Jazz Pharmaceuticals Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 8, 2023

There are 15 speakers on the call.

Operator

Good afternoon. My name is Christa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Jazz Pharmaceuticals Third Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

1. Thank you. I would now like to turn the conference over to Andrea Flynn, Vice President, Head of Investor Relations. You may begin.

Speaker 1

Thank you, operator, and good afternoon, everyone. Today, Jazz Pharmaceuticals reported its Q3 2023 financial results. The slide presentation accompanying this webcast is available on the Investors section of our website. Investors may also refer to the press release we issued earlier today, which is also posted to our website. On the call today are Bruce Kozad, Chairman and Chief Executive Officer Rene Galla, President and Chief Operating Officer and Rob Unone, Executive Vice President, Global Head of R&D.

Speaker 1

Kim Sablage, Executive Vice President and General Manager, United States, will join the team for Q and A. On Slide 2, I'd like to remind you that today's webcast includes forward looking statements, such as those related to our future financial and operating results, growth potential and anticipated development and commercialization milestones and goals, which involve risks and uncertainties that could cause actual events, performance and results to differ materially from those contained in these forward looking statements. We encourage you to review the statements contained in today's press release, in our slide deck and in our latest SEC disclosure documents, which identify certain factors that may cause the company's actual events, performance and results to differ materially from those contained in the forward looking statements made on today's webcast. We undertake no duty or obligation to update our forward looking statements. Turning to Slide 3 on this webcast, we'll discuss non GAAP financial measures.

Speaker 1

Descriptions of these non GAAP financial measures and reconciliations of GAAP to non GAAP financial measures are included in today's press release and the slide presentation available on the Investors section of our website. I'll now turn the call over to Bruce.

Speaker 2

Thanks, Andrea. Good afternoon, everyone, and thank you for joining us today. I'll start on Slide 5. In the Q3 of 2023, We delivered strong commercial results, advanced multiple late stage programs within our pipeline and maintain our focus on Driving Operational Excellence. Our results for the quarter exemplify the successful execution that has led to an exciting transformation and diversification of our business across our commercial portfolio and R and D pipeline and we remain well positioned to achieve vision 2025.

Speaker 2

As we highlighted in today's press release, we've updated our 2023 guidance, raising our full year total revenue and oncology revenue guidance at the midpoints. And as our pipeline continues to advance, we are increasing our R and D guidance, primarily driven by investments in zanidatumab development across multiple HER2 expressing cancers that we believe will allow us to deliver an important new therapeutic option with the potential to raise the standard of care for patients and create long term value for Jazz. It's important to note that our disciplined approach to capital allocation has allowed us to invest in R and D as well as key commercial franchises, while remaining on track to deliver on our full year GAAP net income and non GAAP adjusted net income guidance. With regard to our commercial business, we are seeing strong momentum across all three key growth drivers, Zywave, Epidiolex and Rylase. Combined revenue from these products grew 24% in the 3rd quarter compared to the same period last year.

Speaker 2

We remain confident in the durability of our oxybate franchise and the growth of Zywave in both narcolepsy and idiopathic hypersomnia or IH, even as high sodium branded and authorized generic competition has entered the narcolepsy market. Cywave is annualizing at $1,300,000,000 in revenue, remains the oxidative choice and is the only approved treatment for IH. Underlying demand continues to drive Epidiolex growth. We remain confident in its potential to reach blockbuster status and contribute more than $1,000,000,000 in revenue to our Vision 2025 revenue target. Outside the U.

Speaker 2

S, we expect additional launches and indication expansions through 2024. In oncology, Rylase has continued to grow in the U. S. Supported by strong demand from pediatric patients and our increasing emphasis on the adolescent and young adult market. In addition, we recently received marketing authorization for the product in Europe under the trade name EnriLase.

Speaker 2

The performance of these products together with Zepsilka revenues is fueling the ongoing diversification of our commercial business. More than half of net product revenue this quarter came from Epidiolex and or oncology products combined and Zywave represented more than 2 thirds of our oxybate revenue. This marks a significant shift from just a few years ago when Xyrem represented 3 quarters of total revenue. This diversified revenue stream is a direct result of our outstanding commercial execution along with successful corporate development and the internal R and D efforts. Moving to our pipeline, we now expect up to 5 late stage readouts through the end of 2024.

Speaker 2

Rob will cover our R and D progress in more detail later in the call, but I want to highlight that we view zanidetimab as the most derisked and highest priority program in our pipeline. We plan to initiate a rolling biologics license application or BLA submission this year for accelerated approval of zandidatumab for second line treatment of biliary tract cancers or BTC. This is an important step in delivering zanidatamab to patients with BTC and other HER2 expressing cancers with limited treatment options. Given the strength of clinical data to date and its promise in multiple indications, We believe Zany has the potential to deliver more than $2,000,000,000 in peak revenues. On the operational front, Our commercial execution along with attention to operational excellence has put us in strong financial position.

Speaker 2

We continue to generate significant cash flow from operations, which combined with our strong balance sheet gives us the capacity to invest in the products, pipeline programs and corporate development opportunities with the highest potential to deliver sustainable growth and enhanced value. Turning to Slide 6. We are very pleased with our progress in the Q3 and believe it has advanced us toward achieving all three components of Vision 2025 as we continue our transformation into a high growth global biopharma leader. I'll now turn the call over to Renee to review our commercial performance, after which Rob will share an update on our R and D progress. I'll provide a financial overview and then we'll open the call to Q and A.

Speaker 2

Renee?

Speaker 3

Thanks, Bruce. It's been an exciting few weeks as I'd assume my new role. And while I'm working across a different part of the organization, My focus remains the same, driving the continued growth and transformation of our business. Starting on Slide 8, Our confidence in the durability of our oxybate franchise has only increased as we gain more visibility into how dynamics are evolving with the availability of branded and AG high sodium oxybate. Total oxybate revenue, which includes Zywave and Zyrem revenues together with royalties from Zyrem authorized generics is annualizing at $1,900,000,000 and we are well positioned to achieve our stated goal of $2,000,000,000 in oxybate revenues as part of Vision 2025.

Speaker 3

Zywave revenue was approximately $332,000,000 for the Q3 of 2023, representing growth of 30% compared to the same period in 2022, driven by continued adoption in both narcolepsy and IH. Exiting the Q3, there were approximately 9,500 narcolepsy patients taking Zywave. Our focus on educating patients and prescribers about the benefits of reducing sodium intake continues to drive growth and we recently launched a new campaign to support these initiatives. Importantly, we are seeing adoption from both high sodium oxybates and oxybate naive patients. In IH, we see continued growth of new prescribers and exiting the Q3, there were approximately 2,000 550 active IH patients on Zhiwave.

Speaker 3

Zhiwave is uniquely positioned to address the multiple symptoms of IH, including sleep inertia, excessive daytime sleepiness and cognitive impairment, all of which which have a significant impact on patients' quality of life and daily function. Based on the opportunity to improve the lives of people living with IH and our confidence that the IH indication represents a durable growth driver for Zywave, we are increasing our investment to further build the market. This will include educational initiatives and expanding our field team to include members specifically focused on IH to increase the breadth of prescribers. Slide 9 highlights our latest educational campaign for narcolepsy treaters, Less is More, which reinforces the compelling low sodium health benefits of Zywave. Narcolepsy is a debilitating chronic condition and we have focused our educational efforts around the lifelong burden of high sodium intake for narcolepsy patients who live with a 2 to 3 times higher risk than the general population of cardiovascular comorbidities such as stroke and heart failure.

Speaker 3

Zywave is the only approved low sodium oxybate containing 92% less sodium than high sodium oxybate and importantly is the only oxybate without a labeled warning about high sodium intake. You've heard us use a number of comparisons for the sodium load of high sodium oxybate versus Zywave, including eating 4 large orders of fast food French fries or 5 large bags of potato chips every night before bed or that it would take 12 years of treatment with Zywave to equal the sodium intake of 1 year of high sodium oxybate treatment. Regardless of the parallels we draw, the bottom line is clear. The sodium reduction offered by XYOSTED has significant potential health benefits, including lower blood pressure and improved cardiovascular health. We recently presented data at the World sleep meeting that builds on our body of research demonstrating the clear relationship between sleep disorders and increased cardiovascular risk, as well as the meaningful improvements possible with treatment plans that consider a patient's holistic health, such as reducing sodium intake.

Speaker 3

And earlier this year, we shared data at the American Academy of Neurology meeting that showed narcolepsy patients treated with high sodium oxybate at a higher risk of new onset hypertension diagnosis or antihypertensive medication initiation within 180 days of starting therapy when compared to a matched control group of narcolepsy patients not being treated with high sodium The risk of those taking high sodium oxybate was approximately twice that of the control group. We believe that the majority of patients and healthcare providers will continue to prioritize long term health when evaluating oxybate therapy and we are finding the direct competitive messaging in the less is more campaign to be effective. Additionally, since we know this disease and its treatment are complex, the campaign also highlights the advantages of individualized dosing regimens for XY Wave patients and the support services that Jazz makes available for HCPs and their office staff to have Zywave prescriptions approved, reimbursed and delivered to patients. We also offer a range of patient services that include co pay assistance and disease education. Turning to Slide 10 and Epidiolex.

Speaker 3

We achieved another quarter of growth with net product sales increasing 9% year over year to approximately $214,000,000 driven by underlying demand in both our U. S. And European markets. Key drivers of this Demand growth include Epidiolex's strong product profile, including data around benefits beyond seizure control, increased penetration in the long term care setting and strong uptake in key European markets, all of which provide us with continued confidence in the blockbuster potential of the product. Turning to Slide 11, We are focused on multiple opportunities to drive Epidiolex to blockbuster status, including continued data generation, and we expect to present several datasets at the upcoming American Epilepsy Society meeting in December.

Speaker 3

Our educational efforts around caregiver reported outcomes beyond seizure control from the BECOME survey have been especially impactful, further differentiating Epidiolex from other anti seizure medicines. To accompany this caregiver reported data On improvements in cognition, behavior and other non seizure benefits in LGS and DS, We have initiated the post marketing EpiCOM trial in TSC. EpiCOM was designed in collaboration with HCPs CPs and patient advisory groups to evaluate the impact of Epidiolex on behavioral and cognitive functioning and outcomes using a range of validated scales. Our commercial team also has an enhanced focus on dosing optimization, further penetration in the adult setting and continued growth outside the U. S.

Speaker 3

Turning to Slide 12 and our oncology franchise. Net product sales for Rylase were approximately $105,000,000 for the 3rd quarter, a 43% increase year over year. Demand for Rylase remains strong and we see a number of factors that are driving what we believe is sustainable growth. First, healthcare providers have indicated that they are returning to best clinical practice and switching therapy at the first signs of hypersensitivity, which was often not possible under the 2nd, while Rylase has been almost universally adopted in pediatric oncology protocols, We are now also seeing increased pediatric usage in several other areas. These areas include physicians Switching patients from E.

Speaker 3

Coli based asparaginase due to other treatment related issues that arise, as well as some use of Rylase in first line treatment based on its advantages of having a short acting profile relative to current first line asparaginase therapies. 3rd, we continue to see increased adoption of the Monday, Wednesday, Friday, 25, 25, 50 milligrams per meter squared dosing, which is more in line with preferred clinical practice and allows for a dosing schedule that ensures sustained asparaginase levels through the course of treatment, which is essential to improved outcomes for patients. 4th, we are seeing increased use of Rylase in the treatment of adolescents and young adults or the AYA market, and we expect continued growth in this segment. Our field teams have been expanding their educational efforts to AYA treaters this year with a focus on physicians who have previously used asparaginase therapy. Outside the U.

Speaker 3

S, We recently received European Commission approval under the trade name INRILACE and are planning to begin a rolling launch later this year. With respect to the market opportunity, the commercial landscape in Europe has a number of differences compared to the U. S, including competition and market access dynamics. Turning to Slide 13, Zepselka remains the treatment of choice in second line small cell lung cancer and has generated more than $800,000,000 in revenue since launch, proving to be a highly accretive and well executed corporate development transaction for Jazz. Net product sales for the 3rd quarter increased 11% year over year to $78,000,000 driven by an increase in underlying demand.

Speaker 3

A portion of this demand relates to the continued shortage of platinum chemotherapy, which has led to oncologists choosing Zetzelka for some patients they may have historically re challenged with platinum therapy. Although this dynamic may be temporary in nature, it is currently resulting in greater use of Zepselka, particularly in the community setting, where its clinical profile and ease of administration have been well received. While we have achieved significant penetration in the second line setting, There remains an important unmet need for patients diagnosed with small cell lung cancer. We expect topline PFS data from our pivotal Phase 3 trial of Zepselka in combination with Tecentriq in first line small cell lung cancer at the end of 2024 or early 2025. A positive outcome in this trial would provide a further opportunity to both improved patient lives and outcomes as well as drive future growth in our oncology franchise.

Speaker 3

With that, I'll turn it over to Rob for an update on our pipeline and upcoming milestones. Rob?

Speaker 4

Thank you, Renee. Slide 15 provides an overview of our robust diversified pipeline that includes neuroscience and oncology programs across all phases of development. Consistent with our mission and strategy, these programs are focused on advancing the treatment of serious diseases for which there are limited or no options. Moving to Slide 16, This is an exciting time for our organization as we approach multiple catalysts across the pipeline. We now expect up to 5 late stage data readouts through 2024, with all 5 addressing areas of significant unmet need.

Speaker 4

Starting with neuroscience, recruitment in our Phase III trial of Epidiolex in Japan is progressing well and we now expect top line data in the second half of twenty twenty four. We are pleased to announce that we have completed enrollment and our ongoing Phase 2 trial of JZP-one hundred and fifty and PTSD. Based on timing of the last patient last visit, We are updating the anticipated timing of our top line data readout to January 2024. We also have ongoing trials for suvacalcomide or JZP385 in both essential tremor and Parkinson's disease tremor with top line data from the ET trial expected in the first half of twenty twenty four. If results are positive, we believe this trial could serve as part of a pivotal package.

Speaker 4

In addition, we anticipate initial proof of concept in healthy volunteers later this year for JZP-four forty one, our orexin 2 receptor agonist. Moving to oncology and zenodetimab. We expect to report top line data from the ongoing Phase 3 frontline gastroesophageal adenocarcinoma trial next year. Later in the call, I'll provide an overview of our regulatory strategy for Zanodatumab, including an update on BTC. As Renee just mentioned, top line progression free survival data in ZEMCELLCA in combination with Tecentriq as first line maintenance therapy for extensive stage small cell lung cancer is expected at the end of 2024 or early 2025.

Speaker 4

I'll now discuss some of our key programs in detail, starting on Slide 17 with the emidetimab, our highest priority pipeline asset. Given its potential across multiple HER2 positive tumor types, we are expanding and accelerating our development plans for this exciting molecule. Senadetumab is a novel bispecific antibody that can simultaneously bind 2 non overlapping epitopes of HER2, known as bipyratopic binding. This unique design results in multiple mechanisms of action, including dual HER2 signal blockade, receptor clustering on the cancer cell surface leading to internalization via valuperotopic binding and potent immune activation, including antibody dependent cellular cytotoxicity, antibody dependent cellular phagocytosis and complement dependent cytotoxicity, leading to encouraging antitumor activity in patients. Additionally, zanidatumab can prevent HER2 from combining with other HER2 proteins and with HERB receptor family members like HER3, which can further block growth signaling.

Speaker 4

ZenaDATAMAB has shown compelling activity across a broad range of HER2 expressing tumors, and we presented promising efficacy and early survival data at ASCO in BTC and ASCO GI in GA earlier this year. Most recently, BeiGene, which has development rights in some Asia Pacific markets outside of Japan, reported results at this year's ESMO meeting from a Phase 2 trial of Zanadatimab in combination with chemotherapy enticelizumab, BeiGene's anti PD-one antibody, and first line gastric and gastroesophageal junction cancers. Data included an overall response rate of 76% with a median duration of response of 22.8 months and the median progression free survival of 16.7 months at the time of the cutoff. These data along with our own GEA program are building a body of evidence supporting the potential of zanodetimab in treating first line DEA. Based on compelling Phase 2 data, we plan to initiate a rolling BLA submission this year accelerated approval of Zanodatumab for second line treatment of biliary tract cancer.

Speaker 4

We expect to complete the submission and the first half of twenty twenty four and anticipate that our confirmatory trial in first line BTC will be open and enrolling patients prior to the completion of the rolling BLA submission. Turning to Slide 18. BTC and GEA are the first of multiple indications we plan to pursue for Zanadatimab. We believe zanodetimab has the potential to raise the standard of care for some of the most difficult to treat HER2 expressing cancers, including breast cancer, where we see a significant potential to help patients in both early and late stage disease. We're executing a comprehensive development plan and are excited about delivering this innovative therapy to patients.

Speaker 4

If approved, We expect to initially enter the market in second line BTC, where physicians would gain important experience with zanodetimab. Following BTC, we expect to have a path to approval in first line GEA with a supplemental BLA submission, which provides a more streamlined approval process compared to a full BLA. We strongly believe that a substantial opportunity remains to address the unmet patient need in first line GEA, including in the HER2 positive PD L1 negative patient population where the standard of care remains trastuzumab plus chemotherapy. For patients who are PD L1 positive, We believe that savadetumab has the potential to be the HER2 targeted treatment of choice, while also combining with a PD-one inhibitor. In order to treat those patients with GEA whose tumors express PD L1.

Speaker 4

There also remains an opportunity to move into earlier stages of GEA, where we see the potential to help those patients in the neoadjuvant and adjuvant settings. GA represents a significantly larger patient opportunity compared to BTC and a prior approval in BTC accelerated adoption into GEA treatment guidelines and protocols. We look forward to data from the ongoing pivotal Phase 3 DEA trial expected in 2024, which may support U. S. And global regulatory submissions.

Speaker 4

Breast cancer also represents a considerable opportunity, supported by promising early data for Zanadetimab as monotherapy in multiple combinations and across stages of disease and lines of therapy. Based on the efficacy and safety seen in studies to date, we believe samadatumab is well suited for early stage disease, including potential use as neoadjuvant and adjuvant therapy. Zanadatumab has also shown promise and HER2 positive and hormone receptor positive breast cancer as part of a novel combination. Based on these encouraging signs of activity, we have ongoing trials in neoadjuvant breast cancer, including an arm in the iSPY platform trial, which is studying Zanadatumumab for the neoadjuvant treatment for locally advanced breast cancer. We are also evaluating the opportunity to expand into both combination regimens and later lines of therapy in HER2 positive and HER2 HR positive breast cancer.

Speaker 4

Finally, we are also evaluating zanadatimab in multiple early phase trials and other tumor types, where few HER2 targeted treatment options are available. We are impressed with the strength of data and clinical activities on a data map has shown across a diverse set of HER2 expressing indications, such as colorectal cancer, non small cell lung cancer and multiple other cancers where there continues to be a need for safe and effective targeted treatment options for patients. In summary, we are committed to rapidly advancing and expanding our development program, molecule that has the potential to transform the current standard of care in multiple HER2 expressing cancers. Turning to Slide 19, JZP-one hundred and fifty is our novel, highly selective fatty acid amide hydrolase or FAL inhibitor. We are developing JZP-one hundred and fifty as a once daily oral medication with the potential to impact the pathophysiology and symptoms of PTSD.

Speaker 4

By addressing the underlying cause of PTSD, impairment of fear extinction and its consolidation, JZP-one hundred and fifty has the potential to improve patients' associated symptoms such as anxiety, insomnia and nightmares. Preclinical and early clinical data showed activity on fear extinction and stress response. JCB-one hundred and fifty has a novel and promising mechanism of action, providing irreversible inhibition of FOG, which we believe they have advantages over reversible SAW inhibitors in development, and we anticipate top line data readout in January 2024. On Slide 20, I'll highlight JZP-four forty one, a potent highly selective orexin-two receptor agonist designed to activate and restore impaired orexant signaling. Through this mechanism of action, JZP-four forty one has the potential to exert pronounced wake promoting effects in people with sleep disorders.

Speaker 4

Orexanes are excitatory neuropeptides that play an important role in the regulation of sleep and wakefulness. Patients with Type 1 narcolepsy have a loss of orexin producing neurons with impaired orexin signaling. And clinically, these patients often present with chronic disabling symptoms that significantly impact patients' ability to function normally during the day. Slide 21 illustrates the design of our Phase 1 program, evaluating safety, tolerability, pharmacokinetics and pharmacodynamics of JZP-four forty one in healthy volunteers. Our single ascending dose study is being conducted in sleep deprived healthy volunteers and includes an evaluation of the weight promoting effects of JZP-four forty one using the maintenance of wakefulness test or MWT.

Speaker 4

This is a recognized disease model that historically has translated to patient efficacy. We also have an ongoing study evaluating multiple ascending daytime doses in healthy volunteers intended to provide safety of chronic dosing in support of a multiple dose study in patients. Importantly, we have structured the program to maximize our learnings at this stage, including identifying appropriate dose ranges, which we believe will accelerate later development in patients. We're excited about the potential of JCP-four forty one. We look forward to updating you on our progress later this year.

Speaker 4

Turning to Slide 22. Our team is advancing multiple preclinical compounds toward clinical stage development. JZP-eight fifteen, a molecule that has emerged from our collaboration with RedX, is one of our most recently initiated Phase 1 trials. JCP-eight fifteen is a highly selective potent pan RAF inhibitor with a differentiated mechanism of action. It targets specific components of the mitogen activated protein kinase pathway that are known oncogenic drivers, active against multiple ARAF, BRAF and CRAF mutants and a spectrum of BRAF fusions.

Speaker 4

Activity against araaf mutants may be an important point of differentiation as recent data suggests the importance of araaf in the context of mutant RAS activation. JCP-eight fifteen also potently inhibits both monomer and dimer driven RAF signaling and prevents paradoxical pathway activation induced by BRAF selective inhibition. Slide 23 illustrates the design of the ongoing JZP-eight fifteen Phase 1 trial evaluating the safety, dosing, Pharmacokinetics, pharmacodynamics and initial anti tumor activity of KCP-eight fifteen and participants with advanced or metastatic solid tumors harboring mutations in the MAP kinase pathway. It consists of 2 parts. Part A will characterize the safety and tolerability of JZP-eight fifteen, determining a maximum tolerated dose and PK profile and determine a recommended Phase 2 dose to be further investigated in the expansion phase or Part B.

Speaker 4

Part B will investigate the antitumor activity at the recommended Phase II dose in various tumor types based on mutation status. Overall, our R and D team has been advancing multiple programs from our neuroscience and oncology pipeline, and we have multiple upcoming catalysts and near term data readouts. Now, I will turn the call over to Bruce for a financial update. Bruce?

Speaker 2

Thanks, Rob. I'll start with our top and bottom line results on Slide 25. As a reminder, our full financial results are available in our press release and 10 Q. In the Q3 of 2023, we achieved $972,000,000 in total revenues, driven by continued growth of our key products in both neuroscience and oncology. We're pleased with the continued trajectory of Zhiwave during a period when high sodium oxybate competition has been introduced into the market.

Speaker 2

Coupled with Epidiolex momentum, The strong growth of Rylase and solid performance of Zepsilka, total revenue increased 3% compared to the Q3 of 2022. Our adjusted net income for the quarter was $340,000,000 and we reported adjusted EPS of $4.84 The decreases in ANI and EPS this quarter compared to the same period last year were driven primarily by an increase in R and D investment, partially offset by higher revenues and lower effective tax rate. The majority of our R and D increase this quarter is related to zanidetimab. Our adjusted EPS also reflects a lower number of diluted shares outstanding compared to the same period last year. We continue to generate significant cash from our business.

Speaker 2

We recorded $307,000,000 of cash from operations in the quarter and $925,000,000 through the 1st 3 quarters of the year. Our strong overall financial position means we have significant flexibility to invest in priority commercial and R and D programs as well as corporate development opportunities. Turning to Slide 26, We have raised the midpoint of our full year 2023 revenue guidance to a range of $3,750,000,000 to 3,875,000,000 As a reminder, we raised revenue guidance last quarter and have continued our strong commercial execution on key growth drivers Zywave, Epidiolex and Rylase. Our guidance represents year over year total revenue growth even as we face the headwind of oxybate competition. Our 2023 neuroscience guidance remains unchanged and reflects expectations of continued growth of Zywave and Epidiolex offset by the expected decline in Xyrem with a revenue range of $2,715,000,000 to 2,825,000,000 With regard to high sodium authorized generics, royalties from high sodium oxybate AGs were $29,000,000 in Q3 of 2023, which reflect a significant increase over the first half as we move to a 6 month fixed rate royalty for the AG agreement with Hikma.

Speaker 2

The royalty rate will increase again after the 6 month period, at which point it will remain fixed for the duration of this agreement. AG royalties are included in our neuroscience guidance. We have raised the midpoint of our 2023 oncology revenue guidance to a range of $975,000,000 to $1,050,000,000 which reflects 16% growth at the midpoint. I'd like to draw your attention to several items on Slide 27. Our strong cash generation combined with our disciplined capital allocation provides us with flexibility to make strategic investments in our business.

Speaker 2

This includes an increase to our R and D guidance and an increase to the midpoint of our SG and A guidance, while remaining on track to deliver ANI growth in 2023 compared to 2022. Our updated guidance midpoints equate to an adjusted operating margin of approximately 44%. While margins will vary over time, we believe we are well positioned to achieve our Vision 2025 goal of driving a 5% improvement from 2021 to 2025. One note regarding ANI as we look to the future. In the 3rd quarter, we benefited from a lower tax rate, primarily driven by tax benefits derived from our increased R and D expenditure, expiration of statutes of limitation and changes in product mix.

Speaker 2

We expect that our ETR will increase next year as global tax rates are harmonized. Consistent with our capital allocation strategy, our enhanced investment in R and D is a direct result of our success in diversifying and advancing our pipeline. We've increased our R and D guidance for 2023 to a range of 780,000,000 $820,000,000 reflecting our confidence in our pipeline programs. In particular, we are making substantial investments in Zanidatumab to more aggressively pursue development opportunities that we believe will benefit patients and create long term value for Jazz. Looking at SG and A, we are updating our guidance to a range of $1,065,000,000 to 1,105,000,000 as we invest in a disciplined manner to drive further growth in key brands.

Speaker 2

We believe there is tremendous unrecognized value potential in our stock. We therefore continued share repurchases under our existing repurchase program. In the Q3, we completed approximately $75,000,000 of share repurchases. At the end of the 3rd quarter, approximately $261,000,000 remained available for share repurchases under our current plan. Importantly, given our strong overall financial position, we are able to include share repurchases in our capital allocation strategy without compromising our ability to execute business development opportunities and invest in our innovative R and D programs.

Speaker 2

Additionally, we are reiterating our adjusted EPS guidance of $18.15 to $19 I'll conclude our prepared remarks on Slide 29. Our top line performance this quarter was driven by focused execution and strong commercial results, evidenced by the durability of our oxybate franchise, continued growth of Epidiolex and strength of our oncology business. We continue to advance our pipeline, invest in long term growth and we expect up to 5 late stage data readouts through 2024 that have the potential to further diversify and transform our business. We remain focused on strategic capital allocation. With our strategic investments, expanding product portfolio, R and D progress and focus on operational excellence, We believe we are well positioned to achieve vision 2025 and deliver further diversification, sustainable growth and enhanced value to patients and shareholders.

Speaker 2

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

Operator

Your first question comes from the line of Jessica Fye from JPMorgan. Please go ahead.

Speaker 5

Hey, guys. Good afternoon. Thanks so much for taking my question. This might be a little tricky to respond to, but recently there were some headlines stating that Jazz might be exploring various strategic options, including breaking up the company or sale of a business unit. I generally think of Jazz as more likely to buy a business than to sell a business, but is there anything you want to clarify for folks with respect to how you're thinking about Business Development and the Strategy.

Speaker 5

Thanks.

Speaker 2

Jess, welcome back. Good to hear your voice. So I'll point out that Jazz made no such announcement. There were a story in one place with unnamed sources. I'll also remind you as an Irish takeover panel company that we can be forced to clarify publicly if there's Something actually going on in pretty short order and that did not happen.

Speaker 2

We remain very focused on corporate development as a way To grow our business, that's been part of our strategy historically. It's specifically called out as part of Vision 2025. And we think the strong financial position of the company ending the quarter with $1,600,000,000 in cash, Strong cash flow of $925,000,000 over the 1st 3 quarters. The substantial continued deleveraging of the company put us in really good position to continue to put cash to work to grow our business.

Operator

Your next question comes from the line of Jason Gerberry from Bank of America. Please go ahead.

Speaker 6

Hey, guys. Thank you for taking my question. I guess mine will be around the evolving competitive landscape in the oxybate space with Lumerizan.

Speaker 4

They had

Speaker 6

an update this morning about 1,000 patient enrollment forms. Just curious, your guidance suggests that nothing's really changed relative to your assumptions regarding competition from the start of the year till now. Just curious if you would if you're seeing anything in the marketplace worth noting or if you think that Ultimately, maybe the competitor is just getting more of its business from either naives or patients who have discontinued Zaiwave

Speaker 2

For a little more color, I'll just say, in your comments, you're exactly right that we've foresaw, competition in the oxybate this year both from authorized generics of Xyrem and the branded fixed dose high sodium product and built that into our guidance. We've actually raised our neuroscience guidance last quarter and continue to perform in line with our guidance. But Kim, maybe you could give a little more color on the oxybate landscape.

Speaker 7

Yes, sure. So Yes, XYOST is still growing in narcolepsy. We're pleased to see despite the additional competition from the high sodium oxidase were introduced this year. Our growth in narcolepsy has slowed in line with our expectations in our own forecast as there remain fewer available patients to transition from Xyrem given our early success with Zywave and some patients have decided to go ahead and give FT218 a try. Generally in terms of what we're hearing from health Your providers right now is that they're still telling us that they place a high value on both the low sodium value proposition of XYOSTED as well as on the fact they've gotten used to being able to individualize or customize the dosing regimen for individual patients depending on their needs.

Speaker 7

Many HCPs have expressed an interest in gaining eventually some experience with the new fixed dose high sodium oxybate product and where they're typically doing that they're telling us is among those patients that have come in and really insisted on giving it a try. So overall, we remain very confident in the strength and durability of our OxoBate franchise. We do see XYOST continuing to be the oxidative choice now and in the future and it is still the only one approved to for treatment of idiopathic hypersomnia. And lastly, when we continue to look at our data in terms of Those portion of patients who are naive to oxybate treatment, they're being started on their first oxybate treatment. The vast majority of these patients continue to be being initiated on XYOSTED.

Speaker 7

So we think that's a very strong evidence that Overall, overwhelmingly, physicians still feel it's most important to focus on the patient's long term health.

Operator

Your next question comes from the line of Ami Fadia from Needham and Company. Please go ahead.

Speaker 8

Hi, good evening. Thanks for taking my question. Mine is on JZP-one hundred and fifty. Can you talk about Sort of mechanistically why you think that BCP150's mechanism is perhaps differentiated than irreversible PHY inhibition. And with regards to your ongoing trial, with regards to the GAPS-five endpoint, What would you say what would you consider as a clinically meaningful change that you would like to see?

Speaker 8

And with regards to your trial, can you talk about powering, should we expect to see a statistically meaningful result? And if you could go back and explain why the low dose why you have 2 doses in the trial and not just the higher dose. Thank you.

Speaker 4

Rob? Yes. Thanks, Bruce. Thank you for the question, Ami. So starting with the first part of that around why the mechanism is differentiated.

Speaker 4

I would first say that we think we're interested in TASI Coh150 because of THA is an underlying part of the pathophysiology potentially. So we know that PTSD patients have Low levels of fenanimide by inhibiting FON can raise those levels. So we think this is one of the mechanisms that potentially directly Addresses the underlying pathophysiology. We think we're differentiated and being irreversible, as you mentioned, because you can create a more sustained thaw inhibition. In other words, you ultimately have to resynthesize thaw in order to get back to baseline levels.

Speaker 4

It just allows for consistent inhibition of SAW, Which we think is more important. In terms of clinically meaningful effect sizes, we haven't said What we're necessarily striving for in this, but you could certainly look across different mechanisms and see what has been achieved in In terms of the CAHPS V, in our trial, we think we're certainly well powered for a clinically meaningful effect, given the 270 patients that we've enrolled across those 3 arms. And to your point about a low dose and a high dose, in this trial, we included 2 dose levels Because we wanted to evaluate what we felt was based on prior receptor occupancy data, full constant inhibition versus a lower dose that would be just under that full inhibition. And that sort of brackets The range of exposures that you might want to see allows us to collect safety data in that range and then would put us in a better position to select doses for our pivotal trial, if and when we move forward with that.

Operator

Your next question comes from the line of Mark Goodman from Leerink Partners. Please go ahead.

Speaker 9

Yes. I was hoping you could give us a little flavor on what's going on with Zebzelka. It seems to finally have grown after many quarters, Just seeming flat, so if you could just give us a little color there. And then could you just give us the total oxybate patient number for us, please? Thanks.

Speaker 2

Yes. I'll take the second part of the question first and then Ken, maybe you could jump in on Zepsilka growth, which I agree looked Really nice this quarter. On total OXO patients, we've stopped giving that number. As you noticed in the royalty Revenue off the AG of $29,000,000 during the quarter that has jumped up significantly and that revenue of course is derived from patients That would not be included across Ziwave and Xyrem. So essentially, Total patients doesn't track to our revenues anymore because that Xyrem plus Xyrem royalty is a little bit distinct.

Speaker 2

We've continued to give patient numbers in narcolepsy and idiopathic hypersomnia as we exit a quarter To give you a sense of growth of the Zywave asset, but I'll just point out total revenues Total patients don't track the way they have historically for Jazz until this quarter. In the first half of the year at the much lower royalty rate on the AG and earlier the AG launch, the difference wasn't significant. It is significant now and will only continue to be. On Zepzelka, I'll just point out we're really happy with this deal when I talk about why we do corporate development and add new growth assets To the company, I think Zepsilka having generated over $800,000,000 in revenue since launch has shown that to be a deal that was highly accretive and continues to reward our investors. So, Kim, you want to talk about dynamics there?

Speaker 7

Yes. Really happy with the 11% year over year growth we saw in the Q3. And we'll say that the increased demand this quarter is partially attributed to the temporary platinum chemotherapy shortage that unfortunately the U. S. Is going through, which did lead ZELTA to be used in some patients who oncologists may have historically re challenged with another round of platinum therapy after their first line platinum treatment and we've really been emphasizing for some time that this is where the results with Zeltzer are most impressive, but it's been difficult getting some of the customers to make this switch.

Speaker 7

We did roll out this past few months, Some new data that we hadn't shared with customers before in this platinum sensitive patient population to help them feel more comfortable using it. We shared the secondary endpoint results we had around overall survival and progression free survival. So I think the combination of that data with the Shortage of chemotherapy did lead many customers to give it a try there and largely we think that they're seeing positive results that even when the platinum supply shortage continues to improve, which we hope it does, We do anticipate that some of these healthcare providers, some of them may revert back to their previous practice of rechallenge with Others may now reach for Zepylka more often. In addition, we saw many HCP is getting experience with this product in the community and outpatient setting, and we're really impressed with the ease of administration as well as the duration as well as the clinical profile. Remember, Xelka doesn't require any inpatient monitoring.

Speaker 7

So Again, that business that we think may continue to be a bit sticky after the shortage. So overall, ZEMCELLC is well established as the treatment of choice in second line small cell lung cancer and we think we've gotten some nice momentum here from this market event. But we really do see most of the opportunity for future growth in this brand coming from the first line setting And we've got a Phase 3 trial going on there now.

Operator

Your next question comes from the line of Balaji Saad from Barclays Capital. Please go ahead.

Speaker 10

Hi. Thank you for taking the questions. Looking at what's not covered. On Epidiolex, could we unlike the well defined patient populations in narcolepsy or IH oncology. This is one where the market sizing still seems incomplete.

Speaker 10

So can you discuss the opportunity in the adult settings as you Spoke about this afternoon and the additional ex U. S. Launches and what would this translate to in terms of an expansion of market size. Maybe an extended related question, as you continue to call out that it's well on its way to $1,000,000,000 What can we expect beyond this in terms of longer term growth trajectory? Is it going to be mid single digits or high single digits?

Speaker 10

How can we think about it? Thank you.

Speaker 3

Thanks for the question Balaji. I'll jump in on that one. So I'll just note as We don't provide product specific guidance, but I will comment on the broader opportunity and then I'll I'll turn it to Kim to talk about some of the very specific dynamics that we're seeing in the U. S. So when you think about the growth that we saw in the current quarter, We had 9% year over year, but importantly, we had 14% if you look at the 1st 9 months of this year compared to the prior period.

Speaker 3

So we are confident we're on track for blockbuster status and in line with our vision 2025 expectations. And I think when you think about Epidiolex, There are 3 areas to keep in mind in terms of important growth drivers. 1, this is a global product. As you've noted, that means global opportunities for expansion and growth. We're now approved and reimbursed in 24 different countries.

Speaker 3

We have the pivotal study underway in Japan, which we expect to read out at the end of next year and then we have strong underlying demand growth So in the U. S, which Kim will comment on in a moment. We also view Epidiolex continue to view this as very much a long lived durable asset. We have a robust portfolio of Orange Book listed patents, the majority of which go out to 2,035, but also 2,039. We do see this as something that is very much a long term revenue driver for the company.

Speaker 3

And then 3rd, perhaps most importantly, it's a highly differentiated treatment. Epidiolex is very well characterized and tolerated, which of course lends itself well to polypharmacy, which is the norm in this We've generated significant data around its use, which HCPs are finding helpful. And data such as the EpiCom study that I mentioned before. And all three of these main factors give us collective confidence in that long term potential. Specific to some of the ex U.

Speaker 3

S. Dynamics, we had a number of launches in different countries and across different indications across 23, and we expect that to continue in 2024. So maybe I'll turn it to Kim to comment on adult's long term care segments and other drivers of demand.

Speaker 7

Sure. Thanks, Renee. So yes, I think we've talked about for the last year or so, we've really been putting, I'd say, an increased focus The adult segment there and particularly as it pertains into U. S. To the long term care setting where many of the adults with these conditions reside and we're seeing really nice growth there in that population and disproportionate to what we're seeing in the brand overall.

Speaker 7

So that is a nice growth driver. But across both the pediatric and adult market, there are I'd say 3 other things that are really driving the growth and I think speak well for the future. And the data, we've talked quite a bit with you about the data. We are sharing the data regarding combination with clobazam and the beyond seizure benefits of Epidiolex, particularly as it relates to behavioral improvements and cognition improvements, specifically because we're trying to expand the definition of efficacy and really differentiate the brand from existing products today. And I'd say both of these pieces of data Really our eye opening and do a great job of that in the marketplace, particularly that beyond seizure data in the LGS and Dravet space.

Speaker 7

The third one is that we have done a really nice job I think over the last couple of years of expanding I would say or improving the quality of access to Epidiolex. Pretty much since launch, we had a very high percentage of commercial lives that have coverage as well as Medicaid lives that have coverage for Epidiolex. But what we've really seen in the last couple of years and this year in particular is that the quality of that coverage is improving in terms of the utilization management criteria becoming less burdensome, the pot utilization management criteria being broader in terms of providing easier access to Epidiolex for a broad range of patients with refractory conditions. And ultimately, we are hearing from our customers feedback that they are finding it easier to get their patients on Epidiolex, which of course only reinforces their confidence in prescribing it. And then lastly, it It's been really a hallmark of this brand since it was launched, similar to oxybate once patients get through the early titration period, they tend to stay on epidemics for a long time.

Speaker 7

But despite this, we still have seen rooms for opportunity to invest in improving that Persistency both at the beginning of the treatment and when patients have been on it for some time and we're seeing nice improvements there, particularly if we can get ACPs to support patients and get them up through that titration period. Overall, we see them stay on the drug for a pretty long time. So lots of things there to point to as current and I think future growth drivers in the U. S.

Operator

Your next question comes from the line of Akash Tewari from Jefferies. Please go ahead.

Speaker 11

Hi. Thanks for taking our questions. This is Ivy on for Kash. So we have one quick question on RxGen. So you are guiding to data for P441 in healthy volunteers by year end.

Speaker 11

I guess what level of MWP do you need to see to move this program forward? Also what makes you feel comfortable about the liver tox profile? Thanks.

Speaker 4

Sure. Shall I take that 1, Bruce? Yes, please. Yes. So we have certainly some benchmarks with other orexin agonists that are in the clinic.

Speaker 4

So in terms of what we'd be looking for in the healthy volunteer M WT study is comparable efficacy. And I think that model translates pretty well into patients. And so we have the benefit of benchmarking across a range of doses that we're evaluating versus other compounds, not only in the orexin class, but also other weight promoting agents. So I think we'll have a good sense of when we hit a level of efficacy that we're confident Moving forward with. And then, sorry, the second part of the question was?

Speaker 11

Liver tox profile. Yes.

Speaker 4

So We don't think the liver toxicity is a class effect and we think based on what has been said from the Takeda compound that is likely to be related to that specific structural class. And so we even at the time that we License from Sumitomo, we knew we were operating in a different chemical series. And so we don't think any of that risk is carried over. In our preclinical toxicology studies, there was no concern based on liver toxicity either.

Operator

Your next question comes from the line of David Amsellem from Piper Sandler. Please go ahead.

Speaker 4

Hey, thanks. So also had a question on the orexin agonist GZP-four forty one. So we've seen some early tolerability data at World Sleep for the other compounds, Urinary urgency being one that comes to mind, also visual disturbance. I wanted to pick your brain on how you're thinking about those being on target effects or is something else going on? And just your general level of, I guess vigilance is the right word on those kinds of AEs.

Speaker 4

Thanks. Yes. So I mean, listen, early days across these compounds, we have a lot to learn. But I would say that therapeutic index is going to be very Whether that be to what we perceive as on target effects like the urinary frequency that you mentioned or potential off target like hepatotoxicity. The therapeutic index is going to be important.

Speaker 4

Part of that may relate to The half life of the compound, I mean, if you have something that is too long a half life, you may see residual effects into the evenings And so having A favorable half life and being able to dose in a way that creates therapeutic index for either on target or any And so off target toxicity will be important. And that's part of what we're doing in our healthy volunteer studies, both of the healthy both of the single dose and as well as the multiple dose It's really exploring the therapeutic range and various dosing that will allow us to select then An optimal regimen to be evaluated in patients.

Operator

Your next question comes from the line of Joon Lee from Truist Securities. Please go ahead.

Speaker 4

Hi, this is Jeremy on for Joon. Thanks for taking our questions. How How are you looking at the oxybead market evolving both in terms of Xywave and Xyrem? And has the EG impact been as expected? Thanks.

Speaker 2

Yes. I'll start on that one and just say, again, the way things have Played out this year has been very much in line with our expectations. Xyrem has been declining for years now, largely because we've been successful with Zywave giving patients a healthier lifelong treatment option. That decline has continued this year, obviously, complemented by having new entrants in the marketplace. But that revenue stream for us is now very small relative to our total business at about 16% of our revenues This quarter, if you add up XiRan and our royalties on the AG, and we're focused on growing XiWave.

Speaker 2

We think the product has Great durability as an asset. We are very excited about the opportunity to continue growing the idiopathic hypersomnia market. We know there are more patients to reach. We know diagnosis can improve. And as physicians gain more experience using this product and seeing the benefit in their patients that mirrors what we saw in clinical trials.

Speaker 2

We think that's very favorable for their intended increased use of the product. And we still think there's growth left in the narcolepsy market. We haven't seen much of a change in the overall growth dynamics since the Avadel launch, but it's usually true that having multiple companies out talking about A disease that is sometimes under diagnosed can be helpful. We're excited to continue to grow Zywave.

Operator

Your next question comes from the line of Gary Nachman from Raymond James. Please go ahead.

Speaker 9

Hi, good afternoon. First, can you talk about Rylase expanding in Europe and specifically your expectations on how much that product will contribute ex U. S. Over time, what's a reasonable target there? And then just, on your point, Bruce, on Ziwave in idiopathic hypersomnia, How concentrated is the current prescribing base?

Speaker 9

And what are some of your initiatives to try and expand that further? And at what pace do you think you'll be able

Speaker 2

So two different questions. Maybe I'll hit Zywave first and say the prescriber base for IH is Very overlapping with the narcolepsy prescriber base about 90%. As you heard in our comments on the call, we are Increasing our effort behind IH to have some folks focus on that specifically get out to some physicians who may be a little less familiar with using oxybate to support them, but the prescriber base is very similar. Renee, you want to talk about Rylais a little bit?

Speaker 3

Yes, I'm happy to. So we're really pleased To be able to make this product available in Europe, and as we stated, we expect to begin that rolling launch later this year. I will stress that the market dynamics are very different in Europe versus the U. S. So, in Europe, we have Erwinaze on the market as a competitor.

Speaker 3

We have quite a different pricing scheme and then certain steps to take from a market access perspective to ensure that enrilees Is secured on protocols, which will take some time. So taking all of these things in consideration, I would say being on the market in Europe will provide growth, but characterize that as relatively And then on the topic of the U. S, maybe I'll turn to Kim to provide a few comments of what we're seeing there.

Speaker 7

On IH or on Rylase. I could do both.

Speaker 3

On Rylase, yes.

Speaker 7

On Rylase specifically. Okay, great. Thanks. I'm happy to do that. So yes, we continue to be just very pleased with how this product has performed.

Speaker 7

We never really had the opportunity to To understand what the peak of this market could be given it was always supply constrained. We've obviously don't give product specific guidance. We haven't talked about the peak, but we're just continuing to see strong demand, which we think reflects significant patient need. I think Renee mentioned in the presentation that some of the growth drivers we've seen in the demand that's being driven was expected and some of it was a bit unexpected in this unsupply constrained market. We did expect to see healthcare providers switching patients more rapidly due to hypersensitivity responses, But we are also seeing quite a bit of switching going on in terms of other types of treatment related issues from E.

Speaker 7

Coli based asparaginase. In addition, again, while we don't promote it that way and we don't promote the product for first line use, we are seeing Fair amount of first line use based on the advantages of this product having a forward acting profile relative to current first line asparaginase therapies and the concern that some providers have and particularly in some a patient population like the adult patient population around the potential for treatment related issues. And then lastly, we've been seeing some really nice growth in the overall efforts we've made this year in the adolescent and young adult market. We're seeing this population starting to increase usage in these patients. And as I mentioned, this is one of the places where we see them using the products a little bit differently than we had originally anticipated.

Speaker 7

So overall, the market has embraced it, especially in pediatric market where it's been adopted universally in pediatric protocols, but really seeing increased usage of Erwinia based asparaginases in the adolescent and young adult market for Briones.

Operator

Your next question comes from the line of Gregory Renza from RBC Capital Markets. Please go ahead.

Speaker 9

Hey, good evening, Bruce and Timna. Congrats on the update and thanks for taking my question. Bruce, maybe just a more specific one on the competitive dynamics That you've described this evening. Just curious how you would put into context the value or maybe the value loss of That LumRise FT218 patient. I guess that is how important is that patient who's tried LumRise or who's trying LumRise and the corresponding prescriber.

Speaker 9

How important is that patient to the market strategy that Renee laid out?

Speaker 4

And would

Speaker 9

you see if anything an opportunity to capture or maybe recapture

Speaker 2

Yes. I love the way you ended your question, which Right where I was going to go with my answer, which is we absolutely expect a new product to get some use. But we think all high sodium patients be they on Xyrem, AG Xyrem As we saw from the data we shared earlier this year at the neurology meeting, We can see even in as little as 180 days an increase in hypertension diagnosis initiation of antihypertensive therapy when starting on a high sodium oxybate product. As physicians and patients have already discovered this matters and we believe that will continue to be important making Zywave the oxymate of choice.

Operator

Your next question comes from the line of Charles Duncan from Cantor Fitzgerald. Please go ahead.

Speaker 12

Hi. This is Elaine Kim on for Charles. Congrats on the quarter and thank you for taking our questions. Regarding PTSD, what are your perspectives on the unmet need and the potential for psychedelic medicines such as, MAPS MDMA and possibly COMPASS's psilocybinb therapy. And where do you see JCP150 fitting in the emerging treatment landscape?

Speaker 12

Thank you.

Speaker 2

Rob, you want to jump in on that?

Speaker 4

Sure. So when I think about a treatment like MDMA And what is associated with that in terms of the support that one needs, ultimately, I think that that's going to be appropriate for a subset of the population. PTSD is overall very, very common. And so we think JCP-one hundred and fifty Could potentially be much more broadly applicable.

Operator

Your next question comes from the line of Jeff Hung from Morgan Stanley. Please go ahead.

Speaker 6

Thanks for taking my question. For the suvacalamide here. What's the bar for success in the essential tremor study? And can you talk about what gives you confidence that the Phase 2b will read out positively? Thanks.

Speaker 4

Yes. I think we have a good sense of yes, I think we have a good sense of what's a meaningful change on the TETRIS endpoints and more focused on ADL and a subset of the performance scale as well. And so from our Phase 2 and from interactions with KOLs and FDA, we have a good sense of what's going to be a meaningful change there. And you've seen Other studies that have been published that could be relative benchmarks. Why do we think that JZP385 is differentiated?

Speaker 4

Well, a couple of things. One is that it's a state dependent inhibitor. So it selectively acts on active ion channels, which should ultimately create a better therapeutic index. We have a once daily formulation and based on our Prior studies, we selected 3 fold dose range for the Phase 2b, 10, 20 30 milligrams, Which I think has really allowed us to kind of push that dosing and exposure up to really get maximal efficacy. So we think it's differentiated on that basis and hope to see Pretty robust efficacy with across that dose range.

Operator

Your next Question comes from the line of Mohit Bansal from Wells Fargo. Please go ahead.

Speaker 13

Great. Thanks for taking my question. So I have a question regarding the OCIWI franchise. So can you comment on if there is anything going on with the pricing of Zywave with Lumeriz and Oxide Genetics in the market. I'm asking because this is probably the first time since the launch of Agene, We have seen a sequential decline in this franchise.

Speaker 13

So just wanted to understand how do you see growth to get to the $2,000,000,000 number that you talked about in 2025. Thank

Speaker 2

you. So the quick answer on pricing is there has not been a Significant change in terms of sort of our revenue per patient in the past few quarters. In terms of the revenue decline, that's driven by a loss of Xyrem revenues, Which as I've said had been going down for a long time and are now representing a smaller and smaller portion of our overall revenues while Zywave continues to grow. So those two things at present as we're built into our guidance for the year Essentially are offsetting each other to some degree, but our focus is on growing that Zywave business in narcolepsy and importantly in idiopathic hypersomnia, even as we see royalty income off the AG continue to increase.

Operator

Your next question comes from the line of Troy Langford from TD Cowen. Please go ahead.

Speaker 14

Hi, congrats on all the progress in the quarter and thanks for taking our questions. Just with respect to the opportunity with Zanizatimab,

Speaker 13

I guess, what else do you guys think you need

Speaker 14

to check off that list before you can complete the regulatory submission for the product in H124 or H1 next year? And Related to that, do you all think that you would need to significantly amplify your current oncology sales force to effectively commercialize the product?

Speaker 3

Yes. I'll jump in on that one and just make some comments about our level of excitement about XANI and then ask Rob to comment So as we mentioned on the call, we are extremely excited about this opportunity. This is iLE de risked asset, a global asset for us and then also one with significant revenue potential. We talked a bit about The data that's been generated to date since doing this transaction, we continue to be impressed with what we're seeing in terms of just robust anti tumor activity in HER2 and that's in both monotherapy and in combination with other agents and that gives us a Ton of confidence to put both significant investment behind the molecule, but then also to outline the opportunity as having peak revenue potential of over $2,000,000,000 In terms of the near term need From a commercialization perspective, we don't believe that this is going to require Significant augmenting of our current field force. We believe that that will be quite efficient.

Speaker 3

And of course we are focused So, Rob, you want to comment on development?

Speaker 4

Yes. I think the specific question was what else is needed to complete the BLA submission for BTC and it's just the usual components. As you might expect, some of those components are going to be available sooner than others. And with breakthrough designation, We've been given the opportunity to do a rolling submission that allows us to submit components as soon as they're ready It gives the FDA sort of a head start on reviewing those components. And then as we said, Within the first half of the year, expect to be able to provide everything that's needed to complete that submission.

Operator

And we have no further questions in our queue at this time. I will now turn the call over to Bruce for closing remarks.

Speaker 2

Thank you so much. I'd like to close today's call by recognizing our JAS colleagues for their efforts in delivering new therapeutic options to patients and also thank our partners and shareholders for their continued confidence and support. Thank you all for joining us today.

Operator

This concludes today's conference call. Thank you for your participation and you may now disconnect.

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Earnings Conference Call
Jazz Pharmaceuticals Q3 2023
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