (14,095 ) (75,421 )
Net loss (12,236 ) (3,438 ) (15,771 ) (63,859 )
Net loss per share - basic (0.32 ) (0.09 ) (0.43 ) (1.72 )
Net loss per share - diluted (0.32 ) (0.09 ) (0.43 ) (1.72 )

2017: March 31 June 30 September 30 December 31

Revenues $ 52,507
$ 46,311
$ 39,675
$ 34,752
Gross profit ^(a)
48,605
41,750
35,885
30,704
Operating income (loss) 33,341
34,126
26,118
(4,080 )
Net income (loss) 25,910
28,927
21,679
(8,245 )
Net income (loss) per share - basic 0.63
0.70
0.54
(0.21 )
Net income (loss) per share - diluted 0.61
0.68
0.52
(0.21 )


2019:	March 31		June 30		September 30		December 31

Revenues	$	16,437	$	17,554	$	14,229	$	10,995
Gross profit (a)	13,171		13,932		11,406		8,581
Operating loss	(8,167)		(4,451)		(4,147)		(7,347)
Net loss	(13,018)		(8,605)		(8,864)		(2,739)
Net loss per share - basic	(0.35)		(0.23)		(0.24)		(0.07)
Net loss per share - diluted	(0.35)		(0.23)		(0.24)		(0.07)

^(a) Gross profit is computed by subtracting cost of products from total revenues.

^(b) ~~The Company recorded an impairment charge~~ Operating income for the quarter ended June 30, 2020 includes a gain on the sale of ~~$66,087 during~~ the ~~three months ended December 31, 2018.~~hospital business of $45,760.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

MANAGEMENT’S DISCUSSION AND ANALYSIS

(In thousands, except per share data)

You should read the discussion and analysis of our financial condition and results of operations set forth in this Item 7 together with our consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties, and reference is made to the “Cautionary Disclosure Regarding Forward-Looking Statements” set forth immediately following the Table of Content of this Annual Report on Form 10-K for further information on the forward looking statements herein. In addition, you should read the “Risk Factors” section of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Annual Report on Form 10-K.

~~Overview~~Information pertaining to fiscal year 2018 was included in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2019, on pages 42 through 56, under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on March 16, 2020.

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Overview

Nature of Operations

Avadel Pharmaceuticals plc (Nasdaq: AVDL) (“Avadel,” the “Company,” “we,” “our,” or “us”) is a ~~branded specialty pharmaceutical~~biopharmaceutical company. Our ~~primarily focus~~lead product candidate, FT218, is on the development and potential FDA approval for FT218 which is in a Phase 3 clinical trial for the treatment of narcolepsy patients suffering from excessive daytime sleepiness (EDS) and cataplexy. In addition, we market three sterile injectable drugs used in the hospital setting which were developed under our “unapproved marketed drug” (UMD) program. The Company is headquartered in Dublin, Ireland with operations in St. Louis, Missouri and Lyon, France. For more information, please visit www.avadel.com..

~~Avadel is developing FT218,~~ an investigational once-nightly, extended-release formulation of sodium oxybate ~~based on its propriety Micropump® drug delivery technology,~~ for the treatment of excessive daytime sleepiness ~~(EDS)~~(“EDS”) and cataplexy in ~~patients suffering from~~adults with narcolepsy. FT218 is currently being evaluated in a Phase 3 clinical trial called REST-ON. In addition, Avadel is developing a fourth UMD product, an as-yet undisclosed sterile injectable product intended for the hospital market.

~~Our current marketed products include:~~

~~Akovaz®~~ (ephedrine sulfate injection, USP), an alpha- and beta-adrenergic agonist and a norepinephrine-releasing agent that is indicated for the treatment of clinically important hypotension occurring in the setting of anesthesia.

~~Bloxiverz®~~ ~~(neostigmine methylsulfate injection), a cholinesterase inhibitor, is indicated for the reversal of the effects of non-depolarizing neuromuscular blocking agents (NMBAs) after surgery.~~

~~Vazculep®~~ ~~(phenylephrine hydrochloride injection), an alpha-1 adrenergic receptor agonist indicated for the treatment of clinically important hypotension resulting~~We are primarily ~~from vasodilation in the setting of anesthesia.~~

~~Each of our~~ ~~Akovaz~~, ~~Bloxiverz~~ ~~and~~ ~~Vazculep~~ ~~products is used primarily in the hospital setting and was developed under our UMD program.~~

~~Noctiva™~~, a vasopressin analog indicated for the treatment of nocturia due to nocturnal polyuria in adults who awaken at least two times per night to void. Due to disappointing results after a substantial investment of resources after ~~Noctiva’s~~ ~~commercial launch in March 2018, Specialty Pharma,~~ ~~the Avadel subsidiary responsible for the marketing and sale of~~ ~~Noctiva,~~ made a voluntary filing for Chapter 11 bankruptcy protection on February 6, 2019. Although Specialty Pharma currently continues its marketing and sales efforts for this product, Avadel anticipates that Specialty Pharma will discontinue all activities with respect to ~~Noctiva~~ ~~during 2019 as a result of the bankruptcy.~~

~~Corporate Information~~

The Company was incorporated on December 1, 2015 as an Irish private limited company, and re-registered as an Irish public limited company, or plc, on November 21, 2016. Our principal place of business is located at Block 10-1, Blanchardstown Corporate Park, Ballycoolin, Dublin 15, Ireland. Avadel’s phone number is 011-353-1-485-1200. Our website is www.avadel.com, where

we make available free of charge our reports (and any amendments thereto) on Forms 10-K, 10-Q and 8-K as soon as reasonably practicable after they are electronically filed with or furnished to the U.S. Securities and Exchange Commission (“SEC”). These filings are also available to the public at www.sec.gov.

~~The Company is the successor to Flamel Technologies S.A., a French~~ ~~société anonyme~~ (“Flamel”), as the result of the France-to-Ireland redomestication merger of Flamel with and into the Company completed on December 31, 2016 (the “Merger”). In the Merger, we changed our company name to Avadel Pharmaceuticals plc and our jurisdiction of organization to Ireland; we assumed all the assets and liabilities of Flamel; and we issued one Avadel ordinary share (either directly or in the form of an American Depositary Share (ADS)) in exchange for each formerly outstanding share of Flamel, all of which were canceled. Thus, an Avadel ordinary share held (either directly or represented by an ADS) immediately after the Merger continued to represent the same proportional interest in our equity owned by the holder of a share of Flamel immediately prior to the Merger. References in this Annual Report on Form 10-K to “Avadel,” the “Company,” “we,” “our,” “us,” and similar terms shall be deemed to be references to Flamel prior to the completion of the Merger, unless the context otherwise requires. Additional details about the Merger are set forth in Item 1 under the caption “ - The Reincorporation Merger.”

The Company currently has five direct wholly-owned subsidiaries: (a) Avadel US Holdings, Inc., (b) Flamel Ireland Limited, which conducts business under the name Avadel Ireland, (c) Avadel Investment Company Limited, (d) Avadel Finance Ireland Designated Activity Company and (e) Avadel France Holding SAS. Avadel US Holdings, Inc., a Delaware corporation, is the holding entity of (i) Avadel Specialty Pharmaceuticals, LLC (currently the subject of a voluntary Chapter 11 bankruptcy proceeding as noted above), (ii) Avadel Legacy Pharmaceuticals, LLC, (iii) Avadel Management Corporation, (iv) FSC Holding Company and (v) Avadel Operations Company, Inc. Avadel Finance Ireland Designated Activity Company is the holding entity of Avadel Finance Cayman Limited. Flamel Ireland Limited (operating under the trade name Avadel Ireland) is an Irish corporation which, Since December 16, 2014, has been the owner of substantially all of Avadel’s intellectual property. Avadel France Holding SAS, a French ~~société par actions simplifiée~~, is the holding entity of Avadel Research SAS through which Avadel conducts substantially all of its R&D activities. A complete list of the Company’s subsidiaries can be found in Exhibit 21.1 to this Annual Report on Form 10-K.

References in these consolidated financial statements and the notes thereto to “Avadel,” the “Company,” “we,” “our,” “us,” and similar terms shall be deemed to be references to Flamel prior to the completion of the Merger, unless the context otherwise requires.

~~Business Strategies~~

~~Our primary business strategy is to focus~~focused on the development and potential United States (“U.S.”) Food and Drug Administration (“FDA”) approval of FT218. In December 2020, the Company submitted a New Drug Application (“NDA”) to the FDA ~~approval~~ for FT218 ~~which is in a Phase 3 clinical trial for the treatment of narcolepsy patients suffering from~~to treat excessive daytime sleepiness ~~(EDS)~~ and ~~cataplexy. In addition, we will continue to maximize our current approved hospital products portfolio, including obtaining~~cataplexy in adults with narcolepsy.The NDA for FT218 was accepted by the FDA ~~approval for~~in February 2021 and ~~the commercialization~~assigned a Prescription Drug User Fee Act (“PDUFA”) target action date of October 15, 2021.

Outside of our ~~fourth UMD product. Additionally,~~lead product candidate, we ~~will~~ continue to evaluate opportunities to expand our product portfolio. ~~These strategies are described below~~As of December 31, 2020, we do not have any approved and commercialized products in ~~greater detail.~~our portfolio.

FT218

FT218 ~~(Micropump®~~is a once-nightly formulation of sodium ~~oxybate):~~ ~~FT218 (Micropump® sodium oxybate): Avadel is developing a product~~oxybate that uses our ~~Micropump®~~Micropump controlled release drug-delivery technology for the treatment of ~~excessive daytime sleepiness (EDS)~~EDS and cataplexy in ~~patients~~adults suffering from narcolepsy. ~~Avadel currently refers to this product as FT218. FT218 is a Micropump®-based formulation of sodium oxybate.~~ Sodium oxybate is the sodium salt of gamma hydroxybutyrate, an endogenous compound and metabolite of the neurotransmitter gamma-aminobutyric acid. Sodium oxybate ~~has been described as a therapeutic agent with high medical value. Sodium oxybate~~ is approved in ~~Europe and~~ the ~~United States as a twice nightly formulation indicated~~U.S. for the treatment of EDS and cataplexy in patients with ~~narcolepsy.~~

~~In preparation for a clinical trial of FT218, Avadel reached an agreement with the FDA for the design~~narcolepsy and ~~planned analysis of our pivotal Phase 3 study, Rest-On through a Special Protocol Assessment (“SPA”). A SPA~~ is ~~an acknowledgment by the FDA that the design and planned analysis of a pivotal clinical trial adequately addresses the objectives necessary to support a regulatory submission. Pursuant to the SPA,~~approved in ~~December 2016, Avadel initiated patient enrollment and dosing for the Rest-On clinical trial to assess the safety and efficacy of a once-nightly formulation of FT218~~Europe for the treatment of ~~EDS and~~ cataplexy in patients ~~suffering from~~with narcolepsy. Since 2002, sodium oxybate has only been available as a formulation that must be taken twice nightly, first at bedtime, and then again 2.5 to 4 hours later.

On December 16, 2020, we announced the submission of our NDA to the FDA for FT218. On February 26, 2021, the FDA notified us of formal acceptance of the NDA with an assigned PDUFA target action date of October 15, 2021.

The ~~study is~~REST-ON trial was a randomized, double-blind, placebo-controlled study ~~of 264~~that enrolled 212 patients ~~being~~and was conducted in ~~45 to 55~~ clinical sites in the U.S., Canada, Western Europe and Australia. ~~Avadel believes that, if successful, this study could demonstrate improved efficacy, safety~~The last patient, last visit was completed at the end of the first quarter of 2020 and ~~patient satisfaction over~~positive top line data from the ~~current primary product serving this market, which is~~REST-ON trial was announced on April 27, 2020. Patients who received 9 g of once-nightly FT218, the highest dose administered in the trial, demonstrated a ~~twice nightly~~statistically significant and clinically meaningful improvement compared to placebo across the three co-primary endpoints of the trial: maintenance of wakefulness test, or MWT, clinical global impression-improvement, or CGI-I, and mean weekly cataplexy attacks. The lower doses assessed, 6 g and 7.5 g also demonstrated a statistically significant and clinically meaningful improvement on all three co-primary endpoints compared to placebo. We observed the 9 g dose of once-nightly FT218 to be generally well tolerated. Adverse reactions commonly associated with sodium oxybate ~~formulation, which the marketer estimates will generate revenues of approximately $1.4 billion~~were observed in ~~2018.~~

~~To date, due in part to narcolepsy being a rare disease with~~ a small ~~patient population with no significant geographic concentration, we have not completed patient enrollment for~~number of patients (nausea 1.3%, vomiting 5.2%, decreased appetite 2.6%, dizziness 5.2%, somnolence 3.9%, tremor 1.3% and enuresis 9%), and 3.9% of the patients who received 9 g of FT218 ~~clinical~~discontinued the trial ~~nor have we announced a projected completion date for this clinical trial. Recently, we have engaged a third-party pharmaceutical consulting firm~~due to ~~assist us in evaluating our clinical~~adverse reactions.

development program for FT218 with the goal of ensuring a approvable and commercially viable FDA submission. This evaluation is currently under way, and while the results are not known at this time, they could cause us to modify our development plan with respect to FT218 in ways that materially increase the ultimate cost of development, further delay its completion or identify presently unknown risks with the product.

In January 2018, the FDA granted FT218 Orphan Drug Designation, which makes the drug eligible for certain development and commercial incentives, including a potential U.S. market exclusivity for up to seven ~~years~~years. Additionally, several FT218-related U.S. patents have been issued, and there are additional patent applications currently in development and/or pending at the U.S. Patent and Trademark Office (“USPTO”), as well as foreign patent offices.

In July 2020, we announced that the ~~only once-nightly formulation. However, please see~~first patient was dosed initiating an open-label extension (“OLE”)/switch study of FT218 as a potential treatment for EDS and cataplexy in patients with narcolepsy. The OLE/switch study is examining the ~~information set forth under the caption “- Risks Related to Regulatory~~long-term safety and ~~Legal Matters - If~~maintenance of efficacy of FT218 ~~is approved by the FDA, we may not obtain orphan drug marketing exclusivity”~~in patients with narcolepsy who participated in the ~~“Risk Factors” included~~REST-ON study, as well as dosing and preference data for patients switching from twice-nightly sodium oxybate to once-nightly FT218 regardless if they participated in ~~Part I, Item 1A~~REST-ON or not. We anticipate that the study will enroll up to 250 patients, many of ~~this Annual Report on Form 10-K.~~which will be enrolled in North American clinical trial sites that participated in the REST-ON study.

~~Development~~We believe FT218 has the potential to demonstrate improved dosing compliance, safety and patient satisfaction over the current standard of ~~Micropump®-Based Products~~care for EDS and cataplexy in patients with narcolepsy, which is a twice-nightly sodium oxybate formulation. If approved, we believe FT218 has the potential to take a significant share of the sodium oxybate market. The current market size for the twice-nightly administration of sodium oxybate is estimated at an annualized revenue run rate of $1.8 billion.

~~Avadel’s versatile Micropump® drug~~

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Micropump Drug-Delivery Technology

Our Micropump drug-delivery technology allows for the controlled delivery ~~technology presents~~of small molecule drugs taken orally, which has the potential to reduce safety issues and improve a number of things like efficacy, dosing compliance and patient satisfaction. Beyond FT218, we believe there could be other product development opportunities for our Micropump drug-delivery technology, representing either ~~“life cycle”~~i) life cycle opportunities, whereby additional intellectual ~~property~~property-protected drug delivery technology can be added to a pharmaceutical product to extend the commercial viability of ~~a currently marketed~~that product, or ii) innovative formulation opportunities for known active pharmaceutical ingredients as well as new chemical ~~entities (“NCEs”~~entities.

Previously Approved FDA Products

On June 30, 2020 (the “Closing Date”)~~. FT218 is formulated using this technology. If~~, Avadel Legacy Pharmaceuticals, LLC (the “Avadel Seller”) announced the sale of the portfolio of sterile injectable drugs used in the hospital setting (the “Hospital Products”), which included our three commercial products, Akovaz, Bloxiverz and Vazculep, as well as Nouress, which was approved by the U.S. FDA ~~this product will be commercialized either~~to Exela Sterile Medicines LLC (“Exela Buyer”) pursuant to an asset purchase agreement by and among the Avadel ~~and/or by partners via licensing/distribution agreements.~~Seller, Avadel US Holdings, Inc., the Exela Buyer and Exela Holdings, Inc. This sale included the following FDA approved products:

~~Unapproved Marketed Drug (“UMD”) Products~~

~~In 2006, the U.S. Food and Drug Administration (FDA) issued its Marketed Unapproved Drugs~~•Bloxiverz (neostigmine methylsulfate injection) - Compliance Policy Guide with the intention to incentivize pharmaceutical companies to pursue approvals for pharmaceutical products, many of which pre-date the establishment of the FDA. Although these products are not protected by patents or similar intellectual property, the FDA’s Compliance Policy Guide dictates that should FDA approveBloxiverz is a ~~new~~ drug application (NDA) for any such products via a 505(b)(2) process, the FDA will remove competing unapproved manufacturers until a generic application is approved. Avadel believes that over a thousand unapproved drugs are marketedused intravenously in the ~~United States today and, while many~~operating room to reverse the effects of ~~these products are outdated therapies, we strategically evaluate those UMD products that are more commonly used as candidates for possible future FDA approval and marketing under our UMD program.~~non-depolarizing neuromuscular blocking agents after surgery.

~~To date, Avadel has received FDA approvals for three UMD products which we currently market under the brand names~~ ~~Bloxiverz® (neostigmine methylsulfate injection),~~

•Vazculep® (phenylephrine hydrochloride injection) ~~and~~ - Vazculep is indicated for the treatment of clinically important hypotension occurring in the setting of anesthesia.

•Akovaz® (ephedrine sulfate injection). - Akovaz was the first FDA approved formulation of ephedrine sulfate, an alpha- and beta- adrenergic agonist and a norepinephrine-releasing agent that is indicated for the treatment of clinically important hypotension occurring in the setting of anesthesia.

~~Additional UMD Products. Avadel~~•Nouress (cysteine hydrochloride injection)- Nouress is ~~developing and intends to seek FDA approval of a NDA for UMD #4,~~ a sterile injectable product ~~used~~for use in the hospital ~~setting. The Company anticipates submitting an NDA during the first quarter of 2019 on UMD #4, which, if approved, could contribute revenues~~setting to ~~Avadel starting in 2020. In addition, Avadel continues~~provide parenteral nutrition to monitor and evaluate other UMDs with large existing markets and limited competition for feasibility of possible future NDAs. Avadel believes its strategy to create opportunities to commercialize UMD products in markets with a limited number of competitors may have a limited number of opportunities given the lack of patent protection from competition. Avadel believes this shorter-term strategy may provide us with near term revenue growth and provide cash flows that can be used to fund R&D and inorganic initiatives for other products.neonates.

Key Business Trends and Highlights

In operating our business and monitoring our performance, we consider a number of performance measures, as well as trends affecting our industry as a whole, which include the following:

•Healthcare and Regulatory Reform: Various health care reform laws in the U.S. may impact our ability to successfully commercialize our products and technologies. The success of our commercialization efforts may depend on the extent to which the government health administration authorities, the health insurance funds in the E.U. Member States, private health insurers and other third-party payers in the U.S. will reimburse consumers for the cost of healthcare products and services.



~~Laboratory equipment~~		~~4-8 years~~
Software, office and computer equipment	3 years
Leasehold improvements, furniture, fixtures and fittings		5-10 years

Goodwill.Goodwill represents the excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed. ~~The Company has~~We have determined that we operate in a single segment and ~~has~~have a single reporting unit associated with the development and commercialization of pharmaceutical products. ~~The annual~~We test for goodwill impairment is a two-step process. The first step is a comparison of the fair value of the reporting unit with its carrying amount, including goodwill. If this step indicates impairment, then, in the second step, the loss is measured as the excess of recorded goodwill over the implied fair value of the goodwill. Implied fair value of goodwill is the excess of the fair value of the reporting unit as a whole over the fair value of all separately identified assets and liabilities within the reporting unit. The Company tests goodwill for impairment annually and when events or changes in circumstances indicate that the carrying value may not be recoverable. ~~During the fourth quarter of 2018, we~~We performed our required ~~annual~~ impairment test of goodwill and have determined that no impairment of goodwill existed at December 31, ~~2018 or 2017.~~ 2020 and 2019.

Long-Lived Assets. Long-lived assets include fixed assets and intangible assets. ~~Intangible~~Prior to the sale of the Hospital Products on June 30, 2020, intangible assets ~~consist~~consisted primarily of purchased licenses and intangible assets recognized as part of the Éclat Pharmaceuticals acquisition. Acquired in-process research and development (“IPR~~&D has~~&D”) had an indefinite life and iswas not amortized until completion and development of the project, at which time the IPR&D ~~becomes~~became an amortizable asset, for which amortization of such intangible assets iswas computed using the straight-line method over the estimated useful life of the assets.

Long-lived assets are reviewed for impairment whenever conditions indicate that the carrying value of the assets may not be fully recoverable. Such impairment tests are based on a comparison of the pretax undiscounted cash flows expected to be generated by the asset to the recorded value of the asset or other ~~market based~~market-based value approaches. If impairment is indicated, the asset value is written down to its market value if readily determinable or its estimated fair value based on discounted cash flows. Any significant changes in business or market conditions that vary from current expectations could have an impact on the fair value of these assets and any potential associated impairment. During the fourth quarter of 2018, we recorded a $66,087 impairment charge to the entire acquired developed technology related to ~~Noctiva (see~~ ~~Note 9: Goodwill and Intangible Assets). The Company had~~Noctiva. We determined that no0 impairment existed

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at December 31, 2019. On June 30, 2020, we transferred our remaining intangible asset to the Exela Buyer as part of the disposition of the Hospital Products. We determined that 0 impairment existed at December 31, ~~2017.~~2020 on our remaining long-lived assets.

Lease Obligations. On January 1, 2019, the Company adopted ASU 2016-02, “Leases” which supersedes ASC 840 “Leases” and creates a new topic, ASC 842 “Leases”. The Company adopted ASU 2016-02 using the modified retrospective transition approach and elected the transition option to recognize the adjustment in the period of adoption rather than in the earliest period presented. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with our historical accounting under Topic 840. Upon adoption, we recognized total ROU assets of $5,046, with corresponding lease liabilities of $5,131 on the consolidated balance sheets. The adoption did not impact our beginning retained earnings, or our prior year consolidated statements of income (loss) and statements of cash flows.

The Company elected the package of practical expedients permitted under the transition guidance, which allowed us to carryforward our historical lease classification, our assessment on whether a contract was or contains a lease, and our initial direct costs for any leases that existed prior to January 1, 2019. The Company also elected to combine our lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated statements of income (loss) on a straight-line basis over the lease term.

Under ASU 2016-02, the Company determines if a contract is a lease at the inception of the arrangement. Right-of-use assets and operating lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. The Company reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and will include these options in the lease term when they are reasonably certain of being exercised. The Company’s lease contracts do not provide a readily determinable implicit rate. The Company’s estimated incremental borrowing rate is based on information available at the inception of the lease. Our lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes or other costs. Variable lease costs are expensed as incurred on the consolidated statements of income (loss).

Acquisition-related Contingent Consideration. ~~The~~ Prior to the sale of the Hospital Products on June 30, 2020, the acquisition-related contingent consideration payables arising from the acquisition of Éclat Pharmaceuticals (i.e., our hospital products) and FSC (our pediatrics products), which was assumed by the buyer as part of the disposition of the pediatrics products on February 16, 2018, ~~are~~were accounted for at ~~fair-value~~fair value (see Note ~~11: Long-Term Related Party~~13: Contingent Consideration Payable and Note ~~16:~~18: Divestiture of the Pediatric Assets). The fair value of the warrants issued in connection with the Éclat acquisition were estimated using a Black-Scholes model. A portion of these warrants were exercised on February 23, 2018 and the remaining warrants expired on March 12, 2018. See Note ~~11: Long-Term Related Party~~13: Contingent Consideration Payable. The fair value of acquisition-related contingent consideration payable is estimated using a discounted cash flow model based on the long-term sales or gross profit forecasts of the specified hospital or pediatric products using an appropriate discount rate. There are a number of estimates used when determining the fair value of these earn-out payments. These estimates include, but are not limited to, the long-term pricing environment, market size, market share the related products are forecast to achieve, the cost of goods related to such products and an appropriate discount rate to use when present valuing the related cash flows. These estimates can and often do change based on changes in current market conditions, competition, management judgment and other factors. Changes to these estimates can have and have had a material impact on our consolidated statements of income (loss) ~~income~~ and balance sheets. Changes in fair value of these liabilities are recorded in the consolidated statements of income (loss) ~~income~~ within operating expenses as changes in fair value of ~~related party~~ contingent consideration.

Financing-related Royalty Agreements. We ~~also entered into~~were previously a party to two royalty agreements ~~with related parties~~ in connection with certain financing arrangements. We elected the fair value option for the measurement of the financing-related contingent consideration payable associated with the royalty agreements with certain Deerfield and Broadfin entities ~~both~~(the “Deerfield and Broadfin Royalty Agreements”) (see Note 13: Contingent Consideration Payable). Prior to the sale of ~~whom are related parties (see~~ ~~Note 11: Long-Term Related Party Payable). The~~the Hospital Products on June 30, 2020, the fair value of financing-related royalty agreements iswas estimated using the same components used to determine the fair value of the acquisition-related contingent consideration noted above, with the exception of cost of products sold. Changes to these components can also have a material impact on our consolidated statements of income (loss) ~~income~~ and balance sheets. Changes in the fair value of this liability are recorded in the consolidated statements of income (loss) ~~income~~ as other (expense) income ~~(expense)~~ - changes in fair value of ~~related party~~contingent consideration payable.

~~Foreign Currency Translation.~~ ~~At December 31, 2018,~~In connection with the ~~reporting currency~~disposition of the Hospital Products on June 30, 2020 as discussed in Note 4: Disposition of the Hospital Products, the Deerfield and Broadfin Royalty Agreements were assigned to the Exela Buyer and the Exela Buyer assumed and shall pay, perform, satisfy and discharge the liabilities and obligations of the Company under the Deerfield and our wholly-owned subsidiaries is the U.S. dollar. Prior to December 31, 2016, each of the Company’s non-U.S. subsidiaries and the parent entity, Flamel, used the Euro as their functional currency. At December 31, 2016, in conjunction with the Merger described above, Avadel determined the U.S. dollar is our functional currency. Subsidiaries and entities that do not use the U.S. dollar as their functional currency translate 1) profit and loss accounts at the average exchange rates during the reporting period, 2) assets and liabilities at period end exchange rates and 3) shareholders’ equity accounts at historical rates. Resulting translation gains and losses are included as a separate component of shareholders’ equity in accumulated other comprehensive loss. Assets and liabilities, excluding available-for-sale marketable securities, denominated in a currency other than the subsidiary’s functional currency are translated to the subsidiary’s functional currency at period end exchange rates with resulting gains and losses recognized in the consolidated statements of (loss) income. Broadfin Royalty Agreements.

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Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including marketable securities and contingent liabilities at the date of the consolidated financial statements and the reported amounts of sales and expenses during the periods presented. These estimates and assumptions are based on the best information available to management at the balance sheet dates and depending on the nature of the estimate can require significant judgments. Changes to these estimates and judgments can have and have had a material impact on our consolidated statements of income (loss) ~~income~~ and balance sheets. Actual results could differ from those estimates under different assumptions or conditions.

NOTE 2: ~~Effect of New~~Newly Issued Accounting Standards

Recently Adopted Accounting Guidance

In ~~March 2017,~~August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting ~~Standard~~Standards Update (“ASU”) No. 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Costs.” The standard requires the service component of pension and other postretirement benefit expense to be presented in the same statement

of income lines as other employee compensation costs, however, the other components will be presented outside of operating income. In addition, only the service cost component will be eligible for capitalization in assets. The Company adopted this standard in the first quarter of 2018 and it had an immaterial impact on our consolidated financial statements.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~“Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~.” ASU 2016-15 identifies how certain cash receipts and cash payments are presented and classified in the Statement of Cash Flows under Topic 230. ASU 2016-15 is effective for the Company for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. ASU 2016-15 should be applied retrospectively and early adoption is permitted, including adoption in an interim period. The Company adopted this standard in the first quarter of 2018 and it had an immaterial impact on our consolidated financial statements.

~~In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers~~” which supersedes the most current revenue recognition requirements. This ASU requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods or services. Through May 2016, the FASB issued ASU 2016-08 “Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” ASU 2016-10 “Identifying Performance Obligations and Licensing,” and ASU 2016-12, “Narrow-Scope Improvements and Practical Expedients,” which provide supplemental adoption guidance and clarification to ASU 2014-09, respectively. The Company adopted this pronouncement under the modified retrospective method of transition in the first quarter of 2018. The adoption of the new standard did not have a material effect on the overall timing or amount of revenue recognized when compared to current accounting standards. The impact to the Company of adopting the new revenue standard primarily relates to additional and expanded disclosures. See ~~Note~~ 3~~: Revenue Recognition~~.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~“Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~.” The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The new guidance required the change in fair value of equity investments with readily determinable fair values to be recognized through the statement of income. Upon adoption, the change in the fair value of our available-for-sale equity investments is recognized in our consolidated statement of income (loss) rather than as a component of our consolidated statement of comprehensive income (loss). The Company adopted this standard in the first quarter of 2018 and it had an immaterial impact on our consolidated financial statements.

~~Recent Accounting Guidance Not Yet Adopted~~

~~In August 2018, the FASB issued ASU~~ 2018-13, “Fair Value Measurement (Topic 820):Disclosure Framework— Changes to the Disclosure Requirement for Fair Value Measurement” which amends certain disclosure requirements over Level 1, Level 2 and Level 3 fair value measurements. The amendments in ASU 2018-13 are effective for fiscal years beginning after December 15, 2019, with early adoption permitted. ~~The Company is currently evaluating the impact of adopting~~We adopted ASU ~~2018-13.~~

~~In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment.”~~ This update eliminates step 2 from the goodwill impairment test, and requires the goodwill impairment test to be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This guidance is effective for the Company2018-13 in the first quarter of 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company will assess the timing of adoption and impact of this guidance to future impairment considerations.

In ~~February~~June 2016, the FASB issued ASU ~~2016-02, “Leases” which supersedes ASC 840 “Leases” and creates a new topic, ASC 842 “Leases.~~No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).” This ~~update~~standard requires ~~lessees~~entities to ~~recognize~~measure all expected credit losses for financial assets held at the reporting date based on ~~their balance sheet a lease liability~~historical experience, current conditions and ~~a lease asset~~reasonable and supportable forecasts. ASU 2016-13 will be effective for ~~all leases,~~the Company for fiscal years beginning on or after January 1, 2020, including ~~operating leases, with a term greater than 12 months.~~interim periods within those annual reporting periods and early adoption is permitted. We adopted the provisions of ASU 2016-13 in the first quarter of 2020. Adoption of the new standard did not have any impact on our consolidated financial statements.

Recent Accounting Guidance Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. The ~~update also expands the required quantitative~~FASB’s amendments primarily impact ASC 740, Income Taxes, and ~~qualitative disclosures surrounding leases. This update is~~may impact both interim and annual reporting periods. ASU 2019-12 will be effective for fiscal years beginning after December 15, ~~2018~~2020, and interim periods within those fiscal years ~~with earlier application~~and early adoption is permitted. We are currently evaluating the impact of adopting ASU 2019-12; however, the impact is expected to be immaterial to our consolidated financial statements.

In ~~July 2018,~~August 2020, the FASB issued ASU ~~2018-11 “Targeted Improvements”~~2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging- Contracts in Entity’s Own Equity (Subtopic 815-40), ~~amending~~to reduce the complexity associated with applying U.S. GAAP principles for certain ~~aspects~~financial instruments with characteristics of liabilities and equity. The amendments in this ASU reduce the number of accounting models for convertible instruments and expand the existing disclosure requirements over earnings per share as it relates to convertible instruments. This ASU will be effective for our fiscal year beginning January 1, 2022 and interim periods therein. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The amendments may be adopted through either a modified retrospective method, or a fully retrospective method. We are currently evaluating the impact of adopting ASU 2020-06.

NOTE 3: Subsidiary Bankruptcy and Deconsolidation

Bankruptcy Filing and Deconsolidation

As a result of Specialty Pharma’s bankruptcy filing on February 6, 2019, Avadel ceded authority for managing the business to the Bankruptcy Court, and Avadel management could not carry on Specialty Pharma’s activities in the ordinary course of business without Bankruptcy Court approval. Prior to Bankruptcy Court approval, Avadel managed the day-to-day operations of Specialty Pharma but did not have discretion to make significant capital or operating budgetary changes or decisions and purchase or sell significant assets, as Specialty Pharma’s material decisions were subject to review by the Bankruptcy Court. For these reasons, we concluded that Avadel had lost control of Specialty Pharma, and no longer had significant influence over Specialty Pharma during the pendency of the ~~new leasing standard.~~bankruptcy. Therefore, we deconsolidated Specialty Pharma effective with the filing of the Chapter 11 bankruptcy in February 2019.

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In order to deconsolidate Specialty Pharma, the carrying values of the assets and certain liabilities of Specialty Pharma were removed from our unaudited condensed consolidated balance sheet as of February 5, 2019, and we recorded our investment in Specialty Pharma at its estimated fair value of $0. As the estimated fair value of our investment in Specialty Pharma was lower than its net book value immediately prior to the deconsolidation, we recorded a non-cash charge of approximately $2,678 for the year ended December 31, 2019 associated with the deconsolidation of Specialty Pharma. Subsequent to the deconsolidation of Specialty Pharma, we are accounting for our investment in Specialty Pharma using the cost method of accounting because Avadel does not exercise significant influence over the operations of Specialty Pharma due to the Chapter 11 filing.

On April 26, 2019, Specialty Pharma sold its intangible assets and remaining inventory to an unaffiliated third party in exchange for aggregate cash proceeds of approximately $250, pursuant to an order approving such sale which was issued by the Bankruptcy Court on April 15, 2019. As a result of such sale, Specialty Pharma has completed its divestment of the assets of the Noctiva business.

On July 2, 2019, Specialty Pharma was made aware of a $50,695 claim made by the Internal Revenue Service (“IRS”) as part of the bankruptcy claims process against Specialty Pharma. On October 2, 2019 the IRS amended the original claim filed in July, reducing the claim to $9,302. Specialty Pharma filed its U.S. federal tax return as a member of the Company’s consolidated U.S. tax group. As such, the IRS claim was filed against Specialty Pharma in the bankruptcy proceedings due to IRS tax law requirements for joint and several liability of all members in a consolidated U.S. tax group. On November 19, 2019, Specialty Pharma and the IRS resolved their dispute, subject to the Bankruptcy Court’s approval of Specialty Pharma's Chapter 11 plan, and without prejudice to the claims, rights and defenses of the IRS and other Avadel entities outside of the bankruptcy case. The ~~amendment allows~~resolution provided for allowance of the IRS claim as a priority claim but for the IRS to receive a distribution of 50% of the proceeds, but in no event less than $125 from Specialty Pharma following confirmation of its disclosure statement and Chapter 11 plan of liquidation.

On July 24, 2020, Specialty Pharma sought bankruptcy court approval of a settlement agreement by and between it, Avadel US Holdings, Inc. and Serenity Pharmaceuticals, LLC (“Serenity”) (the “Serenity Settlement Agreement”). Before the commencement of Specialty Pharma's bankruptcy case, Serenity asserted claims against Specialty Pharma and Avadel US Holdings collectively in an amount no less than $50,000, and after the commencement of the bankruptcy case, Serenity asserted a $3,096 claim against Specialty Pharma and voted to reject its Chapter 11 plan of liquidation. The Serenity Settlement Agreement provides for a global resolution of these disputes by way of an $800 payment from Avadel US Holdings to Serenity, a mutual exchange of general releases, and the withdrawal of Serenity's claim and vote in Specialty Pharma's bankruptcy case. The Serenity Settlement Agreement was approved by order of the Bankruptcy Court on August 12, 2020.

At a hearing conducted on October 6, 2020, the Bankruptcy Court granted final approval of Specialty Pharma’s disclosure statement and confirmed its Chapter 11 plan of liquidation. Pursuant to the plan, the appointment of a Plan Administrator was also approved. The Plan Administrator will be responsible for making distributions to creditors, managing the final windup and dissolution of Specialty Pharma, and taking other steps in accordance with the plan of liquidation. The plan of liquidation became effective on October 21, 2020. Subsequent to the finalization of the bankruptcy, we recognized a non-cash gain of $3,364 from the release of certain liabilities that had been retained following the deconsolidation of Specialty Pharma. This gain is including in "Gain from release of certain liabilities" within non-operating income (loss) for the year ended December 31, 2020.

Debtor in Possession (“DIP”) Financing – Related Party Relationship

In connection with the bankruptcy filing, Specialty Pharma entered into a Debtor in Possession Credit and Security Agreement with Avadel US Holdings (“DIP Credit Agreement”) dated as of February 8, 2019, in an aggregate amount of up to $2,700, of which the funds are to be used by Specialty Pharma solely to fund operations through February 6, 2020. During the year ended December 31, 2019, the Company funded $407 under the DIP Credit Agreement. As the Company assessed that it is unlikely that Specialty Pharma will pay back the loan to Avadel, the $407 was recorded as part of the loss on deconsolidation of subsidiary within the consolidated statements of income (loss) during the year ended December 31, 2019. NaN amounts were funded under the DIP Credit Agreement during the year ended December 31, 2020. We do not expect any additional further liabilities from the DIP Credit Agreement.

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NOTE 4: Disposition of the Hospital Products

On June 30, 2020 (the “Closing date”), we announced the sale of our Hospital Products to the Exela Buyer pursuant to the Purchase Agreement (the “Transaction”).

Pursuant to the Purchase Agreement, the Exela Buyer agreed to pay a total aggregate consideration amount of $42,000, of which $14,500 was paid on the Closing Date and an additional ~~optional transition method whereby~~$27,500 is to be paid in ten equal monthly installments. During the year ended December 31, 2020, we collected four installment payments, totaling $11,000. Subsequent to the year ended December 31, 2020 but prior to the filing of this Annual Report, we collected an ~~entity records a cumulative effect adjustment~~additional $5,500 in installment payments. In connection with the sale of the Hospital Products, the parties also agreed to ~~opening retained earnings~~cause the dismissal of the pending civil litigation related to Nouress in the District Court for the District of Delaware.

We were party to a Membership Interest Purchase Agreement, dated March 13, 2012, by and among us, Avadel Legacy, Breaking Stick Holdings, LLC, Deerfield Private Design International II, L.P. (“Deerfield International”), Deerfield Private Design Fund II, L.P. (“Deerfield Fund”) and Horizon Santé FLML, Sarl (“Horizon”) (the “Deerfield MIPA”) and a Royalty Agreement, dated February 4, 2013, by and among us, Avadel Legacy, the Deerfield Fund and Horizon (the “Deerfield Royalty Agreement”). In connection with the closing of the sale of the Hospital Products, the Deerfield MIPA (with respect to certain sections thereof) and the Royalty Agreement were assigned to the Exela Buyer. Pursuant to the Purchase Agreement, the Exela Buyer assumed and will pay, perform, satisfy and discharge the liabilities and obligations of Avadel Legacy under the Deerfield Royalty Agreement for obligations that arise after the Closing date.

We were also party to a Royalty Agreement, dated December 3, 2013, by and between us, Avadel Legacy and Broadfin Healthcare Master Fund, Ltd. (the “Broadfin Royalty Agreement”). In connection with the closing of the sale of the Hospital Products, the Broadfin Royalty Agreement was assigned to the Exela Buyer and the Exela Buyer assumed and shall pay, perform, satisfy and discharge the liabilities and obligations of Avadel Legacy under the Broadfin Royalty Agreement for obligations that arise after the Closing Date.

We recorded a net gain on the sale of the Hospital Products of $45,760 during the year ended December 31, 2020 which has been recorded on the consolidated statement of ~~adoption without restating prior periods,~~income (loss). The $45,760 gain represents the aggregate consideration of $42,000, less transaction fees of $2,928, plus the assets and liabilities either transferred to the Exela Buyer or eliminated by us due to the sale of the Hospital Products, which are listed below.


	December 31, 2020
Prepaid expenses and other current assets	$	(134)
Inventories	(4,922)
Goodwill	(1,654)
Intangible assets, net	(407)
Other non-current assets	(1,095)
Total long-term contingent consideration payable	14,900
Net liabilities disposed of	6,688
Aggregate consideration	42,000
Less transaction fees	(2,928)
Net gain on the sale of the Hospital Products	$	45,760

Subsequent to the disposition of the Hospital Products, the Company ~~has elected.~~entered into a separate and distinct agreement with the Exela Buyer, whereby the Exela Buyer assumed all future returns of the Hospital Products in exchange for cash consideration paid by the Company. The Company recorded a $518 gain from this transaction, which is recorded in “Selling, general and administrative expenses” for the year ended December 31, 2020.

~~On adoption,~~We evaluated various qualitative and quantitative factors related to the disposition of the Hospital Products and determined that it did not meet the criteria for presentation as a discontinued operation.

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The unaudited pro forma condensed combined financial statements included below are being provided for information purposes only and are not necessarily indicative of the results of operations or financial position that would have resulted if the Transaction had actually occurred on the date indicated. The pro forma adjustments are based on available information and assumptions that the Company ~~currently expects~~believes are attributable to ~~recognize additional operating liabilities~~the sale.


	Unaudited Pro Forma Condensed Combined Balance Sheet
	As of December 31, 2019
	As Reported		Pro Forma Adjustments		Notes	Pro Forma

ASSETS

Cash and cash equivalents	$	9,774	$	12,935	(a)	$	22,709


Inventories	3,570		(3,570)		(b)	0

Prepaid expenses and other current assets	4,264		27,500		(c)	31,764



Goodwill	18,491		(1,654)		(d)	16,837
Intangible assets, net	813		(813)		(e)	0

Other non-current assets	39,274		(9,702)		(f)	29,572
Total assets	$	151,436	$	24,696		$	176,132

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current portion of long-term contingent consideration payable	$	5,554	$	(5,054)	(g)	$	500


Accrued expenses	19,810		2,800		(h)	22,610



Long-term contingent consideration payable, less current portion	11,773		(11,773)		(g)	0


Total liabilities	180,635		(14,027)			166,608

Shareholders’ equity (deficit):



Accumulated deficit	(391,215)		38,723		(i)	(352,492)

Total shareholders’ (deficit) equity	(29,199)		38,723			9,524
Total liabilities and shareholders’ equity (deficit)	$	151,436	$	24,696		$	176,132

Adjustments to the pro forma unaudited condensed combined balance sheet

(a) This adjustment represents the receipt of ~~approximately $5,100, with corresponding Right~~$14,500 cash consideration from the Exela Buyer at the closing of ~~Use (ROU) assets~~the Transaction less $1,565 placed into escrow for the estimated earn outs and royalties payable to Breaking Stick Holdings L.L.C., Horizon Santé FLML, Sarl, Deerfield Private Design Fund II, L.P., all affiliates of ~~approximately~~Deerfield Capital L.P. ("Deerfield") and Broadfin Healthcare Master Fund ("Broadfin") for the ~~same amount~~current year ended.

(b) This adjustment reflects the elimination of Inventories that were purchased as part of the Transaction.

(c) This adjustment reflects the Transaction consideration in the form of ten monthly installment payments of $2,750 (totaling $27,500) beginning 90 days from the Closing date.

(d) This adjustment reflects the elimination of $1,654 of Goodwill based on the ~~present~~relative fair value of the ~~remaining minimum rental~~Hospital Products as a portion of the overall value of the Company.

(e) This adjustment reflects the elimination of the unamortized balance of the Intangible asset on acquired developed technology for Vazculep.

(f) This adjustment reflects the elimination of $1,228 of other long-term assets and $8,474 of deferred tax assets at December 31, 2019. The eliminated deferred tax assets are tax attributes of the Hospital Products.

(g) This adjustment reflects the elimination of short and long term related party payables, less the expected amounts due to Deerfield and Broadfin after taking into consideration the escrow discussed in Note (a). As part of the Transaction, the buyer

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agreed to assume the quarterly earn-out and royalty payments for periods after the close of the Transaction. The Company will no longer be responsible for these payments.

(h) This adjustment reflects the estimated transaction fees payable related to the Transaction.

(i) This adjustment reflects the estimated gain of $38,723 arising from the Transaction for the year ended December 31, 2019. This estimated gain has not been reflected in the pro forma unaudited condensed combined statements of loss as it is considered to be nonrecurring in nature. No adjustment has been made to the sale proceeds to give effect to any potential post-closing adjustments under the terms of the Purchase Agreement.


	Unaudited Pro Forma Condensed Combined Statement of Income (Loss)
	Year Ended December 31, 2020
	As Reported		Pro Forma Adjustments		Notes	Pro Forma


Product sales	$	22,334	$	(22,175)	(j)	$	159
Total operating expense	16,519		(8,392)		(k)	8,127
Operating income (loss)	5,815		(13,783)			(7,968)
Loss before income taxes	$	(5,082)	$	(13,348)	(l)	$	(18,430)


	Unaudited Pro Forma Condensed Combined Statement of Income (Loss)
	Year Ended December 31, 2019
	As Reported		Pro Forma Adjustments		Notes	Pro Forma


Product sales	$	59,215	$	(59,273)	(j)	$	(58)
Total operating expense	83,327		(16,092)		(m)	67,235
Operating income (loss)	(24,112)		(43,181)			(67,293)
Loss before income taxes	$	(38,582)	$	(42,803)	(n)	$	(81,385)

Adjustments to the pro forma unaudited condensed combined statements of income (loss)

(j) This adjustment reflects Product sales attributable to the Hospital Products.

(k) This adjustment reflects the following estimated expenses attributable to the Hospital Products:

•Cost of products of $3,540.

•R&D expenses of $322.

•Selling, general and administrative expenses of $797.

•Intangible asset amortization on acquired development technology for Vazculep of $406.

•Changes in fair value of related party contingent consideration of $3,327. The ~~new standard also provides practical expedients~~Company will no longer be responsible for ~~a company’s ongoing accounting. We currently expect~~these payments.

(l) This amount reflects the adjustments noted in (j) and (k) above, as well as estimated Changes in fair value of related party payable of $435 attributable to ~~elect~~ the ~~short-term lease recognition exemption~~Hospital Products. The Company will no longer be responsible for ~~all leases that qualify.~~these payments.

(m) This ~~means,~~adjustment reflects the following estimated expenses attributable to the Hospital Products:

•Cost of products of $11,368.

•R&D expenses of $1,960.

•Selling, general and administrative expenses of $1,102.

•Intangible asset amortization on acquired development technology for ~~those leases that qualify, we~~Vazculep of $816.

•Changes in fair value of related party contingent consideration of $845. The Company will ~~not recognize ROU assets or lease liabilities,~~no longer be responsible for these payments.

(n) This amount reflects the adjustments noted in (j) and ~~this includes not recognizing ROU assets or lease liabilities~~(m) above, as well as the reversal of estimated Changes in fair value of related party payable of $378 attributable to the Hospital Products. The Company will no longer be responsible for ~~existing short-term~~these payments.

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~~leases of those assets in transition. We also currently expect to elect the practical expedient to not separate lease and non-lease components for all of our leases.~~

NOTE 3:5: Revenue Recognition

~~The~~Prior to June 30, 2020, the Company ~~generates~~generated revenue primarily from the sale of pharmaceutical products to customers. ~~From time to time~~On June 30, 2020, the Company ~~also generates revenue from licensing arrangements whereby~~sold the ~~Company provides access to certain~~Hospital Products. See Note 4: Disposition of ~~its intellectual property.~~the Hospital Products.

~~Periods prior to January 1, 2018~~

Product Sales and Services

~~Revenue is generally realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the seller’s price~~Prior to the buyer is fixed or determinable, and collectability is reasonably assured. The Company recorded revenue from product sales when title and risk of ownership transferred to the customer, which was typically upon delivery to the customer and when the selling price was determinable.

~~Licensing Revenues~~

From time to time, the Company enters into licensing agreements for the license of technology used for developing modified controlled release of oral pharmaceutical products. Non-refundable fees where the Company had continuing performance obligations were deferred and recognized ratably over the projected performance period. Milestone payments, which were typically related to regulatory, commercial or other achievements by the Company or their licensees and distributors, were recognized as revenues when the milestone was accomplished and collection was reasonably assured.

~~Periods commencing January 1, 2018~~

~~Product Sales and Services~~

~~Effective January 1, 2018, the Company implemented ASC 606, Revenue From Contracts With Customers. The Company sells~~June 30, 2020, we sold products primarily through wholesalers and ~~considers~~considered these wholesalers to be ~~its~~our customers. ~~Under ASC 606, revenue~~Revenue from product sales iswas recognized when the customer ~~obtains~~obtained control of ~~the Company’s~~our product and ~~the Company’s~~our performance obligations ~~are~~were met, which ~~occurs~~occurred typically upon receipt of delivery to the customer. As is customary in the pharmaceutical industry, ~~the Company’s~~our gross product sales ~~are~~were subject to a variety of price ~~deductions~~adjustments in arriving at reported net product sales. These adjustments ~~include~~included estimates for product returns, chargebacks, payment discounts, rebates, and other sales allowances and ~~are~~were estimated when the product is delivered based on analysis of historical data for the product or comparable products, as well as future expectations for such products.

Reserves to reduce Gross Revenues to Net Revenues

Revenues from product sales ~~are~~were recorded at the net selling price, which ~~includes~~included estimated reserves to reduce gross product sales to net product sales resulting from product returns, chargebacks, payment discounts, rebates, and other sales allowances that are offered within contracts between the Company and its customers and end users. These reserves ~~are~~were based on the amounts earned or to be claimed on the related sales and ~~are~~were classified as reductions of accounts receivable if the amount is payable to the customer, except in the case of the estimated reserve for future expired product returns, which are classified as a liability. The reserves are classified as a liability if the amount is payable to a party other than a customer. Where appropriate, these estimated reserves take into consideration relevant factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates to reduce gross selling price to net selling price to which it expects to be entitled based on the terms of its contracts. The actual selling price ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company adjusts these estimates, which would affect ~~net product revenue and~~ earnings in the period such variances become known.

Product Returns

Consistent with industry practice, the Company maintains a returns policy that generally offers customers a right of return for product that has been purchased from the Company. The Company ~~estimates~~estimated the amount of product returns and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company ~~currently estimates~~estimated product return

liabilities based on analysis of historical data for the product or comparable products, as well as future expectations for such ~~products.~~products and other judgments and analysis.

Chargebacks, Discounts and Rebates

Chargebacks, discounts and rebates represent the estimated obligations resulting from contractual commitments to sell products to its customers or end users at prices lower than the list prices charged to our wholesale customers. Customers charge the Company for the difference between the gross selling price they pay for the product and the ultimate contractual price agreed to between the Company and these end users. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. Chargebacks, discounts and rebates are estimated at the time of sale to the customer.

Revenue from licensing arrangements

The terms of the Company’s licensing agreements may contain multiple performance obligations, including certain R&D activities. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments. Each of these payments ~~results in~~are recorded as license revenues. The Company did not have any license revenue during the years ended December 31, 2020 and 2019. License revenue during the year ended December 31, 2018 was $1,846.

License of Intellectual Property

If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, ~~the Company recognizes~~we recognize revenues from non-refundable, up-front fees allocated to the license when the

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license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Disaggregation of revenue

The Company’s primary source of revenue iswas from the sale of pharmaceutical products, which are equally affected by the same economic factors as it relates to the nature, amount, timing, and uncertainty of revenue and cash flows. For further detail about the Company’s revenues by product, see Note 21:24: Company Operations by Product, Customer and Geography.

Contract Balances

The Company does not recognize revenue in advance of invoicing its customers and therefore has no related contract assets.

A receivable is recognized in the period the Company sells its products and when the Company’s right to consideration is unconditional. ~~See the consolidated balance sheets for the balance of accounts receivable at December 31, 2018.~~

~~See below for contract liability discussion and balance related to a license agreement.~~

There were no0 material deferred contract costs at December 31, ~~2018.~~2020 and 2019.

Transaction Price Allocated to the Remaining Performance Obligation

For product sales, the Company generally satisfies its performance obligations within the same period the product is delivered. Product sales recognized in ~~2018~~2020 from performance obligations satisfied (or partially satisfied) in previous periods were immaterial.

For certain licenses of intellectual property, specifically those with performance obligations satisfied over time, the Company allocates a portion of the transaction price to that performance obligation and recognizes revenue using an appropriate measure of progress towards development of the product. In December 2018, ~~the Company~~we reached an agreement to exit a contract and our remaining performance obligations and recognized the remaining $1,600 of deferred revenue, which represented the unsatisfied performance obligations associated with a license agreement. At December 31, ~~2018,~~2020 and 2019, the deferred revenue balance related to this obligation is $0.

The Company has elected certain of the practical expedients from the disclosure requirement for remaining performance obligations for specific situations in which an entity need not estimate variable consideration to recognize revenue. Accordingly, the Company

applies the practical expedient in ASC 606 to its stand-alone contracts and does not disclose information about variable consideration from remaining performance obligations for which ~~the Company recognizes~~we recognize revenue.

NOTE 4:6: Fair Value Measurements

The Company is required to measure certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting. For example, we use fair value extensively when accounting for and reporting certain financial instruments, when measuring certain contingent consideration liabilities and in the initial recognition of net assets acquired in a business combination. Fair value is estimated by applying the hierarchy described below, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value ~~measurement:~~measurement.

ASC 820, ~~Fair~~“Fair Value Measurements and Disclosures,” defines fair value as a market-based measurement that should be determined based on the assumptions that marketplace participants would use in pricing an asset or liability. When estimating fair value, depending on the nature and complexity of the asset or liability, we may generally use one or each of the following techniques:

•Income approach, which is based on the present value of a future stream of net cash flows.

•Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.

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As a basis for considering the assumptions used in these techniques, the standard establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

•Level 1 - Quoted prices for identical assets or liabilities in active markets.

•Level 2 - Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are directly or indirectly observable, or inputs that are derived principally from, or corroborated by, observable market data by correlation or other means.

•Level 3 - Unobservable inputs that reflect estimates and assumptions.

The following table summarizes the financial instruments measured at fair value on a recurring basis classified in the fair value hierarchy (Level 1, 2 or 3) based on the inputs used for valuation in the accompanying consolidated balance sheets:


	As of December 31, 2018						As of December 31, 2017							As of December 31, 2020						As of December 31, 2019
Fair Value Measurements:	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3		Fair Value Measurements:	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3

Marketable securities (see Note 5)
Marketable securities (see Note 7)													Marketable securities (see Note 7)
Equity securities	$	9,145	$	—	$	—	$	468	$	—	$	—	Equity securities	$	—	$	—	$	—	$	4,404	$	—	$	—
Money market funds	52,996		—		—		44,481		—		—
Money market and mutual funds													Money market and mutual funds	104,672		—		—		38,799		—		—
Corporate bonds	—		6,339		—		—		9,262		—		Corporate bonds	—		22,155		—		—		4,098		—
Government securities - U.S.	—		12,701		—		—		19,050		—		Government securities - U.S.	—		18,999		—		—		5,446		—

Other fixed-income securities	—		9,409		—		—		4,250		—		Other fixed-income securities	—		3,854		—		—		1,637		—
Total assets	$	62,141	$	28,449	$	—	$	44,949	$	32,562	$	—	Total assets	$	104,672	$	45,008	$	—	$	43,203	$	11,181	$	—

Related party payable (see Note 11)	—		—		28,840		—		—		98,925
Contingent consideration payable (see Note 13)													Contingent consideration payable (see Note 13)	—		—		—		—		—		17,327
Total liabilities	$	—	$	—	$	28,840	$	—	$	—	$	98,925	Total liabilities	$	—	$	—	$	—	$	—	$	—	$	17,327

A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. During the fiscal year ended December 31, ~~2018,~~2020, there were no transfers in and out of Level 1, 2, or 3. During the twelve months ended December 31, ~~2018, 2017~~2020, 2019 and ~~2016,~~2018, we did not recognize any other-than-temporary impairment loss.

Some of the Company’s financial instruments, such as cash and cash equivalents, accounts receivable and accounts payable, are reflected in the balance sheet at carrying value, which approximates fair value due to their short-term nature.

Debt

We estimate the fair value of our $143,750 aggregate principal amount of 4.50% exchangeable senior notes due 2023 (the “2023 Notes”), a Level 2 input, based on interest rates that would be currently available to the Company for issuance of similar types of debt instruments with similar terms and remaining maturities or recent trading prices obtained from brokers. The estimated fair value of the 2023 Notes at December 31, ~~2018 based on recent trading activity was $81,490 compared to a~~2020 is $128,210, which is the same as book ~~value of $115,691.~~value.

Additionally, the Company’s other debt is reflected in the balance sheet at carrying value, which approximates fair value, as these represent non-interest bearing grants from the French government and are repayable only if the research project is technically or commercially successful.

See Note 10:12: Long-Term Debt for additional information regarding our debt obligations.

NOTE 5:7:Marketable Securities

The Company has investments in equity and available-for-sale ~~marketable~~debt securities which are recorded at fair market value. ~~Prior to January 1, 2018, unrealized gains~~The change in the fair value of equity investments is recognized in our consolidated statements of income (loss) and ~~losses on all securities are~~the change in the fair value of available-for-sale debt investments is recorded as other comprehensive income (loss) in shareholders’ equity (deficit), net of income tax effects.

~~On January 1, 2018, the Company adopted ASU 2016-01, which requires the change~~ As of December 31, 2020, we considered any decreases in ~~the~~ fair value ~~of available-for-sale equity investments~~on our marketable securities to be ~~recognized in our consolidated statements of (loss) income rather~~driven by factors other than as a component of our consolidated statement of comprehensive income (loss). For the year ended December 31, 2018, the net unrealized loss on our available-for-sale equity investments, recorded as a component of investment income in the accompanying consolidated statements of (loss) income, was $956. The net unrealized gain on our available-for-sale equity investments was immaterial for the year ended December 31, 2017 and $344 for the year ended December 31, 2016. These amounts were recorded as other comprehensive income in shareholders’ equity, net of income tax effects for the year ended December 31, 2017.credit risk, including market risk.

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The following tables show the Company’s available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category as of December 31, ~~2018~~2020 and ~~2017,~~2019, respectively:


	2020
Marketable Securities:	Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value


Money market and mutual funds	$	103,404	$	1,288	$	(20)	$	104,672
Corporate bonds	21,811		350		(6)		22,155
Government securities - U.S.	18,849		155		(5)		18,999

Other fixed-income securities	3,839		22		(7)		3,854


Total	$	147,903	$	1,815	$	(38)	$	149,680

2018
Marketable Securities: Adjusted Cost Unrealized Gains Unrealized Losses Fair Value

Equity securities $ 10,101
$ —
$ (956 ) $ 9,145
Money market funds 52,733
316
(53 ) 52,996
Corporate bonds 6,411
7
(79 ) 6,339
Government securities - U.S. 12,714
66
(79 ) 12,701
Other fixed-income securities 9,400
22
(13 ) 9,409
Total $ 91,359

$ 411

$ (1,180 )
$ 90,590


	2017										2019
Marketable Securities:	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value		Marketable Securities:	Adjusted Cost		Unrealized Gains		Unrealized Losses		Fair Value

Equity securities	$	443	$	31	$	(6	)	$	468	Equity securities	$	4,234	$	170	$	0	$	4,404
Money market funds	44,525		—		(44		)	44,481
Money market and mutual funds										Money market and mutual funds	38,028		771		0		38,799
Corporate bonds	9,285		1		(24		)	9,262		Corporate bonds	4,021		77		0		4,098
Government securities - U.S.	19,080		—		(30		)	19,050		Government securities - U.S.	5,341		110		(5)		5,446

Other fixed-income securities	4,259		—		(9		)	4,250		Other fixed-income securities	1,614		23		0		1,637

Total	$	77,592	$	32	$	(113	)	$	77,511	Total	$	53,238	$	1,151	$	(5)	$	54,384

We determine realized gains or losses on the sale of marketable securities on a specific identification method. We reflect these gains and losses as a component of investment and other income in the accompanying consolidated statements of income (loss).

We recognized gross realized gains of ~~$317, $1,677,~~$474, $483, and ~~$1,265~~$317 for the twelve months ended December 31, ~~2018, 2017,~~2020, 2019, and ~~2016,~~2018, respectively. These realized gains were offset by realized losses of ~~$565, $1,390,~~$912, $151, and ~~$586~~$565 for the twelve-months ended December 31, 2020, 2019, and 2018, ~~2017, and 2016,~~ respectively. ~~We reflect these gains and losses as a component of investment income in the accompanying consolidated statements of (loss) income.~~

The following table summarizes the estimated fair value of our investments in marketable debt securities, accounted for as available-for-sale securities and classified by the contractual maturity date of the securities as of December 31, ~~2018:~~2020:


	Maturities
Marketable Debt Securities:	Less than 1 Year		1-5 Years		5-10 Years		Greater than 10 Years		Total



Corporate bonds	$	6,054	$	14,468	$	1,633	$	0	$	22,155
Government securities - U.S.	0		13,827		2,038		3,134		18,999

Other fixed-income securities	1,017		2,837		0		0		3,854


Total	$	7,071	$	31,132	$	3,671	$	3,134	$	45,008

Maturities
Marketable Debt Securities: Less than 1 Year 1-5 Years 5-10 Years Greater than 10 Years Total

Corporate bonds $ 1,511
$ 4,828
$ —
$ —
$ 6,339
Government securities - U.S. 771
11,145
281
504
12,701
Other fixed-income securities —
9,409
—
—
9,409
Total $ 2,282

$ 25,382

$ 281

$ 504

$ 28,449

~~The Company has~~We have classified our investment in available-for-sale marketable securities as current assets in the consolidated balance sheets as the securities need to be available for use, if required, to fund current operations. There are no restrictions on the sale of any securities in our investment portfolio.

Total gross unrealized losses of our available-for-sale debt securities at December 31, 2020 were immaterial. The unrealized losses are driven by factors other than credit risk and have been in a unrealized loss position for less than one year. We do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases.

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NOTE 6:8:Inventories

The principal categories of inventories, net of reserves of ~~$4,757~~$0 and ~~$1,039~~$914 at December 31, ~~2018~~2020 and ~~2017,~~2019, respectively, are comprised of the following:


Inventory:	2018		2017		Inventory:	2020		2019

Finished goods	$	4,270	$	4,774	Finished goods	$	0	$	3,020
Raw materials	500		1,383		Raw materials	0��		550
Total	$	4,770	$	6,157	Total	$	0	$	3,570

~~Total net reserves increased by $3,718 during the year ended~~The decrease in inventory at December 31, ~~2018 driven largely by approximately $2,583~~2020 is a result of ~~reserves related to Noctiva inventory.~~the June 30, 2020 disposition of the Hospital Products. See Note 4: Disposition of the Hospital Products.

NOTE 7:9:Property and Equipment, net

The principal categories of property and equipment, net at December 31, ~~2018~~2020 and ~~2017,~~2019, respectively, are as follows:


Property and Equipment, net:	2018			2017			Property and Equipment, net:	2020		2019

Laboratory equipment	$	8,864		$	10,135

Software, office and computer equipment	2,487			3,115			Software, office and computer equipment	$	1,443	$	1,258
Furniture, fixtures and fittings	3,715			4,779			Furniture, fixtures and fittings	300		300
Less - accumulated depreciation	(13,155		)	(15,028		)	Less - accumulated depreciation	(1,384)		(1,014)
Total	$	1,911		$	3,001		Total	$	359	$	544

Depreciation expense for the years ended December 31, 2020, 2019 and 2018 ~~2017~~was $287, $459 and ~~2016 was~~ $811, ~~$1,224 and $601,~~ respectively.

~~NOTE 8:Acquisitions~~

On February 5, 2016, the Company acquired FSC, a specialty pharmaceutical company dedicated to providing innovative solutions to unmet medical needs for pediatric patients, from Deerfield CSF, LLC, a Deerfield Management company (“Deerfield CSF”), a related party. The Company disposed of these pediatric assets on February 16, 2018. See ~~Note~~ 16~~: Divestiture of the Pediatric Assets~~.

This acquisition was accounted for using the acquisition method of accounting and, accordingly, its results were included in the Company’s consolidated financial statements from the date of acquisition until the date of divestiture. Total consideration to acquire FSC was $21,659, and was funded with a combination of the following, partially offset by $467 as a result of a net working capital settlement from the seller:

~~$15,000 long-term liability to Deerfield CSF. Under the terms of the acquisition agreement, the Company will pay $1,050 annually for five years with a final payment in January 2021 of $15,000.~~

an estimate of $6,659 in contingent consideration to Deerfield CSF. Under the terms of the acquisition agreement, the Company shall pay quarterly a 15% royalty on the net sales of certain FSC products, up to $12,500 for a period not exceeding ten years.

~~These items were reported in related party payable within the Company’s consolidated balance sheet at December 31, 2017, and is further disclosed in~~ ~~Note~~ 11~~: Long-Term Related Party Payable. These related party payables were disposed of as a part of the February 2018 sale.~~ ~~See Note~~ 16:~~Divestiture of the Pediatric Assets~~.

~~The fair values assigned to the acquired assets and liabilities were recognized as follows:~~

Assigned Fair Value: Amount

Accounts receivable $ 142
Inventories 1,135
Prepaid expenses and other current assets 1,712
Intangible assets:
Acquired product marketing rights 16,600
Acquired developed technology 4,300
Deferred tax assets 853
Other assets 277
Accounts payable and other liabilities (3,827 )
Total
$ 21,192

A portion of the transaction attributable to certain intangible assets was taxable for income tax purposes which resulted in recording some of the assets at fair value for both book and tax purposes. Transaction expenses were not material. The useful lives on FSC acquired intangible assets ranged from nine to fifteen years.

After its acquisition on February 5, 2016, FSC contributed $5,985 to the Company’s net sales for the twelve-month period ended December 31, 2016. FSC incurred a loss of $5,839 for the twelve-month period ended December 31, 2016.

Had the FSC acquisition been completed as of the beginning of 2016, the Company’s unaudited pro forma net revenue and net loss for the twelve months ended December 31, 2016 would have been as follows:

Pro Forma Net Revenue and Income (Loss): 2016

Net revenue $ 150,721
Net loss (42,290 )

On February 12, 2018, the Company, together with its subsidiaries Avadel Pharmaceuticals (USA), Inc., Avadel Pediatrics, Inc., FSC Therapeutics, LLC (“FSC Therapeutics”), and Avadel US Holdings, Inc. (“Holdings”), as the “Sellers,” entered into an asset purchase agreement (the “Purchase Agreement”) with Cerecor, Inc. (“Cerecor”). The transaction closed on February 16, 2018 wherein Cerecor purchased from the Sellers four pediatric commercial stage assets – Karbinal™ ER, Cefaclor, Flexichamber™ and AcipHex® Sprinkle™, together with certain associated business assets – which were held by FSC. See ~~Note 16: Divestiture of the Pediatric Assets~~.

NOTE 9:10:Goodwill and Intangible Assets

The Company’s amortizable and unamortizable intangible assets at December 31, ~~2018~~2020 and ~~2017,~~2019, respectively, are as follows:

2018 2017
Goodwill and Intangible Assets:
Gross
Value

Accumulated
Amortization
Impairment Net Carrying Amount
Gross
Value

Accumulated
Amortization
Net Carrying Amount

Amortizable intangible assets:

Acquired developed technology - Noctiva $ 73,111
$ (7,024 ) $ (66,087 ) $ —
$ 73,111
$ (1,401 ) $ 71,710
Acquired developed technology - Vazculep 12,061
(10,432 ) —
1,629
12,061
(9,616 ) 2,445
Acquired product marketing rights ⁽¹⁾
—
—
—
—
16,600
(2,132 ) 14,468
Acquired developed technology ⁽¹⁾
—
—
—
—
4,300
(634 ) 3,666
Total amortizable intangible assets $ 85,172

$ (17,456 ) $ (66,087 )
$ 1,629

$ 106,072

$ (13,783 )
$ 92,289

Unamortizable intangible assets:

Goodwill $ 18,491
$ —
$ —
$ 18,491
$ 18,491
$ —
$ 18,491
Total unamortizable intangible assets $ 18,491
$ —
$ —
$ 18,491
$ 18,491
$ —
$ 18,491


	2020						2019
Goodwill and Intangible Assets:	Gross Value		Accumulated Amortization		Net Carrying Amount		Gross Value		Accumulated Amortization		Net Carrying Amount


Acquired developed technology - Vazculep (1)	$	0	$	0	$	0	$	12,061	$	(11,248)	$	813


Unamortizable intangible assets - Goodwill (2)	$	16,836	$	0	$	16,836	$	18,491	$	0	$	18,491

⁽¹⁾ ~~These~~ This intangible ~~assets were purchased~~asset was assumed by the ~~buyer~~Exela Buyer as part of the disposition of the ~~pediatrics products~~Hospital Products on ~~February 16, 2018.~~June 30, 2020. See Note16~~: Divestiture~~ 4: Disposition of the ~~Pediatric Assets~~Hospital Products.

(2) In connection with the disposition of the Hospital Products (see Note 4: Disposition of the Hospital Products), the Company allocated goodwill of $1,655 on a relative fair value basis to the Hospital Products and included this amount in the net gain on the disposition of the Hospital Products on the consolidated statement of income (loss) during the year ended December 31, 2020.

The Company recorded amortization expense related to amortizable intangible assets of ~~$6,619, $3,659~~$406, $816 and ~~$13,888~~$6,619 for the years ended December 31, ~~2018, 2017~~2020, 2019 and ~~2016,~~2018, respectively.

NaN impairment loss related to goodwill or intangible assets was recognized during the years ended December 31, 2020 or 2019.

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NOTE 11: Leases

On January 1, 2019, the Company adopted ASU 2016-02, “Leases”, using the modified retrospective transition approach and elected the transition option to recognize the adjustment in the period of adoption rather than in the earliest period presented. At December 31, 2020, the balances of the operating lease right-of-use asset and total operating lease liability were $2,604 and $2,314, respectively, of which $474 of the operating lease liability is classified as a current liability.

All of the Company’s office spaces are leased. The Company also leases a production suite. All leased facilities are classified as operating leases with remaining lease terms between one and five years. The Company determines if a contract is a lease at the inception of the arrangement. The Company reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and will include these options in the lease term when they are reasonably certain of being exercised. For all of the Company’s leases, lease and non-lease components are accounted for as a single lease component, as all non-lease components are immaterial.

The components of lease costs, which are included in selling, general and administrative expenses in the consolidated statements of income (loss) of years ended December 31, 2020 and 2019 were as follows:


Lease cost:	2020		2019

Operating lease costs (1)	$	1,133	$	1,515


Sublease income (2)	(336)		(276)
Total lease cost	$	797	$	1,239

(1) Variable lease costs were immaterial for the years ended December 31, 2020 and 2019.

(2) Represents sublease income received for various office leases.

During the years ended December 31, 2020 and 2019, the Company reduced its operating lease liabilities by $769 and $1,480 for cash paid. During the year ended December 31, ~~2017,~~2020, there were no new operating or finance leases entered into. As of December 31, 2020, the Company ~~acquired $73,111 in developed technology as part~~is aware of one additional potential embedded lease that has not yet commenced and will not commence until certain conditions are met. If these conditions are met and the start date is determined, annual fees would commence and at that time an operating lease right-of-use asset and corresponding operating lease liability will be recorded.

As of December 31, 2020, our operating leases have a weighted-average remaining lease term of 4.3 years and a weighted-average discount rate of 5.3%. Avadel’s lease contracts do not provide a readily determinable implicit rate. Avadel’s estimated incremental borrowing rate is based on information available at the inception of the Exclusive License and Assignment Agreement (ELAA) with Serenity Pharmaceuticals, LLC. The aggregate cost was composed of an upfront payment of $50,000, an accrued payment of $20,000 which was paid for Noctiva during the year ended December 31, 2018, and $3,111 of transaction costs. The Company amortizes the developed technology over a 13 year period, which began October 1, 2017. During the fourth quarter 2018, certain conditions came to light, largely the lack of a meaningful increase in Noctiva prescriptions despite the substantial investment of resources, which indicated that the carrying valuelease.

Maturities of the asset, may not be fully recoverable. As such, the Company performed an impairment test based on a comparison of the pretax discounted cash flows expected to be generated by the asset, which is a Level 3 fair value estimate, to the recorded value of the asset and concluded that the associated cash flows did not support any of the carrying value of the intangible asset and the Company recorded a full impairment charge of $66,087 at December 31, 2018 related to the acquired developed technology associated with Noctiva. The February 6, 2019 Chapter 11 bankruptcy filing of Specialty Pharma, the subsidiary which markets, sells and distributes Noctiva, confirmed management’s conclusion on the impairment. This impairment charge is included in the line “Impairment of intangible asset” in the consolidated statements of (loss) income.

Amortizable intangible assets are amortized over their estimated useful lives, which range from three to fifteen years, using the straight-line method. At December 31, 2018, total future amortization of intangible assets for the next five years isCompany’s operating lease liabilities were as follows:


Maturities:	Operating Leases

2021	$	578
2022	590
2023	602
2024	614
2025	206
Thereafter	0
Total lease payments	2,590
Less: interest	276
Present value of lease liabilities	$	2,314

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Estimated Amortization Expense: Amount

2019 $ 815
2020 814
2021 —
2022 —
2023 —

NOTE ~~10:~~12:Long-Term Debt

~~Long-Term~~Long-term debt is summarized as follows:


	December 31, 2020		December 31, 2019
Principal amount of 4.50% exchangeable senior notes due 2023	$	143,750	$	143,750
Less: unamortized debt discount and issuance costs, net	(15,540)		(22,064)
Net carrying amount of liability component	128,210		121,686
Less: current maturities	0		0
Long-term debt	$	128,210	$	121,686

Equity component:
Equity component of exchangeable notes, net of issuance costs	$	(26,699)	$	(26,699)

December 31, 2018 December 31, 2017
Principal amount of 4.50% exchangeable senior notes due 2023 $ 143,750
$ —
Less: unamortized debt discount and issuance costs, net (28,059 ) —
Net carrying amount of liability component 115,691
—
Other debt 149
267
Subtotal 115,840
267
Less: current maturities (106 ) (111 )
Long-term debt $ 115,734
$ 156

Equity component:
Equity component of exchangeable notes, net of issuance costs $ (26,699 ) $ —
2023 Notes

~~Issuance of Debt Securities~~

On February 16, 2018, Avadel Finance Cayman Limited, a Cayman Islands exempted company (the “Issuer”) and an indirect wholly-owned subsidiary of the Company, issued $125,000 aggregate principal amount of 4.50% exchangeable senior notes due 2023 (the “2023 Notes”) in a private placement (the “Offering”) to qualified institutional buyers pursuant to Rule 144A under the Securities Act. In connection with the Offering, the Issuer granted the initial purchasers of the 2023 Notes a 30-day option to purchase up to an additional $18,750 aggregate principal amount of the 2023 Notes, which was fully exercised on February 16, 2018. Net proceeds received by the Company, after issuance costs and discounts, were approximately $137,560.

The Company pays 4.50% cash interest per year on the principal amount of the 2023 Notes, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on August 1, 2018, to holders of record at the close of business on the preceding January 15 or July 15, respectively. Interest accrues on the principal amount of the 2023 Notes from and including the date the 2023 Notes were issued or from, and including, the last date in respect of which interest has been paid or provided for, as the case may be, to, but excluding, the next interest payment date. The 2023 Notes are general, unsecured obligations of the Issuer, and are fully and unconditionally guaranteed by the Company on a senior unsecured basis. There are no financial debt covenants associated with the 2023 Notes.

The 2023 Notes are the Company’s senior unsecured obligations and rank equally in right of payment with all of the Company’s existing and future senior unsecured indebtedness and effectively junior to any of the Company’s existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness.

The 2023 Notes will be exchangeable at the option of the holders at an initial exchange rate of 92.6956 ADSs per $1 principal amount of 2023 Notes, which is equivalent to an initial exchange price of approximately $10.79 per ADS. Such initial exchange price represents a premium of approximately 20% to the $8.99 per ADS closing price on The Nasdaq Global Market on February 13, 2018. Upon the exchange of any 2023 Notes, the Issuer will pay or cause to be delivered, as the case may be, cash, ADSs or a combination of cash and ADSs, at the Issuer’s election. Holders of the 2023 Notes may convert their 2023 Notes, at their option, only under the following circumstances prior to the close of business on the business day immediately preceding August 1, 2022, under the circumstances and during the periods set forth below and regardless of the conditions described below, on or after August 1, 2022 and prior to the close of business on the business day immediately preceding the maturity date:

•Prior to the close of business on the business day immediately preceding August 1, 2022, a holder of the 2023 Notes may surrender all or any portion of its 2023 Notes for exchange at any time during the five business day period immediately after any five consecutive trading day period (the “Measurement Period”) in which the trading price per $1 principal amount of 2023 Notes, as determined following a request by a holder of the 2023 Notes, for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the ADSs and the exchange rate on each such trading day.

•If a transaction or event that constitutes a fundamental change or a make-whole fundamental change occurs prior to the close of business on the business day immediately preceding August 1, 2022, regardless of whether a holder of the 2023 Notes has the right to require the Company to repurchase the 2023 Notes, or if Avadel is a party to a merger event that

occurs prior to the close of business on the business day immediately preceding August 1, 2022, all or any portion of a the holder’s 2023 Notes may be surrendered for exchange at any time from or after the date that is 95 scheduled trading days prior to the anticipated effective date of the transaction (or, if later, the earlier of (x) the business day after the Company gives notice of such transaction and (y) the actual effective date of such transaction) until 35 trading days after the actual effective date of such transaction or, if such transaction also constitutes a fundamental change, until the related fundamental change repurchase date.

•Prior to the close of business on the business day immediately preceding August 1, 2022, a holder of the 2023 Notes may surrender all or any portion of its 2023 Notes for exchange at any time during any calendar quarter commencing after the calendar quarter ending on June 30, 2018 (and only during such calendar quarter), if the last reported sale

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price of the ADSs for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the exchange price on each applicable trading day.

•If the Company calls the 2023 Notes for redemption pursuant to Article 16 to the Indenture prior to the close of business on the business day immediately preceding August 1, 2022, then a holder of the 2023 Notes may surrender all or any portion of its 2023 Notes for exchange at any time prior to the close of business on the second business day prior to the redemption date, even if the 2023 Notes are not otherwise exchangeable at such time. After that time, the right to exchange shall expire, unless the Company defaults in the payment of the redemption price, in which case a holder of the 2023 Notes may exchange its 2023 Notes until the redemption price has been paid or duly provided for.

~~The Company~~We considered the guidance in ASC 815-15, Embedded Derivatives,, to determine if this instrument contains an embedded feature that should be separately accounted for as a derivative. ASC 815 provides for an exception to this rule when convertible notes, as host instruments, are deemed to be conventional, as defined by ASC 815-40. ~~The Company~~We determined that this exception applies due, in part, to our ability to settle the 2023 Notes in cash, ADSs or a combination of cash and ADSs, at our option. ~~The Company has~~We have therefore applied the guidance provided by ASC 470-20, Debt with Conversion and Other Options which requires that the 2023 Notes be separated into debt and equity components at issuance and a value be assigned to each. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The allocation was performed in a manner that reflected our non-convertible debt borrowing rate for similar debt. The equity component of the 2023 Notes was recognized as a debt discount and represents the difference between the proceeds from the issuance of the 2023 Notes and the fair value of the liability of the 2023 Notes on its issuance date. The excess of the principal amount of the liability component over its carrying amount (the “Debt Discount”) is amortized to interest expense using the effective interest method over the term of the 2023 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

In connection with the issuance of the 2023 Notes, we incurred approximately $6,190 of debt issuance costs, which primarily consisted of underwriting, legal and other professional fees, and allocated these costs to the liability and equity components based on the allocation of the proceeds. Of the total $6,190 of debt issuance costs, $1,201 were allocated to the equity component and recorded as a reduction to additional paid-in capital and $4,989 were allocated to the liability component and recorded as a reduction to debt on our consolidated balance sheets. The portion allocated to the liability component is amortized to interest expense using the effective interest method over the same five-year term as the related 2023 Notes.

NOTE 13:Contingent Consideration Payable

~~Other Debt~~

French government agencies provide financing to French companies for R&D. At December 31, 2018 and 2017, the Company had outstanding loans of $149 and $267, respectively for various programs. These loans do not bear interest and are repayable only in the event the research project is technically or commercially successful. Potential repayment is scheduled to occur through 2019.

During the years ended December 31, 2018, 2017 and 2016, the Company repaid $193, $115 and $277, of loans associated with specific research projects, respectively. In addition, during 2017, the Company received a waiver of repayment for the remaining portion of certain loans of $539, on the basis of limited commercial and technical success. Amounts waived are reported as reductions to R&D expenses in the Company’s consolidated statements of (loss) income. No such waivers were received during 2018 or 2016.

~~NOTE 11:Long-Term Related Party Payable~~

~~Long-term related party~~Contingent consideration payable and related activity are reported at fair value and consist of the following at December 31, ~~2018~~2020 and ~~2017,~~2019, respectively:

Activity during the Twelve Months Ended December 31, 2018

Changes in Fair Value of
Related Party Payable

Balance,
December 31, 2017

Payments to
Related Parties

Operating (Gain)
Expense

Other
Income
Expiration of Warrants Disposal Balance,
December 31, 2018

Acquisition-related contingent consideration:

Warrants - Éclat Pharmaceuticals ^(a)
$ 2,479
$ —
$ (312 ) $ —
$ (2,167 ) $ —
$ —
Earn-out payments - Éclat Pharmaceuticals ^(b)
67,744
(19,468 ) (22,661 ) —
—
—
25,615
Royalty agreement - FSC ^(c)
5,740
(645 ) 242
—
—
(5,337 ) —
Financing-related:

Royalty agreement - Deerfield ^(d)
5,392
(1,922 ) —
(1,286 ) —
—
2,184
Royalty agreement - Broadfin ^(e)
2,570
(916 ) —
(613 ) —
—
1,041
Long-term liability - FSC ^(f)
15,000
—
—
—
—
(15,000 ) —
Total related party payable 98,925
$ (22,951 ) $ (22,731 ) $ (1,899 ) $ (2,167 ) $ (20,337 ) 28,840
Less: Current portion (25,007 )

(9,439 )
Total long-term related party payable $ 73,918

$ 19,401


			Activity during the Twelve Months Ended December 31, 2020
					Changes in Fair Value of Contingent Consideration Payable
	Balance, December 31, 2019		Payments		Operating Expense		Other Expense		Disposition of the Hospital Products		Balance, December 31, 2020

Acquisition-related contingent consideration:
Earn-out payments - Éclat Pharmaceuticals (a) (d)	$	15,472	$	(5,323)	$	3,327	$	0	$	(13,476)	$	0
Financing-related:
Royalty agreement - Deerfield (b) (d)	1,251		(587)		0		272		(936)		0
Royalty agreement - Broadfin (c) (d)	604		(279)		0		163		(488)		0
Total contingent consideration payable	17,327		$	(6,189)	$	3,327	$	435	$	(14,900)	0
Less: current portion	(5,554)										0
Total long-term contingent consideration payable	$	11,773									$	0

~~Each~~(a) In March 2012, the Company acquired all of the ~~above items~~membership interests of Éclat from Breaking Stick Holdings, L.L.C. (“Breaking Stick”, formerly Éclat Holdings), an affiliate of Deerfield. Breaking Stick is ~~associated~~majority owned by Deerfield, with ~~related parties as further described in~~ ~~Note~~ 22~~: Related Party Transactions.~~

~~(a)~~

As part of the consideration for the Company’s acquisition of Éclat Pharmaceuticals, LLC on March 13, 2012, the Company issued two warrants to a related party with a six-year term which allow for the purchase of a combined total of 3,300 ordinary shares of Avadel. One warrant was exercisable for 2,200 ordinary shares at an exercise price of $7.44 per share, and the other warrant was exercisable for 1,100 ordinary shares at an exercise price of $11.00 per share. On February 23, 2018, the related party exercised in full the warrant for 2,200 ordinary shares. On March 12, 2018, the remaining warrant for 1,100 ordinary shares expired worthless.

~~The fair value of the warrants was estimated on~~ a ~~quarterly basis using a Black-Scholes option pricing model with the following assumptions as of December 31:~~

Assumptions for the Warrant Valuation: 2017

Stock price $ 8.20

Weighted average exercise price per share 8.63

Expected term (years) 0.25

Expected volatility 37.90 %
Risk-free interest rate 1.39 %
Expected dividend yield —

These Black-Scholes fair value measurements are based on significant inputs not observable in the market and thus represent a level 3 measurement as defined in ASC 820. The fair value of the warrant consideration is most sensitive to movement in the Company’s share price and expected volatility at the balance sheet date.

~~Expected term~~: The expected term of the options or warrants represents the period of time between the grant date and the time the options or warrants are either exercised or forfeited, including an estimate of future forfeitures for outstanding options or warrants. Given the limited historical data and the grant of stock options and warrants to a limited population, the simplified method has been used to calculate the expected life.

~~Expected volatility: The expected volatility is calculated based on an average of the historical volatility of the Company’s stock price.~~

~~Risk-free~~minority interest ~~rate: The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant and a maturity that approximates the expected term.~~

~~Expected dividend yield: The Company has not distributed any dividends since our inception and has no plan to distribute dividends in the foreseeable future.~~

At the closing date of the 2012 Éclat acquisition and at December 31, 2017, it was uncertain whether the Company would ultimately fulfill its obligation under these warrants using ordinary shares or cash. Accordingly, pursuant to the guidance of ASC 480, the Company determined that these warrants should be classified as a liability. This classification as a liability was further supportedowned by the Company’s ~~determination, pursuant~~former CEO, and certain other current and former employees. As part of the consideration, the Company committed to provide quarterly earn-out payments equal to 20% of any gross profit generated by certain Éclat products. These payments will continue in perpetuity, to the ~~guidance~~extent gross profit of ~~ASC 815-40-15-7(i)~~the related products also continue in perpetuity. In connection with the disposition of the Hospital Products on June 30, 2020 as discussed in Note 4: Disposition of the Hospital Products, ~~that these warrants could also not be considered as being indexed~~the Deerfield MIPA (with respect to certain sections thereof) and the Royalty Agreement were assigned to the ~~Company’s own ordinary shares,~~Exela Buyer. Pursuant to the Purchase Agreement, the Exela Buyer assumed and will pay, perform, satisfy and discharge the liabilities and obligations of Avadel Legacy and the Company under the Deerfield Royalty Agreement.

-80-

(b)As part of a February 2013 debt financing transaction conducted with Deerfield, the Company received cash of $2,600 in exchange for entering into a royalty agreement whereby the Company shall pay quarterly a 1.75% royalty on the ~~basis that~~net sales of certain Éclat products until December 31, 2024. In connection with such debt financing transaction, the ~~exercise price~~Company granted Deerfield a security interest in the product registration rights of the Éclat Pharmaceuticals products. In connection with the disposition of the Hospital Products on June 30, 2020 as discussed in Note 4: Disposition of the Hospital Products, the Deerfield MIPA (with respect to certain sections thereof) and the Royalty Agreement were assigned to the Exela Buyer. Pursuant to the Purchase Agreement, the Exela Buyer assumed and will pay, perform, satisfy and discharge the liabilities and obligations of Avadel Legacy and the Company under the Deerfield Royalty Agreement.

(c)As part of a December 2013 debt financing transaction conducted with Broadfin Healthcare Master Fund, a former related party and shareholder, the Company received cash of $2,200 in exchange for entering into a royalty agreement whereby the ~~warrants is determined~~Company shall pay quarterly a 0.834% royalty on the net sales of certain Éclat products until December 31, 2024. In connection with the disposition of the Hospital Products on June 30, 2020 as discussed in ~~U.S. dollars, although~~Note 4: Disposition of the ~~functional currency~~Hospital Products, the Broadfin Royalty Agreement was assigned to the Exela Buyer and the Exela Buyer assumed and shall pay, perform, satisfy and discharge the liabilities and obligations of the Company atunder the ~~closing date~~Broadfin Royalty Agreement.

(d)Deerfield and Broadfin Healthcare Master Trust disposed of their 2023 Notes and ordinary shares in the Company during the year ended December 31, 2020 and are no longer considered related parties.

Prior to the sale of the ~~Éclat acquisition was the Euro.~~

~~(b)~~

In March 2012, the Company acquired all of the membership interests of Éclat from Breaking Stick Holdings, L.L.C. (“Breaking Stick”, formerly Éclat Holdings), an affiliate of Deerfield. Breaking Stick is majority owned by Deerfield, with a minority interest owned by certain current and former employees. As part of the consideration, the Company committed to provide quarterly earn-out payments equal to 20% of any gross profit generated by certain Éclat products. These payments will continue in perpetuity, to the extent gross profit of the related products also continue in perpetuity.

~~(c)~~

In February 2016, the Company acquired all of the membership interests of FSC from Deerfield. The consideration for this transaction in part included a commitment to pay quarterly a 15% royalty on the net sales of certain FSC products, up to $12,500 for a period not exceeding ten years. This obligation was assumed by the buyer as part of the disposition of the pediatrics products on February 16, 2018. ~~See Note~~ 16~~: Divestiture of the Pediatric Assets.~~

~~(d)~~

As part of a February 2013 debt financing transaction conducted with Deerfield, the Company received cash of $2,600 in exchange for entering into a royalty agreement whereby the Company shall pay quarterly a 1.75% royalty on the net sales of certain Éclat products until December 31, 2024. In connection with such debt financing transaction, the Company granted Deerfield a security interest in the product registration rights of the Eclat products.


~~(e)~~	As part of a December 2013 debt financing transaction conducted with Broadfin Healthcare Master Fund, a related party and current shareholder, the Company received cash of $2,200 in exchange for entering into a royalty agreement whereby the Company shall pay quarterly a 0.834% royalty on the net sales of certain Éclat products until December 31, 2024.

~~(f)~~

In February 2016, the Company acquired all of the membership interests of FSC from Deerfield. The consideration for this transaction in part consisted of payments totaling $1,050 annually for five years with a final payment in January 2021 of $15,000. Substantially all of FSC’s, and its subsidiaries, assets were pledged as collateral under this agreement. This obligation was assumed by the buyer as part of the disposition of the pediatrics products on February 16, 2018. ~~See Note~~ 16~~: Divestiture of the Pediatric Assets.~~

~~At December 31, 2018,~~Hospital Products on June 30, 2020, the fair value of each ~~related party~~contingent consideration payable listed in ~~(b)~~(a), ~~(d)~~(b) and ~~(e)~~(c) above was estimated using a discounted cash flow model based on estimated and projected annual net revenues or gross profit, as appropriate, of each of the specified Éclat products using an appropriate risk-adjusted discount rate of ~~15%~~14%. These fair value measurements are based on significant inputs not observable in the market and thus represent a level 3 measurement as defined in ASC 820. Subsequent changes in the fair value of the acquisition-related ~~related party~~contingent consideration payables, resulting primarily from management’s revision of key assumptions, will be recorded in the consolidated statements of income (loss) ~~income~~ in the line items entitled “Changes in fair value of ~~related party~~ contingent consideration” for items noted in (b) above and in “Other ~~expense~~(expense) income - changes in fair value of ~~related party~~contingent consideration payable” for items ~~(d)~~(b) and ~~(e)~~(c) above. See Note 1:1: Summary of Significant Accounting Policies under the caption Acquisition-related Contingent Consideration and Financing-related Royalty Agreements for more information on key assumptions used to determine the fair value of these liabilities.

~~The~~Prior to June 30, 2020, the Company ~~has chosen~~chose to make a fair value election pursuant to ASC 825, “Financial Instruments” for its royalty agreements detailed in items ~~(d)~~(b) and ~~(e)~~(c) above. These financing-related liabilities ~~are~~were recorded at fair market value on the consolidated balance sheets and the periodic change in fair market value is recorded as a component of “Other expense – ~~changes~~change in fair value of ~~related party~~contingent consideration payable” on the consolidated statements of income (loss) ~~income.~~.

-81-

The following table summarizes changes to the ~~related party~~contingent consideration payables, a recurring Level 3 measurement, for the twelve-month periods ended December 31, ~~2018, 2017~~2020, 2019 and ~~2016:~~2018:


Contingent Consideration Payable:	Balance

Balance at December 31, 2017	$	98,925
Payments of related party payable	(22,951)
Fair value adjustments (1)	(24,630)
Expiration of warrants	(2,167)
Disposition of the pediatrics assets	(20,337)
Balance at December 31, 2018	28,840
Payments of related party payable	(12,736)
Fair value adjustments (1)	1,223
Balance at December 31, 2019	17,327
Payments of contingent consideration payable	(6,189)
Fair value adjustments (1)	3,762
Disposition of the Hospital Products	(14,900)
Balance at December 31, 2020	$	0

Related Party Payable: Balance

Balance at December 31, 2015 $ 122,693
Additions ⁽²⁾
21,659
Payments of related party payable (30,838 )
Fair value adjustments ⁽¹⁾
55,833
Balance at December 31, 2016 169,347
Payments of related party payable (37,311 )
Fair value adjustments ⁽¹⁾
(33,111 )
Balance at December 31, 2017 98,925
Payments of related party payable (22,951 )
Fair value adjustments ⁽¹⁾
(24,630 )
Expiration of warrants (2,167 )
Disposition of the pediatrics assets (20,337 )
Balance at December 31, 2018 $ 28,840

⁽¹⁾Fair value adjustments are reported as ~~“(Gain) loss~~changes in fair value of contingent consideration and other expense - changes in fair value of ~~related party~~ contingent ~~consideration” and “Other income (expense) - changes in fair value of related party payable”~~consideration payable in the consolidated statements of income (loss) ~~income.~~ .

⁽²⁾~~Relates to the acquisition of FSC. See items (c) and (f) above.~~

NOTE ~~12:~~14:Income Taxes

The components of (loss) income before income taxes for the years ended twelve months ended December 31, are as follows:


(Loss) Income Before Income Taxes:	2018			2017			2016			(Loss) Income Before Income Taxes:	2020		2019		2018

Ireland	$	(42,604	)	$	(3,123	)	$	(22,866	)	Ireland	$	(27,205)	$	(50,134)	$	(42,604)
United States	(70,340		)	92,754			32,786
U.S.										U.S.	22,335		10,401		(70,340)
France	(253		)	3,029			(19,638		)	France	(212)		1,151		(253)
Total (loss) income before income taxes	$	(113,197	)	$	92,660		$	(9,718	)
Total loss before income taxes										Total loss before income taxes	$	(5,082)	$	(38,582)	$	(113,197)

The income tax (benefit) provision consists of the following for the years ended December 31:

Income Tax (Benefit) Provision: 2018 2017 2016

Current:

United States - Federal $ —
$ 18,064
$ 30,738
United States - State 330
331
1,081
France —
265
5,267
Total current 330
18,660
37,086

Deferred:

United States - Federal (19,503 ) 4,686
(6,443 )
United States - State 1,280
1,043
(23 )
France —
—
938
Total deferred (18,223 ) 5,729
(5,528 )

Income tax (benefit) provision $ (17,893 ) $ 24,389
$ 31,558


Income Tax (Benefit) Provision:	2020		2019		2018

Current:
U.S. - Federal	$	(12,810)	$	0	$	0
U.S. - State	20		97		330

Total current	(12,790)		97		330

Deferred:
Ireland	0		(1,256)		0
U.S. - Federal	680		(4,093)		(19,503)
U.S. - State	0		(104)		1,280

Total deferred	680		(5,453)		(18,223)

Income tax benefit	$	(12,110)	$	(5,356)	$	(17,893)

-82-

The reconciliation between ~~Domestic~~ income taxes at the statutory rate and the Company’s ~~(benefit) provision~~benefit for income taxes is as follows for the years ended December 31:


Reconciliation to Effective Income Tax Rate:	2020			2019			2018

Statutory tax rate	12.5		%	12.5		%	12.5		%
Differences in international tax rates	(34.5)		%	3.2		%	8.0		%
Nondeductible changes in fair value of contingent consideration	(19.4)		%	(0.3)		%	4.0		%
Intercompany asset transfer	0		%	21.2		%	0		%
Change in valuation allowances	(83.3)		%	(19.1)		%	(5.3)		%
Nondeductible stock-based compensation	(20.9)		%	(2.7)		%	(1.3)		%
Hospital Products sale	183.5		%	0		%	0		%
Unrealized tax benefits	5.4		%	0.7		%	(1.3)		%
State and local taxes (net of federal)	(0.4)		%	0		%	(0.3)		%
Change in U.S. tax law	179.5		%	0		%	(0.2)		%
Nondeductible interest expense	(34.0)		%	(2.5)		%	(1.1)		%
Orphan drug and R&D tax credit	55.0		%	0		%	0		%
Other	(5.1)		%	0.9		%	0.7		%
Effective income tax rate	238.3		%	13.9		%	15.7		%

Income tax benefit - at statutory tax rate	$	(636)		$	(4,823)		$	(14,149)
Differences in international tax rates	1,755			(1,218)			(9,039)
Nondeductible changes in fair value of contingent consideration	988			121			(4,559)
Intercompany asset transfer	0			(8,190)			0
Change in valuation allowances	4,231			7,379			5,998
Nondeductible stock-based compensation	1,060			1,039			1,499
Hospital Products sale	(9,328)			0			0
Unrecognized tax benefits	(274)			(261)			1,440
State and local taxes (net of federal)	20			(7)			299
Change in U.S. tax law	(9,124)			0			274
Nondeductible interest expense	1,728			982			1,269
Orphan drug and R&D tax credit	(2,793)			0			0
Other	263			(378)			(925)
Income tax benefit - at effective income tax rate	$	(12,110)		$	(5,356)		$	(17,893)

Reconciliation to Effective Income Tax Rate: 2018 2017 2016

Statutory tax rate 12.5 % 12.5 % 12.5 %
Differences in international tax rates 8.0 % 22.2 % (31.9 )%
Nondeductible changes in fair value of contingent consideration 4.0 % (11.6 )% (165.0 )%
Income tax deferred charge — % — % (9.7 )%
Change in valuation allowances (5.3 )% (0.7 )% 11.8 %
Nondeductible stock-based compensation (1.3 )% (0.4 )% (14.8 )%
Cross border merger — % 0.3 % (100.6 )%
Unrealized tax benefits (1.3 )% 1.4 % (15.2 )%
State and local taxes (net of federal) (0.3 )% 0.3 % (9.6 )%
Change in U.S. tax law (0.2 )% 3.8 % — %
Nondeductible interest expense (1.1 )% — % — %
Other 0.7 % (1.5 )% (2.3 )%
Effective income tax rate 15.7 %
26.3 %
(324.8 )%

Income tax (benefit) provision - at statutory tax rate $ (14,149 ) $ 11,582
$ (1,215 )
Differences in international tax rates (9,039 ) 20,557
3,097
Nondeductible changes in fair value of contingent consideration (4,559 ) (10,779 ) 16,036
Income tax deferred charge —
—
938
Change in valuation allowances 5,998
(610 ) (1,143 )
Nondeductible stock-based compensation 1,499
(375 ) 1,436
Cross-border merger —
265
9,773
Unrecognized tax benefits 1,440
1,296
1,475
State and local taxes (net of federal) 299
252
934
Change in U.S. tax law 274
3,513
—
Nondeductible interest expense 1,269
—
—
Other (925 ) (1,312 ) 227
Income tax (benefit) provision - at effective income tax rate $ (17,893 ) $ 24,389
$ 31,558

In ~~2018,~~2020, the income tax ~~provision decreased~~benefit increased by ~~$42,282~~$6,754 when compared to the same period in ~~2017.~~2019. The ~~decrease~~increase in the income tax ~~provision~~benefit in 2020 was primarily driven by ~~a significant reduction in~~ the ~~amount~~tax benefits from the sale of ~~taxable income recorded~~our hospital products and passage of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) in the U.S. The Company recorded additional tax benefit in 2020 from the Orphan Drug and ~~Ireland~~R&D tax credit in ~~2018, when compared to 2017. There was also~~the U.S. Tax benefit from the intercompany asset transfer recorded in 2019 did not recur, resulting in a ~~significant increase in valuation allowance in 2018,~~partial offset of tax benefits described above.

In 2019, the income tax benefit decreased by $12,537 when compared to the same period in ~~2017 as a result of the~~2018. The decrease in ~~taxable income in Ireland. In 2018, there was a significant decrease in amounts related to change in U.S. tax law due to the 2017 U.S. Tax Cuts and Jobs Act.~~

~~In 2017,~~ the income tax ~~provision decreased~~benefit in 2019 was primarily driven by ~~$7,169~~the impairment of the Noctiva intangible asset in 2018, which did not recur in 2019. In addition to the non-recurring impairment, an increase in the valuation allowance in 2019, when compared to the same period in ~~2016. The~~2018 also contributed to the decrease in ~~the income~~ tax ~~provision was primarily driven by a significant reduction in the amount of taxable income~~benefit recorded in ~~the U.S. in 2017, when compared to 2016. In 2017,~~2019. As a part of a corporate reorganization, the Company ~~did not incur any significant additional income~~entered into an internal sale transaction in December 2019. The internal sale transaction included transfer of intangible assets from an Irish entity to a U.S. entity. The internal sale transaction resulted in a decrease of $5,536 to Irish deferred tax ~~provision~~asset with corresponding decrease of $5,536 to valuation allowance, an increase of $8,190 to U.S. deferred tax asset associated with ~~the Cross-Border Merger as~~amortization of intangible assets, and a ~~majority of the transaction was completed in 2016. In 2017, the Company recorded $3,513 of~~$8,190 deferred tax ~~provision associated with the U.S. Tax Cuts and Jobs Act signed into law in the U.S. in December of 2017.~~benefit.

-83-

Unrecognized Tax Benefits

The Company or one of its subsidiaries files income tax returns in Ireland, France, U.S. and various states. ~~With few exceptions, the~~The Company is no longer subject to Irish, French, U.S. Federal, and state and local examinations for years before ~~2014. The Internal Revenue Service (IRS) commenced an examination~~2016. During 2020, the Company completed the 2015 through 2017 U.S. Federal Tax Audit. Completion of the ~~Company's~~audit resulted in an assessment of $1,937 for the 2015 through 2017 U.S. ~~income tax return for 2015 in~~Federal Tax Returns compared to the ~~4th quarter~~IRS Claims of ~~2016.~~$50,695 made on July 2, 2019 and the updated IRS Claims of $9,302 on October 2, 2019 made as part of the Specialty Pharma bankruptcy proceedings, which at this time does not include interest and penalties. The Company settled the $1,937 assessment. The French tax authority ~~commenced~~completed an examination of the Company's French tax ~~return~~returns for 2017 ~~in the first quarter of 2019.~~and 2018 during 2020, noting no change.

The following table summarizes the activity related to the Company’s unrecognized tax benefits for the twelve months ended

December 31:


Unrecognized Tax Benefit Activity	2020		2019		2018

Balance at January 1:	$	6,465	$	5,315	$	3,954
Additions based on tax positions related to the current year	0		0		1,087
Increases for tax positions of prior years	0		2,416		274
Statute of limitations expiration	0		(1,266)		0
Settlements	(3,322)		0		0
Balance at December 31:	$	3,143	$	6,465	$	5,315

Unrecognized Tax Benefit Activity 2018 2017 2016

Balance at January 1: $ 3,954
$ 1,686
$ 448
Additions based on tax positions related to the current year 1,087
2,268
1,578
Increases (decreases) for tax positions of prior years 274
—
(340 )
Balance at December 31: $ 5,315
$ 3,954
$ 1,686

The Company ~~does not expect~~expects that within the next twelve months ~~as a result of activities performed in various jurisdictions, that~~ the unrecognized tax benefits ~~will change. However,~~could decrease by an immaterial amount and the interest ~~and penalties~~ could ~~change~~increase by ~~up to $500.~~an immaterial amount.

At December 31, ~~2018, 2017,~~2020, 2019 and ~~2016,~~2018, there are ~~$4,597, $3,349,~~$2,483, $3,806 and ~~$1,565~~$4,597 of unrecognized tax benefits that if recognized would affect the annual effective tax rate.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the years ended December 31, ~~2018, 2017,~~2020, 2019 and ~~2016,~~2018, the Company recognized approximately ~~$725, $304,~~$203, $555 and ~~$26~~$725 in interest and penalties. The Company had approximately ~~$1,057,~~$1,475 and ~~$331~~$1,612 for the payment of interest and penalties accrued at December 31, ~~2018,~~2020 and ~~2017,~~2019, respectively.

-84-

Deferred Tax Assets (Liabilities)

Deferred income tax provisions reflect the effect of temporary differences between consolidated financial statement and tax reporting of income and expense items. The net deferred tax ~~assets/liabilities~~assets (liabilities) at December 31, ~~2018~~2020 and ~~2017~~2019 resulted from the following temporary differences:


Net Deferred Tax Assets and Liabilities:	2018			2017			Net Deferred Tax Assets and Liabilities:	2020		2019

Deferred tax assets:							Deferred tax assets:
Net operating loss carryforwards	$	19,510		$	9,831		Net operating loss carryforwards	$	31,302	$	30,275
Amortization	20,642			7,563			Amortization	3,701		11,602
Stock based compensation	4,587			4,375			Stock based compensation	2,626		3,577
Fair value royalty agreements	—			635
Accounts receivable							Accounts receivable	0		53
Fair value contingent consideration	384			870			Fair value contingent consideration	0		264
Orphan drug and R&D tax credit							Orphan drug and R&D tax credit	2,793		0
Other	479			406			Other	423		901
Gross deferred tax assets	45,602			23,680			Gross deferred tax assets	40,845		46,672

Deferred tax liabilities:							Deferred tax liabilities:
Amortization	(308		)	(2,419		)	Amortization	0		(172)
Accounts receivable	(661		)	(936		)
Prepaid expenses	(405		)	(1,094		)	Prepaid expenses	(75)		(35)
Other							Other	(890)		0
Gross deferred tax liabilities	(1,374		)	(4,449		)	Gross deferred tax liabilities	(965)		(207)

Less: valuation allowances	(21,199		)	(15,354		)	Less: valuation allowances	(21,624)		(17,038)

Net deferred tax assets	$	23,029		$	3,877		Net deferred tax assets	$	18,256	$	29,427

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors ~~and Shareholders~~ of Avadel Pharmaceuticals plc

~~Dublin, Ireland~~

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Avadel Pharmaceuticals plc ~~and subsidiaries~~ (the "Company") as of December 31, ~~2018~~2020 and ~~2017,~~2019, the related consolidated statements of ~~(loss)~~ income (loss), comprehensive ~~(loss)~~ income ~~shareholders'~~(loss), shareholders’ equity (deficit), and cash flows, for each of the three years in the period ended December 31, ~~2018,~~2020, and the related notes and financial statement schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2018~~2020 and ~~2017,~~2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2018,~~2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, ~~2018,~~2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March ~~15, 2019~~9, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Presentation of the Gain on Sale of Hospital Products - Refer to Note 4 to the financial statements

Critical Audit Matter Description

On June 30, 2020, the Company announced the sale of its sterile injectable drugs used in the hospital setting (the “Hospital Products”), including its three commercial products, Akovaz, Bloxiverz, and Vazculep, as well as Nouress, which is approved by the FDA to Exela Sterile Medicines LLC (the “Exela Buyer”) pursuant to an asset purchase agreement between Avadel U.S. Holdings, Inc, Avadel Legacy Pharmaceuticals, LLC, Exela Holdings Inc., and the Exela Buyer.

We identified the presentation and disclosure of the sale of the Hospital Products as a critical audit matter due to the significant amount of judgement by management when evaluating the quantitative and qualitative factors to determine whether the criteria for presentation and disclosure as a discontinued operation had been met. This required a high degree of auditor judgement, an increased extent of effort, and the use of professionals with specialized skill and knowledge to assist in performing audit procedures to evaluate management’s presentation and disclosure of the gain on sale of the Hospital Products.

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How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the gain on sale of the Hospital Products included the following, among others:

•We tested the effectiveness of controls over management’s review of the transaction, including their evaluation of whether the sale met the criteria for discontinued operations.

•With the assistance of professionals with specialized skill and knowledge, we evaluated management’s assessment of the discontinued operations criteria, including the quantitative and qualitative factors surrounding the qualification for discontinued operations treatment.

•We evaluated the accuracy and completeness of management’s disclosure for the disposition of the Hospital Products.

/s/ Deloitte and Touche LLP

St. Louis, Missouri

March ~~15, 2019~~9, 2021

We have served as the Company's auditor since 2016.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors ~~and Shareholders~~ of Avadel Pharmaceuticals plc

~~Dublin, Ireland~~

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Avadel Pharmaceuticals plc ~~and subsidiaries~~ (the “Company”) as of December 31, ~~2018,~~2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2018,~~2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, ~~2018,~~2020, of the Company and our report dated March ~~15, 2019~~9, 2021, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial ~~Reporting.~~Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte and Touche LLP

St. Louis, Missouri

March ~~15, 2019~~9, 2021

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 9A.Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rule 15d -15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission (the “SEC”). Based on that evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report our disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2018.~~2020. In making this assessment, the Company’s management used the criteria set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that, as of December 31, ~~2018,~~2020, the Company’s internal control over financial reporting is effective based on those criteria.

Changes in Internal Control Over Financial Reporting

There have been no ~~other~~ changes in the Company’s internal control over financial reporting (as defined by Rule 13a-15(f)) that occurred during the year ended December 31, ~~2018~~2020 that have materially affected the Company’s internal control over financial reporting. We continue to work from home due to the COVID-19 pandemic and will continue to monitor the impact on the design and operating effectiveness of our internal controls.

Item 9B. Other Information.

Not applicable.

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PART III

Certain information required by Part III is omitted from this Annual Report on Form 10-K because we intend to file our definitive proxy statement for our ~~2019~~2021 annual general meeting of shareholders pursuant to Regulation 14A of the Securities Exchange Act of 1934 (our “Definitive ~~2019~~2021 Proxy Statement”), not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, and certain information to be included in our Definitive ~~2019~~2021 Proxy Statement is incorporated herein by reference.

Item 10. Directors, Executive Officers and Corporate Governance.

Information regarding Directors, Executive Officers and Corporate Governance is hereby incorporated by reference to our Definitive ~~2019~~2021 Proxy Statement, which we intend to file with the SEC within 120 days after December 31, ~~2018.~~2020.

Item 11. Executive Compensation.

Information regarding Executive Compensation is hereby incorporated by reference to our Definitive ~~2019~~2021 Proxy Statement, which we intend to file with the SEC within 120 days after December 31, ~~2018.~~2020.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information regarding Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters is hereby incorporated by reference to our Definitive ~~2019~~2021 Proxy Statement, which we intend to file with the SEC within 120 days after December 31, ~~2018.~~2020.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Information regarding Certain Relationships and Related Transactions, and Director Independence is hereby incorporated by reference to our Definitive ~~2019~~2021 Proxy Statement, which we intend to file with the SEC within 120 days after December 31, ~~2018.~~2020.

Item 14. Principal Accountant Fees and Services.

Information regarding Principal Accountant Fees and Services is hereby incorporated by reference to our Definitive ~~2019~~2021 Proxy Statement, which we intend to file with the SEC within 120 days after December 31, ~~2018.~~2020.

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PART IV

Item 15. Exhibits and Financial Statement Schedules


~~(a)~~	~~Documents filed as part of this report:~~


1.	~~Financial Statements~~ (a)Documents filed as part of this report: 1. Financial Statements

See Item 8 - Financial Statements and Supplementary Data of Part II of this Report.


2. 2. Financial Statement Schedules	~~Financial Statement Schedules~~

See below for Schedule II: Valuation and Qualifying Accounts. All other schedules are omitted as they are not applicable, not required or the information is included in the consolidated financial statements or related notes to the consolidated financial statements.

Schedule II

Valuation and Qualifying Accounts

(In thousands)


Deferred Tax Asset Valuation Allowance:	Balance, Beginning of Period		Additions (a)		Deductions (b)		Other Changes (c)		Balance, End of Period

2020	$	17,037	$	2,805	$	0	$	1,782	$	21,624
2019	$	21,199	$	6,496	$	(4,762)	$	(5,896)	$	17,037
2018	$	15,354	$	6,089	$	(75)	$	(169)	$	21,199

Deferred Tax Asset Valuation Allowance:
Balance,
Beginning of Period

Additions
(a)

Deductions
(b)

Other Changes
(c)

Balance,
End of Period

2018 $ 15,354
$ 6,089
$ (75 ) $ (169 ) $ 21,199
2017 $ 7,599
$ 391
$ (664 ) $ 8,028
$ 15,354
2016 $ 45,516
$ 6,873
$ (42,417 ) $ (2,373 ) $ 7,599
a.Additions to the deferred tax asset valuation allowance relate to movements on certain French, Irish and U.S. deferred tax assets where we continue to maintain a valuation allowance until sufficient positive evidence exists to support reversal.


a.	Additions to the deferred tax asset valuation allowance relate to movements on certain French, Irish and U.S. deferred tax assets where we continue to maintain a valuation allowance until sufficient positive evidence exists to support reversal.


b.	Deductions to the deferred tax asset valuation allowance include movements relating to utilization and removal of net operating losses and tax credit carryforwards, release in valuation allowance and other movements including adjustments following finalization of tax returns.


c.	~~Other changes to the deferred tax asset valuation allowance including currency translation adjustments recorded directly in equity and account method changes.~~

b.Deductions to the deferred tax asset valuation allowance include movements relating to utilization of net operating losses and tax credit carryforwards, release in valuation allowance and other movements including adjustments following finalization of tax returns.

c.Other changes to the deferred tax asset valuation allowance including currency translation adjustments recorded directly in equity, account method changes and the impact of corporate restructuring.

3. Exhibits required by Item 601 of Regulation S-K

The information required by this Section (a)(3) of Item 15 is set forth on the exhibit index that follows the Signatures page of this Form 10-K.

Index to Exhibits


Exhibit Number		Exhibit Description

~~Exhibit Number~~3.1		~~Exhibit Description~~

~~3.1~~	Constitution (containing the Memorandum and Articles of Association) of Avadel Pharmaceuticals plc (incorporated by reference to Appendix 15 of Exhibit 2.1 to the registrant’s current report on Form 8-K, filed on July 1, 2016)

~~4.1~~	Guaranty dated January 1, 2017 by Avadel Pharmaceuticals plc in favor of Breaking Stick Holdings, LLC (f/k/a Éclat Holdings, LLC) with respect to obligations under the Note Agreement filed as Exhibit 4.1 (incorporated by reference to Exhibit 4.1 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 28, 2017)

~~4.2~~	Warrant to purchase 1,100,000 American Depositary Shares, each representing one ordinary share of Avadel Pharmaceuticals plc (incorporated by reference to Exhibit 4.1 to the registrant’s Post-Effective Amendment No. 2 to Form F-3 registration statement (No. 333-183961) on Form S-3, filed on January 6, 2017)



3.2
~~4.3~~	~~Warrant to purchase 2,200,000 American Depositary~~Certificate of Designation of Series A Non-Voting Convertible Preferred Shares ~~each representing one ordinary share~~ of Avadel Pharmaceuticals plc, dated February 20, 2020 (incorporated by reference to Exhibit ~~4.2 to the registrant’s Post-Effective Amendment No. 2 to Form F-3 registration statement (No. 333-183961) on Form S-3, filed on January 6, 2017)~~

~~4.4~~	Indenture, dated as of February 16, 2018, by and between Avadel Finance Cayman Limited, Avadel Pharmaceuticals plc, and The Bank of New York Mellon, as Trustee (including an as exhibit the Form of 4.50% Exchangeable Senior Note due 2023) (incorporated by reference to Exhibit 4.13.1 to the registrant’s current report on Form 8-K, filed on February ~~16, 2018)~~24, 2020)

~~4.5~~4.1		First Supplemental Indenture, dated as of February 6, 2019, by and among Avadel Finance Cayman Limited, Avadel Pharmaceuticals plc, and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit 4.1 to the registrant’s current report on Form 8-K, filed on February 7, 2019)

~~10.1~~	Deposit Agreement dated as of January 3, 2017 among Avadel Pharmaceuticals plc, The Bank of New York, as Depositary, and holders from time to time of American Depositary Shares issued thereunder (including as an exhibit the form of American Depositary Receipt) (incorporated by reference to Exhibit 1.1 to the registrant’s current report on Form 8-K12B, filed on January 4, 2017 and amended January 6, 2017)

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10.2*4.2		Indenture, dated as of February 16, 2018, by and between Avadel Finance Cayman Limited, Avadel Pharmaceuticals plc, and The Bank of New York Mellon, as Trustee (including an as exhibit the Form of 4.50% Exchangeable Senior Note ~~Agreement among Flamel Technologies S.A., Flamel U.S. Holdings, Inc. and Éclat Holdings, LLC dated March 13, 2012~~due 2023) (incorporated by reference to Exhibit 4.1 to the registrant’s current report on Form ~~6-K,~~8-K, filed on ~~March 21, 2012)~~February 16, 2018)

~~10.3~~4.3		~~Registration Rights Agreement between Flamel Technologies S.A.~~First Supplemental Indenture, dated as of February 6, 2019, by and ~~Éclat Holdings, LLC dated March 13, 2012~~among Avadel Finance Cayman Limited, Avadel Pharmaceuticals plc, and The Bank of New York Mellon, as Trustee (incorporated by reference to Exhibit ~~4.5~~4.1 to the registrant’s current report on Form ~~6-K,~~8-K, filed on ~~March 21, 2012)~~

~~10.4~~	Facility Agreement among Flamel US Holdings, Inc., Deerfield Private Design Fund II, L.P. and Deerfield Private Design International II, L.P. dated December 31, 2012 (incorporated by reference to Exhibit 4.7 to the registrant’s annual report on Form 20-F for the year ended December 31, 2012, filed on April 30, 2013)

10.5*	Royalty Agreement among Éclat Pharmaceuticals LLC, Horizon Santé FLML, Sarl and Deerfield Private Design Fund II, L.P. dated December 31, 2012 (incorporated by reference to Exhibit 4.8 to the registrant’s annual report on Form 20-F for the year ended December 31, 2012, filed on April 30, 2013)

10.6*	~~Security Agreement between Éclat Pharmaceuticals, LLC and Deerfield Private Design Fund II, L.P. and Horizon Santé FLML, Sarl dated~~ February ~~4, 2013 (incorporated by reference to Exhibit 4.9 to the registrant’s annual report on Form 20-F for the year ended December 31, 2012, filed on April 30, 2013)~~7, 2019)

~~10.7~~	Broadfin Facility Agreement effective as of December 3, 2013 (incorporated by reference to Exhibit 4.9 to the registrant’s annual report on Form 20-F for the year ended December 31, 2013, filed on April 30, 2014)

10.8*	Broadfin Royalty Agreement dated as of December 3, 2013 (incorporated by reference to Exhibit 4.10 to the registrant’s annual report on Form 20-F for the year ended December 31, 2013, filed on April 30, 2014)

~~10.9~~	Asset Purchase Agreement by and among Flamel Technologies S.A. and Recipharm Pessac dated November 26, 2014 (incorporated by reference to Exhibit 4.11 to the registrant’s annual report on Form 20-F for the year ended December 31, 2014, filed on April 30, 2015)

~~10.10~~	Master Agreement on Supply of Services and Products by and between Avadel Technologies S.A. and Recipharm Pessac dated December 1, 2014 (incorporated by reference to Exhibit 4.12 to the registrant’s annual report on Form 20-F for the year ended December 31, 2014, filed on April 30, 2015)



~~10.11~~4.4		~~Service Agreement by and between Flamel Technologies S.A. and Recipharm Pessac dated December 1, 2014~~Description of Securities (incorporated by reference to Exhibit ~~4.13~~4.6 to the ~~registrant’s~~registrants annual report on Form ~~20-F for the year ended December 31, 2014,~~10-K, filed on ~~April 30, 2015)~~March 16, 2020)

~~10.12~~10.1*		Supply Agreement by and between Flamel Technologies S.A. and Recipharm Pessac dated December 1, 2014 (incorporated by reference to Exhibit 4.14 to the registrant’s annual report on Form 20-F for the year ended December 31, 2014, filed on April 30, 2015)

10.13*	Membership Interest Purchase Agreement by and among Éclat Holdings LLC, Éclat Pharmaceuticals LLC, Flamel Technologies S.A. and Flamel US Holdings Inc. dated March 13, 2012 (incorporated by reference to Exhibit 4.15 to the registrant’s annual report on Form 20-F for the year ended December 31, 2014, filed on April 30, 2015)

10.14*	Exclusive License Agreement by and between Perrigo Pharma International DAC (f/k/a Elan Pharma International ~~Limited~~Limited) and Flamel Ireland Limited dated September 30, 2015, ~~(incorporated~~as amended by ~~reference~~the First Amendment to ~~Exhibit 10.14 to the registrant’s Annual Report on Form 10-K for the year ended~~Exclusive License Agreement dated December ~~31, 2015, filed on March 15, 2016)~~21, 2018 (filed herewith)

~~10.15~~10.2		Lease Agreement by and between Nine East, LLC and Eclat Pharmaceuticals LLC dated July 23, 2013 (incorporated by reference to Exhibit 10.15 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 15, 2016)

~~10.16~~	Office Lease Agreement by and between Grove II LLC and Eclat Pharmaceuticals LLC dated October 5, 2015, ~~(incorporated by reference to Exhibit 10.16 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 15, 2016)~~

~~10.17~~	Lease Agreement by and between Channor Limited, Blanchardstown Corporate Park Management Limited, Flamel Ireland Limited, and Flamel Technologies S.A. dated July 3, 2015 (incorporated by reference to Exhibit 10.17 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 15, 2016)

~~10.18‡~~	Employment Agreement by and between Flamel Technologies S.A. and Sandra Hatten dated July 8, 2015 (incorporated by reference to Exhibit 10.18 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 15, 2016)

~~10.19‡~~	Employment Agreement by and between Flamel Technologies S.A. and Phillandas T. Thompson dated July 7, 2015 (incorporated by reference to Exhibit 10.19 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 15, 2016)

~~10.20~~	~~Membership Interest Purchase Agreement dated~~ as of February 5, 2016 by and among James Flynn, Peter Steelman, Deerfield CSF, LLC, FSC Holding Company, LLC, FSC Therapeutics, LLC, FSC Laboratories, Inc., Flamel Technologies SA, and Flamel US Holdings, Inc. (incorporated by reference to Exhibit 10.20 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 15, 2016)amended (filed herewith)

~~10.21‡~~	Rules Governing the Free Share Plan - December 2014 (incorporated by reference to Exhibit 10.21 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 15, 2016)

~~10.22‡~~	Rules Governing the Free Share Plan - December 2014 (incorporated by reference to Exhibit 10.22 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 15, 2016)

~~10.23‡~~	~~June 2015 Stock Warrant Rules (incorporated by reference to Exhibit 10.23 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 15, 2016)~~

~~10.24‡~~	~~Subscription Form of Stock Warrant (incorporated by reference to Exhibit 10.24 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 15, 2016)~~



~~10.25‡~~10.3‡		December 2015 Stock Option Rules (incorporated by reference to Exhibit 10.25 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 15, 2016)

~~10.26‡~~10.4‡		Form of Stock Option Grant Letter (incorporated by reference to Exhibit 10.26 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 15, 2016)

~~10.27~~10.5‡		Common Draft Terms of Cross-Border Merger dated as of June 29, 2016 between Flamel Technologies S.A. and Avadel Pharmaceuticals Limited (subsequently renamed Avadel Pharmaceuticals plc) (incorporated by reference to Exhibit 2.1 to the registrant’s current report on Form 8-K, filed on July 1, 2016)

~~10.28‡~~	Rules Governing the Free Share Plan - August 2016 (incorporated by reference to Exhibit 99.1 to the registrant’s Registration Statement (No. 333-213154) on Form S-8, filed on August 16, 2016)

~~10.29‡~~10.6‡		August 2016 Stock Option Rules (incorporated by reference to Exhibit 99.2 to the registrant’s Registration Statement (No. 333-213154) on Form S-8, filed on August 16, 2016)

~~10.30‡~~10.7‡		August 2016 Stock Warrant Rules (incorporated by reference to Exhibit 99.3 to the registrant’s Registration Statement (No. 333-213154) on Form S-8, filed on August 16, 2016)

~~10.31~~10.8‡		Form of stock option grant letter for 2016 Stock Option Rules (incorporated by reference to Exhibit 10.31 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 28, 2017)

~~10.32~~‡ 10.9‡		Amended Employment Agreement ~~by and between Avadel Pharmaceuticals plc and Gregory J. Divis,~~ dated ~~January 4, 2017 (incorporated by reference to Exhibit 10.32 to the registrant's Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 28, 2017)~~

~~10.33‡~~	~~Employment Agreement by and~~as of June 3, 2019 between Avadel Management Corporation and ~~Michael S. Anderson dated August 15, 2017~~Gregory J. Divis (incorporated by reference to Exhibit 10.1 to the ~~registrant's Quarterly Report~~registrant’s current report on Form ~~10-Q for the quarter ended September 30, 2017,~~8-K, filed on ~~November 9, 2017)~~June 5, 2019)

~~10.34‡~~10.10‡		~~Employment~~Em ployment Agreement ~~by and~~dated as of May 15, 2020 between Avadel Management Corporation and ~~Gregory J. Divis dated September 5, 2017~~Thomas S. McHugh (incorporated by reference to Exhibit 10.2 to the ~~registrant's Quarterly Report~~registrant’s current report on Form 10-Q ~~for the quarter ended September 30, 2017,~~, filed on ~~November 9, 2017)~~

~~10.35‡~~	~~Employment Agreement by and between Avadel Management Corporation and Sandra Hatten dated~~ August ~~15, 2017 (incorporated by reference to Exhibit 10.3 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 9, 2017)~~10, 2020)

~~10.36‡~~	Employment Agreement by and between Avadel Management Corporation and Michael F. Kanan dated September 5, 2017 (incorporated by reference to Exhibit 10.4 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 9, 2017)

~~10.37‡~~	Employment Agreement by and between Avadel Management Corporation and Phillandas T. Thompson dated August 15, 2017 (incorporated by reference to Exhibit 10.5 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 9, 2017)

10.38*	Exclusive Right of Negotiation Agreement by and between Avadel Specialty Pharmaceuticals, LLC and Serenity Pharmaceuticals, LLC dated as of August 11, 2017 (incorporated by reference to Exhibit 10.6 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 9, 2017)



10.39*10.11		Exclusive License and Assignments Agreement by and between Avadel Specialty Pharmaceuticals, LLC and Serenity Pharmaceuticals, LLC dated as of September 1, 2017 (incorporated by reference to Exhibit 10.7 to the registrant's Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2017, filed on November 17, 2017)

10.40*	Manufacturing Agreement by and between Renaissance Lakewood, LLC (formerly DPT Lakewood, LLC) and Serenity Pharmaceuticals, LLC dated as of July 14, 2014 (incorporated by reference to Exhibit 10.8A to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 9, 2017)

~~10.41~~	Renaissance Agreements Assignment and Assumption Agreement by and between Avadel Specialty Pharmaceuticals, LLC and Serenity Pharmaceuticals, LLC dated as of September 1, 2017 (incorporated by reference to Exhibit 10.8B to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 9, 2017)

~~10.42~~	Master Manufacturing Services Agreement by and between Patheon UK Limited and Éclat Pharmaceuticals L.L.C. dated as of November 8, 2012 (incorporated by reference to Exhibit 10.9 to the registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 9, 2017)

10.4310.12		Asset Purchase Agreement by and among Cerecor, Inc. and Avadel Pharmaceuticals (USA), Inc., Avadel Pediatrics, Inc., FSC Therapeutics, LLC, Avadel US Holdings, Inc. and Avadel Pharmaceuticals plc dated as of February 12, 2018 (incorporated by reference to Exhibit 10.43 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2017, filed on March 16, 2018)

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10.4410.13		License and Development Agreement by and between Cerecor, Inc. and Flamel Ireland Limited operating under the trade name of Avadel Ireland dated as of February 16, 2018 (incorporated by reference to Exhibit 10.44 to the registrant’s Annual Report on Form 10-K/A for the year ended December 31, 2017, filed on April 30, 2018)

10.45*	Guarantee by Avadel US Holdings, Inc. and Avadel Pharmaceuticals plc in favor of Deerfield CSF, LLC, Peter Steelman and James Flynn dated as of February 16, 2018 (incorporated by reference to Exhibit 10.45 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2017, filed on March 16, 2018)

10.4610.14		Guarantee by Armistice Capital Master Fund, Ltd. in favor of Avadel US Holdings, Inc. dated as of February 16, 2018 (incorporated by reference to Exhibit 10.46 to the registrant’s Annual Report on Form 10-K for the year ended December 31, 2017, filed on March 16, 2018)

~~10.47~~10.15#		~~Letter~~Securities Purchase Agreement, dated February ~~22, 2018, between Breaking Stick Holdings, LLC~~20, 2020, by and among Avadel Pharmaceuticals plc and the Investors named therein (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K, filed on February ~~22, 2018)~~24, 2020)

~~10.48‡~~10.16		~~Employment Agreement Termination and Release~~Registration Rights Agreement, dated ~~December 30, 2018, between Avadel Management Corporation,~~February 25, 2020, by and among Avadel Pharmaceuticals plc and ~~Michael S. Anderson~~the Investors named therein incorporated by reference to Exhibit 10.40 to the registrant’s annual report on Form 10-K, filed on March 16, 2020)

10.17*#		Asset Purchase Agreement, dated as of June 30, 2020, by and between Avadel Seller, Seller Parent, Exela Buyer and Buyer Parent (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K, filed on ~~January 3, 2019)~~July 2, 2020)

~~10.49~~10.18‡		~~Binding Term Sheet between~~ Avadel ~~US Holdings, Inc.~~Pharmaceuticals plc 2017 Omnibus Incentive Compensation Plan and ~~Avadel Specialty Pharmaceuticals LLC (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K, filed on February 14, 2019)~~related equity award agreements (filed herewith )

~~14.1~~10.19‡		Avadel Pharmaceuticals plc 2020 Omnibus Incentive Compensation Plan (filed herewith )

14.1		Code of Business Conduct and Ethics ~~(incorporated by reference to Exhibit 14.1 to the registrant’s current report on Form 8-K, filed on March 7, 2017)~~(fi led herewith)

14.2		Financial Integrity Policy (incorporated by reference to Exhibit 14.2 to the registrant’s current report on Form 8-K, filed on March 7, 2017)



21.1						List of Subsidiaries (filed herewith)

23.1						Consent of Deloitte & Touche LLP (filed herewith)

31.1						Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

31.2						Certification of the Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)

32.1						Certification of the Chief Executive Officer pursuant to USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) ~~(1)~~

32.2						Certification of the Principal Financial Officer pursuant to USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) ~~(1)~~

101.INS						XBRL Instant Document

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

-105-



101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						XBRL Taxonomy Extension Labels Linkbase Document

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

* Confidential treatment has been requested for the redacted portions of this agreement. A complete copy of the agreement, including the redacted portions, has been filed separately with the Securities and Exchange Commission.

# The representations and warranties contained in this agreement were made only for purposes of the transactions contemplated by the agreement as of specific dates and may have been qualified by certain disclosures between the parties and a contractual standard of materiality different from those generally applicable under securities laws, among other limitations. The representations and warranties were made for purposes of allocating contractual risk between the parties to the agreement and should not be relied upon as a disclosure of factual information relating to the Company, the Investors or the transaction described in the Current Report on Form 8-K.

‡ Management contract or compensatory plan or arrangement filed pursuant to Item 15(b) of Form 10-K.

(1) This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

-106-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.



		Avadel Pharmaceuticals ~~PLC~~plc

Dated: March ~~15, 2019~~9, 2021	By:	/s/ Gregory J. Divis
		Name: Gregory J. Divis
		Title: ~~Interim~~ Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that ~~each of~~ each of Geoffrey M. Glass, Eric J. Ende, ~~Kevin Kotler,~~Mark A. McCamish, MD, Ph.D., Linda S. Palczuk, ~~Craig R. Stapleton~~ and Peter Thornton, by their respective signatures below, irrevocably constitutes and appoints Gregory J. Divis and ~~Phillandas T. Thompson,~~Thomas S. McHugh, and each of them individually acting alone without the other, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

Signature

Title

Date

/s/ Gregory J. Divis

Director, Chief Executive Officer and Principal Executive Officer

March 9, 2021

Gregory J. Divis

/s/ Thomas S. McHugh

Chief Financial Officer and Principal Financial and Accounting Officer

March 9, 2021

Thomas S. McHugh

/s/ Geoffrey M. Glass

Non-Executive Chairman of the Board and Director

March 9, 2021

Geoffrey M. Glass

/s/ Dr. Eric J. Ende

Director

March 9, 2021

Dr. Eric J. Ende

/s/ Mark A. McCamish, MD, Ph.D.

Director

March 9, 2021

Mark A. McCamish, MD, Ph.D.

~~Signature~~

~~Title~~

~~Date~~

~~/s/ Gregory J. Divis~~

~~Interim Chief Executive Office (Principal Executive Officer)~~

~~March 15, 2019~~

~~Gregory J. Divis~~

~~/s/ Michael F. Kanan~~

~~Chief Financial Officer (Principal Financial Officer)~~

~~March 15, 2019~~

~~Michael F. Kanan~~

~~/s/ David P. Gusky~~

~~Corporate Controller (Principal Accounting Officer)~~

~~March 15, 2019~~

~~David P. Gusky~~

~~/s/ Geoffrey M. Glass~~

~~Non-Executive Chairman of the Board and Director~~

~~March 15, 2019~~

~~Geoffrey M. Glass~~

~~/s/ Dr. Eric J. Ende~~

~~Director~~

~~March 15, 2019~~

~~Dr. Eric J. Ende~~

~~/s/ Kevin Kotler~~

~~Director~~

~~March 15, 2019~~

~~Kevin Kotler~~

/s/ Linda S. Palczuk

Director

March ~~15, 2019~~9, 2021

Linda S. Palczuk

~~/s/ Craig R. Stapleton~~

~~Director~~

~~March 15, 2019~~

~~Craig R. Stapleton~~

/s/ Peter Thornton

Director

March ~~15, 2019~~9, 2021

Peter Thornton

~~-108-~~-107-



Ireland						98-1341933
State or other jurisdiction of incorporation or organization						(I.R.S. Employer Identification No.)

~~Block 10-1, Blanchardstown Corporate Park~~ ~~Ballycoolin~~10 Earlsfort Terrace Dublin ~~15,~~2, Ireland D02 T380						Not Applicable
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: +011-1-485-1200



American Depositary Shares* Ordinary Shares**			~~NASDAQ Stock Market LLC~~ ~~(NASDAQ Global Market)~~
Title of each class	Trading Symbol (s)		Name of exchange on which registered
American Depositary Shares*		AVDL		The Nasdaq Global Market
Ordinary Shares, nominal value $0.01 per share**		AVDL		The Nasdaq Global Market



~~Proprietary Product Pipeline~~
~~Platform / Strategy~~	~~Drug/Product~~	~~Indication~~	~~Stage~~

~~Micropump®~~	~~Sodium oxybate~~	~~EDS / Cataplexy~~	~~Phase 3 trial ongoing~~
~~UMD #4~~	~~Sterile Injectable - Drug Undisclosed~~	~~Undisclosed~~	~~Development ongoing~~



	Years Ended December 31,				Increase / (Decrease)
Comparative Statements of Income (Loss):	2020		2019			$		%

Product sales	$	22,334	$	59,215		$	(36,881)	(62.3)	%


Operating expenses:
Cost of products	5,742		12,125			(6,383)		(52.6)	%
Research and development expenses	20,442		32,917			(12,475)		(37.9)	%
Selling, general and administrative expenses	32,405		30,183			2,222		7.4	%
Intangible asset amortization	406		816			(410)		(50.2)	%
Changes in fair value of contingent consideration	3,327		845			2,482		293.7	%
Gain on sale of Hospital Products	(45,760)		—			(45,760)		(100.0)	%

Restructuring (income) costs	(43)		6,441			(6,484)		(100.7)	%

Total operating expenses	16,519		83,327			(66,808)		(80.2)	%
Operating income (loss)	5,815		(24,112)			29,927		124.1	%
Investment and other (expense) income, net	(832)		1,069			(1,901)		(177.8)	%
Interest expense	(12,994)		(12,483)			(511)		(4.1)	%
Gain from release of certain liabilities	3,364		—			3,364		100.0	%
Loss on deconsolidation of subsidiary	—		(2,678)			2,678		100.0	%
Other expense - changes in fair value of contingent consideration payable	(435)		(378)			(57)		(15.1)	%
Loss before income taxes	(5,082)		(38,582)			33,500		86.8	%
Income tax benefit	(12,110)		(5,356)			(6,754)		(126.1)	%


Net income (loss)	$	7,028	$	(33,226)		$	40,254	121.2	%
Net income (loss) per share - diluted	$	0.13	$	(0.89)		$	1.02	114.6	%



										Increase / (Decrease)
	Years Ended December 31,									2018 vs. 2017					2017 vs. 2016
Comparative Statements of (Loss) Income:	2018			2017			2016			$			%		$			%

Product sales	$	101,423		$	172,841		$	147,222		$	(71,418	)	(41.3	)%	$	25,619		17.4	%
License revenue	1,846			404			3,024			1,442			356.9	%	(2,620		)	(86.6	)%
Total revenues	103,269			173,245			150,246			(69,976		)	(40.4	)%	22,999			15.3	%
Operating expenses:
Cost of products	17,516			16,301			13,248			1,215			7.5	%	3,053			23.0	%
Research and development expenses	39,329			33,418			34,611			5,911			17.7	%	(1,193		)	(3.4	)%
Selling, general and administrative expenses	100,359			58,860			44,179			41,499			70.5	%	14,681			33.2	%
Intangible asset amortization	6,619			3,659			13,888			2,960			80.9	%	(10,229		)	(73.7	)%
(Gain) loss - changes in fair value of related party contingent consideration	(22,731		)	(31,040		)	49,285			8,309			26.8	%	(80,325		)	(163.0	)%
Impairment of intangible asset	66,087			—			—			66,087			100.0	%	—			—	%
Restructuring costs	1,016			2,542			—			(1,526		)	(60.0	)%	2,542			100.0	%
Total operating expenses	208,195			83,740			155,211			124,455			148.6	%	(71,471		)	(46.0	)%
Operating (loss) income	(104,926		)	89,505			(4,965		)	(194,431		)	(217.2	)%	94,470			1,902.7	%
Investment and other income, net	452			2,136			2,758			(1,684		)	(78.8	)%	(622		)	(22.6	)%
Interest expense	(10,622		)	(1,052		)	(963		)	9,570			909.7	%	89			9.2	%
Other income (expense) - changes in fair value of related party payable	1,899			2,071			(6,548		)	172			8.3	%	(8,619		)	(131.6	)%
(Loss) income before income taxes	(113,197		)	92,660			(9,718		)	(205,857		)	(222.2	)%	102,378			1,053.5	%
Income tax (benefit) provision	(17,893		)	24,389			31,558			(42,282		)	(173.4	)%	(7,169		)	(22.7	)%
Net (loss) income	$	(95,304	)	$	68,271		$	(41,276	)	$	(163,575	)	(239.6	)%	$	109,547		265.4	%
Net (loss) income per share - diluted	$	(2.55	)	$	1.63		$	(1.00	)	$	(4.18	)	(256.4	)%	$	2.63		263.0	%



			*			American Depositary Shares may be evidenced by American Depository Receipts. Each American Depositary Share represents one (1) Ordinary Share.



			**			~~Nominal value $0.01 per share.~~ Not for trading, but only in connection with the listing of American Depositary Shares. on The Nasdaq Global Market.



		Page #

Summary Of The Material Risks Associated With Our Business		4
Cautionary Disclosure Regarding Forward-Looking Statements		35

PART I
Item 1.	Business	47
Item 1A.	Risk Factors	19
Item 1B.	Unresolved Staff Comments	3541
Item 2.	Properties	3541
Item 3.	Legal Proceedings	3541
Item 4.	Mine Safety Disclosures	3741

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	3842
Item 6.	Selected Financial Data	4043
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4245
Item 7A.	Quantitative and Qualitative Disclosures About Market Risks	5857
Item 8.	Financial Statements and Supplementary Data	5958
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	99101
Item 9A.	Controls and Procedures	99101
Item 9B.	Other Information	99101

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	~~100~~102
Item 11.	Executive Compensation	~~100~~102
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~100~~102
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~100~~102
Item 14.	Principal Accounting Fees and Services	~~100~~102

PART IV
Item 15.	Exhibits	~~101~~103

SIGNATURES		107



Statement of (Loss) Income Data:	2018			2017		2016			2015		2014

Total revenues	$	103,269		$	173,245	$	150,246		$	173,009	$	14,975
Gross profit ^(a)	85,753			156,944		136,998			161,599		11,592
Operating (loss) income	(104,926		)	89,505		(4,965		)	70,758		(93,657		)
Net (loss) income from continuing operations	(95,304		)	68,271		(41,276		)	41,798		(89,487		)
Net income from discontinued operations	—			—		—			—		4,018
Net (loss) income	(95,304		)	68,271		(41,276		)	41,798		(85,469		)
Net (loss) income per share - basic:
Continuing operations	(2.55		)	1.69		(1.00		)	1.03		(2.47		)
Discontinued operations	—			—		—			—		0.11
Net (loss) income per share - basic	(2.55		)	1.69		(1.00		)	1.03		(2.36		)
Net (loss) income per share - diluted:
Continuing operations	(2.55		)	1.63		(1.00		)	0.96		(2.47		)
Discontinued operations	—			—		—			—		0.11
Net (loss) income per share - diluted	(2.55		)	1.63		(1.00		)	0.96		(2.36		)



Balance Sheet Data:	2018		2017		2016		2015		2014

Cash and cash equivalents	$	9,325	$	16,564	$	39,215	$	65,064	$	39,760
Marketable securities	90,590		77,511		114,980		79,738		53,074
Goodwill	18,491		18,491		18,491		18,491		18,491
Intangible assets, net	1,629		92,289		22,837		15,825		28,389
Total assets	190,300		253,277		245,482		215,081		174,382
Long-term debt (incl. current portion)	115,840		267		815		1,118		3,717
Long-term related party payable (incl. current portion)	28,840		98,925		169,347		122,693		114,750



2018:	March 31			June 30			September 30			December 31

Revenues	$	33,293		$	29,230		$	19,826		$	20,920
Gross profit ^(a)	26,701			25,718			16,706			16,628
Operating loss ^(b)	(12,625		)	(2,785		)	(14,095		)	(75,421		)
Net loss	(12,236		)	(3,438		)	(15,771		)	(63,859		)
Net loss per share - basic	(0.32		)	(0.09		)	(0.43		)	(1.72		)
Net loss per share - diluted	(0.32		)	(0.09		)	(0.43		)	(1.72		)



2017:	March 31		June 30		September 30		December 31

Revenues	$	52,507	$	46,311	$	39,675	$	34,752
Gross profit ^(a)	48,605		41,750		35,885		30,704
Operating income (loss)	33,341		34,126		26,118		(4,080		)
Net income (loss)	25,910		28,927		21,679		(8,245		)
Net income (loss) per share - basic	0.63		0.70		0.54		(0.21		)
Net income (loss) per share - diluted	0.61		0.68		0.52		(0.21		)



	Years Ended December 31,				Increase / (Decrease)
Intangibles Asset Amortization	2020		2019			$		%

Intangible asset amortization	$	406	$	816		$	(410)	(50.2)	%



	Years Ended December 31,				Increase / (Decrease)
Gain on the Sale of the Hospital Products	2020		2019			$		%

Gain on the sale of the Hospital Products	$	(45,760)	$	—		$	(45,760)	(100.0)	%



	Years Ended December 31,						Increase / (Decrease)
Income Taxes	2020			2019				$		%

Income tax benefit	$	(12,110)		$	(5,356)			$	(6,754)	(126.1)	%
Percentage of income (loss) before income taxes	238.3		%	13.9		%



Purchase Commitments:	Balance

2019	$	10,754
2020	5,948
2021	4,880
2022	4,880
2023	220
Thereafter	—
Total	$	26,682



Lease Commitment:	Balance

2019	$	1,191
2020	1,208
2021	1,008
2022	767
2023	695
Thereafter	967
Total	$	5,836


	Payments Due by Period											Payments Due by Period
Contractual Obligations:	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years		Contractual Obligations:	Total		Less than 1 Year		1 to 3 Years		3 to 5 Years		More than 5 Years

Long-term debt and interest	$	173,009	$	6,575	$	12,981	$	153,453	$	—	Long-term debt and interest	$	159,922	$	6,469	$	153,453	$	—	$	—
Long-term related party payable (undiscounted)	51,284		9,439		8,713		7,250		25,882

Purchase commitments	26,682		10,754		10,828		5,100		—		Purchase commitments	4,000		4,000		—		—		—
Operating leases	5,836		1,191		2,217		1,461		967		Operating leases	2,590		578		1,192		820		—
Total contractual cash obligations	$	256,811	$	27,959	$	34,739	$	167,264	$	26,849	Total contractual cash obligations	$	166,512	$	11,047	$	154,645	$	820	$	—


	December 31,							December 31,
	2018			2017				2020		2019
ASSETS							ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	9,325		$	16,564		Cash and cash equivalents	$	71,722	$	9,774
Marketable securities	90,590			77,511			Marketable securities	149,680		54,384
Accounts receivable	11,330			14,785			Accounts receivable	0		8,281
Inventories, net	4,770			6,157			Inventories, net	0		3,570
Research and development tax credit receivable							Research and development tax credit receivable	3,326		2,107
Prepaid expenses and other current assets	8,836			8,958			Prepaid expenses and other current assets	38,726		4,264
Total current assets	124,851			123,975			Total current assets	263,454		82,380
Property and equipment, net	1,911			3,001			Property and equipment, net	359		544
Operating lease right-of-use assets							Operating lease right-of-use assets	2,604		3,612
Goodwill	18,491			18,491			Goodwill	16,836		18,491
Intangible assets, net	1,629			92,289			Intangible assets, net	0		813
Research and development tax credit receivable	7,272			5,272			Research and development tax credit receivable	3,445		6,322
Other non-current assets	36,146			10,249			Other non-current assets	24,939		39,274
Total assets	$	190,300		$	253,277		Total assets	$	311,637	$	151,436

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)							LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:							Current liabilities:
Current portion of long-term debt	$	106		$	111
Current portion of long-term related party payable	9,439			25,007

Current portion of long-term contingent consideration payable							Current portion of long-term contingent consideration payable	$	0	$	5,554
Current portion of operating lease liability							Current portion of operating lease liability	474		645
Accounts payable	3,503			7,477			Accounts payable	2,934		6,100
Deferred revenue	114			2,007
Accrued expenses	21,695			50,926			Accrued expenses	6,501		19,810
Income taxes	73			414

Other current liabilities	3,453			597			Other current liabilities	5,200		3,875
Total current liabilities	38,383			86,539			Total current liabilities	15,109		35,984
Long-term debt, less current portion	115,734			156
Long-term related party payable, less current portion	19,401			73,918
Long-term debt							Long-term debt	128,210		121,686
Long-term contingent consideration payable, less current portion							Long-term contingent consideration payable, less current portion	0		11,773
Long-term operating lease liability							Long-term operating lease liability	1,840		2,319
Other non-current liabilities	14,002			7,084			Other non-current liabilities	4,212		8,873
Total liabilities	187,520			167,697			Total liabilities	149,371		180,635

Shareholders’ equity:
Preferred shares, nominal value of $0.01 per share; 50,000 shares authorized; none issued or outstanding at December 31, 2018 and December 31, 2017, respectively	—			—
Ordinary shares, nominal value of $0.01 per share; 500,000 shares authorized; 42,720 issued and 37,313 outstanding at December 31, 2018, and 41,463 issued and 39,346 outstanding at December 31, 2017	427			414
Treasury shares, at cost, 5,407 and 2,117 shares held at December 31, 2018 and December 31, 2017, respectively	(49,998		)	(22,361		)
Shareholders’ equity (deficit):							Shareholders’ equity (deficit):
Preferred shares, nominal value of $0.01 per share; 50,000 shares authorized; 488 issued and outstanding at December 31, 2020 and 0 issued and outstanding at December 31, 2019							Preferred shares, nominal value of $0.01 per share; 50,000 shares authorized; 488 issued and outstanding at December 31, 2020 and 0 issued and outstanding at December 31, 2019	5		0
Ordinary shares, nominal value of $0.01 per share; 500,000 shares authorized; 58,396 issued and outstanding at December 31, 2020, and 42,927 issued and 37,520 outstanding at December 31, 2019							Ordinary shares, nominal value of $0.01 per share; 500,000 shares authorized; 58,396 issued and outstanding at December 31, 2020, and 42,927 issued and 37,520 outstanding at December 31, 2019	583		429
Treasury shares, at cost, 0 and 5,407 shares held at December 31, 2020 and December 31, 2019, respectively							Treasury shares, at cost, 0 and 5,407 shares held at December 31, 2020 and December 31, 2019, respectively	0		(49,998)
Additional paid-in capital	433,756			393,478			Additional paid-in capital	566,916		434,391
Accumulated deficit	(357,989		)	(262,685		)	Accumulated deficit	(384,187)		(391,215)
Accumulated other comprehensive loss	(23,416		)	(23,266		)	Accumulated other comprehensive loss	(21,051)		(22,806)
Total shareholders’ equity	2,780			85,580
Total liabilities and shareholders’ equity	$	190,300		$	253,277
Total shareholders’ equity (deficit)							Total shareholders’ equity (deficit)	162,266		(29,199)
Total liabilities and shareholders’ equity (deficit)							Total liabilities and shareholders’ equity (deficit)	$	311,637	$	151,436


																						Ordinary shares			Preferred shares				Additional		Accumulated		Accumulated other comprehensive		Treasury Shares			Total shareholders’
	Ordinary shares				Additional			Accumulated			Accumulated other comprehensive			Treasury Shares				Total shareholders’				Shares	Amount		Shares		Amount		paid-in capital		deficit		loss		Shares	Amount		equity (deficit)
	Shares	Amount			paid-in capital			deficit			(loss) income			Shares	Amount			equity
Balance, December 31, 2015	41,241	$	6,331		$	363,984		$	(278,524	)	$	(22,657	)	—	$	—		$	69,134
Net loss	—	—			—			(41,276		)	—			—	—			(41,276		)
Other comprehensive loss	—	—			—			—			(908		)	—	—			(908		)
Subscription of warrants	—	—			326			—			—			—	—			326
Exercise of stock options or warrants	15	2			112			—			—			—	—			114
Vesting of restricted shares	115	18			(18		)	—			—			—	—			—
Stock-based compensation expense	—	—			14,679			—			—			—	—			14,679
Cross-border merger nominal value adjustment	—	(5,937		)	5,937			—			—			—	—			—
Balance, December 31, 2016	41,371	414			385,020			(319,800		)	(23,565		)	—	—			42,069
Net income	—	—			—			68,271			—			—	—			68,271
Other comprehensive income	—	—			—			—			299			—	—			299
Exercise of stock options	69	—			396			—			—			—	—			396
Vesting of restricted shares	23	—			—			—			—			—	—			—
Stock-based compensation expense	—	—			8,062			—			—			—	—			8,062
Share repurchases	—	—			—			—			—			2,117	(22,361		)	(22,361		)
Adjustment to accumulated deficit (see Note 12: Income Taxes)	—	—			—			(11,156		)	—			—	—			(11,156		)

Balance, December 31, 2017	41,463	414			393,478			(262,685		)	(23,266		)	2,117	(22,361		)	85,580			Balance, December 31, 2017	41,463	$	414	0		$	0	$	393,478	$	(262,685)	$	(23,266)	2,117	$	(22,361)	$	85,580
Net loss	—	—			—			(95,304		)	—			—	—			(95,304		)	Net loss	—	—		—		—		—		(95,304)		—		—	—		(95,304)
Other comprehensive loss	—	—			—			—			(150		)	—	—			(150		)	Other comprehensive loss	—	—		—		—		—		—		(150)		—	—		(150)
Exercise of stock options	82	1			534			—			—			—	—			535			Exercise of stock options	82	1		—		—		534		—		—		—	—		535
Exercise of warrants	603	6			2,905			—			—			—	—			2,911			Exercise of warrants	603	6		—		—		2,905		—		—		—	—		2,911
Expiration of warrants	—	—			2,167			—			—			—	—			2,167			Expiration of warrants	—	—		—		—		2,167		—		—		—	—		2,167
Vesting of restricted shares	547	6			(6		)	—			—			—	—			—			Vesting of restricted shares	547	6		—		—		(6)		—		—		—	—		0
Employee share purchase plan share issuance	25	—			127			—			—			—	—			127			Employee share purchase plan share issuance	25	—		—		—		127		—		—		—	—		127
Stock-based compensation expense	—	—			7,852			—			—			—	—			7,852
Share-based compensation expense																					Share-based compensation expense	—	—		—		—		7,852		—		—		—	—		7,852
Equity component of 2023 Notes	—	—			26,699			—			—			—	—			26,699			Equity component of 2023 Notes	—	—		—		—		26,699		—		—		—	—		26,699
Share repurchases	—	—			—			—			—			3,290	(27,637		)	(27,637		)	Share repurchases	—	—		—		—		—		—		—		3,290	(27,637)		(27,637)
Balance, December 31, 2018	42,720	$	427		$	433,756		$	(357,989	)	$	(23,416	)	5,407	$	(49,998	)	$	2,780		Balance, December 31, 2018	42,720	427		0		0		433,756		(357,989)		(23,416)		5,407	(49,998)		2,780
Net loss																					Net loss	—	—		—		—		—		(33,226)		—		—	—		(33,226)
Other comprehensive income																					Other comprehensive income	—	—		—		—		—		—		610		—	—		610
Vesting of restricted shares																					Vesting of restricted shares	153	2		—		—		(2)		—		—		—	—		0
Employee share purchase plan share issuance																					Employee share purchase plan share issuance	54	—		—		—		118		—		—		—	—		118
Share-based compensation expense																					Share-based compensation expense	—	—		—		—		519		—		—		—	—		519
Balance, December 31, 2019																					Balance, December 31, 2019	42,927	$	429	$	0	$	0	$	434,391	$	(391,215)	$	(22,806)	5,407	$	(49,998)	$	(29,199)
Net income																					Net income	—	—		—		—		—		7,028		—		—	—		7,028
Other comprehensive income																					Other comprehensive income	—	—		—		—		—		—		1,755		—	—		1,755
Exercise of stock options																					Exercise of stock options	403	4		—		—		2,041		—		—		—	—		2,045
February 2020 private placement																					February 2020 private placement	8,680	87		488		5		60,478		—		—		—	—		60,570
May 2020 public offering																					May 2020 public offering	11,630	116		—		—		116,808		—		—		—	—		116,924
Vesting of restricted shares																					Vesting of restricted shares	114	1		—		—		(1)		—		—		—	—		0
Employee share purchase plan share issuance																					Employee share purchase plan share issuance	49	—		—		—		144		—		—		—	—		144
Share-based compensation expense																					Share-based compensation expense	—	—		—		—		2,999		—		—		—	—		2,999
Retirement of treasury shares																					Retirement of treasury shares	(5,407)	(54)		—		—		(49,944)		—		—		(5,407)	49,998		0
Balance, December 31, 2020																					Balance, December 31, 2020	58,396	$	583	488		$	5	$	566,916	$	(384,187)	$	(21,051)	0	$	0	$	162,266


◦	all outstanding ordinary shares of Flamel, €0.122 nominal value per share, were canceled and exchanged on a one-for-one basis for newly issued ordinary shares of the Company, $0.01 nominal value per share. This change in nominal value of our outstanding shares resulted in our reclassifying $5,937 on our balance sheet from ordinary shares to additional paid-in capital




Assigned Fair Value:	Amount

Accounts receivable	$	142
Inventories	1,135
Prepaid expenses and other current assets	1,712
Intangible assets:
Acquired product marketing rights	16,600
Acquired developed technology	4,300
Deferred tax assets	853
Other assets	277
Accounts payable and other liabilities	(3,827		)
Total	$	21,192



Pro Forma Net Revenue and Income (Loss):	2016

Net revenue	$	150,721
Net loss	(42,290		)



Estimated Amortization Expense:	Amount

2019	$	815
2020	814
2021	—
2022	—
2023	—



	December 31, 2018			December 31, 2017
Principal amount of 4.50% exchangeable senior notes due 2023	$	143,750		$	—
Less: unamortized debt discount and issuance costs, net	(28,059		)	—
Net carrying amount of liability component	115,691			—
Other debt	149			267
Subtotal	115,840			267
Less: current maturities	(106		)	(111		)
Long-term debt	$	115,734		$	156

Equity component:
Equity component of exchangeable notes, net of issuance costs	$	(26,699	)	$	—



				Activity during the Twelve Months Ended December 31, 2018
							Changes in Fair Value of Related Party Payable
	Balance, December 31, 2017			Payments to Related Parties			Operating (Gain) Expense			Other Income			Expiration of Warrants			Disposal			Balance, December 31, 2018

Acquisition-related contingent consideration:
Warrants - Éclat Pharmaceuticals ^(a)	$	2,479		$	—		$	(312	)	$	—		$	(2,167	)	$	—		$	—
Earn-out payments - Éclat Pharmaceuticals ^(b)	67,744			(19,468		)	(22,661		)	—			—			—			25,615
Royalty agreement - FSC ^(c)	5,740			(645		)	242			—			—			(5,337		)	—
Financing-related:
Royalty agreement - Deerfield ^(d)	5,392			(1,922		)	—			(1,286		)	—			—			2,184
Royalty agreement - Broadfin ^(e)	2,570			(916		)	—			(613		)	—			—			1,041
Long-term liability - FSC ^(f)	15,000			—			—			—			—			(15,000		)	—
Total related party payable	98,925			$	(22,951	)	$	(22,731	)	$	(1,899	)	$	(2,167	)	$	(20,337	)	28,840
Less: Current portion	(25,007		)																(9,439		)
Total long-term related party payable	$	73,918																	$	19,401



Assumptions for the Warrant Valuation:	2017

Stock price	$	8.20
Weighted average exercise price per share	8.63
Expected term (years)	0.25
Expected volatility	37.90		%
Risk-free interest rate	1.39		%
Expected dividend yield	—



Related Party Payable:	Balance

Balance at December 31, 2015	$	122,693
Additions ⁽²⁾	21,659
Payments of related party payable	(30,838		)
Fair value adjustments ⁽¹⁾	55,833
Balance at December 31, 2016	169,347
Payments of related party payable	(37,311		)
Fair value adjustments ⁽¹⁾	(33,111		)
Balance at December 31, 2017	98,925
Payments of related party payable	(22,951		)
Fair value adjustments ⁽¹⁾	(24,630		)
Expiration of warrants	(2,167		)
Disposition of the pediatrics assets	(20,337		)
Balance at December 31, 2018	$	28,840



Retirement Benefit Obligation Assumptions:	2018		2017		2016

Compensation rate increase	2.75	%	3.00	%	3.00	%
Discount rate	1.50	%	1.25	%	1.31	%
Employee turn-over	Actuarial standard and average of the last 5 years
Average age of retirement	60 to 65 years actuarial standard based on age and professional status



Retirement Benefit Obligation Activity:	2018			2017

Retirement indemnity benefit obligation, beginning of year	$	1,303		$	2,431
Service cost	93			132
Interest cost	17			21
Plan amendment	—			(829		)
Benefits paid	(12		)	—
Curtailment gain	(148		)	(717		)
Actuarial loss	(178		)	(25		)
Exchange rate changes	(51		)	290
Retirement indemnity benefit obligation, end of year	$	1,024		$	1,303



Future Retirement Indemnity Benefit Obligation:	Balance

2019	$	—
2020	—
2021	—
2022	17
2023	—
Next five years	158
Total	$	175


Other Non-Current Assets:	2020		2019

Deferred tax assets	$	18,256	$	29,427
Long-term deposits	0		1,477
Guarantee from Armistice	1,050		1,367
Right of use assets at contract manufacturing organizations	5,201		6,428
Other	432		575
Total	$	24,939	$	39,274


Accrued Expenses:	2020		2019

Accrued compensation	$	1,697	$	3,944

Accrued restructuring (see Note 19)	520		2,949
Customer allowances	1,030		6,470
Accrued outsourced contract costs	473		2,833

Other	2,781		3,614
Total	$	6,501	$	19,810


Other Current Liabilities:	2020		2019

Accrued interest	$	2,695	$	2,695
Due to Exela	2,026		0
Guarantee to Deerfield	319		455
Other	160		725
Total	$	5,200	$	3,875


Other Non-Current Liabilities:	2020		2019


Customer allowances	$	0	$	981
Unrecognized tax benefits	3,143		6,465
Guarantee to Deerfield	1,053		1,372
Other	16		55
Total	$	4,212	$	8,873