Avadel Pharmaceuticals plc (AVDL) Earnings Call Transcript & Summary

Greetings, and welcome to Avadel Pharmaceuticals Fourth Quarter and Full Year 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Austin Murtagh with Stern Investor Relations. Thank you. You may begin.

Good morning, and thank you for joining us on our conference call, to discuss fourth quarter 2022 earnings. As a reminder, before we begin, the following presentation includes several matters that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. These risks include risks that products in the development stage may not achieve scientific objectives or milestones, or meet stringent regulatory requirements. Uncertainties regarding market entry and acceptance of products and the impact of competitive products and pricing. These and other risks are described more fully in Avadel's public filings under the Exchange Act included in the Form 10-K for the year ended December 31, 2022, which was filed on March 29, 2023, and subsequent SEC filings. Except as required by law, Avadel undertakes no obligation to update or revise any forward-looking statements, contained in this presentation to reflect new information, future events or otherwise. On the call today are Greg Divis, Chief Executive Officer; Jennifer Gudeman, Senior Vice President of Medical and Clinical Affairs; Richard Kim, Chief Commercial Officer; and Tom McHugh, Chief Financial Officer. At this time, I will turn the call over to Greg.

Thank you, Austin. Good morning, everyone, and thank you for joining us for a company update and to review our fourth quarter and full year 2022 results. 2023 is proving, as we expected to be a pivotal year for Avadel. We've already executed on a number of significant milestones, including the recent completion of multiple strategic financings that pave the way for growth and value creation as we enter the final stages to bring LUMRYZ, our investigational once-at-bedtime oxybate therapy for the treatment of cataplexy or excessive daytime sleepiness in adults with narcolepsy to the market. With an oxybate eligible patient community of 30,000 to 35,000 strong and the opportunity to address the most important unmet need, which requires patients to forcibly awaken in the middle of the night during a precise 90-minute window. LUMRYZ offers the potential to provide oxybate patients the opportunity to have an uninterrupted night sleep, while commanding a meaningful share of the estimated $3 billion to $3.5 billion once-at-bedtime oxybate market. I am proud of all, that our team has recently accomplished, which has put us in a very strong position ahead of a potential final approval and the commercial launch of LUMRYZ. As announced yesterday, significant progress has been made in strengthening the company's balance sheet, providing us with the financial flexibility and a clean 10-K ahead of the potential launch of LUMRYZ, through the execution of a series of strategic financing which, in total, provides the company with approximately $200 million of committed capital to support a potential LUMRYZ launch, and a new April 2027 maturity date for $96.2 million of our convertible notes. The total capital includes $125 million from an equity raise and up to an additional $75 million in royalty financing with RTW Investments. RTW, our largest equity holder, continues to be incredibly supportive of Avadel and LUMRYZ and this additional royalty financing, along with the convert exchange and equity raise provides us with the necessary resources and balance sheet to fully support the commercialization of LUMRYZ for people living with narcolepsy. Tom will provide further details, a little later in this call, but it is important to state emphatically that the completion of these financing actions puts us in a strong financial position to execute on our launch priorities and deliver on our mission to transform Avadel into a commercial organization, and a major player in the narcolepsy space. I want to thank everyone, and especially all of our investors, who have supported us during this process and your continued belief in the promise and future of Avadel and LUMRYZ. Turning to our progress on the regulatory front. Earlier this month, we submitted a minor amendment to our LUMRYZ NDA, requesting final FDA approval. This came shortly after the REMS patent was delisted from the FDA's Orange Book in response to the unanimous 3 to 0 panel decision of the United States Court of Appeals for the Federal Circuit on February 24, affirming the previous District Court ruling, ordering that delisting. Based on recent interactions with the FDA, and the March 1 submission date for our minor amendment requesting final approval. FDA guidance to us would suggest timing to a decision could be around 2 months or approximately early May. Please note, actual timing is not in our control. However, we remain committed to continuing to do all we can to try to accelerate this. If or when, we learn anything more specific, we will certainly share that information as appropriate. We also recently announced that the FDA approved our Pre-Launch Activities Importation Request or PLAIR for LUMRYZ. This has allowed us to import LUMRYZ into the U.S. ahead of a final approval decision and puts us in a position to potentially shorten the time to product availability. With this, we expect to be in a position to have LUMRYZ available in about 4 weeks, after a potential final approval. With the near-term final approval decision and the potential for product availability shortly thereafter, we have been focused on building and preparing our organization for the potential launch of LUMRYZ. Richard will join us shortly to provide a further update on our launch preparations and progress. And lastly, and certainly not least, we continue to expand the patent exclusivity for LUMRYZ. As we've recently been granted 5 additional U.S. patents for a current total of 13. These 13 U.S. patents provide Orange Book listable patent protection into early 2042 with many more applications pending at the U.S. patent office. We have a lot to cover today. So with that, I'll turn the call over to Jennifer for details on our recent scientific data presentations. Jennifer?

Thanks, Greg, and good morning. It's an exciting time for us. We closed out last year by presenting a total of 7 posters between the American Neurological Association and the test meeting. I will briefly highlight 2 of the posters. First, a real-world study with the Mayo Clinic to understand the top 20 comorbidities increased in people with narcolepsy compared to a matched cohort. The top 20 did not include cardiovascular disease. And second, a discrete choice experiment where among 100 clinicians and 125 patients the most important driver of oxybate treatment choice with a single dose. Whether it is medical congresses or individual KOL meetings, our experience in FL team are having, we consistently see unsolicited excitement and enthusiasm for the unmet need that LUMRYZ will fulfill, if approved. The robust clinical study data of LUMRYZ and the clinical value proposition of avoiding middle of the night dosing is well understood. Regarding the benefit of eliminating the middle of the night dose, we supported research that was conducted by trend community to better understand the patient experience with twice-nightly oxybate. Trend community submitted these data, which were accepted as a late-breaking abstract to the advances in Sleep and Circadian Science Meeting held in February. I will share a few highlights [indiscernible] presented from their sample of 85 respondents with narcolepsy who have currently or previously taken twice-nightly oxybate therapies. Approximately 75% of the patients surveyed reported missing the second dose. Of that group, 65% shared, if this happens at least monthly. Further, 32% reported suffering injuries when waiting to take a second dose of therapy. Of that group, 1/3 said this occurs at least monthly. These new TRIM data, which are consistent with what we have learned in our RESTORE study, via patients switching from twice-nightly highlight the potential positive impact that once-nightly dosing will have on people living with narcolepsy. Let's turn now to the published data reporting additional safety concerns with currently available treatment regimens. In January, we published our findings in the Journal drug real-world outcomes from the FDA Adverse Event Reporting system or FAERS, of reports that showed patients are inadvertently taking their second dose of sodium oxybate, less than 2.5 hours after their first. Which can be associated with serious adverse events. It's relevant to consider what prompted this research. We have heard time and time again from people taking twice-nightly oxybate that this happens. And when it does, it can be a heroing experience as the publication underscores. The other consistent theme we hear is that, patients don't report this to their doctors, the FDA or the rooms program because they are fearful if they did that their therapy would no longer be accessible. It's well recognized that Adverse Event Reporting is the tip of the iceberg, reporting it voluntary for both patients and health care providers, and it is estimated that only about 10% of adverse events are reported. Without any other option, the reticence of patients to share these safety concerns and have clinicians to ask about potential safety concerns, is not surprising. Yet the risks are relevant. Among this sample, 27% of reports where dosing was less than 2.5 hours after the first resulted in hospitalization with another 22% associated with the use of emergency services. We look forward to providing a treatment option, we believe will mitigate this serious safety risk of taking a CNS depressant earlier than is advisable, as well as overcoming the challenges of missing the second dose and/or taking it too late. I will now turn the call over to Richard to provide an update on the commercial opportunity and Avadel's preparations for launch. Richard?

Thanks, Jennifer, and good morning, everyone. The great progress that Greg covered has allowed us to finalize our pre-commercialization activities. And today, I will share some additional market research that continues to support why we believe LUMRYZ can have a major impact in the narcolepsy market. In addition, I will provide further updates on our significant launch readiness progress. With the submission of the amendment for LUMRYZ to the FDA, the imminent decision for final approval and rapidly approaching potential product availability, our commercial rate [indiscernible] have progressed as we continue to progress to bring once-at-bedtime [ minimize ] to the north of the community. We have been working diligently over the past few months ensuring [indiscernible] to drug availability following potential final approval, and this was further confirmed with the FDA recently granted our PLAIR. In this regard, we currently expect depending on the potential final approval timing to have product available in the market in approximately 4 weeks post approval. Now in addition to the PLAIR approval, we've made significant progress with our REMS and patient services center, which will both be operational in advance of a final approval and our supply distribution network, which will be fully operational when the product is available. Earlier this year, we performed new market research, which included a sleep specialists with varying amounts of oxybate utilization. Here's a few key takeaways. First, when shown the LUMRYZ product profile, sleep specialists give LUMRYZ the highest oxybate market share. Now receiving the highest overall market share from this research is horribly consistent with 3 previous demand studies we have conducted. Representing insights from hundreds of these specialists. Supporting this, with the vast majority of sleep specialists stated that they were either likely or highly likely to prescribe LUMRYZ. Second, with the introduction of LUMRYZ over time, oxybate usage of narcolepsy patients is expected to grow by at least 50%. This is very consistent with previous research, where with the introduction of once-at-bedtime LUMRYZ, sleep specialty more of their patients becoming eligible and being treated with oxybate therapy. And third, sleep specialty utilization for LUMRYZ coming from switch patients currently taking twice-nightly oxybate, as well as those who are unable to stay on twice-nightly therapy. Further, our research suggests LUMRYZ will become the first choice oxybate for previously untreated oxybate eligible patients. We continue to see the consistency from our market research about the impact that LUMRYZ can have, in addressing the unmet need for people with narcolepsy and the significant interest from sleep specialists that can make LUMRYZ the preferred treatment in a growing oxybate narcolepsy market. Now I'll provide an update on our readiness efforts, as we have significantly expanded the scope of our execution against our launch plans. First, we have packaged a significant amount of commercial supply for LUMRYZ in its primary daily packets. For product fulfillment, we have completed the REMS programming and along with our patient services center, both teams have been actively ramping up their hiring and should be fully staffed in the next couple of weeks. We've also signed contracts with our full specialty pharmacy network. On the payer front, our team had several key meetings with decision-makers at the GPOs and PBMs that manage over 85% of the commercially insured lives. With the favorable decision in the Federal Court, this REMS patent delisting and our REMS, our LUMRYZ amendment submitted, our conversation with payers have accelerated around contracts and coverage for LUMRYZ and the feedback continues to be positive. We've also been focusing on building an exceptional team to support LUMRYZ. We have hired, the majority of noncustomer-facing roles across the team and have made offers to the majority of our territory business managers or sales representatives and our field reimbursement team for them to start in the next couple of weeks. For our sales team, we have prioritized hiring people with rare disease experience, previous least experienced or experience with our target prescriber base. As well as their ability to deliver in highly competitive markets. Now of course, like the rest of our team, being aligned to our core value and always putting patients first is a must. The energy and excitement from our current Avadel team and our new colleagues joining us is helpful. And our goal is to ensure everyone on our team is singularly focused on how to improve the lives of people with narcolepsy. We look forward to providing more updates on future calls. And with that, I will now turn the call over to Tom for an update on the company's financials. Tom?

Thank you, Richard. I'll note that full financial results are available in the press release and the 10-K. And details of our recently completed financing transactions during the 8-Ks we filed. I'll start with comments about our recent financing announcements. I am pleased to report that we executed the financial strategy that we've been communicating for the past several months and accomplished 2 critical goals: one, secured $200 million of funding for the anticipated launch of LUMRYZ in the form of committed capital from a $75 million royalty financing, and immediately available capital from $125 million equity offering. Two, we addressed the maturity of the convertible notes, which strengthened our balance sheet and provides financial flexibility to focus on our launch priorities. Our financing strategy consists of 3 major components: first, we completed an exchange of $96.2 million of the convertible notes and importantly, extended the maturity out to April 2027. This eliminates what would have potentially been a significant use of cash later this year, and moving this debt to a long-term obligation significantly improves our balance sheet and financial flexibility. Second, we secured committed capital in the form of a $75 million royalty financing from RTW Investments. The funding will be available to Avadel in 2 tranches of $30 million and $45 million, upon meeting certain regulatory and financial milestones, and we expect the first tranche will be available following the launch of LUMRYZ. The second tranche of $45 million is available to draw at our option, upon achieving a revenue milestone should we choose to do so. This component of our strategy provides us with the security of a future funding commitment and with favorable terms, such as a royalty rate of 3.75% and lack of financial covenants. We sincerely appreciate the support of RTW and the confidence they placed in Avadel to deliver the value we believe, LUMRYZ promises. Third, we completed an equity raise, which generated gross proceeds of $125 million. This component of our financing strategy provides the immediate capital needed to fund the launch of LUMRYZ. The significant support that our shareholders demonstrated through their participation in the equity offering speaks to the confidence they have and the potential value of LUMRYZ. As I previously stated, we are pleased with the results of our financing strategy, the faith investors have placed in the company and their confidence in the opportunity that lies in pet for LUMRYZ. On a final note, we reported $96.5 million of cash, cash equivalents and marketable securities as of December 31, 2022. For additional detail on our 2022 financial results, please refer to the press release issued earlier this morning, or the 10-K filed yesterday. The combination of cash on hand, the maturity extension of the convertible notes and the capital we secured, allowed us to file a clean 10-K with a strong balance sheet. The actions we took last year resulted in closing out 2022 with over $95 million of cash and that, in addition to the financing stretch we completed puts the company in a strong financial position, as we get ready for our anticipated launch of LUMRYZ. I'll now turn the call back to Greg for closing remarks.

Thank you, Tom. From where we sit today, we are operating from a position of strength across our organization, on the cusp of a pivotal moment for the company as we transition to a commercial company poised for significant growth and rapidly approach the opportunity to make a meaningful and positive impact for patients in the narcolepsy community at large. The significant milestones we have recently achieved, including submitting our amendment to the LUMRYZ NDA along with executing multiple strategic financings, are critical steps toward our mission. Built on the foundation of a clear value proposition of [ Bloom Rise ], which has been recognized by our Chief stakeholders, including patients, sleep specialists and shareholders. With the work our team has done over the past few months from a legal, regulatory, financial and organizational readiness perspective, we are in an excellent position to take our next step to bring LUMRYZ to the narcolepsy community. We are ready to deliver on the promise of LUMRYZ to transform the market and the lives of people with Narcolepsy. We thank you for your support. We look forward to providing future updates on our progress. And with that, operator, we'll open up the call for questions.

[Operator Instructions] Our first question comes from the line of Chris Howerton with Jefferies.

Great. I just wanted to offer my congratulations on all the financing and the updates. I guess two questions from me. One would be in terms of kind of the pricing strategy that you're expecting to use. Maybe you could give us a little more color on kind of how you're considering pricing of LUMRYZ, in this market and maybe is a little corollary there in those discussions, do the payers have the generic twice-nightly oxybate on their radar as part of that discussion. And then the second one would be just kind of are you anticipating a bolus of launch a bolus of patients expecting to get on LUMRYZ at launch or should this be more of a gradual thing?

Yes. Thanks, Chris. Richard, maybe you can start with the pricing and commentary and then certainly, I can comment on the -- how we're thinking about forecast.

Yes, sure. Thanks for the question, Chris. So yes, as far as our pricing is concerned, I mean, our overall strategy based on the value proposition of LUMRYZ has been we're going to win with patients, win with providers, and in essence, really a draw with payers really more from a parity perspective. So, we've been very consistent in our messaging that our target price for LUMRYZ is going to be more in the parity range with the branded oxybate. And as far as the AGs are concerned, yes, we've definitely had a chance to speak to all the payers, thus far. And I think, the general feedback on the AG is, it is being treated like the brand extension. It is from what we see now, it is beginning to get coverage, but we haven't seen any movement or force movement from a branded twice-nightly oxybate to the AG at this stage. So we have built our whole strategy knowing that the AG will be in the marketplace. So the fact that it's here is really very much in line with our plans. And so far, our conversations with the payers have been really, really positive as well. So -- and Greg, I'll pass the next question to you.

Yes. I think, Chris, as it relates to how we think about the early months of launch, we certainly don't intend to guide with any specificity from that standpoint. We'll talk more about, how we think the market opportunity is and what that looks like, as we get through the next number of milestones from an approval and leaning into a launch. But, I think at the end of the day, the team has done a great job to think through all the potential things that happened early on, in kind of ordinary course of product launches from reimbursement to transition into patient services center to securing coverage and whatnot. So we're putting in all the necessary capabilities to be able to address those things, and we're pleased with the progress we've made and the feedback we're getting, both across the patient community, physician community and payer community.

Our next question comes from the line of Adam Evertts with LifeSci Capital.

Great. Congrats on all the great news this quarter, as well as strengthening the balance sheet. So, I just wanted to ask -- make sure I'm clear on what will be in place at the time of full approval, assuming that occurs in early May. I mean it sounds like the commercial team, including the sales force will be ready, product will be available roughly 4 weeks later. And then just remind me, I think, Richard maybe said it on the REMS program that will also be in place by approval or certainly by launch?

Yes. Thanks, Adam. Richard, do you want to comment on that?

Yes. Adam. Thanks for the question today. So yes, we -- as far as our operational perspective, as far as REMS distribution, where we -- the REMS is, in essence, that programming is done. We'll be higher fully staffed for both our REMS program and our patient services center within the next couple of weeks. So that first phase, we're ready. We could be focus switch in just a couple of weeks here as well. To your point, as Greg had mentioned, supply should be available approximately 4 weeks after a final approval, and our team is coming on board as well. So we are ready to be able to deliver this. And yes, so all of our key components are ready to go in the next couple of weeks.

Fantastic. And then, one quick one for Tom. Tom, you mentioned the second tranche on the royalty side. That was triggered by a regulatory milestone or a sales milestone?

The second tranche of $45 million is on a quarterly revenue milestones.

Our next question comes from the line of François Brisebois with Oppenheimer.

This is Dan Tongon on for Frank. Congrats on all the progress. Just a quick one for me. In terms of the payer discussions, just wondering how useful or important are these real-world outcome studies that you've been doing? And is this coming up in these payer discussions from a payer's perspective in terms of reimbursement?

Richard, do you want to go or.

Yes, sure. Dan, thanks for the question. So, I think the really great thing is with the recent regulatory and legal events have come on, the payer engagement has definitely stepped up to that next level, overall here as well. And I think holistically, the good news is we're really focusing on really strengthening the conversations around the clinical value proposition. So the team has been doing clinical presentations. And, I think going forward, I mean the payers are always interested in real-world evidence. So those questions do come up, and I think we plan on sharing more of that as more of the data can -- could be published as well. So overall, the conversation has definitely been a lot more shifted towards the clinical value proposition of LUMRYZ.

Great. And just a quick one. I believe, you already talked about it, just to be clear. In terms of the REMS build-out, -- so at this point, is the -- on the technology infrastructure standpoint, is that already completed and now staffing is the next thing?

In short, Dan, that's exactly correct. And staffing is ongoing now. So, as Richard noted, it was in a matter of just a couple of weeks, that will be fully operational. And Jen, I know this goes under your purview. So if you have any comments you want to add, please do.

You described it perfectly. So programming is complete. The staffing is taking place right now, and we're just a few short weeks away, from being ready to go.

Our next question comes from David Amsellem with Piper Sandler.

So I just had a couple. You talked through the challenges with middle of the night dosing. But I wanted to get your thoughts on potential counter-detailing messages from your competitor. Things that we've heard anecdotally from KOLs like taking LUMRYZ too late at night, intensity interference performing functionality or even bedwetting. So how do you respond to that kind -- those kinds of concerns. And particularly, as it relates to competition and messaging, what is your counter those kinds of concerns. So I'll stop there.

Yes. Thanks, David. Jen, I'll let you go first.

Sure, that's great. We have conducted 2 relative bioavailability studies covering LUMRYZ to twice-nightly sodium oxybate. And what we have shown is that our concentration, 8 hours after taking the dose is actually a little bit lower than twice-nightly sodium oxybate. So based upon those blood levels, there would not be any sort of expectation of impairment the next day. And that certainly is not something we've seen in our pivotal clinical trial or in our open-label study. I think, it's also really, really important to note that within the oxybate, you shouldn't drive or operate heavy machinery 6 hours after taking the dose. When you think about LUMRYZ, that covers the nocturnal sleep period. When you think about twice-nightly and that 90-minute window, when you can take your second dose, when patients are waking up later, that is a restriction with that additional 6 hours that oftentimes does interfere with next-day functioning.

Thanks, Jen. Richard, anything you want to comment?

Yes. David, I just what I sort of add is quite interesting to me [indiscernible] background. David. There we go. So David, to your question, as far as some of the counter messaging is concerned. So I think for us, the one thing we have realized over the last 20 years is I don't think anyone has really thought making patients wake up from the middle of the night has been normal. And where we see that most predominantly in our market research around de novo patients were absolutely consistently, physicians will state that they wouldn't want to start patients on LUMRYZ. Why would they offer a therapy, where you have to get up bring the middle of the night. And to Jen's point, we also know that the -- if there's any tolerability issues with occupancy, they generally tends to fly over time as well. But I think for us, where we sort of see it is physicians are speaking sort of with their boats as far as the need to not -- or the ability to not offer that segment dose is an intuitive proposition for new patients, that we believe will actually spill over into existing patients as well. So those are the counter messages that come up, we're more than prepared to deal with them. And we believe our campaigns will address them head on.

That's helpful. If I may just sneak in a follow-up. Do you think, you're going to be able to pull in patients who've gone to low sodium already?

Yes. So David, when we do our patient research, what we find about patients who have gone to the mixed fault version of the pricing the oxybate, they tend to be patients who have been diagnosed with narcolepsy for a shorter period of time. and they tend to be earlier adopters of therapy. They're generally not satisfied this treatment seeking more. So even though they have switched to the mix salt version, there -- all of our patient segments show extremely high level of interest in learning about LUMRYZ or potentially switching ironically, the highest group just nudging out the Xyrem patients are those on the mix salts. And our belief there is because they are the ones who are going to most often seek more that they can do to manage their narcolepsy.

Our next question comes from the line of Marc Goodman with SVB Securities.

It's Rudy on the line for Marc. Congrats on the progress. Maybe kind of talk about your operating expenses in 2023 based on your current commercial launch planning. Now, we raised another around $200 million. Do you need additional funding before breakeven?

Yes. Thanks for the question. We're really pleased with the amount of capital we raise. We're not providing guidance on operating expenses. We're heading into 2023. But from our standpoint with the capital that we now have, we're quite [indiscernible] good to go for a launch.

So that's very helpful. And also can you talk about the IP. You mentioned that you have 13 patents now carrying these products, like what gives you the confidence about the strength of the IP position?

Well, I think first and foremost, we're quite proud of the fact, that we're the first and only company to actually have innovated at once-at-bedtime or once-nightly oxybate treatment option, and you would assume that we have and we'll continue to protect it to its fullest extent. The patent families that have been granted so far, with many more to come, I would say we're quite confident in they're generally directed to once-nightly oxybate formulations, which includes, obviously, our formulation, but other types of formulations, prodrugs, [indiscernible], alternate salts and whatnot, as well as methods of treating patients in a manner that we believe is consistent with what our final label will be. So we're quite confident in the robustness of our intellectual property, the 13 Orange Book listed patents we have so far, and the more to come.

[Operator Instructions] Our next question comes from Matt Kaplan with Ladenburg Thalmann.

Just a couple of questions. In terms of maybe one for Richard, can you just provide some more color on the sales organization in terms of number of sales reps in a number of regions and kind of your go-to-market strategy with the sales team?

Yes, sure, Matt. No problem. So our pricing for the sales force is based off of the insight, that there are less than 5,000 prescribers of oxybate in the last 3 years. Of that 1,600 mg up 80% of the volume in less than 500 mg up 50% of the total prescription volume. So we're sizing it at around 50 to really sort of focus on those groups. But right out of the gate, we're probably going to spend a little bit more time on the 1,600 that make up 80% of the prescription volume. Now we will cover the entire group and also including a few high narcotic prescribers, who don't use oxybate. And also interesting for us, if we do get some other sort of people interested earlier on, our REMS is almost like an early detection signal, which will allow us to get out to those offices and really ensure that they're set up well before that first prescription goes forward. So, we're sort of going to focus where the oxybate experience is. And then from there, we can expand over time.

And then in terms of your patient support services center, how will that function to help patients get reimbursement and debt coverage?

Yes. It's one of the things that I would sort of see is going to be our secret fastest launch. We know prescribing a fulfilling any specialty product in the United States is a challenge. It's just not made it easy for folks. So, it's beyond our patient services center will be actually staffed with nurses, nurse care navigators. So they will understand more of both the clinical and the reimbursement aspects -- they're actually going to be credited in actual reimbursement services as well. So our goal there is, each office will actually have a dedicated person that they can build a longer-term relationship. It won't be sort of mixing and matching different years care navigators but the other thing that we are also building out concurrently and have already made offers for is our field reimbursement team. And those are folks who will be able to go directly into the offices of these specialists and really helps support the staff that focuses on reimbursement, both in a live aspect there. And then the patient support center will help both office and also guide the actual individual patients themselves, as well. So we've really invested a lot of time and energy because first, we believe that the LUMRYZ value proposition will generate a lot of excitement with prescribers and patients. But we've got to make sure that we've had, and we've spent the time to build the resources to make sure that we can get the fulfillment taking care of as well.

Okay. That's very helpful. And then a question for Tom, in terms of the royalty interest financing with RTW terms there. Can you help us understand in terms of the amount you'll have to pay back to RTW, if you pull down the full amount or if you don't -- if you only pull down the first tranche, is it 2.5x the funding? Or how does that work?

Yes. No, thanks, Matt. I think, one of the great things about the royalty financing is the flexibility we have on the second tranche, where it's really at our option to draw it or not. So if you focus on the first tranche, it's in our 8-K filing, a lot of details out there, but the hard cap is 2.5x.

That concludes today's question-and-answer session. I'd like to turn the call back to Greg Divis for closing remarks.

Thank you, and thank you, everyone. Thank you for your time and joining us today, on our fourth quarter and full year 2022 earnings call. We appreciate your spending the morning with us and wish you a great rest of your day. Thanks.

This concludes today's conference call. Thank you for participating. You may now disconnect.