Avadel Pharmaceuticals (AVDL) 8-K Entry into a Material Definitive Agreement

Exhibit 99.1

Avadel Pharmaceuticals plc

Unaudited Pro Forma Condensed Combined Financial Information

Overview

On February 16, 2018, Avadel Pharmaceuticals plc (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,” completed the previously announced disposition of four pediatric commercial stage assets – Karbinal™ ER, Cefaclor, Flexichamber™ and AcipHex® Sprinkle™, together with certain associated business assets (the “Pediatrics Business”) – to Cerecor, Inc. (“Cerecor”), pursuant to the terms of an asset purchase agreement between the Sellers and the Buyer dated as of February 12, 2018 (the “Purchase Agreement”). Certain additional details of the Purchase Agreement and the transactions contemplated thereby (collectively, the “Transaction”) were set forth in a Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on February 12, 2018.

Pro forma Financial Information

Set forth below are the following:

· Unaudited pro forma condensed combined balance sheet of the Company as of September 30, 2017 (and notes thereto).

· Unaudited pro forma condensed combined balance sheet of the Company as of December 31, 2016 (and notes thereto).

· Unaudited pro forma condensed combined statement of income (loss) of the Company for the nine months ended September 30, 2017 (and notes thereto).

· Unaudited pro forma condensed combined statement of income (loss) of the Company for the twelve months ended December 31, 2016 (and notes thereto).

Basis of Presentation

The unaudited pro forma condensed combined financial statements reflect adjustments to the Company’s historical financial results as reported under the U.S. Generally Accepted Accounting Principles ("GAAP") in connection with the Transaction. The unaudited pro forma condensed combined balance sheet as of December 31, 2016 and the unaudited pro forma condensed combined statement of income (loss) for the twelve months then ended give effect to the sale of the Pediatrics Business as if the Transaction occurred on February 5, 2016 (the date the Pediatrics Business was acquired). The unaudited pro forma condensed combined balance sheet as of September 30, 2017 and the unaudited pro forma condensed combined statement of income (loss) for the nine months then ended give effect to the sale of the Pediatrics Business as if the Transaction occurred on January 1, 2017.

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 and are not intended to project the Company’s results of operations or financial position for any future period. The pro forma adjustments are based on available information and assumptions that the Company believes are attributable to the sale of the Pediatrics Business, are factually supportable, and with respect to the statement of income (loss), have continuing impact on the consolidated results.

The unaudited pro forma condensed combined financial statements and the accompanying notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.

Avadel Pharmaceuticals plc

Unaudited Pro Forma Condensed Combined Balance Sheet

	As of September 30, 2017
(in thousands)	As Reported		(1) Adjustments			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	37,449	$	-		$	37,449
Marketable securities		78,161		-			78,161
Accounts receivable		24,080		-			24,080
Other current assets		9,243		445			8,798
Total current assets		148,933		445			148,488
Goodwill		18,491		-			18,491
Intangible assets, net		94,256		18,495			75,761
Other long-term assets		15,747		190			15,557
Total assets	$	277,427	$	19,130		$	258,297
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term related party payable	$	30,986	$	1,902		$	29,084
Accounts payable and accrued expenses		56,561		-			56,561
Other current liabilities		9,761		-			9,761
Total current liabilities		97,308		1,902			95,406
Long-term related party payable, less current portion		76,131		20,793			55,338
Other long-term liabilities		7,525		-			7,525
Total liabilities		180,964		22,695			158,269
Total shareholders' equity		96,463		(3,565	)		100,028
Total liabilities and shareholders' equity	$	277,427	$	19,130		$	258,297

Notes to Unaudited Pro Forma Condensed Combined Balance Sheet

(1) The divestiture adjustments include the reversal of certain assets and liabilities related to the disposition of four pediatric commercial stage assets – Karbinal™ ER, Cefaclor, Flexichamber™ and AcipHex® Sprinkle™. No adjustments have been made to give effect to the Deerfield and Armistice Guarantees and the impact of Avadel’s retained obligation related to a certain supply contract.

Avadel Pharmaceuticals plc

Unaudited Pro Forma Condensed Combined Balance Sheet

	As of December 31, 2016
(in thousands)	As Reported		(1) Adjustments			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	39,215	$	-		$	39,215
Marketable securities		114,980		-			114,980
Accounts receivable		17,839		-			17,839
Other current assets		9,152		1,623			7,529
Total current assets		181,186		1,623			179,563
Goodwill		18,491		-			18,491
Intangible assets, net		22,837		19,577			3,260
Other long-term assets		22,968		230			22,738
Total assets	$	245,482	$	21,430		$	224,052
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term related party payable	$	34,177	$	1,233		$	32,944
Accounts payable and accrued expenses		24,327		-			24,327
Other current liabilities		3,917		-			3,917
Total current liabilities		62,421		1,233			61,188
Long-term related party payable, less current portion		135,170		21,057			114,113
Other long-term liabilities		5,822		-			5,822
Total liabilities		203,413		22,290			181,123
Total shareholders' equity		42,069		(860	)		42,929
Total liabilities and shareholders' equity	$	245,482	$	21,430		$	224,052

Notes to Unaudited Pro Forma Condensed Combined Balance Sheet

(1) The divestiture adjustments include the reversal of certain assets and liabilities related to the disposition of four pediatric commercial stage assets – Karbinal™ ER, Cefaclor, Flexichamber™ and AcipHex® Sprinkle™. No adjustments have been made to give effect to the Deerfield and Armistice Guarantees and the impact of Avadel’s retained obligation related to a certain supply contract.

Avadel Pharmaceuticals plc

Unaudited Pro Forma Condensed Combined Statement of Income (Loss)

	Nine months ended September 30, 2017
(in thousands)	As Reported			(1) Adjustments			Pro Forma
Total revenue	$	138,493		$	5,341		$	133,152
Operating expenses:
Cost of products and services sold		12,253			2,194			10,059
Research and development expenses		22,093			20			22,073
Selling, general and administrative expenses		35,804			9,300			26,504
Changes in fair value of related party contingent consideration		(30,107	)		1,336			(31,443	)
Other costs		4,865			1,080			3,785
Total operating expenses		44,908			13,930			30,978
Operating income (loss)		93,585			(8,589	)		102,174
Other nonoperating income (expense)		4,761			(766	)		5,527
Income (loss) before income taxes		98,346			(9,355	)		107,701
Income tax provision (benefit)		21,830			(2,806	)		24,636
Net income (loss)	$	76,516		$	(6,549	)	$	83,065
Net income per share - basic	$	1.87					$	2.03
Net income per share - diluted		1.81						1.97
Weighted average number of shares outstanding - basic		40,839						40,839
Weighted average number of shares outstanding - diluted		42,194						42,194

Notes to Unaudited Pro Forma Condensed Combined Statement of Income (Loss)

(1) The divestiture adjustments include the reversal of certain results of operations related to the disposition of four pediatric commercial stage assets – Karbinal™ ER, Cefaclor, Flexichamber™ and AcipHex® Sprinkle™. No adjustments have been made to give effect to the Deerfield and Armistice Guarantees and the impact of Avadel’s retained obligation related to a certain supply contract.

Avadel Pharmaceuticals plc
Unaudited Pro Forma Condensed Combined Statement of Income (Loss)

	Twelve months ended December 31, 2016
(in thousands)	As Reported			(1)(2) Adjustments			Pro Forma
Total revenue	$	150,246		$	5,985		$	144,261
								-
Operating expenses:
Cost of products and services sold		13,248			2,929			10,319
Research and development expenses		34,611			22			34,589
Selling, general and administrative expenses		44,179			9,710			34,469
Changes in fair value of related party contingent consideration		49,285			1,076			48,209
Other costs		13,888			1,324			12,564
Total operating expenses		155,211			15,061			140,150
Operating income (loss)		(4,965	)		(9,076	)		4,111
Other nonoperating expenses		(4,753	)		(1,099	)		(3,654	)
Income (loss) before income taxes		(9,718	)		(10,175	)		457
Income tax provision (benefit)		31,558			(3,184	)		34,742
Net loss	$	(41,276	)	$	(6,991	)	$	(34,285	)
Net loss per share - basic	$	(1.00	)				$	(0.83	)
Net loss per share - diluted		(1.00	)					(0.83	)
Weighted average number of shares outstanding - basic		41,248						41,248
Weighted average number of shares outstanding - diluted		41,248						41,248

Notes to Unaudited Pro Forma Condensed Combined Statement of Income (Loss)

(1) The divestiture adjustments include the reversal of certain results of operations related to the disposition of four pediatric commercial stage assets – Karbinal™ ER, Cefaclor, Flexichamber™ and AcipHex® Sprinkle™. No adjustments have been made to give effect to the Deerfield and Armistice Guarantees and the impact of Avadel’s retained obligation related to a certain supply contract.

(2) The Adjustments column includes results of the Pediatric Business from February 5, 2016 (date of acquisition) through December 31, 2016.