Welcome to the Jazz Pharmaceuticals plc First Quarter 2021 Earnings Conference Call. Following an introduction from the company, we will open the call to questions. I will now turn the call over to Andrea Flynn, Head of Investor Relations at Jazz Pharmaceuticals. Thank you. Please go ahead.

Thank you. And good afternoon, everyone. Today, we reported our first quarter 2021 financial results. The press release and the slide presentation accompanying this webcast are available on the Investors section of our website. On the call today are Bruce Cozadd, Chairman and Chief Executive Officer; Renée Galá, Executive Vice President and Chief Financial Officer; Dan Swisher, President and Chief Operating Officer; and Rob Iannone, Executive Vice President, R&D and Chief Medical Officer. Joining the Q&A are Kim Sablich, Executive Vice President, General Manager of North America; Phil Jochelson, Neuroscience Therapeutic Head; and Anne Borgman, Hematology and Oncology Therapeutic Head. On slides 2 and 3, 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 and the transaction to acquire GW Pharmaceuticals, which involve risks and uncertainties that could cause actual events, performance, and results to differ materially. We encourage you to review the statements contained in today's press release and on our latest SEC disclosure documents, which identify certain factors that may cause the company's actual results to differ materially from those projected. We undertake no duty or obligation to update our forward-looking statements. On this webcast, we'll discuss non-GAAP financial measures. Reconciliations of GAAP to non-GAAP financial measures discussed on this call are included in today's press release and slide presentation. I'll now turn the call over to Bruce.

Thanks, Andrea. Good afternoon, everyone. And thank you for joining us today. I'll start on slide 5. Following an incredibly productive 2020, we have continued this momentum into 2021 with sustained operational excellence across our commercial and R&D organizations, positioning us to achieve multiple milestones during the remainder of the year. Our transformation to an innovative high growth biopharma company is well on its way. In February, we announced our planned acquisition of GW Pharmaceuticals, which is on track to close early this month. This acquisition positions Jazz as an industry leader in neuroscience with a global commercial and operational footprint. The addition of GW further diversifies our commercial portfolio and pipeline with therapies that are complementary to our existing business. Jazz and GW also share a common culture built around the same mission, innovating to transform the lives of patients. We look forward to building an even stronger company together with our GW colleagues, and are excited about the greater impact we will continue to drive for patients, customers and shareholders. Renée and her team have secured financing to support the acquisition and done a fantastic job in executing a very favorable debt structure. She'll provide more color around that, as well as our plans to provide updated guidance for the combined Jazz GW enterprise later in the call. As we progress toward the completion of the GW transaction, in parallel, we have delivered on key milestones in the first quarter. We continue to see strong adoption of Xywav. Dan will discuss our commercial efforts in more detail shortly, but I want to highlight that there were approximately 3,900 actives Xywav patients exiting the first quarter. We view this as a very positive indication that physicians and patients appreciate the benefits of a lower sodium oxybate option. It is…

Thanks, Bruce. I'm excited to share the progress across our commercial portfolio. I want to begin with neuroscience on slide 7 and 8 and first discuss our combined oxybate franchise, including Xyrem and Xywav. Net product sales for the oxybate franchise were $411 million, 1% higher than the same period in 2020, including Xywav net product sales of $75 million. In the first quarter, average active oxybate patients increased to approximately 15,700, a 4% increase over the same period last year and a 2% increase over the prior quarter. This quarter, we continued to see strong adoption of Xywav. As Bruce noted, we ended the quarter with approximately 3,900 actives Xywav patients. This is up from approximately 1,900 at the end of the year. A key component of our launch initiatives is to educate physicians and patients about the lifelong burden of high sodium intake as well as how the use of Xywav enables them to address what is a modifiable risk factor. We're pleased that this message is resonating so well with both audiences. I'm going to stay on slide 7, but for reference, we've included further detail on why sodium intake matters on slide 8. Importantly, we're seeing strong Xywav adoption among existing and new to oxybate patients. Specific to the existing oxybate patients, our market research and reports from the field highlight that many physician offices are comfortable with seamlessly transitioning patients over to Xywav. For existing Xyrem patients, they're receiving information about Xywav availability along with their products shipments from the specialty pharmacy. We have also seen an increase of in-person field engagement with our target HCPs recently. Coupled with strong adoption, we made excellent progress with payers, meeting our goal to obtain broad payer coverage within six months of launch. We now have agreements in…

Thank you, Dan. I'll start on slide 11. In the first quarter, we continued to make significant progress across our R&D efforts. Our two near-term areas of focus are Xywav in idiopathic hypersomnia and JZP458. In April, we announced that the FDA granted priority review and set a PDUFA action date of August 12 of this year for Xywav in IH. As Dan mentioned, at the American Academy of Neurology Annual Meeting, we presented compelling Phase III clinical trial results, which are foundational to our supplemental NDA submission. The overall results of the trial were striking, highly statistically significant and clinically meaningful for all pre-specified endpoints of clinical measures and patient reported outcomes. I also want to take a moment to stress that IH is a debilitating disorder with no FDA approved therapies. Patients are often consumed by sleep and exhibit sleep inertia, brain fog, poor memory, and episodes of micro sleep. The impact of the condition has severe consequences professionally, socially and in patients' daily lives. We're excited about the potential of Xywav to provide a much needed therapeutic option to people living with IH. Now turning to our oncology development programs on slide 12, I'll start with Zepzelca. We continue to work on the development program in collaboration with our partner, PharmaMar, to support robust data generation in combination with other therapies in small cell lung cancer as well as in other tumor types. This includes a Phase III trial evaluated first line use in combination with immunotherapy as maintenance therapy compared to immunotherapy alone in patients with extensive stage small cell lung cancer after induction chemotherapy. Moving to JZP458. In December, we initiated a BLA submission to the FDA under real time oncology review. We're working closely with the FDA to complete the BLA submission and remain…

[Operator Instructions]. Our first question comes from the line of Ken Cacciatore from Cowen and Company.

Hey team, congratulations on all the results. Really fantastic performance. I'll respect to your one question and just go big picture. Just looking at the cash generation of the combined company and you're talking about the ability to delever fairly quickly, just by my math, it looks like you could be in 24 months in a position to do another $5 billion to $7 billion type of transaction without really going into any equity. Can you just talk about the combined business in terms of your appetite for BD either in the near term or around the timelines I just laid out?

Let me have Renée take that one. Renée Galá: I'm happy to jump in, Ken. So, yes, clearly, this business generates a lot of cash currently. And on a combined basis, we see acceleration of our growth, of the cash profile, and that's what gives us the confidence to execute the financing that we did, as well as confidence in that target of getting below 3.5 times by the end of next year and then continuing to rapidly deleverage thereafter. So, I would say, certainly, with that cash profile and that rapid deleveraging, we do have the ability to think about additional transactions at that time. It certainly gives us optionality. I also just want to emphasize how transformative this particular transaction is for us and how excited we are to be able to continue the momentum with Epidiolex to integrate the company, integrate the pipeline and ensure that we're able to realize the full value of what this acquisition is providing us from just a full transformation perspective.

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

My question is about the Xywav IH opportunity. And I'm just curious, how you guys think about potential treatment rates for Xywav in this population versus the roughly 25% oxybate share in the more moderate to severe narcolepsy patients? Should we look at these penetration rates as similar? Or do you think that they could be meaningfully different one way or another? I know you guys have talked about potentially larger TAM, which will be something that will be elucidated over time, but just curious if you could level set as it pertains to penetration rates? And when you launch Xywav for IH from a reimbursement perspective, are you going through another potential six to nine month process to get that access or you step pretty much into the access that Xywav has to the narcolepsy contracting? Thanks.

Let me ask Dan to jump in on this one.

Kim, feel free to add as well on the launch planning. But, yeah, we have been looking at this market. We did a chart review in terms of diagnosis and we came across 37,000 diagnosed patients. Given that there is no approved treatments, we believe that's probably an understatement exactly how much of an under representation we'll get a better chance to see once we can really start promotion, once we can start promotion. We have heard, in certain offices, some of the bigger sleep centers, there could be an equal number of IH patients to narcolepsy. I think there is going to be similar pattern, but it's going to be the more moderate and severe patients that are going to adopt an oxybate therapy, adopt Xywav into their lifestyle. But we know from the clinical results we presented at the AAN meeting, there is very meaningful benefit across all endpoints, clinically meaningful as well as statistically meaningful. So we're on track and excited for the launch. Kim, you want to say anything further about launch preparation?

I'll address the specific question about the payer space. What I can say is, the very strong position that we've achieved in terms of commercial coverage in Xywav and narcolepsy is setting us up really well to go into discussions with payers around idiopathic hypersomnia. Given this coverage, we expect to achieve very similar coverage rates in IH and probably more rapidly than we did in narcolepsy, given that we have those contracts in place. Really what is going to come down is discussions with payers around what type of utilization management is going to be put in place for these patients. So, that's really what we're focused on in terms of access for the IH indication. Yeah, I'll mention a little – I'll say a little bit more about launch prep is really around – we've already gotten started on the medical side with educating HCPs on this condition and reinforcing how it's different from other conditions such as narcolepsy and depression. It's going to be really critical to helping our healthcare providers and handle patients as well, better understand the condition. So, we've gotten started on that with our MSLs, we're doing the same with patients through disease education campaign we've recent recently launched. So, that's going to be a really important aspect of the launch in advance of doing the actual branded product launch.

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

A question on the Xywav switch. Is there any reason to think that initial adopters of Xywav represent low hanging fruit and that you could see a slowing from here? Or can we take this as a sign of momentum that should continue, adding about 2,000 patients per quarter?

This is Bruce. I'll just start by reminding you that we're getting patients on to Xywav, both who were on Xyrem immediately before or at some point in the past, and we're also getting new to oxybate patients, whether they're newly diagnosed with narcolepsy or they've been diagnosed before, but haven't tried the higher sodium Xyrem in the past. So, it's not just a switch. It's adoption by all sorts of patients. For your question about sustainability of momentum and was it low hanging fruit, maybe I'll ask Kim to comment.

We really believe it's not a matter of low hanging fruit. With 3,900 patients already transitioned in the first five months, we don't really see any slowdown in that. So, just quantitatively, the number is strong. Qualitatively, when we talk to customers, we don't hear them – it's not just a subset of customers that are adopting the product and it's not just a subset of patients that they are thinking about using Xywav. And so, we really do believe that this momentum is in a very healthy place to continue.

Our next question comes from the line of Gary Nachman from BMO Capital.

Regarding the payer access for Xywav in narcolepsy, we've heard from a few physicians that in some cases it could be challenging to get Xywav if a patient doesn't have a documented history of hypertension rather than as a preventative measure to prevent the CV issues from happening. So, how are you getting around the potential hurdle, if it is a hurdle for you? It sounds like you feel very good about where access is at this point, but is that something that the physicians sort of have to get around in order to get the patients on it? Thanks.

We have not heard that that is a generalizable trend. We're finding that for most – the vast majority of patients, access to Xywav tracks access to Xyrem. This is a product that delivers the same active moiety that provides the efficacy to patients, but without that additional gram to a gram-and-a-half of sodium every night in a condition that is treated chronically and known to occur in a patient population at high cardiovascular risk. So, we have not, in general, heard what you're describing. Kim, anything you want to add to that?

Yeah, no. I think there are exceptions out there to the rule, and certainly it can differ by geography. So, perhaps you've talked to somebody that were in that geographies where we've got the exceptions, but for the most part, this has not been coming up with a barrier. We've heard the opposite that customers are very pleased with how easy it's been to transition patients to Xywav.

Our next question comes from the line of David Amsellem from Piper Sandler.

I wanted to ask about idiopathic hypersomnia, and specifically how you're thinking about the payer landscape. The question I guess is, is it your expectation that these patients are going to have to have or will be on Provigil or stimulants and have to have that exposure? And is it your view that you're going to contract in such a way where that's the only utilization management and you won't have to worry about, say, a Xyrem step through? How do you think about that?

Well, let's take this in two pieces. And maybe, Phil, I could ask you to comment before we go to the payer side just on what our expectations are for patients who are currently dealing with IH without an approved therapy and how Xywav might be added into that?

First, I would say that many of these patients with idiopathic hypersomnia are in a wake-promoting agent already and still need further improvement in not only the benefit that they may be getting from the wake-promoting agent, but the wake-promoting agents are not actually providing benefit on the other symptoms. And I think we showed that in the clinical trial, where, despite many of these patients coming in already on a wake-promoting agent, their Epworth sleepiness score was actually still in the range of pathological sleepiness with a baseline of about, say, from about 15 or 16, very similar to the narcolepsy population of Epworth scores. So, from my perspective, I think many people will still be on a wake-promoting agent. I'm not going to get satisfactory benefits in the most part for all the symptomatology of IH. And we showed, as I've said, benefits on multiple symptoms in the data that we had presented, including the IHSS scale, which measures both daytime symptoms and nighttime symptoms and sleep inertia.

Thanks, Phil. And, Kim, maybe you could take the second part of David's question.

As I mentioned a moment ago, that will be the main thing we're negotiating with payers is, how much utilization management such as step edits and prior authorizations will be required. And really, as Phil said, we see that the majority of patients are already going to have tried Provigil or Nuvigil. So, that will not be, even if it's in there, a burdensome step to go through. And on the other hand, Xyrem will not be indicated nor any other oxybate product. So it's not impossible, but probably unlikely that a step through that is going to be required. And we are already hearing. We believe the payers are recognizing the value and the clinical significance of low sodium oxybate. So, again, I think that's probably unlikely. But we'll see in terms of where our negotiations ultimately end up, but we feel quite positive about where we're headed.

Our next question comes from the line of David Risinger from Morgan Stanley.

Could you discuss Zepzelca in some detail, please? So, the sales were I think up very marginally sequentially versus the fourth quarter despite the product only being in its -- effectively in its third full quarter of launch. And so, if you could just talk about that performance sequentially? And then the outlook looking forward for sequential growth. Thank you.

I'll ask Kim to comment on what we're seeing in the first quarter that forms the basis of our confidence for continued growth. We haven't provided product-specific revenue guidance for the year, but I think we've said, we do expect significant growth of Zepzelca, as we move through 2021. Kim, you want to comment on the first quarter?

We're actually very pleased with the performance in the first quarter and maintain our optimism on the full-year projections that we have. And that really is based on the underlying demand patterns that we see. We saw very strong demand increase quarter over quarter. So, feel very confident that the underlying demand is strong and particularly very encouraged when we look at patient types. We continue to see really nice growth in second line market share among new patients and we see that both in the platinum-resistant and the platinum-sensitive patients. So, feeling very good and have no reason to believe that demand is flattening.

Our next question comes from the line of Balaji Prasad from Barclays.

So, sticking to one question, Bruce. Since it seem to be quite close to the deal closure, I wanted your insights on the legal landscape for GW and any potential restrictions on raw material based on a cannabis extraction pattern infringement lawsuit that Canopy Growth has against GW Pharma? I think it was filed last December.

Balaji, I'm not going to make any additional disclosure on that legal action. We continue to feel confident in our ability to continue to grow Epidiolex to really continue on the excellent momentum coming out of the first couple of full years on the market under GW's leadership and more recently the European launch, which is in its early phases. We're really excited about where this product can go and don't see any barriers from what you're describing.

Our next question comes from the line of Marc Goodman from SVB Leerink.

Could you give us a bit more color on the 3% decline in bottle growth year-on-year and talk about in the context of the higher patients quarter-to-quarter? And then maybe give us a sense of how you're thinking about bottle growth for the year for the whole oxybate franchise? Thanks.

It's important to see the continued growth in patients on oxybate across Xyrem and Xywav and increasingly the share moving toward Xywav. We have said there'll be some impact, temporal impact on revenue bottles, as that transition occurs for some patients, but we don't think it's an underlying trend. We continue to see patients new to oxybate therapy who are more often going directly to Xywav and to Xyrem.

So, this is not patients taking less bottles. It's not that dynamic. The dynamic is basically [indiscernible] bottles is what you're talking about.

Correct. Revenue bottles, correct.

Revenue bottles . Yeah. Got it, thanks.

Our next question comes from the line of Gregg Gilbert from Truist Security.

On 458, are FDA actions in interactions providing you with more confidence on an approval versus a typical situation given the unique circumstances of the supply situation? And do you have any updated thoughts on your former partner's ability to compete with, let's call it, the older product in the US or around the world? Thank you.

For the first part of that question, on the regulatory side, let me have Rob answer that.

I would just say that throughout this development, the collaboration with Children's Oncology Group and the FDA has been really great. And as you can see from the process so far, granting of real-time oncology review, all parties are invested in having this review go as quickly as possible. And I would just say that everything is really on track based on guidance we've given in the past.

And then just to land, Greg, on your question about former partner and what their plans are, I think internationally it's a little bit easier for them to reference their UK filing and get into the international markets. It's a little less certain what their path forward is going to be in the US. They likely need to file and get approval with a BLA. And again, I think the FDA and the COG are very supportive of a recombinant product with high quality supply that's going to make a difference in the marketplace as well. So, I think a little less certain exactly where their strategy and timing is going to be in the US market.

Gregg, I'll just tag on to Dan's answer by saying we're really excited to be able to get back to promoting this effective treatment for those patients who have a hypersensitivity reaction or silent inactivation. We've had to curtail our promotional activities for a number of years, given the supply constraints. And not only be able to continue that effective penetration into the pediatric ALL market, but really expand in adolescent and young adult marketplace where we think more patients could benefit from an asparaginase containing regimen and then continue our international expansion where, again, we've been limited by supply for a number of years.

Your next question comes from the line of Graig Suvannavejh from Goldman Sachs.

Congrats on the quarter. Maybe my question would be about kind of the real world experience on patients who are now on Xywav. Could you give any color? I know it's still early, but any color around compliance or discontinuation rates? I'm just trying to get a sense of how sticky you think this business will be relative to Xyrem.

Well, maybe we'll take that in two parts. Phil, I'd love just your perspective on what we saw on our clinical trials with patients moving over on to Xywav in terms of tolerability. And then, Kim, we can talk about what you're seeing on the patients who've started on Xywav. Phil?

In our clinical trial with Xywav, the 1506 [ph] study in patients with narcolepsy, we brought in a broad range of subjects, including those who were treatment-naive versus those who were previously on Xyrem with or without a wake-promoting agent. And the patient population that were previously on Xyrem, which was a substantial portion of the clinical trial participants, we had a gram for gram switch as part of the protocol and turned out to be a very seamless transition with the vast majority of patients having that transition and sticking with the same dose of Xywav that they were previously on with Xyrem with minimal discontinuation rates. So, the patients who is on Xyrem and who has already stayed with Xyrem really seemed to persist and continue with Xyrem and seemed to do very well with that gram for gram switch. And obviously, we're coming into a clinical trial. There may be a little bit more dose optimization as part of the clinical trial. And overall, I think a very good experience for that patient population.

Kim, do you want to jump in with what we're seeing with the launch thus far?

I don't have hard quantitative data. But what I can say that the large majority of patients that are starting Xywav are experienced patients with Xyrem. In terms of the feedback we're getting from customers, it's been largely positive. There is no reason to believe that persistence would really differ with Xywav from Xyrem at this point and we actually do see some patients who previously took Xyrem and discontinued coming back on oxybate therapy with the launch of Xywav.

Your next question comes from the line of Esther Rajavelu from UBS.

On 458, can you remind us on the considerations for the two different administrations and whether that might have any implications for the O-US markets versus the US markets?

Rob or Anne, do you want to start on just how we're thinking about route of administration on 458?

The current study is focusing on the intramuscular, IM, route of administration for JZP458. That being said, the trial has progressed so swiftly and nicely that we have initiated the intravenous or IV portion of the study. This will follow on very shortly after our efforts focus on pursuing an IM approval through the RTOR process in the United States.

And Dan, do you want to talk a little bit about how we're thinking about the opportunity globally, not just in the US?

It's important for us to get the full data packet which will include both IV and IM. In the US, IM will likely be the first approval, but we'll pivot very quickly, given the rate of accrual to the current study and the close working relationship with the FDA. In Europe, we may be able to file for the IV, IM together and that's just something we're exploring in terms of how to do so. But importantly, we've been optimizing the clinical profile and the dosing to really get to best results, and that will be part of the label as well.

Our next question comes from the line of Annabel Samimy from Stifel.

Just back on Zepzelca, I know that you had touched on this before. The sales level seems to have been slightly down this quarter. Can you just maybe help us understand if this is a factor of ordering pattern or if this is a factor of earlier deductibles, patient assistance because that doesn't really jive with strong underlying demand patterns that you're talking about? And then maybe you can just touch also on the change in the [indiscernible] classification of immuno-oncology in the second line setting, if you think that should have a big impact for uptake of Zepzelca? Thanks.

Annabel, I think you're focused on the right main point with Zepzelca, which is the demand growth. Other things can impact reported sales in the short term, but the trends we're seeing underlie our confidence that we're seeing and will see continued growth with Zepzelca. Rob, do you want to comment a little bit on what some of the changes of IO moving out of the later lines of therapy mean for Zepzelca?

I was going to ask for that clarification, so if that's the question. I think it has little impact. What's happened in the IO space is that there have been approvals for extensive stage small cell on the first line and that's the great majority of patients. And so, effectively, patients are getting IO upfront, and that's my later line, like second and third line IO is not really relevant to clinical practice. Zepzelca second line plus or after failure of upfront chemotherapy is becoming a standard of care based on the data relative to other therapies like topotecan, which are not particularly good.

Your next question comes from the line of David Steinberg from Jefferies.

I wanted to ask an additional question about 458 and the asparaginase market, particularly how you see it evolving competitively down the road. So, as I understand, a third competitor, ERYTECH, recently had some good Phase II data and they're seeking FDA guidance on their approval pathway. They're obviously behind you. How do you see that market – three-way market evolving over time? The negatives are there are more players, the positives are you're supply constrained? Do you see them as a meaningful competitor? And sort of how do you see your share roughly breaking out over time?

Maybe Rob could just start on the sort of scientific medical side. And then, Dan, you can jump back in on the market side. But, Rob, do you want to give a little perspective?

I would say very different therapy that's based on using red cell transfusions to deliver asparaginase. The data I'm aware of at least are relatively limited, and so far adults-only. So, I think the positioning in 458 is pretty strong at this point.

Just to just add, I think we're going to have some time as the recombinant high quality product with good supply to reestablish this market and regrow it with promotion and awareness of looking for hypersensitivity, looking for silent inactivation and really broadening the use of asparaginase broadly into the AYA market in addition to moving into geographies. So, there's plenty of growth. I think all we can control in the near term is really our product offering, label and promotional efforts. We'll wait to see how the rest of the market evolves over time.

Operator, any more questions? Or shall we wrap up?

There are no questions at this time. I'll turn the call back to Mr. Bruce Cozadd for closing remarks.

Okay, thank you so much. And thanks everyone for joining us today. We're really excited about another great year in 2021. As we talk about the launches you asked questions about today, couldn't be more pleased with the way the Xywav launch is going. Great progress with Zepzelca. We're seeing growth with Sunosi. And as we talked about on this call, we've got upcoming launches of 458 and idiopathic hypersomnia ahead of us. And we're excited about the transformative GW transaction. And remember that Xywav and IH and JZP458 are really great examples of our ability to advance programs from concept all the way through to commercial readiness, which I think speaks well to how people should look at our portfolio and development capabilities. We will look forward to speaking with many of you at the Bank of America, RBC and UBS conferences later this month. And I'd just like to close by thanking our colleagues here at Jazz for their creativity, commitment and strong sense of urgency that continues to fuel our success. We look forward to welcoming our new GW colleagues and we thank our patients, partners and shareholders for their continued confidence and support. And with that, we'll close the call.

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