Q2 2019 Earnings Call

Ladies and gentlemen, thank you for standing by your conference call should begin momentarily again, thank you for standing by the conference call shall begin momentarily. Thank you.

Operator: Ladies and gentlemen, thank you for standing by. Your conference call will begin momentarily. Again, thank you for standing by.

Operator: Your conference call will begin momentarily. (inaudible) Welcome to the Jazz Pharmaceuticals PLC 2nd Quarter 2019 Earnings Conference Call. Following an introduction from the company, we will open the call to questions. I will now turn the call over to Kathy Luttrell, Head of Investment Relations at Jazz Pharmaceuticals.

Following the introduction from the company, we will open the call to questions.

I will now turn the call over to capture Littrell head of Investor Relations at Jazz Pharmaceuticals.

Thank you Valerie and thanks to those of you who are joining our investor call. Today, We reported our second quarter 2019 financial results and updated our financial guidance for 2019, the press release and the slide presentation accompanying this call are available in the Investor section of our website on the call today are Bruce Cozadd CEO .

Kathy Luttrell: Thank you, Valerie, and thanks to those of you who are joining our investor call today. We have reported our second quarter 2019 financial results and updated our financial guidance for 2019. The press release and the slide presentation accompanying this call are available in the investor section of our website. On the call today are Bruce Cozadd, CEO; Rob Iannone, Executive Vice President and R&D; and Matt Young, EVP and CFO. And joining for the Q&A session were Dan Swisher, President and COO, Mike Miller, Executive Vice President, U.S. Commercial, and Alan Lang, Senior Vice President, Clinical Development and Acting CMO.

Robbie Unknowns executive Vice President and our R&D, Matt Young SVP and CFO and joining for the <unk> session, Dan Swisher, President COO, Mike Miller Executive Vice President U.S. commercial.

Alan line.

Senior Vice President clinical development in acting CMO.

Oh I'd like to remind you that some of the statements. We will make on this call relate to future events and performance rather than historical facts and are forward looking examples of forward looking statements include those related to our future financial and operating results, including 2019 financial guidance and goals future growth and growth strategies product launches sales and volumes supply challenges regulatory activities ongoing and future clinical trials and other product development activities and corporate development effort.

Kathy Luttrell: I'd like to remind you that some of the statements we will make on this call relate to future events and performance rather than historical facts and are forward-looking. Examples of forward-looking statements include those related to our future financial and operating results, including 2019 financial guidance and goals, future growth and growth strategy, product launches, sales, and volumes, supply challenges, regulatory activities, ongoing and future clinical trials. These forward-looking statements involve risks and uncertainties that could cause actual events, performance, and results to differ materially. They are identified and described in today's press release and in the accompanying slide presentation under Risk Factors in our Form 10-Q for the quarter ended March 31, 2019, and our Form 10-Q for the quarter ended June 30, 2019, which we will file.

These forward looking statements involve risks and uncertainties that could cause actual events performance and results to differ materially.

They are identified and described in today's press release and the accompanying slide presentation under risk factors in our Form 10-Q for the quarter ended March 31st 2019, and our Form 10-Q for the quarter ended June Thirtyth 2019, which we will file shortly we undertake no duty or obligation to update or forward to update our forward looking statements on this call we discuss non-GAAP financial measures. We believe these measures are.

Kathy Luttrell: We undertake no duty or obligation to update our forward-looking statements. On this call, we discuss non-GAAP financial measures. We believe these measures... They are not meant to be considered in isolation or as a substitute for comparable reported gaps. Reconciliations of GAAP to non-GAAP financial measures discussed on this call are included in today's press release and slide presentation, which can be downloaded. I'll now turn the call over to Bruce.

Financial performance and potential future results.

Were not meant to be considered in isolation or as a substitute for comparable reported GAAP measures.

Reconciliations of GAAP to non-GAAP financial measures discussed on this call are included in today's press release and slide presentation available on our website I'll now turn the call over to Burton. Thanks, Cathy Good afternoon, everyone and thank you for joining us.

Bruce C. Cozadd: Thanks Kathy. Good afternoon everyone, and thank you for joining us. This year, we've had significant achievements across all aspects of our business, including strong financial execution, expansion of our product portfolio, diversification of our development pipeline through internal and acquired R&D programs, and continued global expansion. One of our most significant achievements was the approval and recent launch of CENOSI in the U.S. for patients with excessive daytime sleepiness associated with narcolepsy or OSA. For the remainder of the year, our focus will be on preparing an NDA package for JCP-258, advancing our R&D programs, and planning for the potential approval of sole re-emphatol in the EU as early as year-end. We're pleased to welcome new executive leadership to the company, including Rob Iannone, who's leading our R&D organization, and Nina Patil, who will lead our global legal department.

This year, we had significant achievements across all aspects of our business.

Including strong financial execution expansion of our product portfolio.

Diversification of our development pipeline through internal and acquired R&D programs and continued global expansion.

One of our most significant achievements was the approval and recent launch of Sonos C. In the U.S. for patients with excessive daytime sleepiness associated with narcolepsy Auro I say.

For the remainder of the year, our focus will be on preparing in India package for GGP 258.

Advancing our R&D programs and planning for the potential approval of solely on patrol and maybe even as early as year end.

We're pleased to welcome new executive leadership to the company, including Rob you known who is leading our R&D organization and Neenah Patel, who will lead our global legal department.

After providing details on some of our commercial and regulatory activities I'll turn the call over to Rob to provide an update on our development programs and then Matt will update you on our financials.

Bruce C. Cozadd: After providing details on some of our commercial and regulatory activities, I'll turn the call over to Rob to provide an update on our development programs, and then Matt will update you on our financials. We're delighted to be on the market with Sanosi in the U.S. and will begin reporting sales in the third quarter. As of July 8th, Sanosi was available to retail pharmacies, and our expanded sleep sales force began contacting healthcare providers. Over the first three weeks of launch, we had CENOSI interactions with over 7,500 healthcare providers and good utilization of our sample program. We have implemented robust patient service programs for CENOSI, which aim to reduce out-of-pocket expenses to as little as $9 a month, and discussions with payers are progressing with the goal of obtaining optimal patient access to this important new therapy.

We're delighted to be on the market with Sanofi in the U.S. and we'll begin reporting sales in the third quarter.

As of July 8th Sonos, He was available to retail pharmacies, and our expanded sleep Salesforce began contacting health care providers.

Over the first three weeks of launch we've had so no see interactions with over 7500 health care providers and good utilization of our sample program.

We have implemented robust patient service programs for Sanofi, which aim to reduce out of pocket expenses to as little as $9 a month and discussions with payers are progressing with a goal of obtaining optimal patient access to this important new therapy.

Just a few weeks into the launch we are pleased with the strong interest from health care providers as they increase their knowledge of and experience with Sanofi and how best to incorporate Sonos C. In the management of their narcolepsy, you know, let's say patients such as how to switch their patients to Sonos C from other medications and understanding Sonos east clinical profile.

Bruce C. Cozadd: Just a few weeks into launch, we are pleased with the strong interest from healthcare providers as they increase their knowledge of and experience with Cynosi and how best to incorporate Cynosi in the management of their narcolepsy and OSA patients, such as how to switch their patients to Sanosi from other medications and understand Sanosi's clinical profile. Our medical team is working on a number of publications and other efforts to educate health care providers on emerging science regarding the pathophysiology of EDS and OSA and the role of pharmacotherapy. Jazz will also be launching peer-to-peer Sanosi programs in the near future.

Our medical team is working on a number of publications and other efforts to educate healthcare providers on the emerging science regarding the pathophysiology of Mds and I always say and the role of pharmacotherapy.

Jobs will also be launching peer to peer Sonos C programs in the near future training for the physician speakers is complete and scheduling is underway.

Bruce C. Cozadd: Training for the physician speakers is complete, and scheduling is underway. Additionally, we are pleased with the response to Jazz's consumer disease awareness effort, A Different Kind of Tired. In the first half of this year, the campaign reached over 7 million people, and nearly 1 million unique visitors have visited www.adifferentkindoftire.com to learn more about their EDS in OSA. We're closely monitoring the launch and leading metrics to evaluate CENOSI's progress. We are encouraged by the positive feedback and interest we've received to date and look forward to reporting our progress next quarter. On the regulatory front, we submitted an MAA for sole re-empital in November, and we are expecting an EMA marketing authorization decision as early as the end of this year. We have added key sleep leadership to our EU team as we prepare for initiating a rolling launch in major EU countries next year. We are continuing to evaluate development program opportunities for solariempetol and other conditions associated with debilitating EDS. We are currently discussing with regulatory agencies a program to evaluate sol-re-amphetol for EDS and major depressive disorders. Xyrem performance was strong again in the second quarter, with bottle volume growth of 5 percent compared to the same period last year.

Additionally, we are pleased with the response to John's this consumer disease awareness suffered a different kind of tired.

In the first half of this year. The campaign reached over 7 million people and nearly 1 million unique visitors have visited www, a different kind of tired dot com to learn more about their S. In Oh I say.

We are closely monitoring the launch and leading metrics to evaluate sonos. These progress we are encouraged by the positive feedback and interest we've received to date.

And look forward to reporting our progress next quarter.

On the regulatory front, we submitted an M.A. for slow ramp of told in November and we're expecting an email marketing authorization decision as early as the end of this year.

We have added key sleep leadership to our EU team as we prepare for initiating a rolling launch in major you you countries next year.

We're continuing to evaluate development program opportunities for solar in for Tom and other conditions associated with debilitating Mds.

We are currently discussing with regulatory agencies, a program to evaluate soria for toll for Mds in major depressive disorder.

[noise] Xyrem performance was strong again in the second quarter with bottle volume growth of 5% compared to the same period last year. The average number of active xyrem patients increased to 14700 up 6% compared to the same period last year.

Bruce C. Cozadd: The average number of active Xyrem patients increased to 14,700, up 6 percent compared to the same period last year. Our expanded sleep sales force is fully trained on Xyrem and Cenosi and began promotional efforts for both products in their new sales territories last month. We have increased our Zyra media promotional efforts with the goal of maintaining the momentum from the first half of the year while minimizing any short-term disruption that can occur from changing territories. We look forward to a potential longer-term positive contribution this year. Now on to our HEMONC therapeutic area.

Our expanded sleep Salesforce is fully trained on Xyrem and Sanofi and began promotional efforts for both products in their new sales territories last month, we have increased our xyrem media promotional efforts with the goal of maintaining the momentum from the first half for the year, while minimizing any short term disruption that can occur from changing territories.

We look forward to a potential longer term positive contribution from this.

Now onto our hmos therapeutic area.

In the second quarter Vyxeos sales benefited from our ongoing you launch we made progress on the pricing and reimbursement front for Vyxeos, obtaining national reimbursement in Italy.

Bruce C. Cozadd: In the second quarter, Vixios sales benefited from our ongoing EU launch. We made progress on the pricing and reimbursement front for Vixios, obtaining national reimbursement in Italy. In France, Vixios did not qualify for central reimbursement but will be funded by hospital budgets, similar to other recently approved AML therapies. Our EU team continues pricing negotiations in Germany and Spain.

In France, Vyxeos did not qualify for central reimbursement, but will be funded by hospital budgets similar to other recently approved AML therapies.

Are you team continues pricing negotiations in Germany and Spain.

In the U.S. demand trended upward, particularly in community accounts, where we've continued our intensive education and outreach initiatives emphasizing the strong overall efficacy profile of Vyxeos as the first line therapy for fit secondary AML patients.

Bruce C. Cozadd: In the U.S., demand trended upward, particularly in community accounts, where we've continued our intensive education and outreach initiatives, emphasizing the strong overall efficacy profile of Vixios as the first-line therapy for fit secondary AML patients. Our most recent U.S. market research in secondary AML indicates that our educational efforts are shifting use from 7 plus 3 to VIXEO. In order to increase our share of voice in the AML setting, we are expanding our VIXIOS dedicated sales force by 15 representatives. We plan to hire and train these new reps this quarter and expect them to begin promoting VIXIOS in the fourth quarter. Defitelio continued its strong global performance in the second quarter.

Our most recent U.S. market research and secondary AML indicates that our educational efforts are shifting use from seven plus three to vyxeos.

In order to increase our share of voice in the AML setting we are expanding our vyxeos dedicated sales force by 15 Representatives, we plan to hire and train these new reps this quarter and expect them to begin promoting vyxeos in the fourth quarter.

[noise] Defitelio continued its strong global performance in the second quarter.

In June Defitelio was approved for the treatment of Vo de by Japan's Ministry of Health Labor and welfare and we began shipping commercial vials to Nippon sheet Yakubu, who is responsible for the commercialization of Defitelio in Japan.

Bruce C. Cozadd: In June, Depotelio was approved for the treatment of VOD by Japan's Ministry of Health, Labor, and Welfare, and we began shipping commercial vials to Nippon Shinyaku, who is responsible for the commercialization of Depotelio in Japan. We are continuing to make progress with our Global Expansion Plans for Dovetelio and recently requested marketing authorization in Australia and Switzerland. Our Global Defibritide Development Program continues to advance. Startup activities are underway for our Exploratory Phase 2 study in prevention of CAR T-associated neurotoxicity, and we expect sites to activate this quarter. We are also preparing to activate sites for our Phase 2 study for the treatment of TATMA late this year. Patient recruitment is ongoing in our Phase 2 Prevention of Acute GVHD study, and our goal is to complete enrollment at the end of the year.

We are continuing to make progress with our global expansion plans for Defitelio and recently requested marketing authorization in Australia and Switzerland.

Our global Defibrotide development program continues to advance startup activities are underway for our exploratory phase two study in prevention of car T associated neurotoxicity, and we expect sites to activate this quarter.

We are also preparing to activate sites for a phase two study for the treatment of T.A.T.M.A. late this year.

Patient recruitment is ongoing in our phase two prevention of acute Gvhd study and our goal is to complete enrollment at the end of the year.

Enrollment in the prevention of Vo de Phase three study has been strong. The study includes an interim analysis, we expect to have an update on the timing of the interim analysis later this year.

Bruce C. Cozadd: Enrollment in the Prevention of VOD Phase 3 study has been strong, and the study includes an interim analysis. We expect to have an update on the timing of the interim analysis later this year. For Irwinaze, we experienced an extended out-of-stock period in the second quarter due to ongoing issues at the sole manufacturer, PBL, and we continue to expect further supply disruptions this year. Erwin A's has been the cornerstone of our HEMOC franchise since 2012 and remains a critical component of treatment for patients with ALL. We remain committed to working with PBL and taking steps within our control to improve the reliability of Erwin A's supply and to ensure that all available supply is made available to patients. I'll wrap up by saying we're proud of our significant first half achievement. We remain on track to deliver more than $2 billion in revenues this year while expanding our business and capabilities, advancing our global R&D efforts, and successfully executing our multiple ongoing and planned commercial launches. Rob, I'll now turn the call over to you.

For Irwin Ace, we experienced an extended out of stock period in the second quarter due to ongoing issues at the sole manufacturer PBL and we continue to expect further supply disruptions this year.

Irwin Ace has been the cornerstone of our hemo franchise since 2012.

And remains a critical component of treatment for patients with AOL.

We remain committed to working with PBL and taking steps within our control to improve the reliability of Irwin a supply.

And to ensure that all available supply is made available to patients.

I'll wrap up by saying, we're proud of our significant first half achievements, we remain on track to deliver more than $2 billion in revenues this year, while expanding our business and capabilities advancing our global R&D efforts and successfully executing our multiple ongoing and planned commercial launches.

Rob I'll now turn the call over to you.

Thank you Bruce.

Robert Iannone: Thank you, Bruce. I'm excited to have joined Jazz to lead a committed and capable R&D team focused on advancing the development of life-changing medicines for patients. In 2019, we have made progress in further diversifying our growing R&D pipeline, with the addition of the PAN-RAF inhibitor program and our Exosome Therapeutics Collaboration. I'll begin with development activities in our sleep therapeutic area, starting with JCP258. We are continuing to make progress toward bringing JCP258 to narcolepsy patients. JCP 258 is a novel oxidate formulation with a unique composition of cations, resulting in 92% less sodium than ziron. Most patients taking Xyrem receive between 1,100 and 1,640 milligrams of sodium per night from the medication alone. To put that in context, the American Heart Association recommends a daily sodium intake not to exceed 2,300 milligrams with an ideal limit of 1,500 milligrams.

I'm excited to have joined jazz to lead a committed and capable R&D team focused on advancing the development of life changing medicines for patients.

In 2019, we have made progress in further diversifying our growing R&D pipeline with the addition of the Pan RAF inhibitor program and our Exosome Therapeutics collaboration.

I'll begin that development activities in our sleep therapeutic area, starting with JCP 258.

We are continuing to make progress toward bringing JCP to five day to narcolepsy patients.

JCP 258 is a novel Oxybate formulation with a unique composition of Cat Islands.

Resulting in 92% less sodium than xyrem.

Most patients taking xyrem receive between 1100, and 1600 40 milligrams of sodium per night from the medication alone.

To put that in context, the American Heart Association recommends a daily sodium intake not to exceed 2300 milligrams with an ideal limit of 1500 milligrams.

Narcolepsy is a chronic disease in which lifelong therapy may be clinically indicated and researchers have associated narcolepsy with an increased risk of co morbid conditions, including hypertension and cardiovascular disease.

Robert Iannone: Narcolepsy is a chronic disease in which lifelong therapy may be clinically indicated, and researchers have associated narcolepsy with an increased risk of comorbid conditions, including hypertension and cardiovascular disease. Many public health organizations, medical professional societies, and patient advocacy organizations have highlighted the importance of sodium reduction to lower the risk of hypertension and cardiovascular disease. We believe that a substantial reduction of sodium intake for oxidate patients, to a range of approximately 88 to 131 milligrams of sodium per night with JZP258 represents a meaningful benefit for narcolepsy patients. We believe JCP 258 is a prime example of innovating to improve upon available therapies. In this case, by reducing the inherent risks associated with excessive sodium intake.

Many public health organizations medical professional societies and patient advocacy organizations have highlighted the importance of sodium reduction to lower the risk of hypertension and cardiovascular disease.

We believe that a substantial reduction of sodium intake for oxybate patients.

To a range of approximately 88 to 131 milligrams of sodium per night JCP 258.

Represents a meaningful benefit for narcolepsy patients.

We believe JCP 258 is a prime example of innovating to improve upon available therapies in this case by reducing the inherent risk associated with excessive sodium intake.

Data from our phase three study evaluating JCP to five days for the treatment of cataplexy and Mds in adult patients with narcolepsy has been accepted for oral presentation. During the World Sleep Conference on Wednesday September 25th in the afternoon.

Robert Iannone: Data from our Phase 3 study evaluating JDP-258 for the treatment of cataplexy and EDS in adult patients with narcolepsy has been accepted for oral presentation during the World Sleep Conference on Wednesday, September 25th in the afternoon. We also expect to meet with FDA in the fourth quarter to discuss our NDA package with a goal of submitting it as early as year end. The Phase III study of JCP258 in patients with idiopathic hypersomnia is enrolling well, and we recently activated study sites in Europe. Additionally, JCP 258 recently received orphan drug designation from FDA for the idiopathic hypersomnia indicator.

We also expect to meet with the FDA in the fourth quarter to discuss our end da package with a goal of submitting as early as year end.

The phase three study of JCP 258 in patients with idiopathic Hypersound, India is enrolling well and we recently activated study sites in Europe .

Additionally, JCP 258 recently received orphan drug designation from FDA for the idiopathic hypersound the indication.

Turning to our Hemant development activities I'll start with Vyxeos.

Robert Iannone: Turning to our Hemant development activities, I'll start with Vixio. At ASCO in June, the Children's Oncology Group, COG, presented positive phase one and two data of Vixio in children and young adults with relapsed refractory AML. Primary objectives were focused on safety and efficacy, including determining the recommended phase two deaths. Fixios was administered during Cycle 1 at 135 units per meter squared. Disease was then evaluated, and patients continued with the combination of fludarabine, cytarabine, and filgristim, also known as FLAG. Toxicity was consistent with intensive AML. The overall response rate based on CR, CRP, and CRI was 81.1%, with 70% of patients achieving their best response after cycle one with. Patients who achieved an objective response had 80% of no residual disease by flow cytometry. The percent of patients who achieved MRD negative status was 75% after one cycle and 85% overall.

And ask on June the children's oncology group Cod presented positive phase, one and two day vyxeos in children and young adults with relapsed refractory AML.

Primary objectives were focused on safety and efficacy, including determining the recommended phase two dose.

Vyxeos was administered during cycle, one at 135 units for metered squared.

Disease was then evaluated in patients continued with the combination of Fludarabine cytarabine and filters. There also known as flat.

Toxicity was consistent with intensive ammo regimens.

The overall response rate based on CR CRP NCR I was 81.1%.

70% of patients achieving best response after cycle, one with Vyxeos.

Patients who achieved an objective response, 80% had no residual disease by flow cytometry.

The percentage of patients who achieved MRG negative status was 75% after one cycle and 85% overall.

Another important finding in this study is that 83.3% of patients successfully grids to potentially curative humana pratik stem cell transplantation.

Robert Iannone: Another important finding in the study is that 83.3% of patients successfully bridged the potentially curative hematopoietic stem cell transplantation. This study was part of our pediatric investigation plan with the European Medicines Agency, and we expect to discuss these robust data with the regulatory authorities. We are also continuing to make progress in a broad development program to generate data to facilitate physicians' understanding of the value of Vixios to reach additional patients who may benefit from treatment with Vixios, both as monotherapy and in combination, and also to satisfy our post-marketing commitment. During the second quarter, MD Anderson Cancer Center initiated a phase one attenuated dose finding study of Vixios in higher risk, MDS patients. This quarter, we expect to enroll the first patient in a Phase 1b study evaluating low-intensity therapy myxios in combination with venetoclax in first-line on-fifth. Additionally, study sites have been activated in two key cooperative group studies. Overall, there are currently 27 active... Now I'll turn to the Recombinant Chrysanthemum Space Development Program. We are continuing our efforts to develop new recombinant chrysanthemum product candidates, with the goals of reliable and consistent manufacturing, quality, and supply processes and a compelling target profile. JCP 458 is a recombinant chrysanthemum space that uses a novel Pseudomonas fluorescens expression platform.

This study was part of our pediatric investigation plan with the European Medicines Agency.

And we expect to discuss these robust data with the regulatory authorities.

We're also continuing to make progress in a broad development program to generate data to facilitate physicians understanding the value of vyxeos reach additional patients who may benefit from treatment with vyxeos, both as monotherapy and in combination and also to satisfy our post marketing commitments.

During the second quarter and dance at MD Anderson Cancer Center initiated a phase one attenuated dose finding study of Vyxeos and higher risk.

Mds patients.

This quarter, we expect to enroll the first patient in a phase one b study evaluating low intensity therapy vyxeos in combination phonetic KLAX in first line unfit patients.

Additionally studies that study sites have activated in two key cooperative group studies overall there are currently 27 active studies.

Now I'll turn to the recombinant present, the space development program.

We are continuing our efforts to develop new recombinant chrysanthis based product candidates.

With the goals of reliable and consistent manufacturing quality supply processes and a compelling target profile.

JCP four or five eight is a recombinant chrysanthis space that uses a novel Pseudomonas fluorescence expression platform.

We completed a phase one study of JCP four or five eight in healthy volunteers in the U.S. and the study met safety and efficacy parameters based on measurement of seer asparaginase activity levels.

Robert Iannone: We completed a phase one study of JCP458 in healthy volunteers in the U.S., and the study met safety and efficacy parameters based on measurement of serum asparaginase activity levels. Recently, we met with FDA to discuss these results and agreed on a path forward for a Phase 2-3 study design and expectation of required information to support a BLA. We will be working with COG and FDA to finalize the protocol with plans to initiate a single-arm pivotal phase 2-3 study later this year, given the critical need for reliable therapy for patients who develop hypersensitivity to E. coli-based asparaginase. Our goal is to continue to work closely with FDA, COG, and other global experts and health authorities to bring this treatment option to patients as soon as possible.

Recently, we met with the FDA to discuss these results and agreed on a path forward for phase two three study design and expectation of required information to support it be outlay.

We will be working with coggan FDA to finalize the protocol with plans to initiate a single arm pivotal phase two three study later this year.

Given the critical need for reliable therapy for patients who developed hypersensitivity to E. coli based disparities.

Our goal is to continue to work closely with FDA and other global global experts in health authorities to bring this treatment options to patients as soon as possible.

In R&D, we are focused on building a broad pipeline across multiple therapeutic areas and stages of development to fuel jazz is future growth.

Robert Iannone: In R&D, we are focused on building a broad pipeline across multiple therapeutic areas and stages of development to fuel Jazz's future growth. In an effort to expand our portfolio of early-stage precision oncology assets with high value potential, we completed two key transactions this year. The first was Kodiak and its innovative exosome technology for the potential treatment of hematologic malignancies and solid tumors. More recently, we acquired Red X Pharma's PANRAF inhibitor program for the potential treatment of RAF and RAS mutant tumors. Red X has made significant progress since prior published work and has matured the program to generate candidates with equipotent pan-RAF innovation. This advancement differentiates Red X's pan-RAF inhibitor from other RAF inhibitors in development. And while early, we believe there is the potential for the development of a best-in-class pan-wrapped and We are excited about these early stage programs as they provide an opportunity to transform future cancer treatment. Now, I'll turn the call over to Matt.

In an effort to expand our portfolio of early stage precision oncology assets with high value potential we completed two key Ken transactions this year.

The first was Kodiak and innovative exosome technology for the potential treatment of hematologic malignancies and solid tumors.

More recently, we acquired Red X farmers Pan RAF inhibitor program for the potential treatment of RAF and BRAF mutant tumors.

Fedex has made significant progress.

Since prior published work.

And has matured the program to generate captains with equal potent Pan RAF inhibition.

This advancement differentiate fedexs Pan RAF inhibitor from other RAF inhibitors in development and while early we believe there is the potential for development of the best in class Pan RAF inhibitor.

We are excited about these early stage programs as they provide an opportunity to transform future cancer treatment.

Now I will turn the turn the call over to Matt.

Thanks, Rob and good afternoon, everyone.

Matt Young: Thanks, Rob. And good afternoon, everyone.

In the second quarter, we were pleased with our top and bottom line growth.

Matt Young: In the second quarter, we were pleased with our top and bottom line growth. Revenues increased 7% to $534 million compared to $500 million in the second quarter of 2019. We are increasing our total revenue guidance for 2019 to a range of $2.07 to $2.15 billion from a previous range of $2.05 to $2.13 billion. Now, we'll talk about the performance of our key products. Xyrem delivered another strong quarter with net sales of $413 million, up 16 percent from $356 million last year.

Revenues increased 7% to $534 million compared to $500 million in the second quarter of 2019.

We are increasing our total revenue guidance for 2019 to a range of 2.07 to 2.15 billion from a previous range of $2.5 billion to $2.13 billion.

Now I will talk about the performance of our key products.

Xyrem delivered another strong quarter with net sales of $413 million up 16% from $356 million last year.

As a result of Xyrem strong performance in the first half of the year, we are increasing our 2019 Xyrem net sales guidance range of 1.55 to 1.59 billion from a previous range of $1.53 billion to $1.57 billion and are maintaining our expectation for mid single digit volume growth.

Matt Young: As a result of Xyrem's strong performance in the first half of the year, we are increasing our 2019 Xyrem Net Sales Guidance to a range of $1.55 to $1.59 billion from a previous range of $1.53 to $1.57 billion and are maintaining our expectation for mid-single-digit volume growth. Turning to Erwin A, net sales for the quarter were $28 million compared to $ Product availability in the second quarter was significantly reduced.

Turning to urbanize net sales for the quarter were $28 million compared to $59 million in the same period in 2018.

Product availability in the second quarter was significantly reduced.

We expect further supply disruptions for the remainder of 2019, which will continue to create quarterly variability.

Matt Young: We expect further supply disruptions for the remainder of 2019, which will continue to create quarterly variability. Even so, we are maintaining our Erwin A Net Sales Guidance for 2019 in the range of $165 million. Second quarter defitility net sales were $46 million, up 14 percent compared to the same period of 2018, primarily due to increases in demand. Reported sales also included a shipment of commercial vials to Nippon Shinyaku, our partner in Japan, as they prepare to launch defitility.

Even so we are maintaining our Irwin is net sales guidance for 2019 in the range of 106.

$5 million.

Second quarter Defitelio net sales were $46 million up 49% compared to the same period of 2018, primarily due to increases in demand.

Reported sales also included the shipment of commercial viles to punch in Yahoo, Our partner in Japan as they prepare to launch Defitelio.

We are maintaining our guidance for Defitelio net sales for this year in the range of 155 to 180 million.

Matt Young: We are maintaining our guidance for DefitelioNet sales for this year in the range of $155 to $180 million. Vixio's second quarter net sales were $31 million, an increase of 12% over the second quarter of 2018, and an increase of 8% sequentially from the first quarter, primarily due to increasing contribution from EUC. We are maintaining our Vixios Net Sales guidance for this year in the range of $120 to $150 million. As a reminder, our total revenue guidance for 2019 includes minimal net sales contribution from CENOSI, which we launched in the U.S. in early July. We expect a gradual ramp-up of CENOSI net sales after 2019 as commercial insurance coverage expands, and we believe CENOSI could achieve U.S. net sales of more than $500 million in its current indications in 2025.

Vyxeos second quarter net sales were $31 million, an increase of 12% over the second quarter of 2018, and an increase of 8% sequentially from the first quarter, primarily due to increasing contribution from U.S.

We are maintaining our vyxeos net sales guidance for this year in the range of $120 million to $150 million.

As a reminder, our total revenue guidance for 2019 includes minimal net sales contribution from Sanofi, which we launched in the U.S. in early July we expect a gradual ramp ups in this unit sales after 2019 as commercial insurance coverage expands and we believe Sanofi could achieve us net sales of more than 500 million in its current indications in 2025.

Matt Young: Turning to operating expenses, adjusted SG&A for the second quarter increased 13% to $105 million, or 29% of total revenues compared to $138 million, or 28% of total revenues in the second quarter of 2018. Adjusted SG&A expenses in the quarter increased primarily due to our ongoing and planned product launches, and we expect these expenses to increase in the second half of the year. For 2019, our guidance for adjusted SG&A expenses remains in the range of $620 million to $650 million, or 29 to 31 percent of total revenue guidance. Adjusted R&D expenses for the second quarter of 2019 were $56 million, or 11% of revenue compared to $51 million or 10% of total revenues in the second quarter of 2018. Adjusted R&D expenses in the quarter reflected our growing investments in the development of DefibriTide, Fixio, Solari Amphatol, and JCP458, preparation of the JCP258 NDA package, as well as support of partner programs and IND-enabling work with the CombaPlex platform.

Turning to operating expenses adjusted EPS for the second quarter increased 13% to $105 million or 29% of total revenues compared to 138 million or 28% of total revenues in the second quarter of 2018.

Adjusted operating expenses in the quarter increased primarily due to our ongoing and planned product launches and we expect these expenses to increase in the second half of the year.

For 2019 or guidance for adjusted SGN expenses remain in the range of $620 million to $650 million or 29% to 31% of total revenue guidance.

Adjusted R&D expenses for the second quarter of 2019 were $56 million or 11% of revenue compared to $51 million or 10% of total revenues in the second quarter of 2018.

Adjusted R&D expenses in the quarter reflected our growing investments in the development of distributed Phyxius still ramp it'll end JCP 458 preparation of the JCP 258, Anda package as well as support of partner programs and I, Andy enabling work with the complex platform.

We expect increasing R&D expenses in the second half as we continue to expand and advance our R&D programs.

For 2019 or guidance for adjusted R&D expenses remains in the range of $235 million to $265 million or approximately 11% to 13% of total revenue guidance.

Matt Young: We expect increasing R&D expenses in the second half as we continue to expand and advance our R&D program. For 2019, our guidance for adjusted R&D expenses remains in the range of $235 million to $265 million, or approximately 11 to 13 percent of total revenue guidance. We are maintaining our 2019 Adjusted Effective Tax Rate guidance in the range of 17 to 19 percent. On a Gap Basis, the Affected Tax Rate included a one-time tax benefit of $112 million resulting from an intra-entity intellectual property asset transfer in the second quarter.

We're maintaining our 2019 adjusted effective tax rate guidance in the range of 17% to 19%.

On a GAAP basis, the effective tax rate.

Including a one included a onetime tax benefit of $112 million, resulting from an intra entity intellectual property asset transfer in the second quarter.

Adjusted net income for the second quarter increased 8% to $233 million compared to $215 million in the second quarter of 2018, and adjusted net income per diluted share increased 16% to $4.05 compared to $3.49 in the second quarter of 2018.

As a reminder, our adjusted EPS for 2019 is positively impacted by significant share repurchases made in late 2018 in the first half of 2019.

Please note that we are maintaining our 2019 non-GAAP adjusted EPS guidance range of $14.30 to $15.

Matt Young: Adjusted net income for the second quarter increased 8% to $233 million compared to $215 million in the second quarter of 2018. And adjusted net income per diluted share increased 16% to $4.05 compared to $3.49 in the second quarter of 2018. As a reminder, our adjusted EPS for 2019 is positively impacted by significant share repurchases made in late 2018 and the first half of 2019. Please note that we are maintaining our 2019 non-gap adjusted EPS guidance range of $14.30 to $15.00 and our guidance for weighted average diluted shares outstanding of approximately 58 million. In the second quarter of 2019, we generated $149 million in cash from operations. We used $60 million to repurchase shares during the quarter, and we had $208 million remaining under our share repurchase program as of June. During the quarter, we made milestone payments totaling $26 million related to the FDA's approval of Cynosis. As of June 30, we had $883 million in cash, cash equivalents, and investments. Borrowing Capacity Under Our Revolver of $1.6 Billion and $1.8 Billion in outstanding principal balance on our Long-Term Debt

And our guidance for weighted average diluted shares outstanding of approximately $58 million.

In the second quarter of 2019, we generated 149 million in cash from operations, we used 60 million to repurchase shares during the quarter and had 208 million remaining under our share repurchase program as of June .

During the quarter, we made milestone payments totaling $26 million related to the FDA approval of Sanofi.

As of June 30, we had $883 million in cash cash equivalents and investments borrowing capacity under our revolver of 1.6 billion and $1.8 billion in outstanding principal balance on our long term debt.

We're pleased with our strong companywide execution this year with multiple product launches underway and corporate development efforts that have resulted in the addition of novel potentially best in class product candidates and technologies to our rapidly expanding pipeline.

As we head into the second half of 2019, we expect multiple catalysts to fuel our positive momentum.

We look forward to several data presentations, including JCP 258, and so ramp it's all data.

On the regulatory front, we're preparing in India for JCP to five and expecting the EMA EMA decision on Soarian for toll as early as year end. We also look forward to initiating the phase two three study of GBP four or five eight.

As part of our business strategy to drive shareholder value. We are focused on preparing for and delivering on successful product launches driving internal and external efforts to diversify our R&D and commercial portfolios and importantly, prioritizing patients and their access to our differentiated medicines.

Thank you for joining us on the call today and I'll now turn the call back over to Kathy.

Kathy Luttrell: We're pleased with our strong company-wide execution this year, with multiple product launches underway and corporate development efforts that have resulted in the addition of novel, potentially best-in-class product candidates and technologies to our rapidly expanding pipeline. As we head into the second half of 2019, we expect multiple catalysts to fuel our positive momentum. We look forward to several data presentations, including JCP258 and solar amphitheater data at the end of the day. On the regulatory front, we are preparing an NDA for JCP-258 and expecting the EMA decision on solar re-anvital as early as year-end. We also look forward to initiating the Phase 2-3 study of JCP-458. As part of our business strategy to drive shareholder value, we are focused on preparing for and delivering on successful product launches, driving internal and external efforts to diversify our R&D and commercial portfolios, and importantly, prioritizing patients and their access to our differentiated medicine. Thank you for joining us on the call today, and I'll now turn the call back over to Kathy.

Thanks, Matt we kindly request that you limit yourself today to one to two questions. During this call. So that everyone has an opportunity to ask their questions. We will gladly address any additional questions. After the call or you can re enter the.

With that said operator, please open the line.

Thanks.

Thank you, ladies and gentlemen, I would like to ask a question. Please press Star then one on you touched on telephone.

Again, if you would like to ask a question. Please press Star then one.

One moment for our first question.

Our first question comes from Amy failure of SVB Leerink. Your line is open.

Hi, good evening, thanks for the question.

Perhaps if you could provide us some additional details around the discussions with the FDA.

Around the Asparaginase study that you're gonna, Ron maybe give us some sense of the endpoints to duration.

Study.

And also how would the cost structure of the cost of manufacturing this product look like relative to your current cost of acquisition floral business. Thanks.

So Amit this is Bruce saw on the second part of that question, we're not going to release that information right now, although we're designing this to be a modern.

Bruce C. Cozadd: Thanks Matt. We kindly request that you limit yourself today to one to two questions during this call so that everyone has an opportunity to ask. We will gladly address any additional questions after the call, or you can reenter. With that said, Operator, please open the line for questions. Again, if you would like to ask a question, please press star then 1. One moment for our first question. Our first question comes from Ami Fadia of SVB Leerink. Your line is open. Hi, good evening. Thanks for the question. Perhaps if you could provide us with some additional details around the discussions with the FDA around the asparaginase study that you're going to run, maybe give us some sense of the endpoints, the duration of the study, and also how would the cost structure of your cost of manufacturing this product look relative to your current cost of acquisition for UrbanAce. Thanks.

Production methodology, and we think it will be relatively efficient.

But perhaps I can have Rob jump in and answer your question about.

Size and end points on the JCB 458 phase two three pivotal trial.

Happy to Chris.

So for starters, we had what I really feel was a very collaborative and productive discussion with the FDA. So that we came away from that meeting having clarity around the study design that will ultimately support approval in the U.S.

With that we arrived at a single arm design, where the primary endpoint is fairly nice activity.

We anticipate enrolling 100 patients. However, there is an opportunity for an interim analysis after 50 patients that could support an earlier.

Mitch.

Thank you.

Our next question comes from a cash to worry of Wolfe Research. Your line is open.

Thanks, so much so it looks like we'll get some read outs in approvals in the oral narcolepsy space in the back half of this year. How do you see these new treatment options kind of changing Xyrem is current market dynamics will they change it in any meaningful way and then on to Fiveeight considering that you didn't run a head to head study versus Xyrem can you give us a sense of what other language, we could get on to five eights label outside of not including a warning on high sodium oh on the high sodium content. Thanks, so much.

Bruce C. Cozadd: So Ami, this is Bruce. On the second part of that question, we're not going to release that information right now, although we're designing this to be a modern production methodology, and we think it'll be relatively efficient. But perhaps I can have Rob jump in and answer your question about size and endpoints in the JCP458 Phase II-III pivotal trial.

Robert Iannone: Happy to, Bruce. So for starters, we had what I really feel was a very collaborative and productive discussion with the FDA so that we came away from that meeting with clarity around the study design that would ultimately support approval in the U.S. With that, we arrived at a single-arm design where the primary endpoint is asparaginase activity. We anticipate enrolling 100 patients. However, there is an opportunity for an interim analysis after 50 patients that could support an earlier BLA. Our next question comes from Akash Tewari of Wolf Research. Your line is open.

Yeah on the on the first question about narcolepsy treatment options of course, we're happy we've introduced a number of new treatment options for narcolepsy patients already this year.

Starting with expanding the Xyrem label to pediatric patients and now launching.

So no see for Eos and narcolepsy patients as well as I always say patients of course.

Bruce C. Cozadd: Thanks so much. So it looks like we'll get some readouts and approvals in the oral narcolepsy space in the back half of this year. How do you see these new treatment options kind of changing Xyrem's current market dynamics? Will they change it in any meaningful way?

As we look at the potential expansion of the number of treatments for narcolepsy.

We're reminded the narcolepsy remains an under diagnosed and under treated disease.

Bruce C. Cozadd: And then on 258, considering that you didn't run a head-to-head study versus Xyrem, can you give us a sense of what other language we could get on 258's label outside of not including a warning about high sodium? About the high sodium content. Thanks so much.

Hi, and walls Xyrem, we think is a particularly effective drug for those patients that take it.

You know that the number of patients that take that drug is small relative relative to either the number of diagnosed narcolepsy patients or the broader.

A number of patients who suffer from the disease, but are not yet.

Daniel N. Swisher: Yeah, on the first question about narcolepsy treatment options, of course, we're happy we've introduced a number of new treatment options for narcolepsy patients already this year, starting with expanding the Xyrem label to pediatric patients and now launching CENOSI for EDS and narcolepsy patients as well as OSA patients. You know, as we look at the potential expansion of the number of treatments for narcolepsy, we're reminded that narcolepsy remains an underdiagnosed and undertreated disease. And while Zyram is, we think, a particularly effective drug for those patients that take it, you know that the number of patients that take that drug is small relative to either the number of diagnosed narcolepsy patients or the broader number of patients who suffer from the disease but are not yet appropriately diagnosed and treated. And so additional treatment options, additional focus on the correct diagnosis and treatment of narcolepsy patients, we think is a really important thing for the narcolepsy community, and we continue to want to be part of that conversation with our treatment. Maybe on your question about JCP 258, I can let Dan talk about that a little bit.

Appropriately diagnosed and treated and so additional treatment options additional focus on the correct.

Diagnosis and treatment of narcolepsy patients. We think is a really important thing for the narcolepsy community.

Hi, and we continue to want to be part of that conversation with our treatment.

Maybe on your question on JCP 258, I can now, let Dan talk about that a little bit.

Thanks, Bruce just to remind people of the upcoming milestones and 258 city.

Phase three data read out that would just given the topline two we'll have that data presentation, an oral presentation at world Sleep Conference in September .

We do have a.

Scheduled.

India meeting with the FDA pre NDA meeting with the FDA in the fourth quarter and are looking to put that package together and obviously, we'll be in discussion with the FDA around label its a little premature to talk about that now.

Albeit that this was a pretty streamlined.

Clinical study to get to initial approval with the relevant endpoints that we've got in Xyrem label, but clearly not having the sodium content sodium levels will be reflected in that label.

I think increasingly we're also really looking at that data to think about what additional data do we want to generate both in real world.

Daniel N. Swisher: Yeah.

Daniel N. Swisher: Thanks Bruce. Just to remind people of the upcoming milestones on 258, so the phase three data readout that we've just given the top line to, we'll have that data presentation and oral presentation at the World Sleep Conference in September. We do have a scheduled NDA meeting with the FDA, a pre-NDA meeting with the FDA in the fourth quarter, and looking to put that package together, and obviously, we'll be in discussion then with the FDA around the label. It's a little premature to talk about that now, you know, albeit that this was a pretty streamlined clinical study to get to initial approval with relevant endpoints that we've got in the X I think increasingly we're also really looking at that data to think about what additional data we want to generate, both in real world studies and how that might continue to supplement what's on the market both in terms of labels but also in publications.

Studies, and how that how might that continue to supplement what's on the market. Both in terms of label that also in publications.

Great. Thanks, so much.

Thank you. Our next question comes from Jessica Fye of JP Morgan Your line is open.

Great. Good afternoon, thanks for taking my questions.

On four or five they can you help us think about how long it might take to recruit that pivotal phase two three.

Particularly in light of the erroneous supply issues.

And second part to that is what part of the company's focus on driving global growth do you see any potential that this single arm pivotal could support approval in Europe or would that take a subsequent trial. Thank you.

So Jess I don't think were going to provide a specific projection of enrollment timeline for the four or five eight trial, we need to finalize that protocol.

Get sites open and start that process.

We do believe there is strong interest on the part of a cog membership.

On getting this trial up and running and we certainly expect.

That will go well I will remind you this is an orphan condition.

Wallets the most common childhood cancer, there is still a limited number of patients.

Bruce C. Cozadd: Thank you. Our next question comes from Jessica Fye of J.P. Morgan Great. Good afternoon.

Who would be eligible for a trial like this but we're going to do everything we can to move this right along.

Maybe I'll turn the global growth question over to Dan Yeah. Thanks, Jess on the global growth side, just to really streamline our effort to get to market as quickly as possible. Yeah, we focused our regulatory interactions to date with the FDA.

Bruce C. Cozadd: Thanks for taking my questions. On 458, can you help us think about how long it might take to recruit that pivotal phase two, three, particularly in light of the R18 supply issues? And second, part to this, with part of the company's focus on driving global growth, do you see any potential that this single-arm pivotal could support approval in Europe, or would that take a subsequent trial? Thank you.

But we think the same a market need market conditions are similar in the other countries, where both clinicians and regulators are looking for additional new treatment options.

That provide reliable safe and potentially differentiated products.

Bruce C. Cozadd: So, Jeff, I don't think we're going to provide a specific projection of the enrollment timeline for the 458 trial. We need to finalize that protocol, get sites open, and start that process. We do believe there's strong interest on the part of COG membership in getting this trial up and running, and we certainly expect that it will go well. I will remind you this is an orphan condition. While it's the most common childhood cancer, there's still a limited number of patients who would be eligible for a trial like this, but we're going to do everything we can to move this right along. Maybe I'll turn the global growth question over to Dan.

So we are actively planning now that we've got the FDA input how we approach the other regulators and will update at future calls.

Thank you.

Our next question comes from David Risinger of Morgan Stanley . Your line is open.

Hi, Peter institution on for David Risinger.

I have two questions. The first one is are there any risks associated with the salt replacement components off the 258 formulation.

And the second question is when the two five it data its release in September how should investors assess its efficacy profile relative to xyrem.

Daniel N. Swisher: Yeah. Thanks, Jess.

Thank you.

So David on the Cat eye on mixture, we've used to reformulate.

Daniel N. Swisher: On the global growth side, just to really streamline our effort to get to market as quickly as possible, we focused our regulatory interactions to date with the FDA, but we think the same market need, and market conditions are similar in other countries where both clinicians and regulators are looking for additional new treatment options that provide reliable, safe, and potentially differentiated products. So we were actively planning, now that we've got the FDA's input, how we would approach the other regulators, and we'll update on future calls.

This innovative new product that we think provides this benefit of lower sodium we certainly had in mind too.

Do that in a way that would not introduce additional risk in the product. Obviously, we are collecting safety data in all our work, but we don't have any particular concerns in that regard.

On how to think about efficacy, we've talked about that a little bit when we released the topline.

Data from the trial just to remind people that in addition to the.

Primary endpoint pre specified secondary endpoint.

Bruce C. Cozadd: Our next question comes from David Rissinger of Morgan Family, Elana. Hi there, Sushin on for David Rissinger.

You know theres a lot of data we're collecting in this trial you know remember that the trial design was four arms.

With patients entering either naive already on xyrem treatment or naive or on Xyrem treatment with also anti cataplexy pick treatment.

Bruce C. Cozadd: A few questions. The first one is, are there any risks associated with the salt replacement components of the 258 formulation? And the second question is, when the 258 data is released in September, how should investors assess its efficacy profile relative to Xyrem? Thank you.

And so we're really watching these four different groups of patients as they enter the trial as they ramp up on JCP 258.

And as they either come off xyrem or taper down on the.

Bruce C. Cozadd: So, David, on the cation mixture we've used to reformulate this innovative new product that we think provides this benefit of lower sodium, you know, we certainly had in mind to do that in a way that would not introduce additional risk into the product. Obviously, we are collecting safety data in all our work, but we don't have any particular concerns in that regard.

Anti cataplexy yixin, so watching each of those groups and looking at efficacy and tolerability over the run in period.

Both in this trial and then thinking about how that compares to what we would expect to see relative to prior xyrem treatment or or data. We've had on naive patients. The past gives us a lot of information in the end the primary endpoint and the one that supports our regulatory strategy and where we gave you a sense for how the results came out in the trial.

Bruce C. Cozadd: On how to think about efficacy, we talked about that a little bit when we released the top-line data from the trial, just to remind people that in addition to the primary endpoint, the pre-specified secondary endpoint, you know, there's a lot of data we're collecting in this trial. You know, remember that the trial design was four arms with patients entering either naive already on Xyrem treatment or naive or on Xyrem treatment plus anti-cataplectic treatment. And so we're really watching these four different groups of patients as they enter the trial, as they ramp up on JCP258, and as they either come off Xyrem or taper down on the anti-cataplectics. And so watching each of those groups and looking at efficacy and tolerability over the run-in period both in this trial and then thinking about how that compares to what we would expect to see relative to prior Xyrem treatment or data we've had on naive patients in the past gives us a lot of information.

Was based on a randomization period at the end, where we either kept people onto fiveeight or randomized them back to placebo and we looked at what happened in the primary endpoint to cataplexy attacks over a two week period. So we've already told you that part of the data was strong, but we'll look forward to presenting a little more information both at the world's sleep Congress and as we move forward.

Our next question comes from Gary catchment of BMO capital markets. Your line is open.

Hi, actually Gary Nachman.

So let's see what is the early read been from payers on your whack price that you came out with it seem pretty reasonable do you think coverage could have been a bit more quickly potentially than what you guys talked about.

And are you starting to make some progress with Oh, a say, we're focusing more on the beach head in narcolepsy. How do you think those two markets are going to shake out.

Bruce C. Cozadd: In the end, the primary end point and the one that supports our regulatory strategy and where we gave you a sense of how the results came out in the trial was based on a randomization period at the end where we either kept people on 258 or randomized them back to placebo, and we looked at what happened in the primary endpoint to cataplexy attacks over a two-week period. So, we've already told you that some of the data was strong, but we look forward to presenting a little more information both at the World Sleep Congress and as we move forward.

Thanks.

So Gary glad we know your last name now thank you for that.

[laughter] sure everybody I'll make maybe I'll have a maybe I'll have Mike respond on payers and coverage speed side and then how we're doing in Odessa.

Hey, Gary this is Mike.

Yes, so I think the payer discussions have progressed.

Nicely at this point we are not.

Giving any guidance or differently than what we already have about it.

It is I think the payers have responded well to the data.

Bruce C. Cozadd: Our next question comes from Gary Katchman of BMO Capital Markers. Hi. Actually, it's Gary Nachman.

And I think importantly to your point you know when you think about narcolepsy now I say.

Bruce C. Cozadd: So on Sanosi, what has the early read been from payers on your WAC price that you came out with? It seemed pretty reasonable. Do you think coverage could happen a bit more quickly, potentially, than what you guys talked about? And are you starting to make some progress with OSA, or focusing more on the beachhead and narcolepsy? How do you think those two markets are going to shake out?

Almost all patients are being treated with with narcolepsy have EDSS.

So that is a natural beachhead as you said in a in our launch plans.

Importantly, though the real estate market exists with the Pulmonologists and that's really really opens up the opportunity for the brand a those discussions have gone well I think particularly the differentiated them away that robust efficacy in both indications the lack of drug drug interaction in the nine our activities has been received well.

Bruce C. Cozadd: So, Gary, glad we know your last name now. Thank you for that, sir. Sure, everybody else. Maybe I'll have Mike respond on the payments and coverage speed side and then how we're doing in OSA. Hey Gary, this is Mike.

Mike Miller: Mike, yeah, so I think that the payer discussions have progressed nicely. At this point, we are not giving any guidance differently than what we already have about it. It is, I think the payers have responded well to the data. And I think, importantly, to your point, you know, when you think about narcolepsy in OSA, almost all patients being treated with narcolepsy have EDS. So that is a natural beachhead, as you said, in our launch plans. Importantly, though, the real OSA market exists.

Okay. Thank you.

Our next question comes from Omar Rafat of Evercore. Your line is open.

Thanks, So much for taking my question Bruce I have two today and perhaps the first one is.

What's the level of urgency in the organization on expanding the reliance of the P. and L. beyond Xyrem.

Specifically on M&A. So for instance, should we be expecting a sizable transaction before year end.

Are you guys competitive and the valuation ranges you're looking at I'm sure you understand a lot of investor concern around the reliance on them.

Mike Miller: And that really, really opens up the opportunity for the brand. Those discussions have gone well.

Specially in the backdrop of Vyxeos has been doing.

Mike Miller: I think particularly the differentiated MOA, the robust efficacy in both indications, and the lack of drug-drug interaction in the nine-hour activities have been received well.

And secondly, there was a moderation in the pace of price increases for Xyrem last year, but I noticed with the July increase this year, there's sort of a move back towards the 9% to 10% range should we expect that to be the norm now going forward again, thank you very much.

Mike Miller: This has been received well.

Mike Miller: Okay, thank you. Our next question comes from Uma Rafat of Evercore. Your line is open. Thanks so much for taking my questions.

[noise], yeah rumor on the I'll take the second part of your question first.

Bruce C. Cozadd: Bruce, I have two questions today, and perhaps the first one is... What's the level of urgency in the organization for expanding the reliance of the P&L beyond Xyrem, specifically on M&As? So, for instance, should we be expecting a sizable transaction before year-end? Are you guys competitive in the valuation ranges you're looking at? I'm sure you understand a lot of investor concern around the reliance on the Xyrem franchise, especially in the backdrop of how Vixios has been doing. And secondly, there was a moderation in the pace of price increases for Xyrem last year, but I noticed with this July increase this year, there's sort of a move back towards the 9-10% range. Should we expect that to be the norm now going forward again?

I you know weve for for many years now have not commented on forward.

Our thinking on on price increases I think it's important to look at the situation. When we arrive at a particular moment in time and do something responsible.

That supports our level of commitment to ongoing R&D to help on narcolepsy patients.

So I wouldn't think of this in terms of setting a new trend. It's it's just what we happened to do at this period.

On your second question.

You know in terms of diversifying our topline.

Bruce C. Cozadd: Thank you very much.

Bruce C. Cozadd: Yeah, Omer, I'll take the second part of your question first. We, for many years now, have not commented on forward thinking on price increases. I think it's important to look at the situation when we arrive at a particular moment in time and do something responsible that supports our level of commitment to ongoing R&D to help narcolepsy patients. So I wouldn't think of this in terms of setting a new trend; it's just what we happen to do at this period. On your second question, you know, in terms of diversifying our top line, we're tremendously pleased with Xyrom's continued strong performance, and we'd like nothing more than to see that continue in the years ahead as we expand into the pediatric population, as we continue to try to help more narcolepsy patients with this product.

Were tremendously pleased by his Xyrem is continued strong performance.

And we'd like nothing more than to see that.

Continue in the years ahead as we expand into the pediatric population as we continue to try to help.

On more narcolepsy patients with this product also remind you that.

Under settlement agreements, while there will be generic competition in the future that is still a ways often.

It includes a number of components, including authorized generics where.

There are some economics to jazz.

And we've been talking of course about our efforts to introduce an even better product for narcolepsy patients.

Hi in the years to come.

But that said, we would love to build additional growth drivers into our.

Bruce C. Cozadd: I would also remind you that under settlement agreements, while there will be generic competition in the future, that is still a ways off and, you know, includes a number of components in the years to come. But that said, we would love to build additional growth drivers into our overall business. We continue to look at that by growing existing products, by advancing products in our R&D pipeline, and by broadening our R&D pipeline. We remain interested in bringing marketed products or near-market products in through our CorpDev efforts as well. And maybe I'll ask Matt to comment a little bit about our efforts there and how we think about the market we're in today for those types of assets.

Overall business, we continue to look at that by growing existing products.

By advancing products in our R&D pipeline and by broadening our R&D pipeline.

We remain interested in bringing marketed products or near market products.

In through our Corp, Dev efforts as well and maybe I'll ask Matt.

To comment a little bit about our efforts there and how we think about the market. We're in today for those type of assets.

Yes, so I mean, we remain very enthusiastic about what we're evaluating and continue to build cash and firepower currently at around two and a half billion before any external funding again those leverage finance markets are relatively strong we continue to look really across the spectrum of opportunities and.

Matt Young: Yeah, so I mean, we remain very enthusiastic about what we're evaluating and continue to build cash and firepower, currently at around two and a half billion before any external funding. And again, those leveraged finance markets are relatively strong. We continue to look really across the spectrum of opportunities and believe we have both the capacity to, you know, evaluate and acquire a broad range of assets to build our pipeline or bring in product opportunities. So while we've done a couple of early pipeline building transactions, we're clearly very focused on larger and later stage opportunities as well, both in ways to build upon our existing franchises and looking even...

I believe we have both the capacity to.

Evaluate and acquire a broad range of assets to build our pipeline or bring in product opportunities.

So while we've done a couple of early pipeline building transactions were clearly.

Very focused on.

Larger and later stage opportunities as well both in ways to to build upon our existing franchises and looking even.

Thank you next question comes from David Maris of Wells Fargo. Your line is open.

Good afternoon. Thank you the grassley widen proposal calls for manufacturers to exclude the value of coupons.

Sure.

The ASP calculation for Medicare part B. So maybe can you talk a little bit about your overall Medicare exposure Medicare part B exposure and any color on the use of couponing I would imagine that's mostly related to xyrem. So maybe what percentage of patients use coupons for Xyrem and then separately.

Matt Young: Thank you. The next question comes from David Marris of Wells Fargo, Yolanda. Good afternoon, thank you. The Grassley-Wyden Act

I don't know if you addressed this but the xyrem guidance.

Bruce C. Cozadd: The unwidened proposal calls for manufacturers to exclude the value of coupons for the ASP calculation for Medicare Part B. So maybe can you talk a little bit about your overall Medicare exposure, Medicare Part B exposure, and any color on the use of couponing? I would imagine that's mostly related to Xyrem. So maybe what percentage of patients use coupons for Xyrem? And then separately,

Assumes or looks to project that things are flat first year to us to the second or first half of the year to the second half of the year is there any reason for that or is it just conservatism.

Thank you.

Yes, Thanks, David.

On the first part of your question you know there are.

A host of a possible outcomes to.

Bruce C. Cozadd: I don't know if you addressed this, but the Xyrem Guidance...

Bruce C. Cozadd: I look to project that things are flat from the first half of the year to the second half of the year. Is there any reason for that, or is it just conservatism?

How the government of approaches pharmaceutical pricing through legislative action or otherwise.

We don't think that has landed yet we may feel like we have direction, but I don't know where it's going to land.

Bruce C. Cozadd: Thank you. Yeah, thanks, David. On the first part of your question, you know, there are a host of possible outcomes for how the government approaches pharmaceutical pricing through legislative action or otherwise. We don't think that has landed yet, and we may feel like we have direction, but I don't know where it's going to land. So rather than going through sort of a product by product mix and coupon discussion, I'll just say, generally, our products on average have a lot of commercial pay. I don't feel like we line up as a company. It's particularly skewed toward any one piece of Part B, Part D, or otherwise. Um, you know, I don't think we're at an extreme on any measure, um, so we, like other companies, are watching what is happening. I think we'll have a lot more clarity over the next few months as we move into the fall and toward the end of the year. And then maybe we can give you a better sense, you and others, a better sense of potential impact on the company, um... but in general, we don't think the types of things being talked about as we look at our current product portfolio would have an overly outsized result. On your Xyrom question, maybe I'll have Matt address that.

Ah so rather than going through sort of a product by product mix and coupon discussion I'll just say generally.

Our products on average have a lot of commercial pay.

I don't feel like we line up as a company, particularly skewed toward any one piece of part B part D or otherwise.

I don't think were at an extreme on any measure. So we like other companies are watching what is happening I think we'll have a lot more clarity over the next few months as we move into the fall and toward the end of the year.

And then maybe we can give you a better sense, you and others, a better sense of potential impact on the company.

But in general we don't think the types of things.

They are being talked about as we look at our current product portfolio would have an overly outsized results.

On your Xyrem question, maybe I'll have Matt.

Address that.

Yes, Thanks, David just quickly I'd say.

Matt Young: Yeah, thanks, David. Just quickly, I'd say, remember, this is the first time we've had our field force in our sleep franchise focused on two products, so I think we want to make an account for uncertainties in that regard. And while there's nothing specific that portends what we're guiding to, to your question, we believe our guidance reflects a range of expected scenarios that could materialize as the year progresses and want to just take some of those nuances into account.

Remember this is the first time, we've had our field force in our sleep franchise focused on two products. So I think we want to make.

Out for uncertainties in that regard and.

While there is nothing specific that we that portends, what we're guiding to to your question. We believe our guidance reflects a range of expected scenarios that could materialize as the year progresses and want it just take take some of those nuances into account.

Great. Thank you very much.

Thank you.

Question comes Jason Gerberry of Bank of America. Your line is open.

Hi, good evening, thanks for taking my questions.

Yes, the update on JCP 458 can you.

Bruce C. Cozadd: Great, thank you very much. Our next question comes from Jason Garberry of Bank of America. Oh, hey, good evening.

Confirm or clarify does this have any implications on the PDL agreement business.

Indicate that they're bidding process has concluded.

Operator: This is the update on JCP-458. Let's confirm or clarify. Does this have any...

And if you are.

We have little trial is as accelerated as the erroneous pivotal trials were and you are able to get the NDS stage before end of 2020 does that have implications on the relationship and then also just outside of supply how might four or five any differentiate from our business.

Operator: [inaudible]

Operator: NDA stage before the end of 2020. Does that have implications on the relationship? And then also just

Operator: Outside of supply, how...

Daniel N. Swisher: Outside of supply, how might 458 differentiate from Erwin A's? Yeah, Jason, maybe I'll ask Dan.

Yes, Jason maybe I'll ask Dan to take this question.

Daniel N. Swisher: Yeah, thanks, Jason, for those questions. So, you know, for a number of years now, we've been focused on looking at other recombinant approaches to Christiansis-based programs, and we're just happy that we now have one that's moving from, you know, a good, healthy volunteer experience into Phase II-III. We continue to believe, both short-term and longer-term, that we're a natural partner for PBL. You know, we built the market, we've got the KOL relationships, we've got regulatory filings in most countries, and so, you know, we continue to be involved with PBL both for the short-term and the long-term. In terms of the actual process, we can't comment on that. That's their process, but it is still underway, and we are still engaged in that process.

Yes, thanks, Jason for those questions. So for a number of years now. We then yes focused on looking at other recombinant approaches to Chris to answer space programs and we're just happy that we've got now one that's moving from yellow good healthy volunteer experience into a phase two three.

We continue to believe the short term and longer term that we're a natural partner for PBL.

You know we built the market we've got the scale relationships.

We've got regulatory filings in most countries and so yeah. We continue to be involved with TBL, both for short term and long term.

In terms of the actual process, we can't comment on that that's their process.

That is still underway and we are still engaged in that process.

And in terms of a differentiation.

Daniel N. Swisher: And in terms of differentiation, yeah, it's a little premature now, other than obviously high quality reliability, a much more modern manufacturing process, faster cycle times, etc. So we feel very confident about the supply we would have and the ability to really grow the market into the AYA segments, into geographies like Japan where we've got approval but have not been able to launch. So there's a lot of opportunity to have a second product.

Yes, it's a little premature now other than obviously, a high quality reliability at much more modern manufacturing process.

Faster cycle times et cetera, So we feel very confident about the supply we would have the ability to really grow the market into the aways segments into geographies like Japan, where we've got approval that have not been able to launch so theres a lot of opportunity to have a second product.

Great. Thanks.

Daniel N. Swisher: Great, thanks. Thank you. Our next question comes from... Randall Sinicki of RBC Capital Markets. Your line is open.

Thank you our next question comes from.

Randall Stanicky of RBC capital markets. Your line is open.

Great. Thanks Bruce.

Bruce C. Cozadd: The first one for you is what we think about the upcoming FDA meeting at 258. What are you looking for?

Bruce C. Cozadd: Should we think about this as largely informing REMS? Is there anything else we should be thinking about? And then, secondly for Matt, SG&A stepping up in the back half over the first half, about 10% at the midpoint. I understand there's a lot of infrastructure, commercial infrastructure, going into this. The last couple years, it's been a little more flat in the second half over the first half. Should we think about this back half SG&A spend as a new appropriate run rate going forward? Thanks. Yeah, on the first part of your question, you know, our pre-NDA meeting will just be focused on making sure we submit a high quality package that's going to meet the regulators. We know we think of this product as a significant advance, and we want to get it to patients, but we want to make sure uh... we handle that regulatory interaction uh... in the way that you know optimizes the ultimate review and approval of that product broadly, including REMS, but I don't think that's a particular focus of this meeting. So much is just making sure we're synced up across the board, Matt on

I understand there's lot of core infrastructure commercial and construction going into this last couple of years, it's been a little more flat second half over first half should we think about this back half SGN a spend is a new appropriate run rate going forward. Thanks.

Yes on the first part of your question.

You know our pre Anda meeting, we'll just be.

Focused on making sure we submit a high quality package that is going to meet that.

Regulators.

We think of this product as a significant advance.

And we want to get it to patients, but we want to make sure.

We handle that regulatory interaction.

In a way that.

Optimizes, the ultimate review and approval of that product broadly, including Rems.

But I don't think Thats, a particular focus this meeting so much as just making sure. We're we're sync up across the board.

Matt on SGT.

Matt Young: Yeah, Randall, certainly some of the investments we're making will be ongoing investments on a dollar basis, for sure. And recall, given the early July launch for Synos in the US and the hiring of the field force just before that, and then acceleration of sales, sales expenses, but then marketing and medical expenses, while that had been picking up, even through part of last year, it certainly accelerated with the formal launch.

Yeah Randall its certainly some of the investments, we're making will be ongoing investments on a dollar basis.

For sure and recall.

Given the June early July launch for us and those in the U.S. and the hiring of the field force just before that.

And then acceleration of sales sales expense, but then marketing and medical expenses, while that had been picking up even through part of last year. It certainly accelerates with the formal launch we are also doing them the market building and some of the hiring and.

Matt Young: We are also doing market building and some of the hiring and activities in Europe in anticipation of our result on the European stage later this year or early next. And so that's a big investment. And we, as we mentioned, are making an investment behind Vixios commercially as well, with an additional 15 reps, this in the back half of this year. So again, those are costs that I would expect to be layered in on an ongoing basis that should support, again, a significant uptick in commercial performance.

Activities in Europe , and anticipation of our result in in the European Theater later this year or early next.

And so that's a big investment and we.

As we mentioned are making an investment behind vyxeos commercially as well.

With an additional 15 reps this in the back half of this year. So so again those are costs I would expect to be layered in on an ongoing basis that that should support again, a significant uptick in commercial.

Performance.

Great. Thanks.

Matt Young: Our next question comes from David. Annabel Samimy, David Amsellem, and David Amsellem of Piper Jaffray Lounge.

Our next question comes from David.

AMSO Amsellem of Piper Jaffray. Your line is open.

[noise]. Thanks, so on she knows she can you just remind us how long you're planning to sample aggressively and also how long you're planning to subsidize out of pocket exposure aggressively is that going to persist through much of 2020, and then secondly regarding competition and.

Bruce C. Cozadd: Thanks. So on Cenosi, can you just remind us how long you're planning to sample aggressively and also how long you're planning to subsidize out-of-pocket exposure aggressively? Is that going to persist through much of 2020? And then secondly, regarding competition and narcolepsy and cataplexy, what's the extent to which you think that Pitolacin and Xyrem could potentially be complementary over the long term? And is that something you've given thought to? Thanks.

Narcolepsy with Cataplexy is what's the extent to which you think that they told us and and xyrem could potentially be complementary over the long term and is that something you've given thought to thanks.

Bruce C. Cozadd: Yeah, so David, on sampling and patient access, you know, our goals out of the gate are to get a good trial of this product. We think it's an excellent product. We certainly saw in our clinical experience that patients treated with CENOSI benefited significantly over time. We'd like to give HCPs and patients the opportunity to gain experience with CENOSI, and that's underlying a lot of our early efforts. You know, in terms of the degree to which we'll need to continue to do that, Mike described our efforts to gain payer access over time. And I think we'll watch how that plays out over time. But that'll certainly have an impact on how our programs work. On the potential for use of Cotolisant with Xyrem, you know, maybe I'll have Rob comment on how patients often use Xyrem in combination with other agents. I will remind you that we'll wait to see an ultimate approval and label for Podolsan before we can make more informed comments on that.

Yeah, So David on on sampling and patient access you know our goals out of the gate or to to get good trial of this product we think it's an excellent product.

We certainly saw on our clinical experience with patients treated with Sanofi.

Benefited significantly over time, we'd like to give a HCPCS and patients the opportunity to gain experience.

With Sanofi and that's that's underlying a lot of our early efforts.

You know in terms of the degree to which will need to continue to do that you know Mike described our efforts to gain payer access over time and I think.

I will watch how that plays out over time, but that will certainly have an impact on on how or our programs work.

On the potential for use of Portola sand.

With Xyrem you know, maybe I'll have Rob comment on on how patients often use xyrem in combination with.

Other agents I I'll remind you that.

Now I will wait to see an ultimate approval and label for but also have before we can.

Make more informed comments on that but but Rob maybe you could address this generally.

Robert Iannone: Sure, so just to reiterate, we know...

Sure. So just just to reiterate we know that patients who are on xyrem often.

Robert Iannone: And just to reiterate,

Robert Iannone: and often are also using daytime treatments. And that may well be the case with pitolicin. However, it doesn't obviate the need for, or the benefits of, xyrem overnight.

We're also using daytime treatments and that may well be the case with the tolleson doesn't obviate the need for or the benefits for xyrem overnight and we certainly think that thats, a possibility with sanofi as well.

Robert Iannone: And we certainly think that that's a possibility with tenosy as well. Thanks. Thank you. Our next question comes from Esther Rojava of Oppenheimer. Your line is open. Please make sure your phone is on mute.

Thanks.

Thank you. Our next question comes from Aster for Java Oppenheimer. Your line is open.

[noise].

Please make sure your phone is on mute.

Matt Young: Our next question comes from Greg Gilbert of SunTrust. Your line is open. Thank you. Back on 458, and I assume we're talking about the longer half-life or the half-life extended version here.

One moment please.

Our next question comes from Gregg Gilbert of Suntrust. Your line is open.

Thank you back on four or five eight and I assume we're talking about the.

Longer half life for the half life extended version here can you talk about how large or you think the market is when given a full supply scenario.

Bruce C. Cozadd: So talk about how larger you think the market is when given a full supply scenario and whether

And whether there are any other products as part of your.

Bruce C. Cozadd: Any other products as part of your arrangement with Phoenix that you could speak to or are interested in? And my other question is about Vixios, based on that very strong data and relapsed refractory AML in young adults and kids, plus your intention to file.

Arrangement with Phoenix that you could speak to or are interested in.

And my other question is about Vyxeos.

Based on that very strong data in relapsed refractory AML and young adults and kids.

Plus your intention to file can you put a little bit of context around the commercial opportunity. Thanks.

Bruce C. Cozadd: Can you put a little bit of context in?

Bruce C. Cozadd: That's a little bit of context around the commercial opportunity. Thanks.

So Greg on your on your first question, Jason before five eight is in fact not.

Bruce C. Cozadd: So, Greg, on your first question, JCP458 is, in fact, not a longer-life product. It's, you know, more similar to the Erwinase product in that regard. We, as you'll see in our slide deck, which we make available on our website, we do have an earlier attempt to look at the potential for less frequent dosing of the product, which would be another advantage. But to be clear, the one we're talking about taking into a pivotal trial is not actually that.

A longer half life.

Product it's.

More similar to the.

To the Irwin is product in that regard, we as you'll see in our slide deck that we make available on our IR website, we do have an earlier.

Attempt to look at.

The potential for less frequent dosing of that product, which would be another advantage, but to be clear. The one we're talking about taking into pivotal trial is in fact not that.

Bruce C. Cozadd: In terms of how much larger the market is, it's a great question. And I think, you know, Dan talked about the opportunity for multiple products on the market here. You know, we haven't been able to meet existing market needs.

In terms of how much larger the market is it's a great question and I think.

Dan talked about the opportunity for multiple products on the market here, we haven't been able to meet.

Existing market need that's caused us to.

Bruce C. Cozadd: That's caused us to, you know, certainly take our foot off the gas in terms of continuing to promote expanded use of asparaginase in adolescent and young adult markets. Dan specifically mentioned its limited ability to do geographic expansion with approval in Japan but no launch product, and even beyond that, the ability to do additional clinical investigation of the product in potentially broader applications. I think it could open up new uses. So, you know, we think there's a significantly expanded market for the use of asparaginase overall. And we think JCB 458 could help unlock that potential. On Phoenix, I don't think we have that much more to say other than what we said publicly before that, you know, the deals we've cut with Phoenix are a little broader than just what we're talking about here and Invixios in terms of commercial potential. Maybe I'll ask Alan to talk about that a little bit.

You know say certainly take our foot off the gas in terms of continuing to promote for expanded use.

Of Asparaginase base.

Hi Inn.

Adolescent and young adult market.

You know, Dan specifically mentioned its limited ability to do geographic expansion with approval in Japan, but no launched product.

And even beyond that the ability to do additional clinical investigation of the product in potentially broader applications I think could could open up new use so.

We think theres, a significantly expanded market for use of asparaginase overall.

And we think Jason before five eight could help unlock that potential.

On Phoenix I don't think we have that much more to say other than what we said publicly before.

That.

You know that the deals we've got with Phoenix or a little broader than just what we're talking about here.

And in Vyxeos in terms of commercial potential.

Maybe I'll ask Alan.

To talk about that a little bit.

In the pediatric population Bruce to clarify, yes, so I think in the pediatric population AML is rare than AOL. So it is a small population, but I think what that ASCO data represents is an opportunity right that the drug is effective in pediatrics. So it's not the high risk AML the therapy related AML or AML MRC. This is a younger population with relapse refractory disease different genetic profile in the drug is still highly active and so sort of fits our hypothesis that this drug has wider implications outside of the current indication.

Alan Lang: In the pediatric population, Bruce, to clarify. Yeah, so I think in the pediatric population, AML is rarer than ALL, so it is a small population. But I think what that ASCO data represents is an opportunity, right, that the drug is effective in pediatrics. So it's not the high-risk.

Alan Lang: the therapy related AML or AML-MRC

Alan Lang: This is a younger population with relapse-refractory disease, a different genetic profile, and the drug is still highly active. And so it sort of fits our hypothesis that this drug has wider implications outside of the current indication. Thanks.

Thanks.

Alan Lang: Thank you. Our next question comes from Annabel Samimy of SIPO. Your line is open.

Thank you. Our next question comes from Annabel Samimy of Stifel. Your line is open.

Hi, Thanks for taking my questions just.

Bruce C. Cozadd: Hi, thanks for taking my question. Piggybacking off of some of the narcolepsy questions for Zyram, you mentioned how you're viewing the market evolution with new competitive entrants. Can you maybe give us a sense of how this might affect you in the payer landscape? I mean, you've always been sort of the only one playing in the market for Narcolepsy, and I just want to know if you expect any kind of rebate pressures on Xyrem if there are new options available. And then separately on Victios, I guess you kind of touched on this, but outside of the high-risk populations that you have, you know, the well-studied populations and with some of the new studies underway, has there been any additional comfort to move fixiose earlier in treatment? And do you have any updates on the MDS study design? Thanks.

Hey, you back office on the narcolepsy question for.

You mentioned, how you're viewing the market evolution.

Entrants can you maybe give us a sense on how this might affect you on the payer landscape I mean, you've always been.

Playing in the market.

For narcolepsy and just wanted to know if you expect any kind of rebate pressures.

Environment Theres, new options available and then.

Separately on.

I guess, you kind of touched on this but.

Outside of the high risk populations that you have.

No well study population and with some of the new studies underway has there been any additional comfort to move next year.

Earlier and treatment on and do you have any updates on the Mds study design.

Thanks.

On a xyrem in terms the payer landscape.

Bruce C. Cozadd: on Xyrum in terms of the payer landscape. You know, again, we view this as an important treatment option for patients. We have a number of patients who we think are well treated on Zyra, many of whom have been on the medication for a number of years. We think it's important to maintain that access. We're committed to that.

You know again, we view this as an important treatment option for patients we have a number of patients.

Who we think are well treated on xyrem, many of whom have been on the.

On the medication for a number of years, we think it's important to maintain that access we're committed to that.

I don't think I want to say anything beyond that in terms of particular.

Bruce C. Cozadd: I don't think I want to say anything beyond that in terms of particular pressure from payers. On Vixios, I'm not quite sure I understand your question. Vixios is a frontline treatment. It's a frontline treatment for secondary AML, high-risk AML patients. But on your question about what we're doing in MDS, maybe I could ask Rob to jump in on that.

Pressure from payers.

On Vyxeos I am not quite sure I understand your question Vyxeos is a front line treatment, it's a frontline treatment for the secondary AML high risk AML patients, but on your question on what we're doing in Mds.

Maybe I could ask Rob to to jump in on that.

Yes, as we have mentioned in the prepared comments, we are activating through the.

Robert Iannone: So, as we mentioned in the prepared comments, we are initiating, through the MD Anderson collaboration, a study in MDS, and beyond that, Alan, do we have any other studies?

Through the MD Anderson collaboration the study in Mds.

And.

Beyond that Alan do we do we have any other studies.

Alan Lang: Yeah, I think we've publicly disclosed a randomized study that will be conducted in Europe by one of the cooperative groups. So just remember, in MDS, there is a fit population that is transplant eligible. And so I think, you know, you could go with your current dosing regimen in that population. And that, as Rob alluded to, we have a collaboration with MDS, which is usually a disease of older patients. And, you know, those patients tend to be less fit.

Yes, I think we've publicly disclose a randomized study that will be conducted in Europe by one of the cooperative group. So just remember in Mds. There is a fit population that is transplant eligible and so I think you could go with your current dosing regimen in that population and that as Rob alluded to we have a collaboration with Mds, which is the Mds is usually a disease of older patients.

And those patients tend to be less fit and so we'll have a number of activities exploring lower doses for those less fit patients sort of building on the debt data generated by Roland Walters and Jorge Cortez and just to add I think what you meant by earlier, we our frontline therapy, but I think you're talking about standard risk in younger patients and again alluding back to the ASCO data from the children's oncology group I think one of the things that we are so excited about it. This is a difficult to treat population. They were relapsed refractory patients. This was used as a single agent in patients already exposed to cytarabine and Daunorubicin you had a very high CR rate you had a very high more de rate as well and I think that gave the children's oncology group confidence to test this agent in front line.

Alan Lang: And so we'll have a number of activities exploring lower doses for those less fit patients, sort of building on the data generated by Roland Walters and Jorge Cortez. And just to add, you know, I think what you meant by earlier: we are frontline therapy, but I think you're talking about standard risk in younger patients. And again, alluding back to the ASCO data from the Children's Oncology Group, I think one of the things that we're so excited about it is that this was a difficult-to-treat population. They were relapsed refractory patients. This was used as a single agent in patients already exposed to Cytarabine and Donorubicin. You had a very high CR rate. You had a very high MRD rate as well, and I think that gave the Children's Oncology Group confidence to test this agent on frontline, and that's going to be moving to a large pediatric frontline study. And I think you'll see that as a common theme in other populations as well.

And that's going to be moving to a large pediatric frontline study and I think you'll see that as a common thing theme and other populations as well.

Bruce C. Cozadd: Our next question comes from Leah Abram of City Yard. Good afternoon. Regarding JVP 258, Bruce, would you consider using your priority review voucher for the FDA review of this drug and how important is it for you to get 258 to market as soon as possible given some of the various considerations you have to take into account in commercializing the drug?

Yes, that's what I meant thank you.

Thanks.

Thank you.

Our next question comes from Lee of Abraham of Citi. Your line is open.

Good afternoon.

Regarding JBT to five eight.

Bruce would you consider using your products you have you voucher for.

The FDA review of this drug.

And is it for you to get to five its market as soon as possible given some of the.

Various considerations you have to take into account and commercializing the drug. Thank you.

Bruce C. Cozadd: Kelly, great, great question. We haven't announced what our intentions are with respect to the PRV we own. You know, we think 258 represents an important advance for patients, and we are looking forward to it. I think we're going to avoid commenting more particularly on that at this point, but we do feel good about where we are from a timeline perspective, because we've made rapid progress. I think if you look back, we enrolled our 258 trial well, and you know we got positive results. We're looking forward to that data presentation next month now, and you know we are already underway preparing an NDA, so we feel good about the progress we're making on that program and look forward to bringing it to market.

Kelly of Great Great question, we haven't announced.

What our intentions are with respect to the PRB we own.

You know, we think 258 represents an important advance for patients and we are looking forward.

To getting it to patients.

As quickly as we can.

That said there are a number of ways to do that and.

And other uses we might have for that PRB as well so.

Hi, I think we're going to avoid commenting more particularly on that at this point, but we do feel good about where we are from a timeline perspective that we've made rapid progress.

I think if you look back we enrolled our 258 trial well.

Got the positive results, we're looking for that data presentation next month now and.

I already are underway preparing in India. So we feel good about the progress we're making in that program and.

Look forward to bringing it to market.

Thank you operator.

Kathy Luttrell: Thank you. Operator, this will be our last question. Thank you. Since there are no further questions, I'd like to turn the call back over to Kathleen for any closing remarks. I think there's a...

Operator, this will be our last question.

Thank you I guess, there's no further questions I'd like to turn the call back over to Kathy for any closing remarks.

Gross.

I think there is a.

Kathy Luttrell: You want to go back to Esther and see if the line is unmuted? Yeah. Okay. One moment.

You want to go back to Essar and see if the line is on mute it yes, okay. One moment.

Your line is open.

Matt Young: Yeah, okay, one moment. Your line is open. Hey, thank you so much for taking my question. Apologies for earlier. Just a quick question on defitalio. What was the shipment benefit in the quarter and is the inner quarter variability just for the remainder of 2019, or should we expect that to last longer?

Hey, Thank you so much for taking my question apologies for earlier.

Just a quick question on Defitelio, well with the shipment benefit in the quarter and at the end of quarter variability just for the remainder of 2019 or should we expect that to last longer.

Yeah, Matt are we going to characterize the nipple.

Matt Young: Yeah, Matt, are we going to characterize the Nippon?

Matt Young: Yeah, I mean, we still saw growth in both the U.S. and Europe on a volume basis, apart from that, and so I think importantly, we're seeing growth across the board, so I wouldn't consider it material to the way we described the quarterly results. And as it relates to intercourt availability, that will be true with this product just given the timing of transplants and you know VOD being a relatively rare occurrence even within that transplant So I think we will still see some effect of that just based on patient presentation.

Yeah, I mean, we still saw growth in both the U.S. in Europe .

On a volume basis apart from that and so.

I think importantly were seeing growth.

Across the board so I wouldn't consider it material to though the way we describe the quarterly results and as it relates to inter quarter availability that will be true with this product just given the.

Timing of transplants in view of de being a relatively rare.

Occurrence, even within that transplant environment. So I think we will.

You'll see some some effect of that just based on patient presentation.

Bruce C. Cozadd: But I will say we're very happy with how we've seen Deftelio growing, uh... particularly in the U.S. market of late, you know, that coupled with sort of re-establishing a positive VIXIOS trend, really strong start to VIXIOS in Europe, and super strong Xyron performance in the first half of the year.

But I, but I will say, we're we're very happy with how we've seen defitelio growing.

Particularly in the us market of late.

You know that coupled with.

Sort of reestablishing a positive vyxeos trend really strong start to vyxeos in Europe .

A super strong Xyrem performance in the first half of the year.

Bruce C. Cozadd: You know, our team working hard to address the Irwin-Ace challenges, a good launch of Synose, and the rapid progress of the R&D pipeline leave us feeling really good about where we are going into the back half of the year. We're not done yet. We've got a lot to accomplish, including staying busy on the corp dev side. So I don't want to make it sound like we can coast for the second half of the year. But I think, you know, I want to thank our employees for a great start to the year, and we're looking forward to reporting on our progress in the months to come.

You know our team working hard to address the Irwin is challenges.

Good launch of Sonos C and the rapid progress of R&D pipeline.

Leaves us feeling really good about where we are going into the back half of the year and we're not done yet we've got a lot to accomplish including staying busy on the Corp. Dev side, So I don't want to.

Make it sound like we can coast for the second half of the year, but I think.

I want to thank our employees for a great start to the year and and we're looking forward to reporting our progress in the months to come.

Thank you.

Thank you.

Kathy Luttrell: I'm showing no further questions at this time. I'll turn the call back over to Kathy for any closing remarks. Thank you, Valerie, and thank you again for joining us today. We will be participating in the upcoming Wells Fargo and Morgan Stanley Health Care Conferences, and we'll also host an investor update around the World Sleep Congress and hope to see many of you there.

I'm showing no further questions at this time I turn the call back over to Kathy for any closing remarks.

Thank you Valerie and thank you again for joining US today, we will be participating in the upcoming Wells Fargo and Morgan Stanley Healthcare conferences, and we'll also post an investor update around the World Sleep Congress and hope to see many of you there.

Operator: That will now end our call. Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.

Well now and our call.

Thank you ladies and gentlemen, this does conclude today's conference. Thank you for your participation have a wonderful day you may all disconnect.