Q2 2020 Jazz Pharmaceuticals PLC Earnings Call

Following the introduction from the company.

The quarter your question.

On the Colibri, Kathy Littrell head of Investor Relations at Jazz Pharmaceuticals.

Thank you, Chris and thanks to those of you joining our investor call today, we reported in our second quarter 2020 financial results in Upstate New York financial guidance for 2020, the press release or the slide presentation accompanying this call are available on the Investor section of our website on the call today or bridge so sad.

Dan Swisher precedent right a lot CFO and Rob your nose executive Vice President R&D, Johnny pretty Cuban eight fashion arc himself lunch executive Vice President General manager of North America sell jostled translate the neural site urge you to Chad importantly, hematology and oncology therapeutics.

Sampere Senior Vice President and international tremendous senior Vice President strategy in finance and jet Black our senior fellow Eurosite.

I'd like to remind you that today's call include forward looking statements subject salaries related to our future financial and operating results, which involve risks and uncertainties that could cause actual events performance and results could differ materially.

We encourage you to review statements contained in today's press release, and our latest FCC disclosure document, which identifies certain factors that may have been companies actual results could differ materially from its projected we undertake no duty or obligation to update our forward looking statements.

This call, we discuss non-GAAP financial measures reconciliations of GAAP to non-GAAP financial measures discussed on this call are included in today's press release and slide presentation available on the website I'll now turn the call over expressed.

Thank you Kathy good afternoon, everyone and thank you for joining us I'll start by providing an update on the significant progress made this quarter demonstrating the strength and value of our underlying business. We're unable then provide a financial update Dan will provide an overview of our commercial performance in neuroscience and oncology and.

Finally, Rob will provide an update on our R&D programs.

I'm proud of the strong financial and operational results, we delivered in the second quarter.

Well Cobot 19 brought continued challenges our employees never lost focus and we've continued to advance our strategy, including two product launches in May and July.

Our successes in the quarter aligns nicely with the important goals and milestones we set for the company at the start of the year aimed at further transforming our business.

Despite cobot 19, we made substantial progress across our regulatory commercial and R&D operations positioning us to demonstrate commercialization excellence and agility with the execution of up to five product launches in 2020 and 2021.

With that FDA approval of the sideways for the treatment of cataplexy and eating yes in narcolepsy, we continue to demonstrate the durability ever Oxybate franchise, we've been working for nearly a decade to develop this novel formulation, which has a 92% reduction in sodium compared to ZAR one.

This is why Weve label. Unlike Cyren carries no sodium content warning and offers a significant benefit for narcolepsy patients who would otherwise shoulder the burden of lifelong exposure to high sodium intake.

So I wave is the first treatment exclusively developed from concept Sri clinical research to production by jobs and underscores the transformation of the company's research and development capabilities. Xyrem is an important scientific advances in the treatment of narcolepsy and reflects our deep commitment to improve.

Moving the lives of people living with sleep disorders, we expect to launch site wave in the U.S. during the fourth quarter.

In addition, we expect topline data from our phase three pivotal study of Flyways idiopathic hypersound meal or age in the fourth quarter of this year and are targeting a U.S. launch was light weight in this new indication in late 2021, following a supplemental NDA submission and approval.

Our oncology franchise is poised to generate substantial near and long term value.

Deliberate a significant achievements for patients and shareholders with the U.S. approval and launch except Cellcom. The first new treatment for relapse small cell lung cancer in decades, adding another important and differentiated therapy to our oncology portfolio.

Yep Selco received FDA approval in June two months ahead of its PDUFA date and was launched last month. This was made possible through the tremendous after which the borrowing koji team.

Quickly, making this vital new treatment option available to patients and educating the medical community about steps LCOS profile.

So it's an important new growth driver in our expanding oncology business and we are focused on fully realizing its significant value protection.

The approval of sideways and the launch of Zeljko are the most recent examples of our proven development and commercialization capabilities, which since 2014 have resulted in nine major product approvals in commercial launches as well as a tripling of development pipeline projects, we continue to expand our portfolio.

Those assets and remain focused on our purpose as an organization, we innovate to transform the lives of patients.

At the same time, we continue to focus on maintaining operational efficiency strong margins and thoughtful capital allocation.

We have driven significant and sustainable profitability and robust cash flow cash from operations of over $450 million in the first six months since a year.

Together with our strong balance sheet and significant liquidity. This focus on efficiency in cash generation has allowed jobs to make value enhancing investments, while effectively managing expenses and continuing to evaluate internal and external opportunities to expand our portfolio and broaden our revenue base.

Over the past year, we've continued to enhance our leadership team, adding a number of executives with a broad range of expertise and industry experience to strengthen our capabilities to innovate and execute on our corporate strategy. Most recently, we welcome Kim Sandwich, who joined US June 1st as Executive Vice President General.

Manager of North America, Kim joins jobs with a track record and leading successful commercialization teams. Most recently at my of and Sciences, and previously Glaxosmithkline and Merck.

With this experienced executive leadership team, we are well positioned to grow our business and deliver significant value to our shareholders.

This is an important here for the transformation of drought.

With five product launches on track through 2021, and multiple initiatives a key inflection points. The team is aligned and focused on execution as strength of our business I'll now turn the call over to renew for financial update.

Thank you Bruce our strong operational and financial performance in the second quarter reflect the resilience of our business. Despite cobot 19 and focused efforts towards our most important value drivers.

And the second quarter, our total revenues were $562 million, an increase of 5% over the same period last year and led by our neuroscience products, which contributed double digit growth of 10%.

Our oncology portfolio experienced a low single digit decline due primarily to lower demand related to the impact of cobot 19, a trend that reverse towards the under the second quarter.

Turning to operating expenses during the second quarter, our adjusted <unk> expenses increased 10% to $170 million and adjusted R&D expenses increased 26% to $71 million over the same period last year, reflecting increased spend.

Towards both our commercial launch activities as well is advancing our pipeline.

It's important to note that our second quarter combined adjusted as Gionee and R&D expenses decreased by 10% relative to the first quarter as we further prioritized our investments in response to the pandemic.

Adjusted net income for the quarter was $207 million or 26 million lower than the same period last year, primarily impacted by certain tax related expenses recognized in the current corridor.

Our adjusted net income for the first six months of the year with $233 million, reflecting a decrease of 164 million compared to the prior here.

I'll remind you that we incurred a 200 million dollar upfront payment related to that sell caught in the first quarter and that's starting this year, we no longer exclude upfront and milestone payments from our adjusted net income.

Turning to guidance, we're increasing our total 2020 revenue guidance to a range of 2.2 to five to $2.3 billion to $5 billion, which represents an increase from our prior guidance of $85 million at the midpoint.

The topline increase is driven by the strength of the underlying business lower than anticipated Cove at 19 impact to date and the early approval and launch of the up sell caught.

Our guidance includes the expectation that health care systems continue to better manage patient care through co bed 19.

However, there is continued uncertainty about the scope and duration of the pandemic.

And the neuroscience area, we are increasing our 2020 net sales guidance to a range of 1.7 to $5 billion to $1.8 billion with the increased guidance taking into account factors such as the reopening of sleep centers, leading to increased diagnoses and patient enrollment.

Lower than anticipated impact to our government and patient assistance programs and the gradual return of in person sales force interaction.

With the addition of sideways, we continue to believe that our oxybate business, including future royalties from authorized generics and potential upside from an eye each indication will remain a key revenue contributor for many years.

And the oncology area, we're increasing our 2020 not sales guidance to a range of $445 million to $525 million, reflecting early approval and launch of that Cellcom and improved trends for Defitelio and vyxeos.

We are maintaining our adjusted that DNA guidance, and we'll continue to make disciplined investments to ensure successful product launches.

Based on our improved top line expectations and our focus on advancing our research and development pipeline, we're increasing our adjusted R&D guidance range by $25 million at the midpoint to accelerate.

Our investment in certain activities such as our plan JCP 385 phase Twob study for essential tremor.

Additionally, due to the strength of our operations combined with our outlook for the rest of the here we are increasing our 2020 guidance for non-GAAP adjusted net income to where a range of 670 $730 million or $11, a 90 cents to $13 per.

Share, which equates to an increase of $35 million or 57 cents per share at the midpoint.

Within the quarter, we took the opportunity to further improve our financial flexibility by issuing a billion dollars of exchangeable senior notes due 2026 with a portion of those proceeds going towards repurchases of our 2021 note.

Between our financing activities and strong cash flow generation, we ended the quarter with cash and investments of $1.7 billion and borrowing capacity under our revolver of $1.6 billion, increasing our capacity for a broader set of corporate development opportunities.

Positioning us well to execute on our near and long term strategy.

As we move forward, we are focused on disciplined deployment of capital to enhance our portfolio with targeted and durable assets through both internal and external innovation along with corporate development activities.

Doing this well should enable us to strengthen and diversify our long term revenue base, which we expect to grow and 2021 and and 2022.

In addition, with our current portfolio, we anticipate nearly 50% of our 2022 revenues.

To be derived from products launch since 2019.

As we progressed through the remainder of 2020 with a healthy balance sheet, a clear said objectives and a strong team to execute we're well positioned to generate value for patients and for our shareholders.

I'll now turn the call ever to Dan.

Thanks Renee.

Recently, we achieved multiple key objectives across our commercial regulatory.

R&D organizations, including two FDA approvals and product launches.

Well the advancement of our key clinical programs.

We're pleased with the agility of the team as they quickly pivoted to virtual engagements with physicians and payers.

Mitigated challenges with conducting clinical studies and regulatory reviews and successfully implemented a fully virtual commercial product launch in Germany.

Our strong operational performance this quarter reflects the innovation of our team and the durability and resilience of our products.

In the second quarter, Xyrem volume increased 5% compared to the same period and 29 team.

Reflecting strong patient persistency compliance and continued patient growth.

Average number of active xyrem patients increasing 3%.

15075.

Well the average number of patients on therapy increased new patient diagnoses and enrollments were impacted by cobot 19.

Patient enrollments began to decline late in the first quarter of 2020.

But they trended upward in the latter half of the second quarter.

No meaningful shifts in the payer mix during the second quarter. However, we did observed an increase in demand for patient assistance programs.

We believe new patient enrollment levels may continue to be impacted by cobot 19 during the second half of the year.

Gradually improve as more sleep centers reopened and learn to accommodate patient flow.

We're very pleased with the timely approval as I wave and we look forward to launching this important new low sodium treatment option for narcolepsy patients.

The fourth quarter.

Following the joint XY waves.

Its implementation.

We believe that Weve represents a significant advance for patients.

Become the Oxybate treatment of choice.

Launch activities will initially focus on reaching the top 1500 Xyrem prescribers.

Accounted for approximately 80% of existing Oxybate use.

Our approach would be aimed at ensuring narcolepsy treaters understand the data and as I believe label the benefits of is significantly lower sodium oxybate product for their patients.

The availability of flexible dosing in the ability to seamlessly transition existing xyrem patients <unk>.

Our goal is to have the majority of Oxybate patients onsite wave by 2023.

And for Z wave to become the Oxybate treatment of choice for all patients, including current Xyrem patients.

Patients, who previously were not prescribed xyrem based on sodium concerns and newly diagnosed narcolepsy patients.

We also expect to be able to meaningfully brought in the treated patient population.

Idiopathic hypersonic indication.

Our efforts to ensure a successful launch include obtaining strong payer coverage, providing robust patient access programs and educating patients in prescribers on the benefits of a low sodium product.

To ensure broad patient access we carefully considered the pricing of Z wave and I've made the decision to price at parity Xyrem.

Managed care team has already working with all major payers to contract for Zeit wave.

With the intention to obtain broad and timely coverage.

We will be hosting Z wave investor update webcast in the fourth quarter as we approach launch and this will include information on the treatment of narcolepsy.

Commercial initiatives and educational efforts.

Turning now to Sanofi against the backdrop of Cove at 19 and its impact at this stage of the launch.

We're pleased to physicians continue to start new patients on sonobuoy, Despite a reduction in patient office visits and new diagnoses.

We did observe a 12% increase in U.S. prescriptions compared to the first quarter of 2020, including strong patient refills.

First half 2020, net sales were 11 million.

These included inter quarter variability in gross to nets.

Expect to second half 2020 sales growth over first half 2020 to more closely track Trx growth and expect the GTN in the second half of the year to fall within the 40% to 60% analog range.

Additionally, we're pleased with the initial uptake and positive feedback from narcolepsy prescribers following our launch in Germany in May and we look forward to continue in the rolling launch.

Other European countries over the next 18 months.

As part of our launch efforts were driving awareness through digital campaigns as use of digital media has increased during cold the 19.

We're also commencing a pilot campaign through telemedicine portals, we've seen an increasing number of prescriptions and we have restarted face to face interactions with target prescribers.

Turning to the oncology portfolio I'm very pleased to give you an update on the launches that cellcom as you know that soca was approved by FDA engine for the treatment of patients with relapsed small cell lung cancer.

So could becomes commercially available became commercially available to all distributors on July 7th.

And we received orders that same day I want to acknowledge the excellent collaborative and cross functional approach of our sales medical marketing market access teams and everyone involved that prepared us for a robust.

Upset zipsor telco launch within six months of licensee in this product.

During the initial phases up sell 'cause lunch, we're focused on engaging with the top 1500 small cell lung cancer prescribers and we're seeing strong interest from physicians and a new treatment option.

Its efficacy and safety monotherapy profile.

Initial demand for its up sell could across more than 250 academic and community centers to date is very promising.

So the importance of this new indication has been reflected in the fact that NCCN quickly added sub selco to their guideline in early July following our scientific affairs teams submitting the data and the approval dossier on the same day of product approval.

That's okay as a recommended treatment for relapse small cell lung cancer patients in a preferred treatment for patients who relapse up to six months. Following prior systemic therapy. We believe that this expedited addition to the guidelines reflects a compelling clinical profile of Zeljko, along with the need for additional treatment options for relapsed.

Small cell lung cancer patients.

Now turning to Irwin Ace PBL, the owner and so manufacturer continues to have quality manufacturing issues. Given this product available availability in the U.S. market was limited to less than one week in the second quarter, we expect significant global supply disruptions.

To continue for the remainder of the year.

Related to covert 19.

Although the shortage manifests itself in our financials.

Impact to patients and their families is significantly more important. This drives are focused on bringing GCP four or five days a high quality quality recombinant asparaginase used to the market as quickly as possible.

In summary, we are on track to deliver significant near and long term revenue as we execute on up to five key launches through 2020, and 2021 to bring multiple innovative new products or indications to market.

I will now turn the call over to Rob for an update on our development programs.

Thank you Dan.

Over the past few years, we've transformed our R&D capabilities.

By adding depth to our research and development expertise.

Partnering with external collaborators innovative approaches to drug development.

Building clinical development expertise in our key therapeutic areas enhancing our regulatory affairs function and supporting robust evidence generation plans for key brands with our global Medical Affairs team.

Our goal is to continue to advance new and highly differentiated treatment options the patients in a productive and timely manner.

During the quarter, we made progress against our pipeline because we continue to focus our key priorities and mitigating the impact of cobot 19 on our R&D programs.

Our progress is building toward multiple pipeline catalyst in the second half and demonstrates our R&D productivity as we deliver key clinical data from our studies of sideways.

I think hypersound there.

That's a kallio for the prevention of acute graft versus host disease, and our plan B.L.A. submission of JCP four or five day.

Earlier, this year and based on our pivotal phase two three study.

[laughter] I'll begin our nurse science development activities with side.

We achieved the major milestone last month.

FDA approval in sideways or patient seven years of agent older for the treatment of he of cataplexy and Mds and narcolepsy.

We're pleased with the data included in the label, which we believe provides physicians with important information for initiating treatment for newly diagnosed narcolepsy patients.

As well as for patients.

Transitioning from existing along narcolepsy therapies, including Xyrem.

So I wave treatment has initiated at the same dose and regimen has sodium oxybate and the label allows for flexible dosing, including using on equal first and second doses.

Fortunately unlike desired.

As I wave label does not include a warning to prescribers to monitor patients sensitive to sodium intake, including patients with heart failure hypertension or renal impairment.

We look forward to bringing this innovative therapeutically advanced oxybate option patients later this year.

During the second quarter, our efforts were focused on ensuring patient safety and continuity in our phase three study evaluating die way idiopathic hypersound.

As a reminder, this study completed enrollment of patients in the first quarter ahead of schedule.

The study design is similar to the study was conducted in narcolepsy patients and we've included a slide in the earnings that with more detail for your reference.

Well idiopathic hypersound idea and narcolepsy or Hypersound wants disorders that share similar disease characteristics in symptoms such as excessive sleepiness.

A series of retrospective case studies I lose feminist skew published and sleep medicine in 2016.

Demonstrated that patients with idiopathic hypersound there were treated with Xyrem experience improved wakefulness similar to that seen xyrem treated patients with narcolepsy.

Additionally, improvements in sleep inertia falling asleep and sleep duration. We're also noted idiopathic hypersound the patients receiving.

Insurance claims data suggests the diagnostic prevalence of idiopathic Hypersound knits approximately 37000 patients in the U.S.

However, given the known Miss 100 diagnoses of age in addition to the lack of hefty approved therapies, we believe the unmet need maybe significantly greater.

Given our successful efforts to ensure the continuity in this study through the Cobas 19 pandemic.

Chris: and from the company, we will open up the call to your questions. I would now turn the call over to Kathy Luttrell, Head of Investor Relations at Jazz Pharmaceuticals. Thank you, Chris.

We expect topline data in the fourth quarter.

Kathy Luttrell: And thanks to those of you who joined our investor call today. Today, we reported our second quarter 2020 financial results and updated our financial guidance for 2020. The press release and the slide presentation accompanying this call are available in the investor section of our website. On the call today are Bruce Cozadd, CEO; Dan Swisher, President; Rene Gala, CFO, and Rob Iannone, Executive Vice President, R&D. Joining for the Q&A session are Kim Sablich, Executive Vice President, General Manager of North America, Phil Jochelson, Sleep and Neuroscience Therapeutic Head, Ken Boardman, Hematology and Oncology Therapeutic Head, Sam Pierce, Senior Vice President, Europe and International, Sean Mendes, Senior Vice President, Strategy and Finance, and Jed Black, our Senior Fellow, Neuroscience. I'd like to remind you that today's call includes forward-looking We encourage you to review the forward-looking statements contained in today's press release and our latest FTC disclosure documents, which identify certain factors that may cause the company's actual results to differ materially from those projected. We undertake no duty or obligation to update our forward-looking statements.

Data from our ongoing sleep medicine research for Xylene and Sanofi will be featured at the upcoming virtual and you'll sleep meeting later this month.

We've provided a list of abstract and earning slide deck for your reference.

Turning to JCP three five are highly selective modulator P type calcium channel.

For essential tremor, we will begin initiating a new healthy volunteer study this month to evaluate our modified release formulation.

We're excited to get this study underway with an approach to generate data necessary to support the planned phase to be study also protecting the safety of our phase one volunteers during this and then.

This is an important program and we're working to make progress on study start up activities. This year to enable initiation assays to be study in early 2021.

Turning to oncology at starting with Vyxeos.

We continue to evaluate vyxeos to abroad development program in multiple AML and Mds populations and settings.

The children's oncology group initiated a phase three study last month, comparing vyxeos to standard chemotherapy.

Children and young adults to the age 22.

Hey, Novo non split three mutant and now.

Kathy Luttrell: On this call, we discuss non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures. Discussions on this call are included in today's press release and slide presentation available on our website. I'll now turn the call over to Bruce. Thank you, Kathy. Good afternoon, everyone.

And importantly, we entered into a cooperative research and development agreement with the National Cancer Institute to collaborate on the Nonclinical clinical development Vyxeos.

Turning to this itself.

We are actively working on the development program for said Salka in collaboration with our partner Farm Amar.

Bruce C. Cozadd: And thank you for joining us. I'll start by providing an update on the significant progress made this quarter, demonstrating the strength and value of our underlying business. Renee will then provide a financial update. Dan will provide an overview of our commercial performance in neuroscience and oncology. And finally, Rob will provide an update on our R&D programs. I'm proud of the strong financial and operational results we delivered in the second quarter.

Areas of interest include evaluating steps alka in small cell lung cancer in combination with other therapies and both first line and in the post Pat platinum setting as well as in other tumor types.

In the relapse small cell lung cancer setting in combination with immunotherapy two investigator initiated phase one size two studies are underway.

One is in combination with Pembrolizumab and another with the tease it wasn't that.

Bruce C. Cozadd: While COVID-19 brought continued challenges, our employees never lost focus, and we have continued to advance our strategy, including two product launches in May and July. Our successes in the quarter align nicely with the important goals and milestones we set for the company at the start of the year, aimed at further transforming our business. Despite COVID-19, we made substantial progress across our regulatory, commercial, and R&D operations, positioning us to demonstrate commercialization excellence and agility with the execution of up to five product launches in 2020 and 2021, with FDA approval of CyWave for the treatment of cataplexy and EDS in narcolepsy. We continue to demonstrate the durability of our OxyBate franchise. We have been working for nearly a decade to develop this novel formulation, which has a 92% reduction in sodium compared to Xyrum. The XyWave label, unlike XyRM, carries no sodium content warning and offers a significant benefit for narcolepsy patients who would otherwise shoulder the burden of lifelong exposure to high sodium intake.

We're looking forward to the phase three results of the Lantus trial in the second half of 2020.

Well you weightings of Salka in combination with doxorubicin.

Bruce C. Cozadd: XyWave is the first treatment exclusively developed from concept through clinical research to production by Jazz and underscores the transformation of the company's research and development capabilities. Xyrem is an important scientific advance in the treatment of narcolepsy and reflects our deep commitment to improving the lives of people living with sleep disorders. We expect to launch Xywave in the U.S. during the fourth quarter. In addition, we expect top-line data from our Phase 3 Pivotal Study of Xi Wave in Idiopathic Hypersomnia, or IH, in the fourth quarter of this year and are targeting a U.S. launch of Xi Wave in this new indication in late 2021, following a supplemental NDA submission and approval. Our oncology franchise is poised to generate substantial near and long-term value. We delivered a significant achievement for patients and shareholders with the U.S. approval and launch of Zepzelka, the first new treatment for relapsed small cell lung cancer in decades, adding another important and differentiated therapy to our oncology portfolio. Zepzelka received FDA approval in June, two months ahead of its PDUFA date, and it was launched last month.

Turning to full JCP, four or five eight or recombinant her Winnie asparaginase.

Enrollment in our single arm pivotal phase two three study patients with MLL or LPL following hypersensitivity to equalize derived asparaginase is ongoing.

Despite the cobot 19 environment, we have activated nearly all the planned clinical trial sites.

JCP four or five eight remains a priority development program for us given the inconsistent availability of Irwin nice reliable and consistent supply recombinant Nani coal I drive disparages urgently needed.

We are focused on bringing JCP four or five eight patients as quickly as possible.

Within objective of launching in the U.S. and mid 2021.

I'll now turn the call over to Bruce for closing remarks.

Thanks, Rob in closing I'm proud of our teams exceptional efforts, which produced strong financial and operational results. This year. Despite the unprecedented global health crisis with three major regulatory approvals to product launches and continued advancements in our development pipeline, we have made significant progress toward our 20.

20 objectives and are well positioned for the future importantly, as we look to our next phase of growth, we view, our emerging portfolios and no seat zilkha XY wave and JCP for 58, as representing billions of dollars of revenue potential for the company and a meaningful opportunity how.

Crew and transform lives of patients. Thank you for joining us on the call today I'll now turn the call back over to Kathy for Cuba.

[noise] expertise, we kindly request that you limit yourself to one question during this call.

We're going to be looking and we're going to this means the one she said that everyone has an opportunity to add question. Today. So we will gladly address any additional questions. After the call or you can always reenter the queue. So with that said operator, please open the lines for questions.

Thank you and as a reminder, ladies and gentlemen to ask a question you need to press star one of your telephone to withdraw your question. Please press the pound key please demo we can probably acuity roster.

And our first question comes from the line of Brendan folks with Cantor Fitzgerald. Your line is now open.

Bruce C. Cozadd: This was made possible through the tremendous efforts of our oncology team, quickly making this vital new treatment option available to patients and educating the medical community about XepXelka's profile. XepXelka is an important new growth driver in our expanding oncology business, and we are focused on fully realizing its significant value potential. The approval of ZyWave and the launch of ZepZelka are the most recent examples of our proven development and commercialization capabilities, which, since 2014, have resulted in nine major product approvals and commercial launches, as well as a tripling of development pipeline projects. We continue to expand our portfolio of assets and remain focused on our purpose as an organization. We innovate to transform the lives of patients. At the same time, we continue to focus on maintaining operational efficiency, strong margins, and thoughtful capital allocation.

Hi, Thanks, taking my question and congratulations on all the progress this year ended the quarter and I'm going to lock in Dhaka can you talk about your expectations for the Atlantis trial and what are your range of trace threshold for successful outcome here I know the Pos you've talked about this trial setting has a consent.

The trial, even if it's not that they can you elaborate a little bit more around that scenario and then if Atlanta knock on cemetery. How soon should we expect you to begin a trend compared to treat trial off the monotherapy. Thank you.

Okay, maybe Rob I'll ask you to comment on this from a regulatory perspective, and then Kim if you want to jump in with any implications to a commercial that would be great Rob.

So as I. Thank you Bruce as I said in the past Atlanta's trial actually predated the decision to move forward with a single arm monotherapy.

Bruce C. Cozadd: We have driven significant and sustainable profitability and robust cash flow with cash from operations of over $450 million in the first six months of the year. Together with our strong balance sheet and significant liquidity, this focus on efficiency and cash generation has allowed Jazz to make value-enhancing investments while effectively managing expenses and continuing to evaluate internal and external opportunities to expand our portfolio and broaden our revenue base. Over the past year, we've continued to enhance our leadership, adding a number of executives with a broad range of expertise and industry experience to strengthen our capabilities to innovate and execute on our corporate strategy. Most recently, we welcome Kim Sablich, who joined us June 1st as Executive Vice President, General Manager of North America.

South approval in second line. It was designed based on some preliminary phase one two data in combination with dock showing promising results.

And that say street was initiated on its own.

Once our partner pharma more engaged the sta about the possibility of approval accelerated approval based on single arm monotherapy data. There was a discussion about weather lantus could serve as a confirmatory trial, even though it wasn't designs such and the guidance we've gotten this that potentially could and ultimately dips.

Bruce C. Cozadd: Kim joins Jazz with a track record of leading successful commercialization teams, most recently at Myovant Sciences and previously at Glasso-SmithKline and Merck. With this experienced executive leadership team, we are well positioned to grow our business and deliver significant value to our shareholders. This is an important year for the transformation of Jazz.

What we observed there.

And we maintain that it doesn't necessarily need to be a stat sig resolve it just needs to be confirming what we observed in the monotherapy trial.

Somehow that's not ultimately confirmatory then we would.

Plan to.

Initiate a confirmatory trial.

And the exact timing and detail so that will be subject to regulatory interactions.

Thanks, Robin and I'll, just say to people, our excitement about subsalt and the launch and our early uptake is really revolving around its strong profile as a monotherapy and can maybe you can talk a little bit about why we're excited about that.

Renee Gala: With five product launches on track through 2021 and multiple initiatives at key inflection points, the team is aligned and focused on execution as we strengthen our business. I'll now turn the call over to Rene for a financial update. Thank you, Bruce.

Sure Great. So early weeks here, we're seeing very positive customer responses and very encouraging failed Oh, we're seeing strong sales both in academic and community setting a and another very positive signal that is over 20, 40% of accounts, who ordered in the first two week have already played.

Renee Gala: Our strong operational and financial performance in the second quarter reflect the resilience of our business despite COVID-19 and focused efforts towards our most important value drivers. In the second quarter, our total revenues were $562 million, an increase of 5% over the same period last year and led by our neuroscience products, which contributed double-digit growth of 10%. Our oncology portfolio experienced a low single-digit decline due primarily to lower demand related to the impact of COVID-19, a trend that reversed towards the end of the second quarter. Turning to operating expenses, during the second quarter, our adjusted SG&A expenses increased 10% to $170 million, and adjusted R&D expenses increased 26% to $71 million over the same period last year, reflecting increased spending towards both our commercial launch activities as well as advancing our pipeline.

A second order.

Well, we're certainly facing challenges getting face to face assets with our customers due to Covance news about deltas availability and the inclusion in the NCCN guidelines is generating a lot of physician and account interest and we're very confident that access and effectiveness of our outreach to customers is going to increase.

With our full sales team, including our existing representative and a nuclear failed Paris, just completing training most of whom have prior experience in a small cell lung cancer space and bring with them on existing customer relationships. So while it's too early to know the real world experience. Our customers are seeing was that delta is.

Year to us that physicians and patients are both very eager asked for a new treatment option and particularly one with the type of clinical profile demonstrated in our clinical study.

[music].

Renee Gala: It's important to note that our second quarter combined adjusted SG&A and R&D expenses decreased by 10% relative to the first quarter as we further prioritized our investments in response to the pandemic. Adjusted net income for the quarter was $207 million, or $26 million lower than the same period last year, primarily impacted by certain tax-related expenses recognized in the current quarter.

Thank you.

Our next question comes from a line of humor Refaat with Evercore Evercore. Your line is now open.

Hi, Thanks, so much for taking my question I actually wanted to continue on the Liberty next it didn't seem for a second.

Bruce It seems like this trial Atlanta has been wrapped up for a few months now so just trying to understand pushes and pulls behind the data disclosure why it's not out and.

Not only is a clin trials that suggests it's been wrapped up it's also in the FTC review, where some of the submitted document. The just the trial was done by February So I'm trying to understand just the timing because it sounds odd that's been done, but it's not out and on that same note. There was also a provisions in the job RMR agreement, whereby Florida FDA approval certainly.

Renee Gala: Our adjusted net income for the first six months of the year was $233 million, reflecting a decrease of $164 million compared to the prior year. I'll remind you that we incurred a $200 million upfront payment related to Zep Celka in the first quarter and that, starting this year, we no longer exclude upfront and milestone payments from our adjusted net income. Turning to guidance, we are increasing our total 2020 revenue guidance to a range of $2.225 to $2.325 billion, which represents an increase from our prior guidance of $85 million at the midpoint. The top-line increase is driven by the strength of the underlying business, lower-than-anticipated COVID-19 impact to date, and the early approval and launch of Zep Celka. Our guidance includes the expectation that health care systems will continue to better manage patient care through COVID-19. However, there is continued uncertainty about the scope and duration of the pandemic.

No. It doesn't Atlanta is how can be done could you walk us through what that specifically was and where they're components of Atlanta that were already used afford the FDA approval that can vary from here.

Renee Gala: In the neuroscience area, we are increasing our 2020 Net Sales Guidance to a range of $1.725 to $1.8 billion, with the increased guidance taking into account factors such as the reopening of sleep centers leading to increased diagnoses and patient enrollment, lower than anticipated impact on our government and patient assistance programs, and the gradual return of in-person salesforce interaction. With the addition of PsiWaves, we continue to believe that our Oxibate business, including future royalties from authorized generics and potential upside from an IH indication, will remain a key revenue contributor for many years. In the Oncology area, we are increasing our 2020 Net Sales Guidance to a range of $445 to $525 million, reflecting early approval and launch of Zefzelka and improved trends for Defitilio and Vixio.

Yes so.

An opening comment remember that we're partnered with this product with pharma, who was overseeing the prosecution of the N.D.A. and the Atlanta is trial.

So I'm not going to.

Say much more than corn Lamar I have said, but Rob do you want to generally address.

Timing of completion of Atlanta Us I I'm not sure Gonna say anything about the impact on the model therapy approval since that approval did come through early.

Rob Yes, yes, it would just reiterate that this trials being run by Fibermark our collaborators.

It's an event driven trial and so the overall survival and needed to accumulate and then try went into a phase of.

Cleaning data and ultimately topline results.

And we understand that that should be expected in the second half.

This year.

Thank you.

Next question comes from the line of Gary Nachman with BMO capital markets. Your line is now open.

Hi, good afternoon.

Die wave and congrats on that approval or how do you expect payers will handle the two products with pricing at parity have you been preparing payers for this transition from Xyrem.

And what prelaunch activities or you're planning on doing on the low sodium benefits to help facilitate uptake and to try and get to the majority of that switch by 2023.

Dan talked about thank you.

So maybe I'll ask him to start and then Dan if you want to jump in feel free.

Renee Gala: We are maintaining our adjusted SG&A guidance and will continue to make disciplined investments to ensure successful product launches. Based on our improved top-line expectations and our focus on advancing our research and development pipeline, we are increasing our adjusted R&D guidance range by $25 million at the midpoint to accelerate our investment in certain activities, such as our planned JZP 385 Phase 2B study for essential tremor. Additionally, due to the strength of our operations combined with our outlook for the rest of the year, we are increasing our 2020 guidance for non-GAAP adjusted net income to a range of $670 to $730 million, or $11.90 to $13 per share, which equates to an increase of $35 million or $0.57 per share at the midpoint.

Sure. So as Dan mentioned earlier, we are very focused on ensuring in abroad and timely coverage with our commercial payers, we basically want to remove product assets is an issue in allowing prescribers to true they wait for either existing or the new narcolepsy patients and we're out there.

Today already engaging with payers in preparation for the launch and we've been out there prior to that in terms of educating and disease wise to set ourselves up for the launch. So again, we've losh die way that parity pricing after xyrem and we're feeling very confident that that's going to help us achieve our assets.

It's pretty rapidly.

Thanks. Thanks, Kevin This is Dan just adding onto that as many of you will remember as we were launching Sanofi, we started to engage with payers and establish contracts and relationships with them.

Both for Sanofi, but also for Xyrem and so it's very natural now for us within the portfolio to transition to.

Renee Gala: Within the quarter, we took the opportunity to further improve our financial flexibility by issuing a billion dollars of exchangeable senior notes due 2026, with a portion of those proceeds going towards repurchases of our 2021 notes. Between our financing activities and strong cash flow generation, we ended the quarter with cash and investments of $1.7 billion and borrowing capacity under our revolver of $1.6 billion, increasing our capacity for a broader set of corporate development opportunities and positioning us well to execute on our near and long-term strategies.

Which we believe is the treatment of choice.

And at parity access should be a readily taken up in a timely way.

Okay, and other prelaunch activities and if you could comment on that in terms of lets turn benefit yeah, we're going to we're going to get into more detail. Obviously in our webcast in October but you know we're turning our field medical market access teams are fully over to you know focused on sideways and.

Weve, obviously been presenting and publishing a lot of data on onsite ways answer the background as co morbidities and the burden of disease for narcolepsy patients. So.

Daniel N. Swisher: As we move forward, we are focused on the disciplined deployment of capital to enhance our portfolio with targeted and durable assets through both internal and external innovation, along with corporate development activities. Doing this well should enable us to strengthen and diversify our long-term revenue base, which we expect to grow in 2021 and in 2022. In addition, with our current portfolio, we anticipate nearly 50% of our 2022 revenues to be derived from products launched in 2019. As we progress through the remainder of 2020 with a healthy balance sheet, a clear set of objectives, and a strong team to execute, we are well positioned to generate value for patients and for our shareholders. I'll now turn the call over to Dan. Thanks, Rene.

It's really just pushing on those efforts and as we get closer to Q4 with Rems implementation, you'll see much more and we'll go into that detail in Q4.

I'll just add on Gary that you know as Dan pointed out the.

Couple of months it takes to get to a full rems implementation gives us an unusual period of time, what we have an approved label.

And we know exactly what we can educate around and so we're going to do our best to do that including through some partnerships we have with other organizations.

Who care about the long term health cardiovascular cardio metabolic health of narcolepsy patients with other population so more to come over the upcoming months.

Thank you.

Next question comes from the line of David Amsellem with Piper Sandler Your line is open.

Thanks, So on ons I live I, just wanted to get more.

Daniel N. Swisher: Recently, we achieved multiple key objectives across our commercial, regulatory, and R&D organizations, including two FDA approvals and product launch, as well as the advancement of our key clinical programs. We're pleased with the agility of the team as they quickly pivoted to virtual engagements with physicians and payers, and Mitigated Challenges with Conducting Clinical Studies and Regulatory Review, successfully implemented a fully virtual commercial product launch in Germany. Our strong operational performance this quarter reflects the innovation of our team and the durability and resilience of our products.

More of a window into your thought process regarding pricing.

The market overall, though the long term becoming more varied.

You know authorized generics command as the other del products is lake Axis and no see.

Just wondering if they would have made sense to price, so anyway, but something of a discount to xyrem.

But I wanted to get your thought process as to why you chose parity pricing and why you think that's going to be winning strategy. Thanks.

Dan do you want to take that yeah sure Yeah, no <unk> or overall objective is of course, we're delivering value in a significant a dance and treatment options.

Daniel N. Swisher: In the second quarter, Xyron volume increased 5% compared to the same period in 2019, reflecting strong patient persistence, compliance, and patient growth, with the average number of active Xyrem patients increasing by three. 15,075, while the average number of patients on therapy increased. Patient Diagnoses and Enrollments were impacted by COVID-19. Patient enrollments began to decline late in the first quarter, but they trended upward in the latter half of the second quarter. There were no meaningful shifts in the payor mix during the second...

Relative to what's on the market today, a young particular relative to Xyrem and a and other agents and so we believe this strategy will.

I will get us broad and and timely coverage and then.

Really establishing the low sodium benefit for patients.

And we get the physician education to support both the adoption of Xyrem patients over to sideways patients who could have been candidates for JUXTAPID therapy, but because of the sodium concern didn't go onto Xyrem now available for Z wave and then really to the you know top of mind for treatment of choice.

Daniel N. Swisher: However, we did observe an increase in demand for patient assistance. We believe new patient enrollment levels may continue to be impacted by COVID-19 during the second half of the year but will gradually improve as more sleep centers reopen and learn to accommodate patient flow. We're very pleased with the timely approval of Zywave, and we look forward to launching this important new low-sodium treatment option for narcolepsy patients in the 4th quarter following the joint XiWave, XiREM, and REMS implementation.

He's on newly diagnosed patients and we believe the parity pricing that launch gets a sir.

Thank you.

Thank you and our next question comes from the line Ami Fadia would SDB Leerink. Your line is now open.

Hi, good evening congrats on the nice quarter. My question is on the Ivy.

But if I think hypersound now the primary endpoint in the study that you have ongoing is excessive.

Daniel N. Swisher: We believe that XyWave represents a significant advance for patients and will become the OxyBay Treatment of Choice. Launch activities will initially focus on reaching the top 1,500 Xyron prescribers, accounting for approximately 80% of existing OxyBate users.

[laughter] core.

And I think that baseline core for patients with the file above 11, what level of change do you believe would be clinically meaningful for those patients and if you can shed any beans around.

Daniel N. Swisher: Our approach will be aimed at ensuring narcolepsy treaters understand the data in the Zywave label, the benefits of a significantly lower sodium oxalate product for their patients, the availability of flexible dosing and the ability to seamlessly transition existing XyRM patients to XyWay. Our goal is to have the majority of oxybate patients on Zywave by 2023, and for Zywave to become the OxyBait treatment of choice for all patients, including patients who previously were not prescribed Xyrem based on sodium concerns and newly diagnosed narcolepsy.

Probably not the study that would be helpful.

And just as a follow up to the audio questions on diabetes couldn't just give us a sense of do you expect the gross to net.

Yes, I need to be higher than that for xyrem and have been quantified the.

A number of patients that couldn't get side.

Because of the high for them in boss. Thank you.

Well Ami you get credit for a multipart question. So let's first go to IDH jet do you want to comment a little bit on the the trial.

Sure.

Daniel N. Swisher: We also expect to be able to meaningfully broaden the treated patient population with an idiopathic hypersomnia indication. Our efforts to ensure a successful launch include obtaining strong payer coverage, providing robust patient access programs, and educating patients and prescribers on the benefits of a low sodium product. To ensure broad patient access, we carefully considered the pricing of Xiwave and have made the decision to price it at parity to Xyron. Our managed care team is already working with all major payers to contract for Zywave, with the intention to obtain broad and timely coverage. We will be hosting a Zywave Investor Update webcast during the fourth quarter.

I used trial was run similar to the most recent XY wipro in narcolepsy that is to say following the screening period patients were in an open label fashion titrated up two efficacy and Tolerability.

And then a stable those period and then what through randomized withdrawal period.

Active versus placebo drug for two weeks period [laughter].

You're correct the assess preliminary assessment and I wish the study is the upper sleepy the skill.

And studies, all with respect to clinical relevance with respect your question suggested a 2.2.

It's somewhere between a two to two to 2.75.

Point change, yes. This is clinically meaningful with respect to what we would anticipate.

Daniel N. Swisher: As we approach launch, and this will include information on the treatment of narcolepsy, Commercial Initiatives, and Education. Turning now to... Against the backdrop of COVID-19 and its impact at this stage of the launch, we are pleased that physicians continue to start new patients on CENOSI, despite a reduction in patient office visits and New Diagnosis. We did observe a 12% increase in U.S. prescriptions compared to the first quarter of 2020, including strong patient refills. First half 2020 net sales were $11 million, and this included inter-quarter variability in gross to net.

Given the data that we have so far in the case series and the single cases, as well as clinical experience, but it doesn't really change.

Well within.

Well, well within or beyond that range and.

With respect to your question about powering the study the study was powered for.

90%.

Powering and so we do we are excited about.

The opportunity.

Using as always.

This patient population.

Oh good.

No the solid efficacy.

Daniel N. Swisher: We expect second half 2020 sales growth over first half 2020. To more closely track TRX growth and expect the GTN, Additionally, we're pleased with the initial uptake and positive feedback from narcolepsy prescribers. Following our launch in Germany in May, and we look forward to continuing the rolling launch in other European countries over the next 18 months.

Dan maybe over to you on the gross to net and then the additional opportunity for patients.

Who felt the existing salt load and xyrem might be too high yeah. No. Good question. So on the gross that obviously, we're early in the discussions with payers, but given where we landed with the xyrem and the advance we feel we've got was I ways and where we're starting.

Yeah, we would expect to be roughly the same ballpark and we'll have more detail is those contracts.

Daniel N. Swisher: As part of our launch efforts, we're driving awareness through digital campaigns as the use of digital media has increased during COVID-19. We're also commencing a pilot campaign through telemedicine portals where we have seen an increasing number of prescriptions, and we have restarted face-to-face interactions with target prescribers. Turning to the oncology portfolio, I'm very pleased to give you an update on the launch of Zebzelka. As you know, Zebzelka was approved by FDA in June for the treatment of patients with relapsed small cell lung cancer. Zepsoca became commercially available became commercially available to all distributors on July 7th, and we received orders that same day.

Actually get finalized a with regard to patients who could be candidates for oxybate therapy, but because of the sodium concern are not going on sodium oxybate and what could be available for us to access overtime for his I wave, we continued to triangulate on about 20%.

The narcolepsy patients.

That's a.

Market research, we've been conducting as well is doing some close examination of claims data on patients who have cardiovascular risk.

What that looks like in the general narcolepsy population, what we see with a sovereign patients today.

Daniel N. Swisher: I want to acknowledge the excellent, collaborative, and cross-functional approach of our sales, medical, marketing, market access teams, and everyone involved that prepared us for a robust ZepZelka launch within six months of licensing this product. During the initial phase of ZepZelka's launch, we're focused on engaging with the top 1,500 small cell lung cancer prescribers, and we're seeing strong interest from physicians in a new treatment Initial demand for Zevzelka is across more than 250 academic and community centers.

Yeah.

And I'm, just going a step edit and crystal.

We weren't saying, 20% of all narcolepsy patients 20% of patients that doctors would have considered for oxybate.

Don't get it because of this cause alone it's slightly different statistic.

That's very helpful. Thank you.

Thank you enter next question comes from the line Oh, My Gosh, two Ari with Wolfe Research. Your line is now open.

Hi, This is Andrew do not for a cash you got to publish data in the past showing that at one year over 50% of patients discontinued or cyber regimen. How do you think this kind of high discontinuation rate is going to affect the 258 launch and wish proportion of these discontinuations are real versus just patient cycling on and off and then secondly, you guys noted that.

Daniel N. Swisher: The data is very promising, and the importance of this new indication has been reflected in the fact that NCCN quickly added Zebzelka to their guideline in early July, following our scientific affairs team submitting the data and the approval dossier on the same day of product approval. Zepzoka is a recommended treatment for relapsed small cell lung cancer patients and a preferred treatment for patients who relapse up to six months following prior systemic therapy. We believe that this expedited addition to the guidelines reflects the compelling clinical profile of Zebzelka along with the need for additional treatment options for relapsed small cell lung cancer patients. Now turning to Irwin Ace, PBL, the owner and sole manufacturer, continues to have quality and manufacturing issues.

New products are gonna represent about half of 2022 revenue and that's not consensus models right now which products is consensus most under appreciated.

[music].

Andrew good questions on on discontinuation you know, we do see discontinuation often when people are starting oxybate therapy.

Particularly over that titration period over the first few months.

Remember here, we're talking about the potential for patients to move from Xyrem directly to 258. These are oxybate experienced patients and we certainly saw that in some of the data we released at World Sleep Congress in September of last year.

Daniel N. Swisher: Given this, product availability in the U.S. market was limited to less than one week in the second quarter. We expect significant global supply disruption to continue for the remainder of the year unrelated to COVID-19. Although the shortage manifests itself in our financials, the impact on patients and their families is significantly more important. This drives our focus on bringing JCP-458, a high-quality recombinant asparaginase, to the market as quickly as possible. In summary, we are on track to deliver significant near and long-term revenue as we execute on up to five key launches through 2020 and 2021 to bring multiple innovative new products or indications to market. I will now turn the call over to Rob for an update on our development program. Thank you, Dan.

In terms of a part of our trial that had patients move over dose for dose easily. So I think it is a very different prospects. There. So naive patients who maybe have never been on Xyrem I would expect some discontinuation rate over that early period, we found that over time, it's important to doctors set the right.

To expectations for patients in terms of while still experience as I trade on dose.

Both in terms of at the answer.

You're right to point out that we do get cycling some patients back on to.

Back onto the time to time [noise].

And in terms of our confidence revenue potential for our new product launches you know our market our our forecast that we see published vary considerably about how they take into account not only is lie ways, but whether they credit for idiopathic hyper samia JCP for 58 isn't in ever.

Robert Iannone: Over the past few years, we've transformed our R&D capabilities by adding depth to our research and development expertise, partnering with external collaborators on innovative approaches to drug development, building clinical development expertise in our key therapeutic areas, enhancing our regulatory affairs function, and supporting robust evidence generation plans for our key brands with our global medical affairs team. Our goal is to continue to advance new and highly differentiated treatment options for patients in a productive and timely manner. During the quarter, we made progress against our pipeline as we continued to focus on our key priorities and mitigate the impact of COVID-19 on our R&D program. Our progress is building toward multiple pipeline catalysts in the second half and demonstrates our R&D productivity as we deliver key clinical data from our studies of zyways and idiopathic hypersomnia. Gafatelio for the prevention of acute graft-versus-host disease and our planned BLA submission of JCP458 as early as year-end based on our Pivotal Phase II-III study.

The ones model so.

These are all significant opportunities as I waves absaloka for this year's launches and idiopathic hyper sanmina and four or five eight or potential 2021 launches and then of course, we're excited about sonos these potential as well.

Awesome. Thank you.

Thank you.

Next question comes from the line of Gregg Gilbert with Suntrust. Your line is now open.

[noise]. Thank you [noise].

It's truest at this point.

Looks like weight kicks is off to a decent start Bruce according to what S. One I'm just curious if you are your team it set any updated thoughts on where or how that product is being used 10.

Do you see the potential addition of cataplexy to its label should that occur.

It's a meaningful change to the competitive profile. Thank you.

[noise], Yeah, Greg and I was going to point out the name change congratulations on that and we'll get that right from now on a Dan overview.

Yeah, and as all of you know oxybate therapies, I run than particulars than standard of care and really for a certain types of patient that's gone through a number of other therapies. The only approved therapy for both the E.D.S. and cataplexy and so despite sort of way cooks being on the market.

Robert Iannone: I'll begin our neuroscience development activities with Xyla. We achieved a major milestone last month with FDA approval of ZyWave for patients seven years of age and older for the treatment of cataplexy and EDS in narcolepsy. We are pleased with the data included in the label, which we believe provides physicians with important information for initiating treatment for newly diagnosed narcolepsy patients, as well as for patients transitioning from existing narcolepsy therapies, including Zyra. Thigh wave treatment is initiated at the same dose and regimen as sodium oxidate, and the label allows for flexible dosing, including using unequal first and second dosing.

Robert Iannone: Importantly, unlike XyRM, the XyWave label does not include a warning for prescribers to monitor patients sensitive to sodium intake, including patients with heart failure, hypertension, or renal impairment. We look forward to bringing this innovative and therapeutically advanced Oxybate option to patients later this year. During the second quarter, our efforts were focused on ensuring patient safety and continuity in our Phase 3 study evaluating Zywave and idiopathic hypersomnia. As a reminder, this study completed enrollment of patients in the first quarter ahead of schedule. The study design is similar to the study we conducted in narcolepsy patients, and we've included a slide in the earnings deck with more detail for your reference. Both idiopathic hypersomnia and narcolepsy are hypersomnolence disorders that share similar disease characteristics and symptoms, such as excessive sleepiness.

And you know they said in their own S, 170% payer coverage and definitely strong promotional push yeah, we haven't seen any impact to our business and you know up through co that sort of take of it out of the equation.

Really were on the same baseline of fees and refills and.

And the base business and of course, we've got broad and good coverage with payers. So yeah. We think the products really exist in different continuing for patient care.

And we're very confident with both what we've got to offer free D.S. with Sanofi for narcolepsy, which is.

Done very well and we've had really nice refills through 'cause it because the product is working well for those patients and then for those who need a strong cataplexy therapy. In addition to benefit now transitioning over to as I always I'm. So we feel good about the product offering.

Thanks in personal hurt feelings about the name you have a lot of new names to keep up.

No problem and just as a reminder, we did take up revenue guidance in a in sleep neuro on this call. So we do feel that business is doing very well.

Thank you and our next question comes from the line of velocity precise with Barclays. Your line is now.

Hi.

Thank you question so.

This is just going back to something that goes Oh free cash flow generation continues to be very strong. It's a great problem to have which will also begin the question on what will you be planning to dealing with it and still then showed that returns profile is held the I'm just as it went on to that.

<unk>.

Robert Iannone: A series of retrospective case studies by Luce Aminescu, published in Sleep Medicine in 2016, demonstrated that patients with idiopathic hypersomnia who were treated with Xyrem experienced improved wakefulness similar to that seen in Xyrem-treated patients with narcolepsy. Additionally, improvements in sleep inertia, falling asleep, and sleep duration were also noted in idiopathic hypersomnia patients receiving Insurance claims data suggest the diagnostic prevalence of idiopathic hypersomnia is approximately 37,000 patients in the U.S.

Great.

Positions being built into the.

Thanks.

Yeah, maybe I'll hand that went over to Renee.

Sure, Yeah, and if I could ask you to repeat the second part of your question I Didnt hear the second part you cut out after the free cash flow generation part.

Just a do I fight, but I was little bit therefore claimed dual and who knows you on July 29 Dnbi.

I don't I, let me know.

No I actions, but into this but I'll.

So with I'll answer that question first with respect to 2022 and looking at our projected revenue that is based on our current profile of products. Our current portfolio with the products launched from 2019 forward make.

Robert Iannone: However, given the known myths and underdiagnoses of IH, in addition to the lack of FDA-approved therapies, we believe the unmet need may be significantly greater. Given our successful efforts to ensure continuity in this study through the COVID-19 pandemic, we expect top-line data in the fourth quarter. Data from our ongoing sleep medicine research for Zywave and Sinose will be featured at the upcoming virtual annual sleep meeting later this month. We've provided a list of abstracts in the earnings slide deck for your reference. Turning to JCP385, our highly selective modulator of T-type calcium channels, for Essential Tremor.

Hang up approximately 50% of that so that would be Sanofi XY wave.

Four or five eight as well as that sell cars and then in terms of corporate development and how we leverage our cash flow you know clearly as we look at broadening and enhancing our portfolio. We look at both our internal innovation in terms of programs. We can invest 10, but also important.

External opportunities with the cash balance the leverage capacity, we have we do have the opportunity to do more meaningful corporate development transaction.

Robert Iannone: We will begin initiating a new healthy volunteer study this month to evaluate our modified release formulation. We're excited to get this study underway with an approach to generate data necessary to support the planned Phase 2B study while also protecting the safety of our Phase 1 volunteers during this pandemic. This is an important program, and we are working to make progress on study startup activities this year to enable initiation of a Phase 2B study in early 2021. Now, turning to Oncology and starting with Fixio. We continue to evaluate Vixios through a broad development program in multiple AML and MDS populations and settings. The Children's Oncology Group initiated a Phase 3 study last month comparing Vixios to standard chemotherapy for children and young adults up to the age of 22 with De Novo non-Flip 3 mutant AML.

We have the opportunity to think about leveraging up quite a bit given our current leverage profile for the REIT transaction of course transactions that have the opportunity to be more transformational in nature or fewer and far between but that's certainly an important part of our strategy which is.

Leveraging that cash flow investing in the internal portfolio looking for great opportunities for external innovation, such as that Selco, which was not an acquisition, but a great opportunity to bring in a late stage near market asset to be able to put that into our portfolio and very quick.

We'd be ready to launch.

Thank you.

Our next question comes from a lot of Ronny Gal with bear with Bernstein. Your line is now open.

Robert Iannone: And importantly, we entered into a cooperative research and development agreement with the National Cancer Institute to collaborate on the non-clinical and clinical development of Subselca. Turning to Subselca, we're actively working on the development program for Subselca in collaboration with our partner, Pharmamon. Areas of interest include evaluating Zefzalka in small cell lung cancer in combination with other therapies in both the first line and in the post-platinum setting, as well as in other tumors. In the relapsed small cell lung cancer setting, in combination with immunotherapy, two investigator-initiated Phase 1-2 studies are underway.

Hi, good afternoon, everybody congratulations nice quarter on question on 385, now that you seem to have kind of got your heads around.

Next trial you just.

Little bit of feel for what that trial would look like in terms of science and points and more importantly timing to completion and will it be a trial you could potentially summit.

Yeah, let me hand that over it up.

Yes. Thank you so.

We we have had the opportunity to get feedback from the FDA and we do believe that the space to be trial will contribute to the registration package Wong with additional data.

Robert Iannone: One is in combination with pembrolizumab and another with atezolizumab. We are looking forward to the Phase 3 results of the ATLANTIS trial in the second half of 2020, evaluating Vifzelka in combination with doxorubicin. Turning to JCP458, a recombinant Erwinia asparaginase, enrollment in our single-arm pivotal phase 2-3 study in patients with ALL or LBL following hypersensitivity to E. coli-derived asparaginase is ongoing. In spite of the COVID-19 environment, we have activated nearly all the planned clinical trial sites. JCP 458 remains a priority development program for us. Given the inconsistent availability of Irwinase, a reliable and consistent supply of recombinant, non-E. coli-derived asparaginase is urgently needed.

On on safety.

As you know we are developing a new formulation for once daily administration and that's in testing as of this month.

Healthy volunteers.

And elaborate.

[music].

We haven't we haven't said any details yet about the fact design of the trial.

At this point, we're still finalizing some some of that.

Thank you broke up just a little bit there makes your answer your question.

Operator, I think we're ready for another question.

Robert Iannone: We are focused on bringing JCP458 to patients as quickly as possible, with an objective of launching it in the U.S. in mid-2021. I will now turn the call over to Bruce for closing remarks. Thanks, Rob.

Thank you in our next question comes from Annabel Samimy with Stifel. Your line is now open.

Hi, Thanks for taking my question congratulations on a quarter I'm just in oncology area. Once that's a couple of questions are unclear itself. There's clearly a lot of excitement among chaos and we still continue to get their hands on the drug in admittedly.

Bruce C. Cozadd: In closing, I'm proud of our team's exceptional efforts, which produced strong financial and operational results this year despite the unprecedented global health crisis. With three major regulatory approvals, two product launches, and continued advancements in our development pipeline, we have made significant progress toward our 2020 objectives and are well-positioned for the future. Importantly, as we look to our next phase of growth, we view our emerging portfolio of Cenosi, Zapzelka, Zywave, and JCP458 as representing billions of dollars of revenue potential for the company and a meaningful opportunity to improve and transform the lives of patients. Thank you for joining us on the call today. I'll now turn the call back over to Kathy for Q&A. Thanks, Bruce.

You know one thing they did say that it was not as well known in the community setting. So can you just talk about.

Some of the educational efforts you might have for the community setting.

And is that already starting to be taking care of with NCCN guidelines and they quickly on four or five they can you just remind us the timing of the interim analysis for that program is there any kind of potential for halting the trial early and filing that thanks.

Kim do you want to talk a little bit about our efforts are rounds up Selkirk.

Yes, sure. So it's all hands on Dec right now.

Kathy Luttrell: We kindly request that you limit yourself to one question during this call. We're going to be looking, and we're going to be listening to you, so that everyone has an opportunity to ask questions today. So we will gladly address any additional questions after the call, or you can always re-enter the queue. So with that said, Operator, please open the line for questions. Thank you. And as a reminder, ladies and gentlemen, to ask a question, you need to press star one on your telephone.

Given that we're in a co that environment. Our team has been very active in both the digital basic outreaching through email have had some good responses back in terms of appointment, we're getting out face to face and areas that we can at due to cove in where we are welcomed and and we had a a nice launchcast.

Last week, so I'm really happy with the progress there as I said before both in the community.

Operator: And to withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. And our first question comes from the line of Brandon Folkes with CancerFish Gerald. Your line is now open.

Setting as well and the academic where kind of thing sales come in and that the proportion that we expected there said performing well in both.

And Rob on for 58.

Yes, we mentioned in the opening remarks, we've been able to open nearly all the sites for four or five eight despite the Cobiz 19 pandemic and the trial is enrolling well based on that we have the objective.

Brandon Richard Folkes: Hi, thanks for taking my question and congratulations on all the progress this year and in the quarter. I'm going to ask Zeb Zolker, can you talk about your expectations for the Atlantis trial and what your range of thresholds for a successful outcome here? I know in the past you've talked about this trial serving as a confirmatory trial, even if it's not stat.

Bruce C. Cozadd: So can you just elaborate a little bit more around that scenario and then, if Atlantis is not confirmatory, how soon should we expect you to begin a true confirmatory trial of the monotherapy? Thank you. Okay, maybe Rob, I'll ask you to comment on this from a regulatory perspective, and then Kim, if you wanna jump in with any implications for commercial, that would be great. Rob?

Cementing appeal as early as they ended this year.

Thanks.

Thank you.

Our next question comes from the line of Randall Stanicky with RBC capital markets. Your line is now open.

Great. Thanks, Bruce on the assumption that your goal is to maximize the uptick of.

Weve, how do we think about the timing and impact of the.

Figured generics that would likely occur and then.

Looking at this why wouldn't this be a case for a hard switch you're going to be single selling two products that are effectively the same one steeper than the other.

Robert Iannone: Yes, so thank you, Bruce. So, as I said in the past, the Atlantis trial actually predated the decision to move forward with a single-arm monotherapy Zipselc approval in second line. It was designed based on some preliminary phase one, two data in combination with doctors showing promising results, and phase three was initiated on its own.

Just it seems to me that there's probably not a need for the for for Xyrem. If that's the case is that something you guys have considered I know you've been asked before thanks.

Yes, Thanks Randall for the good questions on the on the first one you know our goal.

Is to make as I wave of Big success. We think this is a great product for patients currently on Xyrem. We think it's a great products for patients who may not have been on Xyrem historically, a great product for patients newly diagnosed with narcolepsy.

Robert Iannone: Once our partner PharmaVar engaged the FDA about the possibility of approval, accelerated approval based on single-arm monotherapy data, there was a discussion about whether Atlantis could serve as a confirmatory trial, even though it wasn't designed as such. And the guidance we've gotten is that it potentially could and ultimately depends on what we observed there. And we maintain that it doesn't necessarily need to be a stat sig result but just needs to be confirming what we observed in the monotherapy trial. If somehow that's not ultimately confirmatory, then we would plan to initiate a confirmatory trial.

Hi, and pending the results of our idiopathic hyper somebody a trial.

A great new product for patients who have not had approved.

Agent before so we're really excited about making it a success.

We're not going to hold off on that.

To avoid any possibility of triggering a market decline, which I'll remind you would be a very very substantial drop.

Hi insight from sales.

You know my view is if we've hit that we've probably been more successful than most of you have modeled in your models.

Robert Iannone: And the exact timing and details of that will be subject to regulatory interaction. Thanks Rob, and I'll just say to people our excitement about Zep Zelka and the launch and our early uptake is really revolving around its strong profile as a monotherapy, and Kim, maybe you can talk a little bit about why we're excited about that. Sure, great.

You know in terms of how we think about skywave and xyrem.

You know we need to continue supporting our existing xyrem patients.

You know that that transition is not going to happen on the same day for all patients for lots of different reasons.

Kim Sablich: So in the early weeks here, we're seeing very positive customer responses and very encouraging sales. We're seeing strong sales, both in academic and community settings. And another very positive signal that over 20-40% of accounts who ordered in the first two weeks have already placed a second order. While we're certainly facing challenges getting face-to-face access with our customers due to COVID, the news about Zilka's availability and its inclusion in the NCCN guidelines is generating a lot of physician and account interest. And we're very confident that access and effectiveness of our outreach to customers is going to increase with our full sales team, including our existing representatives and a new group of salespeople just completing training, most of whom have prior experience in the small cell lung cancer space and bring with them existing customer relationships.

But we are going to be focusing our efforts on making sure people understand the benefits of sideways, particularly in light of a chronic lifelong therapy for these patients in a group that is known to have higher quarter cardiovascular risk than the general population.

Great. Thanks.

Thank you.

And our next question comes from the line of David Risinger with Morgan Stanley. Your line is open.

Yes, thanks, very much and congrats on all of the updates on the call.

So with respect to idiopathic Hypersonically trial.

Given the overlap of IDH with severe daytime sleepiness, our arent physicians already prescribing.

Xyrem for such patients.

It would seem that it would be obvious to them.

Kim Sablich: So while it's too early to know the real-world experience our customers are seeing with Zilka, it is clear to us that physicians and patients are both very eager for a new treatment option, and particularly one with the type of clinical profile demonstrated in our clinical studies. Thank you. And our next question comes from the line of Umar Rafat with Evercore. Your line is now open. Hi, thanks so much for taking my question. I actually wanted to continue on the Lerby-Neckton theme for a second.

Patient presented with idiopathic hypersound idea that.

They would be aware of xyrem and its efficacy.

Severe daytime sleepiness, and thus prescribe it to such patients.

Thanks, so much.

Yeah, I'll I'll, let me take the first part of that which is you know there's been no approved treatment for idiopathic hypersonic and you know, we think the ability to get out and.

Umar Rafat: Bruce, it seems like this trial, Atlantis, has been wrapped up for a few months now. So just trying to understand the pushes and pulls behind data disclosure, why it's not out yet. And not only is it the ClinTrials that suggest it's been wrapped up, but it's also in the FDA review where some of the submitted documents suggest the trial was done by February. So I'm trying to understand just the timing because it sounds odd that it's been done, but it's not out.

Educate.

About the diagnosis survived H and the potential treatment of IDH.

Could go a long way and helping to uncover IDH maybe beyond what's currently recognized and treated so I think you know before we talk about what's happening with existing patients. You know I think I think it's more than that in terms of the market opportunity, but maybe I'll, let dan handle what happens today, if a doctor wants to treat.

Bruce C. Cozadd: And on that same note, there were also provisions in the Jazz Pharma-Mar Agreement whereby for FDA approval, certain analyses of Atlantis had to be done. Could you walk us through what that specifically was, and were there components of Atlantis that were already used for FDA approval that came early? Thank you. Yeah, so an opening comment.

And I each patient with with Cyren.

Yeah, No and I just do it Bruce is saying is that no one's been focused on this market and it's been.

A hard for us actually triangulate down to what the but the prevalence is in the U.S. and I and we continue to think that's well under.

Bruce C. Cozadd: Remember that we're partnered with this product by Pharma Mar, who was overseeing the prosecution of the NDA and the Atlantis trial. So I'm not going to, you know, say much more than Pharma Mar has said. But Rob, do you want to generally address the timing of completion of Atlantis? And I'm not sure we're going to say anything about the impact on the monotherapy approval since that approval did come through early.

Represented fourth the true opportunity could be.

I always feel encouraged when I see a clinical study with.

Fairly tight inclusion exclusion criteria and road ahead of schedule.

So we know there's a market need out there that we want to address you in terms of Xyrem working in this patient population you know, we do have historical K series, including in the U.S.

Yeah were anecdotally on a on a patient by patient some of the published K series that Rob mentioned.

Robert Iannone: Yeah. Yeah, I would just reiterate that this trial is being run by Pharma Mar, our collaborators. It's an event-driven trial, and so the overall survival events needed to accumulate.

But unfortunately as.

Pvms.

We're more and more concerned about a specialty pricing in putting further payer restrictions and authorization you know, we only get a market reimbursement at this point for true bona Fide narcolepsy patients and so that's why it's so critical to get this on label indication for sideways.

Thank you.

Our next question comes from a lot of Graig Suvannavejh with Goldman Sachs. Your line is now open.

Robert Iannone: And then the trial went into a phase of cleaning data and ultimately top-line results, and we understand that that should be expected in the second half of this year. Thank you. And our next question comes from the line of Gary Nachman with BMO Capital Markets. Your line is now open. Hi, good afternoon.

Great. Thanks, so much for taking my questions. My question just has to do with the revised guidance and in terms of what's your outlook is with respect to how cold. It is evolving can you just remind us and you might have said at the beginning part of the call your assumptions on the job.

Gary Nachman: I'm Zywave, and congrats on that approval. How do you expect payers will handle the two products with pricing at parity? Have you been preparing payers for this transition from ZyRAM? And what pre-launch activities are you planning on doing on the low sodium benefits to help facilitate uptake and to try and get to the majority of that switch by 2023 that Dan talked about? So maybe I'll ask Kim to start, and then Dan, if you want to jump in, feel free.

Business for the second half in light of the uncertainty with Covance, 19, and whether or not.

Not only their risks for upward revisions and guidance based on that but also downward revisions. Thanks.

Yes, they do you want to pick that one.

Kim Sablich: Sure. As Dan mentioned earlier, we are very focused on ensuring broad and timely coverage with our commercial payers. We basically want to remove product access as an issue in allowing prescribers to choose Zywave for either their existing or their new narcolepsy patients. And we're out there today already engaging with payers in preparation for the launch. And we've been out there prior to that in terms of education and disease-wise to set ourselves up for the launch. So, again, we've launched Zywave at parity pricing with Zyram, and we're feeling very confident that that's going to help us achieve our actual goals pretty rapidly. Thanks, Kim. And this is Dan.

Sure Yeah, I'd be happy too so as we mentioned in the script clearly through our second quarter results. Our organization was able to navigate cove at 19 quite well in terms of.

Using innovative approaches to ensure that we switched very quickly from in person to virtual digital ways to connect with concessions and health care providers. So part of our outlook in terms of thinking about the second half is driven by our bill.

I'd to pivot well in the second quarter and to be able to than actually see some of those trends reverse thing. The other thing that we saw within our oncology area of course, we saw in the second quarter change with respect to delays and.

Kim Sablich: Just adding to that, as many of you will remember, as we were launching CENOSI, we started to engage with payers and establish contracts and relationships with them, both for Synosy and also for Xyrem, and so it's very natural now for us, within the portfolio, to transition to Zywave, which we believe is the treatment for and at Parity Access should be readily taken up in a timely way. Okay, and other pre-launch activities? I don't know if you could comment on that in terms of the low-turning benefit.

And stem cell transplant, a switch for some period of time to oral oncolytics as we mentioned in the script that trend tended to reverse towards the end of the second quarter.

So that underlying assumption then drives forward with respect to health care providers finding ways to continue to provide health care to patients that are non coal bed patients to be able to navigate the pandemic through the rest of the here with respect to our medicines and.

Daniel N. Swisher: Yeah, we're going to get into more detail, obviously, in our webcast in October, but, you know, we're turning our, you know, field medical market access teams fully over to ZyWave, and we've obviously been presenting and publishing a lot of data on ZyWave and sort of the background of comorbidities and the burden of disease for a narcolepsy patient, so it' You'll see much more, and we'll go into that detail in... I'll just add to Gary that, as Dan pointed out, the couple months it takes to get to a full REMS implementation give us an unusual period of time where we have an approved label. And we know exactly what we can educate around.

General we've talked about the durability of the products given the chronic.

Life, saving and or life changing nature of the treatment. So while we do expect to continue to have to navigate through the pandemic and in different ways, including and how we launched upsells.

And how we launched die way, but the ended the year, we do anticipate being able to.

Continue to to work that's true our commercial organizations to be able to feel confident and raising the guidance across neuroscience oncology and then also down to the bottom line any P.S. now with that being said of course, there's uncertainty we don't expect.

Bruce C. Cozadd: And so we're going to do our best to do that, including through some partnerships we have with other organizations who care about the long-term health, cardiovascular, and cardiometabolic health of narcolepsy patients and other populations. So more to come in the upcoming months. Thank you. And our next question comes from the line of David Amsellem with Piper Sandler. Your line is now open. Thanks. So, on Zywave, I just wanted to get more of a window into your thought process regarding pricing, with the market, in the long term, becoming more varied. I mean, you have, you know, authorized generics coming, there's the Avidel product, there's Wacix, there's Sanosi. I was just wondering if it would have made sense to price Zywave at something of a discount to Zyram.

Life to go back to normal we're more focused on the assumption that the ability to treat patients and provide health care throughout the pandemic will continue.

Thank you.

And our next question comes from the line of Swanee over Barna with Bank of America. Your line is now open.

Hey, guys. This is a adjacent actually.

A question that's why it makes clear on on there have been active and so.

We've heard anecdotally I guess that second line small cell lung volume or patients down their older they're more immuno compromised the pretty fragile.

Are you, saying that you feel like the that's returned to normal location.

David A. Amsellem: But I wanted to get your thought process as to why you chose parity pricing and why you think that's going to be a winning strategy. Thanks. Dan, do you want to take this?

And what you're seeing kind of some of the more near term metrics and then on uncorked as I just wanted to come back to the so you play in oncology acute pain area, both the monk solid tumors for potential M&A transaction get valuations.

Daniel N. Swisher: Yeah, sure. Yeah, no. Our overall objective is, of course, to deliver value in a, you know, significant advance in treatment options, relative to what's on the market today, in particular relative to Xyron and other agents.

I have really stepped up and there's been a strong IPO cycle for private so I'm. Just curious if there are willing to step outside your core therapeutic area of focus thanks.

[music].

Yeah, maybe I'll ask.

Robbie indoor Kim to just comment on what's going on with treatment of second line patients right now.

Daniel N. Swisher: And so we believe this strategy will get us broad and timely coverage and then, you know, really establishing the low sodium benefit for patients, and we get physician education to support both the adoption of XyRM patients over to XyWave and patients who could have been candidates for oxidate therapy but because of the sodium concern, didn't go on to XyRM are now available for XyWave. And then really be top of mind for treatment of choice in newly diagnosed patients, and we believe the parity pricing at launch gets us there. Thank you. Thank you. And our next question comes from the line of Ami Fadia with SDB Levering.

And then Renee maybe back are you in terms of what we're looking at in terms of potential areas of focus for Corp. dove.

Yes, I can start with that Bruce This is Rob how would you say that before is up sell because approval.

There was very little in the way of therapeutic options for patients and in second line. So often patients weren't offered anything where they are offered so supportive care or first line therapy with continued.

[music].

No longer than you'd expect.

So now with a more effective therapy, that's better tolerated.

We expect.

Ami Fadia: Hi, good evening. Congratulations on the nice quarter. My question is on XyWay. But on idiopathic hypersomnia, the primary endpoint in the study that you have ongoing is excessive sleepiness score. And I think that the baseline score for those patients was about 11 or so. What level of change do you believe would be clinically meaningful for those patients? And if you can share with us any details around the powering of the study, that would be helpful.

Patients to be treated potentially even earlier or greater proportion of patients.

To be could be treated and with that greater efficacy I think ultimately will be.

Better uptick, especially given the tolerability profile.

And and Rob I'll, just add to that while we theme the impact of co that vary across our business.

Launches in the industry are at risk.

In small cell lung cancer get into the very serious nature of it and we really has seen that patient treatment rates have been a minimally effective.

Affected and therefore, we see rapid embracing as our therapy and expect that to continue through the pandemic.

Robert Iannone: And just as a follow-up to the earlier questions on Zyve, maybe if you could just give us a sense of whether you expect the growth to net for Zyve to be higher than that for Zyram? And if you can quantify the number of patients that couldn't get Xyrem because of the high sodium involved. Thank you. Well, Ami, you get credit for a multi-part question. So let's first go to IHJED.

And then maybe I'll hop then with respect to corporate development on how we think about that I mean, clearly to be able to leverage our commercial organization I'm looking at potential opportunities within neuroscience and oncology.

Robert Iannone: Do you want to comment a little bit on the trial? Sure. The IH trial was run similar to the most recent ZyWave trial in narcolepsy. That is to say, following a screening period, patients were, in an open-label fashion, titrated up to efficacy and tolerability, and then through a stable dose period, and then went through a randomized withdrawal period with active versus placebo for a two-week period. And you're correct: the primary assessment in IH, the IH study is the upward-sleeping scale. And studies with respect to clinical relevance, with respect to your questions, suggest that a 2.2, somewhere between a 2 to 2.75 point change in the ESS is clinically meaningful. With respect to what we would anticipate with IH, given the data that we have so far in the case series and the single cases, as well as clinical experience. Page PAGE of NUMPAGES www.verbalink.com Page PAGE of NUMPAGES, and 90% Powering.

She makes a lot of sun for us.

With respect to commercial with respect to growing an expanding expertise not only in hematology that now with learn been acted in solid tumors and we have of course lift that looked at opportunities outside our therapeutic area.

If we were to look at something more closely in that area and consider at more seriously.

I would think it would need to be something that would be late to near on markets to be able to leverage commercial capabilities that were already in place or that we would have the opportunity to build our primary focus, though however is the leveraging our two existing therapeutic areas are.

Expertise as well as.

Our current infrastructure and then importantly, ensuring that whatever products were adding to the portfolio that were interested and that those are durable products that can have a meaningful impact for patients that can have a meaningful impact to expanding our revenue base overtime and ensure.

During that we're we're able to achieved good returns for our shareholders.

Thank you and our next question comes from the line the can catch your tour with Cowen and company. Your line is now.

Robert Iannone: And so we are excited about the opportunity to use Zywave in this patient population and anticipated. Good. Solid efficacy. Dan, maybe over to you on the Gros-Tenet and then the additional opportunity for patients who felt the existing salt load of Xyrem might be too high? Yeah, no, good question.

Well, Thanks, guys. Bruce I was wondering play that's business development question, a little bit differently were often you see you buying single product assets. It was wondering would you at all be interested or or think of a company that has a portfolio of products instead of a single asset and maybe a company that you all view as Ms.

Manage spending so you can take your operating.

Daniel N. Swisher: So on Gros-Tenet, obviously, we're early in the discussions with the payers. But, you know, given where we landed with Xyrem in the advance, we feel we've got with Xywave and where we're starting, we would expect to be in roughly the same ballpark, and we'll have more detail as those contracts actually get finalized.

Excellent see in kind of put it to up to a company like that so as we look to the future could we be thinking about this development a little bit differently or could we expect business development, a little bit differently than the past. Thank you.

Yeah, I can really great insightful question. It does so happen.

Daniel N. Swisher: With regard to patients who could be candidates for oxybate therapy but because of the sodium concern are not going on sodium oxybate and what could be available for us to access over time for Zywave, we continue to triangulate on about twenty percent of patients with Narcolepsy, and that's both market research we've been conducting as well as doing some, you know, close examination of claims data. What that looks like in the general narcolepsy population and what we see with Xyrem patients today. And I'm just going to edit Dan just a little bit. We weren't saying 20 percent of all narcolepsy patients, 20 percent of patients that doctors would have considered for Oxybate. Don't get it because of this cause alone. It's a slightly different statistic,

In a number of deals over the last few years have been primarily focused around a one asset in some cases entirely focused around one asset.

But we clearly are interested in collaborations and potential acquisitions that would be more portfolio based you've seen some of our development oriented transactions be around a basket of targets for that reason, but I think you're asking a different question, which is you know up to and including a a commercial business with multiple asset.

It's an absolutely that is of interest to us as well.

Great. Thanks.

Thank you.

And our last question comes from a lot of zinc abuse with Wells Fargo Securities. Your line is now.

Hey, thanks for fitting in and I leave like you say you're supposed to launch in fourth quarter. Following rents implementation is you got that runs as location taking longer than you would have thought and what's causing the delay there. If there is one and also if you could just give.

Daniel N. Swisher: That's very helpful. Thank you. Thank you. And our next question comes from the line of Akash Tewari with Wolf Research. Your line is now open. Hi, this is Andrew Newton. I'm on behalf of Akash.

The what percent enrollment your AG currently on the for 58 trial. Thanks.

Akash Tewari: You guys have published data in the past showing that at one year, over 50% of patients discontinue their Zyvron regimen. How do you think this kind of high discontinuation rate is going to affect the 258 launch and which proportion of these discontinuations are real versus just patients cycling on and off? And then secondly, you guys noted that new products are going to represent about half of 2022 revenue, and that's not in consensus models right now. Which products is consensus underappreciating?

Yeah, Jacob Bruce I'll take those questions, we're not going to give.

Specific enrollment percentage. Other then I'll reiterate robs comments from earlier that our trial is enrolling well on xyrem in the Rems implementation actually we have a goal of doing it faster than we've done it before last time, we needed to implement a rems.

You know updated Rems was for the pediatric launch we think we can do it a little bit faster. This time, we want to make sure we're ready to go into patients will get the right treatment.

Daniel N. Swisher: Thanks. Hey, Andrew, good questions on discontinuation. You know, we do see discontinuation often when people are starting Oxybate therapy, particularly during that titration period over the first few months.

They'll get the right counseling to understand how to use the medication safely fill understand how the system works that we'll have different forms for the two products. So we do have some work to do there, but we're right on track to to launch on the timeline, we had laid out.

Daniel N. Swisher: Remember, here we're talking about the potential for patients to move from Xyrem directly to 258. These are oxibate-experienced patients, and we certainly saw that in some of the data we released at World Sleep Congress in September of last year in terms of the part of our trial that had patients move over dose-for-dose easily. So I think it is a very different prospect there.

And maybe I can just and since I think that was our last question before I turn it back over the Kathy to say.

You know we're excited that we reported good results and to raise guidance on both the top and bottom line, but I think we're even more excited about the future with XY wave launch upcoming our progress on JC before 58, our upcoming data in a potential launch next year on idiopathic hypersound and our opportunities on the Corp Dev side.

Daniel N. Swisher: For naive patients who maybe have never been on Xyrem, I would expect some discontinuation rate over that early period. We found that over time it's important that doctors set the right expectations for patients in terms of what they'll experience as they titrate up on their dose. Both in terms of the answer, you're right to point out that we do get cycling of some patients back on to, back on to, time to time. And in terms of our confidence in revenue potential for our new product launches, you know, our market, our forecast that we see published vary considerably in how they take into account not only ZyWave but whether they credit for idiopathic hypersomnia. JZP458 isn't in everyone's model.

And I want to end by thanking our employees for their continued focus during this unprecedented time on making sure. We take good care of patients so with Kathy without back over to you.

Thank you Bruce and thanks, Chris for your house today.

Thanks to all of you for joining US today, we will be participating in the upcoming Morgan Stanley Cantor and be a day healthcare conferences and hope to speak with many after your during this event is now entercom.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

[music].

Daniel N. Swisher: So, you know, these are all significant opportunities: ZyWave, ZepZelka for this year's launches and idiopathic hypersomnia and 458 or potential 2021 launches. And then, of course, we're excited about Synosis' potential as well. Awesome, thank you.

Greg Gilbert: Thank you. And our next question comes from the line of Greg Gilbert with SunTrust. Your line is now open. Thank you.

Greg Gilbert: Looks like Wakex is off to a decent start, Bruce, according to the S1. I was curious if you or your teammates had any updated thoughts on where or how that product is being used, and do you see the potential addition of Cataplexy to its label, should that occur, as a meaningful change to the competitive profile? Thank you. Yes, Greg, and I was going to point out the name change.

Daniel N. Swisher: Congratulations on that, and we'll get that right from now on. Dan, over to you. Yeah, now, as all of you know, Oxybate therapy, Xyrum in particular, has been the standard of care, and really, for a certain type of patient that's gone through a number of other therapies, is the only approved therapy for both Cataplexy and tremors.

Daniel N. Swisher: And so despite Sir Awakex being on the market, Uh, and they've said in their own S1, 70% payer coverage and definitely a strong promotional push. You know, we haven't seen any impact on our business and, you know, through COVID. So sort of take COVID out of the equation.

Daniel N. Swisher: We really were on the same baseline of PEs and refills, and the base business. And, of course, we've got broad and good coverage with payers. So, you know, we think the products really exist in a different continuum for patient care, and we're very confident with both what we've got to offer and how it's working well. We've had really nice refills through COVID because the product is working well for those patients. And then for those who need strong cataplexy therapy in addition to EDS benefits, uh... now transitioning over to Zaiwei. So we feel good about the product. Thanks, and Bruce, no hard feelings about the name. You have a lot of new names to keep up with.

Greg Gilbert: No problem. And just as a reminder, we did take up revenue guidance for Sleep Neuro on this call, so we do feel that business is doing very well. Thank you. And our next question comes from the line of Balaji Prasad with Barclays Journalism. Hi, thanks for taking the question. So, Bruce, just going back to something that we discussed, free catalog generation continues to be very strong. It's a great problem to have, which will also beget the question of what you will be planning to do with it and still ensure that the returns profile is healthy. And just as an add-on to that, could you have Acquisitions built into this house?

Balaji V. Prasad: Thanks. Yeah, maybe I'll hand that one over to Renee. Sure, yeah, and if I could ask you to repeat the second part of your question, I didn't hear the second part you cut out after the free cash flow generation part. Got it.

Renee Gala: Just to clarify that outlook for 2022, when revenues are new, not just 2019, that there are no actions built into this dollar. So I'll answer that question first. With respect to 2022 and looking at our projected revenue, that is based on our current profile of products, our current portfolio, with the products launched from 2019 forward making up approximately 50% of that. But that's certainly an important part of our strategy, which is leveraging that cash flow, investing in the internal portfolio, and looking for great opportunities for external innovation, such as Zepdelka, which was not an acquisition but a great opportunity to bring in a late-stage, near-market asset to be able to put that into our portfolio and very quickly be ready to launch.

Renee Gala: Thank you. And our next question comes from the line of Ronnie Gough with Bernstein. Your line is now open. Good afternoon, everybody, and congratulations on a nice quarter. Question on 385: now that you seem to have kind of got your head around the next trial, can you just give us a little bit of a feel for what that trial would look like in terms of size, endpoints, and, more importantly, timing to completion, and will it be a trial you could potentially submit? Yeah, let me hand that over to you.

Robert Iannone: So we, we have had the opportunity to get feedback from the FDA, and we do believe that this phase two B trial will contribute to the registration package, along with additional data on safety. As you know, we are developing a new formulation for once daily administration, and that's in testing this month in healthy volunteers, and a little bit.

Robert Iannone: We haven't, we haven't said any details yet about the exact design of the trial. You know, to this point, we're still finalizing some, Thank you. You broke up just a little bit there, Dean.

Robert Iannone: I'll make sure I answer your question. Operator, I think we're ready for another question. Thank you. And our next question comes from Annabel Samimy with E4. Your line is now open.

Annabel Eva Samimy: Hi, thanks for taking my question. Congratulations on a good quarter. Just in the oncology area, I wanted to ask a couple of questions on Zedzalka. There was clearly a lot of excitement among KOLs who we spoke to to get their hands on the drug. But admittedly, you know, one thing they did say is that it was not as well known in the community setting.

Kim Sablich: So can you just talk about some of the educational efforts you might have for the community setting? And is that already starting to be taken care of with NCCN guidelines? And then, quickly on 458, can you just remind us the timing of the interim analysis for that program? And is there any kind of potential for stopping the trial early and filing then?

Kim Sablich: Thanks. Kim, do you want to talk a little bit about our efforts with Zepselco? Yeah, sure. So it's all hands on deck right now. Given that we're in the COVID environment, our team has been very active in both the digital space, outreaching through email, has had some good responses back in terms of appointments; we're getting out face to face in areas that we can do to COVID where we're welcomed in. And we had a nice launch cast last week.

Kim Sablich: So really happy with the progress there. As I said before, both in the community setting as well as in the academic setting, we're kind of seeing sales come in in the proportion that we expected there. So performing well in both, and Rob on 458.

Robert Iannone: As we mentioned in the opening remarks, we've been able to open nearly all the sites for 458 despite the COVID-19 pandemic, and the trial is enrolling well. And based on that, we have the objective of submitting a BLA as early as the end of this year. Thank you. And our next question comes from the line of Randall Staneky with RBC Capital Markets. Great. Thanks, Bruce. On the assumption that your goal is to maximize the... As I wave, how do we think about the timing and impact of the triggered generics that would likely occur? Looking at this, why wouldn't this be a case for a hard switch?

Randall Staneky: You're going to be selling two products that are effectively the same, one safer than the other, so there's probably not a need for the for for Xyram if this is the case. Is that something you guys, I know you've been asked before, have been asked before? Thanks. Yeah, thanks, Randall, for the good questions. On the first one, you know, our goal is to make Zywave a big success. We think this is a great product for patients currently on Zyram. We think it's a great product for patients who may not have been on Zyram historically, a great product for patients newly diagnosed with narcolepsy, and pending the results of our idiopathic hypersomnia trial, you know, a great new product for patients who have not had an approved agent before.

Bruce C. Cozadd: So we're really excited about making it a success. We are not going to hold off on that to avoid any possibility of triggering a market decline, which, I'll remind you, would be a very, very substantial drop in Xyrem sales. My view is that if we've hit that, we've probably been more successful than most of you have modeled in your models.

Bruce C. Cozadd: In terms of how we think about Xywave and Xyrem, we need to continue supporting our existing Xyrem patients. That transition is not going to happen on the same day for all patients for lots of different reasons, but we are going to be focusing our efforts on making sure people understand the benefits of Xywave, particularly in light of a chronic, lifelong therapy for these patients in a group that's known to have higher cardiovascular risk than the general population. Thank you. And our next question comes from David Reisinger with Morgan Stanley. Your line is now open. Yes, thanks very much. And congrats on all the updates on the call. So with respect to the idiopathic hypersomnia trial, Given the overlap of IH with severe daytime sleepiness, aren't physicians already prescribing Xyrem for such patients?

David Reisinger: It would seem that it would be obvious to them if a patient presented with idiopathic hypersomnia that they would be aware of Xyrem and its efficacy in severe daytime sleepiness and thus prescribe it to such patients. Thanks so much. Yeah, I'll let me take the first part of that, which is, you know, there's been no approved treatment for idiopathic hypersomnia. And, you know, we think the ability to get out and about about the diagnosis of IH and the potential treatment of IH could go a long way in helping to uncover IH maybe beyond what's currently recognized and treated. So I think, you know, before we talk about what's happening with existing patients, you know, I think it's more than that in terms of the market opportunity, but maybe I'll let Dan handle what happens today if a doctor wants to treat an IH patient with SIREN.

David Reisinger: Yeah, no, and I just add to what Bruce is saying is that, you know, no one's been focused on this market, and it's been... uh... hard for us to actually triangulate down to what the prevalence is in the U.S. and I, and we continue to think that well under-represented for what the true opportunity could be.

Daniel N. Swisher: You know, I always feel encouraged when I see a clinical study with, you know, fairly tight inclusion-exclusion criteria and role ahead of schedule. So we know there's a market need out there that we want to address. You know, in terms of Xyrem working in this patient population, you know, we do have historical case series, including in the U.S, uh... you were anecdotally on a on a patient by patient some of the published case series that rob, But unfortunately, as, you know, PBMs were more and more concerned about specialty pricing and putting further payer restrictions and authorizations, uh... you know uh... we only get uh... market reimbursement at this point for true bonafide narcolepsy, So that's why it's so critical to get this on-label indication.

Daniel N. Swisher: Thank you. And our next question comes from the line of Greg Suvarnavi with Goldman Sachs. Your line is now open.

Gregory Daniel Fraser: Great, thanks so much for taking my question. My question just has to do with the revised guidance. And in terms of what your outlook is, with respect to how COVID is evolving, can you just remind us, and you might have said it in the beginning part of the call, your assumptions on the jazz business for the second half in light of the uncertainty with COVID-19, and whether not only is there a risk for upward revisions and guidance based on that, but also downward revisions. Thanks. Yeah, Renee, do you want to take that one?

Renee Gala: Sure, yeah, I'd be happy to. So, as we mentioned in the script, clearly through our second quarter results, our organization was able to navigate COVID-19 quite well in terms of using innovative approaches to ensure that we switched very quickly from in-person to virtual and digital ways to connect with physicians and healthcare providers. So part of our outlook in terms of thinking about the second half is driven by our ability to pivot well in the second quarter and to be able to then actually see some of those trends reversing. The other thing that we saw within our oncology area, of course, we saw in the second quarter, was a change with respect to delays in stem cell transplants and a switch for some period of time to oral oncolytics. As we mentioned in the script, that trend tended to reverse itself towards the end of the second quarter.

Renee Gala: So that underlying assumption then drives forward with respect to healthcare providers finding ways to continue to provide healthcare to patients that are non-COVID patients to be able to navigate the pandemic through the rest of the year. With respect to our medicines in general, we've talked about the durability of the products given the chronic life-saving and or life-changing nature of the treatments. So while we do expect to continue to have to navigate the pandemic in different ways, including in how we launched Zepselka and how we launched Thywave at the end of the year, we do anticipate being able to continue to work through our commercial organizations to be able to feel confident in raising guidance across neuroscience, oncology, and then also down to the bottom line in EPS. Now, with that being said, of course, there's We don't expect life to go back to normal.

Renee Gala: We're more focused on the assumption that the ability to treat patients and provide healthcare throughout the pandemic will continue. Thank you. And our next question comes from the line of Ashwani Varna with Bank of America. Your line is now open. Hey guys, this is Jason actually. Quick question, I just want to make clear on leberbanectin.

Ashwani Verma: So, we've heard anecdotally, I guess that second line, small cell lung cancer, the volume of patients is down, they're older, they're more immunocompromised, they're pretty fragile. Are you saying that you feel like that's returned to normal, the flow of patients, from what you're seeing in terms of some of the more near-term metrics? And on CorpDev, I just wanted to come back to this. So, you play in oncology; it seems to be the main area, both EMONC and solid tumors, for potential M&A transactions, yet valuations have really stepped up, and there's been a strong IPO cycle for private companies. So, I'm just curious, is there a willingness to step outside your core therapeutic area of focus? Yeah, maybe I'll ask Rob and or Kim to just comment on what's going on with the treatment of second line patients right now.

Ashwani Verma: And then Renee, maybe I could back over to you in terms of what we're looking at in terms of potential areas of focus for CorpDev. Yeah, I can start with that. Bruce, this is Rob. I would just say that before Zipfelka's approval, there was very little in the way of therapeutic options for patients on second line. So often patients weren't offered anything, or they were offered just supportive care, or first-line therapy was continued, you know, longer than you'd expect.

Robert Iannone: And so now with a more effective therapy that's better tolerated, we expect, you know, patients to be treated, potentially even earlier or a greater proportion of patients to be treated. And with that greater efficacy, I think ultimately there'll be better uptake, especially given the tolerability profile. And Rob, I'll just add that while we've seen the impact of COVID vary across our business, certainly launches in the industry are at risk. In small cell lung cancer, given the very serious nature of it, we really have seen that patient treatment rates have been minimally affected, and therefore we see rapid adoption of our therapy and can expect that to continue through the pandemic.

Robert Iannone: And then maybe I'll hop in with respect to corporate development and how we think about that. I mean, clearly, to be able to leverage our commercial organization, looking at potential opportunities within neuroscience and oncology makes a lot of sense for us. With respect to commercial, with respect to growing and expanding expertise, not only in hematology but now with Lerbinectadine solid tumors, we have, of course, looked at opportunities outside our therapeutic area and ensured that we're able to achieve good returns for our shareholders.

Renee Gala: Thank you. And our next question comes from the line of Ken Caxiatore with Cowen and Company. Your line is now open. Thanks, guys. Bruce, I was wondering if I could ask the business development question a little bit differently. We're often used to you buying single product assets. I was wondering if you would at all be interested in or think of a company that has a portfolio of products instead of a single asset and maybe a company that you all view as mismanaged spending, so you can take your operating excellence and kind of put it to a company like that. As we look to the future, could we be thinking about business development a little bit differently, or could we expect business development a little bit differently than the past?

Renee Gala: Thank you. Yeah, Ken, a really great, insightful question. You know, it does happen that a number of deals over the last few years have been primarily focused around one asset, in some cases entirely focused around one asset, but we clearly are interested in collaborations and potential acquisitions that would be more portfolio-based. You've seen some of our development-oriented transactions be around a basket of targets for that reason, but I think you're asking a different question, which is, you know, up to and including a commercial business with multiple assets, and absolutely that is of interest to us as well.

Ken Caxiatore: And our last question comes from the line of Jacob Hughes with Wells Fargo Securities. Your line is now open. Hey, thanks for fitting me in. I'm Xywave. Like you said, you're supposed to launch in the fourth quarter following REMS implementation. Is that REMS implementation taking longer than you would have thought? And what's causing the delay there, if there is one?

Bruce C. Cozadd: And also, if you could just give what percent enrollment you're at currently on the 450A trial? Thanks. Yeah, Jacob, Bruce, I'll take those questions. We're not going to give a specific enrollment percentage other than I'll reiterate Rob's comments from earlier that our trial is enrolling well. On Xyrem and the REMS implementation, actually, we have a goal of doing it faster than we've done it before.

Jacob Hughes: You know, the last time we needed to implement a REMS, uh... you know updated rams was for the pediatric launch uh... we think we can do it a little bit faster this time but we want to make sure we're ready to go in the patients will get the right treatment they'll get the right counseling they'll understand how to use the medication safely they'll understand uh... you know how the system works will have uh... different forms for the two products so we do have some work to do there uh... but we're right on track uh... to to launch on the timeline uh... we had laid out, And maybe I can just end since I think that was our last question before I turn it back over to Kathy to say. You know, we're excited that we reported good results and to raise guidance on both the top and bottom line, but I think we're even more excited about the future with ZyWave launch upcoming, our progress on JCP458, our upcoming data and a potential launch next year on idiopathic hypersomnia and our opportunities on the CorpDev side.

Jacob Hughes: And I want to end by thanking our employees for their continued focus during this unprecedented time on making sure we take good care of patients. So, with Kathy, with that back over to you. Thank you, Bruce, and thanks, Chris, for your help today. Thanks to all of you for joining us today. We will be participating in the upcoming Morgan Stanley Cancer and BFA Health Care Conferences and hope to speak with many of you during these events. This now ends our conversation. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.