Q3 2022 Jazz Pharmaceuticals PLC Earnings Call

November 9, 2022

The conference will begin shortly to raise your hand during Q&A you can dial star one one.

[music].

Okay.

Good day and thank you for standing by welcome to the Q3 2022 jazz Pharmaceuticals earnings Conference call.

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

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Please be advised that today's conference is being recorded.

Now I'd like to hand, the conference over to your Speaker today, Andrea Flynn Vice President of Investor Relations. Please go ahead.

Thank you operator, and good afternoon, everyone today Jazz Pharmaceuticals reported a third quarter 2022 financial results.

The slide presentation accompanying this webcast is available on the investors section of our website industrious may also refer to the press release, we issued earlier today, which is also posted to our website.

The call today are Bruce <unk>, Chairman and Chief Executive Officer, Renee Gala Executive Vice President and Chief Financial Officer, Dan Swisher, President and Chief operating Officer, and Rob <unk> Executive Vice President Global head of R&D.

Ken Statelets Executive Vice President and General manager U S 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 programs and pipeline regulatory activities and commercialization milestones goals unexpected.

Mining and statements with respect to our licensing agreement presented data that is subject to closing conditions, 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, and our slide deck and in our latest SEC disclosure documents, which identifies certain factors that may cause the companys actual events performance and results to differ materially from those contained in the forward looking statements made on this.

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

Now I'll turn the call over to Bruce.

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

In the third quarter strong operational performance across all areas of our business enabled us to deliver significant year over year top and bottom line growth for the quarter building on a productive first half of the year.

Im pleased to report that based on our performance through the first three quarters of 2022, we are raising the midpoint of our full year revenue guidance, reflecting increases in the guidance mid points of both our neurology and oncology net sales projections.

We're unable to discuss these and other updates to our guidance later in the call.

Our commercial business continues to execute well in our neuroscience franchise, we're seeing compelling adoption of <unk> in both narcolepsy and idiopathic hypersomnia.

H and we're pleased to have achieved another important milestone exiting October 2022, there are now more narcolepsy patients taking XI wave than Xyrem.

Looking ahead, we remain confident in the durability of his highway as a core component of our commercial portfolio.

For <unk>, we are seeing growth driven by underlying demand and recently, we completed the pricing and reimbursement process in France paving the way for commercial launch in this key European market.

We believe that the dialects can become a cornerstone of treatment for refractory seizures and remain confident in <unk> potential to achieve blockbuster status.

Moving to oncology <unk> is established as the treatment of choice in second line small cell lung cancer are.

Our ongoing clinical development efforts are focused on expanding within that indication as well as looking to address additional patient populations, who may benefit from therapy.

<unk> had another strong quarter as momentum with prescribers as continued <unk>.

<unk> remains the only therapy available to patients in the U S who experienced a hypersensitivity reaction to E coli derived asparaginase.

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

Our pipeline efforts were productive again this quarter with multiple clinical trial starts.

We enrolled the first patient in our phase one trial evaluating <unk>, our Pan RAF inhibitor for the treatment of solid tumors that contain mutations in the <unk> pathway.

We initiated a phase III trial for <unk> in Parkinson's disease, tremor, which complements our ongoing phase <unk> trial in essential tremor.

And for Epic dialects, we initiated our phase III trial evaluating epidiorite in patients with epilepsy, with Myoclonic atonic seizures or E mass as well as enrolled the first patient in our pivotal trial in Japan.

And just last month, we announced a licensing agreement to further expand our late stage pipeline as part of our agreement with <unk> to acquire development and commercialization rights to any data mab.

<unk> heard <unk> targeted by specific antibody in the U S Europe , Japan and other markets.

Rob will provide additional comments on our pipeline programs in progress, including any data map later in the call.

Turning to slide six vision 2025 includes three components central to driving sustainable growth and enhanced value as we transform our company commercial pipeline and operational excellence.

With commercial we're positioned to grow revenue to $5 billion in 2025 through a combination of existing products potential new therapies emerging from our pipeline and corporate development.

Our R&D organization is advancing key programs addressing significant patient needs in neuroscience and oncology and we anticipate delivering at least five novel product approvals by the end of the decade through a combination of existing pipeline programs and corporate development.

Is there any data map transaction is an example of our corporate development initiatives that could contribute to both our commercial and pipeline objectives.

And on operational excellence, 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.

With vision 2025 is our roadmap, we continue to transform our business and operating model to ensure we have the appropriate structure in place to scale, while continuing to invest in our business in order to meet our goals.

We believe our accomplishments in the third quarter position us for a strong ending the year entering 2023 with considerable momentum across the business and well positioned to achieve vision 2025.

I'll now turn the call over to Dan to review, our third quarter commercial performance.

After which Rob will share an update on the progress of our R&D programs.

<unk> will provide a financial overview, including our corporate development update and then we'll open the call up for Q&A.

Dan.

Thanks, Bruce I am excited about the progress we've made on the commercial portfolio and I'm pleased to report on our strong third quarter performance.

Starting with neuroscience on slide eight we are maintaining positive momentum for our Oxidate franchise with <unk>, we have meaningfully advanced patient care with a lower sodium oxidate products.

In the third quarter average active Oxford patients increased to approximately 17600 reps.

Representing growth of approximately 10%.

Impaired to the same period last year.

There were approximately 9500 active <unk> patients exiting the quarter, resulting from strong adoption in both narcolepsy and IH.

We continue to see strong uptake of <unk> for narcolepsy in the third quarter.

Did the quarter with approximately 8050 narcolepsy patients taking <unk>.

As Bruce mentioned, we've reached an important milestone with more narcolepsy patients, taking <unk> and Xyrem and.

In addition to continued adoption of <unk> among current xyrem patients. The large majority of new docs they'd narcolepsy patients have been prescribed XI ways, we expect that trend to continue as our educational efforts around the benefits of lower sodium oxidate are resonating with prescribers and patients.

With continued strong adoption NIH, we have a substantial growth opportunity there is a high level of engagement and receptivity in the market for a new IH therapy.

We have secured reimbursement on par with narcolepsy and importantly, we continued to grow the IH prescriber base.

As physicians gain experience prescribing <unk> for IH.

And they have the opportunity to observe its clinical benefits within their own practices. We are seeing increased enthusiasm for identifying appropriate patients and initiating therapy.

Exiting the third quarter, there were approximately 1450 IH patients taking <unk> were focused on educating prescribers about IH diagnosis and patient identification.

<unk> is the first and only FDA approved therapy for IH and we are confident in our ability to maximize its potential.

This underserved market.

We expect that <unk> will be the ox debate of choice in 2023, even as authorized generics enter the market and is branded competition potentially becomes available.

So anyway, that's the only lower 30 marks debate and is the only oxidative proved for both narcolepsy NIH.

We have confidence that <unk> has a durable product that will continue to contribute meaningfully to jazz as commercial portfolio.

Turning to slide nine and <unk> net product sales increased by 22% in the third quarter of 2022 compared to the same period last year, driven primarily by demand.

Our overall volume of engagement with health care providers continues to grow.

As a positive development for the brand given the promotional sensitive nature of the dialogues.

And the anti epilepsy market as a whole.

We're also pleased that our market research indicates nearly 60% of prescribers are moving up the dialogues.

Up in the treatment algorithm.

Polypharmacy is the dominant treatment strategy in treatment refractory epilepsy, and one approach we have taken that is resonating with U S. Health care professionals is to highlight data on the synergistic effects using up the dialects in combinations club exam.

<unk> is one of the most widely used anti seizure therapies and health care providers have been very impressed with the combination data.

Both epidemics and club examine demonstrated effectiveness in reducing seizure frequency and lgs dravet and CSC.

In combination epidemics press club exam have been shown to reduce seizure frequency by around 60% in lgs and dravet and nearly 50% in PSC compared to an approximately 30% reduction in seizures for patients, giving club exam plus placebo.

These data are particularly relevant for healthcare professionals, who have limited experience with the dialogues.

<unk> has strong rationale to begin incorporating <unk> into their patients treatment regimens.

There has also been continued adoption and growth to that the Donaldson markets outside the U S and we recently completed the pricing and reimbursement process in France.

We expect to launch later this year at which point <unk> will be reimbursed and commercially available in all five major European markets, including France, Germany, the United Kingdom, Spain, and Italy.

We also have opportunity for additional growth coming from multiple new markets and indication launches throughout this year and next.

Given <unk> differentiation in the anti epilepsy drug market and its ability to be combined with a wide range of other therapies. We remain confident it will emerge as the global standard of care and treatment resistant epilepsy.

Now moving to oncology I'll begin with <unk> on slide 10, we have established <unk> as the treatment of choice in second line small cell lung cancer.

Third quarter net product sales were in line with our expectations.

As we noted in our third quarter 'twenty, one earnings announcements <unk> 'twenty, one net product sales were favorably impacted by approximately $10 million.

Relating to a reduction in the returns accrual rate, which was due to lower than estimated actual returns.

Excluding that impact net product sales increased by approximately 14% and <unk> 22 compared to the same period in 2021.

We're also exploring ways to further expand market share in our current indication.

By investing in real World evidence and observational studies.

We believe we will generate additional data around <unk> zelle, because utility in a broad range of second line small cell lung cancer patients.

Rob will cover our development plans for <unk> in more depth, which also includes trials in first line small cell lung cancer and other tumor types.

And the opportunity for meaningful future growth and new patient populations.

Turning to slide 11, we have continued to see strong demand for <unk> since our U S launch in the third quarter of 2021.

This reflects robust brand awareness among customers and prescribers confidence in a high quality reliable supply of product and <unk> position as the only therapy available to patients in the U S who have a hypersensitivity reactions to E coli derived asparaginase.

We continue to hear from health care professionals that based on the availability of <unk>. They are returning to best clinical practice and switching to non E. Coli derived asparaginase earlier when there has been an initial hypersensitivity reaction observed.

<unk> has been adopted almost universally and U S. Pediatric oncology protocols and we are encouraged to see that there is increase in use of <unk> in the treatment of adolescence and young adults.

Now I will turn the call over to Rob to provide an R&D update Brian .

Thanks, Dan.

I'll kick things off on slide 13.

In mid October we announced our agreement to license development and commercialization rights presented data map.

This is an extremely promising program.

Samad data map to the novel her to targeted by specific antibody with.

With buy parrot topic binding that has the potential to transform the current standard of care in multiple her to express some cancers.

The ongoing clinical program presented data, Matt as well design.

It includes anticipated near term data readouts that could support registration.

Topline data from a pivotal trial in biliary tract cancer PTC are expected by year end.

Topline data from the ongoing pivotal phase III trial, and gastroesophageal adenocarcinoma or <unk>.

<unk> are expected in 2024.

Potential approval on BTC would enable us to deliver this therapy to patients as quickly as possible.

Allow health care professionals to gain real world experience with this drug in BTC prior to potential approval and other larger cancer populations such as GE.

As an oncologist I'm impressed to see monotherapy activity with zama data map across multiple <unk> expressing tumor types, including cases resistant to prior car T therapies.

In the ongoing trials are expected to provide data that will inform development beyond BTC gea.

We're looking forward to working with the experienced team at <unk> to.

To achieve our shared objective of realizing the full potential is out of date and perhaps patients.

Slide 14 provides an overview of our near term R&D opportunities.

We are advancing a number of programs across the pipeline within neuroscience I'm pleased to report that we have initiated our pivotal phase III trial for <unk> in Japan that includes duvet lgs and TSA.

With the first patient enrolled in October .

We have also initiated our phase III trials profit dialects in epilepsy with Micronic atonic seizures demos.

This would add a potential fourth indication so our label and provide the first clinical data on our <unk>.

Our phase II trial for GBP, one fiber and post traumatic stress disorder is progressing.

As is our phase <unk> trial for <unk> or <unk> three five for the treatment of essential tremor.

And based on preclinical evidence and significant patient need.

We have initiated a separate phase III trial for suite accounts and Parkinson's disease.

And expect to enroll the first patient by the end of the year.

We have completed our analysis of the <unk> small MFS one trial.

First in the <unk> program's potential to support regulatory approval for multiple sclerosis related specificity in the U S.

As well as in the context of our broader pipeline opportunities we.

We have made the decision to discontinue the program.

There is no impact to patients currently enrolled in the trial and they will complete the study.

Further clinical trial protocol.

On behalf of my colleague with jazz I wanted to extend our gratitude to the investigators clinical sites.

<unk> and their families who participated in the recent depicts all trials.

That is the brand name for <unk> was approved outside the U S.

Or the treatment of <unk> related specificity.

Just on a comprehensive clinical trial program.

Moving three positive phase III randomized controlled clinical trials completed in Europe .

We continue to believe that set of X confirms benefit to patients with mes related specificity.

We're continuing to support the availability of side effects and the 29 markets outside of the U S where it is approved.

So that it remains available to patients who benefit from therapy.

We also remain excited about the GW cannabinoid platform and are committed to advancing cannabinoid programs, including those beyond that.

With the potential to address critical unmet patient needs.

Moving to oncology, we continue to execute on our robust development effort for instance, zilkha.

This includes an ongoing phase III trials supported by jazz and Roche to evaluate <unk> in combination with the centric.

First line extensive stage small cell lung cancer.

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

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

We are also exploring <unk> in other solid tumors and a phase II basket trial.

Turning to <unk>.

<unk> is continuing to review our BLA for O'reilly to update our label to a Monday Wednesday, Friday intramuscular dosing schedule with patients receiving 25 milligrams per meter squared on Monday to Wednesday, and 50 milligrams per meter squared on Friday.

This schedule, which is more in line with current clinical practice to avoid weekend dosing would allow patients to maintain clinically meaningful level of serum asparaginase activity through the entire duration of treatment.

Currently the label dosing schedule is every 48 hours 25 milligrams per meter square.

We also completed a separate S BLA to support intravenous administration.

Similar to the review of our original BLA.

The Monday, Wednesday, Friday dosing schedule and the IV formulation.

Supplemental BLA or being reviewed under the real time oncology review program.

While we do not believe these label updates would have a significant impact on usage. They do have the potential to improve the relates to experience for clinicians and patients.

We have also completed an MAA submission to the European Medicines Agency for Railways, which included Monday Wednesday Friday had every 48 hour dosing schedules as well as IV administration.

Potential approval in 2023.

Looking at our earlier stage programs.

We recently reached a milestone for JBT, a one five or.

A pan RAF inhibitor for the treatment of solid tumors.

That contain mutations in the map kinase pathway.

Enrolling the first patient in a phase one clinical trial in October .

We're also advancing a number of programs towards IND submission.

In summary, our R&D portfolio has evolved dramatically over the last 24 months.

We have a robust pipeline of mid and late stage programs with data Readouts expected through 2020 for.

Further complemented by promising early stage programs.

I've never been more excited about the compounds in our pipeline with our R&D organization integrated following the <unk> transaction.

We have an exceptionally talented experienced and diverse team with the expertise and capabilities to rapidly drive development with the goal of delivering additional innovative therapies to patients.

Now I will pass the call off to Rene for our financial update Rene.

Thanks, Rob I'll begin on slide 16, our third quarter financial results reflect strong execution across the business we.

We achieved impressive top and bottom line growth with third quarter total revenues of $941 million representing growth of 12% compared to the same quarter in 2021.

Our continued focus on both the top and bottom line drove third quarter adjusted net income of $370 million, a 42% increase compared to the same period in 2021.

Adjusted EPS was $5 17 in the third quarter, a 23% increase compared to the same period last year adjusting our three Q 'twenty one results for the accounting change for our convertible debt our adjusted EPS growth for <unk> 'twenty two would have been 38 <unk>.

Compared to the same period in 2021.

Our updated guidance is outlined on slide 17.

Just on results from the third quarter, we are raising the mid point for all of our revenue and net sales guidance metrics and updating the range for.

For full year total revenue guidance to three six to $3 $7 billion neuroscience net product sales.

Two seven to $2 $8 billion and oncology net product sales to $860 million to $920 million.

In all three instances, we have cut the upper end of our guidance the same while increasing the lower end.

With regard to Opex, we continue to focus on strategic disciplined use of capital.

We noted last quarter that we expected to come in towards the lower end of our guidance range and we are now narrowing our SG&A expense guidance to one.

One <unk> to one <unk> billion dollars, and reducing R&D expense guidance to $490 million to $520 million.

We are excited about our pipeline and investing in multiple ongoing clinical and preclinical programs and the reduction in R&D guidance was driven primarily by the discontinuation of the <unk> program and continued focus on financial discipline.

We are raising our 2022 non-GAAP <unk> guidance range to one to two five to $1 $75 billion.

This is a $35 million improvement at the midpoint.

Fight the inclusion of a $15 million upfront payment related to the scanner data on that transaction that we expect to pay by yearend upon expiration of the HSR waiting period.

Should we decide to continue with the transaction following review of data from <unk>, We anticipate the second upfront payment of $325 million would be recognized in the fourth quarter with both payments included in our IP R&D line.

Turning to slide 18, our non-GAAP net leverage ratio was approximately two nine times at the end of the third quarter. We have now de Levered two full turns since the close of the GW transaction in May 2021.

Which we've accomplished through both paying down debt and increasing adjusted EBITDA.

Our focus remains on managing the balance sheet through disciplined capital allocation to ensure we are investing at our highest priority initiatives across the business and leveraging our strong cash flow all of which provides us with meaningful flexibility for further corporate development initiatives.

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

We believe our recent transaction with <unk> is an ideal strategic fit for jazz and exemplifies our approach to corporate development. This.

This transaction has the potential to further diversify our commercial portfolio in the near term with an innovative therapy that we can evaluate in multiple tumor types following potential initial approval and BTC.

A few aspects of this transaction that I'll call particular attention to.

First it is aligned with our strategic focus on opportunities, where we not only have unique insights and there is critical unmet patient need, but where we can also leverage <unk> existing integrated capabilities and global infrastructure to commercialize efficiently.

Notably in the U S. There's a significant overlap with our existing set selco call universe, where we have built strong relationships and quickly established <unk> as the standard of care in second line small cell lung cancer.

Should we continue and the licensing agreement and secure approval for Zanna data map and BTC and Gea, which are the first two potential indications there is a concentrated physician audience for efficient commercialization.

Second this is a durable asset with the opportunity for significant regulatory exclusivity following potential approval and a robust patent portfolio expiring several years later.

And third as Rob noted Vanna data Nab has potential in a broad range of cancers. As we look to continue to diversify our commercial portfolio. We believe this type of asset and transaction offers significant upside with a relatively modest upfront investment including.

The deal structure that is weighted towards achievement of regulatory and commercial milestones rather than higher upfront payments.

I'll also point out that the scope and structure of the transaction coupled with our strong cash flow leaves us with plenty of bandwidth to continue to be active on the corporate development front.

As I noted on the previous slide with respect to the GW transaction, we've shown the ability to lever up and then quickly delever in order to Opportunistically transact and we ended the quarter with nearly $900 million in cash cash equivalents and investments.

As in prior years, we plan to provide 2023 guidance and our full year earnings disclosure.

However, I would like to comment on two items that are shaping our perspective on 2023 and vision 2025.

First upcoming Octavate competition.

As we've previously noted we expect that <unk> will remain the oxalate of choice in 2023, even as the first xyrem authorized generic interest the market either late this year or early next year with others to follow.

And branded competition potentially becomes available.

We have orphan drug exclusivity that extends to 2027 for narcolepsy and 2028 for IH as well as the Orange book listed patents that extend out to 2033.

We also expect to receive meaningful royalties for all Xyrem authorized generics and we expect the ox of eight franchise led by <unk>. We will continue to be an important component of our revenue stream in the coming years.

Second operating margin improvement.

Our updated 2022 guidance implies an operating margin of 49% at the midpoint.

Positioning us to both further invest in our business in 2023 and 2024.

<unk> achieved the operating margin targets outlined in vision 2025.

With our strategic investments expanding product portfolio R&D progress and focus on operational excellence. We believe we are well positioned to achieve vision 2025, and deliver further diversification sustainable growth and enhanced value to patients and shareholders.

<unk>.

Now I'll turn the call back to Bruce for some final remarks.

Thanks, Renee I'll conclude our prepared remarks on slide 20, we.

We finished the third quarter with strong momentum across our business and are in an excellent overall financial position. Despite a challenging period in the biotech sector and global markets in general.

Our commercial efforts have driven strong uptake for <unk> in both narcolepsy NIH growth in <unk>.

<unk> had an outstanding one for railways and establish <unk> as the treatment of choice in second line small cell lung cancer.

Our R&D team continues to advance multiple mid and late stage programs and we expect to submit several ind's through 2023 depends.

The pending addition of is any data map strengthens our oncology pipeline.

Program with anticipated near term clinical milestones and the potential to contribute to our vision 2025, commercial and R&D objectives.

Operational excellence also remains a key area of focus including our goal of improving our adjusted operating margin, while maintaining diligent and disciplined capital allocation to drive shareholder value.

In summary, we remain on track to achieve vision 2025, and our updated guidance reflects our team's execution across the business in the first three quarters of 2022.

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

As a reminder to ask a question. Please press star one one on your telephone please standby, while we compile the Q&A roster.

Our first question.

Comes from Ken Cacciatore with Cowen Your line is now open.

Hi, everyone Great progress great performance, just kind of focus on XI wave Bruce can you talk about or maybe Dan talk about the retention you are seeing on the on the early patients I know, it's still just the initial patients using it but any views on the retention rates and I know you described that there is a.

Increasing number of prescribers can you give a sense of force already seeing repeat prescribing by these clinicians and then lastly.

Some folks are still worried that this is a bolus that we're seeing as youre, adding these patients can you talk as you've had more experience in the field about your view on the patient size here you described in the past as being similar to narcolepsy do you still think that this eventually could equate to where xyrem was in narcolepsy with <unk>.

Wave can achieve an NIH. Thanks, so much.

Yes, Ken I'll start with the comment on the overall market opportunity and then maybe let Tim take the questions on.

What we're seeing in initial patient experience with sideways.

On the overall market size, what we do believe that the market opportunity as we move forward in time is very large and may in fact be the size of the narcolepsy opportunity. If you look at.

Diagnosed and undiagnosed patients.

Our initial focus as we've talked about is going after that segment of the market, where we know patients already had a diagnosis of IH and are actively seeking.

Medical care, so it's a subset of that but yes, the opportunity long term is larger Kim.

Sure Yes.

Emphasize is we're still seeing a really high level of engagement and receptivity in the market overall for this new therapy and as you mentioned, Ken we're continuing quarter over quarter to bring new prescribers on and grow that prescriber base among those prescribers, who have utilized the product so far and their patients.

We are hearing very positive experience and ultimately that theyre seeing the product perform both efficacy and safety wise in line with what we saw in the phase III clinical study, so very positive experiences as well as positive experience with would be.

Availability of the product on Formularies again, you know that we've got.

90% coverage for both narcolepsy NIH and the commercial patient population at this point in time. So so overall, what we're seeing and hearing is that is as the health care provider gets their own firsthand clinical experience with prescribing XI wave and this idiopathic paper signed in your pocket.

<unk> and have the ability to observe its clinical benefit within their own practices, we really see increased since he adds enthusiasm about it.

An effort on their part so you start to identify.

Additional appropriate patients in which they can.

<unk> therapy. So all of this positive signal from those utilized as well as those who have.

Not allow.

Allows us to continue to be really confident in our ability to maximize the potential of <unk> and this really underserved market.

And it makes us very pleased that we're continuing to grow the Iowa are across both narcolepsy, and IH and putting us well on track to be activated choice in 2023.

And Ken maybe I'll, just wrap by saying if you contrast, what physicians are seeing with sideways NIH with the options they had available to them before our launch.

We're using unapproved drugs off label, primarily just to address eds and as a reminder, XI wave is broadly indicated to treat the disease idiopathic hypersomnia across a number of important symptoms and so we're seeing that.

<unk> come through.

Both patients and clinicians.

Thanks, so much.

Please standby for our next question.

Our next question comes from Jessica Fye with Jpmorgan. Your line is open.

Great. Good evening guys. Thanks for taking my question does the IRI influence your business development priorities or how you evaluate potential targets and what about within your own pipeline does it impact your thinking on which indications or efforts to prioritize.

So that's I would say like other companies in our industry, we're continuing to evaluate.

The impact of the IRA legislation, particularly as we learn more over time about how it is going to be implemented.

See how that will impact our investment decisions and it may impact our investment decisions across.

Our R&D portfolio, but also and importantly across corporate development opportunities. There are parts of IRI, we liked including really trying to address out of pocket cost for patients.

It was a step in the right direction.

There are other provisions that we think are actually.

Challenging to innovators in terms of some of the probably unintended consequences or.

Not fully recognized consequences.

In terms of providing a return on capital for those investments. So we like everyone will be looking at potential impacts I don't think we believe for our existing commercial.

Portfolio of products, we see a much certainly.

Near term period.

That would concern us, but we will take it into account when we're making longer term investment decisions.

Thank you.

Please standby for our next question.

Our next question comes from Jason <unk> with Bank of America. Your line is now open.

Hey, guys. Thanks for taking my question.

First question not asking for guidance, but just curious if directionally you see 2020 as our revenue growth here and the reason I ask is because you have this 2025 target out there and I think from an investor standpoint, it's easier.

I believe that if you think 2023 as a growth year.

And given the generic competitor entry I think it would just be something that would be helpful. If you guys could address at some threshold and then the <unk> quarter was impressive I am just curious.

You can speak a little bit to like the one or two biggest growth drivers on a year over year basis, you guys were pushing into adults into rural and suburban kind of.

Areas. So just kind of curious if you can give us a little bit more color on what specifically where some of the bigger growth drivers rapid dialect. Thanks.

Maybe I'll ask Renee to take the broader revenue.

<unk> question and I hear that Youre not asking for guidance. So thank you.

And then.

Maybe I can turn it over to Dan and Ken to talk a little bit about our <unk> growth.

Yes, Thanks, Chris and Jason Thanks for the question so with respect to 'twenty three.

As you would expect we typically provide that full year guidance for a new year alongside our for your full year results in the first quarter. So you can expect that from us and early 2023.

However, with respect to how we're thinking about 2023 relative to <unk> or potential competition I would say, we continue to expect <unk> to be the oxalate therapy of choice.

We're confident in the path that we have ahead of us for 2025, and the ability the oxidate franchise more broadly.

Delivered $2 billion of revenue across <unk> branded Ziram and then the royalties of Ags <unk>, which of course carry meaningful economics to us.

But going back to 2023 and <unk>.

As you would have listened to our comments and.

And looked at our third quarter results. We believe we are very well positioned for <unk> to be the therapy of choice within the OXXO base for the year, we have established excellent payer coverage for both narcolepsy NIH.

<unk> heard today, we now have more.

<unk> patients on <unk> than Ziram, another important milestone for the brand and we are also in the third quarter now generated over $250 million of net sales in a single quarter with sideways. So all of this points to meaningful.

<unk> and success for the brand and positions us really well as we prepare to enter 2023.

Tim.

Yes.

I'll start off by talking about the U S and we have really seen a number of things.

Giving us momentum here.

In the U S and leading us to be optimistic about the future and I think there is some of the themes that we've been talking about for the past year or looking forward. The first is that.

As Dan mentioned, our overall volume of engagement with HCP.

It's really been continuing to grow nicely quarter over quarter, which is really important to our products. This early in the lifecycle such as Epidiorite and given that we have number of customers have yet to use it or utilize it broadly so.

Promotion and education efforts are absolutely important and this highly sensitive promotional sensitive market that we're operating in so that's one.

The second driver is as we've kind of talked.

<unk> talked about and predicted is that we're really seeing this reality of HCP is getting more experience with epidiorite seeing what it can do for their patients feeling more comfortable.

With the product and impressed and utilizing it more broadly than mention that quantitatively.

Also seeing this in terms of market research showing that.

They are reporting that 60% of them.

Versus a year ago. It moved epidiorite up in their treatment algorithm. So that is working exactly as we had predicted and had been seeing early on so lots of great momentum and then the last one.

0.2 is we've been talking all year again about our promotional focus and effort in terms of trying to get hcp's to utilize the product for the first time more and more broadly by sharing that combination data that we have with <unk>. It has been very impressive it really does.

And when they see that there is a synergistic effect of using these two products together and that most of their patients are already on <unk>.

And its ability to reduce this combination theatres by 60% in lgs and Vietnam drove a 50% in PSC. It really does give them pause.

And tell the until they tell us it's highly motivating for them to either try it for the first time.

Or to utilize it in their patients who are already on <unk>, we really could benefit from further seizure reduction. So I look at those three things really as the major things putting wind in our sales and leading to both the 22% year over year growth. We saw in the third quarter, but also leading to the op.

The minimum that we have that this product is going to continue to grow nicely.

And achieved blockbuster status.

The U S.

Turn it over to Dan to talk about our efforts outside the U S.

Yes, I'll just say a few words, because it's largely consistent with some of the.

Trends and growth drivers that Kim mentioned, just as a reminder were launched in 15 markets with 34 countries approved and so theres still a series of rolling.

Launches both geographically and also as we are adding TFC to the label.

And some of those markets.

What we are seeing is the same HCP engagement and.

Yes, it's a promotion sensitive brands so that's beneficial.

Last major market to <unk>.

Europe .

Gonna be France, and we did secure pricing and reimbursement and we will be launching in that country, where we've had a very successful.

Prelaunch experience through an ATM, so theres already awareness in patients who've been benefiting from the drug on that and sort of moving that into a full commercial launch node by the end of the year and then too.

Commercial benefit for next year or so.

We also remain optimistic on a worldwide basis set up the dialogues can become cornerstone of therapy for this treatment resistant epilepsy and be a blockbuster product for us.

Great. Thanks, guys.

Please standby for our next question.

Our next question comes from David Anderson.

With Piper Sandler Your line is now open.

Hey, Thanks, So two for me one is on the long term targets for 2025.

<unk> was one of the things you've talked about as margin expansion getting I think it was near 48% or close to 50%.

25, and I'm wondering out loud.

Particularly in the context of your <unk>.

Commentary how much of that expansion is.

Expense control and particularly R&D, just putting aside in process R&D of course, but just organic R&D, how should we think about that.

Given that youre at about what $4 90 to $5 <unk> in your guidance. This year. So that's number one.

Number two is on <unk>, you talked about new prescriber growth I'm. Just wondering if you are in a position to disclose how penetrated you are in your target.

<unk>.

And what's your general view regarding.

The pace of new prescriber growth as we move in to and through 2020. Thanks.

Hi, David its Renee I'll take your first question in terms of margin expansion. So certainly we've been highly focused on operational excellence and yes.

We have set out a 2025 adjusted operating margin ambition of being at 48% in terms of the midpoint of our guidance today in my comments for the full year of being in a position where we're already at 49% for 2022.

We've accomplished that through a number of areas of course, we said R&D was.

Favorable largely due to.

The <unk> program decision as well as continued discipline, but as we look forward at what we're trying to accomplish ultimately we're looking to better leverage SG&A overall to be able to accommodate additional business development to be able to accommodate.

Additional investments in R&D in our pipeline and so by being in the position that we are already it gives us the opportunity to between now and 2025 invest in our business invest in the brands that we're launching the pipeline our capabilities continue to leverage.

That G&A footprint as our topline growth so that we can scale effectively and efficiently and then still have the capacity to be active in future corporate development, which of course could result in additional commercial our R&D expenses, but.

But we certainly have a commitment to continuing to expand our R&D pipeline. We now have enhanced capabilities across the pipeline coming out of our transaction with GW and that's an area. We would expect over time, we will continue to generate more value for patients and for shareholders.

<unk>.

And then I'll turn it over to Dan to answer your second question.

Yes, thanks, Renee so on the <unk>.

Yes, we're not giving specific penetration rates, but we had said in the past that drove a little more penetrated the smaller indication yes.

Lgs and PSC, we see.

More opportunity. We also just see broadly that the drug works in a number of different seizure types.

There is many that make up these refractory populations.

<unk> approved therapies. So then it's a question of.

Physician use and experience and market access.

That's all going beneficially for us as well.

There is a lot of focus in terms of retention and we've seen very strong retention. So in patient start the drug they find this to be a very beneficial within a polypharmacy setting.

Also see that as.

Physicians gain experience and they push up the doses.

That also generally leads to better efficacy and so continuing to titrate up.

I think in some of the markets, we feel were under dosed. So.

So thats going to be an area of growth and then we've got a broad indication for <unk>.

Starting at a young age going all the way up then I think.

<unk> done a good job with the pediatric settings in most markets, but theres still an opportunity to transition those pediatrics as they become young adults and even adults with these lifelong condition and also.

Addressing the adult patient population.

And then there is still additional geographic opportunities and some of the countries. We haven't been in and longer term. We are investing in data generation for new new seizure types such as Cmos.

We're also looking to address new significant markets like Japan and Asia.

Okay. Thank you.

Please standby for our next question.

Our next question comes from Marc Goodman with SBB. Your line is now open.

Yes, I'm, sorry to keep it on epic dialects more but maybe you could just help us a little bit last year in the third quarter. It was kind of a weak quarter and then fourth quarter was extremely strong and so the question was there a little bit of.

One quarter, taking away from the other any inventory movements and stuff like that and so.

Can you help us understand if there was any of that in this quarter, obviously, a very big quarter.

And we're just trying to understand if maybe you can help tease out like is this all just European regions, just getting added on or was there actually real growth in the United States that could you can you confirm there was double digit growth in the United States Youre on something like that was there any inventory change and then just lastly, you talked about the Japan study I was just.

Curious before <unk> was approved.

In the U S and Europe , there was a lot of CBD usage, you buy them in the bodega as albeit at all over the place. It was just the thing to do and it was pretty well understood is that the same over there in Japan do you expect the same type of ramp up over there and.

And that type of excitement.

Yes, Mark this is Bruce I'll take the first part of your question and then maybe have Dan makes a couple of comments on Japan.

Going to be a short answer the growth you saw in Epidiorite is real yes, it's in the U S.

As we continue the rollout of new countries and new indications. The stand described in Europe , we are seeing solid growth in the U S and no it's not due to changes in inventory.

Dan do you want to take Japan.

Yes on the Japan side.

We're super excited for that market and to now have launched our official study and so worked very closely with the.

The regulatory agency in developing thought leaders who needed.

We're very interested in the data that was coming out of that the dialogues.

But unlike other markets. There is really no cannabis allowed factors the candidates control Act, which <unk>.

Prevents use of whether it's regulated or non regulated and so we're also working in parallel as GW had done successfully in other geographies.

With government officials to allow for exceptions to the cannabis control Act for regulated medicines that have gone through the safety and efficacy evaluation and we're feeling confident we'll be able to do that change of law and sort of change of practice and then Meanwhile are enrolled and get the experience within Japan from the <unk>.

<unk> studies so.

So that's where we are with which you can.

Thanks.

As a reminder, please limit to one question. Please standby for our next participant.

Our next question comes from Amy <unk> with Needham Your line is now open.

Thanks for the question.

My question is about <unk> 25.

There's.

A meaningful gap between where consensus is.

Yes.

Okay for credit Suisse.

Can you talk to where you think you might be more confident in the performance of the business.

To what extent do you.

Need to rely on future business development or new pipeline successes in order to be able to get to that 5 billion number.

Sure.

Yes, Hi, Amie and thanks for the question I would say that even when we first communicated vision 2025.

We talked about having a <unk>.

Revenues from our existing.

Commercial portfolio, but also including a placeholder for.

Productivity out of our pipeline and our Corp, Dev with a strong commitment to doing Corp, Dev and maybe Renee can make a few more comments about how we're thinking about that.

Sure I'd be happy too well on me as we look forward.

We certainly expect corporate development to continue to be an important strategic pillar for us clearly.

Clearly, it's had a huge impact on our ability to grow and diversify our revenues to date.

And also expand our pipeline.

As you look at the.

The deal we just transacted on with Santa data map. It has the potential is as Bruce had mentioned to contribute to vision 2025, both as part of the $500 million placeholder, we've identified from future growth and corporate development, but also as part of the five novel therapies to deliver.

By the end of the decade.

We look at that strategic framework for corporate development.

We're looking at early assets that have the opportunity to continue to grow that pipeline, but also late.

Molecules and then things that can also be.

Very close to commercial I'd put any in that category in terms of being able to contribute to two different pillars and we're excited in the case of any data on that to be a potential best in class therapy. This is the sort of transaction for us that we think has the potential to.

To have a meaningful impact for patients, where we can apply our unique insights where we have the ability to commercialize efficiently given the overlap with <unk> and we will continue to look at transactions of this nature and then I'll just now just given our financial position right now and the speed at which we have deal.

The health of our operating cash flow, we feel confident in our ability to continue to leverage corporate developments.

We of course, as we look forward and see a lot of opportunities still given valuations, where they are where they are today and have a corporate development Chris.

Thats quite busy so we're excited about the opportunity to continue to lean into that.

Part of our business to augment what we have already as a business. We're really excited about with the opportunities we have to grow the topline and continued to drive the pipeline forward with what we have in house today.

Thank you.

Please standby for our next question.

Our next question comes from Ash Verma with UBS. Your line is open.

Hi, Thanks for taking my question.

So on <unk> I think the emptied the poor timeline passed on September 28.

Can you confirm if you have visibility whether there were any paragraph four patent certification.

Thanks.

Nothing to add other than we've made clear in our filings. So that's the earliest filings could occur.

Fully expect there may be filings over time.

Of course, those go into the FDA first and come to Us later.

But nothing to report at this point.

Okay.

Please standby for our next question.

Our next question comes from Madhu Kumar with Goldman Sachs. Your line is now open.

Well, great. Thanks for taking our questions. So we.

We are curious on how to think about kind of <unk> growth and IH and kind of how you look at the trajectory now do you think that there is kind of like a further up ramp to happen as you mentioned the kind of.

Physicians get more experience as I would have to get comfortable with it I think it would be like a further pickup in an expansion in idiopathic hypersomnia like how should we think about that.

Yes, Kim you want to talk a little bit about future opportunity for growth with with IH.

Sure.

So lots of opportunity for growth, we've talked in the past about there being already out there in the marketplace 37000 patients who are diagnosed with IH and they are actually out actively seeking health care. So it's not a sale diagnosis. So we've got a nice healthy.

Patient population to go after what we're focused on right now is really ensuring that.

We're educating around IH diagnosis.

Despite this given.

We really want to try to help HCP.

And sure that Theyre, taking indicators iteration the full range of symptoms that patients are experienced theres really used to mostly focusing on that excessive daytime sleepiness.

<unk> off label usage of wake promoting agents and stimulus then enabling them to address and we want to make sure that they are thinking much more broadly about the breadth of symptoms that patients are experiencing and that diluted can treat and then secondarily, we're helping hcp's to identify patients who may be ready for that.

Highway and again, a big part of that is around making sure. They are thinking about that full breadth of symptoms. So overall strong.

Excitement and feedback in the market, but as we said I think for a long time now.

Your packet hypersomnia is a new market.

Yeah.

We're excited to build it just like we did with narcolepsy, but we expect that it will take some time and grow gradually.

Overall.

Reasons to be optimistic, but also to appreciate jazz.

<unk> been working in the narcolepsy market for.

A decade or more now.

And we plan it would be.

Just as a successful theyre ultimately with.

The highway then idiopathic hypersomnia, but it will take some time.

Yeah and ill add.

Kim and that Kim mentioned narcolepsy and remember our sales force is really.

Trying to do two things here to drive adoption in the new market of IH, but also continue our messaging to the narcolepsy community, including about the importance of the lower sodium.

That we see in <unk> that led the FDA to grant the orphan.

Exclusivity based on a safer product because of that reduction in sodium and what that can mean for cardiovascular events. So important to do that narcolepsy messaging as we continue to grow NIH.

Okay and then in terms of corporate development are you guys. Seeing you guys are really impressive rate of deleveraging I guess as we think about future corporate development will it be kind of like <unk>, where it's kind of the partnering kind of pulling out individual assets or how do you make outright acquisitions like GW, how should we think about that on the forward.

Yes.

Can you talk about the breadth of approaches yeah great.

Yes, sorry about that yeah. So as I said corporate development will continue to be important for us and.

As I step back and think about the opportunity the strength of our cash flow, we generated over $930 million of operating cash in the first nine months. The fact that we de Levered two full turns.

And we did that through both paying down debt, we paid down over $1 billion of debt since closing the deal and we increased our adjusted EBITDA by more than $400 million, which is 30% north of 30%, which means that places us in a really opportunistic position to be able to.

To have.

The ability to transact at a lot of different levels with greater EBITDA, we have greater capacity should we decide that we want to do something on a larger scale, but when we look at our business today.

We think that we can continue to do transactions like the ones. We did in Q2 with werewolf and Sumitomo two assets early in the pipeline that we're quite excited about the van <unk> deal as well being very close to pivotal data.

Transaction that we think has meaningful.

Potential to create value over time, and then looking at the.

The strength of our cash flow combined with our expanded capabilities across.

All aspects now and stage of our pipeline, including research capabilities. It really opens up a lot of opportunity and optionality for us as we look forward. We are primarily focused in neuro and <unk>, we do look at other areas Opportunistically.

And within that we tend to be technology agnostic, meaning between small or large molecules and really focused on where we think we could have the biggest impact for patients.

And then also for our shareholders.

Yes.

Operator.

Our next question comes from <unk> Prasad with Barclays.

Good afternoon, Thanks for taking our questions just a quick one on the Fannie deal. We know that the Optionality for continue will be based out of the BTC pivotal readout by thinking thoughts of the BTC is a relatively small market and the bigger portion of our revenue.

We would likely need to be from other indications like ta in the breast cancer and just wondering is there anything you would like to highlight a multiple in terms of the read through from the BTC pivotal data for the rest of the indications like GE and the breast cancer thought Jess fye. The existing is timing of factory here. Thank you so much.

Yeah.

Yes, maybe Rob I'll ask you to talk about what we think we'll learn in the near term and how we're thinking about the broader opportunity set.

Sure happy to.

What I would say before I answer the question directly is I've been impressed with the broad activity of this drug across really any tumor types that express her too.

And even in cases, where patients have progressed after.

Her to therapy.

And so I think that speaks to the promise.

Both in gastric in BTC, and I would say beyond that.

We're doing additional studies in breast cancer.

In colorectal cancer et cetera, what we'll see.

At the BCC readout is.

Give us a sense of whether it will have that near term.

Opportunity to to file with BTC and that's potentially important just even beyond the specific indication remember if we get approval in a relatively small indications such as BTC. The next.

Submission would be a supplemental it would mean.

A more rapid.

Review by FDA.

Could mean that we would get a CCN.

Guidelines.

Around gastric based on the published data even before its approval.

And it gives us a chance to do some preparation in the marketplace as well so I think that becomes.

Factor in that regard, but I don't expect that it's going to have kind of a direct read through to.

The ongoing gastric trial.

Got it this is very helpful. Thank you so much please.

Please standby for our next question.

Our next question comes from Gary Nachman with BMO capital markets. Your line is now open.

Thanks, Good afternoon.

<unk> can you confirm that the strong reimbursement.

That you have already locked is going to be locked in for next year.

Or is there still some uncertainty there for certain payors, depending on how the generic generic market forms for xyrem. So how did those negotiations take place.

And then generally how much is the launch of IH help overall awareness with narcolepsy as well.

You definitely continue to increase the number of patients treated in narcolepsy announced at NIH.

Yes, Kim you want to take that.

Yes, sure. So in terms of 2023 coverage I mean, what I can just say at this point in time is that we've got 90% commercial coverage for <unk>.

That wave in both narcolepsy in idiopathic hypersomnia, and we think that.

Bodes very well for us heading into next year I believe you asked about the authorized generic really based on our conversations with payers.

As well as the strong contracts that we have in place.

What do you think the most likely scenario is going to be that payer as well.

The AG on the formulary for on their formularies.

In a comparable position to that.

<unk>.

In terms of IH, helping awareness of narcolepsy look what I'll just say, it's not so much just around the disease, but we are out there now wherever we can with the same sales force at the same customers largely due to that overlap that.

Bruce mentioned, 90% overlap with the IH targets with those that were calling on already for narcolepsy.

Many times getting into discussion so.

Essentially you know in many cases doubled the amount of promotion.

Around the brand itself. So I do believe that that just overall.

It leads to more months in both in both directions.

For both indications.

Please standby for our next question.

Our next question comes from Annabel <unk> with Stifel. Your line is now open.

Hi, Thanks for squeezing me in.

Just wanted to ask about <unk>.

Think about the trajectory here, obviously, you had a really nice uptake I'm a little bit curious to see.

If this is a new peak level, obviously higher than our one is is it going to be plateauing here given that you seem to have.

Tap the pediatric market.

How should we think about growth from this point forward.

Is it harder to get into LVL patients.

<unk> ex geographies, how should we think about the about the dynamic of growth it sort of plateau or is it just a gradual growth from here.

Sure.

Tim you want to start with the U S. Yes, I'd be happy to take that one because we're incredibly pleased.

That rising sales have exceeded prior U S peak sales of <unk> and that we believe this is a strong signal that the unmet needs of the market had never really been fully met.

For <unk>, they started to have supply issues. So.

I'll point to a number of things, we now have robust brand awareness among customers and prescribers we've created high.

High confidence and the high quality and reliable supply of the product.

And right now we enjoy the position as the only available therapy to patients in the U S who have a hypersensitivity reactions to E. Coli derived asparaginase and we're continuing to hear from customers that based on the availability of reilly's that they are returning to best clinical practice and switching to non eco.

<unk> derived asparaginase earlier than.

And then they previously were during the supply shortage when.

When they see that initial hypersensitivity reaction observed.

At this point Reilly has been adopted if you kind of said almost universally in the pediatric oncology protocols, but we're also encouraged to see that there is increasing use of <unk> in the treatment of adolescence.

And young adults now the majority of the patients out there are pediatric.

And it's important to note that.

Many adolescent and young adult patients are actually treated in pediatric centers under the really strong pediatric protocol, so that but a big driver of the growth in our launch.

Was focused in the last year in establishing <unk> with our existing asparaginase prescribers, who again were predominantly in the pediatric setting.

Next year in 2023, we aim to increase our efforts to driving prescribing in the adolescent and young adult population and seeing if we can further.

Expand the market. So again, that's just inside the U S and certainly there's lots of growth opportunity ex U S for Dan to talk about.

Yes, thanks, Kim on the outside the U S. As we've mentioned we filed with the EMA.

We're hoping for a potential approval in 2023, depending on how long that takes and to answer your questions et cetera, It's a different market over there of course pricing is lower and also <unk> on the market in the European setting.

That being said the experience we've had within the U S and haven't really optimize particularly the Monday Wednesday Friday dose.

With a bigger dose on Friday to ensure full coverage.

For these patients and then there is other advantages in terms of the concentration the ready Phil fully recombinant no particular in the solution.

So we do look forward to giving another treatment option to those physicians.

Outside of Europe , there are some countries, where <unk> is not yet on the market Japan is one and.

And we do we're actually considering what the opportunity there is and will be working with the regulators to see.

Is there an expedited path to get this important medicine to patients who could benefit from it.

Please standby for our next question.

Our next question comes from Gregory <unk> with RBC capital. Your line is now open.

Hey, good evening, Bruce and team congrats on the quarter and thanks for taking my question.

Bruce I just wanted to ask a specific one on <unk>, perhaps you can just give us some updated color on <unk> performance and view <unk>.

Victory from here and maybe related to that it's super helpful to to hear Rene and the team's color elaborating on on BD and Danny.

Danny as a as a potential blueprint I'm just curious as you reflect on <unk> from <unk>.

Two years ago, and with <unk> now under under Jess how that potentially juxtaposes.

As far as the strategy back then to how Youre looking at deals like Sandy going forward. Thank you very much.

Yes, Greg Thanks for the question.

Always interesting to learn from your past Corp. Dev deals as you consider your important strategy going forward.

The <unk> deal we brought in a near term launch with fixed pass now.

Now on the market in the U S and.

Abroad, as well as the combo Plex platform, which we continue.

To see as a source of other.

Interesting products for our future.

<unk> and commercialization.

I'll, just remind you that fixed <unk> remains under study.

In other areas inside and outside AML that we think may.

Allow us to broaden use.

In the future.

So Rob maybe talk a little bit about how <unk> is being.

Studied right now and then maybe Renee you can jump in with the.

The prompt.

How we think about different approaches to Corp, Dev moving forward Rob.

Sure Bruce Thanks, that's being studied in a number of different ways through.

These collaborations with major cancer centers.

And cooperative groups as.

As well as in some ongoing studies that we're conducting and I would just highlight a couple of things one would be in combinations that could be highly relevant like combinations with <unk> those trials are ongoing.

And also in trials that would seek to.

Extend the indication to a broader group of patients such as the cooperative group with AML S. G, which is not just the high risk patients, but more broadly frontline.

Yes, and then I'll just tap it out in terms of business development going forward. So if I just look at the data on that deal in terms of how we structure that we are looking to ensure as we enter into transactions that are.

Our.

Meeting our strategic objectives that we're also looking to balance.

Sure.

Strikes the right balance between monetary upfront financial outlays with risk and other value inflection points.

Certainly with that transaction.

Excited to be able to leverage the team at <unk> in terms of continuing to drive. These studies in the near term and looking at creative ways that we can continue to leverage our partners for their superpowers and skills that they are bringing to the table while also continuing.

To advance our strategy and in particular with this with this transaction we were pleased to be able to strike that balance with the financials and thats value inflection points not only in the upfront and how we've structured that but also as we look forward.

And look at the milestones that were primarily driven by regulatory and future commercial value inflection points. So with the optionality that we have going forward both from a financial perspective, as well as having a broader business now we'll continue to look at Cree.

Right of ways to structure transactions to have win win outcomes for both jazz and our patients and shareholders as well as our partners.

At this time I am showing no further questions.

Now like to turn the conference back to Bruce <unk> for closing remarks.

Thanks Michelle.

So thanks for joining US everyone. We look forward to a strong finish to 2022 and remained focused on achieving vision 2025, and I would just like to close today's call by recognizing our jazz colleagues for their commitment to delivering new therapeutic options to patients and want to thank our partners and shareholders for their continued collaboration.

<unk> and support have a good evening everyone.

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

The conference will begin shortly.

As Johan during Q&A, you can dial star one one.

[music].

Yes.

Okay.

[music].

Okay.

[music].

Sure.

Yes.

[music].

Good day, and thank you for standing by while considered the Q3 2022 jazz Pharmaceuticals 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 the session you will need to press star one one when your telephone and you will then hear an automated message advising your hands as rate. Please.

Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Andrea Flynn Vice President of Investor Relations. Please go ahead.

Thank you operator, and good afternoon, everyone today Jazz Pharmaceuticals reported its third quarter 2022 financial results.

A 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 on.

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 Chief Operating Officer, and Rob You know executive Vice President Global head of R&D.

Jim <unk> Executive Vice President and General manager U S will join the team for Q&A.

Timing and statements with respect to our licensing agreement presented data about that is subject to closing conditions, which involve risks and uncertainties that could cause actual events.

<unk> 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, and our slide deck and in our latest SEC disclosure document, which identify 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 it.

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 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.

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

I am pleased to report that based on our performance through the first three quarters of 2022, we are raising the midpoint of our full year revenue guidance, reflecting increases in the guidance mid points of both our neurology and oncology net sales projections.

We're unable to discuss these and other updates to our guidance later in the call.

Our commercial business continues to execute well in our neuroscience franchise, we're seeing compelling adoption of XI wave in both narcolepsy and idiopathic hypersomnia.

H and we're pleased to have achieved another important milestone exiting October 2022, there are now more narcolepsy patients, taking XI wave and fly around.

Looking ahead, we remain confident in the durability of his highways as a core component of our commercial portfolio.

Rapid dialects, we are seeing growth driven by underlying demand and recently, we completed the pricing and reimbursement process in France paving the way for commercial launch in this key European market.

We believe that the dialects can become a cornerstone of treatment for refractory seizures and remain confident in <unk> potential to achieve blockbuster status.

Moving to oncology does that Delta is established as the treatment of choice in second line small cell lung cancer are.

Our ongoing clinical development efforts are focused on expanding within that indication as well as looking to address additional patient populations, who may benefit from therapy.

<unk> had another strong quarter as momentum with prescribers as continued <unk>.

<unk> remains the only therapy available to patients in the U S. We experienced a hypersensitivity reactions to E coli derived asparaginase.

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

Our pipeline efforts were productive again this quarter with multiple clinical trial starts.

We enrolled the first patient in our phase one trial evaluating <unk>, our Pan RAF inhibitor for the treatment of solid tumors that contain mutations in the <unk> pathway.

We initiated a phase III trial for <unk> in Parkinson's disease, tremor, which complements our ongoing phase <unk> trial in essential tremor.

And for <unk>. The dialects, we initiated our phase III trial evaluating <unk> in patients with epilepsy, with Myoclonic atonic seizures or E mass as well as enrolled the first patient in our pivotal trial in Japan.

<unk> heard <unk> targeted by specific antibody in the U S Europe , Japan and other markets.

Rob will provide additional comments on our pipeline programs in progress, including any data map later in the call.

Turning to slide six vision 2025 includes three components central to driving sustainable growth and enhanced value as we transform our company commercial pipeline and operational excellence.

Turning with commercial we're positioned to grow revenue to $5 billion in 2025 through a combination of existing products potential new therapies emerging from our pipeline and corporate development.

Is there any data map transaction is an example of our corporate development initiatives that could contribute to both our commercial and pipeline objectives.

We believe our accomplishments in the third quarter position us for a strong and then give the year entering 2023 with considerable momentum across the business and well positioned to achieve vision 2025.

I'll now turn the call over to Dan to review, our third quarter commercial performance.

After which Rob will share an update on the progress of our R&D programs.

<unk> will provide a financial overview, including our corporate development update and then we'll open the call up for Q&A.

Dan.

Thanks, Bruce I am excited about the progress we've made on the commercial portfolio and I'm pleased to report on our strong third quarter performance.

Starting with neuroscience on slide eight we are maintaining positive momentum for our Oxidate franchise with <unk>, we have meaningfully advanced patient care with a lower sodium oxidate products.

In the third quarter average active Oxford patients increased to approximately 17600 reps.

Representing growth of approximately 10%.

Impaired to the same period last year.

There were approximately 9500 active <unk> patients exiting the quarter, resulting from strong adoption in both narcolepsy and IH.

We continue to see strong uptake of <unk> for narcolepsy in the third quarter.

Did the quarter with approximately 8015 narcolepsy patients taking <unk>.

As Bruce mentioned, we've reached an important milestone with more narcolepsy patients, taking <unk> and Xyrem and.

In addition to continued adoption of <unk> among current xyrem patients. The large majority of new docs made narcolepsy patients are being prescribed <unk>, we expect that trend to continue as our educational efforts around the benefits of lower sodium oxidate are resonating with prescribers and patients.

We've continued.

<unk> strong adoption NIH, we have a substantial growth opportunity there is a high level of engagement and receptivity in the market for a new IH therapy.

We have secured reimbursement on par with narcolepsy and importantly, we continued to grow the IH prescriber base.

As physicians gain experience prescribing <unk> for IH.

And they have the opportunity to observe its clinical benefits within their own practices. We are seeing increased enthusiasm for identifying appropriate patients and initiating therapy.

Exiting the third quarter, there were approximately 1450 IH patients, taking <unk> and we're focused on educating prescribers about IH diagnosis and patient identification.

<unk> is the first and only FDA approved therapy for IH and we are confident in our ability to maximize its potential.

This underserved market.

We expect that <unk> will be the oxidative choice in 2023, even as authorized generics enter the market and is branded competition potentially becomes available.

<unk> is the only lower 30 marks debate and is the only oxidate approved for both narcolepsy NIH.

We have confidence that <unk> has a durable product that will continue to contribute meaningfully to jazzes commercial portfolio.

Turning to slide nine and <unk> net product sales increased by 22% in the third quarter of 2022 compared to the same period last year, driven primarily by demand.

Our overall volume of engagement with health care providers continues to grow which is a positive development for the brand given the promotional the sensitive nature of F. The dialogues.

And the anti epilepsy market as a whole.

We're also pleased that our market research indicates nearly 60% of prescribers are moving up the dialogues.

<unk> in the treatment algorithm.

Polypharmacy is the dominant treatment strategy in treatment refractory epilepsy, and one approach we have taken that is resonating with U S. Healthcare professionals is to highlight data on the synergistic effects of using <unk> in combination with <unk>.

<unk> is one of the most widely used anti seizure therapies and health care providers have been very impressed with the combination data.

Both epidemics and club examine demonstrated effectiveness in reducing seizure frequency and lgs dravet and CSC.

In combination epidermis Express club exam have been shown to reduce seizure frequency by around 60% in lgs and dravet and nearly 50% in TSB compared to an approximately 30% reduction in seizures for patients, giving club exam plus placebo.

These data are particularly relevant for healthcare professionals, who have limited experience with that the dialogues.

Offering a strong rationale to begin incorporating <unk> into their patients treatment regimens.

There has also been continued adoption in growth is that the dynamics in markets outside the U S and we recently completed the pricing and reimbursement process in France.

We also have opportunity for additional growth coming from multiple new markets and indication launches throughout this year and next.

Given that the <unk> differentiation in the anti epilepsy drug market and its ability to be combined with a wide range of other therapies. We remain confident it will emerge as the global standard of care and treatment resistant epilepsy.

Now moving to oncology I'll begin with <unk> on slide 10, we have established <unk> as the treatment of choice in second line small cell lung cancer.

Third quarter net product sales were in line with our expectations.

As we noted in our third quarter 'twenty, one earnings announcements <unk> 'twenty, one net product sales were favorably impacted by approximately $10 million.

Relating to a reduction in the returns accrual rate, which was due to lower than estimated actual returns.

Excluding that impact net product sales increased by approximately 14% and three Q 'twenty to <unk>.

Paired to the same period in 2021.

We're also exploring ways to further expand market share in our current indication.

By investing in real World evidence and observational studies.

We believe will generate additional data around <unk> zelle, because utility in a broad range of second line small cell lung cancer patients.

Rob will cover our development plans for <unk> in more depth, which also includes trials in first line small cell lung cancer and other tumor types.

Providing the opportunity for meaningful future growth and new patient populations.

Turning to slide 11, we have continued to see strong demand for <unk> since our U S launch in the third quarter of 2021.

We continue to hear from health care professionals that based on the availability of <unk>. They are returning to best clinical practice and switching to non E coli derived asparaginase earlier.

And there has been an initial hypersensitivity reaction observed.

<unk> has been adopted almost universally and U S. Pediatric oncology protocols and we are encouraged to see that there is increase in use of <unk> in the treatment of adolescents and young adults.

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

Bob.

Thanks, Dan.

I'll kick things off on slide 13.

In mid October we announced our agreement to license development and commercialization rights to their data Matt.

This is an extremely promising program.

And the data mapped to the novel her to targeted by specific antibody with buy parrot topic binding that has the potential to transform the current standard of care.

<unk> heard you express some cancers.

The ongoing clinical program presented data mab as well design and.

That includes anticipated near term data readouts that could support registration.

Topline data from a pivotal trial in biliary tract cancer for PTC are expected by year end.

Topline data from the ongoing pivotal phase III trial, and gastroesophageal adenocarcinoma or gea are expected in 2024.

Potential approval on BTC would enable us to deliver this therapy to patients as quickly as possible and allow health care professionals to gain real world experience with this drug in BTC prior to potential approval and other larger cancer populations such as GE.

Yes.

As an oncologist I'm impressed to see monotherapy activity with zama data map across multiple <unk> expressing tumor types, including cases resistant to prior car T therapies and.

In the ongoing trials are expected to provide data that will inform development beyond BTC gea.

We're looking forward to working with the experienced team at <unk>.

To achieve our shared objective of realizing the full potential is out of date and perhaps patients.

Slide 14 provides an overview of our near term R&D opportunities.

We are advancing a number of programs across the pipeline.

In neuroscience.

Pleased to report that we have initiated our pivotal phase III trial for <unk> in Japan that includes Dravet lgs and PSC with.

With the first patient enrolled in October .

We have also initiated our phase III trial dialects in epilepsy, with Myoclonic atonic seizures or Cmos. This.

This would add a potential fourth indication to our label and provide the first clinical data on our fourth Ctrip zone.

Our phase II trial for GBP, one five out in post traumatic stress disorder is progressing.

As is our phase <unk> trial for <unk> or <unk> for the treatment of essential tremor.

And based on preclinical evidence and significant patient need we.

We have initiated a separate phase III trial for soup accounts and Parkinson's disease.

We expect to enroll the first patient by the end of the year.

We have completed our analysis of the <unk> small MFS one trial.

First in the <unk> program's potential to support regulatory approval for multiple sclerosis related specificity in the U S.

As well as in the context of our broader pipeline opportunities we.

We have made the decision to discontinue the program.

There is no impact to patients currently enrolled in the trial and they will complete the study.

Further clinical trial protocol.

On behalf of my colleague with jazz I wanted to extend our gratitude to the investigators clinical sites.

<unk> and their families who participated in the recent soft shops.

That is the brand name for <unk> was approved outside the U S.

For the treatment of <unk> related specificity.

Just on a comprehensive clinical trial program.

Excluding three positive phase III randomized controlled clinical trials completed in Europe .

We continue to believe that side of ex confirms benefit to patients with MFS related specificity and are continuing to support the availability of side effects and the 29 markets outside of the U S where it is approved.

So that remains available to patients who benefit from therapy.

We also remain excited about the GW cannabinoid platform and are committed to advancing cannabinoid programs, including those beyond that today.

With the potential to address critical unmet patient needs.

Moving to oncology, we continue to execute on our robust development effort for instance, zilkha.

This includes an ongoing phase III trial supported by jazz and Roche to evaluate <unk> in combination with the centric and first line extensive stage small cell lung cancer.

The confirmatory phase III trial in second line small cell lung cancer being run by our partner Farmer Maher.

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

We are also exploring <unk> in other solid tumors and a phase II basket trial.

Turning to relate FDA is continuing to review our BLA for O'reilly to update our label to a Monday Wednesday, Friday intramuscular 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, but allow patients to maintain clinically meaningful level of serum asparaginase activity through the entire duration of treatment.

Currently the label dosing schedule is every 48 hours 25 milligrams per meter square.

We also completed a separate S BLA to support intravenous administration.

To the review of our original BLA.

Both the Monday Wednesday, Friday dosing schedule.

The IV formulation.

Supplemental BLA or being reviewed under the real time oncology review program.

While we do not believe these label updates would have a significant impact on usage.

They do have the potential to improve the related experience for clinicians and patients.

We have also completed.

A submission to the European Medicines agency for royalties, which included Monday, Wednesday, Friday, and every 48 hour dosing schedules as well as IV administration with potential approval in 2023.

Looking at our earlier stage programs, we recently reached a milestone for <unk> five.

Pan RAF inhibitor for the treatment of solid tumors.

It contained mutations in the map kinase pathway.

Enrolling the first patient in a phase one clinical trial in October .

We're also advancing a number of programs towards IND submission.

In summary, our R&D portfolio has evolved dramatically over the last 24 months.

We have a robust pipeline of mid and late stage programs with data Readouts expected through 2020 for.

Further complemented by promising early stage programs.

I've never been more excited about the compounds in our pipeline with our R&D organization integrated following the GW transaction.

Now I will pass the call off to Rene for our financial update Rene.

Thanks, Rob I'll begin on slide 16, our third quarter financial results reflect strong execution across the business we.

We achieved impressive top and bottom line growth with third quarter total revenues of $941 million representing growth of 12% compared to the same quarter in 2021.

Our continued focus on both the top and bottom line drove third quarter adjusted net income of $370 million, a 42% increase compared to the same period in 2021.

Adjusted EPS was $5.17 in the third quarter, a 23% increase compared to the same period last year adjusting our three Q 'twenty one results for the accounting change for our convertible debt our adjusted EPS growth for <unk> 'twenty two would have been 38 <unk>.

Compared to the same period in 2021.

Our updated guidance is outlined on slide 17.

Just on results from the third quarter, we are raising the mid point for all of our revenue and net sales guidance and that tracks and updating the range for.

For full year total revenue guidance to three six to $3 $7 billion neuroscience net product sales.

Two seven to $2 $8 billion and oncology net product sales to $860 million to $920 million.

In all three instances, we have cut the upper end of our guidance the same while increasing the lower end.

With regard to Opex, we continue to focus on strategic disciplined use of capital.

We noted last quarter that we expected to come in towards the lower end of our guidance range and we are now narrowing our SG&A expense guidance to one <unk> to one <unk> billion, and reducing R&D expense guidance to $490 million to $520 million.

We are raising our 2022, non-GAAP <unk> guidance range to $1 225 to $1 $75 billion.

This is a $35 million improvement at the midpoint. Despite the inclusion of a $50 million upfront payment related to the xenon data on that transaction that we expect to pay by yearend upon expiration of the HSR waiting period.

Debt and increasing adjusted EBITDA.

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

We believe our recent transaction with <unk> is an ideal strategic fit for jazz and exemplifies our approach to corporate development. This.

A few aspects of this transaction that I'll call particular attention to.

First it is aligned with our strategic focus on opportunities, where we not only have unique insights and there is a critical unmet patient need, but where we can also leverage <unk> existing integrated capabilities and global infrastructure to commercialize efficiently.

Should we continue and the licensing agreement and secure approval for example data map and BTC and Gea, which are the first two potential indications there is a concentrated physician audience for efficient commercialization.

Second this is a durable asset with the opportunity for significant regulatory exclusivity following potential approval and a robust patent portfolio expiring several years later.

And third as Rob noted Zanna data Nab has potential in a broad range of cancers. As we look to continue to diversify our commercial portfolio. We believe this type of asset and transaction offers significant upside with a relatively modest upfront investment including.

The deal structure that is weighted towards achievement of regulatory and commercial milestones.

Other than higher upfront payments.

I'll also point out that the scope and structure of the transaction coupled with our strong cash flow leaves us with plenty of bandwidth to continue to be active on the corporate development front.

As in prior years, we plan to provide 2023 guidance and our full year earnings disclosure.

However, I would like to comment on two items that are shaping our perspective on 2023 and vision 2025.

First upcoming Oxidate competition as we've previously noted we expect that <unk> will remain the oxalate of choice in 2023, even as the first xyrem authorized generic interest the market either late this year or early next year with others to follow.

Branded competition potentially becomes available.

We have orphan drug exclusivity that extends to 2027 for narcolepsy and 2028 for IH as well as the Orange book listed patents that extend out to 2033.

We also expect to receive meaningful royalties for all Xyrem authorized generics and we expect the oxalate franchise led by <unk>. We will continue to be an important component of our revenue stream in the coming years.

Second operating margin improvement.

Our updated 2022 guidance implies an operating margin of 49% at the midpoint.

Positioning us to both further invest in our business in 2023 and 2024.

<unk> achieved the operating margin targets outlined in vision 2025.

<unk>.

Now I'll turn the call back to Bruce for some final remarks.

Thanks, Renee I'll conclude our prepared remarks on slide 20, we.

Our commercial efforts have driven strong uptake preside wave in both narcolepsy NIH growth in <unk> resulted in an outstanding one for railways and establish <unk> as the treatment of choice in second line small cell lung cancer.

Our R&D team continues to advance multiple mid and late stage programs and we expect to submit several ind's through 2023.

The pending addition of is any data map strengthens our oncology pipeline as a program.

Program with anticipated near term clinical milestones and the potential to contribute to our vision 2025, commercial and R&D objectives.

In summary, we remain on track to achieve vision 2025, and our updated guidance reflects our team's execution across the business in the first three quarters of 2022.

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

As a reminder to ask a question. Please press star one one on your telephone please standby, while we compile the Q&A roster.

Our first comes from Ken Cacciatore with Cowen Your line is now open.

An increasing number of prescribers can you give a sense of where it's already seeing repeat prescribing by these clinicians and then lastly.

Wave can achieve an NIH. Thanks, so much.

Yes, Ken I'll start with a comment on the overall market opportunity and then maybe let Tim take the questions on.

What we're seeing in initial patient experience with sideways.

On the overall market size, what we do believe that the market opportunity as we move forward in time is very large and may in fact be the size of the narcolepsy opportunity. If you look at.

Diagnosed and undiagnosed patients.

Our initial focus as we've talked about is going after that segment of the market.

We know patients already had a diagnosis of IH and are actively seeking.

Medical care, so it's a subset of that but yes, the opportunity long term is larger Kim.

Sure Yes.

Availability of the product on formulary. So again, you know that we've got.

90% coverage for both narcolepsy NIH and the commercial patient population at this point in time. So so overall, what we're seeing and hearing is that is.

Health care provider gets their own firsthand clinical experience with prescribing XI wave and this idiopathic paper.

On the population and have the ability to observe its clinical benefit within their own practices.

Really see increase soon as he adds enthusiasm about it and.

Effort on their part to start to identify additional appropriate patients in which they can.

<unk> therapy. So all of this positive signal from those that have utilized as well.

If you have not.

Allows us to continue to be really confident in our ability to maximize the potential of <unk> and this really underserved market.

And it makes us very pleased that we're continuing to grow the die away or across both narcolepsy, and IH and putting us well on track to be activated choice in 2023.

And Ken maybe I'll, just wrap by saying if you contrast, what physicians are seeing with sideways NIH with the options they had available to them before our launch.

As patients and clinicians.

Thanks, so much.

Please standby for our next question.

Our next question comes from Jessica Fye with Jpmorgan. Your line is open.

So that's I would say like other companies in our industry, we're continuing to evaluate.

The impact of the <unk> legislation, particularly as we learn more over time about how it is going to be implemented.

To see how that will impact our investment decisions and it may impact our investment decisions across.

Our R&D portfolio, but also and importantly across corporate development opportunities. There are parts of IRI, we liked including really trying to address out of pocket cost for patients.

As a step in the right direction.

There are other provisions that we think are actually.

Challenging to innovators in terms of some of the probably unintended consequences or.

Not fully recognized consequences.

In terms of providing a return on capital for those investments. So we like everyone will be looking at potential impacts I don't think we believe for our existing commercial.

Portfolio of products, we see a much certainly in any near term period.

That would concern us, but we will take it into account when we're making longer term investment decisions.

Thank you.

Please standby for our next question.

Our next question comes from Jason <unk> with Bank of America. Your line is now open.

Hey, guys. Thanks for taking my questions.

First question not asking for guidance, but just curious if directionally you see 2020 as our revenue growth year and the reason I ask is because you have this 2025 target out there and I think from an investor standpoint, it's easier.

I believe that if you think 2023 as a growth year.

You can speak a little bit to like the one or two biggest growth drivers on a year over year basis, you guys were pushing into adults into rural and suburban kind of.

Areas. So just kind of curious if you can give us a little bit more color on what specifically where some of the bigger growth drivers rapid dialect. Thanks.

Maybe I'll ask Renee to take the broader revenue.

<unk> question and I hear that Youre not asking for guidance. So thank you.

And then.

Maybe I can turn it over to Dan and Ken to talk a little bit about our <unk> growth.

Yes, Thanks, Bruce and Jason Thanks for the question so with respect to 'twenty three.

As you would expect we typically provide that full year guidance for a new year alongside our for your full year results in the first quarter. So you can expect that from us and early 2023.

However, with respect to how we're thinking about 2023 relative to <unk> or potential competition I would say, we continue to expect <unk> to be the oxalate therapy of choice.

We're confident in the path that we have ahead of us for 2025, and the ability the oxidate franchise more broadly.

Delivered $2 billion of revenue across <unk> branded Ziram and then the royalties of <unk>, which of course carry meaningful economics to us.

Going back to 2023 and <unk>.

You would have listened to our comments and.

And looked at our third quarter results. We believe we are very well positioned for <unk> to be the therapy of choice within the <unk> for.

For the year, we have established excellent payer coverage for both narcolepsy NIH.

Today, we now have more narcolepsy patients on <unk> than Ziram. Another important milestone for the brand and we are also in the third quarter now generated over $250 million of net sales in a single quarter with sideways. So all of this.

0.2 meaningful progress and success for the brand and positions us really well as we prepare to enter 2023.

Kim.

Yep.

I'll start off by talking about the U S and we have really seen a number of things.

Giving us momentum here.

In the U S and leading us to be optimistic about the future and I think there are some of the themes that we've been talking about for the past year.

Looking forward. The first is that as Dan mentioned, our overall volume of engagement with HCP.

<unk> really been continuing to grow nicely quarter over quarter, which is really important to our product and it's early in the lifecycle such as Epidiorite and given that we have number of customers have yet to use that or utilize it broadly so.

Promotion and education efforts are absolutely important and this highly sensitive promotional sensitive market that we're operating in.

That's one.

The second driver is as we've kind of talked.

<unk> talked about and predicted is that we're really seeing this reality of HCP is getting more experience with epidiorite seeing what it can do for their patients feeling more comfortable.

With the product and impressed and utilizing it more broadly Dan mentioned that quantitatively.

Also seeing this in terms of market research showing that.

The reporting that 60% of them.

Versus a year ago. It moved at the dialects up in their treatment algorithm. So that is working exactly as we had predicted and had been seen early on so lots of great momentum and then the last one.

0.2 is we've been talking all year again about our promotional focus and effort in terms of trying to get HCP is to utilize the product for the first time more and more broadly by sharing that combination data that we have with <unk>. It has been very impressive it really does.

And when they see that there is a synergistic effect of using these two products together and that most of their patients are already on <unk>.

And its ability to reduce this combination theatres by 60% in lgs and Vietnam drove a 50% in PSC. It really does give them pause.

And tell the until they tell us it's highly motivating for them to either try it for the first time.

At minimum that we have that this product is going to continue to grow nicely.

And achieved blockbuster status and Thats.

The U S. So I'll turn it over to Dan to talk about our efforts outside the U S.

Yes, I'll just say a few words, because it's largely consistent with some of the.

Trends and growth drivers that Kim mentioned, just as a reminder were launched in 15 markets with 34 countries approved and so theres still a series of rolling.

Bunches, both geographically and also as we're adding TFC to the label.

And some of those markets.

What we are seeing is the same HCP engagement and.

Yes, it's a promotion sensitive brands so that's beneficial.

The last major market to in Europe is going to be France, and we did secure pricing and reimbursement and we will be launching in that country, where we've had a very successful.

Prelaunch experience through an ATM, so theres already awareness in patients who've been benefiting from the drug on that and sort of moving that into a full commercial launch mode by the end of the year and then to the full commercial.

<unk> for next year so we.

We also remain optimistic on a worldwide basis set up the dialogues can become cornerstone of therapy for this treatment resistant epilepsy and be a blockbuster product for us.

Great. Thanks, guys.

Please standby for our next question.

Our next question comes from David Anderson.

With Piper Sandler Your line is now open.

Hey, Thanks, So two for me.

One is on the long term targets for 2025.

It was one of the things you've talked about as margin expansion getting I think it was near 48% or close to 50%.

25, and I'm wondering out loud.

Particularly in the context of your <unk>.

Commentary how much of that expansion is.

Expense control and particularly R&D, just putting aside in process R&D of course, but just organic R&D, how should we think about that.

Given that youre at about what $4 90 to $5 20.

Your guidance this year. So so that's number one.

Number two is on epic dialogues, you're talking about new prescriber growth I'm. Just wondering if you are in a position to disclose how penetrated you are in your target.

<unk>.

And what's your general view regarding.

The pace of new prescriber growth as we move in to and through 2020. Thanks.

Hi, David That's fair Nate I'll take your first question in terms of margin expansion. So certainly we've been highly focused on operational excellence and yes.

We have set out 2025, adjusted operating margin ambition of being at 48% in terms of the midpoint of our guidance today in my comments for the full year of being in a position where we're already at 49% for 2022.

We've accomplished that through a number of areas of course, we said R&D was.

<unk> largely due to.

Additional investments in R&D in our pipeline and so by being in the position that we are already it gives us the opportunity to between now and 2025 and invest in our business invest in the brands that we're launching the pipeline our capabilities continue to leverage.

<unk>.

And then I'll turn it over to Dan to answer your second question.

Yes, thanks, Renee so on the <unk>.

Yes, we're not giving specific penetration rates, but we had said in the past that drove a little more penetrated the smaller indication.

Lgs and PSC, we see.

More opportunity. We also just see broadly that the drug works in a number of different seizure types.

There is many that make up these refractory populations that don't have FDA approved therapy. So then it's a question of.

Physician use and experience and market access and that's all going beneficially for us as well.

There is a lot of focus in terms of retention and we've seen very strong retention. So in patient start the drug they find this to be a very beneficial within a polypharmacy setting.

So see that as.

Physicians gain experience and they push up the doses.

That that also generally leads to better efficacy and so continuing to titrate up and I think in some of the markets. We feel were under dosed.

So thats going to be an area of growth and then we've got a broad indication for <unk>.

Starting at a young age going all the way up then I think.

Addressing the adult patient population.

And then there is still additional geographic opportunities and some of the countries. We haven't been in and longer term. We are investing in data generation for new new seizure types such as the months go.

We're also looking to address new significant markets like Japan and Asia.

Okay. Thank you.

Please standby for our next question.

Our next question comes from Marc Goodman with SBB. Your line is now open.

One quarter, taking away from the other any inventory movements and stuff like that and so.

Can you help us understand if there was any of that in this quarter, obviously, a very big quarter.

And we're just trying to understand if maybe you can help tease out like is this all just European regions, just getting added on or was there actually real growth in the United States that could you can you confirm there was double digit growth in the United States. You are on your felt like that was there any inventory change and then just lastly, you talked about the Japan study I was just.

Curious before <unk> was approved.

In the U S and Europe , there was a lot of CBD usage, you buy them in the bodega as there'll be that all over the place. It was just the thing to do and it was pretty well understood is that the same over there in Japan do you expect the same type of ramp up over there and.

And that type of excitement.

Yes, Mark this is Bruce I'll take the first part of your question and then maybe have Dan make couple of comments on Japan.

Going to be a short answer the growth you saw in Epidiorite is real yes, it's in the U S.

As we continue the rollout of new countries and new indications as Dan described in Europe , we are seeing solid growth in the U S and no it's not due to changes in inventory.

Dan do you want to take Japan.

Yes on the Japan side.

We're super excited for that market and to now have launched our official study and so worked very closely with the.

The regulatory agency and developed and thought leaders who needed.

We're very interested in the data that was coming out of that the dialogues.

But unlike other markets. There is really no cannabis allowed factors the candidates control Act, which <unk>.

Prevents use of whether it's regulated or non regulated and so we're also working in parallel as GW had done successfully in other geographies with government officials to allow for exceptions to the cannabis control Act for regulated medicines that have gone through a safety and efficacy.

<unk>.

We're feeling confident we'll be able to do that.

<unk> la and sort of change of practice and then Meanwhile, enroll and get the experience within Japan from the clinical studies so.

So that's where we are with Japan.

Thanks.

As a reminder, please limit to one question.

Standby for our next participant.

Our next question comes from Amy <unk> with Needham Your line is now open.

Thanks, Thanks for the question Mike.

My question is about <unk> 25.

There's.

Meaningful gap between where consensus is.

And that also goes for Crimson.

Can you talk to where you think you might be more confident in the performance of the business.

To what extent do you.

No need to rely on business development.

Our new pipeline successes in order to be able to get to that 5 billion number.

Thanks.

Yes, Hi, Amie and thanks for the question I would say that even when we first communicated vision 2025.

We talked about having.

Revenues from our existing commercial portfolio, but also including a placeholder for.

Productivity out of our pipeline <unk> Corp, Dev with a strong commitment to doing Corp, Dev and maybe Renee can make a few more comments about how we're thinking about that.

Sure I'd be happy too well on me as we look forward.

We certainly expect corporate development to continue to be an important strategic pillar for us clearly it's had a huge impact on our ability to grow and diversify our revenues to date.

And also expand our pipeline.

So as you look at the.

End of the decade, as we look at that strategic framework for corporate development.

We're looking at early assets that have the opportunity to continue to grow that pipeline, but also late.

Molecules and then things that can also be <unk>.

Close to commercial I'd put there.

Any in that category in terms of being able to contribute to two different pillars and we're excited in the case of any data on that to be a potential best in class therapy. This is the sort of transaction for us that we think has the potential to have a meaningful impact for patients where we can apply.

Our unique insights, where we have the ability to commercialize efficiently given the overlap with <unk> silica and we'll continue to look at transactions of this nature and then I'll just now just given our financial position right now and the speed at which we have de Levered the health of our operating cash flow.

Feel confident in our ability to continue to leverage corporate developments.

We are of course, as we look forward and see a lot of opportunity still given valuations, where they are where they are today and have a corporate development Chris.

Quite busy so we're excited about the opportunity to continue to lean into that.

Part of our business to augment what we have already as a business. We're really excited about with the opportunities we have to grow the top line and continue to drive the pipeline forward with what we have in house today.

Thank you.

Please standby for our next question.

Our next question comes from Ash Verma with UBS. Your line is open.

Hi.

Thanks for taking my question just one.

So on <unk> I think the empty this poor timeline passed on September 28.

Can you confirm if you have visibility whether there were any padded up four pattern certification.

Thanks.

Nothing to add other than we've made clear in our filings, but that's the earliest filings could occur.

Fully expect there may be filings over time.

Of course, those go into the FDA first and come to Us later.

But nothing to report at this point.

Okay.

Please standby for our next question.

Our next question comes from Madhu Kumar with Goldman Sachs. Your line is now open.

Oh, great. Thanks for taking our questions so weird.

Physicians get more experience as I would have to get comfortable with it I think it would be like a further pickup in an expansion in idiopathic hypersomnia like how should we think about that.

Yes, Kim you want to talk a little bit about future opportunity for growth with with IH.

Sure.

So lots of opportunity for growth, we've talked in the past about there being already out there in the marketplace 37000 patients who are diagnosed with IH and theyre actually out actively seeking health care. So it's not a scale diagnosis. So we've got a nice healthy.

Patient population to go after what we're focused on right now is really ensuring that.

We're educating around IH diagnosis.

Despite this given.

We really want to try to help HCP.

And sure that Theyre, taking indicators iteration the full range of symptoms that patients are experiencing really used to mostly focusing on that excessive daytime sleepiness that.

<unk> off label usage of wake promoting agents and stimulus.

Enabling them to address and we want to make sure that they are thinking much more broadly about the breadth of symptoms that patients are experiencing and that diluted can treat and then secondarily, we're helping HCP to identify patients who may be be ready for the highway but again, a big part of that is around making sure. They are thinking about that full breadth of.

Symptoms so overall strong.

The excitement and feedback in the market, but as we've said I think for us.

Long time now.

Video Pathet hypersomnia is a new market.

<unk>.

We're excited to build it just like we did with narcolepsy, but we expect that it will take some time and grow gradually.

<unk>.

Overall lots of reasons to be optimistic but also to appreciate jazz.

<unk> been working in the narcolepsy market for <unk>.

Decade or more now.

<unk>.

We plan to be.

Just as a successful theyre ultimately with.

With the highway then idiopathic hypersomnia, but it will take some time.

And I'll, just add that Kim and that Kim mentioned narcolepsy and remember our sales force is really trying to do two things Youre drive adoption in the new market of IH, but also continue our messaging to the narcolepsy community, including about the <unk>.

<unk> of the lowered sodium.

That we see in <unk> that led the FDA to grant the orphan.

Exclusivity based on a safer product because of that reduction in sodium and what that can mean for cardiovascular events.

So important to do that narcolepsy messaging as we continue to grow NIH.

Okay and then in terms of the corporate development are you guys seeing visit I really impressive rate of deleveraging I guess as we think about future corporate development will it be kind of like design works, where it's kind of the partnering kind of pulling out individual assets or how you can make outright acquisitions like GW, how should we think about that on the forward.

Yes.

And then talk about the breadth of approaches yeah great.

Yes, sorry about that yeah. So as Ive said corporate development will continue to be important for us and.

As I step back and think about the opportunity the strength of our cash flow, we generated over $930 million of operating cash in the first nine months. The fact that we de Levered two full turns.

To have.

The ability to transact with a lot of different levels with greater EBITDA, we have greater capacity should we decide that we want to do something on a larger scale, but when we look at our business today.

Thinks that we can continue to do transactions like the ones. We did in Q2 with werewolf and Sumitomo two assets early in the pipeline that we're quite excited about the van <unk> deal as well being very close to pivotal data.

Transaction that we think has meaningful potential.

Potential to create value over time, and then looking at the strength of our cash flow combined with our expanded capabilities across.

That we tend to be technology agnostic, meaning between small or large molecules and really focus on where we think we can have the biggest impact for patients and then also for our shareholders.

Our next question comes from <unk> Prasad with Barclays.

Good afternoon, Thanks for taking our Hudson just a quick one on the <unk> deal. We know that the Optionality for continue will be based out of the BTC pivotal readout.

Linking thoughts of the BTC is a relatively small market and a bigger portion of that revenue would likely need to be from other indications like ta in the breast cancer and just wondering is there anything you would like to highlight in terms of the read through from the BTC pivotal data for the rest of the indications.

And the breast cancer.

It's finding interesting is timing of factory here. Thank you so much.

Yes, maybe Rob I'll ask you to talk about what we think we'll learn in the near term and how we're thinking about the broader opportunity set.

Sure Bruce happy to what I would say before I answer. The question directly is I've been impressed with the broad activity of this drug across really any tumor types.

Express her too.

And even in cases, where patients have progressed after.

Her to therapy.

And so I think that speaks to the the <unk>.

Both in gastric in BTC, and I would say beyond that.

We're doing additional studies in breast cancer.

Colorectal cancer et cetera.

We'll see.

At the BCC readout is.

Give us a sense of whether it will have that near term.

Opportunity to to file with BTC, that's potentially important just even beyond the specific indication remember if we get approval in a relatively small indications such as BTC. The next <unk>.

Admission would be a supplemental it would mean a more rapid.

Review by FDA.

It could mean that we would get and CCN.

Guidelines.

Round gastric based on the published data even before its approval.

It gives us a chance to do some preparation in the marketplace as well so.

Think that becomes.

Factor in that regard, but I don't expect that it's going to have kind of a direct read through.

To the ongoing gastric trial.

This is very helpful. Thank you so much please.

Please standby for our next question.

Our next question comes from Gary Nachman with BMO capital markets. Your line is now open.

Thanks, Good afternoon.

Back to <unk> can you confirm that the strong reimbursement.

That you have already locked is going to be locked in for next year.

Or is there still some uncertainty there for certain payors, depending on how the generic generic market forms for xyrem. So how did those negotiations take place.

And then generally how much is the launch of IH help overall awareness with narcolepsy as well as you definitely continue to increase the number of patients treated in narcolepsy announced NIH. Thanks.

Yes, Kim you want to take that.

Sure. So in terms of 2023 coverage I mean, what I can just say at this point in time is that we've got 90% commercial coverage for.

Z wave in both narcolepsy in idiopathic hypersomnia, and we think that.

Bodes very well for us heading into next year I believe you asked about the <unk>.

<unk> generic really based on our conversations with payers.

Well as the strong contracts that we have in place.

We think the most likely scenario is going to be that payers will.

Put the AG on the formulary for on their formularies.

In a comparable position to that.

Xilinx.

In terms of IH, helping the awareness of narcolepsy look what I would just say is it's not so much just around the disease, but we are out there now.

We can with the same sales force at the same customers largely due to that overlap that.

Bruce mentioned, 90% overlap with the IH targets with those that were calling on already for narcolepsy.

Many times getting into discussion so we've.

Essentially you know in many cases double the amount of promotions.

Round the brand itself. So I do believe that that just overall.

Leads to momentum both in both directions.

For both indications.

Please standby for our next question.

Our next question comes from Annabel <unk> with Stifel. Your line is now open.

Hi, Thanks for squeezing me in.

Just wanted to ask about <unk>.

When you think about the trajectory here, obviously, you had a really nice uptake I'm a little bit curious to see if.

This is a new peak level, obviously higher than <unk>.

It's going to be perhaps Sean here, given that you seem to have.

Tap the pediatric market.

How should we think about growth from this point forward.

Is it harder to get into LVL patients <unk> patients ex geographies, how should we think about the about the dynamic of growth it sort of plateau or is it just a gradual growth from here.

Sure.

Kim you want to start with the U S. Yes, I'd be happy to take that one because we're incredibly pleased.

<unk> sales have exceeded prior U S peak sales of <unk> and that we believe this is a strong signal that the unmet needs of the market had never really been fully met before urban they started to have supply issues. So.

I'll point to a number of things, we now have robust brand awareness among customers and prescribers we've created.

High confidence and the high quality and reliable supply of the product.

And right now we enjoy the position as the only available therapy to patients in the U S will have a hypersensitivity reactions to E coli derived asparaginase.

We're continuing to hear from customers that based on the availability of reilly's that they are returning to best clinical practice and switching to non E. Coli derived asparaginase earlier than they previously were during the supply shortage.

When they see that initial hypersensitivity reaction observed.

At this point Reilly has been adopted.

Said almost universally in the pediatric oncology protocols, but we're also encouraged to see that there is increasing use of <unk> in the treatment of adolescence.

And young adults now the majority of the patients out there are pediatric.

And it's important to note that.

Many adolescent and young adult patients are actually treated in pediatric centers under the really strong pediatric protocol, so that but a big driver of the growth in our launch.

It was focused in the last year in establishing <unk> with our existing asparaginase prescribers, who again were predominantly in the pediatric setting.

Next year in 2023, we aim to increase our efforts to driving prescribing in the adolescent and young adult population and seeing if we can further.

Expand the market. So again, that's just inside the U S and certainly there's lots of growth opportunity ex U S for Dan to talk about.

Yes, thanks, Kim on the outside the U S. As we've mentioned we filed with the EMA.

We're hoping for a potential approval in 2023, depending on how long that takes and to answer your questions et cetera.

It's a different market over there of course pricing is.

Lower and also <unk> on the market in the European setting.

That being said the experience we've had within the U S and haven't really optimize particularly the Monday Wednesday Friday dose with a bigger dose on Friday to ensure full coverage for.

For these patients and then there is other advantages in terms of the concentration already fill fully recombinant no particulate in the solution.

So we do look forward to giving another treatment option to those physicians.

Outside of Europe , there are some countries, where <unk> is not yet on the market Japan is one and.

And we do we're actively considering what the opportunity there is and will be working with the regulators to see.

Is there an expedited path to get this important medicine to patients who could benefit from it.

Please standby for our next question.

Our next question comes from Gregory <unk> with RBC capital. Your line is now open.

Hey, good evening, Bruce and team congrats on the quarter and thanks for taking my question.

Bruce I just wanted to ask a specific one on <unk>, perhaps you can just give us some updated color on <unk> performance and view <unk>.

Victory from here and maybe related to that it's super helpful to to.

To hear Rene and the team's color elaborating on on BD and.

Danny as it has a potential blueprint I'm just curious as you reflect on <unk> from from a few years ago and with <unk> now under under Jets, how that potentially juxtaposes as.

As far as the strategy back then to how Youre looking at deals like Sandy going forward. Thank you very much.

Yes, Greg Thanks for the question.

Always interesting to learn from your past Corp. Dev deals as you consider your important strategy going forward.

<unk> deal, we brought into near term launch with fixed pass now.

Now on the market in the U S and.

Abroad, as well as the combo Plex platform, which we continue.

To see as a source of other.

Interesting products for our future.

<unk> and commercialization.

I'll just remind you that <unk> remains under study.

In other areas inside and outside AML that we think may.

Allow us to broaden use.

In the future.

So Rob maybe talk a little bit about how <unk> is being.

Studied right now and then maybe Renee you can jump in with the.

The prompt.

How we think about different approaches to Corp, Dev moving forward Rob.

Sure Bruce Thanks, So it's being studied in a number of different ways through.

These collaborations with major cancer centers.

And cooperative groups.

As well as into the ongoing studies that we're conducting and I would just highlight a couple of things one would be in combinations that could be highly relevant like combinations with <unk> those trials are ongoing.

And also in trials that would speak to.

And the indication to a broader group of patients such as the cooperative group with AML S. G, which is just the high risk patients, but more broadly frontline.

Yeah, and then I will just cap it out in terms of business development going forward. So if I just look at the data.

Data on that deal in terms of how we structure that we are looking to ensure as we enter into transactions that are.

Meeting our strategic objectives that we're also looking to balance.

Strikes the right balance between monetary upfront financial outlays with risk and other value inflection points.

Certainly with that transaction.

Excited to be able to leverage the team at <unk> in terms of <unk>.

<unk> can drive these studies in the near term and looking at creative ways that we can continue to leverage our partners for <unk>.

Their superpowers and skills that they are bringing to the table. While also continuing to advance our strategy and in particular with this with this transaction. We were pleased to be able to strike that balance with the financials and the value inflection points not only in the upfront and how we structure.

That but also as we look forward and look at the milestones that were primarily driven by regulatory and future commercial value inflection points. So with the optionality that we have going forward, both from a financial perspective, as well as having a.

Broader business now, we'll continue to look at creative ways to structure transactions to have win win outcomes for both jazz and our patients and shareholders as well as our partners.

At this time I am showing no further questions I would now.

Now I'd like to turn the conference back to Bruce <unk> for closing remarks.

Thanks Michelle.

Thanks for joining US everyone. We look forward to a strong finish to 2022 and we remain focused on achieving.

<unk> 2025, and I'd, just like to close today's call by recognizing our jazz colleagues for their commitment to delivering new therapeutic options to patients and want to thank our partners and shareholders for their continued collaboration and support have a good evening everyone.

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

Q3 2022 Jazz Pharmaceuticals PLC Earnings Call

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