Good day, and thank you for standing by. Welcome to the Q3 2022 Jazz Pharmaceuticals Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Andrea Flynn, Vice President, Vice President of Investor Relations. Please go ahead.

Thank you, operator and good afternoon, everyone. Today, Jazz Pharmaceuticals reported its third quarter 2022 financial results. 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 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, Global Head of R&D. Kim Sablich, Executive Vice President and General Manager, US, will join the team for Q&A. On slide two, I’ll remind you that today’s webcast includes forward-looking statements such as those related to our future financial and operating results, including expectations related to Vision 2025 and our guidance for 2022, growth potential and anticipated development programs and pipeline, regulatory activities and commercialization milestones, goals and expected timing, and statements with respect to our licensing agreement for Zanidatamab that is subject to closing condition, which involve risks and uncertainties that could cause actual events, performance, and results to differ materially from those contained in these forward-looking statements. We encourage you to review the statements contained in today’s press release, in our slide deck, and in our latest SEC disclosure document, which 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 three, on this webcast, we’ll discuss non-GAAP financial measures. Reconciliations of GAAP to non-GAAP financial measures are included in today’s press release and in the slide presentation available on the Investors section of our website. I’ll now turn the call over to Bruce.

Thank you, Andrea. Good afternoon, everyone, and thanks for joining us today. I'll start on slide five. In the third quarter, strong operational performance across all areas of our business enables us to deliver significant year-over-year top and bottom-line growth for the quarter, building on a productive first half of the year. I'm pleased to report that based on our performance through the first three quarters of 2022, we are raising the midpoint of our full year revenue guidance, reflecting increases in the guidance midpoints of both our neurology and oncology net sales projections. Renée will discuss these and other updates to our guidance later in the call. Our commercial business continues to execute well. In our neuroscience franchise, we are seeing compelling adoption of Xywav in both narcolepsy and idiopathic hypersomnia, or IH, and we're pleased to have achieved another important milestone. Exiting October 2022, there are now more narcolepsy patients taking Xywav than Xyrem. Looking ahead, we remain confident in the durability of Xywav as a core component of our commercial portfolio. For Epidiolex, we are seeing growth driven by underlying demand. And recently, we completed the pricing and reimbursement process in France, paving the way for commercial launch in this key European market. We believe Epidiolex can become a cornerstone of treatment for refractory seizures and remain confident in Epidiolex's potential to achieve blockbuster status. Moving to oncology. Zepzelca is established as the treatment of choice in second-line small cell lung cancer. Our ongoing clinical development efforts are focused on expanding within that indication as well as looking to address additional patient populations who may benefit from therapy. Rylaze had another strong quarter, as momentum with prescribers has continued. Rylaze remains the only therapy available to patients in the US who experience a hypersensitivity reaction to E.…

Thanks, Bruce. I'm excited about the progress we've made on the commercial portfolio and pleased to report on our strong third quarter performance. Starting with neuroscience on slide eight. We are maintaining positive momentum for our oxybate franchise. With Xywav, we have meaningfully advanced patient care with a lower sodium oxybate product. In the third quarter, average active oxybate patients increased to approximately 17,600 and representing growth of approximately 10% compared to the same period last year. There were approximately 9,500 active Xywav patients exiting the quarter resulting from strong adoption in both narcolepsy and IH. We continue to see strong uptake of Xywav for narcolepsy in the third quarter and we exited the quarter with approximately 8,050 narcolepsy patients taking Xywav. As Bruce mentioned, we've reached an important milestone with more narcolepsy patients taking Xywav and Xyrem. In addition to continued adoption of Xywav among current Xyrem patients, the large majority of new to oxybate narcolepsy patients are being prescribed Xywav. We expect that trend to continue as our educational efforts around the benefits of lower sodium oxybate are resonating with prescribers and patients. With continued strong adoption in IH, we have a substantial growth opportunity. There is a high level of engagement and receptivity in the market for a new IH therapy. We have secured reimbursement on par with narcolepsy – and importantly, we continue to grow the IH prescriber base. As physicians gain experience prescribing Xywav for IH and they have the opportunity to observe its clinical benefits within their own practices, we are seeing increased enthusiasm for identifying appropriate patients and initiating therapy. Exiting in the third quarter, there were approximately 1,450 IH patients taking Xywav, and we're focused on educating prescribers about IH diagnosis and patient identification. Xywav is the first and only FDA-approved therapy…

Thanks Dan. I'll kick things off on slide 13. In mid-October, we announced our agreement to license development and commercialization rights to Zanidatamab. This is an extremely promising program. Zanidatamab is a novel HER2-targeted bispecific antibody with biparatopic binding that has the potential to transform the current standard-of-care in multiple HER2-expressing cancers. The ongoing clinical program for Zanidatamab is well designed and includes anticipated near-term data readouts that could support registration. Topline data from a pivotal trial in biliary tract cancer performance BTC, are expected by year-end, and topline data from the ongoing pivotal Phase 3 trial in gastroesophageal adenocarcinoma, or GEA are expected in 2024. Potential approval in BTC would enable us to deliver this therapy to patients as quickly as possible. that allow health care professionals to gain real-world experience with this drug in BTC prior to potential approval in other larger cancer populations such as GEA. As an oncologist, I'm impressed to see monotherapy activity with Zanidatamab across multiple HER2-expressing tumor types, including cases resistant to prior HER2 therapies. And the ongoing trials are expected to provide data that will inform development beyond BTC, GEA. We're looking forward to working with the experienced team at Xymarks [ph], to achieve our shared objective of realizing the full potential of Zanidatamab patients. Slide 14 provides an overview of our near-term R&D opportunities. We are advancing a number of programs across the pipeline. Within neuroscience, I'm pleased to report that we have initiated our pivotal Phase 3 trial for Epidiolex in Japan that includes Dravet, LGS and TSC with the first patient enrolled in October. We have also initiated our Phase 3 trial for Epidiolex in epilepsy with myoclonic atonic seizures, or EMAS. This would add a potential fourth indication to our label and provide the first clinical data on…

Thanks, Renée. I'll conclude our prepared remarks on slide 20. We finished the third quarter with strong momentum across our business and are in an excellent overall financial position despite a challenging period in the biotech sector, and global markets in general. Our commercial efforts have driven strong uptake for Xywav in both narcolepsy and IH, growth in Epidiolex resulted in an outstanding launch for Rylaze and established Zepzelca as the treatment of choice in second-line small cell lung cancer. Our R&D team continues to advance multiple mid and late-stage programs and we expect to submit several INDs through 2023. The pending addition of zanidatamab, strengthens our oncology pipeline to add to program with anticipated near-term clinical milestones and the potential to contribute to our Vision 2025 commercial and R&D objectives. Operational excellence also remains a key area of focus, including our goal of improving our adjusted operating margin, while maintaining diligent and disciplined capital allocation to drive shareholder value. In summary, we remain on track to achieve Vision 2025, and our updated guidance reflects our team's execution across the business in the first three quarters of 2022. That concludes our prepared remarks. I'd now like to turn the call over to the operator to open the line for Q&A.

[Operator Instructions] Our first question comes from Ken Cacciatore with Cowen. Your line is now open.

Hi, everyone. Great progress, great performance. Just going to focus on Xywav. Bruce, can you talk about -- or maybe Dan, talk about the retention you're seeing on the early patients? I know it's still just the initial patients using it, but -- any views on the retention rate? And I know you described that there is an increasing number of prescribers. Can you give us a sense of who's already seeing repeat prescribing by these clinicians? And then lastly, some folks are still worried that this is a bolus that we're seeing as you're adding these patients. Can you talk, as you've had more experience in the field about your view on the patient size here -- you described in the past as being similar to narcolepsy. Do you still think that this eventually could equate to where Xyrem was in narcolepsy what Xywav can achieve in IH? Thanks so much.

Yes. Ken, I'll start with a comment on the overall market opportunity and then maybe let Kim take the questions on what we're seeing in initial patient experience with Xywav. On the overall market size, while we do believe that the market opportunity as we move forward in time is very large and may, in fact, be the size of the narcolepsy opportunity, if you look at diagnosed and undiagnosed patients. Our initial focus, as we've talked about, is going after that segment of the market where we know patients already have a diagnosis of IH and are actively seeking medical care. So it's a subset of that, but yeas, the opportunity long-term is larger. Kim?

Sure. Yes, what I'll emphasize is we're still seeing a really high level of engagement and receptivity in the market overall for this new IH therapy. And as you mentioned, Ken, we're continuing quarter-over-quarter to bring new prescribers on and grow that prescriber base among those prescribers who have utilized the product so far in their patients. We're hearing very positive experience. And ultimately, that they're seeing the products perform, both efficacy and safety wise, in line with what we saw in the Phase 3 clinical studies. So, very positive experiences as well as positive experience with the availability of the product on formularies. Again, that we've got 90% coverage for both narcolepsy and IH in the commercial patient population at this point in time. So overall, what we're seeing and hearing is that, as a health care provider gets their own first-hand clinical experience with prescribing Xywav in this idiopathic population, and have the ability to observe its clinical benefits within their own practices we really see increase enthusiasm about it, and an effort on their part to start to identify additional appropriate patients in which they can initiate therapy. So all of this, positive signal from those that have utilized as well as those who have not allows us to continue to be really confident in our ability to maximize the potential of Xywav in this really underserved market, and it makes us very pleased that we're continuing to grow Xywav across both narcolepsy and IH and putting us well on track to be the oxybate of choice in 2023.

And Ken, maybe I'll just wrap by saying if you contrast what physicians are seeing with Xywav in IH, with the options they had available to them before our launch they were using unapproved drugs off-label, primarily just to address EDS. And as a reminder, Xywav is broadly indicated to treat the disease idiopathic hypersomnia across a number of important symptoms. And so we're seeing that effectiveness come through to both patients and clinicians.

Thanks so much.

Please standby for our next question. Our next question comes from Jessica Fye with JPMorgan. Your line is open.

Great. Good evening, guys. Thanks for taking my questions. Does the IRA influence your business development priorities or how you evaluate potential targets? And what about within your own pipeline? Does it impact your thinking on which indications or efforts to prioritize?

So, I guess, I would say, like other companies in our industry, we're continuing to evaluate the impact of the IRA legislation, particularly as we learn more over time about how it's going to be implemented to see how that will impact our investment decisions, and it may impact our investment decisions across our R& D portfolio, but also importantly, across corporate development opportunities. here are parts of IRA we liked, including really trying to address out-of-pocket cost for patients. I think that was a step in the right direction. There are other provisions that we think are actually challenging to innovators in terms of some of the probably unintended consequences or not fully recognized consequences in terms of providing a return on capital for those investments. So we, like everyone, will be looking at potential impacts. I don't think we believe for our existing commercial portfolio of products. We see much certainly in any near-term period that would concern us, but we will take it into account when we're making longer-term investment decisions.

Thank you.

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

Hey, guys. Thanks for taking my question. First question, not asking for guidance, but just curious if directionally you see 2023 as a revenue growth year? And the reason I ask is because you have this 2025 target out there. And I think from an investor standpoint, it's easier to believe that if you think 2023 is a growth year. And given the generic competitor entry, I think it would just be something that would be helpful to you guys could address at some threshold. And then the Epidiolex quarter was impressive. I'm just curious if you can speak a little bit to like the one or two biggest growth drivers on a year-over-year basis. You guys were pushing into adults, into rural and suburban kind of areas. So just kind of curious if you could give us a little bit more color on what specifically were some of the bigger growth drivers for Epidiolex? Thanks.

Maybe I'll ask Renée to take the broader revenue trends question, and I hear that you're not asking for guidance, so thank you. and then maybe I can turn it over to Dan and Kim to talk a little bit about our Epidiolex growth. Renée Galá: Yes. Thanks, Bruce. And Jason, thanks for the question. So with respect to 2023, as you would expect, we typically provide that full year guidance for a new year alongside our full year results in the first quarter. So you can expect that from us in early 2023. However, with respect to how we're thinking about 2023 relative to AGs or potential competition, I would say we continue to expect Xywav to be the oxybate therapy of choice. We're confident in the path that we have ahead of us for 2025 and the ability of the oxybate franchise, more broadly, to deliver $2 billion of revenue across Xywav, branded Xyrem and then the royalties of AGs, which, of course, carry meaningful economics to us. But going back to 2023 and Xywav, as you would have listened to our comments and looked at our third quarter results, we believe we are very well positioned for Xywav to be the therapy of choice within the oxybate for the year. We've established excellent payer coverage for both narcolepsy and IH. You've heard today, we now have more narcolepsy patients on Xywav than Xyrem, another important milestone for the brand. And we've also, in the third quarter, now generated over 50 million of net sales in a single quarter with Xywav. So all of this points to meaningful progress and success for the brand and positions us really well as we prepare to enter 2023.

Kim?

Yes. So I'll start off by talking about the US, and we have really seen a number of things giving us momentum here in the US and leading us to be optimistic about the future. And I think there are some of the themes that we've been talking about for the past year are looking for. The first is that, as Dan mentioned, our overall volume of engagement with HCPs has really been continuing to grow nicely quarter-over-quarter, which is really important to a product this early in the life cycle such as Epidiolex and given that we have a number of customers have yet to use it or utilize it broadly. So promotion and education efforts are absolutely important in this highly sensitive, promotionally-sensitive market that we're operating in. So that's one. I think the second driver is as we've kind of talked about and predicted is that we're really seeing this reality of HCPs getting more experience with Epidiolex, seeing what it can do for their patients, feeling more comfortable with the product and impressed and utilizing it more broadly. Dan mentioned that quantitatively, we're also seeing this in terms of market research showing that HCPs are reporting that 60% of them versus a year ago, have moved Epidiolex up in their treatment algorithm. So that's working exactly as we had predicted and had been seeing early on. So lots of great momentum. And then the last one I'll point to is we've been talking all year, again, about our promotional focus and effort in terms of trying to get HCPs to utilize the product for the first time or more broadly by sharing that combination data that we have with Clobazam. It has been very impressive. It really does when they see that there's a synergistic effect of using these two products together and that most of their patients are already on Clobazam. And its ability to reduce this combination seizures by 60% in LGS and Dravet, 50% in TSC, it really does give them pause. And until they tell us it's highly motivating for them to either try it for the first time or to utilize it in their patients who are already on Clobazam who really could benefit from further seizure reduction. So I look at those three things really as the major things putting wind in our sales and leading to both the 22% year-over-year growth we saw in the third quarter, but also leading to the optimism that we have that this product is going to continue to grow nicely and achieve blockbuster status. And that's just the US. So I'll turn it over to Dan to talk about our efforts outside the US.

Yes, I'll just say a few words, because it's largely consistent with some of the trends and growth drivers that Kim mentioned. Just as a reminder, we're launched in 15 markets with 34 countries approved. And so, there's still a series of rolling launches, both geographically and also as we're adding TSC to the label, in some of those markets. What we are seeing is the same HCP engagement and it's a promotionally sensitive brand. So that's beneficial. The last major market to -- in Europe is going to be France, and we did secure pricing and reimbursement, and we will be launching in that country where we've had a very successful sort of pre-launch experience through an ATU. So there's already awareness in patients who've been benefiting from the drug on that and sort of moving that into a full commercial launch mode by the end of the year and into the full commercial benefit for next year. So we also remain optimistic on a worldwide basis that Epidiolex can become cornerstone of therapy for this treatment-resistant epilepsy and be a blockbuster product for us.

Great. Thanks, guys.

Please stand by for our next question. Our next question comes from David Amsellem with Piper Sandler. Your line is open.

Hey, thanks. So two for me. One is, on the long-term targets, the 2025 goals, one of the things you talked about is margin expansion getting -- I think, it was near 48% or close to 50% in 2025. And I'm wondering out loud, just particularly in the context of your nabiximols commentary, how much of that expansion is expense control and particularly R&D, just putting aside in process R&D, of course, but just organic R&D. How should we think about that, given that you're at about, what, $490 million to $520 million in your guidance this year? So that's number one. Number two is on Epidiolex, you talked about new prescriber growth. I'm just wondering, if you're in a position to disclose how penetrated you are in your target audience? And what's your general view regarding the pace of new prescriber growth as we move into and through 2023? Thanks. Renée Galá: David, its Renée. I'll take your first question in terms of margin expansion. So, certainly, we've been highly focused on operational excellence. And, yes, we have set out a 2025 adjusted operating margin ambition of being at 48%, in terms of the midpoint of our guidance today and my comments for the full year being in a position where we're already at 49% for 2022. We've accomplished that through a number of areas. Of course, we said R&D was favorable, largely due to the nabiximols program decision as well as continued discipline. But as we look forward at what we're trying to accomplish, ultimately, we're looking to better leverage SG&A overall to be able to accommodate additional business development, to be able to accommodate additional investments in R&D in our pipeline. And so, by being in the position that we are already, it gives us the opportunity to, between now and 2025, invest in our business, invest in the brands that we're launching, the pipeline, our capabilities, continue to leverage that G&A footprint as our top line grows so that we can scale effectively and efficiently, and then still have the capacity to be active in future corporate development, which, of course, could result in additional commercial or R&D expenses. But we certainly have a commitment to continuing to expand our R&D pipeline. We now have enhanced capabilities across the pipeline coming out of our transaction with GW, and that's an area we would expect over time, will continue to generate more value for patients and for shareholders. And then I'll turn it over to Dan to answer your second question.

Yes. Thanks, Renée. So on the Epidiolex, yes, we're not giving specific penetration rates, but we had said in the past that Dravet is a little more penetrated because of the smaller indication. LGS and TSC, we see more opportunity. We also just see broadly that the drug works in a number of different seizure types and there's many that make up these refractory populations that don't have FDA-approved therapy. So then it's a question of physician use and experience and market access. And that's all going beneficially for us as well. There's a lot of focus in terms of retention, and we've seen very strong retention. So when patients start the drug, they find this to be a very beneficial within a polypharmacy setting. We also see that as physicians gain experience and they push up the doses that, that also generally leads to better efficacy. And so continuing to titrate up, and I think in some of the markets, we feel we're under-dosed. So that's going to be an area of growth. And then we've got a broad indication for starting at a young age going all the way up and I think we've done a good job with the pediatric settings in most markets. But there's still an opportunity to transition those pediatrics as they become young adults and even adults with these lifelong conditions and also addressing the adult patient population. And then, there's still additional geographic opportunities in some of the countries we haven't been in. And longer term, we're investing in data generation for new seizure types such as EMAS but we're also looking to address new significant markets like Japan and Asia.

Good. Thank you.

Please standby for our next question. Our next question comes from Marc Goodman with SVB. Your line is now open.

Yes. I'm sorry to keep it on Epidiolex more, but maybe you could just help us a little bit here. Last year, in the third quarter, it was kind of a weak quarter and then fourth quarter was extremely strong. And so the question was there a little bit of one quarter taking away from the other, any inventory movements and stuff like that. And so -- can you help us understand if there was any of that in this quarter, obviously, a very big quarter, and we're just trying to understand it. Maybe you can help tease out like is this all just European regions just getting added on or was there actually real growth in the United States? Like, can you confirm there was double-digit growth in the United States year-on-year, something like that? Was there any inventory change? And then just lastly, you talked about the Japan study. I was just curious, before Epidiolex was approved in US and Europe, there was a lot of CBD usage, buy them in the Bodega, all over the place. It was just the thing to do, and it was pretty well understood. Is it the same over there in Japan? Do you expect the same type of ramp up over there and that type of excitement? Thanks.

Yes. Mark, this is Bruce. I'll take the first part of your question and then maybe have Dan make a couple of comments on Japan. It's going to be a short answer. The growth you saw in Epidiolex is real. Yes, it's in the US as we continue to roll out in new countries and new indications as Dan described in Europe, we are seeing solid growth in the US and no, it's not due to changes in inventory. Dan, you want to take Japan?

Yes. On the Japan side, we're super excited for that market and to now have launched our official study and so worked very closely with the regulatory agency and developing thought leaders who needed we're very interested in the data that was coming out of Epidiolex. But unlike other markets, there is really no cannabis allowed vector, the Cannabis Control Act, which prevents use of whether it's regulated or non-regulated. And so we're also working in parallel as GW had done successfully in other geographies with government officials to allow for exceptions to the Cannabis Control Act for regulated medicines that have gone through a safety and efficacy evaluation. And we're feeling confident we'll be able to do that change of law and sort of change of practice. And then meanwhile, so enroll and get the experience within Japan from the clinical study. So that's where we are with Japan.

Thanks.

[Operator Instructions] Our next question comes from Ami Fadia with Needham. Your line is now open.

Thanks. Thanks for the question. My question is about Vision 2025. There's a meaningful gap between the consensus and then your outlook for -- can you talk to where you think you might be more confident in the performance of the business? And to what extent do you need to rely on future business development or new pipeline successes in order to be able to get to that $5 billion number? Thanks.

Yes. Hi, Ami, and thanks for the question. I would say that even when we first communicated Vision 2025, we talked about having revenues from our existing commercial portfolio, but also including a placeholder for productivity out of our pipeline and/or corp dev with a strong commitment to doing corp dev. And maybe Renee can make a few more comments about how we're thinking about that. Renée Galá: Sure. Yes, I'd be happy to. Well, Ami, as we look forward, we certainly expect corporate development to continue to be an important strategic pillar for us. Clearly, it had a huge impact on our ability to grow and diversify our revenues to date and also expand our pipeline. So as you look at the deal we just transacted on with Zanidatamab, it has the potential, as Bruce had mentioned, to contribute to Vision 2025 both as part of the $500 million placeholder we've identified from future growth in corporate development, but also as part of the five novel therapies to deliver by the end of the decade. As we look at that strategic framework for corporate development, we're looking at early assets that have the opportunity to continue to grow that pipeline, but also late molecules and then things that can also be very close to commercial. I'd put zani in that category in terms of being able to contribute to two different pillars. And we're excited in the case of zanidatamab to be a potential best-in-class therapy. This is the sort of transaction for us that we think has the potential to have a meaningful impact for patients, where we can apply our unique insights, where we have the ability to commercialize efficiently given the overlap with Zepzelca. And we'll continue to look at transactions of this nature. And then, I'll just note, just given our financial position right now and the speed at which we've delevered the health of our operating cash flow, we feel confident in our ability to continue to leverage corporate developments. We, of course, as we look forward, see a lot of opportunities, still given valuations where they are today, and have a corporate development group that's quite busy. So we're excited about the opportunity to continue to lean into that part of our business to augment what we have already as a business. We're really excited about with the opportunities we have to grow the top line and continue to drive the pipeline forward with what we have in-house today.

Thank you.

Please stand by for our next question. Our next question comes from Ash Verma with UBS. Your line is open.

Hi. Thanks for taking my question. Just one. So on Epidiolex, I think the NCE plus forward timeline passed on September 28. Can you confirm if you have visibility whether there were any Paragraph IV patent certification? Thanks.

Nothing to add other than we've made clear in our filings that that's the earliest filings could occur. We fully expect there may be filings over time. Of course, those go into the FDA first and come to us later, but nothing to report at this point.

Okay.

Please stand by for our next question. Our next question comes from Madhu Kumar with Goldman Sachs. Your line is now open.

Great. Thanks for taking our question. We are curious on how to think about, kind of, Xywav growth in IH and kind of how you look at the trajectory now. Do you think that there's kind of like a further up ramp to happen? As you mentioned, they kind of -- as physicians get more experience with Xywav, they get comfortable with it. There could be like a further tick up and expansion in idiopathic hypersomnia, like, how should we think about that?

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

Sure. So lots of opportunity for growth. We've talked in the past about there being already out there in the marketplace, 37,000 patients who are diagnosed with IH and they're actually out actively seeking health care. So it's not a sales diagnosis. So we've got a nice, healthy patient population to go after. What we're focused on right now is really ensuring that we're educating around IH diagnosis. Despite this, given we really want to try to help HCPs ensure that they're taking into consideration the full range of symptoms that patients are experienced, they're really used to mostly focusing on that excessive daytime sleepiness the off-label usage of weight-promoting agents and stimulants have been enabling them to address, and we want to make sure that they're thinking much more broadly about the breadth of symptoms that patients are experiencing and that Xywav can treat. And then secondarily, we're helping HCPs to identify patients who maybe be ready for Xywav. And again, a big part of that is around making sure they're thinking about that full breadth of symptoms. So overall, strong excitement and feedback in the market, but as we've said, I think for a long time now, idiopathic hypersomnia is a new market. And we're excited to build it just like we did with narcolepsy, but we expect that it will take some time and grow gradually. So overall, lots of reasons to be optimistic, but also to appreciate, Jazz is been working in the narcolepsy market for a decade or more now. And we plan to be successful there ultimately with Xywav in idiopathic hypersomnia, but it will take some time.

I'll maybe add that, Kim -- and Kim mentioned narcolepsy. And remember, our sales force is really trying to do two things here, drive adoption in the new market of IH, but also continue our messaging to the narcolepsy community, including about the importance of the lowered sodium that we see in Xywav that led the FDA to grant the orphan exclusivity based on a safer product because of that reduction in sodium and what that can mean for cardiovascular events. So, important to do that narcolepsy messaging as we continue to grow in IH.

Okay. And then in terms of corporate development, you guys you guys have a really impressive rate of deleveraging. I guess as we think about future corporate development, will it be kind of like Zymeworks where it's kind of the partnering kind of pulling out individual assets or how you may like outright acquisitions like GW? How should we think about that on the forward? Renée Galá: Yes, I'm happy to talk about...

Yes, Renée, why don't you talk about the breadth of approaches? Yes. Great. Renée Galá: Yes. Sorry about that. Yes. So as I've said, corporate development will continue to be important for us and as I step back and think about the opportunity, the strength of our cash flow, we generated over $930 million of operating cash in the first nine months. The fact that we de-levered two full turns – and we did that through both paying down debt. We paid down over $1 billion of debt since closing the deal, and we increased our adjusted EBITDA by more than $400 million, which is 30% -- north of 30%, which means it places us in a really opportunistic position to be able to have the ability to transact at a lot of different levels. With greater EBITDA, we have greater capacity should we decide that we want to do something on a larger scale. But when we look at our business today, we think that we can continue to do transactions like the ones we did in Q2 with Werewolf and Sumitomo, two assets early in the pipeline that we're quite excited about. The Zani deal as well being very close to pivotal data, a transaction that we think has meaningful potential to create value over time. And then looking at the strength of our cash flow, combined with our expanded capabilities across all aspects now and stage of our pipeline, including research capabilities, really opens up a lot of opportunity and optionality for us as we look forward. We are primarily focused in neuro and onc. We do look at other areas opportunistically. And within that, we tend to be technology agnostic, meaning between smaller large molecules and really focus on where we think we could have the biggest impact for patients and then also for our shareholders.

Operator?

Our next question comes from Balaji Prasad with Barclays.

Good afternoon. This is Joe [ph] for Balaji. Thanks for taking our question. Just a quick one on the Zani deal. We know that the optionality for continued will be based on the BTC pivotal readout thinking that the BTC is a relatively small market and a bigger portion of the revenue would likely to be from other indications like GEA and breast cancer. I'm just wondering, is there anything you would like to highlight in terms of the -- in terms of the risk through from the BTC pivotal data for the rest of the indications like GEA and breast cancer that Jazz find interesting? Is timing of factor here? Thank you so much.

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

Sure, Bruce. Happy to. What I would say before I answered the question directly is I've been impressed with the broad activity of this drug across really any tumors types that express HER2 and even in cases where patients have progressed after HER2 therapy. And so I think that speaks to the promise, both in gastric and BTC and then I would say beyond. And we're doing additional studies in breast cancer and colorectal cancer, et cetera. What we'll see at the BTC readout is going to give us a sense of whether we'll have that near-term opportunity to file with BTC. And that's potentially important just even beyond the specific indication. Remember, if we get approval in a relatively small indication, such as BTC, the next submission would be a supplemental. It would mean a more rapid review by FDA, it could mean that we would get NCCN guidelines around gastric based on the published data even before its approval and it gives us a chance to do some preparation in the marketplace as well. So I think that becomes a factor in that regard. But I don't expect that it's going to have kind of a direct read through to the ongoing gastric trial.

Got it. This is very helpful. Thank you so much.

Our next question comes from Gary Nachman with BMO Capital Markets. Your line is now open.

Thanks. Good afternoon. Just back to Xywav, can you confirm that the strong reimbursement that you have already locked is going to be locked in for next year? Or is there still some uncertainty there for certain payers, depending on how the generic market forms for Xyrem. So how did those negotiations take place? And then generally, how much is the launch of IH helped overall awareness with narcolepsy as well as – you definitely continue to increase the number of patients treated in narcolepsy, not just in IH? Thanks.

Yes. Kim, do you want to take that?

Yes Sure. So in terms of 2023 coverage, I mean, what I can just say at this point in time is that we've got 90% commercial coverage for Xywav in both narcolepsy and idiopathic hypersomnia. And we think that bodes very well for us heading into next year. I believe you asked about the authorized generic really based on our conversations with payers as well as the strong contract that we have in place. We think the most likely scenario is going to be that payers will put the AG on the – put on their formularies in a comparable position to that of Xywav. In terms of IH helping the awareness of narcolepsy, look, what I'll just say is it's not so much just around the disease, but we are out there now wherever we can with the same sales force of the same customers largely due to that overlap that Bruce mentioned, a 90% overlap with the IH targets with those that we're calling on already for narcolepsy, that we're many times getting into discussions. So we've essentially, in many cases, doubled the amount of promotion around the brand itself. So I do believe that, that just overall leads to momentum in both directions for both indications.

Please standby for our next question. Our next question comes from Annabel Samimy with Stifel. Your lie is now open.

Just wanted to ask about Rylaze. When you think about the trajectory here, obviously, you had a really nice uptake. I'm a little bit curious to see if this is a new peak level, obviously, higher than Erwinaze. Is it going to be plateauing here given that you seem to have tapped the pediatric market? How should we think about growth from this point forward? Is it harder to get into LDL patients, AYA patients? X geographies? How should we think about the dynamic of growth? Is it a plateau? Or is it just a gradual growth from here?

Kim, you want to start with the US?

Yes, I'd be happy to take that one because we are incredibly pleased that Rylaze sales have exceeded prior U.S. peak sales of Erwinaze and that we believe this is a strong signal that the unmet needs of the market had never really been fully met before Erwinaze started to have supply issues. So I'll point to a number of things. We now have robust brand awareness among customers and prescribers. We've created high confidence in the high-quality and reliable supply of the product. And right now, we enjoy the position as the only available therapy to patients in the US, who have a hypersensitivity reaction to E. coli-derived asparaginase. We're continuing to hear from customers that based on the availability of Rylaze that they are returning to that clinical practice and switching to non-E. coli derived asparaginase earlier than they previously were during the supply shortage when they see initial hypersensitivity reaction observed. At this point, Rylaze has been adopted, as you kind of said, almost universally in the pediatric oncology protocols. But we're also encouraged to see that there is increasing use of Rylaze in the treatment of adolescents and young adults. Now, the majority of the patients out there are pediatric. And it's important to note that many adolescent and young adult patients are actually treated in pediatric centers under the really strong pediatric protocol. So that's a good driver of the growth. Our launch was focused in the last year on establishing Rylaze with our existing asparaginase prescribers who, again, were predominantly in the pediatric setting. And next year in 2023, we aim to increase our efforts to driving -- prescribing in the adolescent young adult population and seeing if we can further expand the market. So again, that's just inside the US. And certainly, there's lots of growth opportunity ex-US for Dan to talk about.

Yes. Thanks, Kim. On the outside of the US, as we've mentioned, we filed with the EMA, and we're hoping for a potential approval in 2023, depending on how long that takes and to answer questions, et cetera. It's a different market over there. Of course, pricing is lower and also Erwinaze is on the market in the European setting. That being said, the experience we've had within the US and having really optimized, particularly the Monday, Wednesday, Friday dose with a bigger dose on Friday to ensure full coverage for these patients. And then there's other advantages in terms of the concentration, the ready till fully recombinant, no particulates in the solution. So we do look forward to giving another treatment option to those physicians. Outside of Europe, there are some countries where Erwinaze is not yet on the market. Japan is one. And we do -- we're actively considering what the opportunity there is, and we'll be working with the regulators to see, is there an expedited path to get this important medicine to patients who could benefit from it.

Please stand by for our next question. Our next question comes from Gregory Renza with RBC Capital. Your line is open.

Hey, good evening, Bruce and team. Congrats on the quarter and thanks for taking my question. Bruce, I just wanted to ask a specific one on Vyxeos. Perhaps you can just give us some updated color on the Vyxeos performance and view and trajectories from here? And maybe related to that, it's super helpful to hear Renée and the team's color elaborating on BD and zani as a potential blueprint. I'm just curious, as you reflect on Celator from few years ago and with Vyxeos now under Jazz, how that potentially juxtaposes as far as the strategy back then to how you're looking at deals like zani going forward? Thank you, very much.

Yes, Greg, thanks for the question. And always interesting to learn from your past corp dev deals as you consider your important strategy going forward. In the Celator deal, we brought in a near-term launch with Vyxeos now on the market in the US and abroad as well as the CombiPlex platform, which we continue to see as a source of other interesting products for our future development and commercialization. And I'll just remind you that Vyxeos remains under study in other areas inside and outside AML that we think may allow us to broaden use in the future. So Rob, maybe talk a little bit about how Vyxeos is being studied right now? And then maybe, Renee, you can jump in with the prompt of how we think about different approaches to corp dev moving forward. Rob?

Sure, Bruce, thanks. So it's being studied in a number of different ways through ISD's collaborations with major cancer centers and cooperative groups as well as in some ongoing studies that we're conducting. And I would just highlight a couple of things. One would be in combinations that could be highly relevant, like combinations with venetoclax. Those trials are ongoing. And also trials that would seek to extend the indication to a broader group of patients, such as the cooperative group with AMLSG, which is not just the high-risk patients but more broadly, front line. Renée Galá: Yes. And then I'll just cap it out in terms of business development going forward. So if I just look at the Zanidatamab deal in terms of how we structured it we are looking to ensure as we enter into transactions that are meeting our strategic objectives that we're also looking to balance -- strike the right balance between monetary upfront financial outlays with risk and other value inflection points. Certainly, with that transaction, we are excited to be able to leverage the team at Zymeworks in terms of continuing to drive these studies in the near term and looking at creative ways that we can continue to leverage our partners for their superpowers and skills that they're bringing to the table while also continuing to advance our strategy. And in particular, with this transaction, we were pleased to be able to strike that balance with the financials and the value inflection points, not only in the upfront and how we've structured that. But also as we look forward, and look at the milestones that were primarily driven by regulatory and future commercial value inflection points. So with the optionality that we have going forward, both from a financial perspective as well as having a broader business now, we'll continue to look at creative ways to structure transactions to have win-win outcomes for both Jazz and our patients and shareholders as well as our partners.

At this time, I am showing no further questions. I would now like to turn the conference back to Bruce Cozadd for closing remarks.

Thanks, Michelle. So thanks for joining us, everyone. We look forward to a strong finish to 2022 and remain focused on achieving Vision 2025. And I'd just like to close today's call by recognizing our Jazz colleagues for their commitment to delivering new therapeutic options to patients and want to thank our partners and shareholders for their continued collaboration and support. Have a good evening, everyone.

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