Q1 2022 Jazz Pharmaceuticals PLC Earnings Call

May 4, 2022

Good day, ladies and gentlemen, and thank you for standing by.

Good day, ladies and gentlemen, and thank you for standing by welcome to the Jazz Pharmaceuticals first quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press Star then one on your telephone.

Welcome to the Jazz Pharmaceuticals first quarter 2022 earnings conference call.

On the call today are Bruce Cozadd, Chairman and Chief Executive Officer, Rene Gala, Executive Vice President and Chief Financial Officer, Dan Swisher, President, and Rob Iannone, Executive Vice President, Global Head of R&D.

At this time, all participants are in a listen-only mode.

Kim Sablich, Executive Vice President and General Manager, North America, and Phil Jochelson, Neuroscience, Therapeutic Head, will join the team for Q&A.

After the speaker's presentation, there will be a question and answer session.

To ask a question during the session, you will need to press star, then one on your, telephone keypad.

As a reminder, this conference call is being recorded.

If you require any further assistance, please press star, then zero.

Any further assistance. Please press Star then zero at this time I would like to turn the conference over to MS. Andrea Flynn Ma'am you may begin.

At this time, I would like to turn the conference over to Ms. Andrea Flynn.

Ma'am, you may begin.

Thank you, and good afternoon, everyone.

Thank you and good afternoon, everyone today Jazz Pharmaceuticals reported its first quarter 2022 financial result.

Today, Jazz Pharmaceuticals reported its first quarter 2022 financial results. The slide presentation accompanying this webcast is available on the investor's section of, our website.

The slide presentation accompanying this webcast is available on the investors section of our website investor.

Investors may also refer to the press release we issued earlier today, which is also posted, to our website.

Investors May also refer to the press release, we issued earlier today, which is also posted to our website.

On the call today are Bruce Kozad, Chairman and Chief Executive Officer, Renee Galaf, Executive Vice President and Chief Financial Officer, Dan Swisher, President, and Rob Yunone, Executive Vice President, Global Head of R&D.

On the call today are Bruce <unk>, Chairman and Chief Executive Officer.

Galore Executive Vice President and Chief Financial Officer, Dan Swisher, President and Rob <unk> Executive Vice President Global head of R&D, Ken Stabler Executive Vice President and General manager of North America, and fill Jackups and neuroscience therapeutic head will join the team for Q&A.

Kim Sablich, Executive Vice President and General Manager, North America, and Phil Jockelson, Neuroscience Therapeutic Head, will join the team for Q&A.

On slide two, I'll remind you that today's webcast includes forward-looking statements, such as those related to our future financial and operating results, including expectations related to Vision 2025 and our guidance for 2022, growth potential, and anticipated development and commercialization milestones and goals, which involve risks and uncertainties that could cause actual events, performance, and results to differ materially from those contained in these forward-looking statements.

On slide two I'll remind you that today's webcast includes forward looking statements such as those related to our future financial and operating results, including expectations related to vision 2025, and our guidance for 2022 growth potential and anticipated development and commercialization milestones and goals, which involve risks and uncertainties that could cause actual.

Events performance and results to differ materially from those contained any forward looking statements.

We encourage you to review the statements contained in today's press release, in our, slide deck, and in our latest SEC disclosure document, which identifies certain factors that may cause the company's actual events, performance, and results to differ materially from those contained in the forward-looking statements made on today's webcast.

We encourage you to review the statements contained in today's press release, in our, slide deck, and in our latest SEC Disclosure Document, which identifies certain factors that may cause the company's actual events, performance, and results to differ materially from those contained in the forward-looking statements made on today's webcast.

We encourage you to review the statements contained in today's press release in our slide deck and in our latest SEC disclosure document, which identifies certain factors that may cause the company's actual events performance and results to differ materially from those contained in the forward looking statements made on today's webcast.

We undertake no duty or obligation to update our forward-looking statements.

We undertake no duty or obligation to update our forward looking statements.

Moving to slide three, on this webcast, we'll discuss non-GAAP financial measures.

Turning to slide three, on this webcast, we'll discuss non-GAAP financial measures.

Turning to slide three on this webcast, we will discuss non-GAAP financial measures reconciliations.

Reconciliations of GAAP to non-GAAP financial measures are included in today's press release, and in the slide presentation available on the Investors section of our website.

Reconciliations of GAAP to non-GAAP financial measures are included in today's press release and in the slide presentation available on the investors section of our website.

I'll now turn the call over to Bruce.

Thanks, Andrea.

Good afternoon, everyone, and thank you for joining us today.

Thanks, Andrea good afternoon, everyone and thank you for joining us today I'll start on slide five.

I'll start on slide five.

Considering our strong performance and execution in 2021, we began 2022 with substantial momentum. Since the beginning of the year, we've demonstrated considerable progress across commercial, R&D, and corporate development, while delivering solid year-over-year top and bottom-line growth in the first quarter.

Following our strong performance and execution in 2021, we began 2022 with substantial momentum.

Since the beginning of the year, we've demonstrated considerable progress across commercial R&D and corporate development, while delivering solid year over year top and bottom line growth in the first quarter.

Importantly, we continue to substantially diversify our business with an eye toward, optimizing our product portfolio and improving our adjusted operating margin.

Importantly, we continue to substantially diversify our business with an eye toward optimizing our product portfolio and improving our adjusted operating margin.

I'm excited by the progress we are making in transforming our business.

I am excited by the progress we are making in transforming our business. Despite typical first quarter payer churn any impact from the omicron Varian our year to date performance has been strong.

Despite typical first-quarter pay or churn and impact from the Omicron variant, our year-to-date performance has been strong. That, coupled with our continued focus on strategic capital allocation, has enabled us to increase our guidance ranges for both the top and bottom line.

Despite typical first-quarter payer churn and impact from the Omicron variant, our year-to-date, performance has been strong. That, coupled with our continued focus on strategic capital allocation, has enabled, us to increase our guidance ranges for both the top and bottom line.

That coupled with our continued focus on strategic capital allocation has enabled us to increase our guidance ranges for both the top and bottom line.

On the commercial front, we're very encouraged by the positive direction of the launch of ZyWave in idiopathic hypersomnia, or IH, underscored by the growing number of patients on therapy, the effectiveness of ongoing outreach to educate prescribers and patients about the benefits of ZyWave, and the high level of engagement and receptivity in the market.

On the commercial front, we're very encouraged by the positive direction of the launch of, ZyWave in idiopathic hypersomnia, or IH, underscored by the growing number of patients on therapy, the effectiveness of ongoing outreach to educate prescribers and patients about the benefits of ZyWave, and the high level of engagement and receptivity in the market.

On the commercial front, we're very encouraged by the positive direction of the launch of <unk> in idiopathic hypersomnia.

H underscored by the growing number of patients on therapy.

<unk> of ongoing outreach to educate prescribers and patients about the benefits of XI wave and the high level of engagement and receptivity in the market.

We're seeing strong demand for Rylase, and in January of this year, we submitted an SBLA to support Monday, Wednesday, Friday intramuscular dosing, followed in April by a separate SBLA for IV administration.

We're seeing strong demand for Rylase, and in January of this year, we submitted an SBLA, to support Monday, Wednesday, Friday intramuscular dosing, followed in April by a separate SBLA for IV administration.

We're seeing strong demand for Reillys and in January of this year, we submitted an SPL a to support Monday Wednesday Friday intramuscular dosing followed in April by a separate S. BLA for IV administration.

Dan will provide a more complete overview of our performance across our commercial portfolio later in the call.

Dan will provide a more complete overview of our performance across our commercial portfolio, later in the call.

Dan will provide a more complete overview of our performance across our commercial portfolio later in the call.

Turning to our pipeline, we've made substantial advances this year. Starting with oncology, we enrolled the first patient in a Phase II basket trial for Zebzelka, evaluating its safety and efficacy across several solid tumors.

Turning to our pipeline, we have made substantial advances this year.

<unk> with oncology, we enrolled the first patient in a phase II basket trial for <unk> evaluating its safety and efficacy across several solid tumors and for the first time, we presented preclinical data on <unk>. Our next generation Pan RAF kinase inhibitor at the ACR annual meeting.

And for the first time, we presented preclinical data on JCP815, our next generation pan-RAF kinase inhibitor, at the AACR annual meeting in April.

And for the first time, we presented preclinical data on JCP815, our next generation Pan-Raf, kinase inhibitor, at the AACR annual meeting in April.

In April .

Moving to neuroscience, data from the first of three ongoing Phase III clinical trials of dibixamols in multiple sclerosis-related spasticity is expected this quarter, as is the initiation of our Phase III trial of Epidiolex in epilepsy with myoclonic atonic seizures, or EMOS.

Moving to neuroscience, data from the first of three ongoing Phase III clinical trials, of Bibixamals in multiple sclerosis-related spasticity is expected this quarter, as is the initiation of our Phase III trial of Epidiolex in epilepsy with myoclonic atonic seizures, or EMOS.

Moving to neuroscience data from the first of three ongoing phase III clinical trials of the <unk> malls and multiple sclerosis related spasticity is expected this quarter. As this is the initiation of our phase III trial of <unk> in epilepsy, with Myoclonic atonic seizures or <unk>.

We've also added two promising compounds to our pipeline since the beginning of the year.

Yes.

We've also added two promising compounds to our pipeline since the beginning of the year.

This afternoon, we announced a licensing agreement with Sumitomo Pharma for DSP0187, which we are now referring to as JCP441. JCP441 is a potent, highly selective orexin-2 receptor agonist that has the potential to advance the treatment of narcolepsy and other sleep disorders, and further solidifies our sleep leadership position.

This afternoon, we announced a licensing agreement with Sumitomo Pharma for DSP0187, which we, are now referring to as JCP441. JCP441 is a potent, highly selective orexin-2 receptor agonist that has the potential to, advance the treatment of narcolepsy and other sleep disorders, and further solidifies our sleep leadership position.

This afternoon, we announced a licensing agreement with Sumitomo pharma for DSP.

187, which we are now referring to as JCB $4 41.

JCB $4 41 is a potent highly selective orexin two receptor agonist that has the potential to advance the treatment of narcolepsy and other sleep disorders, and further solidifies our sleep leadership position.

This follows our licensing agreement last month with Werewolf Therapeutics for WTX613, which we now refer to as JCP898. JCP898 is a differentiated, conditionally activated interferon-alpha-endokine molecule that has the potential to minimize the toxicity associated with systemic interferon-alpha therapy, thereby expanding its clinical utility in treating cancer.

This follows our licensing agreement last month with Werewolf Therapeutics for WTX613, which we now refer to as JCP898. JCP898 is a differentiated, conditionally activated interferon-alpha-endokine molecule, that has the potential to minimize the toxicity associated with systemic interferon-alpha therapy, thereby expanding its clinical utility in treating cancer.

This follows our licensing agreement last month with werewolf therapeutics for WTS $6 13.

Which we now referred to as <unk> hundred 98.

<unk> hundred 98 is a differentiated conditionally activated interferon alpha <unk> molecule that has the potential to minimize the toxicity.

So CAE with systemic interferon alpha therapy, thereby expanding its clinical utility in treating cancer.

Both of these transactions expand our pipeline in core therapeutic areas and are consistent with our strategy.

Both of these transactions expand our pipeline in core therapeutic areas and are consistent, with our strategy.

Both of these transactions expand our pipeline in core therapeutic areas and are consistent with our strategy.

While expanding our pipeline and diversifying our revenue remain key imperatives, we also regularly review our commercial and pipeline portfolios to prioritize the medicines and R&D programs that are most likely to deliver value to patients and shareholders.

While expanding our pipeline and diversifying our revenue remain key imperatives, we also, regularly review our commercial and pipeline portfolios to prioritize the medicines and, R&D programs that are most likely to deliver value to patients and shareholders.

While expanding our pipeline and diversifying our revenue remained key imperatives. We also regularly review our commercial and pipeline portfolios to prioritize the medicines and R&D programs that are most likely to deliver value to patients and shareholders.

As a result, in the first quarter, we entered into an agreement to divest Cenosi to Axone Therapeutics.

As a result, in the first quarter, we entered into an agreement to divest Cynosi to Axone, Therapeutics. We believe Axone is well-positioned to deliver continued access to this important medication.

As a result in the first quarter, we entered into an agreement to divest Sanofi to axon Therapeutics. We believe <unk> is well positioned to deliver continued access to this important medication.

We believe Axone is well-positioned to deliver continued access to this important medication.

These transactions demonstrate our discipline, strategic allocation of capital, and commitment to drive long-term value as we transform our business.

These transactions demonstrate our discipline, strategic allocation of capital, and commitment, to drive long-term value as we transform our business.

These transactions demonstrate our disciplined strategic allocation of capital and commitment to drive long term value as we transform our business.

Our execution in the first quarter drove significant growth and has positioned us to raise our guidance for the year on both the top and bottom line, with improved operating margin at the midpoint.

Our execution in the first quarter drove significant growth and has positioned us to raise our, guidance for the year on both the top and bottom line, with improved operating margin at the midpoint.

Our execution in the first quarter drove significant growth and has positioned us to raise our guidance for the year on both the top and bottom line with improved operating margin at the midpoint.

We continue to see growth opportunities for our key commercial products and remain focused on operating efficiency and enhancing and expanding our pipeline.

We continue to see growth opportunities for our key commercial products and remain focused, on operating efficiency and enhancing and expanding our pipeline.

We continue to see growth opportunities for our key commercial products and remain focused on operating efficiency and enhancing and expanding our pipeline in short, we're really pleased with where the businesses and more importantly, where it's going.

In short, we're really pleased with where the business is and, more importantly, where it's going.

In short, we're really pleased with where the business is and, more importantly, where, it's going.

Moving to slide six, in January, we announced Vision 2025, which includes three components central to driving sustainable growth and enhanced value, commercial, pipeline, and operational excellence.

Moving to Slide 6, in January, we announced Vision 2025, which includes three components, central to driving sustainable growth and enhanced value. Commercial, Pipeline, and Operational Excellence.

Moving to slide six.

In January we announced the vision 2025, which includes three components central to driving sustainable growth and enhanced value.

Commercial pipeline and operational excellence.

After achieving over $3 billion in revenue in 2021, we're positioned to grow revenue to $5 billion in 2025.

Our R&D organization continues to advance key programs addressing significant patient needs in neuroscience and oncology, including recent Phase II trial initiations for subacaltamide and JCP150.

Our R&D organization continues to advance key programs addressing significant patient needs in neuroscience and oncology, including recent phase II trial initiations for Super Kalsomine, and JCB $1 50 and.

And we anticipate delivering at least five novel product approvals by the end of the decade.

And we anticipate delivering at least five novel product approvals by the end of the decade. Our 2021 adjusted operating margin was 43%, and we plan to improve that by 5 percentage points from 2021 to 2025, delivering more of our top line through to the bottom line.

And we anticipate delivering at least five novel product approvals by the end of the decade.

Our 2021 adjusted operating margin was 43%, and we plan to improve that by five percentage points from 2021 to 2025, delivering more of our top line through to the bottom line.

Our 2021, adjusted operating margin was 43% and we plan to improve that by five percentage points from 2021% to 2025, delivering more of our topline through to the bottom line.

Collectively, our continued execution in the first quarter provides additional evidence of our ability to achieve Vision 2025.

Collectively our continued execution in the first quarter provides additional evidence of our ability to achieve vision 2025.

I'll now turn the call over to Dan for an overview of our first quarter commercial performance, after which Rob will share an update on progress of our R&D programs.

I'll now turn the call over to Dan for an overview of our first quarter commercial performance after which Rob will share an update on progress of our R&D programs Renee will provide a financial overview and discuss the year's corporate development transactions and then we will open the call to Q&A Dan.

Renee will provide a financial overview and discuss the year's corporate development transactions, and then we'll open the call to Q&A.

Dan?

Thanks, Bruce.

Thanks, Bruce I am excited to share an update on our commercial portfolio starting with neuroscience.

I'm excited to share an update on our commercial portfolio.

Starting with neuroscience, the divestiture of CINOSI allows our highly experienced commercial team to further sharpen its focus on our key neuroscience products, XyWave and Epidiolex.

Starting with neuroscience, the divestiture of Cynosi allows our highly experienced commercial team, to further sharpen its focus on our key neuroscience products, ZyWave and Epidiolex.

Divestiture of Sanofi allows our highly experienced commercial team.

To further sharpen its focus on our key neuroscience products XI away then that the dialects.

We continue to build momentum in our OxyBaid franchise, as highlighted on slide 8.

We continue to build momentum in our OxyBait franchise, as highlighted on Slide 8.

We continue to build momentum in our Oxidate franchise as highlighted on slide eight in addition to market leading the adoption of <unk> the narcolepsy.

In addition to market-leading adoption of XyWave and Narcolepsy, we are pleased with the progress of the commercial launch of XyWave and IH.

In addition to market-leading adoption of ZyWave and Narcolepsy, we are pleased with the progress of the commercial launch of ZyWave NIH.

We are pleased with the progress of the commercial launch of <unk> NIH average active oxidate patients increased to approximately 16650 in the first quarter and approximately 6% increase compared to the same period last year.

Average active OxyBaid patients increased to approximately 16,650 in the first quarter, an approximate 6% increase compared to the same period last year.

Average active OxyBait patients increased to approximately 16,650 in the first quarter, an approximate 6% increase compared to the same period last year.

With XyWave, we have meaningfully advanced patient care with a lower-sodium OxyBaid product and continue to see enthusiasm for adoption.

With ZyWave, we have meaningfully advanced patient care with a lower-sodium OxyBait product, and continue to see enthusiasm for adoption.

With <unk>, we have meaningfully advanced patient care with a lower sodium oxidate product and continue to see enthusiasm for adoption.

In Narcolepsy, our efforts center around educating physicians and patients about the lifelong burden of high sodium intake in this patient population who live with an increased risk of cardiovascular comorbidity.

In Narcolepsy, our efforts center around educating physicians, and patients about the lifelong burden of high-sodium intake in this patient population who live with an increased risk of cardiovascular comorbidities.

<unk>, our efforts center around educating physicians and patients.

The lifelong burden of high sodium intake in this patient population, who live with an increased risk of cardiovascular comorbidities.

In the first quarter, we continued to drive adoption in narcolepsy, and importantly, we, see opportunities for additional growth in narcolepsy. We exited the first quarter with approximately 7,050 narcolepsy patients taking ZyWave.

In the first quarter, we continue to drive adoption in Narcolepsy, and importantly, we see opportunities for additional growth in Narcolepsy. We exited the first quarter with approximately 7,050 Narcolepsy patients taking ZyWave.

In the first quarter, we continued to drive adoption in narcolepsy and importantly, we see opportunities for additional growth in narcolepsy.

We exited the first quarter with approximately 7050 narcolepsy patients taking <unk>.

For ZyWave and IH, we're encouraged by the continued launch momentum, as well as feedback, from prescribers and the IH community. We are seeing increasing coverage of IH, and plans that are in the process of updating, their formularies have been providing access to ZyWave without significant barriers.

For ZyWave and NIH, we're encouraged by the continued launch momentum, as well as feedback from prescribers and the IH community. We are seeing increasing coverage of IH, and plans that are in the process of updating their formularies have been providing access to ZyWave without significant barriers. Exiting the first quarter, there were approximately 750 IH patients taking ZyWave.

For <unk> the NIH, we're encouraged by the continued launch momentum as well as feedback from prescribers and the IH community.

We are seeing increasing coverage of IH and plans that are in the process of updating their formularies have been providing access to XI with without significant barriers.

Exiting the first quarter, there were approximately 750 IH patients taking ZyWave. We're particularly pleased with this initial adoption, given that we expect new patient, starts in IH to more closely track the trajectory of a rare disease launch, where there have been previously no approved therapies.

Exited in the first quarter there were approximately 750 IH patients taking sideways.

We're particularly pleased with this initial adoption, given that we expect new patient starts in IH to more closely track the trajectory Turning to slide 9 in Epidiolex, we saw 6% revenue growth in the first quarter compared, to the same period in 2021 on a pro-forma basis.

We're particularly pleased with its initial adoption given that we expect new patient starts to NIH to more closely track the trajectory of our rare disease launch.

There has been previously no approved therapies.

Turning to slide 9, in Epidiolex, we saw 6% revenue growth in the first quarter compared, to the same period in 2021 on a pro-forma basis. As a reminder, in the fourth quarter of last year, Epidiolex net product sales benefited, from a temporary increase in specialty pharmacy inventory levels, which increased fourth quarter net sales by approximately 18 million. The majority of this reversed in first quarter 22, reducing first quarter's revenues.

Turning to slide nine and Thats. The dialogues, we saw 6% revenue growth in the first quarter compared to the same period in 2021 on a pro forma basis.

As a reminder, in the fourth quarter of last year, Epidiolex net product sales benefited, from a temporary increase in specialty pharmacy inventory levels, which increased fourth quarter net sales by approximately $18 million. The majority of this reversed in first quarter 22, reducing first quarter's revenues.

As a reminder, in the fourth quarter of last year at the dialects net product sales benefited from a temporary increase in specialty pharmacy inventory levels, which increased fourth quarter net sales by approximately $18 million.

The majority of that's reversed in first quarter 'twenty, two reducing first quarter's revenues.

Excluding this impact, we saw double-digit percentage revenue growth in the first quarter, with continued growth in underlying demand, despite challenges posed by the Omicron variant.

Excluding this impact we saw double digit percentage revenue growth in the first quarter with continued growth in underlying demand despite challenges posed by the omicron variant.

We have been successfully adding new prescribers, growing Epidiolex's active prescriber base.

We have been successfully adding new prescribers growing epidiorite active.

Active prescriber base as.

As we have previously highlighted, we expect that as newer prescribers gain experience, with Epidiolex and see its clinical utility, they will more broadly adopt Epidiolex as a cornerstone of therapy for their treatment-resistant epilepsy patients.

As we have previously highlighted we expect that as newer prescribers gain experience with the dialogues and see its clinical utility they will more broadly adopt at the dialogues as a cornerstone of therapy for their treatment resistant epilepsy patients.

We're also continuing to make significant progress in Europe and are very pleased with, adoption in markets where Epidiolex is reimbursed. During the first quarter, we launched Epidiolex in Ireland and expect to launch in France, later this year, pending final pricing and reimbursement discussions, at which point, Epidiolex would be launched and reimbursed in all five major European markets.

We're also continuing to make significant progress in Europe , and our <unk>.

Pleased with adoption in markets, where at the dialogue is reimbursed.

During the first quarter, we launched at the dialects in Ireland and expect to launch in France. Later, this year pending final pricing and reimbursement discussions at which point at the dialects would be launched and reimbursed in all five major European markets.

The increasing use of Epidiolex earlier in the treatment algorithm and positive experiences, in real-world settings are being driven by its unique mechanism of action, efficacy and safety profile, and ability to be combined with other therapies.

The increasing use of Epidiorite earlier in the treatment algorithm and positive experiences in real world settings are being driven by its unique mechanism of action efficacy and safety profile and ability to be combined with other therapies.

Given the efforts of our commercial team, we are confident we can achieve blockbuster, status as a global standard of care in treatment-resistant epilepsies.

Given the efforts of our commercial team. We are confident we can achieve blockbuster status as the global standard of care and treatment resistant epilepsy.

Now moving to oncology and starting with ZepZelk on slide 10, first quarter net revenues were, $59.3 million and include some quarter-to-quarter variability driven primarily by inventory levels.

Now moving to oncology and starting with <unk> on slide 10.

First quarter net revenues were $59 3 million and includes some quarter to quarter variability driven primarily by inventory levels.

We have rapidly established ZepZelk as the treatment of choice in second-line small cell, lung cancer and see opportunities for growth within our current indication. We continue to invest in additional real-world evidence and observational studies, as well as prospective clinical trials in second-line small-cell lung cancer, and see additional opportunities to continue to grow market share. We believe these data will add to the body of evidence around Zep Celka's positive benefit-risk profile for second-line small-cell lung cancer patients, and potentially drive increased adoption moving forward.

We have rapidly established ZepZelk as the treatment of choice in second-line small-cell, lung cancer and see opportunities for growth within our current indication. We continue to invest in additional real-world evidence and observational studies, as well, as prospective clinical trials in second-line small-cell lung cancer and see additional opportunities to continue to grow market share. We believe these data will add to the body of evidence around ZepZelk's positive benefit, risk profile for second-line small-cell lung cancer patients and potentially drive increased adoption moving forward.

We have rapidly established <unk> as the treatment of choice in second line small cell lung cancer and see opportunities for growth within our current indication.

We continue to invest in additional real world evidence and observational studies as well as prospective clinical trials in second line small cell lung cancer and see additional opportunities to continue to grow market share.

We believe these data will add to the body of evidence around <unk> positive benefit risk profile for a second line small cell lung cancer patients and potentially drive increased adoption moving forward.

Beyond second-line therapy, we believe our robust development plan, which Rob will cover in more depth, has the potential to identify additional patients who can benefit from this therapy, providing the opportunity for accelerated and meaningful growth.

Beyond second-line therapy, we believe our robust development plan, which Rob will cover, in more depth, has the potential to identify additional patients who can benefit from this therapy, providing the opportunity for accelerated and meaningful growth.

Beyond second line therapy, we believe our robust development plan, which Rob will cover in more depth has the potential to identify additional patients who can benefit from this therapy, providing the opportunity for accelerated and meaningful growth.

Turning to slide 11, first-quarter net product sales for Rylase, our recombinant Erwinia asparaginase therapy, were $54.2 million and were encouraged by the continued increase in demand through the first quarter. As a reminder, fourth-quarter 2021 net product sales included an initial buildup of inventory, which is typical for products early in launch, and inventory levels began to normalize through 1Q22. While there could be further inventory effects as distributors optimize stocking levels, going forward, we expect net revenues will more closely reflect demand. Rylase sales reflect increased brand awareness among customers and its position in the market, as the only therapy available to patients in the U.S. who have a hypersensitivity reaction to E. coli-derived asparaginase.

Turning to slide 11, first quarter net product sales for Rilase, our recombinant Erwinia, asparaginase therapy were $54.2 million and were encouraged by the continued increase, As a reminder, fourth quarter 2021 net product sales included an initial build-up of inventory, which is typical for products early in launch, and inventory levels began to normalize through 1Q22.

Turning to slide 11 first quarter net product sales for <unk>, our recombinant <unk> asparaginase therapy were $54 2 million and were encouraged by the continued increase in demand through the first quarter.

As a reminder, fourth quarter 2021 net product sales included an initial buildup of inventory, which is typical for products early in launch and inventory levels begin to normalize through <unk> 'twenty two.

While there could be further inventory effects as distributors optimize stocking levels, going forward, we expect net revenues will more closely reflect demand.

There could be further inventory effects as distributors optimized stocking levels go.

Going forward, we expect net revenues will more closely reflect demand.

Riley sales reflect increased brand awareness among customers and its position in the market as the only therapy available to patients in the U.S. who have a hypersensitivity reaction to E. coli-derived asparaginase.

<unk> sales reflect increased brand awareness among customers and its position in the market as the only therapy available to patients in the U S. We have a hypersensitivity reactions to E coli derived asparaginase.

Feedback from customers remains positive, and prescribers have indicated they are now returning to best clinical practice with respect to moving to non-E. coli-derived asparaginase because of the product profile, reliable supply of Rylase, and suite of support services that we provide.

Feedback from customers remains positive, and prescribers have indicated they are now returning to best clinical practice with respect to moving to non-E. coli-derived asparaginase because of the product profile, reliable supply of Rilase, and suite of support services that we provide.

Feedback from customers remains positive and prescribers have indicated they are now returning to best clinical practice with respect to move into non E. Coli derived asparaginase because of the product profile reliable supply of <unk> and suite of support services that we provide.

Looking ahead, we're excited to evolve our launch messaging based on the potential label update to intramuscular dosing on a Monday, Wednesday, Friday schedule, and IV administration, which Rob will also cover in more detail.

Looking ahead, we're excited to evolve our launch messaging based on the potential label update to intramuscular dosing on a Monday, Wednesday, Friday schedule and IV administration, which Rob will also cover in more detail.

Looking ahead, we're excited to evolve our launch messaging based on the potential label update.

Intramuscular dosing on a Monday, Wednesday, Friday schedule, and IV administration, which Rob will also cover in more detail.

Overall, our team started 2022 by, again, delivering strong results, providing increased optimism for a successful year ahead.

Overall, our team started 2022 by again delivering strong results providing.

Providing increased optimism for a successful year ahead now.

Now I'll turn the call over to Rob to provide an R&D update.

Now I'll turn the call over to Rob to provide an R&D update Rob.

Rob?

Thank you Dan.

Thank you, Dan.

Slide 13 provides an overview of our R&D pipeline and I'm excited about the recent addition of two promising early stage molecules.

Slide 13 provides an overview of our R&D pipeline, and I'm excited about the recent addition of two promising early-stage molecules.

This afternoon <unk>.

Now that we have license rights from Sumitomo pharma DSP <unk> eight a potent highly selective.

Active oral orexin two receptor agonist.

Central application for the treatment of narcolepsy.

Pathics hypersomnia and other sleep disorders.

This afternoon, we announced that we have licensed rights from Sumitomo Pharma to DSP-0187, a potent, highly selective, oral erection-to-receptor agonist with potential application for the treatment of narcolepsy, idiopathic hypersomnia, and other sleep disorders. As Bruce mentioned, we have designated this molecule as JZP441.

As Bruce mentioned, we have designated this molecule <unk> hundred one.

Sumitomo has already initiated the Phase I clinical program in Japan, and we expect to rapidly advance this program based on those clinical findings.

Sumitomo has already initiated a Phase I clinical program in Japan, and we expect to rapidly advance this program based on those clinical findings.

Sumitomo has already initiated a phase one clinical program in Japan, and we expect to rapidly advance. This program based on those clinical findings.

In April, we licensed global development and commercialization rights for JZP898, formerly, referred to as W2X613, a differentiated, conditionally activated interferon-alpha-endokine molecule. JZP898 is activated specifically within the tumor microenvironment, which may serve to, minimize the severe toxicities that have been observed with systemically active recombinant interferon-alpha therapy, and therefore maximize clinical benefit.

In April, we licensed global development and commercialization rights for JZP898, formerly referred to as W2X613, a differentiated, conditionally activated interferon-alpha-endokine molecule. JZP898 is activated specifically within the tumor microenvironment, which may serve to minimize the severe toxicities that have been observed with systemically active recombinant interferon-alpha therapy, and therefore maximize clinical benefit.

In April we licensed global development and commercialization rights for GBP 898, formerly referred to as W. Two X 613 differentiated conditionally activated interferon Alpha <unk> molecule.

<unk> hundred 98 activated specifically within the tumor microenvironment.

Which may serve to minimize the severe toxicities have been observed with systemically active recombinant interferon therapy, and therefore maximize clinical benefit.

These early-stage programs represent innovative approaches in areas where there is critical, unmet patient need that can benefit from our unique insights, have potential for multiple applications, and are in therapeutic categories where we believe we can develop and commercialize efficiently.

These early-stage programs represent innovative approaches in areas where there is critical unmet patient need that can benefit from our unique insights.

These early stage programs represent innovative approaches and areas, where there is critical unmet patient need.

And that's it from our unique insights.

Potential for multiple indications.

They have potential for multiple indications and are in therapeutic categories where we believe we can develop and commercialize efficiently.

In therapeutic categories, where we believe we can develop and commercialize efficiently.

In the near term, our team will be working to rapidly advance these programs with the, ultimate goal of delivering them to patients.

In the near term, our team will be working to rapidly advance these programs with the ultimate goal of delivering them to patients.

In the near term our team will be working to rapidly advance these programs with the ultimate goal of delivering them to patients.

I also want to highlight that at the American Association of Cancer Research annual meeting, in April, we presented data on JZP815 for the first time. JZP815 is our next-generation pan-RAF kinase inhibitor, and preclinical data show that, JZP815 selectively and potently inhibits mutant A, B, and C-RAF kinases, and also demonstrated anti-tumor activity in RAS and RAS mutant xenograft models.

I also want to highlight that at the American Association of Cancer Research Annual Meeting, in April, we presented data on JZP815 for the first time. JZP815 is our next generation pan-raft kinase inhibitor. And preclinical data show that JZP815 selectively and potently inhibits mutant A, B, and C-raft, kinases and also demonstrated anti-tumor activity in RAS and RAS mutant xenograft models.

I also want to highlight that at the American Association of cancer Research annual meeting in April .

We presented data on JCB eight five for the first time.

GGP one five is our next generation Pan RAF kinase inhibitor.

Preclinical data showed that <unk> one five.

Secondly, and Potently inhibits <unk>.

A b and C. RAF kinases, and also demonstrated anti tumor activity and Ras and RAF mutant Xenograft models.

Based on this encouraging preclinical activity, we intend to file an IND with the FDA later, this year.

Based on this encouraging preclinical activity, we intend to file an IND with the FDA later this year.

I'm really excited about the progress we have made to strengthen and mature our R&D organization.

I'm really excited about the progress we have made to strengthen and mature our R&D organization. Our concerted efforts to expand our pipeline and capabilities is now beginning to bear fruit, following multiple clinical trial initiations in 2021. We are primed for a number of exciting program milestones in 2022 and multiple IND submissions through 2023.

I'm really excited about the progress we have made to strengthen and mature our R&D organization.

Our concerted efforts to expand our pipeline and capabilities is now beginning to bear, fruit.

Our concerted efforts to expand our pipeline and capabilities is now beginning to bear fruit.

Following multiple clinical trial initiations in 2021, we are primed for a number of exciting, program milestones in 2022 and multiple IND submissions through 2023. On slide 14, we've detailed the mid- and late-stage clinical programs in our pipeline.

Following multiple clinical trial initiations in 2021, we are prime for a number of exciting program milestones in 2022 and multiple submissions through 2023.

On slide 14, we detailed the mid- and late-stage clinical programs in our pipeline. Starting with programs emerging from the GW cannabinoid platform, we are on track to begin a phase 3 trial for epidiolex, and epilepsy with myoclonic atonic seizures later this quarter.

On slide 14.

We've detailed the mid and late stage clinical programs in our pipeline.

Starting with programs emerging from the GW cannabinoid platform, we are on track to begin, a phase 3 trial for Epidiolex and epilepsy with myoclonic atonic seizures later this quarter.

Starting with programs emerging from the GW cannabinoid platform.

We are on track to begin a phase III trial for <unk> and Pep OFC with Myoclonic Atonic seizures later this quarter.

Our Niviximals program has three active trials focused on multiple sclerosis-related spasticity.

Our Naviximals program has three active trials focused on multiple sclerosis-related spasticity. The first trial, which is smaller and shorter relative to the other two, is assessing changes in muscle tone using elements of the modified Asper's scale.

Our <unk> program has three active trials focused on multiple sclerosis related spasticity.

The first trial, which is smaller and shorter relative to the other two, is assessing changes, in muscle tone using elements of the modified Asper's scale.

The first trial, which is smaller and shorter relative to the other two.

As assessing changes in muscle tone using elements of the modified ashworth scale.

We remain on track for data to read out this quarter.

We remain on track for data to read out this quarter, and if results from this first trial are supportive, there is the potential for a regulatory submission in the U.S. later this year.

We remain on track for data readout this quarter.

And if results from this first trial are supportive, there is the potential for a regulatory submission, in the U.S. later this year.

Results from this first trial are supportive there is the potential for a regulatory submission in the U S. Later this year.

We do anticipate a delay in data readouts for the subsequent two trials due to challenges, with site activation and enrollment related to COVID-19. Interest in these trials remains high, and now that the first trial is fully enrolled, we can take advantage of the opportunity to learn from both its upcoming data readout and site operations to optimize the other two trials.

We do anticipate a delay in data readouts for the subsequent two trials due to challenges with site activation and enrollment related to COVID-19. Interest in these trials remains high, and now that the first trial is fully enrolled, we can take advantage of the opportunity to learn from both its upcoming data readout and site operations to optimize the other two trials.

We do anticipate a delay in data readouts for the subsequent two trials due to challenges with site activation and enrollment related to COVID-19.

Interest in these trials remain time and now that the first trial is fully enrolled we can take advantage of the opportunity to learn from both its upcoming data readout.

<unk> operations to optimize the other two trials.

Further, we have identified opportunities to mitigate COVID-related challenges, and we, will provide updates regarding the trial and timing as appropriate.

Further, we have identified opportunities to mitigate COVID-related challenges, and we will provide updates regarding the trial and timing as appropriate.

Further we have identified opportunities to mitigate COVID-19 related challenges and we will provide updates regarding the trial and timing as appropriate.

Our Phase 2b trial for Supercalcimize, or JZP385, an essential tremor, began enrolling, at the end of last year, and this trial may potentially contribute to a pivotal package.

Our Phase 2b trial for Supercalcimize, or JZP385, an essential tremor, began enrolling at the end of last year, and this trial may potentially contribute to a pivotal package.

Our phase <unk> trial for soup account Tonight, our GBP 385, and essential tremor began enrolling at the end of last year and.

In this trial may potentially contribute to pivotal package.

We also initiated a Phase 2 trial for JZP150 in PTSD last year. Enrollment for both trials is ongoing, and we remain on track to top-line data from these, trials in the first half of 2024 and late 2023, respectively.

We also initiated a Phase 2 trial for JZP150 in PTSD last year. Enrollment for both trials is ongoing, and we remain on track to top-line data from these trials in the first half of 2024 and late 2023, respectively.

We also initiated a phase II trial for <unk>, one five hour in.

In PTSD last year.

Element for both trials is ongoing and we remain on track with top line data from these trials in the first half of 2024 and late 2023, respectively.

Moving to oncology, as Dan mentioned, we are advancing a robust development effort for, Zipfelka.

Moving to oncology, as Dan mentioned, we are advancing a robust development effort for Zipf-Zelka. Three separate trials were initiated in 2021. A Phase 3 trial supported by Jazz and our partner Roche evaluates Zipf-Zelka in combination with Tessentric in first-line extensive-stage small-cell lung cancer.

Moving telling colleges as Dan mentioned, we are advancing a robust development efforts as itself.

Three separate trials were initiated in 2021. A Phase 3 trial supported by Jazz and our partner Roche evaluates Zipfelka in combination, with Tessentric in first-line extensive-stage small-cell lung cancer.

Three separate trials were initiated in 2021.

Our phase III trials supported by jazz and our partner Roche.

Valuate steps now in combination with Concentrix and first line extensive stage small cell lung cancer.

A confirmatory Phase 3 trial in second-line small-cell lung cancer being run by our partner, PharmaMARP, and our own post-marketing observational trial in second-line small-cell lung cancer.

A confirmatory Phase III trial in second-line small cell lung cancer being run by our partner, PharmaMARP and our own post-marketing observational trial in second-line small cell lung cancer.

Our confirmatory phase III trial in second line small cell lung cancer being run by our partner farmer.

And our own post marketing observational trial and second line small cell lung cancer.

In the first quarter of this year, we also initiated our Phase 2 basket trial called, eMERGE-201. This is a multicenter, open-label trial designed to assess the safety and efficacy of Zipfelka, as monotherapy in three cohorts of patients with solid tumors, advanced urothelial carcinoma, large-cell neuroendocrine carcinoma of the lung, and homologous recombination-deficient tumors. The primary objective of the trial is to determine Zipfelka's ability to improve patient outcomes, as measured by objective response rate.

In the first quarter of this year, we also initiated our Phase II BASCCA trial called, EMERGE-201. This is a multi-center, open-label trial designed to assess the safety and efficacy, of Zipfelka as monotherapy in three cohorts of patients with solid tumors, advanced urothelial carcinoma, large cell neuroendocrine carcinoma of the lung, and homologous recombination deficient tumors. The primary objective of the trial is to determine Zipfelka's ability to improve patient outcomes, as measured by objective response rate.

In the first quarter of this year, we also initiated a phase II basket trial called emerged 201.

This is a multicenter open label trial designed to assess the safety and efficacy of <unk>.

As monotherapy in three cohorts of patients with solid tumors advanced <unk> carcinoma.

Large cell neuroendocrine carcinoma of the lung.

And homologous recombination deficient tumors.

The primary objective of the trial determines itself because ability to improve patient outcomes.

By objective response rate.

Now moving to RYLASE, in January, we submitted an SDLA for RYLASE to update our label to, an intramuscular Monday, Wednesday, Friday dosing schedule with patients receiving 25 milligrams per meter squared on Monday and Wednesday and 50 milligrams per meter squared on Friday. This schedule, which is more in line with current clinical practice to avoid weekend, dosing, allows patients to maintain a clinically meaningful level of serum-espoused innate activity through the entire duration of treatment. Currently, the label dosing schedule is every 48 hours at 25 milligrams per meter squared.

Now moving to Rylase, in January, we submitted an SDLA for Rylase to update our label to, an intramuscular Monday-Wednesday-Friday dosing schedule, with patients receiving 25 milligrams per meter squared on Monday and Wednesday and 50 milligrams per meter squared on Friday. This schedule, which is more in line with current clinical practice to avoid weekend, dosing, allows patients to maintain a clinically meaningful level of serum asparaginase activity through the entire duration of treatment. Currently, the label dosing schedule is every 48 hours at 25 milligrams per meter squared.

Now moving to release in January we submitted an S. DLA for relates to update our label to an intramuscular or Monday, Wednesday, Friday dosing schedule with patients receiving 25 milligrams per meter squared on Monday, and Wednesday, and 50 milligrams per meter squared on Friday.

This schedule, which is more in line with current clinical practice to avoid weekend dosing.

Allows patients to maintain a clinically meaningful level of serum asparaginase activity through the entire duration of treatment.

Currently the label dosing schedules every 40 analysis at 25 milligrams per meter squared.

Similar to the review of our original BLA, the SDLA will be reviewed under real-time, oncology review process. And I'm pleased to announce that we recently completed a separate SDLA to support intravenous, administration, which will also be reviewed under RTOR.

Similar to the review of our original BLA, the SDLA will be reviewed under real-time, oncology review process, and I'm pleased to announce that we recently completed a separate, SDLA to support intravenous administration, which will also be reviewed under RTOR.

Similar to the review of our original BLA.

<unk> will be reviewed under real time oncology review process and I'm pleased.

To announce that we recently completed a separate BLA to support intravenous administration.

Which will also be reviewed under our CLR.

We're also planning to submit an application in Europe for both IM and IV administration, mid-year with potential approval in 2023.

We're also planning to submit an application in Europe for both <unk> and IV administration mid year with potential approval in 2023.

Now I'll pass the call over to Renee for a financial update.

Now I'll pass the call over to Renee for financial update.

Renee?

Thanks, Rob.

Thanks, Rob I'll begin on slide 16.

I'll begin on slide 16.

Our first quarter results maintain the positive momentum we established last year. First quarter total revenues of $814 million represent growth of 34 percent compared to, the same quarter in 2021. This included neuroscience and oncology revenues of $612 million and $197 million, respectively, both delivering double-digit growth compared to the same period in 2021.

Our first quarter results maintain the positive momentum we established last year. First quarter total revenues of $814 million represent growth of 34% compared to the same, quarter in 2021. This included neuroscience and oncology revenues of $612 million and $197 million, respectively, both delivering double-digit growth compared to the same period in 2021.

Our first quarter results, maintaining the positive momentum we established last year.

First quarter total revenues of $814 million represent growth of 34% compared to the same quarter in 2021.

This included neuroscience, and oncology revenues of $612 million and $197 million respectively.

Both delivering double digit growth compared to the same period in 2021.

As we continue to drive operational efficiency and grow our recently launched products, first, quarter adjusted SG&A expenses were 32% of total revenues, an approximate six percentage point improvement compared to first quarter 2021.

As we continue to drive operational efficiency and grow our recently launched products first quarter. Adjusted SG&A expenses were 32% of total revenues, an approximate six percentage point improvement compared to first quarter 2021.

First quarter adjusted R&D expenses increased to 14% of revenues, reflecting our investment, in multiple clinical trials and development of the GW cannabinoid platform. This is aligned to our focus on driving value from our R&D pipeline and platform.

First quarter, adjusted R&D expenses increased to 14% of revenue.

<unk>, our investment in multiple clinical trials and development of the GW cannabinoid platform.

This is aligned to our focus on driving value from our R&D pipeline and platform.

Our continued focus on both the top and bottom line drove first quarter adjusted net income, of $262 million, a 14% increase compared to the same period in 2021.

Our continued focus on both the top and bottom line drove first quarter adjusted net income of $262 million.

14% increase compared to the same period in 2021.

Adjusted EPS was $3.73 in the first quarter, slightly below the same period last year, and reflecting the increased share count related to the accounting change for convertible debt. This accounting change results in dilution of approximately 44 cents in our first quarter, adjusted EPS. And without this change, adjusted EPS growth would have been 7% compared to the same period, last year.

Adjusted EPS was $3.73 in the first quarter, slightly below the same period last year, and reflecting the increased share count related to the accounting change for convertible debt. This accounting change results in dilution of approximately 44 cents in our first quarter adjusted EPS, and without this change, adjusted EPS growth would have been 7% compared to the same period last year.

Adjusted EPS was $3 73.

First quarter slightly below the same period last year, and reflecting the increased share count related to the accounting change for convertible debt.

This accounting change results in dilution.

<unk> 44 cents in our first quarter adjusted EPS and without this change adjusted EPS growth would have been 7% compared to the same period last year.

We're pleased to deliver strong first quarter results, despite pay or churn, seasonality, and the impact of Omicron. Moving to slide 17, these first quarter results, coupled with our disciplined approach to capital, allocation, enabled us to raise both top and bottom line guidance.

We're pleased to deliver strong first quarter results despite payer churn, seasonality, and the impact of Omicron.

We're pleased to deliver strong first quarter results, despite payer churn seasonality and the impact at all on the crime.

Turning to slide 17, these first quarter results, coupled with our disciplined approach to capital allocation, enabled us to raise both top and bottom line guidance. We've increased total revenue guidance to $3.5 to $3.7 billion, driven by neuroscience revenues, which were increasing to $2.6 to $2.8 billion, or $40 million at the midpoint.

Turning to slide 17, these first quarter results, coupled with our disciplined approach to capital allocation enabled us to raise.

And bottom line guidance.

We've increased total revenue guidance to $3.5 to $3.7 billion, driven by neuroscience, revenues, which were increasing to $2.6 to $2.8 billion, or $40 million at the midpoint. This increase reflects our confidence in both Epidiolex and ZyWave adoption, the increased, focus and resources available to support those products, divestment of CINOSI, continued ZyRAM strength, and updates to our assumptions regarding ZyRAM competitive entry, which have, the dual effect of strengthening ZyRAM revenues and pushing out our assumptions on the entry timing of ZyRAM authorized generics to late 2022, or possibly even January 2023.

We've increased total revenue guidance to three 5% to $3 $7 billion, driven by neuroscience revenues, which were increasing to two six to $2 8 billion or $40 million at the midpoint.

This increase reflects our confidence in both at the dialogues and sideways adoption the increased focus and resources available to support those products.

No that's been a fee.

<unk> xyrem strength and updates to our assumptions regarding xyrem competitive entry, which have the dual effect of strengthening xyrem revenues and pushing out our assumptions on the entry timing of Xyrem authorized generic.

Late 2022, or possibly even January 2023.

With the divestment of CINOSI and our increased revenue guidance, we expect our full year, 2022 revenues from newly launched or acquired products to be between 60 and 65%, representing substantial diversification of our business since 2020, and importantly, a strong foundation for growth.

With the divestment of Sanofi and our increased revenue guidance, we expect our full year 2022 revenues from newly launched or acquired products to be between 60 and 65%, representing substantial diversification of our business since 2020, and importantly, a strong foundation for growth.

With the divestment of Sanofi and our increased revenue guidance, we expect our full year 2022 revenues from newly launched or acquired products to be between 60, and 65% representing substantial diversification of our business in 2020, and importantly, a strong foundation.

Asian tour growth.

In terms of non-GAAP OPEX guidance, we have reduced our projected 2022 SG&A expense by, $50 million at the midpoint. This is primarily attributed to the reallocation and reduction of expenses as a result of the, divestiture of Sunosi.

In terms of non-GAAP OPEX guidance, we have reduced our projected 2022 SG&A expense by $50 million at the midpoint. This is primarily attributed to the reallocation and reduction of expenses as a result of the divestiture of Sanofi.

In terms of non-GAAP Opex guidance.

<unk> reduced our projected 2022 SG&A expense by $50 million at the midpoint. This is primarily attributed to the reallocation and reduction of expenses as a result of the divestiture of today's date.

In addition, we have added IPR&D expense of $65 million to reflect the upfront payments, in our licensing agreements with Werewolf and Sumitomo.

In addition, we have added IP R&D expense of $65 million to reflect the upfront payments and our licensing agreements with werewolf and Sumitomo.

Turning to the bottom line, we are raising our adjusted net income guidance by $50 million, to a range of $1.18 to $1.25 billion. This represents year-over-year A&I growth of greater than 22% at the midpoint and translates, to a full-year adjusted operating margin of 46% at the midpoint.

Turning to the bottom line, we are raising our adjusted net income guidance by $50 million to a range of $1.18 to $1.25 billion. This represents year-over-year A&I growth of greater than 22% at the midpoint and translates to a full-year adjusted operating margin of 46% at the midpoint.

Turning to the bottom line, we are raising our adjusted net income guidance by $50 million to a range of $1 one eight to 125 billion.

This represents year over year growth of greater than 22% at the midpoint and translates to a full year adjusted operating margin of 46% at the midpoint.

As a reminder, our guidance does not include any new yet-to-be-announced corporate development, transactions.

As a reminder, our guidance does not include any new yet-to-be-announced corporate development transactions.

As a reminder, our guidance does not include any new yet to be announced corporate development transactions.

Turning to slide 18, we have already demonstrated rapid deleveraging following the GW transaction, and we are on track to meet our stated non-GAAP net leverage ratio target of below 3.5 times by the end of 2022. In less than a year from closing the GW acquisition, we have reduced our non-GAAP net leverage, ratio by a full turn to approximately 3.9 times at the end of the first quarter, which will enable us to remain opportunistic with respect to corporate development and other strategic investments in our business.

Turning to slide 18, we have already demonstrated rapid deleveraging following the GW transaction, and we are on track to meet our stated non-GAAP net leverage ratio target of below 3.5 times by the end of 2022. In less than a year from closing the GW acquisition, we have reduced our non-GAAP net leverage ratio by a full turn to approximately 3.9 times at the end of the first quarter, which will enable us to remain opportunistic with respect to corporate development and other strategic investments in our business.

Turning to slide 18, we have already demonstrated rapid deleveraging following the <unk> transaction and we are on track to meet our stated non-GAAP net leverage ratio target of below three five times by the end of 2022.

In less than a year from closing that GW acquisition, we have reduced our non-GAAP net leverage ratio by a full turn to approximately three nine times at the end of the first quarter, which will enable us to remain opportunistic with respect to corporate development and other strategic investments in our business.

Slide 19 details our corporate development activities so far this year. Corporate development is a foundational pillar of our strategy to deliver long-term growth, and value for both patients and shareholders and is critical to our efforts to achieve, Vision 2025. We are pleased to have executed on three value-enhancing transactions since the start of the year, each of which is well-aligned with our strategy and vision and reflect our continued transformation into a more innovative and agile company.

Slide 19 details our corporate development activities, so far this year.

Corporate development is a foundational pillar of our strategy to deliver long term growth and value for both patients and shareholders and it's critical to our efforts to achieve vision 2025.

We are pleased to have executed on three value enhancing transactions since the start of the year each of which is well aligned with our strategy and vision and reflect our continued transformation into a more innovative and agile company.

Our divestiture of Spinosi will enable us to sharpen our focus on our highest strategic, priorities, and laser focuses our neuroscience commercial teams on achieving the full potential of Zywave and Epidiolex.

Slide 20 Our divestiture of Spinoza will enable us to sharpen our focus on our highest strategic priorities and laser focuses our neuroscience commercial teams on achieving the full potential of Zywave and Epidiolex.

Our divestiture of Sanofi will enable us to sharpen our focus on our highest strategic priorities and laser focuses our neuroscience commercial team on achieving the full potential of evaluate and at the dialogue.

Our timeline to close remains on track, and we believe that Axiom is well-positioned to, deliver access to this important medication.

Our timeline to close remains on track, and we believe that Axiom is well-positioned to deliver access to this important medication.

Timeline to close remains on track and we believe that <unk> is well positioned to deliver access to this important medication.

I'm also excited by the potential of the compounds we've licensed from Sumitomo and WERWA. Both are promising and differentiated compounds targeting significant unmet patient needs, in areas where we can leverage our expertise and internal R&D engine to drive their development.

Slide 21 I'm also excited by the potential of the compounds we've licensed from Sumitomo and WERWA. Both are promising and differentiated compounds targeting significant unmet patient needs in areas where we can leverage our expertise and internal R&D engine to drive their development.

I'm also excited by the potential of the compounds, we have license from Sumitomo and <unk>, both are promising and differentiated compounds targeting significant unmet patient needs in areas, where we can leverage our expertise and internal R&D engine to drive their development.

These three transactions are aligned with using our capital wisely, optimizing our portfolio, and positioning us to drive long-term value and growth.

Slide 22 These three transactions are aligned with using our capital wisely, optimizing our portfolio, and positioning us to drive long-term value and growth.

These three transactions are aligned with using our capital wisely, optimizing our portfolio and positioning us to drive long term value and growth.

As we look at additional pipeline and commercial deals, primarily in our core therapeutic areas, we will remain focused on opportunities where we believe we can provide unique insights, commercialize efficiently, and bring significant value to patients.

As we look at additional pipeline and commercial deals primarily on our core therapeutic areas.

We'll remain focused on opportunities, where we believe we can provide unique insight.

<unk> efficiently and bring significant value to patients.

With our strategic investments, long-lived product portfolio, and continued commitment to operational excellence, we believe we are well-positioned to achieve our Vision 2025 and deliver further diversification, sustainable growth, and enhanced value to patients and shareholders.

Slide 23 With our strategic investments, long-lived product portfolio, and continued commitment to operational excellence, we believe we are well-positioned to achieve our Vision 2025 and deliver further diversification, sustainable growth, and enhanced value to patients and shareholders.

With our strategic investments long lived product portfolio and continued commitment to operational excellence. We believe we are well positioned to achieve our vision 2025.

And deliver further diversification sustainable growth and enhanced value to patients and shareholders I would now like to turn the call back to Bruce.

I'd now like to turn the call back to Bruce.

Thanks, Renee I'll conclude our prepared remarks on slide 21.

Our achievements in the first quarter of 2022 were a continuation of the strong momentum we created last year.

As I shared at the outset of the call we have a demonstrated considerable progress across commercial R&D and corporate development.

In commercial we are focused on execution across our neuroscience and oncology portfolios, including maintaining the strong start of our slightly the NIH and reilly's launches as well as realizing the blockbuster potential of up of dialects and continuing to drive adoption of <unk> in narcolepsy.

<unk>.

With respect to our pipeline, we anticipate multiple IMD submissions through 2023, we are advancing several mid and late stage programs and expect the first clinical data from our <unk> program this quarter.

Operational excellence remains a key area of focus including optimizing our adjusted operating margin.

Corporate development transactions announced already in 2020 to expand our oncology pipeline and extend our leadership in sleep Medicine importantly, they also demonstrate our ability to utilize our significant cash flow to expand and diversify our business.

We're pleased with the way, we have leveraged our experience and expertise to identify and perform against the drivers outlined in vision 2025, which in our view come down to having the right Foundation, the right assets and the right opportunities for execution.

Thanks, Rene.

Thanks, Renee.

Raising our top and bottom line guidance for the year underscores our confidence across the business and our strategy.

That concludes our prepared remarks, I'd now like to turn the call over to the operator to open the line for Q&A.

I'll conclude our prepared remarks on slide 21.

Thank you ladies and gentlemen, if you have a question or comment at this time. Please press Star then one on your telephone keypad.

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Our first question or comment comes from the line of Ken Cacciatore from Cowen Your allowance your line is open.

Great start to the year, everyone. Just wondering as we think about the XI wave NIH really nice penetration and I know Dan gave some perspective of this could look like as standard rare disease launch I was wondering if you could frame out a little bit what his view of us kind of a standard rare disease launch it looks like maybe kind of over three year window.

And with that just wondering if where you believe this could peak obviously xyrem.

Using maybe narcolepsy in Xyrem penetration into narcolepsy is a comparator can you give us a sense of where you think eventually this may be able to.

To peak at as you've worked through the early launch thanks, so much.

Yeah, Ken a couple parts to that question. So let me split it up a little bit and.

Maybe comment first on.

Peak expectations, there's never been a drug.

Approved to treat this serious disorder idiopathic hypersomnia.

So we're in uncharted territory right now but.

We do have a highly effective agent as evidenced by our clinical trial data.

And in a second youll hear from from Kim a little bit how that early launches going and what we're hearing from.

Customers and patients.

But I will say, we think the ultimate size of this market opportunity at least as measured by patients could be as large as the narcolepsy opportunity.

Our initial launch focus is a little more narrow than all potential diagnose.

Diagnose patients with IH, but there's certainly that potential that this could be quite significant opportunity I'll break the rest of your question into a couple pieces, maybe Dan could talk a little bit about why he used the language. He did in describing how this launch might be different.

From our narcolepsy highway of launch and then Kim maybe you can comment on what we've seen in our first few months so Dan.

Sure. Thanks, Chris Yeah, So NIH, unlike narcolepsy theres not a pool of experienced oxidate patients. So in narcolepsy, we had the data and we're able to very rapidly bring experienced oxidate xyrem patients over to <unk>.

It's more of a first FDA approved therapy.

I know that there is 37000.

And those patients actively seeking treatment.

Sort of bringing them into the office, making them aware of the medicine getting them enrolled in the ramps and bringing them on.

Patient by patient and titrated up.

The good news and you'll hear from Kevin is that in real World experience has been very positive for the patient to the adoptive therapy.

So maybe with that Kim you want to give more color.

Sure happy to Dan So hopefully youre gathering that we are very pleased with the positive early launch momentum that we're seeing and I'm very pleased that 750 patients with IH have already been started by way of since we launched it just last November and really what we've been hearing in the last quarter is very consistent.

With what we've been hearing from November and that are.

Healthcare providers are very pleased with the profile of the medicine.

On behalf of treatment option.

With positive and compelling clinical trial results.

Ultimately dress is not just one or two of the symptoms of the condition, but addressing the default condition.

And really the phase III clinical trial results have been very powerful for us in terms of them looking both at objective and patient access.

My mum on really hitting the mark with prescribers.

And then lastly, the <unk>.

Initial coverage that we've had some payers on this launch has.

Ultimately allowed fibers to prescribe with confidence they've been very pleased with that coverage and that's really been a driver for us in the launch. So overall our team is remaining focused on executing our launch strategy building on the momentum that we have.

Our achievements in the first quarter of 2022 were a continuation of the strong momentum we created last year.

And executing both a branded effort as well as continuing to help educate our customers around some important aspects of idiopathic hypersomnia.

Diagnosing doing patient identification, so overall very positive signals, we're receiving.

Thank you. Our next question or comment comes from the line of Jessica Fye from Jpmorgan. Your line is open.

Hey, guys. Good afternoon. Thanks for taking my question I wanted to ask about the Orexin aging in licensed.

Tractor due to this molecule in particular and how confident are you that you'll be able to avoid the side effects that.

What we're seeing with Takeda as product was that issue they had on target or off target.

And then related to that when do you expect to have the Japan phase one data and do you expect to also conduct phase one work in the U S.

As I shared at the outset of the call, we have demonstrated considerable progress across commercial, R&D, and corporate development.

Hi, Jeff Thanks for the question.

Late breaking news, obviously coming out just a few minutes before a press release, but maybe I can ask Rob to weigh in a little bit on what excites us about this particular program, but also address your question about.

How it might or might not relate to what we've seen from another agent so rob.

With respect to our pipeline, we anticipate multiple IND submissions through 2023.

We are advancing several mid- and late-stage programs and expect the first clinical data from our Dabiximals program this quarter.

We are advancing several mid- and late-stage programs and expect the first clinical data from our Nabiximals program this quarter.

Yeah happy to Bruce.

Operational excellence remains a key area of focus, including optimizing our adjusted operating margin.

The corporate development transactions announced already in 2022 expand our oncology pipeline and extend our leadership in sleep medicine.

Importantly, they also demonstrate our ability to utilize our significant cash flow to expand and diversify our business.

Very excited about this mechanism, which we know a great deal about.

We're pleased with the way we've leveraged our experience and expertise to identify and perform against the drivers outlined in Vision 2025, which in our view come down to having the right foundation, the right assets, and the right opportunities for execution.

Raising our top and bottom line guidance for the year underscores our confidence across the business and our strategy.

And the molecule will be developing.

Highly specific orexin two antagonist, that's also highly potent.

And given the preclinical and clinical validation around this target.

Think it's a very.

Promising mechanism.

It has the potential to really be complementary.

<unk> as a treatment for narcolepsy, but also beyond into idiopathic hypersomnia.

Sleep disorders.

With regard to the question around <unk>.

Toxicity was observed with Takeda this is a novel.

Chemical entity, we don't believe that toxicity was mechanism based and so I don't.

Anticipate any read through to this particular.

Molecule.

With regard to toxicity.

And then you asked about the ongoing development as a clinical phase molecule currently.

Healthy volunteers are being dosed in Japan.

We will leverage those emerging data, even before that trial and to.

To help initiate and accelerating further.

Phase one development to set us up for a rapid transition into pivotal trials.

That concludes our prepared remarks.

I'd now like to turn the call over to the operator to open the line for Q&A.

Thank you. Our next question or comment comes from the line of Jason <unk> from Bank of America. Your line is open.

Thank you.

Hey, guys. Thanks for taking my question so.

Ladies and gentlemen, if you have a question or comment at this time, please press star then 1 on your telephone keypad.

Ladies and gentlemen, if you have a question or comment at this time, please press star then one on your telephone keypad.

So I just wanted to go there.

If your question has been answered or you wish to remove yourself from the queue, simply press the pound key.

Each question and trying to understand market dynamics can you speak to the impact like dose titration has on revenue recognition in the early period, like <unk>, where octavate or as I always sales were a little bit light versus consensus, but yet you're raising guidance. So trying to just get a sense of.

In order to facilitate as many participants as possible, we ask that you please limit yourself to one question.

If you have a follow-up question, you may rejoin the queue.

Again, if you have a question or comment at this time, please press star then one on your telephone keypad.

Our first question or comment comes from the line of Ken Cacciatore from Cowan.

Then you might get patients to a more normalized maintenance dose or alternatively, perhaps the guidance raise on sales was more about the push to the AG launch and Thats fine just wanted to clarify those dynamics. Thanks.

Your line is open.

Yes, maybe I'll split this into a couple of pieces. There was a piece of this is a very specific to IH, but maybe I'll come to Renee and a second for just talking about what we typically see in the first quarter.

For our oxygen business be it XI away for narcolepsy as highway for IH or Xyrem.

But on your particular question.

About IH it is true that patients new to therapy.

Which is generally the case for all IH patients and not generally the case for most narcolepsy.

Cases, where they can transfer over dose for dose.

<unk> are being titrated up on dose over time, and so obviously usage of the product is what drives our revenue recognition. So that does increase with time, but I think the dynamic youre seeing in our results is probably more attributed to something else and Rene maybe I can ask you to weigh in on that.

Sure I'm happy to so generally speaking and we've seen this over the last several years with the oxalate franchise. What we see in Q1 is largely a function of payer churn plan reset and then as a result increased in patients accessing.

Patient access programs that we provide so that results in increased growth to that and if you look at the last several years you do see a decline from Q4 to Q1 in terms of the oxalate revenues.

But coming back to the guidance more broadly in terms of raising $540 million at the top line, which of course was driven by neuroscience. There are a number of factors that go into it as as I had mentioned on the call we have <unk>.

<unk> been at the dialects adoption and what we're seeing that gives us continued confidence we do with the Sanofi divestment have an increased focus in terms of shared management teams and marketing teams that now will be focused squarely on at the dialect since highway really looking to Max.

<unk> has the potential and then Jason you had also mentioned <unk>. So with continued xyrem strength related to updates on.

On an assumed xyrem competitive entry that has the impact of also pushing out our assumptions for AG timing. So it's a combination of those factors that lead to the change in guidance.

Again, if you have a question or comment at this time, please press star then 1 on your telephone keypad.

Thank you.

Next question or comment comes from the line of Marc Goodman from SBB Leerink. Your line is open.

Our first question or comment comes from the line of Ken Cacciatore from Cowan.

Yes, I was hoping you could give us a little more color just on epic dialects talk about some of the underlying fundamentals in the United States, but also in Europe , and just give us a sense of how it's ramping in some of these countries.

Your line is open.

Hey, great start to the year, everyone.

Just wondering, as we think about the Xi wave and IH, really nice penetration.

Thank you.

And I know Dan gave some perspective of this could look like a standard rare disease launch.

I was wondering if he could frame out a little bit what his view of kind of a standard rare disease launch looks like, maybe kind of over a three-year window.

Yes, maybe mark will have Kim start on the U S side, and then Dan maybe you can jump in with some commentary ex U S as well so Kim.

And with that, just wondering where you believe this could peak?

Obviously, using maybe narcolepsy and Xyrem's penetration into narcolepsy as a comparator, can you give a sense of where you think eventually this may be able to peak at as you work through the early launch?

Yes sure.

Thanks so much.

So as you saw in the results, we saw 6% revenue growth in the first quarter compared to <unk>.

First quarter 'twenty, one last year.

Yeah, Ken, a couple parts to that question, so let me split it up a little bit and maybe, comment first on peak expectations.

There's never been a drug approved to treat this serious disorder, idiopathic hypersomnia, so we're in uncharted territory right now, but we do have a highly effective agent as evidenced by our clinical trial data, and in a second you'll hear from Kim a little bit how that early launch is going and what we're hearing from our customers and patients.

But I will say we think the ultimate size of this market opportunity, at least as measured, by patients, could be as large as the narcolepsy opportunity.

And I think you recall back in fourth Q.

We did talk about the fact that at the dialogue net product sales benefited from a temporary increase in specialty pharma.

Our initial launch focus is a little more narrow than all potential diagnosed patients, with IH, but there's certainly that potential that this could be a quite significant opportunity.

Pharmacy inventory levels of about $18 million now we have seen the majority of this will reverse out in the first quarter and if we excluded this impact we saw double digit revenue growth of about double basically double digit revenue growth in the first quarter plus continued growth in underlying demand.

I'll break the rest of your question into a couple pieces.

Maybe Dan could talk a little bit about why he used the language he did in describing, how this launch might be different from our narcolepsy's I wave launch, and then, Kim, maybe you can comment on what we've seen in our first few months.

So Dan?

Despite the challenges, but we're certainly out there posed by the Amazon surge in the early part of the quarter. So yes.

Sure.

With all of this what underlies that is that we're continuing to see positive trends in terms of adding new prescribers.

Thanks, Bruce.

Well as we see current prescribers broadening their use and using it earlier in the treatment regimen and as we bring those new prescribers onboard.

Yes.

So, in IH, unlike narcolepsy, there's not a pool of experienced oxidate patients.

So, in narcolepsy, we had the data and were able to, you know, very rapidly bring experienced, oxidate XyROM patients over to XyWave.

In IH, it's more of a first FDA-approved therapy.

Feel like Theyre going to follow suit with the existing prescribers in terms of getting more experience.

We know that there's 37,000 diagnosed patients actively seeking treatment, but it's sort, of bringing them into the office, making them aware of the medicine, getting them enrolled in the REMS, and bringing them on patient-by-patient and titrating up.

The good news, and you'll hear from Kim, is that in real world, the experience has been, very positive for the patients who've adopted therapy.

In the clinical utility and the product and starting to adopt it more broadly and ultimately make it a cornerstone of therapy. So.

So, maybe with that, Kim, you want to give more color?

We remain very.

Confident.

Is going to become a standard of care and treatment resistant epilepsy.

Sure.

And I'll just leave you also with the notion that we're very pleased right now.

Happy to, Dan. So, hopefully, you're gathering that we are very pleased with the positive early launch, momentum that we're seeing, and very pleased that 750 patients with IH have already been started on XyWave since we launched it just last November.

And really, what we've been hearing the last quarter is very consistent with what we've, been hearing since November, and that our, you know, healthcare providers are very pleased with the profile of the medicine, excited to have a treatment option, you know, with positive and compelling clinical trial results that, you know, ultimately addresses not just one or two of the symptoms of the condition, but addresses the full condition itself.

And really, the, you know, phase three clinical trial results have been very powerful for, us in terms of them looking both at objective and patient-assessed measurements, and really hitting the mark with prescribers.

And then, lastly, you know, the initial coverage that we've had from payers on this launch, has ultimately allowed prescribers to, you know, prescribe with confidence.

With the increases in personal engagement that will be achieved.

They've been very pleased with that coverage, and it's really been a driver for us in the, launch.

So, overall, our team is remaining focused on executing our launch strategy, building, on the momentum that we have, and executing, you know, both a branded, you know, effort, as well as continuing to help educate our customers around some important aspects of idiopathic hypersomnia, and diagnosing it, and doing patient identification.

So, overall, you know, very positive signals we're receiving.

In March and April as we kind of came out of it on the <unk> surge and really feel like were building. Some nice momentum here. So that's what's giving us a lot of encouragement in terms of where it will go in the rest of the year.

And outside the U S. We're really we're really pleased with the progress we've been making significant progress in Europe in the first quarter.

We launched the dialects in Ireland in Norway.

We expect the full impact of the full year from the second half launches, Italy and Spain.

We're off to a good start.

At the end of 'twenty one.

And sort of the last major market countries in France, or we expect.

Launched this year pending final pricing and reimbursement discussions and that would have us.

Launched fully in all five major European markets.

And there is still opportunity for additional launches and growth. We've got approval in 34 countries. We've launched in 13.

Importantly, because of the value of the product in.

The data we've got we've been able to establish pricing at <unk>.

Later than 70% of the U S whack.

So I think theres a lot of opportunity for continued momentum outside the U S.

Thank you.

Our next question or comment comes from the line of Jessica Fye from J.P. Morgan.

Next question or comment comes from the line of Brandon Folkes from Cantor Fitzgerald. Your line is open.

Your line is open.

Hey, guys.

Good afternoon.

Hey, great start to the year, everyone.

Hi, Thanks for taking my question and congratulations on the good start in guidance maybe.

Just wondering, as we think about the Xi wave and IH, really nice penetration, and I know Dan gave some perspective of this could look like a standard rare disease launch.

I was wondering if you could frame out a little bit what his view of kind of a standard rare disease launch looks like, maybe kind of over a three-year window.

And with that, just wondering where you believe this could peak.

So maybe just on <unk>.

Color on the current market share in the second line small cell lung cancer, setting compared to <unk> <unk> and <unk>.

Our oncology monotherapy at this stage. Thank you.

Thanks for taking my question.

I wanted to ask about the Orexin agent you enlicensed.

Thanks so much.

Kim maybe I'll turn that one over to you.

Yeah, Ken, a couple parts to that question.

What attracted you to this molecule in particular, and how confident are you that you'll be able to avoid the side effects that we're seeing with Takeda's product?

So let me split it up a little bit and, you know, maybe comment first on peak expectations.

Yeah sure. So we're thrilled to have rapidly established delta as the treatment of choice in second line small cell lung cancer. So it is the leader out there and a fair amount of the share has come.

You know, there's never been a drug approved to treat this serious disorder, idiopathic hypersomnia, so we're in uncharted territory right now.

From from Telco T can.

While we don't provide product level guidance.

We're continuing to see.

Opportunities for growth with that Delta.

By displacing just what you alluded to further displacing telcos he can as well as.

Immuno oncology products that are being used as monotherapy, but.

But we also see quite a bit of potential among patients that are today being re challenged with platinum based chemotherapies are receiving other chemotherapy regimens.

So we're continuing to see demand for that Delta.

And are progressing as you heard Rob talk about a robust clinical development program that we feel is going to make the product proposition, even stronger and provide even more rationale for expanding its use in the second line setting.

Was that issue they had on target or off target?

But, you know, we do have a highly effective agent, as evidenced by our clinical trial data, and in a second you'll hear from Kim a little bit how that early launch is going and what we're hearing from our customers and patients.

But I will say we think the, you know, ultimate size of this market opportunity, at least as measured by patients, could be as large as the narcolepsy opportunity.

And Kevin This is Robert.

And then, related to that, when do you expect to have the Japan Phase I data, and do you expect to also conduct Phase I work in the U.S.?

You know, our initial launch focus is a little more narrow than, you know, all potential diagnosed patients with IH, but there's certainly that potential that this could be a quite significant opportunity.

I'll break the rest of your question into a couple pieces.

Go ahead Rob.

Maybe Dan could talk a little bit about why he used the language he did, in describing how this launch might be different from our narcolepsy's I wave launch, and then, Kim, maybe you can comment on what we've seen in our first few months.

Yes, I'd love to add to that color. There just to just to say that I think from a medical perspective.

So, Dan?

<unk> gained experience with itself in the second line.

Sure.

They're going to find that.

Thanks, Bruce.

Yeah, so in IH, unlike narcolepsy, there's not a pool of experienced, oxidate patients.

Relatively easy drug to give and very well tolerated.

So in narcolepsy, we had the data and were able to, you know, very rapidly bring experienced oxidate xyrem patients over to XyWave.

<unk> to re challenging for example, with a platinum doublet.

Can only be given for a limited time periods and I think that that experienced growth.

Hi.

I'd be expecting greater use, especially in that segment I'm also very.

In IH, it's more of a first FDA-approved therapy.

Im very.

We know that there's 37,000 diagnosed patients actively seeking, treatment, but it's sort of bringing them into the office, making them aware of the medicine, getting them enrolled in the REMS, and bringing them on patient by patient and titrating up.

Optimistic about the potential to bring this in.

The good news, and you'll hear from Kim, is that in real world, the experience has been very positive for the patients who've adopted therapy.

First line therapy as an add on and as you know we have an ongoing first line trial will be compared to placebo as add on therapy during maintenance for extensive stage small cell lung cancer, a disease that has a very poor prognosis. The great majority of patients have active residual disease at the end of the chemo.

So maybe with that, Kim, you want to give more color?

Sure.

So it's a real opportunity to extend their progression free survival and hopefully ultimately overall survival.

Giving giving patients a longer duration.

Duration of therapy than if they were to wait for a second line.

Thank you. Our next question or comment comes from the line of Jeff Hung from Morgan Stanley . Your line is open.

Jeff, thanks for the question.

Happy to, Dan. So hopefully you're gathering that we are very pleased with the positive early, you know, launch momentum that we're seeing, and very pleased that 750 patients with IH have already been started on XyWave since we launched it just last November.

You know, late breaking news, obviously, coming out just a few minutes before our press release, but maybe I can ask Rob to weigh in a little bit on what excites us about this particular program, but also address your question about how it might or might not relate to what we've seen from another agent.

And really, what we've been hearing the last quarter is very consistent with what we've been hearing since November, and that our, you know, healthcare providers are very pleased with the profile of the medicine, excited to have a treatment option, you know, with positive and compelling clinical trial results that, you know, ultimately addresses not just one or two of the symptoms of the condition, but addresses the full condition itself.

And really the, you know, phase three clinical trial results have been very powerful for us in terms of them looking both at objective and patient assessed measurements, and really hitting the mark with prescribers.

And then lastly, you know, the initial coverage that we've had from payers on this launch has, ultimately allowed prescribers to, you know, prescribe with confidence.

They've been very pleased with that coverage, and it's really been a driver for us in the launch.

So overall, our team is remaining focused on executing our launch strategy, building on the momentum that we have, and executing, you know, both a branded, you know, effort as well as continuing to help educate our customers around some important aspects of idiopathic hypersomnia and diagnosing it and doing patient identification.

Okay. Thanks for taking the question.

So overall, you know, very positive signals we're receiving.

Thank you.

Been active on the BD front, such as today's announcement of GBP. Four one was the divestment of <unk> see more of a onetime event like what is your view on divesting other assets to further refocus on the higher strategic priorities. Thanks.

So, Rob?

Yes, Renee, maybe I'll hand that over to you.

Yeah, happy to, Bruce.

Our next question or comment comes from the line of Jessica Fye from JP Morgan.

Sure Yes. Thanks for the question so as we think about this and as the transaction.

So, very excited about this mechanism, which we know a great deal about, and the molecule that we'll be developing is a highly specific Orexin II agonist that's also highly potent. And given the preclinical and clinical validation around this target, we think it's a very promising mechanism, and has the potential to really be complementary to Oxabate as a treatment for narcolepsy, but also beyond into idiopathic hypersomnia and other sleep disorders.

With regard to the question around toxicity that was observed with Takeda, this is a novel chemical entity.

Your line is open.

As we said, we're really focused on ensuring that we have the ability.

We don't believe that the toxicity was mechanism-based, and so I don't anticipate any read-through to this particular molecule with regard to toxicity.

Hey, guys.

To focus on our highest strategic priorities.

Coming into 2022, and looking at our business Holistically.

Good afternoon.

We see other priorities that relate to products that we've either launched or acquired since we launched Sanofi. So as we look at our broader portfolio and think about what has transpired since getting approval and launching Sanofi, we had approval and launch of <unk>.

Thanks for taking my question.

<unk> in both narcolepsy NIH, we have launched the Cellcom, we acquired GW with that the dialogues and then also launched Riley. So clearly our business has transformed fairly dramatically and we're really thrilled with the momentum that we have across our business. So we will.

Continue to look at the portfolio and ensure that we're optimizing both the commercial portfolio, where we are expanding geographically and that importantly, continuing to lean in to business development.

Both for expanding and growing our pipeline, but as well as expanding and diversifying our revenues as we've stated with with vision 2025.

Thank you. Our next question or comment comes from the line of velocity Prasad from Barclays. Your line is open.

Hi, Thanks for the question couple of them <unk>.

Can you help us understand with regard to the survey on the restaurants that you are seeing with 40% of respondents.

This drug up that treatment algorithm are you seeing it in the form of increased prescription growth.

If not is there is an incremental that we need to look falko.

I wanted to ask, about the orexsin agent you enlicensed.

What attracted you to this molecule in particular, and how confident are you that you'll be able to avoid the side effects that were seen with Takeda's product?

Secondly on Sanofi I think its been its class a for me.

I would think that jazz with a calling point is that you have learned and fitting your narcolepsy and spleenful because you would have been the best position to extract value from this asset can you help us understand why the divestment. Thanks.

Was that issue they had on target or off target?

Yes, <unk>, maybe I'll take those in opposite order and just say.

<unk> was a little bit different as we moved out of that core narcolepsy space that we've been so active in for so long into.

Eds in obstructive sleep apnea, which required.

Much broader set of physicians and physicians, who obviously, both werent familiar with <unk>.

Ox abate and or I'm, sorry, we're not familiar with.

Sanofi, but also didn't in all cases.

Have drug therapy as part of their standardized approach to optimizing their OSA patients so not quite as perfect an overlap as you would think and.

As Rene said when we looked at our portfolio after everything that's happened with.

And then you asked about the ongoing development.

This is a clinical phase molecule. Currently, healthy volunteers are being dosed in Japan, and we will leverage those emerging data even before that trial ends to help initiate and accelerate further Phase I development to set us up for a rapid transition into physical trials.

All of our product launches over 2020, one and.

And the acquisition of GW, we essentially had our smallest near term opportunity product with the largest sales force.

And while we could have continued down that road, we had other places in our business, including our ongoing launches some exciting pipeline programs. In addition to some exciting Corp, Dev opportunities and when we thought about where we wanted to deploy our capital we saw.

More on on target strategic opportunities available to us.

Thank you.

And then related to that, when do you expect to have the Japan phase one data, and do you expect to also conduct phase one work in the U.S.?

On the first part of your question about <unk> and what that survey data about potentially moving it up in the algorithm means for our business Kim maybe I'll hand that to you.

Our next question or comment comes from the line of Jason Gerberi from Bank of America.

Jess, thanks for the question.

Your line is open.

Sure Yeah, and I'll clarify. So these are current prescribers those that have gotten some experience early on the first couple of years Epidiorite.

It really telling us that while they were primarily using it.

Fourth line, let's say agent they've had good results with it and Theyre starting to use that third line second line.

And so forth. So that's really the intention there and I would say that the effect of that is being felt now that also in the future because theyre basically saying theyre just starting to do that Additionally, as we talked about as were adding new prescribers onto our prescriber base, we feel very confident they're going to go through a very similar experience.

Having a positive first experience with their patients in later lines of use and then moving towards <unk>.

<unk> four into earlier lines of here.

So, Rob?

Thank you. Our next question or comment comes from the line of Madhu Kumar from Goldman Sachs. Your line is open.

Hey, guys.

Yeah, happy to, Bruce.

So, very excited about this mechanism, which we know a great deal, about.

And the molecule that we'll be developing is a highly specific orexin-2 agonist that's also highly potent. And given the preclinical and clinical validation around this target, we think it's a very promising mechanism and has the potential to really be complementary to Oxabate as a treatment for narcolepsy, but also beyond into idiopathic hypersomnia and other sleep disorders.

With regard to the question around toxicity that was observed with Takeda, this is a novel chemical entity.

Hey, guys. Thanks for taking our call. This is rob on come due.

We don't believe that the toxicity was mechanism-based, so I don't anticipate any read-through to this particular molecule with regard to toxicity.

Thanks for taking my question.

Thank you.

And then you asked about the ongoing development.

This is a clinical-phase molecule. Currently, healthy volunteers are being dosed in Japan, and we will leverage those emerging data even before that trial ends to help initiate and accelerate further Phase I development to set us up for a rapid transition into physical trials.

Wondering could you break down the levers that are driving that.

Up revenue guidance through the end of the year, just maybe specifically go through what gives you confidence that.

You can raise that you were able to raise guidance.

So I just wanted another Zywave IH question.

Our next question or comment comes from the line of Jason Gerberry from Bank, of America.

Yes, Renee you want to take that one.

Sure, Yes, Im happy too so as we've mentioned previously the $40 million raised at the topline was strengthened by neuroscience.

I'm trying to understand Lush Dynamics.

Your line is open.

Can you speak to the impact, like, dose titration has on revenue recognition in the early period, like 1Q where Oxabate or Zywave sales were a little bit light versus consensus, but yet you're raising guidance, so trying to just get a sense of when you might get patients to a more normalized maintenance dose or alternatively perhaps the guidance raised on sales was more about the push to the AG launch.

Truly reflects our continued confidence in both at the <unk> the adoption, but also as we've mentioned with the divestment of Sanofi, having increased focus and resources available to get then behind those two product launches. We did have shared managed.

And that's fine.

I just wanted to clarify those dynamics.

<unk> share of marketing that supported both sideways and Sanofi and so we're also now able to shift some of that focus over squarely to our remaining neuroscience products.

Thanks.

Yeah, maybe I'll split this into a couple pieces.

There was a piece of this that was very specific to IH, but maybe I'll come to Renee in a second for just talking about what we typically see in the first quarter for our be it Zywave for narcolepsy, Zywave for IH or Zyrem.

We've mentioned that as we look at <unk> and Xyrem and the competitive situation. We've updated some of our assumptions regarding the competitive entry timing and while that shifts out. It does both strengthen xyrem revenues, but also has been.

But on your particular question, about IH.

<unk> of pushing our assumptions around the Xyrem AG entry to late 2022 or as I had mentioned on the call on the prepared remarks, even potentially January 2023, and we were able to raise that revenue guidance despite taking sanofi.

Our revenue generating product out of the portfolio.

And I'll also just comment that we didn't just raise the top line guidance of course, we reduced SG&A by $15 million at the midpoint, we brought in two assets.

<unk> raised our expectation for IP R&D by $65 million, and then still managed to increase our expectations for Eni.

$50 million at the midpoint and going back to our commitment to delivering more to the bottom line to operational excellence.

In turn the impact of expanding our projected adjusted operating margin to 46% at the midpoint.

For the year of 2022.

Thank you.

Our next question or comment comes from the line of Amy <unk> from Needham <unk> Company. Your line is open.

Hey, guys.

Hello, Thank you for taking the question for Andy.

I Wonder if you can give me an answer.

Site on.

What.

Yes.

But we didn't look like.

For the <unk>.

<unk>.

Right.

For the rest of the year.

Thanks for taking my question.

Okay.

201 basis.

It is going to continue.

Okay.

Yes.

I'm not sure I.

Totally understood. Your question, so I want to try that one more time I'm, sorry, you broke up a little bit.

So, I just wanted another Xywave IH question in trying to understand loss dynamics.

I'm sorry so.

I Wonder if you can.

Add more color on.

The growth in the narcolepsy patient population.

<unk>.

You mentioned that.

There is some growth in the first Q I wanted to know.

Do you think it's going to be continuing in the 2022.

Okay.

Can you, speak to the impact, like, dose titration has on revenue recognition in the early period, like 1Q, where Oxabate or Xywave sales were a little bit light versus consensus, but yet you're raising guidance?

Yes, Kim you want to talk about growth in <unk>, specifically on the narcolepsy side.

Both what we saw in the first quarter, but how to think about that going forward.

Tim are you muted, yes, sorry, yes so.

So, trying to just get a sense of when you might get patients to a more normalized maintenance dose, or alternatively, perhaps, the guidance raised on sales was more about the push to the AG launch, and that's fine.

In the first quarter, we saw some nice growth there in narcolepsy for Xilinx, specifically, we had an increase from.

I just wanted to clarify those dynamics.

606650 patients in the fourth quarter to 7050 patients.

Thanks.

Second quarter.

So overall pleased pleased.

Pleased with that launch now that growth now we would expect with any launch the uptake curve to come down and flattened a bit over time and I'm, particularly.

Yeah.

Maybe I'll split this into a couple pieces.

As we were impacted by as we mentioned on the kind of January and February , but we feel very confident that that growth that we've been seeing is going to continue throughout the year and that physicians are going to continue.

And transition their patients over from Xyrem Kids die away.

And maybe I'll, just maybe I'll, just broaden the answer a little bit to say.

In the near term, we will have a business unit that's completely focused on XI waves.

Hi.

Which we obviously view as a huge opportunity both in narcolepsy and idiopathic hypersomnia, but I also just want to go back to vision 2025, and point out that we view this as a <unk> and durable franchise.

You know, it is true that patients new to therapy, which is generally the case for all IH patients and not generally the case for most narcolepsy cases where they can transfer over, dose for dose, you know, people are being titrated up on dose over time.

There was a piece of this that was very specific to IH, but maybe I'll come to Renee in a second for just talking about what we typically see in the first quarter for, our Oxabate business, be it Xywave for narcolepsy, Xywave for IH, or XyREM.

And so, you know, obviously, usage of the product is what drives our revenue recognition.

Even in the face of competition and so.

Our target that $2 billion in revenues, even as we get out to 2025 will be coming from the auction bait franchise I think tells you.

Where we see continued opportunity overtime.

Thank you. Our next question or comment comes from the line of Gary Nachman from BMO capital markets. Your line is open.

So that does increase with time.

But on your particular question about IH, you know, it is true that patients new to therapy, which is generally the case for all IH patients, and not generally the case for most narcolepsy cases where they can transfer over dose for dose, you know, people are being titrated up on dose over time.

But I think the dynamic you're seeing in our results is probably more attributed to something else.

And so, you know, obviously, usage of the product is what drives our revenue recognition, so that does increase with time.

And, Renee, maybe I can ask you to weigh in on that.

But I think the dynamic you're seeing in our results is probably more attributed to something else, and, Renee, maybe I can ask you to weigh in on that.

Hi, Thanks.

Sure.

In terms of the ramp for XI always NIH 250 patients last quarter and 750 this quarter I'm curious how concentrated that prescribing has been with your target physicians. The early adopters. So I'm wondering how much low hanging fruit there is to capture those IH patients versus how challenging it will be.

To really get much broader prescribing across sleep specialists in.

<unk> primary care play a role here at all with referrals or is that much farther down the line. Thank you.

I'm happy to.

So, generally speaking, and we've seen this over the last several years with the Oxabate franchise, what we see in Q1 is largely a function of payer churn, plan resets, and then, as a result, increase in patients accessing those patient access programs that we provide.

So that results in increased growth to net, and if you look at the last several years, you do see a decline from Q4 to Q1 in terms of the Oxabate revenues.

So generally speaking, and we've seen this over the last several years with the Oxybate franchise, what we see in Q1 is largely a function of payer churn, plan resets, and then as a result, increase in patients accessing those patient access programs that we provide.

As I mentioned on the call, we have Zywave and Epidiolex adoption, and what we're seeing that gives us continued confidence.

But coming back to the guidance more broadly in terms of raising by $40 million at the top line, which, of course, was driven by neuroscience, there are a number of factors that do go into it.

Kim I'll hand, it over to you to take the IH related questions.

We do, with the Sanosi divestment, have an increased focus in terms of shared management teams and marketing teams that now will be focused squarely on Epidiolex and Zywave, really looking to maximize the potential.

And then, Jason, you'd also mentioned AGs. So, with continued Xyrim strength related to updates on assumed Xyrim competitive entry, that has the impact of also pushing out our assumptions for AG timing.

So, it's a combination of those factors that lead to the change in guidance.

Sure, let me start with the back half of that around primary care, we really see right now that the opportunity for IH is concentrated in the hands.

Thank you.

Our next question or comment comes from the line of Mark Goodman from SVB Lyric.

Really more of the fleet specialists.

Which have multiple different kind of specialties behind them, but ultimately are concentrated in focusing on treating patients with fleet condition.

And really in terms of sequencing and growth.

We are focused I think as we've said several times today at launch on the 37000 patients that we can see out there and claims data not only have a diagnosis for idiopathic hypersomnia, but also have been actively engaging very recently in the healthcare system.

It is not a sale diagnosis, but as we've also indicated we do believe that the patient population that has.

Idiopathic hypersomnia.

It could be as large as that the narcolepsy patient population. So while today, we're really focused on going after those patients who have this diagnosis and we're largely seeing a sleep specialists not a primary care physician.

We will at one point in time behavioral kit in a sequence them, there and really sequence less from a specialty standpoint, but more from the patient standpoint to those patients.

Probably that would be beyond that 37000 that perhaps getting more solid diagnosis as a result.

I'll start re engaging with the health care system as a result of their finally being.

On a product out there that way.

Clinically proven and.

Approved by the FDA for the condition of idiopathic hypersomnia.

So that results in increased growth to net.

Very helpful.

Commercial undertaking for us on that there is.

90% overlap between those physicians that we are.

Getting through the launch of idiopathic hypersomnia on those that we already call on today.

For narcolepsy.

Thank you. Our next question or comment comes from the line of David <unk> from Piper Sandler Your line is open.

And if you look at the last several years, you do see a decline from Q4 to Q1 in terms of the Oxybate revenues.

Your line is open.

Yes.

Hey, Thanks, So wanted to pick your brain on.

R&D questions. One is what's the extent to which you're prioritizing.

Once nightly low sodium.

Product.

That's number one number two is.

Are you looking at other sleep disorders.

The target towards further development or even the nexgen.

A once nightly oxidize product.

And then on the <unk> and that you just didn't license to sort of similar question.

Beyond narcolepsy, I mean is there an opportunity NIH or other sleep disorders, and how should we think about that thank you.

But coming back to the guidance more broadly, in terms of raising by $40 million at the top line, which of course was driven by neuroscience, there are a number of factors that do go into it.

Yes, I was hoping you could give us a little more color just on epidiolex, talk about some of the underlying fundamentals in the United States, but also in Europe and just give us a sense of, you know, how it's ramping in some of these countries, you know.

Yes, David maybe I'll take the first part of that.

Thank you.

Specific to ox abate and Rob have you weigh in a little bit on the <unk> side.

Yeah, maybe, Mark, we'll have Kim start on the U.S. side, and then, Dan, maybe you can jump in with some commentary ex-U.S. as well.

So, Kim?

Yeah, sure.

On the once nightly low sodium product that is part of our development portfolio, but we don't have additional updates on that.

You know, so, as you saw in the results, we saw 6% revenue growth in the first quarter compared to first quarter 21 last year. And I think you recall back in 4Q, we did talk about the fact that epidiolex net product sales benefited from a temporary increase in specialty pharmacy inventory levels of about $18 million.

At the moment, you know that we made a decision many years ago that the most important thing we could do for narcolepsy patients getting ox abate was substantially reduce the sodium burden.

Now, we have seen the majority of this reduce – reverse out in the first quarter. And if we exclude this impact, we saw double-digit revenue growth of about – basically double-digit revenue growth in the first quarter, plus continued growth in underlying demand, despite, you know, the challenges that were certainly out there posed by the Omicron surge in the early part of the quarter.

So, that's, you know, what's giving us a lot of encouragement in terms of where it will go in the rest of the year.

And outside the U.S., we're really pleased with the progress we've been making, you know, significant progress in Europe.

As I've mentioned on the call, we have, Zywave and Epidiolex adoption and what we're seeing that gives us continued confidence.

Thank you.

In the first quarter, we launched Epidiolex in Ireland and Norway.

We do, with the Cenosi divestment, have an increased focus in terms of shared management, teams and marketing teams that now will be focused squarely on Epidiolex and Zywave, really looking to maximize the potential.

You know, we expect the full impact of a full year from the second half launches of Italy and Spain that we're off to a good start in the end of 21.

And there's still opportunity for additional launches and growth.

And then, Jason, you'd also mentioned AGs.

We've got approval in 34 countries.

So, with continued Xyrem strength related to updates on assumed Xyrem competitive entry, that has the impact of also pushing out our assumptions for AG timing. So, it's a combination of those factors that lead to the change in guidance.

We've launched in 13.

Thank you.

Importantly, because of the value of the product and the data we've got, we've been able to establish pricing at greater than 70% of U.S. WAC.

So, I think there's a lot of opportunity for continued momentum outside the U.S.

By a gram to a gram and a half per night, a 92% reduction that.

<unk> has found provides a clinically superior product because it's safer and will result in fewer cardiovascular.

Yes.

Comorbidities for these patients and so that that has been our focus is get that product to market. When we think about.

Dosing.

While once nightly sounds convenient and if you ask most people.

Question would you rather take a drug once or twice a night, you'll get a predictable answer, but remember that change in half life.

Has other ramifications for patients in terms of taking a full night's dose of.

The date rape drug or something that really knocks you out.

And you can't Untakable once you've taken it and so that has potential.

Potential implications for patients' ability to get up in the middle of the night to go to the bathroom.

So in your resource is something you think about.

Ability to check on kids during the middle of the night and flexibility and timing of your own life. If you take a dose a little bit later at night than you're used to that has implications for when you can give up.

Safely operate in automobile in the morning.

Get to an early morning meeting.

Obviously, the more immediate release dosing gives patients a little more flexibility.

In how they live their life.

We've said, we believe <unk> will be.

The dominant product in this space.

Even if patients have access to.

Branded xyrem generic xyrem.

<unk> potential once.

A night products, we believe that XI wave is actually going to be the preferred product across that patient population. We haven't said anything to date about going beyond narcolepsy in idiopathic hypersomnia.

Ox abate.

And Rob maybe I'll hand, it off to you to talk about potential utility of <unk> agonist program.

Yes happy to Bruce.

Certainly.

<unk> agonists are developing has the potential beyond narcolepsy to other sleep disorders, including idiopathic hypersomnia or any other disorder that causes.

Time somnolence the.

The mechanism is likely to be.

Very potent across sleep disorders.

Given what its demonstrated pre clinically.

From the Takeda clinical data so far so we're very interested.

Thank you.

Our next question or comment comes from the line of Mark Goodman from SVB Lyric.

Our next question or comment comes from the line of Brandon Foulkes from Cantor, Fitzgerald.

Next question or comment comes from the line of Annabel <unk> from Stifel. Your line is open.

Your line is open.

Yes, I was hoping you could give us a little more color just on Epidiolex, talk about some of the underlying fundamentals in the United States, but also in Europe and just give us a sense of how it's ramping in some of these countries.

Hi, thanks for your question and congratulations on the good start and guidance.

Maybe just, on Zep Zolka, any color in the current market share in the second line small cell lung cancer setting compared to the TCAN and immuno-oncology monotherapy at this stage?

For taking my question.

Thank you.

So given the big small state is coming out this quarter I guess, what would determine whether the first of these three studies.

Yeah, maybe, Mark, we'll have Kim start on the U.S. side, and then, Dan, maybe you can jump in, with some commentary ex-U.S. as well.

Kim, maybe I'll turn that one over to you.

So, Kim?

Sufficient enough to justify an NDA filing.

Yeah, sure.

And are there any hard end points that you can draw from the EU studies that could ensure that you could potentially.

You know, so, as you saw in the results, we saw 6% revenue growth in the first quarter compared to first quarter 21 last year.

So, you know, we're thrilled to have rapidly established Zep Zolka as the, treatment of choice in second line small cell lung cancer.

And I think you recall back in 4Q, we did talk about the fact that Epidiolex net product sales, benefited from a temporary increase in specialty pharmacy inventory levels of about $18 million. Now, we have seen the majority of this reduced, reversed out in the first quarter.

And if we, exclude this impact, we saw double-digit revenue growth of about, basically, double-digit revenue revenue growth in the first quarter, plus continued growth in underlying demand, despite, you know, the challenges that were certainly out there posed by the Omicron surge in the early part of the quarter.

So, you know, with all of this, what underlies that is that we're continuing to see positive trends in terms of adding new prescribers, as well as we see current prescribers broadening their use and using it earlier in the treatment regimen.

And as we bring those new prescribers on board, you know, we just feel like they're going to follow suit with the existing prescribers in terms of getting more experience, seeing the clinical utility in the product, and starting to adopt it more broadly and ultimately make it a cornerstone of therapy.

So, you know, we remain very, you know, confident that this is going to become a standard of care, in treatment-resistant epilepsies.

File on that first.

And I'll just leave you also with the notion that, you know, we're very pleased right now with the increases in personal engagement that we achieved in March and April as we kind of came out of this Omicron surge, and really feel like we're building some nice momentum here.

First smaller study.

So I know that Europe is a little bit more based on subjective measure. So maybe you can just give us a little bit more color there.

Yes, Rob do you want to take the question about how this.

Upcoming.

Clinical data on blinding will inform potential submission in and how that relates to the data that we already know from from prior studies.

Yes, so Geoff as you know.

<unk> is approved in 29 European countries based on really an extensive set of data not only around efficacy, but also on dosing and safety and so our strategy in the U S is really to leverage all of those data and bridge to a U S submission, which the FDA has said shouldnt.

<unk> additional data.

Using endpoints other than the numeric rating scale that.

That was the primary endpoint for European submission.

And approvals and particularly the FDA wanted to see measures of muscle tone or spasm frequency. So we will certainly leverage all of those prior data.

And.

We will evaluate the outcome of this relatively small study that's about to read out.

And if those data are promising we certainly would want to go to the FDA to have a conversation around how soon could we could.

Can we submit an NDA.

As you know the other trials that are ongoing are larger are meant to be a more robust assessment both of muscle tone and spasm frequency separately.

And so that if this smaller study.

Sufficient for an NDA at this point.

We would have those studies.

To leverage down the road.

Okay.

Yeah.

Thank you our next question or comment comes from the line of Oren.

Loopnet from H C. Wainwright your line is open.

Hey, Thanks for taking the question I was hoping I could build upon.

But someone earlier touched on the XI wave in narcolepsy ramp I mean, clearly you were able to raise guidance on several factors, but xyrem strength is one of those.

And so I look at that as sort of a trade off or not.

Purely a switch but.

I guess, if you have slowing XI wave penetration that I guess, the big Xyrem last longer right. So can you talk about that trend now I think you added in terms of exit rates 200 patients in Q2 900 in Q3 $6 50, an hour 400 in Q1.

And I'm just wondering is Q1 seasonally tougher for desired wave new starts and switches.

Or are there some other dynamics that we should expect this to continue to potentially slow in terms of rate of patient adds in narcolepsy like payer pressure seeing AG is coming or any other headwind.

Yes.

Excited or and to be in a position, where we've got <unk> being rolled out I would still say still fairly early in narcolepsy and now brand new in idiopathic hypersomnia. These are both patient populations that can benefit from this new medications.

And where we see substantial opportunity in while you pointed out correctly, the sort of rate of narcolepsy ads of course, we added 900 patients.

XI wave across the two indications in the first quarter, which is <unk>.

A really terrific.

In our.

Promotional efforts, we definitely want to balance continuing to make progress in narcolepsy, where we think all patients can benefit from.

The sodium reduction relative to Xyrem, where we're seeing new patients to ox abate predominantly start directly on <unk> rather than going through.

Xyrem.

But also now offering this to patients with idiopathic hypersomnia, who had no FDA approved treatment options before so.

Kim maybe you could just close this answer by talking a little bit about how you do think about allocating the sales force across those are.

Areas and how we continue to make progress in the narcolepsy ramp.

Yes sure.

In terms of making progress.

Really staying the course on our strategy that we think is really resonating with customers about the benefits of reduced sodium propulsion and the fact that the FDA has recognized xilinx clinical superiority.

Tobacco Xyrem.

But also I'd say the strategic divestiture of Sanofi that we were talking about earlier does enable us to sharpen our focus on our highest strategic priority.

Typically in fleet, but allows our fleet team to be very laser focused on achieving the full potential of <unk>, both in narcolepsy and in IHS and we do have the luxury of having both of these very large opportunities to go after and it is a balancing act for us.

With our sales force and our resources in general, but we really feel like we're striking that right balance in terms of continuing.

To encourage customers to.

Transition patients from Xyrem to die away and at the same time to really identify the idiopathic hypersomnia patients.

That would benefit.

<unk>, so we feel fortunate to have both opportunities.

Really right now about staying the course and executing on both.

Very strongly and we think that.

The team is doing a really solid job at that.

Yeah.

Yes.

Thank you. Our next question or comment comes from the line of Greg Fraser from <unk> Securities. Your line is open.

Thanks, and good afternoon folks I had a question on <unk> and the potential for that to come back to the market you hold the BLA is your prior partner trying to file the BLA from you is that something that's on the table any color on that would be helpful. Thank you.

Yeah.

So Greg the quick answer to that is.

That relationship.

Ended.

When we stopped selling <unk>.

I wouldn't comment on any any possibilities for.

The two companies working together going forward <unk>, obviously pursuing their own strategy there.

But Dan maybe I could ask you to comment generally how we think about.

Riley as being on the on the market today in the U S and where we're going not just in the U S, but globally and.

And how we think about potential entry of.

Another <unk> product.

Yes, I mean, we're really excited with the <unk> launch in.

Yes.

The one and only and reliable reliably supplied we're seeing the change in medical practice back to ensuring that.

Any patient who shows a sign of hypersensitivity reaction to an E. Coli based can move to realize that it's not only the supply. It's the fact that we studied it and optimize the dose schedule and as we get the.

The Monday, Wednesday, Friday, and the IP that creates additional optimization.

<unk> this relative to the package label that we have with our awareness and I'd say also there's a suite of services plus a field medical team that knows that customer extremely well.

Outside the U S. We're on track for midyear.

Filing and we anticipate a product launch.

As soon as 2023 and look forward to bringing that same odd.

Optimized product, which isn't it.

Easy vial already reconstitute.

It's got a higher concentration in <unk>.

Into those markets as well, where <unk> is available. So we're our anticipation is.

That release can be the treatment of choice broadly in this market.

So, it is the leader out there.

Thank you I'm showing no additional questions in the queue at this time I would like to turn the conference back over to Mr. Bruce <unk> for any closing remarks.

So, that's, you know, what's giving us a lot of encouragement in terms of where it will go in the rest of the year.

Alright, thanks, operator.

Let me just close by saying, we've got numerous opportunities across our commercial portfolio, our pipeline and our operations to continue to drive our.

Growth in value and achieve operational excellence, we're very focused on vision 2025, and excited about the progress, we're making and I think our results have demonstrated the power of our products our platform and our people.

And outside the U.S., we're really pleased with the progress we've been making, you know, significant progress in Europe.

It would be a year ago tomorrow that we closed the GW acquisition and when I look at.

How we have successfully integrated the two organization something that somehow.

Sometimes trips people up in acquisitions in and think about how well we did that during a pandemic.

What we're seeing in terms of ongoing combined performance.

Including.

Being efficient with our spend in.

And importantly, deleveraging as quickly.

As we have in that in that 12 month period.

I couldnt be more pleased.

To close the call by recognizing our jazz colleagues for their tenacity their dedication and their creativity, which have led to us delivering new therapeutic options to patients and I also want to thank our partners and shareholders for their continued confidence and support we look forward to updating you on our progress this year as we.

Now move toward.

Our raised top line guidance are raised Bottomline guidance are improved guided midpoint margin.

Again, we're really excited about the rest of this year and importantly, how that continues to position us well towards achieving vision 2025, so with that thanks, everyone for joining us today and stay well.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may now disconnect everyone have a wonderful day.

[music].

Good day, ladies and gentlemen, and thank you for standing by walking to the jazz Pharmaceuticals first quarter 2022 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation.

There will be a question and answer session to ask a question. During this session you will need to press Star then one on your telephone keypad. As a reminder, this conference call is being recorded if you require any further assistance. Please press Star then zero at this time I would like to turn the conference over to MS. Andrea Flynn Ma'am you may begin thank.

Thank you and good afternoon, everyone today's out Pharmaceuticals reported its first quarter of 2022 financial result.

In the first quarter, we launched Epidiolex in Ireland and Norway, and we expect the full, impact of a full year from the second half launches of Italy and Spain, that we're off to a good start in the end of 21.

And, you know, a fair amount of the share has come from Topo TCAN.

The slide presentation accompanying this webcast is available on the investors section of our website.

Investors May also refer to the press release, we issued earlier today, which is also posted to our website.

You know, while we, don't provide product-level guidance, you know, we are continuing to see opportunities for growth with Zep Zolka by displacing, just what you alluded to, further displacing Topo TCAN as well as immuno-oncology products that are being used as monotherapy.

On the call today are Bruce <unk>, Chairman and Chief Executive Officer, Renee Gala Executive Vice President and Chief Financial Officer, Dan Swisher, President and Rob You know executive Vice President Global head of R&D, Kim Stabler Executive Vice President and General manager of North America, and still Jackup in neuroscience therapeutic.

Ted will join the team for Q&A.

On slide two I'll remind you that today's webcast include forward looking statements such as those related to our future financial and operating results, including expectations related to vision 2025, and our guidance for 2022 growth potential and anticipate a development and commercialization milestones and goals, which involve risks and uncertainties that could cause actual.

Events performance and results to differ materially from those contained in these forward looking statements.

We encourage you to review the statements contained in today's press release in our slide deck and in our latest I think the disclosure documents, which identifies certain factors that may cause the company's actual events performance and results to differ materially from those contained in the forward looking statements made on today's webcast.

We undertake no duty or obligation to update our forward looking statements.

Turning to slide three on this webcast, we'll discuss non-GAAP financial measures reconciliations.

Reconciliations of GAAP to non-GAAP financial measures are included in today's press release and in the slide presentation available on the investors section of our website.

I'll now turn the call over to Bruce.

And so the last major market country is in France, where we expect a launch this year, pending final pricing and reimbursement discussions, and that would have us, you know, launched fully in all five major European markets.

But we, also see quite a bit of potential among patients that are, you know, today being re-challenged with platinum-based chemotherapies or receiving other chemotherapy regimens.

Thanks, Andrea good afternoon, everyone and thank you for joining us today I'll start on slide five.

So, you know, we're continuing to see demand for Zep Zolka and are progressing, as you heard Rob talk about, a robust clinical development program that we feel is, you know, going to make the product's proposition even stronger and provide even more rationale for expanding its use in the second-line setting.

And there's still opportunity for additional launches and growth.

Following our strong performance and execution in 2021, we began 2022 with substantial momentum.

We've got approval in 34 countries, we've launched in 13, importantly because of the, value of the product and the data we've got, we've been able to establish pricing at greater than 70% of the U.S. WAC, so I think there's a lot of opportunity for continued momentum outside the U.S.

Thank you.

Importantly, we continue to substantially diversify our business with an eye towards optimizing our product portfolio and improving our adjusted operating margin.

I am excited by the progress we are making in transforming our business. Despite typical first quarter payer churn any impact from the omicron Berrien our year to date performance has been strong.

Our next question or comment comes from a line of Brandon Folks from Canter Fitzgerald.

Your line is open.

That coupled with our continued focus on strategic capital allocation has enabled us to increase our guidance ranges for both the top and bottom line.

Hi.

On the commercial front, we're very encouraged by the positive direction of the launch of <unk> in idiopathic hypersomnia.

Thanks for your question and congratulations on the good start and guidance.

H underscored by the growing number of patients on therapy.

<unk> ongoing outreach to educate prescribers and patients about the benefits of XI wave and the high level of engagement and receptivity in the market.

We're seeing strong demand for Reillys and in January of this year, we submitted an S. BLA to support Monday Wednesday Friday intramuscular dosing followed in April by a separate Spl's for IV administration.

Dan will provide a more complete overview of our performance across our commercial portfolio later in the call.

Let me just on ZipZilker, any color in the current market share in the second line small, cell lung cancer setting compared to type of TCAN and immuno-oncology monotherapy at this stage?

Turning to our pipeline, we have made substantial advances this year.

Thank you.

<unk> with oncology, we enrolled the first patient in a phase II basket trial for <unk> zilkha evaluating its safety and efficacy across several solid tumors.

Kim, maybe I'll turn that one over to you.

Yeah, sure.

And for the first time, we presented preclinical data on <unk>, our next generation Pan RAF kinase inhibitor at the ACR annual meeting in April .

Moving to neuroscience data from the first of three ongoing phase III clinical trials of the <unk> malls in multiple sclerosis related spasticity is expected this quarter. As this is the initiation of our phase III trial of the dialects in epilepsy with Maya colonic atonic seizures or EMA.

Ross.

We've also added two promising compounds to our pipeline since the beginning of the year.

This afternoon, we announced a licensing agreement with Sumitomo pharma for DSP 0187, which we are now referring to as JCB $4 41.

This follows our licensing agreement last month with werewolf Therapeutics for WTS 613, which we now referred to as <unk> hundred 98 <unk>.

<unk> hundred 98 is a differentiated conditionally activated interferon alpha in the kind molecule that has the potential to minimize the toxicity.

So CAE with systemic interferon alpha therapy, thereby expanding its clinical utility in treating cancer.

Both of these transactions expand our pipeline in core therapeutic areas and are consistent with our strategy.

As a result in the first quarter, we entered into an agreement to divest Sanofi to axon Therapeutics. We believe <unk> is well positioned to deliver continued access to this important medication.

These transactions demonstrate our disciplined strategic allocation of capital and commitment to drive long term value as we transform our business.

Our execution in the first quarter drove significant growth and has positioned us to raise our guidance for the year on both the top and bottom line with improved operating margin at the midpoint.

Moving to slide six in January we announced the vision 2025, which includes three components central to driving sustainable growth and enhanced value <unk>.

Commercial pipeline and operational excellence.

After achieving over $3 billion in revenue in 2021, we're positioned to grow revenue to $5 billion in 2025.

And we anticipate delivering at least five novel product approvals by the end of the decade.

Our 2021, adjusted operating margin was 43% and we plan to improve that by five percentage points from 2021% to 2025, delivering more of our topline through to the bottom line.

Collectively our continued execution in the first quarter provides additional evidence of our ability to achieve vision 2025.

So, you know, we're thrilled to have rapidly established ZipZilker as the treatment of, choice in second line small cell lung cancer, so it is the leader out there, and, you know, a fair amount of the share has come from topo-TCAN, you know, while we don't provide product-level guidance, you know, we are continuing to see opportunities for growth with ZipZilker by displacing, just what you alluded to, further displacing topo-TCAN as well as immuno-oncology products that are being used as monotherapy, but we also see quite a bit of potential among patients that are, you know, today being re-challenged with platinum-based chemotherapies or receiving other chemotherapy regimens, so, you know, we're continuing to see demand for ZipZilker and are progressing, as you heard Rob talk about, a robust clinical development program that we feel is, you know, going to make the product's proposition even stronger and provide even more rationale for expanding its use in the second-line setting.

And, Kim, this is Rob, you know, and I'd...

And, Ken, this is Rob, you know, and I'd...

Go ahead, Rob.

Thanks, Chris I'm excited to share an update on our commercial portfolio starting with neuroscience.

Yeah, I'd love to add to that color there, just to say that I think, from a medical perspective, as physicians gain experience with ZipZilker in the second line, they're going to find that it's a relatively easy drug to give and very well-tolerated, you know, relative to re-challenging, for example, with a platinum doublet, which can only be given for a limited time period.

And I think that as that experience grows, you know, I'd be expecting greater use, especially, in that segment.

Divestiture of Sanofi allows our highly experienced commercial team.

To further sharpen its focus on our key neuroscience products XI away then at the dialects.

We continue to build momentum in our Oxidate franchise as highlighted on slide eight in addition to market leading the adoption of <unk> the narcolepsy.

We are pleased with the progress of the commercial launch of XI wave NIH average active oxidate patients increased to approximately 16650 in the first quarter, an approximate 6% increase compared to the same period last year.

With <unk>, we have meaningfully advanced patient care with a lower sodium oxidate product and continue to see enthusiasm for adoption.

Collectively our efforts center around educating physicians and patients.

The lifelong burden of high sodium intake in this patient population, who live with an increased risk of cardiovascular comorbidities.

In the first quarter, we continued to drive adoption in narcolepsy and importantly, we see opportunities for additional growth in narcolepsy.

We exited the first quarter with approximately 7050 narcolepsy patients taking <unk>.

For <unk> the NIH, we're encouraged by the continued launch momentum as well as feedback from prescribers and the IH community.

We are seeing increasing coverage of IH and plans that are in the process of updating their formularies.

<unk> been providing access to XI ways without significant barriers.

Exited in the first quarter there were approximately 750 IH patients taking <unk>.

We're particularly pleased with its initial adoption given that we expect new patient starts to NIH to more closely track the trajectory of our rare disease launch.

There has been previously no approved therapies.

Turning to slide nine and Thats. The dialogues, we saw 6% revenue growth in the first quarter compared to the same period in 2021 on a pro forma basis.

As a reminder, in the fourth quarter of last year at the dialogues net product sales benefited from a temporary increase in specialty pharmacy inventory levels, which increased fourth quarter net sales by approximately $18 million.

The majority of that's reversed in first quarter 'twenty, two reducing first quarter's revenues.

Excluding this impact we saw double digit percentage revenue growth in the first quarter with continued growth in underlying demand despite challenges posed by the omicron variant.

We have been successfully adding new prescribers growing epidiorite says active prescriber base as.

As we have previously highlighted we expect that as newer prescribers gain experience without the dialects and see its clinical utility they will more broadly adopt at the dialects as a cornerstone of therapy for their treatment resistant epilepsy patients.

We're also continuing to make significant progress in Europe and.

And I'm very pleased with adoption in markets, where at the dialogue is reimbursed.

The first quarter, we launched at the dialects in Ireland and expect to launch in France. Later, this year pending final pricing and reimbursement discussions at which point at the dialects would be launched and reimbursed in all five major European markets.

Increasing use of Epidiorite earlier in the treatment algorithm and positive experiences in real world settings are being driven by its unique mechanism of action efficacy and safety profile and ability to be combined with other therapies.

Given the efforts of our commercial team. We are confident we can achieve blockbuster status as the global standard of care and treatment resistant epilepsy.

Yeah, I'd love to add to that, Keller, there, just to say that I think, from a medical perspective, as physicians gain experience with Zep Zolka in the second line, they're going to find that it's a relatively easy drug to give and very well-tolerated, you know, relative to re-challenging, for example, with a platinum doublet, which can only be given for a limited time period.

Now moving to oncology and starting with <unk> on slide 10.

First quarter net revenues were $59 3 million and include some quarter to quarter variability driven primarily by inventory levels.

And I think that, as that experience grows, you know, I'd be expecting greater use, especially in that segment.

We have rapidly established <unk> as the treatment of choice in second line small cell lung cancer and see opportunities for growth within our current indication.

I'm also very, very optimistic about the potential to bring this into first-line therapy as an add-on.

And, as you know, we have an ongoing first-line trial where we'll be compared to placebo as add-on therapy during maintenance for extensive states, small-cell lung cancer.

That's a disease that has a very poor prognosis. The great majority of patients have active residual disease at the end of their chemo, and so it's a real opportunity to extend their progression pre-survival and, hopefully, ultimately, overall survival, giving patients a longer duration of therapy than if they were to wait for second-line.

Thank you.

Our next question or comment comes from the line of Jeff Hung from Morgan Stanley.

Turning to slide 11 first quarter net product sales for <unk>, our recombinant erwinia asparaginase therapy were $54 2 million and were encouraged by the continued increase in demand through the first quarter.

Well there could be further inventory effects as distributors optimize stocking levels.

Going forward, we expect net revenues will more closely reflect demand.

Feedback from customers remains positive and prescribers have indicated they are now returning to best clinical practice with respect to move into non E. Coli derived asparaginase because of the product profile reliable supply of relays and suite of support services that we provide.

Looking ahead, we're excited to evolve our launch messaging based on the potential label update to intramuscular dosing on a Monday Wednesday, Friday schedule, and IV administration, which Rob will also cover in more detail.

I'm also very.., very optimistic about the potential to bring this into first-line therapy as an add-on.

Overall, our team started 2022 by again delivering strong results.

Providing increased optimism for a successful year ahead.

As you know, we have an ongoing first-line trial where we'll be compared to placebo as add-on therapy during maintenance for extensive states, small cell lung cancer. That's a disease that has a very poor prognosis. The great majority of patients have active residual disease at the end of their chemo, and so it's a real opportunity to extend their progression, free survival, and hopefully ultimately overall survival, giving patients a longer duration of therapy than if they were to wait for second-line.

Your line is open.

Now I'll turn the call over to Rob to provide an R&D update Rob.

Thank you.

Thanks for taking the question.

Thank you Dan.

Our next question or comment comes from the line of Jeff Hung from Morgan Stanley.

Slide 13 provides an overview of our R&D pipeline and I'm excited about the recent addition of two promising early stage molecules.

Your line is open.

This afternoon <unk>.

Now that we have license rights from Sumitomo pharma DSP <unk> eight seven.

Highly selective oral orexin two receptor agonist.

Potential application for the treatment of narcolepsy.

AUO Pathic hypersomnia and other sleep disorders.

Thanks for taking the question.

You've been active on the BD front, such as today's announcement, of JVP441.

As Bruce mentioned, we have designated this molecule as <unk> four for warrant.

You've been active on the BD front, such as today's announcement of JVP441.

Was the divestment of Cenosi more of a one-time event?

Sumitomo has already initiated a phase one clinical program in Japan, and we expect to rapidly advance. This program based on those clinical findings.

Was the divestment of Cenosi more of a one-time event?

In April we licensed global development and commercialization rights for <unk> hundred 98, formerly referred to as <unk> X X one three differentiated conditionally activated interferon alpha indicate molecule.

GBP 898 activated specifically within the tumor microenvironment.

Which may serve to minimize the severe toxicities that have been observed with systemically active recombinant interferon therapy.

Therefore maximize clinical benefit.

These early stage programs represent innovative approaches and areas, where there is a critical unmet patient need.

Thats it from our unique insights.

The potential for multiple indications.

And our in therapeutic categories.

We believe we can develop and commercialize efficiently.

In the near term our team will be working to rapidly advance these programs with the ultimate goal of delivering them to patients.

I also wanted to highlight that at the American Association of Cancer Research annual meeting in April we presented data on JCB eight five for the first time.

<unk> five is our next generation Pan RAF kinase inhibitor.

And preclinical data showed that <unk> one side.

Secondly, and Potently inhibits <unk>.

A b and C. RAF kinases, and also demonstrated anti tumor activity in Ras and RAF mutant Xenograft models.

Based on this encouraging preclinical activity, we intend to file an IND with the FDA later this year.

What is your view, on divesting other assets to further refocus on the higher strategic priorities?

Like, what is your view on divesting other assets to further refocus on the higher strategic priorities?

I'm really excited about the progress we have made to strengthen and mature our R&D organization.

Thanks.

Our concerted effort to expand our pipeline and capabilities is now beginning to bear fruit.

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

Renee, maybe I'll hand that over to you.

Following multiple clinical trial initiations in 2021, we are prime for a number of exciting program milestones in 2022 and multiple submissions through 2023.

Sure.

Sure, yeah, thanks for the question, Jeff.

So, as we think about the Sanosi transaction, you know, as we've said, we're really focused on ensuring that we have the ability to focus on our highest strategic priorities.

So, we'll continue to look at the portfolio, ensure that we're optimizing both the commercial portfolio, where we are expanding geographically, and then, importantly, continuing to lean into business development, both for expanding and growing our pipeline, but as well as expanding and diversifying our revenues, as we've stated with Vision 2025.

On slide 14, we.

We've detailed the mid and late stage clinical programs in our pipeline.

Thank you.

Starting with programs emerging from the GW cannabinoid platform.

We are on track to begin a phase III trial for <unk> in epilepsy with Myoclonic Atonic seizures later this quarter.

Our next question or comment comes from the line of Balaji Prasad from Barclays.

Our new <unk> program has three active trials focused on multiple sclerosis related spasticity.

Your line is open.

The first trial, which is smaller and shorter relative to the other two.

As assessing changes in muscle tone using elements of the modified ashworth scale.

Hi.

We remain on track for data readout this quarter.

And if results from this first trial are supportive there is the potential for a regulatory submission in the U S. Later this year.

Thanks for the question.

A couple of them.

We do anticipate a delay in data readouts for the subsequent two trials due to challenges with site activation and enrollment related to COVID-19.

First, in Epidiolex, can you help us understand with regard to the survey and the response that you're seeing with 40% of respondents moving this drug up their treatment algorithm? Are you seeing it in the form of increased prescription growth?

Interest in these trials remains high and now that the first trial is fully enrolled we can take advantage of the opportunity to learn from both its upcoming data readout.

Site operations to optimize the other two trials.

Further we have identified opportunities to mitigate COVID-19 related challenges and we will provide updates regarding the trial and timing as appropriate.

Or, if not, is this an incremental that we need to look forward to?

Our phase <unk> trial for soup account Tonight.

<unk> hundred five in essential tremor began enrolling at the end of last year.

In this trial may potentially contribute to pivotal package.

We also initiated a phase III trial for GBP one five in.

In PTSD last year.

Enrolment for both trials is ongoing and we remain on track with top line data from these trials in the first half of 2024 and late 2023, respectively.

Moving to oncology as Dan mentioned, we.

We are advancing a robust development efforts as it sounds good.

Separate trials were initiated in 2021.

Phase III trials supported by jazz and our partner Roche evaluate <unk> in combination with Concentrix and first line extensive stage small cell lung cancer.

Our confirmatory phase III trial in second line small cell lung cancer being run by our partner farmer Mark.

And our own post marketing observational trial and second line small cell lung cancer.

In the first quarter of this year, we also initiated a phase II basket trial called emerge 201.

This is a multicenter open label trial designed to assess the safety and efficacy of <unk> as monotherapy in three cohorts of patients with solid tumors advanced <unk> carcinoma.

Large cell neuroendocrine carcinoma of the lung.

And from August recombination deficient tumors.

The primary objective of the trial to determine that <unk> ability to improve patient outcomes.

<unk> by objective response rate.

Yeah, thanks for the question, Jeff.

And, secondly, on Cynosi, I think it's been a scratcher for me.

I would think that Jazz, with the calling points that you have and this fitting your narcolepsy and sleep focus, you would have been in the best position to extract value from this asset.

This schedule, which is more in line with current clinical practice to avoid weekend dosing.

Allows patients to maintain a clinically meaningful levels of serum asparaginase activity through the entire duration of treatment.

Currently the label dosing schedules every 48 hours at 25 milligrams per meter squared.

As we think about the Cenosi transaction, as we've said, we're really focused on ensuring that we have the ability to focus on our highest strategic priorities.

Can you help us understand why the divestment?

Similar to the review of our original BLA.

DLA will be reviewed under real time oncology review process and I am pleased.

Coming into 2022 and looking at our business holistically, we see other priorities that relate to products that we've either launched or acquired since we launched Cenosi.

Thanks.

To announce that we recently completed a separate S BLA to support intravenous administration.

Which will also be reviewed under our TR.

We're also planning to submit an application in Europe for both <unk> and IV administration mid year with potential approval in 2023.

Now I'll pass the call over to Renee for financial update.

Thanks, Rob I'll begin on slide 16.

Our first quarter results maintained a positive momentum we established last year.

So, as we look at our broader portfolio and think about what has transpired since getting approval and launching Cenosi, we had approval and launch of Zywave in both Narcolepsy and IH.

Yeah, Balaji, maybe I'll take those in opposite order and just say, on Cynosi, the call point was a little bit different as we moved out of that core narcolepsy space that we've been so active in for so long into EDS and obstructive sleep apnea, which required a much broader set of physicians and physicians who obviously both weren't familiar with Oxybate and – or, I'm sorry, were not familiar with Cynosi, but also didn't in all cases have drug therapy as part of their standardized approach to optimizing their OSA patients.

First quarter total revenues of $814 million represent growth of 34% compared to the same quarter in 2021.

So, not quite as perfect an overlap as you'd think.

This included neuroscience, and oncology revenues of $612 million and $197 million respectively.

Delivering double digit growth compared to the same period in 2021.

We have launched Subselca.

We acquired GW with Epidiolex and then also launched Rilase.

First quarter adjusted R&D expenses increased to 14% of revenue, reflecting our investment in multiple clinical trials and development of the GW cannabinoid platform.

This is aligned to our focus on driving value from our R&D pipeline and platform.

Our continued focus on both the top and bottom line drove first quarter adjusted net income of $262 million, a 14% increase compared to the same period in 2021.

Adjusted EPS was $3 73 in the first quarter slightly below the same period last year and reflecting the increased share count related to the accounting change for convertible debt.

This accounting change results in dilution of approximately <unk> 44.

And our first quarter adjusted EPS and without this change adjusted EPS growth would have been 7% compared to the same period last year.

We're pleased to deliver strong first quarter results.

Slight payer churn seasonality and the impact of all micron.

Turning to slide 17, these first quarter results, coupled with our disciplined approach to capital allocation enabled us to raise both top and bottom line guidance.

We've increased total revenue guidance to $3 five to $3 $7 billion, driven by neuroscience revenues, which were increasing to two six to $2 8 million or.

Or $40 million at the midpoint.

This increase reflects our confidence in both at the dial X and XI wave of adoption.

The increased focus and resources available to support those products.

No thats been a fee.

Xyrem strength and updates to our assumptions regarding xyrem competitive entry, which have the dual effect of strengthening xyrem revenues and pushing out our assumptions on the entry timing of Xyrem authorized generic <unk>.

Late 2022, or possibly even January 2023.

<unk> for growth.

In terms of non-GAAP Opex guidance, we have reduced our projected 2022 SG&A expense by $50 million at the midpoint. This is primarily attributed to the reallocation and reduction of expenses as a result of the divestiture of today's date.

In addition, we have added IP R&D expense of $65 million to reflect the upfront payments and our licensing agreements with werewolf and Sumitomo.

Turning to the bottom line, we are raising our adjusted net income guidance by $50 million to a range of $1. One eight to 125 billion. This represents year over year Eni growth of greater than 22% at the midpoint and translates to a full year.

<unk> operating margin of 46% at the midpoint.

As a reminder, our guidance does not include any new yet to be announced corporate development transactions.

In less than a year from closing the GW acquisition, we have reduced our non-GAAP net leverage ratio by a full turn to approximately three nine times at the end of the first quarter, which will enable us to remain opportunistic with respect to corporate development and other strategic investments in our business.

Slide 19 details our corporate development activities, so far this year.

Corporate development is a foundational pillar of our strategy to deliver long term growth and value for both patients and shareholders and is critical to our efforts to achieve vision 2025.

Our timeline to close remains on track and we believe that axon is well positioned to deliver access to this important medication.

I'm also excited by the potential of the compounds, we've licensed from Sumitomo and whereabouts.

With our promising and differentiated compounds targeting significant unmet patient needs in areas, where we can leverage our expertise and internal R&D engine to drive their development.

These three transactions are aligned with using our capital wisely, optimizing our portfolio and positioning us to drive long term value and growth.

As we look at additional pipeline and commercial deals primarily on our core therapeutic areas. We will remain focused on opportunities, where we believe we can provide unique insight.

<unk> efficiently and bring significant value to patients.

With our strategic investments long lived product portfolio and continued commitment to operational excellence. We believe we are well positioned to achieve our vision 2025.

And deliver further diversification sustainable growth and enhanced value to patients and shareholders I would now like to turn the call back to Bruce.

So, clearly, our business has transformed fairly dramatically, and we're really thrilled with the momentum that we have across our business.

And, as Renee said, when we looked at our portfolio, after everything that's happened with all of our product launches over 20 and 21 and the acquisition of GW, we essentially had our smallest near-term opportunity product with the largest sales force.

And while we could have continued down that road, we had other places in our business, including our ongoing launches, some exciting pipeline programs, in addition to some exciting corp dev opportunities.

Thanks, Renee I'll conclude our prepared remarks on slide 21.

Our achievements in the first quarter of 2022 were a continuation of the strong momentum we created last year as.

As I shared at the outset of the call we have a demonstrated considerable progress across commercial R&D and corporate development.

In commercial we are focused on execution across our neuroscience and oncology portfolios, including maintaining the strong start of our size wave NIH and reilly's launches as well as realizing the blockbuster potential of up of dialects and continuing to drive adoption of <unk> in narcolepsy.

<unk>.

With respect to our pipeline, we anticipate multiple IND submissions through 2023, we are advancing several mid and late stage programs and expect the first clinical data from our <unk> program this quarter.

Operational excellence remains a key area of focus including optimizing our adjusted operating margin.

The corporate development transactions announced already in 2020 to expand our oncology pipeline and extend our leadership in sleep medicine.

And when we thought about where we wanted to deploy our capital, we saw more on-target strategic opportunities available to us.

Accordingly, they also demonstrate our ability to utilize our significant cash flow to expand and diversify our business.

On the first part of your question about Epidiolex and what that survey data about potentially moving it up in the algorithm means for our business, Kim, maybe I'll hand that to you.

Thank you.

Sure.

Yeah.

Raising our top and bottom line guidance for the year underscores our confidence across the business and our strategy.

That concludes our prepared remarks, I'd now like to turn the call over to the operator to open the line for Q&A.

Our next question or comment comes from the line of Balaji Prasad from Barclays.

And I'll clarify.

Thank you ladies and gentlemen, if you have a question or comment at this time. Please press Star then one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue simply press the pound key.

So these are current prescribers, those that have gotten some experience early on for a couple years with Epidiolex.

You know, really telling us that while they were primarily using it as a fourth-line, let's say, agent, they've had good results with it, and they're starting to use it third-line, second-line, and so forth.

Our first question or comment comes from the line of Ken Cacciatore from Cowen Your allowance your line is open.

Your line is open.

Hi.

So that's really the intention there.

Great start to the year, everyone. Just wondering as we think about the XI wave NIH really nice penetration and I know Dan gave some perspective of this could look like as standard.

Thanks for the question.

Disease launch I was wondering if you could frame out a little bit what his view of kind of a standard rare disease launch it looks like maybe kind of over three year window.

And with that just wondering if where you believe this could peak obviously xyrem.

Using maybe narcolepsy in Xyrem penetration into narcolepsy is a comparator can you give us a sense of where you think eventually this may be able to.

To peak at as you work through the early launch thanks, so much.

A couple of them.

And, you know, I would say that the effect of that is being felt now, but also in the future, because they're basically saying they're just starting to do that.

Yeah, Ken a couple of parts to that question. So let me split it up a little bit and.

First, on Epidiolex, can you help us understand, with regard to the survey and the response that you're seeing with 40 percent of respondents moving this drug up their treatment algorithm?

Maybe comment first on.

Are you seeing it in the form of increased prescription growth, or if not, is this an incremental that we need to look forward to?

Peak expectations, there's never been a drug.

Approved to treat this serious disorder idiopathic hypersomnia.

So we're in uncharted territory right now but.

And secondly, on Sunosi, I think it's been a scratcher for me.

We do have a highly effective agent as evidenced by our clinical trial data.

And in a second youll hear from from Kim a little bit how that early launches going and what we're hearing from.

Customers and patients.

Additionally, as we talked about, as we're adding new prescribers onto our prescriber base, we feel very confident they're going to go through a very similar experience, you know, having their positive first experience with those patients in later lines of use, and then moving forward to earlier lines of use.

But I will say, we think the ultimate size of this market opportunity at least as measured by patients could be as large as the narcolepsy opportunity.

Thank you.

Our initial launch focus is a little more narrow than all potential diagnose patients with IH, but there is certainly that potential that this could be a quite significant opportunity.

Our next question or comment comes from the line of Madhu Kumar from Goldman Sachs.

I would think that Jazz, with the calling points that you have and this fitting your narcolepsy and sleep focus, you would have been in the best position to extract value from this asset.

The rest of your question into a couple of pieces, maybe Dan could talk a little bit about why he used the language. He did in describing how this launch might be different from our narcolepsy sideways launch and then Ken maybe you can comment on what we've seen in our first few months so Dan.

Can you help us understand why the divestment?

Your line is open.

Thanks.

Hey, guys.

Sure. Thanks, Bruce Yes.

And IH, Unlike narcolepsy theres not a pool of experienced docs that eight patients. So in narcolepsy, we had the data and we're able to very rapidly bring experienced oxidate xyrem patients over to <unk>.

Yeah, Balaji, maybe I'll take those in opposite order and just say, on Cenosi, the call point, was a little bit different as we moved out of that core narcolepsy space that we've been so active in for so long into EDS and obstructive sleep apnea, which required, you know, a much broader set of physicians and physicians who obviously both weren't familiar with Oxybate and, or I'm sorry, were not familiar with Cenosi, but also didn't in all cases have drug therapy as part of their standardized approach to optimizing their OSA patients.

So not quite as perfect an overlap as you'd think.

NIH, it's more of a first FDA approved therapy.

Thanks for taking our call.

We know that there is 37000.

Diagnosed patients actively seeking treatment.

Bringing them into the office, making them aware of the medicine.

Getting them enrolled in the rems and bringing them on patient by patient and titrated up the.

The good news that you will hear from Kevin is that real world experience has been very positive for the patient to the adopted therapy.

And, you know, as Renee said, when, we looked at our portfolio after everything that's happened with, you know, all of our product launches over 20 and 21 and the acquisition of GW, we essentially had our smallest near-term opportunity product with the largest sales force.

This is Rob on from Madhu.

So maybe with that Kim you want to give more color.

And, you know, while we could have continued down that road, we had other places in our business, including our ongoing launches, some exciting pipeline programs, in addition to some exciting CorpDev opportunities.

And when we thought about where we wanted to deploy our capital, we saw, you know, more on, on target strategic opportunities available to us.

Sure happy to you Dan So hopefully youre gathering that we are very pleased with the positive early launch momentum that we're seeing and I'm very pleased that 750 patient with IH have already been started by the way since we launched it just last November and really what we've been hearing in the last quarter is very consistent.

On the first part of your question about Epidiolex and what that survey data about potentially, moving it up in the algorithm means for our business, Kim, maybe I hand that to you.

I was just wondering, could you break down the levers that are driving the picked-up revenue guidance through the end of the year?

Sure.

Yeah.

And I'll clarify.

With what we've been hearing from November on that are.

So these are current prescribers, those that have gotten, some experience early on for a couple of years with Epidiolex, you know, really telling us that while they were primarily using it as a fourth line, let's say agent, they've had good results with it and they're starting to use it third line, second line and so forth.

Healthcare providers are very pleased with the profile of the medicine excited to have a treatment option.

So that's really the intention there.

And, you know, I would say that the effect of that, is being felt now, but also in the future, because they're basically saying they're just starting to do that.

With positive and compelling clinical trial results.

Thank you.

Ultimately dress is not just one or two of the symptoms of the condition, but addressing the default condition.

Our next question or comment comes from the line of Madhu Kumar from Goldman Sachs.

And really that your phase III clinical trial results have been very powerful for us in terms of them looking both at objective and pacing of that.

Measurement on really hitting the mark with prescribers.

And then lastly.

Initial coverage that we've had some payers on this launch has.

Ultimately allowed subscribers to prescribed with <unk> <unk> been very pleased with that coverage and that's really been a driver for us in the launch. So overall our team is remaining focused on executing our launch strategy building on the momentum that we have.

And executing both a branded effort as well as continuing to help educate our customers around some important aspects of idiopathic hypersomnia.

And diagnosing and doing patient identification.

Overall very positive signals, we're receiving.

Your line is open.

Just, like, maybe specifically go through what gives you confidence that you can raise – that you were able to raise guidance?

Thank you. Our next question or comment comes from the line of Jessica Fye from Jpmorgan. Your line is open.

Hey, guys, thanks for taking our call.

Thanks.

Hey, guys. Good afternoon. Thanks for taking my question I wanted to ask about the Orexin agent in licensed.

What attracted you to this molecule in particular and how confident are you that you'll be able to avoid the side effects.

We are seeing with Takeda product was that issue they had on target or off target.

And then related to that when do you expect to have the Japan phase one data and do you expect to also conduct phase one work in the U S.

Yeah, Renee, you want to take that one?

Hi, Jeff Thanks for the question.

This, is Rob on from Madhu.

How it might or might not relate to what we've seen from another agent so rob.

Sure.

Yeah happy to Bruce.

Very excited about this mechanism, which we know a great deal about.

Yeah, I'm happy to.

And the molecule will be developing is highly specific orexin two antagonist. That's also highly potent.

And given the preclinical and clinical validation around this target.

Think it's Barry.

Pharmacy mechanism.

It has the potential to really be complementary.

<unk> as a treatment for narcolepsy, but also beyond into idiopathic hypersomnia.

Sleep disorders.

With regard to the question around <unk>.

Toxicity was observed with Takeda this is a novel.

Chemical entity, we don't believe that toxicity was mechanism based and so I don't.

Anticipate any read through to this particular.

Molecule.

With regard to toxicity.

And then you asked about the ongoing development. This is a clinical phase molecule currently.

Healthy volunteers are being dosed in Japan.

We will leverage those emerging data, even before that trial and to.

To help initiate and accelerating further.

<unk> development to set us up for a rapid transition into pivotal trials.

Thank you. Our next question or comment comes from the line of Jason <unk> from Bank of America. Your line is open.

I was just wondering, could you break down the levers that are driving the picked up revenue guidance through the end of the year, just like maybe specifically go through what gives you confidence that you were able to raise guidance?

Hey, guys. Thanks for taking my question so.

Thanks.

So I just wanted to another.

Each question I'm trying to understand market dynamics can you speak to the impact like dose titration has on revenue recognition in the early period like <unk>, where activate or as our sales were a little bit light versus consensus, but yet you're raising guidance. So trying to just get a sense of.

Yeah, Renee, you want to take that one?

Sure.

Then you might get patients to a more normalized maintenance dose or alternatively, perhaps the guidance raise on sales was more about the push to the AG launch and Thats fine just wanted to clarify.

Those dynamics thanks.

For our auction based business be it XI away for narcolepsy as highway for IH or Xyrem.

But on your particular question.

About IH it is true that patients new to therapy.

Which is generally the case for all IH patients and not generally the case for most narcolepsy.

Cases, where they can transfer over dose for dose.

People are being titrated up on dose.

Over time, and so obviously usage of the product is what drives our revenue recognition. So that does increase with time, but I think the dynamic youre seeing in our results is probably more attributed to something else and Rene maybe I can ask you to weigh in on that.

Yeah, I'm happy to.

Those patient access programs that we provide so that results in increased growth to that and if you look at the last several years you do see a decline from Q4 to Q1 in terms of the oxalate revenues.

But coming back to the guidance more broadly in terms of raising.

So, as we mentioned, previously, the $40 million raise at the top line was driven by neuroscience.

So, as we've mentioned previously, the $40 million raise at the top line was driven by neuroscience.

$540 million at the top line, which of course was driven by neuroscience. There are a number of factors that go into it as as I had mentioned on the call we have.

Truly reflects our continued confidence in both Epidiolex and PsiWave adoption, but also, as we've mentioned, that with the divestment of Cynosi, having increased focus and resources available to get them behind those two product launches.

It truly reflects our continued confidence in both Epidiolex and ThighWave adoption, but also, as we've mentioned, with the divestment of Cenosi, having increased focus and resources available to get them behind those two product launches.

We did have shared management, shared marketing that supported both ThighWave and Cenosi, and so we're also now able to shift some of that focus over squarely to our remaining neuroscience products.

We did have shared management, shared marketing that supported both PsiWave and Cynosi, and so we're also now able to shift some of that focus over squarely to our remaining neuroscience products.

<unk> has the potential and then Jason you had also mentioned <unk>. So with continued xyrem strength related to updates on.

Also, we've mentioned that as we look at PsiWave and Xyrem and the competitive situation, we've updated some of our assumptions regarding the competitive entry timing, and while that shifts out, it does both strengthen Xyrem revenue, but also has the impact of pushing our assumptions around the Xyrem AG entry to late 2022, or as I've mentioned on the call, on the prepared remarks, even potentially January 2023.

On ascend Xyrem competitive entry that has the impact of also pushing out our assumptions for <unk> timing. So it's a combination of those factors that lead to the unchanged guidance.

And we were able to raise that revenue guidance despite taking Cynosi, a revenue, generating product, out of the portfolio.

Thank you. Our next question or comment comes from the line of Marc Goodman from SBB Leerink. Your line is open.

Thank you.

Yes.

And I'll also just comment that we didn't just raise the top line guidance, of course.

Yes, maybe mark will have Kim start on the U S side, and then Dan maybe you can jump in with some commentary ex U S as well so Kim.

We reduced SG&A by $50 million at the midpoint. We brought in two assets and raised our expectation, for IPR&D by $65 million and then still managed to increase our expectations for ANI by $50 million at the midpoint.

Yes sure.

So as you saw on the results, we saw 6% revenue growth in the first quarter compared to.

First quarter 'twenty, one last year.

And I think you recall back in for Q.

We did talk about the fact that at the dialogue net product sales benefited from a temporary increase in specialty pharma.

Pharmacy inventory levels of about $18 million now we have seen the majority of this region.

This reversed out in the first quarter and if we exclude this impact we saw double digit revenue growth of about double basically double digit revenue growth in the first quarter plus continued growth in underlying demand despite the challenging but we're certainly out there.

By the Amazon surge in the early part of the quarter. So yeah.

With all of this what underlies that is what we're continuing to see positive trends in terms of adding new prescribers.

As well as we see current prescribers broadening their use and using it earlier in the treatment regimen and as we bring those new prescribers onboard.

We just feel like they are going to follow suit with the existing prescribers in terms of getting more experience.

Seeing the clinical utility and the product and starting to adopt it more broadly and ultimately make it a cornerstone of therapy. So.

We remain very.

And are confident this is going to become a standard of care and treatment.

Distant epilepsy.

I believe you also with the notion that we're very pleased right now with the increases in personal engagement that will be achieved.

March and April as we kind of came out of it <unk> really feel like were building. Some nice momentum here, so thats whats, giving us a lot of encouragement in terms of where it will go in the rest of the year.

Yes.

And outside the U S. We're really we're really pleased with the progress we've been making.

Significant progress in Europe in the first quarter.

We launched <unk> in Ireland in Norway.

We expect the full impact of the full year from the second half launches in Italy and Spain.

We're off to a good start.

At the end of 'twenty one.

And so the last major market countries in France, or we expect.

Launched this year pending final pricing and reimbursement discussions and that would have us.

Launched fully in all five major European markets.

And there is still opportunity for additional launches and growth. We've got approval in 34 countries. We've launched in 13.

Importantly, because of the value of the product in.

The data we've got we've been able to establish pricing at greater than 70% of the U S. Whack.

So I think theres a lot of opportunity for continued momentum outside the U S.

Thank you.

Our next question or comment comes from the line of Brandon Folkes from Cantor Fitzgerald. Your line is open.

Hi, Thanks for taking my question and congratulations on the good thoughts and guidance.

So let me just on <unk> any color on the current market share in the second line small cell lung cancer setting compared to <unk>.

You may now oncology monotherapy at this stage. Thank you.

Kim maybe I'll turn that one over to you.

Yeah sure. So we're thrilled to have rapidly established delta as the treatment of choice in second line small cell lung cancer. So it is the leader out there and a fair amount of the share has come.

From from Telco T can.

While we don't provide product level guidance.

We're continuing to see.

Opportunities for growth with that Delta.

By displacing just what you alluded to further displacing telcos he can as well is.

Nino oncology products that are being used as monotherapy, but.

But we also see quite a bit of potential among patients that are today being re challenged with platinum based chemotherapies are receiving other chemotherapy regimen.

So we're continuing to see demand for that Delta.

And Kevin This is Robert.

Go ahead Rob.

Yes, I'd love to add to that color. There just to just to say that I think from a medical perspective.

<unk> gained experience with <unk> in the second line.

They're going to find that.

Relatively easy drug to give and very well tolerated.

Relative to re challenging for example, with a platinum doublet.

Can only be given for a limited time period, and I think that that experienced growth.

Hi.

I'd be expecting greater use, especially in that segment I'm also very.

Barry.

Domestic about the potential to bring this in.

First line therapy as an add on and as you know we have an ongoing first line trial.

It will be compared to placebo as add on therapy.

During maintenance for extensive stage small cell lung cancer at the <unk>.

That has a very poor prognosis the great majority of patients have active residual disease at the end of the chemo and so it's a real opportunity to extend their progression free survival and hopefully ultimately overall survival.

Giving giving patients a longer duration.

Duration of therapy than if they were to weight per second line.

Thank you. Our next question or comment comes from the line of Jeff Hung from Morgan Stanley . Your line is open.

Okay. Thanks for taking the question you've been active on the BD front such as today's announcement of GBP. Four one was the divestment of <unk> more of a onetime event like what is your view on divesting other assets to further refocus on the higher strategic priorities. Thanks.

Yes, Renee, maybe I'll hand that over to you.

Sure Yes. Thanks for the question so as we think about this and as the transaction as.

As we've said, we're really focused on ensuring that we have the ability to focus on our highest strategic priorities.

Coming into 2022, and looking at our business Holistically.

<unk> in both narcolepsy NIH, we have launched the silica we acquired GW with that the dialogue and then also launched Riley.

Clearly our business has transformed fairly dramatically and we're really thrilled with the momentum that we have across our business. So we'll continue to look at that portfolio and ensure that we're optimizing both the commercial portfolio, where we are expanding geographically and that importantly.

Continuing to lean in to business development, both for expanding and growing our pipeline, but as well as expanding and diversifying our revenues as we have stated with with vision 2025.

Thank you. Our next question or comment comes from the line of <unk> Prasad from Barclays. Your line is open.

Hi, Thanks for the question.

Couple of them <unk>.

Can you help us understand with regard to the survey on the restaurants that you are seeing with below 40% of respondents.

Moving this drug up their treatment algorithm are you seeing it in the form of increased prescription growth.

If not is there is an incremental that we need to look <unk> and <unk>.

Secondly on <unk> I think it's been it's scratcher for me.

I would think that jazz with a calling points that you have learned and fitting your narcolepsy and Spleenful Gov. You would have been the best position to extract value from this asset can you help us understand why the divestment. Thanks.

Yes.

Yes, <unk>, maybe I'll take those in opposite order and just say.

<unk> was a little bit different as we moved out of that core narcolepsy space that we've been.

So active in for so long into.

Eds in obstructive sleep apnea, which required.

A much broader set of physicians and physicians, who obviously both werent familiar with.

Ox abate and or I'm, sorry, we're not familiar with.

So no C. But also didn't in all cases.

Have drug therapy as part of their standardized approach to optimizing their OSA patients. So <unk>.

Not quite as perfect an overlap as you would think and.

As Rene said when we looked at our portfolio after everything that's happened with <unk>.

All of our product launches over 2020 one.

And the acquisition of GW, we essentially had our smallest near term opportunity product with the largest sales force.

More on on target strategic opportunities available to us.

On the first part of your question about <unk> and what that survey data about potentially moving it up in the algorithm means for our business Kim maybe I'll hand that to you.

Sure Yeah, and I'll clarify. So these are current prescribers those that have gotten some experience early on first couple of years Epidiorite.

It really telling us that while they were primarily using it.

Fourth line, let's say agent they've had good results with it and Theyre starting to use that third line second line.

So far so that's really the intention there and I would say that the effect of that is being felt now but also in the future because theyre basically saying theyre just starting to do that Additionally, as we talked about as were adding new prescribers onto our prescriber base, we feel very confident they're going to go through a very similar experience.

Having a positive first experience with the patients in later lines of views and then moving towards four.

<unk> into earlier lines.

Thank you. Our next question or comment comes from the line of Madhu Kumar from Goldman Sachs. Your line is open.

Hey, guys. Thanks for taking our call. This is Rob on some do.

Just wondering could you break down the levers that are driving that.

Picked up revenue guidance through the end of the year, just maybe specifically go through what gives you confidence that.

You can raise that you were able to raise guidance.

Yes, Renee you want to take that one.

Sure, Yes, Im happy too so as we've mentioned previously the $40 million raise at the topline was driven by neuroscience truly reflects our continued confidence in both at the dialect since highway of adoption, but also as we had mentioned with the divestment of <unk>.

Sanofi, having increased focus and resources available to get then behind those two product launches. We did have shared management shared marketing that supported both sideways and Sanofi and so we're also now able to shift some of that focus.

Over squarely to our remaining neuroscience products also we've mentioned that as we look at <unk> and Xyrem and the competitive situation. We've updated some of our assumptions regarding the competitive entry timing and.

While that shifts out it does both strengthen xyrem revenues, but also has the impact of pushing our assumptions around the xyrem AMG entry to late 2022 or as I have mentioned on the call on the prepared remarks, even potentially January two.

2023, and we were able to raise that revenue guidance, despite taking sanofi a revenue generating product out of the portfolio.

And I'll also just comment that we didn't just raise the top line guidance of course, we reduced SG&A by $15 million at the midpoint, we brought in two assets.

And raised our expectation for IP R&D by $65 million, and then still managed to increase our expectations for Eni by $50 million at the midpoint and going back to our commitment to delivering more to the bottom line to operation.

And going back to our commitment to delivering more to the bottom line, to operational excellence, this has in turn the impact of expanding our projected adjusted operating margin to 46% at the midpoint for the year of 2022.

And going back to our commitment to delivering more to the bottom line to operational excellence, this has, in turn, the impact of expanding our projected adjusted operating margin to 46% at the midpoint for the year of 2022.

Excellent.

In turn the impact of expanding our projected adjusted operating margin to 46% at the midpoint.

For the year of 2022.

Thank you.

Our next question or comment comes from the line of Amy <unk> from Needham <unk> Company. Your line is open.

Hello, Thank you for taking the question Amin for any.

I Wonder if you can give me some insight on.

What.

But we didn't look like.

For.

<unk> growth right.

For the rest of the year.

<unk> posted some growth from the first one.

This.

Is going to continue.

Yes.

I'm not sure I.

Totally understood. Your question, so I want to try that one more time, sorry, you broke up a little bit.

I'm sorry so.

I Wonder if you can.

Add more color on the.

The growth in the narcolepsy patient population.

<unk>.

You mentioned that.

There is some growth in the first Q I wanted to know.

Do you think is going to be continuing in the 2022.

Okay.

Yes, Kim you want to talk about growth in <unk>, specifically on the narcolepsy side.

Both what we saw in the first quarter, but how to think about that going forward.

Tim are you muted alright, yes, sorry, that's yes so.

In the first quarter, we saw some nice growth there in narcolepsy for Xilinx, specifically, we had an increase from.

606650 patients in the fourth quarter, just that 1050 patients and the <unk>.

Second quarter.

So overall pleased pleased.

Pleased with that launch now that growth now we would expect with any launch the uptake curve to come down and flattened a bit over time and I'm, particularly.

As we were impacted by as we mentioned Mccann in January and February .

But we feel very confident that that growth that we've been seeing is going to continue throughout the year and that physicians are going to continue.

DOCSIS and transition their patients over from Xyrem Kids die away.

Thank you.

And maybe I'll, just maybe I'll, just broaden the answer a little bit to say.

In the near term, we will have a business unit that's completely focused on XI waves.

Hi.

Even in the face of competition and so.

Our target that $2 billion in revenues, even as we get out to 2025 will be coming from the auction bait franchise I think tells you.

Where we see continued opportunity overtime.

Our next question or comment comes from the line of, Amy Sedia from Needham & Company.

Our next question or comment comes from the line of Ami Sadia from Needham & Company.

Thank you. Our next question or comment comes from the line of Gary Nachman from BMO capital markets. Your line is open.

Your line is open.

Hi, Thanks.

In terms of the Ram for XI always NIH 250 patients last quarter and 750 this quarter I'm curious how concentrated that prescribing has been with your target physicians. The early adopters. So I'm wondering how much low hanging fruit there is to capture those IH patients versus how challenging it will be.

To really get much broader prescribing across sleep specialists in.

<unk> primary care play a role here at all with referrals or is that much farther down the line. Thank you.

Hello, guys.

Tim I'll hand, it over to you to take the IH related questions.

Thank you for taking the question.

Sure, let me start with the back half of that around.

This is Amin for Ami.

I wondered if you can give me some insight on what would it look like for the Y-Wave growth rate for the rest of the year?

I'm sorry.

Primary care, we really see right now that the opportunity for IH is concentrated on the hands.

This is Amy for ANI.

I wondered if you can give, me some insight on what would it look like for the dry wave growth rate for the rest of the year?

I'm not sure I totally understood your question, so why don't you try that one more time?

Really more of the fleet specialists.

We have multiple different kind of specialties behind them ultimately are concentrated in focusing on treating patients with great condition.

Sorry, you broke up a little bit.

And really in terms of sequencing and growth.

Oh, I'm sorry.

So, I wondered if you can add more color on the growth in the narcolepsy patient population.

You mentioned that there was some growth in the first Q. I wanted to know if you think it's going to be continuing in the 2022.

Not a sale diagnosis, but as we've also indicated we do believe that the patient population that has again idiopathic hypersomnia.

So, I wondered if you can add more color on the growth in the narcolepsy patient, population.

You mentioned that there was some growth in the first Q. I wanted to know if you think it's going to be continuing in 2022?

The 2022?

Yeah.

We will at one point in time behavioral to sequence them, there and really sequence less from a specialty standpoint, but more from the patient standpoint to those patients.

Probably that would be beyond that 37000 that perhaps get a more solid diagnosis as a result.

I'll start re engaging with the health care system as a result of their finally being.

On a product out there that is.

Clinically proven and.

Approved by the FDA for the condition of idiopathic hypersomnia.

It is a very efficient.

Commercial undertaking for us on that there is.

90% overlap between those physicians that we are.

Getting through the launch of idiopathic hypersomnia on those that we already call up today.

For narcolepsy.

Yeah.

Kim, you want to talk about growth in Y-Wave, specifically on the narcolepsy side, both what we saw in the first quarter, but how to think about that going forward?

Thank you. Our next question or comment comes from the line of David <unk> from Piper Sandler Your line is open.

Kim, you want to talk about growth in ZyWave, specifically on the narcolepsy side, both what we saw in the first quarter, but how to think about that going forward?

Kim, are you muted?

Yes.

Hey, Thanks, So wanted to pick your brain on.

R&D questions. One is what's the extent to which you're prioritizing.

Yeah, sorry.

Thank you.

Once nightly low sodium.

Product.

So, in the first quarter, we saw some nice growth there in narcolepsy for ZyWave. Specifically, we had an increase from 6,650 patients in the fourth quarter to 7,050 patients, in the second quarter.

That's number one number two is.

Are you looking at other sleep disorders.

So target towards further development or even the nexgen.

A once nightly oxidize product.

And then on the <unk> and that you just didn't license to sort of similar question.

Beyond narcolepsy, I mean is there an opportunity NIH or other sleep disorders, and how should we think about that thank you.

So, overall, pleased with that launch, that growth. Now, we would expect, with any launch, the uptake curve to come down and flatten a bit over time, particularly as we were impacted by, as we've mentioned, Omicron in January and February.

Maybe I'll just broaden the answer a little bit to say, in the near term, we'll have a business unit that's completely focused on XyWave, which we obviously view as a huge opportunity, both in narcolepsy and idiopathic hypersomnia.

But we feel very confident that that growth that we've been seeing is going to continue throughout the year, and physicians are going to continue to adopt this and transition their patients over from, ZyRAM to ZyWave.

But I also just want to go back to Vision 2025 and point out that we view this as a growable and durable franchise, even in the face of competition.

Yes, David maybe I'll take the first part of that.

And maybe I'll just broaden the answer a little bit to say, you know, in the near term we'll, have a business unit that's completely focused on Zywave, you know, which we obviously view as a huge opportunity both in narcolepsy and idiopathic hypersomnia, but I also just want to go back to Vision 2025 and point out that we view this as a growable and durable franchise, you know, even in the face of competition, and so, you know, our target that $2 billion in revenues, even as we get out to 2025, will be coming from the Oxybate franchise, I think tells you where we see continued opportunity over time.

Specific to ox abate and Rob have you weigh in a little bit on the <unk> side.

Our next question or comment comes from the line of Gary Nachman from BMO Capital Markets.

On the once nightly low sodium product that is part of our development portfolio, but we don't have additional updates on that.

At the moment, you know that we made a decision many years ago that the most important thing we could do for narcolepsy patients getting ox abate was substantially reduce the sodium burden.

And so, our target, that $2 billion in revenues, even as we get out to 2025, will be coming from the OxyBate franchise, I think tells you where we see continued opportunity over time.

Thank you.

By a gram to a gram and a half per night, a 92% reduction that.

FDA has found provides a clinically superior product because it's safer and will result in fewer cardiovascular.

Yes.

Comorbidities for these patients and so that that has been our focus is get that product to market. When we think about.

Dosing.

While once nightly sounds convenient and if you ask most people.

Question would you rather take a drug once or twice a night youll get a predictable answer, but remember that change in half life.

Has other ramifications for patients in terms of taking a full night's dose of.

The date rape drug or something that really knocks you out.

And you can't Untakable once you've taken it and so that has potential.

Potential implications for patients' ability to get up in the middle of the night to go to the bathroom.

So in your resources something do you think about.

Safely operate in automobile in the morning.

Get to an early morning meeting.

Obviously, the more immediate release dosing gives patients a little more flexibility.

In how they live their life.

So we've said, we believe XI wave will be.

The dominant product in this space.

Even if patients have access to.

Branded xyrem generic xyrem.

<unk> potential once.

Ox abate.

And Rob maybe I'll hand, it off to you to talk about potential utility of <unk> agonist program.

Yes happy to Bruce.

Certainly.

<unk> agonists are developing has the potential beyond narcolepsy to other sleep disorders, including idiopathic hypersomnia or any other disorder that causes daytime somnolence mec.

The mechanism is likely to be.

Very potent across sleep disorders.

Given what its demonstrated pre clinically.

From the Takeda clinical data so far so we're very interested.

Your line is open.

Our next question or comment comes from the line of Gary Nachman from BMO Capital, Markets.

Thank you.

Next question or comment comes from the line of Annabel <unk> from Stifel. Your line is open.

Hi, thanks.

Your line is open.

Hi, thanks.

Taking my question.

In terms of the ramp for Zywave NIH, 250 patients last quarter and 750 this quarter, I'm curious how concentrated that prescribing has been with your target physicians, the early adopters, so I'm wondering how much low-hanging fruit there is to capture those IH patients versus how challenging it'll be to really get much broader prescribing across the sleep specialists, and will primary care play a role here at all with referrals, or is that much farther down the line?

In terms of the ramp for Zywave NIH, 250 patients last quarter and 750 this quarter, I'm curious how concentrated that prescribing has been with your target physicians, the early adopters.

Thank you.

So, I'm wondering how much low-hanging fruit there is to capture those NIH patients versus how challenging it'll be to really get much broader prescribing across the sleep specialists.

So given the big small status coming out this quarter I guess, what would determine whether the first of these three studies.

Kim, I'll hand it over to you to take the Zywave IH-related questions.

And will primary care play a role here at all with referrals, or is that much farther down the line?

Sufficient enough to justify an NDA filing.

And are there any hard endpoint. So you can draw from from the EU studies that could ensure that you could potentially.

File on that first.

First smaller study.

So I know that Europe was a little bit more based on subjective measure. So maybe you can just give us a little bit more color there.

Yes, Rob do you want to take the question about how this.

Sure.

Thank you.

Upcoming.

Clinical data on blinding will inform potential submission in and how that relates to our data that we already know from from prior studies.

Let me start with the back half of that around primary care.

Kim, I'll hand it over to you to take the Zywave NIH-related questions.

You know, we really see, right now that the opportunity for IH is concentrated in the hands of, you know, really more of the sleep specialists, which, you know, have multiple different kind of specialties behind them, but ultimately are concentrated and focusing on treating patients with sleep conditions, and really in terms of sequencing and growth, you know, we're focused, I think, as we've said several times today at launch on those 37,000 patients that we can see out there and claim data, not only have a diagnosis for idiopathic hypersomnia, but, you know, also have been actively engaging very recently in the healthcare system, so it's not a stale diagnosis, but as we've also indicated, we do believe that the patient population that has, you know, idiopathic hypersomnia, you know, could be as large as the narcolepsy patient population, so while today we're really focused on going after those patients who have this diagnosis and who are largely seeing a sleep specialist, you know, not a primary care physician, we will at one point in time be able to, you know, sequence from there and really sequence less from a specialty standpoint, but more from a patient standpoint to those patients, you know, probably that are beyond that 37,000 to perhaps get a more solid diagnosis as a result of us or start reengaging with the healthcare system as a result of there finally being a product out there for them, clinically proven and approved by the FDA for the condition of idiopathic hypersomnia.

Sure.

Yes, so Geoff as you know.

Let me start with the back half of that around primary care.

You know, we really see, right now that the opportunity for NIH is concentrated in the hands of, you know, really more of the sleep specialists, which, you know, have multiple different kind of specialties behind them, but ultimately are concentrated and focusing on treating patients with sleep conditions.

<unk> additional data.

Using endpoints other than the numeric rating scale that.

That was the primary endpoint for European submissions.

And approvals and particularly the FDA wanted to see measures of muscle tone or spasm frequency. So we will certainly leverage all of those prior data.

And.

We will evaluate the outcome of this relatively small study that's about to read out.

And if those data are promising we certainly would want to go to the FDA to have a conversation around how soon could we.

Could we submit an NDA.

As you know the other trials that are ongoing are larger are meant to be a more robust assessment both of muscle tone and spasm frequency separately.

And so that if this smaller study.

Sufficient for an NDA at this point.

We would have those studies.

To leverage down the road.

Thank you.

Yeah.

Thank you our next question or comment comes from the line of Oren.

Loopnet from H C. Wainwright your line is open.

Hey, Thanks for taking the question I was hoping I could build upon.

But someone earlier touched on the <unk> in narcolepsy ramp I mean, clearly you were able to raise guidance on several factors, but xyrem strength is one of those.

And so I look at it as sort of a trade off.

On a purely a switch but.

And I'm just wondering is Q1 seasonally tougher for desired wave new starts and switches.

Yes, we're.

Excited or and to be in a position, where we've got got zywiec being rolled out I would still say, it's still fairly early in narcolepsy and now brand new in idiopathic hypersomnia. These are both patient populations that can benefit from this new medication.

And this is a very efficient commercial undertaking for us, in that there is 90% overlap between those physicians that we are targeting for the launch of idiopathic hypersomnia and those that we already call upon today for narcolepsy.

And really, in terms of sequencing and growth, you know, we're focused, I think as we've said several times today at launch, on those 37,000 patients that we can see out there and claim data, not only have a diagnosis for idiopathic hypersomnia, but, you know, also have been actively engaging very recently in the healthcare system.

Thank you.

So, it's not a stale diagnosis, but as we've also indicated, we do believe that the patient, population that has, you know, idiopathic hypersomnia, you know, could be as large as the narcolepsy patient population.

Our next question or comment comes from the line, of David Amsalom from Piper Sandler.

And where we see substantial opportunity in while you pointed out correctly, the sort of rate of narcolepsy ads of course, we added 900 patients.

Your line is open.

Hey, thanks.

XI away or across the two indications in the first quarter, which is <unk>.

Terrific.

Our promotional efforts, we definitely want a balanced continuing to make progress in narcolepsy, where we think all patients can benefit from.

The sodium reduction relative to Xyrem, where we're seeing new patients to ox abate predominantly start directly on <unk> rather than going through.

Xyrem.

But also now offering this to patients with idiopathic hypersomnia, who had no FDA approved treatment options before so.

So, while today we're really focused on going after those patients who have this diagnosis and who are largely seeing a sleep specialist, you know, not a primary care physician, we will at one point in time be able to, you know, sequence from there and really sequence less from a specialty standpoint, but more from a patient standpoint to those patients, you know, probably that are beyond that 37,000 that perhaps get a more solid diagnosis as a result of us, you know, start reengaging with the healthcare system as a result of there finally being a product out there that is, you know, clinically proven and, you know, approved by the FDA for the condition of idiopathic hypersomnia.

And, you know, this is a very efficient, you know, commercial undertaking for us in that there is, you know, 90 percent overlap between those physicians that, you know, we are, you know, targeting for the launch of idiopathic hypersomnia and those that we already call upon today for narcolepsy.

Jim maybe you could just close this answer by talking a little bit about how you do think about allocating the sales force across those are.

Areas and how we continue to make progress in the narcolepsy ramp.

So wanted to pick your brain on a couple of R&D questions.

Thank you.

Yes sure.

Our next question or comment comes from the line of David Amsalam from Piper-Fandler.

In terms of making progress.

So that of Xyrem.

But also I'd say the strategic divestiture of Sanofi that we were talking about earlier does enable us to sharpen our focus on our highest strategic priority.

Typically in fleet, but allows our team to be very laser focus on achieving the full potential of <unk>, both in narcolepsy and in IHS and we do have the luxury of having both of these very large opportunities to go after and it is a balancing act for us.

With our sales force and our resources in general.

But we really feel like we're striking that right balance in terms of continuing.

To encourage customers to.

Transition patients from Xyrem to die away and at the same time to really identify the idiopathic hypersomnia patients.

That would benefit.

<unk>, so we feel fortunate to have those opportunities.

Really right now about staying the course and executing on both.

Very strongly and we think that.

The team is doing a really solid job at that.

Yes.

Thank you. Our next question or comment comes from the line of Greg Fraser from <unk> Securities. Your line is open.

Your line is open.

Hey, thanks.

So I wanted to pick your brain on a couple of R&D questions.

One is, what's, the extent to which you're prioritizing a once-nightly, low-sodium product?

That's number one.

Number two is, are you looking at other sleep disorders to target for further xy-wave development or even a next-gen once-nightly-oxibate product?

And then on the Erexin that you just enlicensed, a sort of similar question.

Yeah.

So Greg the quick answer to that is.

That relationship.

Ended.

When we stopped selling <unk>.

I wouldn't comment on any any possibilities for.

The two companies working together going forward <unk>, obviously pursuing their own strategy there.

Beyond narcolepsy, is there an opportunity in IH or other sleep disorders, and how should we think about that?

But Dan maybe I could ask you to comment generally how we think about.

Thank you.

Riley as being on the on the market today in the U S and where we're going not just in the U S, but globally and.

Yeah, David, maybe I'll take the first part of that, you know, specific to oxibate.

And how we think about potential entry of.

Another <unk> product.

And, I'll have you weigh in a little bit on the Erexin side.

Yes, I mean, we're really excited with the <unk> launch.

Yes.

You know, on the once-nightly, low-sodium product, that is part of our development portfolio, but we don't have additional updates on that at the moment.

You know that we made a decision many years ago that the most important thing we could do for narcolepsy patients getting oxibate was substantially reduce the medication burden by, you know, a gram to a gram and a half per night, a 92% reduction that, you know, FDA has found provides a clinically superior product because it's safer and will result in fewer cardiovascular comorbidities for these patients.

The one and only and reliable reliably supplied we're seeing the change in medical practice back to ensuring that.

The Monday Wednesday Friday in the IV that creates additional optimization.

<unk> this relative to the package label that we had with <unk>.

And I'd say also there's a suite of services plus a field medical team that knows that customer extremely well.

Outside the U S. We're on track for a mid year.

Filing and we anticipate a product launch.

As soon as 2023 and look forward to bringing that same.

Optimized product, which isn't it.

Easy vial already reconstituted.

It's got a higher concentration in <unk>.

Into those markets as well, where <unk> is available so.

And so, you know, that has been our focus is get that product to market.

When we think about, you know, dosing, while once-nightly sounds convenient and if you ask most people the question, would you rather take a drug once or twice a night, you get a predictable answer.

But remember that change in half-life has other ramifications for patients in terms of taking a full night's dose of, you know, the date-rape drug or something that really knocks you out, and you can't untake it once you've taken it.

Our anticipation is.

And so that has, you know, potential implications for patients' ability to get up in the middle of the night to go to the bathroom, you know, so enuresis is something you think about, ability to check on kids during the middle of the night, and flexibility in timing of your own life.

If you take a dose a little later at night than you're used to, you know, that has implications for when you can get up and safely operate an automobile in the morning, you know, get to an early morning meeting.

That release can be the treatment of choice broadly in this market.

Obviously, the more immediate release dosing gives patients a little more flexibility in how they live their life.

Thank you I'm showing no additional questions in the queue at this time I would like to turn the conference back over to Mr. Bruce <unk> for any closing remarks.

One is what's the extent to which you're prioritizing, a once nightly low sodium product?

That's number one.

Number two is, are you looking at other sleep disorders, to target for further xywave development or even a next gen once nightly oxidase product?

Alright, thanks, operator.

And then on the Erexin that you just enlistened, the sort of similar question, beyond narcolepsy, I mean, is there an opportunity in IH, or other sleep disorders?

And how should we think about that?

So we've said we believe Zywave will be the dominant product even if patients have access to, you know, branded Xyrem, generic Xyrem, Zywave potential once-a-night products. We believe that Zywave is actually going to be the preferred product across that patient population.

We haven't said anything to date about going beyond narcolepsy and idiopathic hypersomnia with Oxabate.

Let me just close by saying, we've got numerous opportunities across our commercial portfolio, our pipeline and our operations to continue to drive our.

Thank you.

And, Rob, maybe I'll hand it off to you to talk about potential utility of an erection, agonist program.

Yeah, David, maybe I'll take the first part of that, you know, specific to Oxybate.

B a year ago tomorrow that we closed the GW acquisition and when I look at.

And Rob, have you weigh in a little bit, on the Erexin side?

You know, on the once nightly low sodium product, that is part of our development portfolio, but we don't have additional updates on that at the moment. You know that we made a decision many years ago, that the most important thing we could do for narcolepsy patients getting Oxybate was substantially reduce the sodium burden by, you know, a gram to a gram and a half per night, a 92% reduction that, you know, FDA has found provides a clinically superior product, because it's safer and will result in fewer cardiovascular comorbidities for these patients.

And so, you know, that has been our focus, is get that product to market.

How we've successfully integrated the two organization something that some.

When we think about, you know, dosing, while once nightly sounds convenient, and if you ask most people the question, would you rather take a drug once or twice a night, you get a predictable answer.

But remember that change in half-life, has other ramifications for patients in terms of taking a full night's dose of, you know, the date rape drug or something that really knocks you out, and you can't untake it once you've taken it.

And Rob, maybe I'll hand it off to you to talk about potential utility of an orexin, agonist program.

And so that has, you know, potential implications, for patients' ability to get up in the middle of the night to go to the bathroom.

You know, so enuresis is something you think about, ability to check on kids during the middle of the night, and flexibility and timing of your own life.

Sometimes trips people up in acquisitions in and think about how well we did that during a pandemic.

If you take a dose a little bit later at night, than you're used to, you know, that has implications for when you can get up and safely operate an automobile in the morning, you know, get to an early morning meeting.

Obviously, the more immediate release dosing, gives patients a little more flexibility in how they live their life.

So we've said we believe Zywave, will be the dominant product in this space, even if patients have access to, you know, branded Xyrem, generic Xyrem, Zywave potential once.

We haven't said anything to date about going beyond narcolepsy and idiopathic hypersomnia, with Oxybate.

Yeah.

What we're seeing in terms of ongoing combined performance.

Including.

Being efficient with our spend in.

And importantly, deleveraging as quickly.

As we have in that in that 12 month period.

I couldnt be more pleased.

To close the call by recognizing our jazz colleagues for their tenacity.

Dedication and their creativity, which have led to us delivering new therapeutic options to patients and I also want to thank our partners and shareholders for their continued confidence and support we look forward to updating you on our progress this year as we now move toward.

Our raised top line guidance are raised bottom line guidance are improved guided midpoint margin.

Happy to, Bruce.

DR.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may now disconnect everyone have a wonderful day.

And certainly, the orexin agonist we're developing has the potential beyond narcolepsy to other, sleep disorders, including idiopathic hypersomnia or any other disorder that causes daytime somnolence. The mechanism is likely to be very potent across sleep disorders, given what it's demonstrated, preclinically and from the Takeda clinical data so far.

ROBERT IANNONE Yeah.

So we're very interested.

Happy to, Bruce, and certainly the erection agonist we're developing has the potential, beyond narcolepsy to other sleep disorders, including idiopathic hypersomnia or any other disorder that causes daytime somnolence.

This concludes the program.

Thank you.

The mechanism is likely to be very potent across sleep disorders, given what it's demonstrated, preclinically and from the Takeda clinical data so far.

Our next question or comment comes from the line of Annabelle Samimi from Staple.

So we're very interested.

You may now disconnect.

Your line is open.

DR.

Everyone, have a wonderful day.

Thank you for taking my question.

BRUCE COLLINS.

Music, The slide presentation accompanying this webcast is available on the Investors section of our website.

So given that the Nabix-MALS data is coming out this quarter, I guess, what would determine, whether the first of these three studies is sufficient enough to justify an NDA filing?

Thank you.

Investors may also refer to the press release we issued earlier today, which is also posted to our website.

And, you know, are there any hard endpoints that you can draw from from the EU studies, that could ensure that you could potentially file on that first-this first smaller study?

Our next question or comment comes from the line of Annabel Samimi from Staple.

I know that Europe was a little bit more based on subjective measures, so maybe you can just, give us a little bit more color there.

Your line is open.

Yeah.

MS.

Rob, you want to take the question about how this upcoming clinical data on blinding will, inform potential submission and how that relates to data that we already know from prior studies?

ANNABEL SAMIMI.

Yes.

Thank you for taking my question.

So, Jeff, as you know, SADIV-X is approved in 29 European countries based on really an, extensive set of data, not only around efficacy but also on dosing and safety.

So given that the Nabix-Mals data is coming out this quarter, I guess, what would determine, whether the first of these three studies is sufficient enough to justify an NDA filing?

And so our strategy in the U.S. is really to leverage all of those data and bridge to, a U.S. submission, which the FDA has said should include additional data using endpoints other than the numeric rating scale that we-that was the primary endpoint for European submissions and approvals. In particular, the FDA wanted to see measures of either muscle tone or spasm frequency.

And are there any hard endpoints that you can draw from from the EU studies that could, ensure that you could potentially file on that first, this first smaller study?

So, we'll certainly leverage all of those prior data, and we will evaluate the outcome, of this relatively small study that's about to read out.

I know that Europe was a little bit more based on subjective measures, so maybe you can just, give us a little bit more color there.

And if those data are promising, we certainly would want to go to the FDA to have a conversation, around, you know, how soon could we-could we submit an NDA.

DR.

As you know, the other trials that are ongoing are larger, meant to be a more robust assessment, both of muscle tone and spasm frequency separately, and so that if this smaller study is not sufficient for an NDA at this point, we would have those studies to leverage them.

BRUCE COLLINS.

Our next question or comment comes from the line of Oren Livnet from H.C. Wainwright.

Yes.

Your, line is open.

Rob, do you want to take the question about how this upcoming clinical data on blinding, will inform potential submission and how that relates to data that we already know from prior studies?

Hey, thanks for taking the question.

DR.

I was hoping I could build upon what someone earlier, touched on, the xywave and narcolepsy ramp.

ROBERT COLLINS.

I mean, clearly, you were able to raise guidance on several factors, but xyram strength is one of those.

Yes.

And so, I look at it as sort of a tradeoff.

So, Jeff, as you know, Sativex is approved in 29 European countries based on really an, extensive set of data not only around efficacy but also on dosing and safety.

I know it's not purely a switch, but I guess if you have slowing xywave penetration, that I guess a big xyram lasts longer, right?

So, can you talk about that trend now?

So we'll certainly leverage all of those prior data, and we will evaluate the outcome of, this relatively small study that's about to read out.

I think you added, in terms of exit rates, 1,200 patients in Q2, 900 in Q3, 650, and now 400 in Q1.

And if those data are promising, we certainly would want to go to the FDA to have a conversation, around, you know, how soon could we-could we submit an NDA.

And I'm just wondering, is Q1 seasonally tougher for the xywave new starts and or switches, or are there some other dynamics that we should expect this to continue to potentially slow in terms of rate of patient ads in narcolepsy, like payer pressure, seeing AGs coming, or any other headwind?

As you know, the other trials that are ongoing are larger, meant to be a more robust assessment, both of muscle tone and spasm frequency separately.

Yeah, well, we're excited, Oren, to be in a position where we've, you know, got xywave, being rolled out, you know, I would still say still fairly early in narcolepsy, and now brand new in idiopathic hypersomnia. These are both patient populations that can benefit from this new medication and where we see substantial opportunity.

And so that if this smaller study is not sufficient for an NDA at this point, we would have those, studies to leverage down the road.

And while you pointed out correctly the sort of rate of narcolepsy ads, of course, we added 900 patients to xywave across the two indications in the first quarter, which is really terrific.

DR.

And, you know, in our promotional efforts, we definitely want to balance continuing to make progress in narcolepsy where we think all patients can benefit from the sodium reduction relative to xyrem, where we're seeing new patients to oxibate predominantly start directly on xywave rather than going through xyrem, but also now offering this to patients with idiopathic hypersomnia who had no FDA-approved treatment options before.

LORI LIVNETT.

So, Kim, maybe you could just close this answer by talking a little bit about how you do think about allocating the sales force across those areas and how we continue to make progress in the narcolepsy ramp.

Thank you.

Yeah, sure.

CHAIR POWELL.

So, in terms of making progress, you know, it's really staying the course on, our strategy that we think is really resonating with customers about the benefits of reduced sodium for patients and the fact that the FDA has, you know, recognized xywave's clinical superiority, you know, to that of xyrem.

Thank you.

Yeah, but also I'd say that the strategic divestiture of Sanosi that we were talking about earlier does enable us to sharpen our focus on our highest strategic priorities, and, you know, specifically in sleep, it allows our sleep team to be very laser-focused on achieving, you know, the full potential of xywave both in narcolepsy and in IH, and we do have the, you know, the luxury of having both of these very large opportunities to go after, and it is a balancing act for us with our sales force and, you know, our resources in general, but we really feel like, you know, we're striking that right balance in terms of continuing to encourage customers to, you know, transition patients from xyrem to xywave and, at the same time, to really identify those idiopathic hypersomnia patients that would benefit from xywave.

Our next question or comment comes from the line of Oren Livnett from HC Wainwright.

So, you know, we feel fortunate to have both opportunities, and, you know, really right now it's about staying the course and executing on both very strongly, and we think that, you know, that the team is doing a really solid job at that.

Your line is open.

Thank you.

DR.

Our next question or comment comes from the line of Greg Fraser from Truist Securities.

OREN LIVNETT.

Your line is open.

Hey.

Thanks and good afternoon, folks.

Thanks for taking the question.

I had a question on IrwinAIDS and the potential for that product to come back to the market.

I was hoping I could build upon what someone earlier touched on, the ZyWave and narcolepsy, ramp.

You hold the BLA.

I mean, clearly, you know, you were able to raise guidance on, you know, several factors, but, you know, Xyrem's strength is one of those.

Is your prior partner trying to acquire the BLA from you?

And so I look at it as sort of a tradeoff, or, you know, I know it's not purely a switch, but I guess if you have slowing ZyWave penetration, that, I guess, would make Xyrem last longer, right?

Is that something that's on the table?

So can you talk about that trend now?

Any color on that would be helpful.

I think you added, in terms of exit rates, 1,200 patients in Q2, 900 in Q3, 650, and, now 400 in Q1.

Thank you.

And I'm just wondering, is Q1 seasonally tougher for the ZyWave new starts and or switches, or are there some other dynamics that we should expect this to continue to potentially slow in terms of rate of patient ads in narcolepsy, like payer pressure, seeing AGs coming, or any other headwind?

Greg, the quick answer to that is that relationship ended when we stopped selling IrwinAIDS.

Yeah, well, we're excited, Oren, to be in a position where we've, you know, got Zywave, being rolled out, you know, I would still say still fairly early in narcolepsy and now brand new in idiopathic hypersomnia.

I wouldn't comment on any possibilities for the two companies working together going forward.

These are both patient populations that can benefit from this new medication and where, we see substantial opportunity.

PBL is obviously pursuing their own strategy there, but Dan, maybe I could ask you to comment generally how we think about Riley's being on the market today in the U.S, and where we're going, not just in the U.S., but globally and how we think about potential entry of another IrwinAIDS product.

And while you pointed out correctly the sort of rate of narcolepsy ads, of course, we added, 900 patients to Zywave across the two indications in the first quarter, which is really terrific.

We're really excited with the Riley's launch.

And, you know, in our promotional efforts, we definitely want to balance continuing to, make progress in narcolepsy where we think all patients can benefit from the sodium reduction relative to Xyrem, where we're seeing new patients to oxibate predominantly start directly on Zywave rather than going through Xyrem, but also now offering this to patients with idiopathic hypersomnia who had no FDA approved treatment options before.

As the one and only and reliably supplied, we're seeing a change in medical practice back to ensuring that any patient who shows a sign of hypersensitivity or reaction to an E. coli-based can move to Riley's.

So, Kim, maybe you could just close this answer by talking a little bit about how you do think, about allocating the sales force across those areas and how we continue to make progress in the narcolepsy ramp.

It's not only the supply.

Yeah, sure.

It's the fact that we studied it and optimized the dose schedule.

So, in terms of making progress, you know, it's really staying the course on our strategy, that we think is really resonating with customers about the benefits of reduced sodium for patients and the fact that the FDA has, you know, recognized Zywave's clinical superiority, you know, to that of Xyrem.

As we get the Monday, Wednesday, Friday, and the IV, that creates additional optimization of this relative to the package label that we had with IrwinAIDS.

Yeah, but also I'd say that the strategic divestiture of Sanosi that we were talking, about earlier does enable us to sharpen our focus on our highest strategic priorities and, you know, specifically in sleep, it allows our sleep team to be very laser focused on achieving, you know, the full potential of Zywave, both in narcolepsy and in IH, and we do have the, you know, the luxury of having both of these very large opportunities to go after, and it is a balancing act for us with our sales force and, you know, our resources in general, but we really feel like, you know, we're striking that right balance in terms of continuing to encourage customers to, you know, transition patients from Xyrem to Zywave and, at the same time, to really identify those idiopathic hypersomnia patients that would benefit from Zywave.

I'd say also there's a suite of services plus a field and medical team that knows that customer extremely well.

So, you know, we feel fortunate to have both opportunities and, you know, really right, now it's about staying the course and executing on both very strongly, and we think that, you know, that the team is doing a really solid job at that.

Outside the U.S., we're on track for a mid-year filing.

Thank you.

We anticipate a product launch as soon as 2023 and look forward to bringing that same optimized product, which is in an easy vial already reconstituted.

Our next question or comment comes from the line of Greg Frazier from Truist Securities.

It's got a higher concentration than IrwinAIDS, into those markets as well where IrwinAIDS is available.

Your line is open.

Our anticipation is that Riley's can be the treatment of choice broadly in this market.

Thanks, and good afternoon, folks.

Thank you.

I had a question on IrwinAIDS and the potential for that product to come back to the market.

I'm showing no additional questions in the queue at this time.

You hold the BLA.

I would like to turn the conference back over to Mr. Bruce Cassaw for any closing remarks.

Is your prior partner trying to acquire the BLA from you?

All right.

Is that something that's on the table?

Thanks, Operator.

Any color on that would be helpful.

Let me just close by saying we've got numerous opportunities across our commercial portfolio, our pipeline, and our operations to continue to drive growth and value and achieve operational excellence.

Thank you.

We're very focused on Vision 2025 and excited about the progress we're making.

So, Greg, the quick answer to that is, you know, that relationship ended when we stopped, selling Erwin A's and, you know, I wouldn't comment on any possibilities for the two companies working together going forward, you know, PBL is obviously pursuing their own strategy here, but Dan, maybe I could ask you to comment generally how we think about Riley's being on the market today in the U.S. and where we're going, not just in the U.S., but globally, and how we think about, you know, potential entry of, you know, another Erwinia asparaginase product.

I think our results have demonstrated the power of our products, our platform, and our people.

Yeah, I mean, we're really excited with the Riley's launch, and it's, you know, it's the, one and only and reliably supplied.

It would be a year ago tomorrow that we closed the GW acquisition. When I look at how we've successfully integrated the two organizations, something that sometimes trips people up in acquisitions.

We're seeing a change in medical practice back to ensuring that, you know, any patient, who shows a sign of hypersensitivity or reaction to an E. coli-based can move to Riley's.

Think about how well we did that during a pandemic, what we're seeing in terms of ongoing combined performance, including being efficient with our spend.

But it's not only the supply, it's the fact that we studied it and optimized the dose, schedule, and as we get the, you know, the Monday, Wednesday, Friday, and the IV, that creates additional optimization of this relative to the package label that we had with Erwinase.

Importantly, deleveraging as quickly as we have in that 12-month period, I couldn't be more pleased.

And I'd say also there's a suite of services plus a field and medical team, you know, that, knows that customer extremely well.

I'd like to close the call by recognizing our Jazz colleagues for their tenacity, their, dedication and their creativity which have led to us delivering new therapeutic options to patients.

Outside the U.S., we're on track for a mid-year filing, and, you know, we anticipate a product, launch, you know, as soon as 2023, and look forward to bringing that same, you know, optimized product, which is in an easy vial, already reconstituted.

And I also want to thank our partners and shareholders for their continued confidence, and support.

It's got a higher concentration than Erwinase into those markets as well where Erwinase, is available.

We look forward to updating you on our progress this year as we now move toward our raised, top line guidance, our raised bottom line guidance, our improved guided midpoint margin.

So, you know, our anticipation is that Riley's can be the treatment of choice, you know, broadly in this market.

Again, we're really excited about the rest of this year and importantly how that continues, to position us well toward achieving Vision 2025.

Thank you.

So with that, thanks everyone for joining us today and stay well.

I'm sure no additional questions in the queue at this time.

Ladies and gentlemen, thank you for participating in today's conference.

I would like to turn the conference back over to Mr. Bruce Cassaw for any closing remarks.

All right, thanks, Operator.

Let me just close by saying we've got numerous opportunities across our commercial portfolio, our pipeline, and our operations to continue to drive a growth and value and achieve operational excellence.

We're very focused on Vision 2025 and excited about the progress we're making, and I think, our results have demonstrated the power of our products, our platform, and our people.

You know, it would be a year ago tomorrow that we closed the GW acquisition, and when, I look at, you know, how we've successfully integrated the two organizations, something that sometimes trips people up in acquisitions, and think about how well we did that during a pandemic, what we're seeing in terms of ongoing combined performance, including, you know, being efficient with our spend, and importantly, deleveraging as quickly as we have in that 12-month period, I couldn't be more pleased.

I'd like to close the call by recognizing our Jazz colleagues for their tenacity, their, dedication and their creativity which have led to us delivering new therapeutic options to patients.

And I also want to thank our partners and shareholders for their continued confidence, and support.

We look forward to updating you on our progress this year as we now move toward our raised, top line guidance, our raised bottom line guidance, our improved guided midpoint margin.

Again, we're really excited about the rest of this year and importantly how that continues, to position us well toward achieving Vision 2025.

So with that, thanks everyone for joining us today and stay well.

Ladies and gentlemen, thank you for participating in today's conference.

Q1 2022 Jazz Pharmaceuticals PLC Earnings Call

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