Avadel stock surges after jury rules in favor of Jazz, royalty rater lower than expected

Avadel Pharmaceuticasl (NASDAQ:AVDL) jumped 22% after a jury ruled in favor of Jazz Pharmaceuticals (NASDAQ:JAZZ) in a patent dispute over a sleep disorder drug. The royalty rate awared to Jazz was much lower than it requested.

A jury in Wilmington, Delaware ruled that Avadel’s Lumryz infringes on a patent 782 for Jazz’s Xyrem, court observers told Seeking Alpha. The jury ruled that the royalty that should be paid to Jazz is 3.5%, which is well below the rate that 27% royalty that Jazz (JAZZ) had requested.

The FDA has already granted tentative approval for Lumryz to treat excessive daytime sleepiness (EDS) or cataplexy in adults with narcolepsy. Jazz (JAZZ) which markets Xyrem for the same indication, has disputed the IP rights for Lumryz based on the U.S. patent No. 8731963 (REMS Patent), listed in the FDA’s Orange Book.

In November, a district court in Delaware ordered Jazz (JAZZ) to request de-listing of the REMS Patent from the FDA’s Orange Book, and the company later appealed the decision

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