(Reuters) -ASL Strategic Value Fund on Monday urged shareholders of Avadel Pharmaceuticals to replace its board, citing mismanagement in the rollout of the drugmaker's flagship sleep disorder drug Lumryz since its launch two years ago.

The hedge fund said Avadel was unable to convert patients to its drug Lumryz from its rivals, despite the treatment being what it called "best-in-class", leaving hundreds of millions in potential revenue unrealized.

Lumryz, which competes with Jazz Pharmaceuticals' treatments, is approved in the United States to treat certain symptoms of narcolepsy by using a central nervous system depressant drug called sodium oxybate.

ASL said "constant mis-steps" with the launch of Lumryz and miscommunication over the last several years with investors had destroyed significant shareholder value along with the management's credibility.

ASL said Avadel should have converted 40% to 50% of sodium oxybate users within two years of launching Lumryz, an opportunity that could have generated an additional $600 million to $800 million in revenue.

"The status quo at Avadel is unacceptable," ASL told shareholders in its letter. The election for the directors will be held at the company's annual meeting on July 29.

ASL also asked Avadel to hire an investment bank to monetize the value in Lumryz, adding that the drug could bring $500 million to $1 billion in revenue if approved for idiopathic hypersomnia, a condition that causes excessive sleepiness.

The fund holds shares worth about $15 million in Avadel according to a Wall Street Journal report on Sunday.

Avadel told Reuters on Monday that its board has "consistently engaged with its largest shareholders and proactively sought their perspectives". The company said it remains focused on unlocking the full value of Lumryz in narcolepsy and in future indications.

Separately, Avadel said the U.S. Court of Appeals for the District of Columbia Circuit gave a favorable ruling in a suit brought by Jazz regarding the FDA's approval of Lumryz.

The ruling affirms FDA's decision to state that Lumryz's once-nightly dosing is clinically superior to other similar treatments.

(Reporting by Christy Santhosh in Bengaluru; Editing by Shailesh Kuber)