Pharmaceutical filing citing a Sleep Medicine paper — Avadel Pharmaceuticals, 2020-11-09
Avadel PharmaceuticalsAvadel PharmaceuticalsUS AVDL
cited a paper published in Sleep Medicine in its regulatory filing with the U.S. Securities and Exchange CommissionU.S. Securities and Exchange Commission
Regulator · Website as a basis for its claims. The company read the manner in which it wrote the paper and the actual scope of the paper in sequence. It described where the stock price movement over the following month compared to past cases of the same type. This is a hindsight judgment written after knowing the results. The paper was read only up to the abstract.
The disclosure is written in the press release as follows:
When a U.S.-listed company has something to inform its shareholders, the form it files with the Securities and Exchange Commission is called 8-K. The item numbers of the document filed by Avadel Pharmaceuticals on 2020-11-09 were 2.02 Earnings Release · 9.01 Financial Statements and Exhibits. In the press release attached to it, the company cited a paper published in Sleep Medicine. Translating the sentence in which it cited the paper verbatim, it reads as follows.
The press release did not automatically identify the sentence citing the paper. Check the original link. Do not replace it with another paragraph.
What the reader first sees is where the company placed the paper within the press release. Next, the reader must determine whether the paper supports the company's entire claim or only part of it. To answer the latter question, one must read the full paper. This article, having read only the abstract, cannot provide that answer.
The scope of the paper discussed in the abstract ends here.
The paper's title is The sodium in sodium oxybate: is there cause for concern? and it was published in Sleep Medicine on 2020-09-21. The authors are affiliated with University of California, Los Angeles · UCLA Health · Stanford Medicine · Stanford University. The summary at the beginning of the paper is called abstract. This article read only up to that point. This paragraph was written by a person after filtering a machine-generated draft by numerical comparison; it is of a different quality than a full reading of the paper.
The abstract of this article is not publicly available, so it has not been summarized. From the title alone, it is possible to know that the article discusses whether the amount of sodium in sodium oxybate, a drug used for narcolepsy, is a cause for concern. It is not possible to determine from the title alone whether the article contains new experimental results or is a commentary.
The abstract does not answer; the details remain in the main text and the appendix. This article, which does not go there, leaves the blank as it is. Readers compare the two citations above to determine which sentence in the abstract corresponds to the excerpt cited by the company.
One month later, the stock price was within the middle half of the sample.
The return remaining after subtracting the portion attributable to movement with the overall market is called excess return. The date is recorded in terms of trading days, counting only the days the stock market is open. In calendar terms, 20 trading days amount to roughly one month. The excess return for the day of the regulatory filing and the following month are presented in the table below.
| Period | Excess return relative to the market | Meaning |
|---|---|---|
| Five trading days before the regulatory filing | +2.0% | Degree of movement before the filing |
| On the day of the regulatory filing | +7.5% | On the filing day or the first trading day following |
| +1~+5 trading days cumulative | +22.8% | one week |
| +1~+20 trading days cumulative | −1.6% | one month |
A bundle of past cases of the same type is called a sample. The position counted from the bottom is expressed as a percentile. The one-month excess return of -1.6% in this case is within the bottom 61% of the 142 samples, placing it in the lower half.
| Sample scale (20 trading days) | Tenth from the bottom | Fourth from the bottom | Median | Top 25% | top 10% | this case |
|---|---|---|---|---|---|---|
| excess return | −31.9% | −20.1% | −7.4% | +5.5% | +19.5% | −1.6% |
half of the sample falls between the two middle marks in the table. From the table, one checks whether this case falls inside or outside. The sample collects cases where U.S. listed companies wrote papers in 8-K filings over the past ten years. The company itself is excluded from the sample. The numbers written here are past facts, not rules to apply to future cases.
After the regulatory filing, the company issued such documents
After the disclosure date, the company filed three 8-Ks. Here are only the item numbers. In 8-Ks without titles, the item numbers indicate the type of content. Whether it was an earnings announcement or a contract can be determined by the number. To learn what exactly happened, read the original text via each link.
- 2020-12-14 8-K Item 7.01 — Reg FD Disclosure
- 2020-12-16 8-K Items 8.01,9.01 — Other Events · Financial Statements · Exhibits
- 2021-02-17 8-K Items 5.02,9.01 — Officer/Director Changes · Financial Statements · Exhibits
What this article did not answer
This article, based only on abstracts, cannot answer what method the paper used, what it demonstrated, and to what extent. The number of citations the company's paper has received after that can be verified again through the citation count on OpenAlexOpenAlex
Data source · Website. The next thing to check is whether the company's next 8-K again cites the same paper.
Glossary
- 8-K
- A spontaneous report submitted to the Securities and Exchange Commission when a U.S. listed company has something to inform shareholders. The type is indicated by item numbers such as earnings, contracts, and executive changes. All events in this article come from this document.
- Excess return
- The remainder obtained by subtracting the market's overall return from the stock's return. It is used to observe the company's unique movement after removing the portion attributable to the market's collective rise or fall.
- Trading day
- A date counting only the days when the stock market is open. Since weekends and holidays are excluded, 20 trading days correspond to approximately one calendar month.
- Sample and percentile
- A bundle of past cases of the same type is a sample, and the position from the bottom is expressed as a percentile. A percentile of 10 means that nine out of ten cases performed better than this case.
- Abstract
- A summary placed at the beginning of a paper. The author writes in a few sentences what was done, how it was done, and what results were obtained. Without reading the full text, one cannot know the details and limitations of the methods.