Q4 2022 Jazz Pharmaceuticals PLC Earnings Call
Speaker 2: It's winter.
Speaker 3: Good day, and welcome to the Jazz Pharmaceuticals fourth quarter and full year 2022 Finance Results 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. Instructions will be given at that time. As a reminder, this call is being recorded.
Speaker 3: I would now like to turn the call over to Darren Fox, Executive Director of Investor Relations. You may begin.
Speaker 4: Thank you, operator, and good afternoon, everyone. Today, Jazz Pharmaceuticals reported its fourth quarter and full year 2022 financial results. The slide presentation accompanying this webcast is available on the investors section of our website.
Speaker 4: Investors may also refer to the press release we issued earlier today, which is also posted on our website.
Speaker 4: On the call today are Bruce Kozad, Chairman and Chief Executive Officer, Renee Galar, Executive Vice President and Chief Financial Officer, Dan Swisher, President and Chief Operating Officer, and Rob Yannone, Executive Vice President, Global Head of R&D.
Speaker 4: Kim Sablich, Executive Vice President and General Manager, United States, will join the team for Q&A.
Speaker 4: On slide 2, I'd like to remind you that today's webcast includes forward-looking statements, such as those related to our future financial and operating results, growth potential and anticipated development and commercialisation milestones and goals.
Speaker 4: which involve risks and uncertainties that could cause actual events, performance and results to differ materially from those contained in these forward-looking statements.
Speaker 4: We encourage you to review the statements contained in today's press release in our slide deck and in our latest SEC disclosure document, which identifies certain factors that may cause the company's actual events, performance and results to differ materially from those contained in the forward-looking statement.
Speaker 4: made on today's webcast. We undertake no duty or obligation to update our forward-looking statements.
Speaker 4: Turning to slide 3, on this webcast we'll discuss non-GAAP financial measures.
Speaker 4: Reconciliations of GAAP to non-GAAP financial measures are included in today's press release and the slide presentation available on the investor section of our website. I'll now turn the call over to Bruce.
Speaker 5: Thanks, Darren. Good afternoon, everyone, and thank you for joining us today. I'm excited to share our strong fourth quarter and full year results, capping off an outstanding year of performance and execution for jazz, providing us with significant momentum as we enter 2023.
Speaker 5: and continue to drive toward Vision 2025.
Speaker 5: toward Vision 2025. I'll start on slide five.
Speaker 5: This year, JAZ is celebrating its 20th anniversary. Over those 20 years, we've remained focused on our purpose of improving the lives of patients and our commitment to being a great place to work, while delivering consistent top-line growth.
Speaker 5: In 2022, we built on that foundation of strong execution, achieving record revenue, advancing multiple therapies in our pipeline.
Speaker 5: and adding several exciting molecules through corporate development, all while remaining focused on discipline capital allocation and operational excellence.
Speaker 5: All of these accomplishments contributed to the ongoing transformation of our business to a high-growth global biopharma leader and position us well to achieve Vision 2025.
Speaker 5: Vision 2025 includes three components central to driving sustainable growth and enhanced value as we transform our company.
Speaker 5: commercial, pipeline, and operational excellence.
Speaker 5: I'll now highlight several of our accomplishments in each of those areas in 2022, starting with commercial.
Speaker 5: Based on our strong commercial performance, we continue to deliver significant revenue growth.
Speaker 5: In 2022, we recorded $3.7 billion in revenue, which represented an 18% increase compared to 2021. Our top-line growth was driven by the continued success of three recently launched products – Ziwave, Zepdelka, and Ryleys – along with strong growth for Epidiolex.
Speaker 5: Zywave is now our largest product by revenue, annualizing at more than a billion dollars.
Speaker 5: Based on our outstanding commercial execution, we achieved our 2022 total revenue guidance, as well as guidance for each of our neuroscience and oncology franchises.
Speaker 5: Moving to the pipeline, we continued to advance our clinical portfolio and added three exciting new molecules to our pipeline during 2022. Within the past three months, our most recent oncology pipeline addition, Xanny Data Maps, has had positive data readouts in both of its initial target indications. Over the course of the year, we also reduced itsumbled errors after the campaign.
Speaker 5: We initiated seven new clinical trials submitted for new INDs, generated multiple important data sets, and received regulatory approval for an important update to Rylee's dosing. Our pipeline has never been as robust or productive as it is right now, and we have multiple value inflection points over the next 12 to 24 months.
Speaker 5: On operational excellence, our continued focus on discipline capital allocation and operating efficiency drove a 2022 adjusted operating margin of 48%, which represents a substantial increase from the 43% we recorded in 2021. We significantly reduced our net leverage ratio.
Speaker 5: and continue to diversify our revenues in 2022, while also executing multiple strategic transactions that we believe will create sustainable value for patients and shareholders. These achievements on both the top and bottom line enabled us to significantly increase our revenue.
Speaker 5: operating cash flow and financial strength. We generated 1.3 billion dollars in cash from operations.
Speaker 5: and the overall health of our balance sheet is enabling us to be active in pursuing additional corporate development opportunities.
Speaker 5: Turning to slide six.
Speaker 5: We've made substantial progress in introducing Vision 2025 last January , and we remain focused on our transformation to a high-growth global biopharma leader.
Speaker 5: Our many accomplishments in 2022 have positioned us well for 2023, despite the recent introduction of an authorized generic of Xyrem, which until recently was the company's largest product by net sales.
Speaker 5: We are entering the year with an expectation of achieving top-line revenue growth in 2023 and remain confident in our ability to achieve the important milestones underpinning Vision 2025.
Speaker 5: I'll now turn the call over to Dan for an overview of our commercial performance, after which Rob will share an update on progress across our R&D programs.
Speaker 5: Renee will then provide a financial overview which will include a discussion of our 2023 guidance in addition to 2022 performance. We'll then open the call to Q&A. Dan? Carlos?
Speaker 5: Thanks, Bruce. I'm excited to share the continued progress across our commercial portfolio.
Speaker 6: I'll start on slide eight with neuroscience and oxidate. As a leader in sleep medicine, we believe the approval of ZY wave in mid 2020 marked a meaningful advance in patient care.
Speaker 6: As a lower sodium oxybate, Zywaeth has offered patients from narcolepsy NIH to are taking a lifelong therapy to address their sleep disorders, a way to reduce sodium intake which is a known risk factor for cardiovascular disease.
Speaker 6: In the fourth quarter, average active oxfade patients increased to approximately 18,000, representing growth of approximately 11% compared to the same period last year. There were approximately 10,300 active XyWave patients exiting the quarter.
Speaker 6: resulting from strong adoption in both narcolepsy and IH. Over the course of 2022, this compelling adoption continued to reinforce our confidence in the durability of ZiWave, and we expect ZiWave to grow and remain the oxidative choice in 2023.
Speaker 6: As Bruce noted, Ziway became our largest product in net sales in fourth quarter 2022, annualizing at more than a billion dollars and on track to achieve Blockbuster status in 2023.
Speaker 6: We continue to see robust uptake of Xi-Wave for narcolepsy in the fourth quarter, and we exited the quarter with approximately 8,550 narcolepsy patients taking Xi-Wave. There are now more narcolepsy patients on Xi-Wave than Xi-Rem, indicating our study and messaging is resonating with healthcare providers.
Speaker 6: for IH, and we are continuing to see increased enthusiasm among physicians for identifying appropriate patients and initiating therapy.
Speaker 6: Exceeding the fourth quarter, there were approximately 1,750 IH patients taking Xi-Wave. We remain focused on educating prescribers and patients about the compelling efficacy and established safety profile of Xi-Wave.
Speaker 6: and our confidence and our ability to maximize eye-waste potential in this underserved market.
Speaker 6: I also want to comment on the evolving landscape for Oxibate. In January 2023, an authorized generic of Xyrem was launched. We expect that XyWave will both grow and remain the Oxibate of choice in 2023, even with one or more authorized generics on the market and branded competition potentially entering the marketplace this year.
Speaker 6: Xi-wave remains the only lower sodium oxibate available to patients, and we expect it to be the only oxibate indicated for IH for the foreseeable future.
Speaker 6: FDA has recognized ZYWAVE as clinically superior to Xyrem by means of greater safety.
Speaker 6: In addition, we have Orphan drug exclusivity that extends to 2027 for narcolepsy and 2028 for IH, as well as Orange Book listed patents that extend out to 2033. All of these factors give us confidence that Zywave is a durable product that will continue to be a core growth driver for jazz.
Speaker 6: Turning to slide nine in Epidiolex, net product sales grew by 7% in the fourth quarter and 12% for the full year 2022 compared to same periods in 2021 on a pro forma basis with growth driven primarily by underlying demand.
Speaker 6: Now that we are several years out from launch, we have visibility into seasonality trends. Inventory typically builds over the course of the second half of the year, which results in lower revenues in the first half.
Speaker 6: Our success in growing Epidiolex this year has been driven by a number of factors, including increased access to treatment centers and physician offices, leading to more face-to-face interactions. Given the promotionally sensitive nature of Epidiolex,
Speaker 6: and the anti epilepsy market as a whole, greater access to HCPs has been a key driver. We continue to add new prescribers, our volume of engagement with HCPs is increasing, and our market research indicates nearly 60% of prescribers are moving up the dialytes up in the treatment algorithm. All positive indicators for continued growth.
Speaker 6: There has been continued adoption of Epidiolex in ex-US markets. With the recent launch in France, Epidiolex is fully reimbursed and commercially available in all five major European markets.
Speaker 6: We remain excited about the future growth and blockbuster potential of Epidiolex. We are confident that with its unique mechanism of action and ability to be combined with other therapies along with increasing positive experiences in real-world settings, Epidiolex can become standard of care in treatment resistant epilepsies and achieve blockbuster status.
Speaker 6: Now, moving to slide 10 in Zepzelka, we have rapidly established Zepzelka as a treatment of choice in second line small cell lung cancer, achieving $607 million in revenue since launch in mid 2020. Year-over-year revenue growth was 11% and 9% for the fourth quarter and full year respectively.
Speaker 6: We have multiple ongoing efforts to further expand market share in the second line setting by investing in real-world evidence and observational studies that we believe will generate additional data around Zapsalka's utility in a broad range of second-line small cell lung cancer patients.
Speaker 6: Our robust development program, which Rob will outline in more detail shortly, is exploring the utility of Zephzalka in several new patient populations.
Speaker 6: Our nearest term opportunity for meaningful growth comes from the potential of Zabzelka to be used in first-line treatment of small cell lung cancer.
Speaker 6: We also have trials assessing the efficacy and safety of Zabzilka and other tumor types.
Speaker 6: As highlighted on slide 11, the RILACE launch has been incredibly successful with $367 million in revenue since launch in mid-2021, including 25% revenue growth in the fourth quarter of 2022 compared to the same period in 2021.
Speaker 6: RILACE remains the only therapy available to patients in the U.S. who have a hypersensitivity reaction to E. coli drive to spherogenase. It has been adopted universally in pediatric oncology protocols and having solved for the supply constraints for non-E. coli drive to spherogenase.
Speaker 6: Healthcare professionals are reporting that they are returning to best clinical practice and switching ALL and LDL patients to Rylase earlier.
Speaker 6: when there has been an initial hypersensitivity reaction observed. We are encouraged to see that there is increasing use of Rylase in the treatment of adolescents and young adults, a potential growth driver for 2023.
Speaker 6: To summarize, we are continuing to execute incredibly well on commercial and are maintaining the momentum to successful launches for our key products.
Speaker 6: Now I will turn the call over to Rob for an update on our pipeline progress in 2022 and milestones for 2023. Rob?
Speaker 7: Thanks, Dan. In recent years, we've enhanced the breadth and depth of our pipeline.
Speaker 7: as well as our R&D capabilities. Our acquisition of DW in 2021 accelerated that process. And in 2022, we added three promising candidates to our pipeline. Then a data map, a novel late stage oncology asset, JCP441. JCP441.
Speaker 7: An erection to receptor Agnes, which we initiated the phase 1 clinical program in 2022. And a differentiated conditionally activated. Interferon alpha into kind molecule that will be entering the clinic later this year.
Speaker 7: Starting on slide 13, I'll highlight the most recent addition to our pipeline, then a data map. A novel HER2 targeted bispecific antibody, the biparatopic binding, and the potential to transform the current standard of care in multiple HER2-expressing cancers.
Speaker 7: As an oncologist, I'm impressed to see monotherapy activity with data data map across multiple HER2-expressing tumor types.
Speaker 7: including cases resistant to prior Hercule therapies. Based on its potential to benefit patients across multiple tumor types,
Speaker 7: We are committed to advancing this program as rapidly as possible. The most advanced clinical work within a data map is in biliary tract cancers, or BTC.
Speaker 7: and metastatic gastroesophageal adenocarcinoma, or GEA. These are cancers with significant unmet need and poor outcomes with current standards of care. Our confidence in Xamadatamab has only grown based on positive data in both of these settings. Continuing on to slide 14.
Speaker 7: We are very encouraged by the positive top line results from the recent pivotal trial, the data map, and BTC.
Speaker 7: And the 1st, overall survival data presented data map. From the phase 2 1st, line study. In December , our partners, I'm works announced positive top line results. From a pivotal phase to be open label. Single arm clinical trial called horizon.
Speaker 7: evaluating Sani Data Map as monotherapy in patients with previously treated, HER2 amplified and expressing VTC. I think the people are looking at the results of this and I'm really okay with why I need to feel like I'm developing a website on an ImmuneT
Speaker 7: In the trial, 41% of these patients with HER2 amplified and expressing disease, achieved an objective response as assessed by a blinded independent center review. In the trial, 41% of these patients with HER2 amplified and expressing disease, achieved an objective response as assessed by a blinded independent center review.
Speaker 7: The median duration of response at the time of data cutoff was 12.9 months.
Speaker 7: By contrast, standard of care chemotherapy and second line BTC Would be expected to have an objective response rate of less than 10%.
Speaker 7: The safety profiles on a data map in the trial was consistent with that observed in previously reported monotherapy studies.
Speaker 7: Currently, there are no HER2 targeted therapies approved for the treatment of BTC.
Speaker 7: And we plan to discuss the potential regulatory password presented data map and BTC with the FDA. In January at the ASCO G. I conference. The 1st, overall survival data presented data map were presented from the face.
Speaker 7: 2 trials evaluating Zana datamap in combination with chemotherapy and first line patients with HER2 expressing metastatic GEA. The preliminary results showed that Zana datamap in combination with chemotherapy is a highly active treatment regimen with the ability to generate significant and durable responses.
At the time of the analysis, the median overall survival had not yet been reached. The median duration of study follow-up of 26 and a half months.
The 18 month overall survival rate was 84%. The overall survival findings in this trial are compelling given historically reported. Overall survival rate for the currently approved care is a median of 14 months.
These results show that a data maps potential as a foundational treatment patients with her to positive. And we look forward to additional data from the ongoing pivotal phase 3 GEA trial.
Expected to read out in 2024, which may support us and global regulatory findings.
Importantly, ongoing research efforts on Data Data Map will inform development and indications beyond BTC and GEA.
Turning to slide 15, we've detailed key clinical programs in our pipeline.
Starting with neuroscience, we have initiated a phase two trial for the treatment of Parkinson's disease tremor for JVP 385 or Suvacalcimide.
This is in addition to our ongoing phase 2B trial and essential tremor for which we anticipate top line data in the 1st, half of 2024.
For JCP 150, enrollment is ongoing in our phase 2 PTSD trial with top-line data expected later this year.
In 4 Q, 2022, we initiated our phase 1 program. For the erection to receptor agonist, J. P. 441.
and there are currently healthy volunteer trials in the clinic. We anticipate initial proof of concept can help volunteers this year.
Moving to oncology as Dan mentioned. We are continuing to execute a robust development effort for ZFSTLCA.
This includes an ongoing phase 3 trial in collaboration with Roche to evaluate Sipselka in combination with Tocentric and first line extensive stage Small Cell 1 Cancer. A confirmatory phase 3 trial in second line Small Cell 1 Cancer being run by our partner will there be interview for a 12 car crash, shot in dry, sipselka defect
In our own post marketing observational trial. And 2nd, line small cell lung cancer, we're also exploring and other solid tumors and a phase 2 basket trial.
With respect to our supplemental submission for an IV formulation of Riley's.
We have received a complete response letter from the FDA. Requesting additional clinical data on the IV administration of Rylase.
I want to stress there is no impact on the approved product labeling for. For Riley intramuscular administration.
We are currently evaluating the CRL to determine the next steps. Our marketing authorization application submission for JCP 458 To the European medicines agency is currently under review. With potential for approval in 2023.
We're also advancing our program in Japan. For potential submission approval and large. Well, not listed on this slide. I'll also note that in October we initiated a phase 1 clinical trial for JCP 815. Our pan rap inhibitor for the treatment of solid tumors. That have mutations in the pathway.
The Pan-Raf inhibitor program is part of a novel class of next generation precision oncology therapies. That has the potential to benefit cancer patients. With high unmet needs in multiple different solid tumors.
Also, recruitment is expected to begin shortly for our first clinical trial of JCP 541, a cannabinoid from the GW platform assessing its utility in treating irritability associated with autism spectrum disorder in adults.
In summary, with the initiation of multiple clinical trials in 2022, we continue to expand our pipeline into disease areas with significant unmet patient needs that provide strong opportunities for long-term sustainable growth. We expect to submit several investigational new drug applications throughout the next few weeks.
I will pass the call off to Renee for a financial update. Renee? Thanks, Rob. I'll start with our top line results on slide 17. As a reminder, our full financial results are available in our press release and 10K. In 2022, we recorded significant year-over-year revenue growth of 18 percent.
driven by our key products in both neuroscience and oncology. We achieved $3.66 billion in revenues for the year, and almost a billion dollars in revenues in the fourth quarter. Launching multiple products over the past three years, coupled with the acquisition of GW pharmaceuticals,
has enabled us to successfully diversify our revenues, meeting our 2022 diversification target of 60 to 65 percent of net product sales coming from products launched or acquired since 2019.
Given our expectations regarding the durability and growth potential of these products, along with our continued focus on adding new products through corporate development, we believe we are well positioned to achieve our Vision 2025 goal of $5 billion in revenue. Turning to slide 18, our disciplined capital allocation and focus on operational and financial development is a key part of our mission.
for one, which have the potential to create sustainable long-term value for our company.
Our efforts to improve adjusted operating margins to 48% in 2022 have given us additional flexibility to invest in our business.
and contributed to our significantly enhanced cash generation. In 2022, we generated almost $1.3 billion in cash from operations, an increase of $493 million, or 63% compared to 2021.
On slide 19, we've highlighted our success in rapidly delevering our balance sheet following the MSfireproofJS WGW transaction.
By delevering two full turns since the deal closed in May of 2021, which we accomplished through both debt reduction and enhancing our adjusted EBITDA, we achieved our deleveraging target six months ahead of schedule. We exited the year with an adjusted net leverage ratio of 2.9 times, which reflects cash outflows of $375 million in the fourth quarter.
to fund the Xani Data Map transaction. Our delevered balance sheet and strong cash flow position us with continued strategic flexibility to invest in our current business as well as corporate development opportunities. Our revenue guidance for 2023, outlined on slide 20, reflects our confidence in the durability of our Oxivate franchise.
and our expectations for continued growth across key products. Our 2023 guidance for neuroscience of $2.675 to $2.825 billion encompasses our growth expectations for both Zywave and Epidiolex, and the continued decline in Xyrem due to strong Zywave adoption.
authorized generics of Xyrem, and potential competition from an additional high-sodium branded Oxabate. For simplicity, our neuroscience guidance also includes AG royalties, which will be recognized within total revenues under royalties, not under neuroscience net product sales. Due to the royalty structures within our AG agreements, our
We expect our royalties to be higher in the second half of 2023 relative to the first half. We remain confident in the durability of our Oxibate business, now led by lower sodium Ziwave, which is our largest product by net sales and is expected to generate more than a billion dollars in net sales in 2023. Our oncology guidance of 950 million to 1.05 billion dollars with a midpoint of a billion dollars reflects expectations of continued double digit growth for this franchise driven by the expected performance of Rylase and Zepselka.
print and commercialization expenses.
novel candidates across neuroscience, oncology, and cannabinoids, representing four times the number of projects we had in 2015. At the midpoint of our guidance, we'll be investing approximately 19% of revenue into R&D, which is indicative of our continuing transformation.
Assumed in this spend are the Xani DataMap and Zefelka clinical programs, later stage trials for subocalcimide in both essential tremor and Parkinson's disease tremor, JZP-150 and PTSD, as well as earlier stage trials for neuroscience programs like JZP-441, JZP-150, and JZP-150.
at oncology programs such as JCP 815 and JCP 898. As Bruce and Rob noted earlier, we have key value inflection points in 2023 and 2024 that have the potential to create meaningful long-term value. On the bottom line, we expect to continue to deliver strong adjusted net income with 37% growth at the midpoint and a guidance range of $1.24 to $1.31 billion. The midpoints of our financial guidance imply an adjusted operating margin of approximately 46% for the year. We'll continue to prioritize commercial, R&D, and business development efforts that we believe will deliver the most value.
growth and enhanced value to patients and shareholders.
and enhanced value to patients and shareholders. I'd now like to turn the call back to Bruce.
Thanks, Renee. I'll conclude our prepared remarks on slide 23. 2022 was a transformative year for us. We achieved strong double-digit revenue growth and improved our operating margins significantly. Our commercial teams demonstrated strong performance across our portfolio. We're confident that Xi Wave will remain the oxidative choice in 2023, entering the year with Blockbuster status.
We expect growth for EpidialX and that our oncology franchise will continue to deliver. Our R&D organization has reached new levels of productivity and expanded its capabilities. We added three new molecules in 2022 and have trials for multiple products underway ranging from potentially pivotal trials to early stage studies. We are employing greater discipline in our capital allocation strategy, which has aimed at the highest priority areas, including R&D programs and corporate development. With our strong cash flow, balance sheet, and adjusted operating margins, we have the flexibility to make significant investments.
across commercial, R&D, and corporate development to drive sustainable growth and enhanced value. We're excited about building on our current momentum in 2023 and expect growth across our key products. Vision 2025 provides a clear perspective on what we expect to achieve in the coming years. We're excited about the future and what we can deliver to patients and shareholders. I look forward to updating you on our progress as we advance. That concludes our prepared remarks. I'd now like to turn the call over to the operator to open the line for Q&A. Thank you. If you'd like to ask a question, please press star 1-1. If your question hasn't been answered and you'd like to remove yourself in the queue, please press star 1-1 again. Our first question comes from Jessica Fye with JP Morgan. Your line is open.
Great. Thanks so much for taking the questions. I galaic too if you can. First, can you talk about how XIROM dynamics are playing out relative to your expectations since the authorized generic entered? And second, understanding you're no longer getting by product franchise here. Can you speak a bit to your expectations for Epidylex growth? Is it possible that growth for that business accelerates in 2023 relative to 22 with just increasing the ability to be in the office, etc? Thank you.
of the virus sales coming down. As to what we're seeing with the AG, maybe I'll ask Kim to give a couple thoughts on our experience thus far in 23, although we're obviously not reporting first quarter results right here. And then maybe, Kim, you could just transition right into epidemiologics growth and dynamics there. Sure, Bruce. Happy to do that. You know, as Bruce said, it's really too early here. Early stages, it's a comment on the
overall impact of the AG on Xyrem. And as he said, our focus does remain on Xywave. And we're feeling that we're going to continue to expect in 2023 continued strong uptake of Xywave in both narcolepsy and IH with continuing transition of narcolepsy patients from high sodium oxabates, either that be Xyrem or later on from the AG over to Xywave, based on its differentiation as the only lower sodium oxabate product. So as a result, we also continue to expect that Xywave will both grow and remain the oxabated choice in 2023, even with one or more authorized generics on the market and potentially branded competition entering later on in the year. So, you know, overall, you know, our guidance includes continued decline in Xyrem.
both due to strong XyWave adoption and the AG entry and potential competition. We feel very optimistic about the ability of XyWave to continue to grow through 2023. In terms of Epidiolex and the question about whether or not it can accelerate, what I will basically say is that we are continuing to be very pleased with the Epidiolex net product sales, that it increased 12% on a pro forma basis in 2022 compared to 2021. We are very pleased that this has been driven primarily by demand. We are continuing to add new prescribers still to our active prescriber base and our overall engagement as Dan said of HCPs continues to grow, which is really positive for this product in a very promotionally sensitive market. Dan also mentioned the driver of 60% of prescribers now indicating to us that they are using Epidiolex even earlier in the treatment algorithm.
heading into 2023. You know, we've got a new push in terms of, you know, payer coverage. You know, we've talked for several years about the payer coverage being quite strong, you know, from a quantitative standpoint for patients. But we're really pleased that, you know, our contract tracking efforts in the last year really has paid off and that we're entering 2023. And then even stronger position with payers. We've seen several plans, reduced at the start of 2023, their utilization management criteria, ultimately making it a bit easier for HCPs and patients to get access to Epidylics. And then we're going to continue to, you know, promote the synergistic effect of using Epidylics and combination of Clobe, ZAM. You know, we've been out there doing that for a year, but HCPs are continuing, you know, to have a very impressed reaction to these data.
that have shown that we can reduce seizures by around 60% in LGS and Durbey and nearly 50% in TSC. So overall, we're very excited about the future potential of Epigylox as a significant contributor to our top line and division 2025. Thank you, ladies and gentlemen. We ask that you please limit yourself to one question. Our next question comes from Mark Goodman with SDV Lereng. Your line is open.
Yes, can you give us a flavor for the persistence of these patients, the IH patients and how that's going? We know what the number is at the end of the quarter. I'm just kind of curious if there are a lot of patients that are already dropping off and you're getting a lot of new patients, so that's the net effect. So just trying to get a sense of that maybe on an absolute basis, you can give us a sense or even on a relative basis relative to how the drug is used for narcolepsy and the persistence Just maybe give us a sense there. And then just one quick question just on the R&D guidance. Is there included any major milestones in there or is that just increased because of the...
Give us a flavor for the persistence of these patients, the IH patients and how that's going. We know what the number is at the end of the quarter. I'm just kind of curious if there are a lot of patients that are already dropping off and you're getting a lot of new patients, so that's the net effect. So just trying to get a sense of that, maybe on an absolute basis, you can give us a sense or even on a relative basis, relative to how the drug is used for narcolepsy and the persistence there, just maybe give us a sense there. And then just one quick question, just on the R&D guidance, is there included any major milestones in there or is that just increased because of the clinical studies that you've already mentioned?
So maybe Kim will come to you on what we're seeing in terms of patient staying on IH thus far in launch although we're still pretty early. And then Renee, maybe you can take a question on R&D guidance, Kim. I had to come back up mute. Yeah, so we're 14 months into the launch, you know, and we continue to be really pleased with the uptake. And we're still seeing from the marketplace a lot of excitement about having the first, you know, only approved a product for IH. You know, we have had compelling growth continue into this quarter with 1750 active patients exiting the quarter. And we're expecting to have continued to have a strong growth here. And in terms of persistence, I basically just say it's it's pretty consistent in terms of what we see. In narcolepsy. So the number we do report around active patients is that net number is includes both those coming on and as well as those coming off. You know, our our focus in IH, you know, remains on educating prescribers on how to better diagnose IH and.
identify patients who would benefit from thywave, you know, we're reminding them that IH is a 24-hour condition, and that thywave is approved to treat the full condition and can address multiple symptoms of IH, not just the daytime symptom of excessive daytime sleepy sleepiness. And keep in mind, I think we cautioned for some while that, you know, we're building the market here. This is the first and only FDA approved treatment for IH and adults. And, you know, overall in the long term, we feel as we build this market, we're really confident in our ability to ultimately maximize thywave's potential in this, you know, very underserved marketplace. Yeah, and then I'll just chime in, Mark, with respect to the R&D milestone. So our increased R&D guidance is really a reflection of an expanded, more robust pipeline. Clearly, you saw the expenses. In Q4, come up a reflection of taking on the Zany Data Map program, which we want to invest fully behind across 2023.
So it's a combination of Danny and the clinical programs to support that. The later stage studies for subacaltimide, of course, JCP-150, we expect to read out at the end of this year. And then the broader expansion altogether. I had mentioned on the call that, you know, we have a pipeline today that's four times the size of the one that we had not that long ago in 2015. So the focus we've had on discipline capital allocation has enabled us to be able to lean more into R&D as part of our spending in 2023.
Our next question comes from Jason Gerberry of Bank of America. Your line is open. Hey, guys. Thanks for taking my question. My question pertains to your sales guidance for 2023. It looks pretty conservative, especially in the context of Vision 2025, which X Corp development I think is $4.5 billion, which would imply like basically after 2023 midpoint you have to gain $350 million in sales in 2024 and 2025 respectively, but you're only modeling about plus 100 in REBS in 2023. So just wondering if you could shed a little bit more light on that dynamic. That would be helpful. Thanks. Yeah, thanks, Jason. I'll start and then invite Renee to jump in. Hey, guys.
You know, what you're seeing in 23, and I think Renee did a nice job of this in laying out the guidance, is real growth in all of our core products offset by a continuing significant decline in Xyrem. And I just think as you get out to later years, you're going to continue to see growth in our key products, but you've already suffered a lot of the loss in Xyrem, and so the net gain becomes a little clearer. And I think one of the rationales of rolling out Vision 2025 to give people a little more context of growth curve over time was to make sure people understood that we would be going through this transition in 2023.
So, maybe just to build on that further, Bruce. So, you know, as Bruce described, we had, you know, we have these multiple dynamics at play, right? We have this dynamic of growth within Xi-wave, Epidiolex, Rylase, and Sepzelka, but that is offset by this continued decline in Xi-REN, in large part due to the strong uptake of Xi-wave, but also through the introduction of AGs, which of course we earn royalties
from your existing business and continuing to be active on the BD front, which we expect to be. And we've also stated that we do expect Z&E to contribute to our 2025 revenue. We also expect we'll need to continue to be active as we have been over the last several years, each year closing a transaction that has...
resulted quite quickly in revenue generation. So that's how we're thinking about the overall guidance and feeling good about where we are. Thank you. Our next question comes from Annabelle Simeewe, with Steeple. Your line is open. Hi, thanks for speaking my question. I'm going to be different in asking something about your new product. This is a pipeline product, Danny. So regarding the case to open label data and.
first line GEA in combination with chemo. I guess, can you put this into context with the current phase three data that's, or phase three trial that's ongoing, and how comfortable are you that, I guess, some of this data can be indicative of potential success in the phase three study? How similar are the different arms, and is there something that you can draw from it, or is the population too small at this point? And when might we be able to see this data? And then just as a quick follow on, you clearly have a number, a tremendous number of opportunities here with anti-car2 agent.
How will you be making the decisions on the new tumor types and when might we be able to hear about some of these programs that you're going to be moving forward? Rob loves it when you say what gets them excited about our pipeline. So on Zannie, you know, we're in the really fortunate position of having had a couple data readouts even since we signed the initial transaction. They give us confidence, but I'll let Rob jump in on specific answers to your questions. Yeah, thanks for the question. Thanks, Bruce.
You have it right. I described the very strong data from the single arm phase 2 trial that's front line data map and combination with standard of care. And that was meant to provide data in support of the ongoing pivotal program. And I think the results give us a lot of reassurance about what we expect in that phase 3 pivotal program and confidence that it's likely to be the standard care. So you're thinking about that in the right way. In terms of where else to go with this. If you look at all the data published now, BTC, gastric, breast cancer data, other data from the face 1 trial, it's very clear that this is highly active anti-hereto.
David M. Sellam with Piper Samler. Your line is open. Hey, thanks. So I want to switch gears to one of your pipeline products. This is the erection Agnes 441. So in the study, if I'm not mistaken, you're dosing it at nighttime. And I'm just trying to get a better sense as to the rationale here given that...
This is a ostensibly awakefulness or alertness drug. And do you think that there's something there that could set you apart from the other erections that are in development, be it the cicada one or the one from alchemy's or potentially others? Thank you. Yeah, so Rob, I'll be a jumping on that.
Yeah, happy to. I'll answer the second part first, which is, you know, we looked at this molecule carefully before we did the deal preclinical data, emerging clinical data, and we do we do it a lot of confidence around it being differentiated potentially to other products that are in development.
In terms of our approach to the study design, you asked specifically about dosing healthy volunteers at night. This is really a way for us to quickly, in healthy volunteers, establish, establish the proof of concept around weight promotion. So in healthy volunteers, when they're sleep deprived, you can then measure alerting effects.
in that population that would be harder to measure and during the daytime in an otherwise healthy population. So as we do that rising single dose study, evaluating increasingly higher doses, we then have an opportunity to interrogate the relative weight promoting effects across those doses, which then sets us up for the necessary downstream study. So clearly then we need multiple dose.
safety and that will help us select the dose for the study that we just posted on KunnigleTrials.gov and then ultimately together help us to select the dose for first patient studies. Thank you. Our next question comes from Gary Nothman with BMO. Your line is open.
Thanks. So my question is on Ryleys, which has been growing pretty nicely. So how much will the Monday, Wednesday, Friday, this being help for their uptake of that product? And then what's the cadence for expanding Ryleys geographically, including the EU in Japan? And how much will those X2S markets ultimately contribute? And then with the CRL for the IV, how important is that ultimately to the franchise? So would there be a long-term impact if you don't move forward with it? I know there won't be an impact in the near term, but what about the long term? Thank you.
Thanks, Gary. I'm going to reorder your questions a little bit. Maybe have Kim take Monday, Wednesday, Friday, dosing, and then comment on any impact of not having IV and then Dan. Maybe you can take the XUS piece of the so Kim. Great. Thanks for asking about RILAs. We're really pleased that the sales for RILAs have exceeded the prior USP sales with Irwin A's. And we believe this is a really strong signal that the unmet needs of the market had never truly been satisfied. In terms of Monday, Wednesday, Friday, dosing, we really believe when we put this out there that our customers were utilizing RILAs and not denying any patients. We had a label with every 48 hour dosing. So we really were not expecting a lift and sales from the Monday, Wednesday, Friday, dosing. But instead, probably a lift and customer status.
And then on the Japan side, we are going to be engaging with the health authorities and trying to bring this program differentiated from Irwinnays to the marketplace. There's still no non-equal-I based Irwinniam in the Japanese market. In terms of overall growth, it really depends a little bit on pricing.
Europe and the US and Japan likely would be more tied to a lower pricing. And so historically we saw 80% of urnase revenue coming from the US versus Europe while there's still a lot of patients over there. But ultimately it depends on how we can differentiate the product and near-term focus of course is getting the product approved. And the EU potential for approval is later this year. Thank you.
Thank you. Our next question comes from the logic facade with Barclays. You know why this opens? Thanks for the questions. Just two from me. Firstly, with vision 2025, including around $2 billion of oxibase, would you discuss the relative rail or contribution between Naukalepc and IH towards this vision? Secondly, with Epidelix, I want to address a point where we're getting significant investor questions, which is the generic challenges to Epidelix with 10 to 11 filers.
Is there any confidence that you can provide the market around the durability of EpidioLags? Just want to see that and show that there's not an overhang on the stock for the longer run. Thanks. Yeah, so maybe I'll take that second question first and then we can have maybe Renee jump in a little bit on what we've said in terms of the Oxibait revenue piece of Vision 2025.
On Epidilex, there's no new information out there on durability. We've said from the time we first announced the GW transaction that we did have a lot of confidence in the durability of this asset. We had predicted correctly the likely timing of first-hand-assumissions and of course that's public now with our announcement of the Hatch-Waxman litigation.
You know, since the time of the deal, we did have additional IP issue, including some with longer duration patents. That's not a surprise. We, again, predicted that at the time of the transaction. But, you know, I don't have new information to share other than all the things we've shared historically that give us confidence that this is not a short duration product. Kevin and Vellaggio, your other question. Yeah, I was just going to ask him to jump in there. Yeah, sure. I think your question was about, you know, what we see the long term mix being between narcolepsy and high age for, for thy weight.
during the prepared remarks that with respect to the royalties on authorized generics of Xyren, you should think about those being higher in the second half versus the first half of the year and recall the way that the royalties work. The first six months we just had HICMA on the market.
And we have tiered, wide-ranging royalties, which are essentially low, with they are selling a low percentage of the overall oxybate volumes, and then those increase as those volumes increase. That royalty rate ranges from 10 all the way up to 90%. Now the second and recall, they're exclusive. The second six months of this year, we expect the royalties to be higher because the royalty rate with Heckmot increases.
to a fixed rate where both we and HICMA have substantial economics. And then we have the expectation of three other extremely volume limited AGs coming in with low fixed rate volumes and royalties to jazz. As we go forward, recall that after the first year, then the royalties with HICMA.
exceed, sorry, accelerate to a much higher double digit rate to jazz and remain at that through the duration of the royalty period. Thank you. Our next question comes from Gregory Renza with RBC. Your line is open. Thanks, A. Bruce and Tima. Thanks for taking my question. Maybe Bruce, just one for me. How is the current commercial performance across your products and segments?
really feeding back to the early pipeline selection that you, Rob, and the team are doing, the no-go decisions there and the risk tolerance. And just maybe thinking about the commercial products, how that actually is affecting or influencing what you see as diversification of the portfolio. Of course, as Renee mentioned, with the pipeline being four times the size, now are there particular areas where you'd like to see greater pipeline output from? Thanks so much. Yeah, I love the question. You know, I would say that we keep learning the same lesson over and over, which is if you have great products that really meet an unmet patient need.
in later stage where we have more data, fall into that category of meat significant unmet patient need and are differentiated from other currently available or expected to be available therapies.
You know, in the earlier part of the pipeline, we're taking some bigger risks and shooting for some, you know, big targets and some of those were working, some of those won't, you don't know which ones are which yet. But, but we're going to ride the winners and the winners are going to be those ones that are highly differentiated.
in mind is you know some of our pipeline is also evidence generation new indications new formulations of our existing brands so we want to continue to unlock the full potential of those brands including broadly Epidiolex and Oxibate and even on the oncology side I mean Sandy is a pipe
clearly remaining and enhancing our category leadership. And now epilepsy, sleep medicine, and increasingly some of these areas and both solid and liquid tumors is also a incentive for the way we think about building out the pipeline. And we have...
you know, under Rob's leadership really created much more internal capability all the way from filing our own I&Ds through development to also a corporate development muscle, which I'd say a second to none. Where we can really look at external innovation and folks are knocking on our door because of the other success we've done in some of these partnerships, whether late stage or early pipeline. So...
It's a good place to be, but we will move into some new areas as Bruce reference where there's significant unmet need and we think we can get to some smart go-no-go decision points. Thank you. Our next question comes from Brandon Foltz with Canter Fitzgerald. Your line is open.
Hi, thanks. Take my question. Maybe just one Zepsalca. Any update on the enrollment and timeline expectations for Lagoon and Enforte? Any chance of getting the potential first line move complete before or during 2025, just as you think about vision 2025. Thank you.
Rob, do you want to talk about Jeppelka clinical trial expectations? I would make me ask for a reminder from our group and chairs of what's been communicated previously, but I would just say that that trial is on track relative to expectations, and we really are quite excited about the potential to accept self-improve up into the front line where we're preemptively treating patients before they progress, accessing more patients.
treating patients for a longer duration of time. And thank you, I'm seeing now that we had said previously that we're expecting the complete enrollment this year. Lord. Sorry.
in the first line, Drone. Yeah. Thank you. Our next question comes from Ash Verma with UBS. Your line is open. I, uh, thanks for taking a question. My question now I have to. So first one on the so we called the my, so what's the level of confidence here in the essential tremor mechanism the type of culture in China pathway and we've seen that. New Yorkers failed with the same mechanism and practice data is expected shortly.
is your molecule in any way different versus some of these competitors. And then second, I wanted to see if you can provide any kind of a color on what you're observing in the marketplace for the ZIRM AG. Our stable patients getting switched to AG whenever they're going back to the physicians for their regular checkup or at the insurance line, driving the AG uptake without patients seeing the doctor trying to just get a sense of how quickly HIPHR can take a share here. So let's go first to Rob on the on the 3D.
selection criteria and the right endpoints of course in agreement with the FDA for that trial. So we think the prior data that we had in our phase two with our molecule gives us confidence about the outcome of the ongoing phase 2b which as you know is three doses with one daily formulation.
Yeah, and I'll just add on the second part of your question probably too early for us to comment on payer dynamics. You know, we saw obviously where I hit my put their whack pricing.
at the time of launch, you know, we're aware that there is some uptake of the AG as we would expect and as was built into our expectations coming into the year and as is built into the guidance we've given you, but I don't think we've got enough data yet to get more specific.
Thank you. Our next question comes from Amy Fadia with Needham and Companies. Your line is open. Great. Thanks for taking my question. Maybe first we just on the IH market since you've been...
You know, in the market for some time now, any sort of updated thoughts around the size of the market. And the value of Zybey, are you seeing more patients doing?
diagnosed and treated in the market. And then just to follow up on JCP 385, give you the mind of how you're thinking about the essential tremor patient population as opposed to the Parkinson's disease, other similarities of differences that we should be thinking about as we consider, you know, if you see positive data of an essential tremor.
Does that give us greater confidence that the Parkinson's disease drug would also work? Thank you. So, Kim, maybe you could start on just how you're thinking about the IH opportunity overall. Yeah, sure. I'll start by reiterating that we feel like we have compelling growth in IH already with 1,750 patients coming out of the end of the year and do expect it to grow nicely moving forward. But as we said, we are building a market here. There's quite a bit of education to do. So we're still trying to estimate.
of IH, not just EDS. So again, this is the first and only approved treatment. The subscribers really haven't had to think much more beyond EDS so far today, but we really feel good about the way that they're coming along and starting patients, and we're confident that they're going to be able to do that. And I think that's a really important part of the process. And I think that's a really important part of the process. And I think that's a really important part of the process.
and our ability to ultimately maximize the opportunity of the product in this really underserved market. Dan, do you want to jump in on the 385 to different market opportunities? Dan, are you on mute? I was on mute, Bruce. Thank you.
Yeah, so sorry, on sort of ET and Parkinson's, I mean, what's similar to it is, you know, significant on that need and ET, there's been no, you know, new approved therapies and the therapies that are there have very little limitations. So no approved therapy in 50 years. Nothing improved for Parkinson's tremor. We do think there's overlapping pathophysiology between
the tremor type. So, and there is some preclinical opportunity for us to as well think the tea calcium channel blockers should work there. In terms of the market opportunity, it's a couple million of diagnosed across the Western markets. We think the actual market opportunity for essential tremors up to 11 million. So it's that classic. With the right drug, you can really uncover a lot of market growth and opportunity.
Then on Parkinson's, that's a more defined patient population and very addressable in terms of Parkinson treating physicians. It's about a million patients per year of which 75 percent have tremors for which there's no approved therapy. Exactly how we would configure the Salesforce if we're lucky enough to get both indications is something we'll be figuring out, but we do think from a price value as well as market coverage and interest from both HCTs and patients, it could be quite a large.
within the core of oncology and neuroscience, or could you expand outside of that? Okay, let's, I'm in a minute, gonna come to Dan on ex-US Epidiolex opportunity, and then Renee on corporate development. But before that, I think there might've been a dangling part of the last question we didn't get, which was really how to think about the two.
clinical trial populations and whether there's any relationship and how to think about potential results in essential tremors, they might apply to Parkinson's tremors. So Rob, maybe you could jump in on that first. Yeah, thanks, Bruce. I do think Dan covered it with respect to yes, these are two distinct clinical entities, but we have strong preclinical rationale that the mechanism of T type calcium channel inhibitors could could help block the tremor associated with each of these conditions. So, while certainly, you know, if we see a positive readout in either of these indications, it's going to give us increasing confidence around this molecule.
in working the way we think it should work, but I wouldn't have a direct read through, you know, to say if it doesn't work in one or more in the other. And then on the ex-US growth for epidemics, we do see a strong continued growth for in 2023 and contributing toward 2025. Importantly, we had some headwinds that we don't think will face as directly in terms of FX rates. And importantly, now we've got approval toward the end of last year in France with full reimbursement. So...
We're now fully launched in all five major European countries. And we've still got some smaller markets to add over time. So we're approved in 15 or we're launched in 15 of 35 approved markets. And then more from a medium term perspective, we see significant opportunity in the Asia Pack region. And in particular, Japan, where we've got a phase three study ongoing and we look forward to thinking through our commercialization strategies there for the neuroscience. And then maybe just jumping in on corporate development in terms of areas we're interested in. Clearly, we're we're definitely focusing on neuro and oncology. But we're also looking more broadly at rare and orphan in general. This is a space that we're.
focus is still in our neuroscience and oncology therapeutic areas. In terms of the stage of compounds, we're looking at commercial, near commercial, but also pipeline deals. You've heard us talk about our guidance today. We're investing heavily there and we do think our increased capabilities.
that we've developed both organically, but also with the acquisition of GW have set us up really well. Thank you. Our last question comes from Greg Fraser with Truist. Your line is open. Great. Thanks for squeezing in. On VyWave, you're clearly confident in continued strong growth for both indications. On narcolepsy, do you expect the pace of new patient ads to potentially slow a bit this year given the oxidative market dynamics? Last year, I think you added about 500 new patients.
each quarter. I'm curious whether you think that pace could continue with the various moving parts in the off-state markets this year. Thanks so much. Kim, anything you want to add on narcolepsy ads in 23? Yeah, just that we're still confident here that we've got clear differentiation based on the reduced sodium and that we're going to continue with a nice pace, both in terms of patient conversions.
as well as new patient starts, where we're just already seeing the vast majority of patients being started on Xi Wave versus Xyrem. So, overall, we feel really good about that momentum continuing throughout the year. Thank you. If there are no further questions, I'd like to turn the call back over to Bruce for Nicole's remarks.
All right, thank you, operator. And I just, I want to close by recognizing the passion and innovation of our 2800 talented employees around the globe who come to work each day, dedicating to improving the lives of more patients than before. And I also want to thank our partners and our shareholders for their continued confidence and support.
Thanks everyone for joining us today and stay well. Thank you for participation. You may now disconnect. Everyone, have a great day. Shortly, to raise and lower your hand during Q&A, you can dial star 11.
I have.
Good day and welcome to the Jazz Pharmaceuticals fourth quarter in full year 2022 financial results call. At this time, all participants are listening to the motion. After the speaker's presentation, there will be a question and answer session instructing to the given at that time. As a reminder, this call is being recorded. I will now turn the call over to Deer and Fox, Executive Director of Invest Relations. You may begin.
Thank you, operator, and good afternoon, everyone. Today, Jazz Pharmaceuticals reported its fourth quarter and full year 2022 financial results. The slide presentation accompanying this webcast is available on the investors section of our website. Investors may also refer to the press release we issued earlier today, which is also posted on our website.
On the call today, our Bruce Kosa, Chairman and Chief Executive Officer, René Gala, Executive Vice President and Chief Financial Officer, Dan Swisher, President and Chief Operating Officer and Rob, you know, Executive Vice President, Global Head, Bar and D.
Kim Stavelich, Executive Vice President and General Manager, United States, will join the team for Q&A. On slide two, I'd like to remind you that today's webcast includes forward-looking statements, such as those related to our future financial and operating results, growth potential, and anticipated development and commercialisation milestones and goals, which involve risks and uncertainties that could cause actual events.
performance and results to differ materially from those contained in these forward looking statements. We encourage you to review the statements contained in today's press release in our slide deck and in our latest SEC disclosure document, which identifies certain factors that may cause the company's actual events, performance and results to differ materially from those contained in the forward looking statements made on today's webcast. We undertake no duty or obligation to update our forward looking statements.
Turning to slide three, on this webcast we will discuss non- GAAP financial measures. Reconciliation of gap to non- GAAP financial measures are included in today's press release and the slide presentation available on the Invested section of our website. I'll now turn the call over to Bruce. Thanks Darren, good afternoon everyone and thank you for joining us today.
I'm excited to share our strong fourth quarter and full year results, capping off an outstanding year of performance and execution for jazz, providing us with significant momentum as we enter 2023 and continue to drive toward vision 2025. I'll start on slide slides. This year, jazz is celebrating its 20th anniversary.
Over those 20 years, we've remained focused on our purpose of improving the lives of patients and our commitment to being a great place to work while delivering consistent top-line growth. In 2022, we built on that foundation of strong execution, achieving record revenue, advancing multiple therapies in our pipeline.
and adding several exciting molecules through corporate development, all while remaining focused on disciplined capital allocation and operational excellence. All of these accomplishments contributed to the ongoing transformation of our business to a high-growth global bioparma leader and position us well to achieve Vision 2025.
Gisborne 2025 includes three components central to driving sustainable growth and enhanced value as we transform our company, commercial, pipeline, and operational excellence. I'll now highlight several of our accomplishments in each of those areas in 2022 starting with commercial. Based on our strong commercial performance, we continue to deliver significant revenue new growth.
In 2022, we recorded $3.7 billion in revenue, which represented an 18% increase compared to 2021. Our top line growth was driven by the continued success of three recently launched products, Zywave, Zeppelka, and Ryleys along with strong growth for F2D. Zywave is now our largest product by revenue, annualizing at more than a billion dollars. Based on our outstanding commercial execution, we achieved our joint growth.
course of the year, we initiated seven new clinical trials submitted four new I.N.D.s.
generated multiple important data sets and receive regulatory approval for an important update to Rylee's dosing. Our pipeline has never been as robust or productive as it is right now, and we have multiple value inflection points over the next 12 to 24 months. On operational excellence, our continued focus on discipline capital allocation and operating efficiency drove a 2022 adjusted operating margin of 48 percent. She runs the development for the ??? ???. She does start completing but will
which represents the substantial increase from the 43% we recorded in 2021. We significantly reduced our net leverage ratio and continued to diversify our revenues in 2022 while also executing multiple strategic transactions that we believe will create sustainable value for patients and shareholders. These achievements on both the top and bottom line enabled us to significantly increase our operating cash flow and financial strength. We generated $1.3 billion in cash from operations and the overall health law balance sheet is enabling us to be active.
in pursuing additional corporate development opportunities. Turning to slide six, we've made substantial progress in introducing Division 2025 last January , and we remain focused on our transformation to a high growth global bio-farmal leader. Our many accomplishments in 2022 have positioned us well for 2023.
Despite the recent introduction of an authorized generic of XI-REM, which until recently was the company's largest product by net sales, we are entering the year with an expectation of achieving top-line revenue growth in 2023 and remain confident in our ability to achieve the important milestones underpinning Vision 2025.
I'm now sharing the call over to Dan for an overview of our commercial performance, after which Rob will share an update on progress across our R&D programs. Renewal then provide a financial overview, which will include a discussion of our 2023 guidance in addition to 2022 performance. We'll then open the call to Q&A. Dan?
Thanks Bruce. I'm excited to share the continued progress across our commercial portfolio. I'll start on slide 8 with neuroscience and oxydate. As a leader in sleep medicine, we believe the approval of Zywave in mid-2020 marked a meaningful advance in patient care. As a lower sodium oxydate, Zywave has offered patients with narcolepsy NIH who are taking a lifelong therapy to address their sleep disorders, a way to reduce sodium intake, which is a known risk factor for cardiovascular disease.
In the fourth quarter, average active ox spade patients increased to approximately 18,000, representing growth of approximately 11% compared to the same period last year. There were approximately 10,300 active zi-wave patients exiting the quarter, resulting from strong adoption in both narcolepsy and iH.
Over the course of 2022, this compelling adoption continued to reinforce our confidence in the durability of Zywave, and we expect Zywave to grow and remain the oxidative choice in 2023. As Bruce noted, Zywave became our largest product in net sales in 4th quarter 22.
annualizing at more than a billion dollars in on track to achieve blockbuster status in 2023. We continue to see robust uptake of Zaiwave for narcolepsy in the fourth quarter and we exited the quarter with approximately 8,515 narcolepsy patients taking Zaiwave.
There are now more narcolepsy patients on zy-waves than zy-rem. Indicating narciety a messaging is resonating with healthcare providers and patients. In addition to adoption of zy-wave among current zy-rem patients, the large majority of new to oxidate narcolepsy patients are being prescribed zy-waves.
DiWave is the first and only FDA-approved therapy for IH, and we were continuing to see increased enthusiasm among physicians for identifying appropriate patients and initiating therapy. I've seen the fourth quarter, there were approximately 1,750 IH patients taking Zaywave.
We remain focused on educating prescribers and patients about the compelling efficacy and established safety profile as zy-wave and our confident and our ability to maximize zy-waves potential in this underserved market. I also want to comment on the evolving landscape for oxybate. In January 2023 an authorized generic of zy-waves was launched.
We expect that Zaiwave will both grow and remain the oxidative choice in 2023, even with one or more authorized generics on the market and branded competitions potentially entering the marketplace this year. Zaiwave remains the only lower study and oxidative available to patients, and we expect it to be the only oxidative indicated for IH for the foreseeable future. FDA has recognized Zaiwave as clinically superior to Zyrum by means of greater safety. In addition, we have orthandrug exclusivity.
that extends to 2027 for narcolepsy and 2028 for IH, as well as orange book listed patterns that extend out to 2033. All of these factors give us confidence that Zyway is a durable product that will continue to be a core growth driver for jazz. Turning to slide nine and at the dialects.
Net products sales grew by 7% in the fourth quarter and 12% for the full year 2022, compared to same periods in 2021 on a pro-former basis, with growth driven primarily by underlying demand. Now that we are several years out from launch, we have visibility into seasonality trends. Inventory typically builds over the course of the second half of the year, which results in lower revenues in the first half.
Our success in growing epidemics this year has been driven by a number of factors, including an increased access to treatment centers and physician offices leading to more face-to-face interactions. Given the promotionally sensitive nature of epidemics and the anti-epilepsy market as a whole, greater access to HCPs has been a key driver. We continue to add new prescribers, our volume of engagement with HCPs is increasing.
And our market research indicates nearly 60% of prescribers are moving epidylics up in the treatment algorithm, all positive indicators for continued growth. There has been continued adoption of epidylics in XUS markets with the recent launch in France, epidylics is fully reimbursed and commercially available in all five major European markets. We remain excited about the future growth and blockbuster potential of epidylics. We are confident that this...
that with its unique mechanism of action and ability to be combined with other therapies, along with increasing positive experiences in real world settings, Epidilif can become a standard of care and treatment-resistant epilepsies and achieve blockbuster status. Now moving to slide 10 in Zef Zelka, we have rapidly established Zef Zelka as a treatment of choice in second line, Small Cell Lung Cancer, achieving 607 million in revenues since launch in mid-2020. Year over year revenue growth was 11% and 9% for the fourth quarter in full year respectively. We have multiple ongoing efforts to further expand market share in the second line setting.
by investing in real-world evidence in observational studies that we believe will generate additional data around Zepzelka's utility in a broad range of second-line small cell lung cancer patients. Our robust development program, which Rob Lulautline and more detail shortly, is exploring the utility of Zepzelka in several new patient populations. Our nearest term opportunity for meaningful growth comes from the potential of Zepzelka to be used in first-line treatment of small cell lung cancer. We also have trials assessing the efficacy and safety of Zepzelka and other tumor types. As highlighted on slide 11, the Ryleis launch has been incredibly successful with $367 million in revenues since launch in mid-2021.
including 25% revenue growth in the fourth quarter of 2022 compared to the same period in 2021.
RILACE remains the only therapy available to patients in the U.S. who have a high-percent sensitivity reaction to E. coli drive to spariginase. It has been adopted universally in pediatric oncology protocols and having solved for the supply constraints for non-E. coli drives the spariginase. Healthcare professionals are reporting that they are returning to best clinical practice.
and switching ALL and LBL patients to RILACE earlier when there has been an initial hypersensitivity reaction and serves. We are encouraged to see that there is increasing use of RILACE in the treatment of adolescents and young adults a potential growth driver for 2023. To summarize, we are continuing to execute incredibly well on commercial and are maintaining the momentum to successful launches for our key products.
Now I will turn the call over to Rob for an update on our pipeline progress in 2022 and milestones for 2023. Rob? Thanks, Dan. In recent years, we have enhanced the breadth and depth of our pipeline, as well as our R&D capabilities. Our acquisition of GW in 2021 accelerated that process. And in 2022, we added three promising candidates to our pipeline.
Then a data map, a novel, late stage oncology asset, JCP441, an erection to receptor agonist, for which we initiated the Phase I clinical program in 2022. Can JCP 898, a differentiated, conditionally activated, interferon alpha into kind molecule that will be entering the clinic later this year? Starting on slide 13, I'll highlight the most recent additions to our pipeline, data map, a novel, HER2 targeted by specific antibody, the bi-paracopic binding, and the potential to transform the current standard of care in multiple HER2 expressing cancers. As an oncologist,
I'm impressed to see monetary activity without a data map across multiple her two expressing tumor types, including cases resistant to prior hercute therapies. Based on its potential to benefit patients across multiple tumor types, we are committed to advancing this program as rapidly as possible. The most advanced clinical work within a data map is in BILIRA Cancer or BTC.
and metastatic gastroestophageal adenocarcinoma for GEA. These are cancers with significant unmet need and poor outcomes with current standards of care. Our confidence in Zanadata map has only grown based on positive data in both of these settings. Continuing on to slide 14, we are very encouraged by the positive top-lying results from the recent pivotal trials Zanadata map in BTC and the first overall survival data for Zanadata map from the Phase 2 First Line GEA study. In December , our partner's time works announced positive top-line results.
from a pivotal phase to be open label single arm clinical trial called Horizon BTC01. Evaluating Santa Data Map as monotherapy in patients with previously treated, her two amplified and expressing BTC. In the trial, 41% of these patients with her two amplified and expressing disease achieved an objective response as assessed by a blinded, independent, central reviewer. The median duration of response at the time of data cut off was 12.9 months. By contrast,
Standard of care, chemotherapy, and second-line BTC would be expected to have an objective response rate of less than 10%. The safety profile of the data map in the trial was consistent with that observed in previously reported monotherapy studies. Currently there are no hurt to targeted therapies approved for the treatment of BTC. From we plan to discuss the potential regulatory password for the data map in BTC with the FDA. In January at the ASCO GI conference, the first overall survival data for the data map were presented from a phase 2 trial, evaluating the data map in combination with chemotherapy and first-line patients with hurt to expressing metastatic GIA. The preliminary results showed that the data was in combination with chemotherapy is a highly active treatment regimen, but the ability to generate significant and durable responses. At the time of the analysis.
The median overall survival had not yet been reached, but the median duration of study follow-up of 26 and a half months. The 18 month overall survival rate was 84%. The overall survival findings in this trial are compelling given the historically reported overall survival rate for the currently approved care as a median of 14 months. These results show that a data maps potential as a foundational treatment patients with HER2-positive-GEA, and we look forward to additional data from the ongoing pivotal phase three GEA trial expected to read out in 2024, which may support US and global regulatory findings. Importantly, ongoing research efforts on data data map will inform development and indications beyond BTC and GEA. Okay, turning to slide 15, we've detailed key clinical programs in our pipeline.
Starting with neuroscience, we have initiated a phase 2 trial for the treatment of Parkinson's disease tremor for JCP 385 or Suvacalcimide. This is in addition to our ongoing phase 2B trial and essential tremor. For which we anticipate top line data in the 1st, half of 2024. For JCP 150. Enrollment is ongoing in our phase 2 PTSD trial with top line data expected later this year. In drawing the
In 4 Q2 022, we initiated our Phase I program for the Rexantube Receptor Agonist, JCP-441, and there are currently healthy volunteer trials in the clinic. We anticipate initial proof of concept can help volunteers this year. Moving to oncology, as Dan mentioned, we are continuing to execute a robust development effort for Zistelka.
This includes an ongoing phase 3 trial in collaboration with Roche. Evaluate in combination with centric and 1st line extensive state small cell 1 cancer. A confirmatory phase 3 trial and 2nd line small cell 1 cancer. Being run by our partner farmer Mark.
in our own post-marketing observational trial in second-line, small cell lung cancer. We are also exploring Zepselka and other solid tumors in a phase two-basket trial. With respect to our supplemental BLA submission for an IV formulation of RILAES, we have received a complete response letter from the FDA requesting additional clinical data on the IV administration of RILAES.
I want to stress there's no impact on the approved product labeling for Ryan Lates Intramuscular Administration. We are currently evaluating the CRL to determine the next steps.
Our Marketing Authorization Application Submission for JDP-458 to the European Medicines Agency is currently under review with potential for approval in 2023.
We are also advancing our program in Japan for potential submission, approval and march. While not listed on this slide, I'll also note that in October we initiated our Phase 1 clinical trials for JCP-815, our pan-Rap inhibitor for the treatment of styled tumors that have mutations in the MAP-PARNES pathway. The pan-Rap inhibitor program is part of a novel class of next-generation...
spectrum disorder and adults. In summary, with the initiation of multiple clinical trials in 2022, we continue to expand our pipeline into disease areas with significant combat patient needs that provide strong opportunities for long-term sustainable growth. We expect to submit several investigational new drug applications throughout 2023.
Increased investment, upcoming catalyst, and expanded capabilities in R&D give us confidence in our ability to deliver sustained long-term value to both patients and shareholders.
Now I'll pass the call off to Renee for a financial update. Renee? Thanks Rob. I'll start with our top line results on slide 17. As a reminder, our full financial results are available in our press release and 10k.
In 2022, we recorded significant year-over-year revenue growth of 18% driven by our key products in both neuroscience and oncology.
We achieved $3.66 billion in revenues for the year and almost a billion dollars in revenues in the fourth quarter. Launching multiple products over the past three years, coupled with the acquisition of GW pharmaceuticals, has enabled us to successfully diversify our revenues, meeting our 2022 diversification target of 60 to 65.
vision 2025 goal of $5 billion in revenue. Turning to slide 18, our disciplined capital allocation and focus on operational excellence drove adjusted net income of $934 million, which includes $444 million of IPR and D expense related to corporate development. Contributing to IPR and D.
were upfront payments for key pipeline additions such as Annie DataMab and JZP441, which have the potential to create sustainable long-term value for our company. Our efforts to improve adjusted operating margins to 48% in 2022 have given us additional flexibility to invest in our business and contributed to our significantly enhanced cash generation.
In 2022, we generated almost $1.3 billion in cash from operations, an increase of $493 million, or 63% compared to 2021. On Slide 19, we've highlighted our success in rapidly delivering our balance sheet following the GW transaction.
By de-lebering two full turns since the deal closed in May of 2021, which we accomplished through both debt reduction and enhancing our adjusted EBITDA, we achieved our de-leveraging target six months ahead of schedule. We exited the year with an adjusted net leverage ratio of 2.9 times, which reflects cash outflows of $375 million in the fourth quarter to fund the Zany DataMAD transaction.
Our delevered balance sheet and strong cash flow position us with continued strategic flexibility to invest in our current business as well as corporate development opportunities. Our revenue guidance for 2023, outlined on slide 20, reflects our confidence in the durability of our Oxivate franchise and our expectations for continued growth across key products. Our 2023 guidance for neuroscience of $2.675 to $2.825 billion.
encompasses our growth expectations for both Xiwave and Epidiolex, and the continued decline in Xirem due to strong Xiwave adoption, authorized generics of Xirem, and potential competition from an additional high sodium branded Oxabate.
For simplicity, our neuroscience guidance also includes AG royalties, which will be recognized within total revenues under royalties, not under neuroscience net product sales.
Due to the royalty structures within our AG agreements, we expect our royalties to be higher in the second half of 2023 relative to the first half. We remain confident in the durability of our Oxibate business, now led by lower sodium zywave, which is our largest product by net sales and is expected to generate more than a billion dollars in net sales in 2023.
Our oncology guidance of $950 million to $1.05 billion with a midpoint of $1 billion reflects expectations of continued double-digit growth for this franchise driven by the expected performance of Rylase and Zepselka. Our total revenue guidance range for 2023 is $3.675 to $3.875 billion.
positioning us for total revenue growth year over year. Turning now to OPEX and the bottom line on 521, our S-GNA guidance of 1.045 to 1.105 billion dollars is a reduction compared to 2022. As we continue to focus on operational excellence and our operating margin.
We are gaining greater leverage from our global footprint and commercialization expenses. Our R&D guidance of $675 to $725 million represents enhanced investment over 2022, reflecting the growth and maturation of our pipeline. In 2023, we'll be investing in a robust pipeline with 23 novel candidates across neuroscience
on college and cannabinoids, representing four times the number of projects we had in 2015. At the midpoint of our guidance, we'll be investing approximately 19% of revenue into R&D, which is indicative of our continuing transformation. Assumed in this spend are the Zannie Data Nab and Zepfelka Clinical Programs, later stage trials pursue the calcimide in both essential tremor and Parkinson's Disease Tremor. JZP 150 and PTSD, as well as earlier stage trials,
of $1.24 to $1.31 billion. The midpoints of our financial guidance imply an adjusted operating margin of approximately 46% for the year. We'll continue to prioritize commercial, R&D, and business development efforts that we believe will deliver the most value, leveraging our strong cash generation to invest in our business to createtern LSX 167- beg and maximize cock judge judge by $1. wherever thanks to
improve our bottom line, and continue to deliver strong shareholder returns. Looking ahead to 2023, 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.
I'd now like to turn the call back to Bruce. Thanks, Renee. I'll conclude our prepared remarks on slide 23. 2022 was a transformative year for us. We achieved strong double-digit revenue growth and improved our operating margins significantly.
Our commercial teams demonstrated strong performance across our portfolio. We're confident that ZaiWave will remain the activated choice in 2023 and train the year with blockbuster status. We expect growth for Epidilex and that our oncology franchise will continue to deliver. Our R&D organization has reached new levels of productivity and expanded its capabilities. We're confident that ZaiWave will remain the activated choice in 2020 and train the year with blockbuster status.
We added three new molecules in 2022 and have trials for multiple products underway ranging from potentially pivotal trials to early stage studies. We are employing greater discipline in our capital allocation strategy, which has aimed at the highest priority areas, including R&D programs and corporate development. We are employing greater discipline in our capital allocation strategy, which has aimed at the highest priority areas, including R&D programs and corporate development.
With our strong cash flow, balance sheet, and adjusted operating margins, we have the flexibility to make significant investments across commercial, R&D, and corporate development to drive sustainable growth and enhanced value.
We're excited about building on our current momentum in 2023 and expect growth across our key products. Vision 2025 provides a clearer perspective on what we expect to achieve in the coming years. We're excited about the future and what we can deliver to patients and shareholders. I look forward to updating you on our progress as we advance. That concludes our prepared remarks. I'd now like to turn the call over to the operator.
to open the line for Q&A. Thank you. If you'd like to ask a question, please press star 1 1. If your question hasn't answered and you'd like to remove yourself in the queue, please press star 1 1 again. Our first question comes from Jessica Fye with J.P. Morgan. Your line is open. Great. Thanks so much for taking the questions. Ideally, two if you can. First, can you talk about how Xyrem Dynamics are playing out relative to your expectations since the authorized generic entered? And second, understanding you're no longer guiding by product franchise here.
Can you speak a bit to your expectations for Epidylex growth? Is it possible that growth for that business accelerates in 2023 relative to 22 with just increasing the ability to be in the office, etc? Thank you. Thanks, Jess. On your question about Xyram, let me first just put this in context. Our major focus for 2023 and going forward is growing XyWave. Both in narcolepsy and the end of the year about the cut for Somalia.
there. Sure, Bruce, happy to do that. You know, as Bruce said, it's really too early here in the early stages. It's a comment on the overall impact of the AG on Xyrem. And as he said, our focus does remain on Xywave. And, you know, we're feeling that we're going to continue to expect in 2023 continued strong uptake of Xywave in both narcolepsy and IH.
with continuing transition of narcolepsy patients from high sodium oxabates, either that be Zyrem or later on from the AG over to Zywave, based on its differentiation as the only lower sodium oxabate product. So as a result, we also continue to expect that Zywave will both grow and remain the oxabated choice in 2023, even with one or more authorized generics on the market and potentially branded competition entering later on in the year. So, overall, our guidance includes continued decline in...
2022 compared to 2021 and that we're very pleased that this has been driven primarily by demand. We're continuing to add new prescribers still to the active prescriber base and our overall engagement is Dan said of HCPs continues to grow, which is really positive for this product in a very promotionally sensitive market. Dan also mentioned in the driver of 60% of prescribers now indicating to us that they're
using epidialics even earlier in the treatment algorithm, heading into 2023, you know, we've got a new push in terms of, you know, payer coverage. You know, we've talked for several years about the payer coverage being quite strong, you know, from a quantitative standpoint for patients, but we're really pleased that, you know, our contract tracking efforts and last year really have paid off and that we're entering 2023. And then even stronger position with payers. We've seen several plans reduce at the start of 2023 their utilization management criteria.
our top line and to Vision 2025. Thank you. Ladies and gentlemen, we ask that you please limit yourself to one question. Our next question comes from Mark Goodman with SDV Lyric. Your line is open.
Yes, can you give us a flavor for the persistence of these patients, the IH patients, and how that's going? We know what the number is at the end of the quarter. I'm just kind of curious if there are a lot of patients that are already dropping off and you're getting a lot of new patients, so that's the net effect. So just trying to get a sense of that, maybe on an absolute basis you can give us a sense, or even on a relative basis, relative to how the drug is used for narcolepsy and the persistence there. Just maybe give us a sense there. And then just one quick.
And then Renee, maybe you can take the question on R&D guidance. Kim? Got it. Had to come back up mute. Yeah, so we're 14 months into the launch, you know, and we continue to be really pleased with the uptake. And we're still seeing from the marketplace a lot of excitement about having the first, you know, only approved product for IH. You know, it's been a long time.
We have had compelling growth continue into this quarter with 1,750 active patients exiting the quarter and we're expecting to have continued to have a strong growth here. In terms of persistence, I basically just say it's pretty consistent in terms of what we see in narcolepsy. So the number we do report around active patients is that net number that includes both those coming on and as well as those coming off. Our focus in IH remains on educating prescribed.
in adults and you know overall in the long term we feel as we build this market we're really confident in our ability to ultimately maximize ViWaves potential in this you know very underserved marketplace. Yeah and then I'll just chime in Mark with respect to the R&D milestone. So our increased our
across 2023. So it's a combination of Danny and the clinical programs to support that. The later stage studies for Sue the Caltamide, of course, JCP 150. We expect to read out at the end of this year and then the broader expansion altogether. I had mentioned on the call that, you know, we have a pipeline today that's four times the size of the one that we had not that long ago in 2015.
So the focus we've had on discipline capital allocation has enabled us to be able to lean more into R&D as part of our spending in 2023. Thank you. Our next question comes from Jason Gerberi of Bank of America. Your line is open. Hey guys, thanks for taking my question. Thank you.
My question pertains to your sales guidance for 2023. It looks pretty conservative, especially in the context of Vision 2025, which X Corp developed. I'm going to think it's 4.5 billion, which would imply, like, basically, after 2023 midpoint, yet to gain $350 million in sales in 24 and 25 respectively. But you're only modeling about plus 100 in REBs in 2023. So...
Just wondering if you could shed a little bit more light on that dynamic. That would be helpful. Thanks. Yeah, thanks Jason. I'll start and then invite Renee to jump in. You know, what you're seeing in 23, and I think Renee did a nice job of this in laying out the guidance, is real growth in all of our core products offset by a continuing significant decline in Xyrem. And I just think as you get out to later years, you're going to continue to see growth in our key products, but you've already suffered a lot of the loss in Xyrem.
So the net game becomes a little clearer. And I think one of the rationales of rolling out vision 2025 to give people a little more context of growth curve over time was to make sure people understood that we would be going through this transition in 2023.
As Bruce described, we have these multiple dynamics at play. We have this dynamic of growth within Xi-Wave, Epidiolex, Rylase, and Cefzelka, but that is offset by this continued decline in Xi-REN, in large part due to the strong uptake of Xi-Wave, but also through the introduction of AGs, which of course we earn royalties on. And then as we move forward, we also expect, as Bruce had mentioned, to see continued growth in 24 and 25. So what does it mean based on our 23 guidance, which does have more muted growth on a consolidated basis?
generation. So that's how we're thinking about the overall guidance and feeling feeling good about where we are. Thank you. Our next question comes from Annabelle Samimi with Steeples. Your line is open. Hi, thanks for taking my question.
So that's how we're thinking about the overall guidance and feeling good about where we are. Thank you. Our next question comes from Annabelle Simimi with Steeple. Your line is open. Hi, thanks for taking my question. I'm going to be different and ask something about your new product.
This is pipeline product, Danny. So regarding the Phase 2 open label data in Perthline GIA in combination with chemo, I guess can you put this into context with the current Phase 3 data that's, or Phase 3 trial that's ongoing and how comfortable are you that I guess some of this data can be indicative of potential success in the, um.
in the Phase 3 study, how similar are the different arms, and is there something that can draw from it or is the population too small at this point? And when we might be able to see the data, and then just as a quick follow-on, you clearly have a number, a tremendous number of opportunities here with anti-cortuation. How will you be making the decisions on the new tumor types, and when might we be able to hear about some of these programs that you're gonna be moving forward? Um.
have similar or the different arms and is there something that can draw from it or is a population too small at this point. And when we might be able to see the data and then just as a quick follow on, you clearly have a number, a tremendous number of opportunities here with anti-cortuation agent. How will you be making the decisions on the new tumor types and when might we be able to hear about some of these programs that you're going to be moving forward? What gets you excited? Thanks.
Oh, Rob loves it when you say, what gets him excited about our pipeline. So on Zannie, we're in the really fortunate position of having had a couple data readouts, even since we signed the initial transaction that give us confidence, but I'll let Rob jump in on specific answers to your questions. Yeah, thanks for the question. Thanks, Chris. You have it right. I described the very strong data from the single arm.
Phase 2 trial that's front line data map and combination with standard of care. And that was meant to provide data in support of the ongoing pivotal program. And I think the results give us a lot of reassurance about what we expect in that phase 3 pivotal program and confidence that it's likely to be the standard of care. So you're thinking about that in the right way. In terms of where else to go with this.
If you look at all the data published now, BTC, gastric, breast cancer data, other data from the Phase I trial, it's very clear that this is a highly active anti-heritut therapy in just about any tumor type that is overexpressing. It's very clear that this is a highly active anti-heritut therapy in just about any tumor type that is overexpressing.
In fact, we see activity in patients progress on other anti-Herta therapies, which is very important as you think about where to position this next different lines of therapy. And so we're actively looking at different opportunities beyond our current strategy. As you know, we're planning a pass the market strategy with BTC.
and then our next little trial in gastric, but looking at other opportunities. How's from David M. Selam with Piper Sammler? Your line is open. Hey, thanks. So I want to switch gears to one of your pipeline products. This is the erection, Agnes 441. So.
In the study, if I'm not mistaken, you're dosing it at nighttime, and I'm just trying to get a better sense as to the rationale here, given that this is ostensibly a wakefulness or alertness drug. And do you think that there's something there that could set you apart from the other erections that are in development, be it the cicada one or the one from alchemies or potentially others? Thank you.
Yeah, I'll drop it on that. Yeah, happy to. I'll answer the second part first, which is, you know, we looked at this molecule carefully before we did the deal preclinical data, merging clinical data, and we do, we, we do it a lot of confidence around it being differentiated potentially to other products that are in development. In terms of our approach to the study design, you asked specifically about dosing healthy volunteers at night.
This is really a way for us to quickly, in healthy volunteers, establish the proof of concept around weight promotion. So in healthy volunteers, when they're sleep deprived, you can then measure alerting effects in that population that would be harder to measure during the daytime in an otherwise healthy population. So as we do that rising single dose study, evaluating increasingly higher doses, we then have an opportunity to interrogate the relative weight promoting effects across those doses.
which then sets us up for the necessary downstream study. So clearly then we need multiple dose safety, and that will help us select the dose for the study that we just posted on clinicaltrials.gov. And then ultimately together, help us to select the dose for first patient studies. Thank you.
Thank you. Our next question comes from Gary Nachman with BMO. Your line is open. Thanks. So my question is on Rylase, which has been growing pretty nicely. So how much will the Monday, Wednesday, Friday dosing help further uptake of that product? And then what's the cadence for expanding?
Ryalys geographically, including the EU in Japan, and how much will those X2S markets ultimately contribute? And then with the CRL for the IV, how important is that ultimately to the franchise? So would there be a long-term impact if you don't move forward with it? I know there won't be an impact in the near term, but what about the long term? Thank you. Thanks, Gary. I'm going to reorder your questions a little bit. Maybe have Kim take Monday Wednesday Friday dosing and then comment.
In terms of Monday, Wednesday, Friday dosing, we really believe, and we put this out there, that our customers were utilizing RILAs and not denying any patience, access to it, because we had a label with every 48 hour dosing. So we really were not expecting a lift and fails from the Monday, Wednesday, Friday dosing, but instead probably a lift and customer satisfaction in terms of...
customers who are used to, and this is the preferred route of way of dosing the product, would be able to administer it in a way that's closer to what they're historically used to and prefer. And then just following up on Kim, this is Dan. So very quickly on the CRL question, we don't see that as a limitation to the uptake in the US market. We're just looking to get that additional data in the hands of the HCTs, ideally through the label, but it's also been published and presented at the end of the year.
Erwinase to the marketplace, there's still no non-E. coli based Erwinia in the Japanese market. In terms of overall growth, it really depends a little bit on pricing. In the US and Japan, it would likely be tied to a lower pricing.
Historically, we saw 80 percent of erwinase revenue coming from the US versus Europe , while there's still a lot of patients over there. But ultimately, it depends on how we can differentiate the product. Near-term focus, of course, is getting the product approved.
And the EU potential for approval is later this year. Thank you. Our next question comes from Balaji Prasad with Barclay. Your line is open.
Thanks for the question. Just two from me. Firstly, with Vision 2025, including around $2 billion of Oxibate, would you discuss the relative role or contribution between narcolepsy and IH towards this vision? Secondly, with Epidiolex, I wanted to address a point where we're getting significant investor questions, which is the Right Loser as yo
generic challenges to Epidiolex with 10 to 11 filers. Is there any confidence that you can provide the market around the durability of Epidiolex? Just want to see that, ensure that there's not an overhang on the stock for the longer run. Thanks. Yeah, so maybe I'll take that second question first and then we can have maybe Renee jump in a little bit on what we've said in terms of the Oxibate revenue piece of Vision 2025. On Epidiolex, there's no new information.
out there on durability. We've said from the time we first announced the GW transaction that we did have a lot of confidence in the durability of this asset. We had predicted the correctly the likely timing of first-hand of submissions and of course that's public now with our announcement of the Hatch-Wackson litigation. You know since the time of the deal we did have additional IP issue including some with longer.
duration patents. That's not a surprise. We again predicted that at the time of the of the transaction, but I don't have new information to share other than all the things we've shared historically that give us confidence that this is not a short duration product.
And then, Velazia, your other question. Yeah, I was just going to ask Kim to jump in there. Yeah, sure. I think your question was about, you know, what we see the long-term mix being between narcolepsy and IH for XI wave. You know, overall, we see it as a very durable franchise, and, you know, we do expect XI wave to provide substantial value in both the near and the long term.
And we expect that VyWave will both grow and remain the oxidative choice in 2023. And that in addition to this, IH is a very meaningful growth opportunity as the only FDA-approved treatment for IH. So it's really a combination of the two contributing very meaningfully moving forward.
And maybe I'll just jump in quickly then on the royalties. I think that may have been an aspect of your question as well. So I'd mentioned during the prepared remarks that with respect to the royalties on authorized generics of ZIRIN, you should think about those being higher in the second half versus the first half of the year. And recall the way that the royalties work. The first six months we just have HICMA on the market.
And we have tiered wide ranging royalties, which are essentially low, with they are selling a low percentage of the overall oxabay volumes, and then those increase as those volumes increase. That royalty rate ranges from 10 all the way up to 90%. Now the second, and recall they're exclusive, the second six months of this year,
we expect the royalties to be higher because the royalty rate with HICMA increases to a fixed rate where both we and HICMA have substantial economics. Then we have the expectation of three other extremely volume limited AGs coming in with low fixed rate volumes and royalties to jazz. As we go forward, recall that after the first year, then the royalties with HICMA
exceed, sorry, accelerate to a much higher double digit rate to jazz and remain at that through the duration of the royalty period. Thank you. Our next question comes from Gregory Renza with RBC. Your line is open. Great, thanks. Hey, Bruce and Tima. Thanks for taking my question. Maybe Bruce, just one for me. How is the current commercial performance across your products and segments?
really feeding back to the early pipeline selection that you rob in the team or doing the NOGO decisions there in the risk tolerance. And just maybe thinking about the commercial products, how that actually is affecting or influencing what you see as diversification of the portfolio. Of course, as Renee mentioned with the pipeline being four times the size, now are there particular areas where you like to see greater pipeline output from? Thanks so much. Yeah, love the question. You know, I would say that we keep learning the same lesson over and over, which is if you have great products that really meet.
we're investing most heavily in, particularly in later stage where we have more data, fall into that category of meet significant unmet patient need and are differentiated from other currently available or expected to be available therapies. In the earlier part of the pipeline, we're taking some bigger risks and
and shooting for some big targets. And some of those will work and some of those won't. We don't know which ones are which yet. But we're gonna ride the winners and the winners are gonna be those ones that are highly differentiated. Dan, I wanna give you a chance to weigh in here too if you'd like to add anything in particular about the translation of our commercial experience back to R&D choices. Yeah, thanks, Bruce. I mean, one thing to take in mind is, some of our pipeline is also evidence generation, new indications, new formulations of our existing brands. So we wanna continue to unlock the full potential.
of those brands, including broadly Epidiolex and Oxibate and even on the oncology side. I mean, Xani is a pipeline within a product, of course, and so how we kind of think that through and where we can get the most differentiation and you know, PTRS's, etc. So it's a great set of challenges that we've got with the pipeline and the commercial portfolio and clearly remaining and and enhancing our category leadership and now epilepsy, sleep medicine and increasingly some of these areas and both solid and liquid tumors is
also, you know, an incentive for the way we think about building out the pipeline. And we have, you know, under Rob's leadership, really created much more internal capability all the way from filing our own INDs through development to also a corporate development muscle, which I'd say is second to none, where we can really look at external innovation and folks are knocking on our door because of the success we've done in some of these partnerships, whether late stage or early pipeline. So it's a good place to be, but we will move into some new areas, as Bruce referenced, where there's significant unmet need and we think we can get to some smart go-no-go decision points.
Thank you. Our next question comes from Brandon Foltz with Cantor Fitzgerald. Your line is open. Hi, thanks for taking my question. David is wanting to know, any updates on the enrollment and timeline expectations for Lagoon and Mforte? Any chance of getting the potential first line move complete before or during 2025, just as you think about Vision 2025? Thank you. Rob, do you want to talk about ZEPS-ULCA clinical trial expectations?
And I would maybe ask just for a reminder from our group in terms of what's been communicated previously, but I would just say that that trial is on track relative to expectations, and we really are quite excited about the potential steps that still can move up into the front line where we're preemptively treating patients before they progress, accessing more patients, treating patients for a longer duration of time.
And I, and thank you, I'm seeing now that we had said previously that we're expecting the complete enrollment this year. In the first line trial. Yes. Thank you. Our next question comes from Ash Verma with UBS. Your line is open. Hi. Thanks for taking question my question. I have to.
So, first one on sivacalcomide. So, what's the level of confidence here in the essential tremor mechanism, the type of calcium channel pathway? And we've seen that near-occurring failed with the same mechanism and practice data as expected shortly. Is your molecule in any way different versus some of these competitors? And then second, I wanted to see if you can provide any kind of a color on what you're observing in the marketplace for desiram-AG. Are stable patients getting switched to AG whenever they're going back to the...
of a Phase IIa proof of concept study before initiating our current trial, which enabled us to see that in fact there was the response that we expected to see based on the mechanism and consistent with our preclinical data. It also allowed us to identify what would ultimately be the right...
patient selection criteria and the right endpoints, of course in agreement with the FDA, for that trial. So we think the prior data that we had in our phase two with our molecule gives us confidence about the outcome of the ongoing phase 2b, which as you know is three doses with a once daily formulation. Yeah, and I'll just add on the second part of your question, probably too early for us.
to get more specific. Thank you. Our next question comes from Amy Fadia with Needham and Company. Your line is open.
Great, thanks for taking my question. Maybe firstly, on the IH market, since you've been in the market for some time now, any sort of updated thoughts around the size of the market and the value of ZYBA? Are you seeing more patients being vaccinated?
Diagnosed and treated in the market and then just to follow up on JCP 385. Can you remind us how you're thinking about the essential tremor. Patient population as opposed to the Parkinson's disease.
Are there similarities or differences that we should be thinking about as we consider, you know, if we see positive data of essential tremor, does that give us greater confidence that the Parkinson's disease trials would also work? Thank you. So, Kim, maybe you could start on just how you're thinking about the IH opportunity overall. As
Yeah, sure. I'll start by reiterating that we feel like we have compelling growth in IH already with 1700 and 50 patients coming out of the end of the year and do expect it to grow nicely moving forward. But as we said, we are building a market here. There's quite a bit of education to do. So we're still trying to estimate ultimately how big this will be. We feel very optimistic, but we know we need to still educate prescribers on how to better diagnose IH. There are 37,000 patients out there. We've been talking about that are diagnosed and actively seeking treatment.
But the HCPs have kind of shown us that they tend to think fairly narrowly about the condition as being all about excessive daytime sleepiness. And we're reminding them that this is a 24-hour condition and that we're approved with ZYWave to treat the full condition and address multiple symptoms of IH, not just EDS. So again, this is the first and only approved treatment. Prescribers really haven't had to think much more beyond EDS so far today, but we really feel good about the way that they're coming along.
Thank you. Yeah, so sorry. On sort of ET and Parkinson's, I mean, what's similar to it is, you know, significant on that need. And ET, there's been no new approved therapies and the therapies that are there have very little limitation. So no approved therapy in 50 years, nothing approved for Parkinson's, tremor. We do think there's overlapping pathophysiology between.
the tremor type. And there is some preclinical opportunity for us to as well think the T-type calcium channel blockers should work there. In terms of the market opportunity, it's a couple million of diagnosed across the Western markets. We think the actual market opportunity for essential tremor is up to 11 million. So it's that classic.
With the right drug, you can really uncover a lot of market growth and opportunity. Then on Parkinson's, that's a more defined patient population and very addressable in terms of Parkinson treating physicians. It's about a million patients per year of which 75 percent have tremors for which there's no approved therapy. So exactly how we would configure the Salesforce if we're lucky enough to get both indications is something we'll be figuring out. But we do think from a price value as well as market coverage and interest from both HCP.
Could you expand outside of that? Okay, let's, I'm in a minute, going to come to Dan on ex-US Epidiolex opportunity and then Renee on corporate development. But before that, I think there might've been a dangling part of the last question we didn't get, which was really how to think about the two clinical trial populations and whether there's any relationship and.
how to think about potential results in essential tremor as they might apply to Parkinson's tremors. So, Rob, maybe you could jump in on that first. Yeah, thanks, Bruce. And I do think Dan covered it with respect to, yes, these are two distinct clinical entities, but we have strong preclinical rationale that the mechanism of T-type calcium channel inhibitors could help block the tremor associated with each of these conditions. So, while certainly, you know, if we see a positive readout in either of these indications, it's going to give us increasing confidence around this molecule in working the way we think it should work, but I wouldn't have a direct read-through, you know, to say if it doesn't work in one of our two.
other. And then on the ex-US growth for epidemics we do see strong continued growth for in 2023 and contributing toward 2025. Importantly we had some headwinds that we don't think we'll face as directly in terms of FX rates and importantly now we've got approval toward the end of last year in France with full reimbursement so we're now fully launched in all five major European countries and we've still got some smaller markets to add over time so we're approved in 15 of 30 or we're launched in 15 of 35 approved markets.
Then more from a medium-term perspective, we see significant opportunity in the Asia Pac region and in particular Japan where we've got a phase 3 study ongoing and we look forward to thinking through our commercialization strategies there for the neuroscience portfolio. And then maybe just jumping in on corporate development. In terms of areas we're interested in, clearly we're definitely focusing on neuro and oncology, but we're also looking more broadly at rare and orphan in general. This is a space that we're very comfortable in currently with.
potentially extending beyond neuro and oncology. But the primary focus is still in our neuroscience and oncology therapeutic areas. In terms of the stage of compounds, we're looking at commercial, near commercial, but also pipeline deals. You've heard us talk about our guidance today. We're investing heavily there, and we do think our increased capabilities.
that we've developed both organically, but also with the acquisition of GW have set us up really well. Thank you. Our last question comes from Greg Fraser with Truist. Your line is open.
Great. Thanks for squeezing in. On XilinWave, you're clearly confident and continue strong growth for both indications. On narcolepsy, do you expect the pace of new patient ads to potentially slow a bit this year, given the oxidative market dynamics? Last year, I think you added about 500 new patients each quarter. I'm curious whether you think that pace could continue with the various moving parts in the oxidative market this year. Thanks so much. Kim, anything you want to add on narcolepsy ads in 23?
Yeah, just that we're still confident here that we've got clear differentiation based on the reduced sodium and that we're going to continue at a nice pace, both in terms of patient conversions as well as new patient starts where we're just already seeing the vast majority of patients being started on die wave versus Xyrem. So overall, we feel really good about that momentum continuing throughout the year. Thank you.
Thank you. If there are no further questions, I'd like to turn the call back over to Bruce for any closing remarks. All right. Thank you, operator. And I just, I want to close by recognizing the passion and innovation of our 2,800 talented employees around the globe who come to work each day, dedicating to improving the lives of more patients than before. And I also want to thank our partners and our shareholders for their continued confidence and support.
Thanks, everyone, for joining us today and stay well. Thank you for your participation. You may now disconnect. Everyone, have a great day.