Jazz Pharmaceuticals plc (JAZZ) Q2 2026 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to Jazz Pharmaceuticals Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that today's conference is being recorded. I will now hand the conference over to your first speaker today, John Bluth, VP and Head of Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. Today, Jazz Pharmaceuticals reported its second quarter 2026 financial results. The slide presentation accompanying this webcast is available on the Investors section of our website along with the press release and quarterly report on Form 10-Q for the second quarter ended June 30, 2026. On the call today are Renee Gala, President and Chief Executive Officer; Sam Pearce, Chief Commercial Officer; Rob Iannone, Global Head of R&D and Chief Medical Officer; and Phil Johnson, Chief Financial Officer. 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, regulatory and commercial milestones, 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 these risks and uncertainties described in today's press release and under the caption Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, 2025. We undertake no duty or obligation to update our forward-looking statements. As noted on Slide 3, we will discuss non-GAAP financial measures on this webcast. 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. Now I'd like to turn the call over to Renee. Renée Galá: Thanks, John. Good afternoon, everyone, and thank you for joining today's conference call. We delivered another outstanding quarter, generating record revenue of $1.2 billion representing 16% year-over-year growth. The momentum we've built in the first half of the year provides us with confidence to raise our full year revenue guidance. Our results reflect an intense focus on aligned execution across our diversified portfolio, sustained demand of our commercial products and progress in advancing our long-term priorities for value creation. As we approach a significant milestone with the August 25 PDUFA date for zanidatamab in first-line HER2-positive metastatic GEA, our commercial, medical and market access teams are fully prepared to successfully launch zanidatamab. We're entering a new phase of growth created by the opportunity to deliver clinically meaningful outcomes for patients facing this highly aggressive, difficult-to-treat disease. Our consistent execution reflects the focused strategy we outlined at the beginning of the year, expand our leadership in key therapeutic areas, advance differentiated innovation and create durable long-term value. Across the business, our teams are delivering key therapies to patients, advancing zanidatamab, and leveraging our financial strength to invest in both internal R&D and external innovation. An example of this approach is our preclinical research collaboration with AbCellera, which leverages their T-cell engager platform to discover novel multi-specific antibodies. This agreement directly complements our oncology expertise and supports our refined rare disease strategy. These exceptional results from the quarter position us to sustain our momentum while delivering meaningful benefits for patients and driving robust returns for our shareholders. With that, I'll turn the call over to Sam to share more details on our commercial performance.

Thank you, Renee. Our commercial teams delivered another impressive quarter of revenue, with 16% growth across the portfolio and double-digit growth from each of our key promoted brands. This performance is a result of focused investments and targeted impactful execution, which is driving sustained momentum across our increasingly diversified portfolio. I'll begin on Slide 7 with rare sleep. Xywav's profile as the only low sodium oxybate on the market continues to resonate with physicians and patients. Xywav net product sales increased 13% to $471 million in the second quarter of 2026 compared to the second quarter of 2025. Supported by targeted health care provider and patient-focused digital campaigns, our field execution continues to expand the narcolepsy and idiopathic hypersomnia markets, and deliver sustained new patient adds. These efforts emphasize Xywav's differentiated low sodium profile and the efficacy it provides by treating underlying disrupted nighttime sleep and addressing daytime symptoms for patients living with narcolepsy and idiopathic hypersomnia. Demand for Xywav remains robust with approximately 525 net patient additions in the quarter. This brings our total active patients to approximately 17,125, representing more than 12% year-over-year growth. This momentum is supported by our targeted investments in high-touch patient support services, such as our field nurse educator program, which delivered differentiated support to help patients achieve optimal dosing and sustained treatment. This first half performance underscores the durability of our sleep franchise with limited impact from high sodium generics. Whilst we will closely monitor second half market dynamics, including generic availability and potential new product launches, our confidence in Xywav's foundational role is unwavering. Its clinical profile remains differentiated as the only low sodium oxybate and the only FDA-approved option for IH patients. Moving to Slide 8 and Epidiolex. Epidiolex delivered another outstanding quarter with net product sales growing 16% year-over-year to $292 million, driven primarily by robust underlying demand, this momentum is fueled by our field team's ongoing success in educating HCPs and caregivers on Epidiolex's broad spectrum efficacy and its meaningful beyond-seizure benefits for new and existing patients. Concurrently, we are actively expanding the Epidiolex franchise, while Rob will cover our clinical expansion into new treatment resistant seizures, I want to highlight a critical life cycle initiative: our novel capsule formulation. Designed to unlock additional utilization within our approved indications, the capsule targets deeper penetration in certain segments of the adult patient population. By offering this convenient alternative alongside our oral solution formulation, we aim to improve accessibility and compliance for adult patients while firmly reinforcing our long-term leadership in the anti-seizure market. Turning to our oncology portfolio. We are extremely pleased with the ongoing launch of Ziihera in BTC, as shown on Slide 9. In the second quarter of 2026, Ziihera generated $15 million in net product sales. Since launching in second-line BTC, we have rapidly established clinical leadership, achieving more than 50% of the addressable market share in the U.S. This clinical momentum is driven by deepening utilization in academic centers and expanding adoption across community settings, supported by highly consistent, positive real-world prescriber experiences. Critically, our success in BTC serves as a powerful commercial foundation for our next major growth phase in GEA because there is significant direct overlap between existing BTC and GEA-treating accounts, our commercial infrastructure is fully primed. On Slide 10, you can see how our launch readiness framework is designed to drive rapid uptake. Our commercial footprint is highly optimized with over 90% target physician overlap, allowing our team to rapidly generate clinician excitement and demand. And this enthusiasm is rooted in zanidatamab's exceptional clinical data, specifically an unprecedented median overall survival exceeding 2 years, establishing it as the potential preferred backbone in HER2-positive GEA. To support immediate clinical adoption at launch, we've submitted this data to key oncology pathways, and we'll leverage our already established permanent J-code to minimize reimbursement barriers. Backed by our robust JazzCares patient support program, we are fully prepared to deliver seamless access to patients upon approval. Turning to Slide 11 and Modeyso. Modeyso generated $48 million in net product sales in the second quarter of 2026, representing remarkable progress since our launch in August of last year. Driven by highly coordinated, disciplined execution, more than 600 patients have now been treated with Modeyso through the end of the second quarter. To sustain this upward trajectory, we initiated additional nonpersonal promotion and peer-to-peer speaker programs in the second quarter. These initiatives are designed to educate community-based physicians and expand our reach to ensure timely referral of patients to academic centers of excellence. On the diagnostic front, while biomarker testing is already high in high-grade gliomas we are actively working to establish reflexive testing across all of the gliomas. This systematic approach is critical to ensure every H3 K27M patients is identified early and referred to targeted care. To support this, updated NCCN guidelines now endorse liquid biopsy for the H3 K27M biomarker. This represents a major milestone that broadens diagnostic pathways, reduces patient risk and accelerates time to treatment. Finally, Modeyso continues to benefit from robust highly favorable payer coverage. Combined with our dedicated patient support services, we are exceptionally well positioned to maintain the strong commercial momentum. Moving to Slide 12 and Zepzelca. We are very pleased with Zepzelca's performance this quarter, achieving $106 million in net product sales, a 42% year-over-year increase. This robust growth was driven by highly positive prescriber feedback and rapid adoption in the first-line maintenance setting, which more than offset the anticipated tapering of our historical second-line business. The strength of our IMforte trial data clearly demonstrates that Zepzelca's greatest clinical value is in early intervention in combination with a PD-L1 inhibitor in the first-line maintenance setting, a consensus recently reinforced by its elevation to a category 1 listing in the NCCN guidelines. Because metastatic small cell lung cancer progresses so rapidly, reaching patients earlier in their journey is critical. Later, Rob will provide an update on the second line indication. Overall, we are very pleased with the commercial performance across our portfolio in the second quarter, and we remain focused on sustaining this momentum throughout the remainder of the year. With that, I'll now turn the call over to Rob to provide an update on our pipeline. Rob?

Thanks, Sam. I'll start on Slide 14. This is a very exciting time with Jazz driven in part by the August 25 PDUFA date for zanidatamab. The Phase III Horizon GEA 01 trial results were recently published in the New England Journal of Medicine, further characterizing the efficacy and safety profile of zanidatamab in combination with chemotherapy with and without a PD-1 inhibitor to tislelizumab. Publication in the New England Journal of Medicine underscores the clinical significance of these results, and we believe will support awareness and adoption of zanidatamab among oncologists treating GEA patients. We also presented subgroup data at ASCO, confirming that the zani and tisle combination delivers a consistent survival benefit irrespective of PD-L1 tumor expression, a 26.4 month median overall survival was observed with the zanidatamab plus tislelizumab arm, which was more than 7 months longer than the control arm with trastuzumab. The benefit was seen for all HER2-positive patients, irrespective of tumor PD-L1 status and represents a remarkable advance for this patient population. Zanidatamab plus chemotherapy showed a clinically meaningful survival benefit with a median OS of more than 2 years and a strong trend towards statistical significance at the time of the first interim OS analysis. We look forward to the upcoming top line results from the second interim OS analysis of this doublet arm, which are expected in 3Q '26. In addition, we have submitted the New England Journal of Medicine manuscript for potential inclusion in the NCCN guidelines. Our belief in zanidatamab increases and it was recently granted breakthrough therapy designation for adults with previously treated, locally advanced unresectable or metastatic HER2-positive colorectal cancer. We look forward to sharing more on our development plans for colorectal cancer in the near term. Turning to Slide 15. Our R&D programs remain focused on building the next generation of growth drivers through internal innovation and external partnerships. We are leveraging our deep expertise in rare epilepsies to broaden our pipeline and extend the potential benefits of Epidiolex, also known as cannabidiol to more patients with treatment-resistant seizures. We are initiating 3 new clinical trials, including a Phase IV trial in adults with LGS, a Phase III trial assessing the antiseizure efficacy in a broad group of developmental and epileptic encephalopathies and a seamless Phase II/III trial that will explore the capsule formulation in juvenile myoclonic epilepsy. These new trials build on the Phase Ib trial in focal onset seizures that was initiated at the end of last year and the Phase I trial of JZP047, a novel molecular entity discovered by Jazz being developed in absence epilepsy. In addition, we submitted an NDA to the FDA for a novel capsule formulation to broaden utilization of Epidiolex in currently approved indications of LGS, DS and TSC to improve flexibility and provide a new administration option for patients. Moving to oncology and Zepzelca. Based on the results of the LAGOON trial, and in alignment with FDA in 3Q '26, we will submit for FDA's review and subsequent action of labeling supplement to remove the second line indication. The first-line maintenance indication will not be affected. Lastly, on Modeyso, our Phase III ACTION trial is progressing based on the latest estimate of event accrual, we now anticipate that the overall survival interim analysis will be in the first half of 2027. This trial is designed to confirm the benefit of Modeyso and support regulatory approval as frontline therapy directly following radiation. We are making meaningful progress across our pipeline and in-house R&D efforts. And we look forward to sharing more updates as our programs advance. Now I will turn the call over to Phil for a financial update. Phil?

Thanks, Rob. Before diving into the financials for the quarter, I'd like to underscore our consistent progress delivering on our rare disease strategy. Our commercial organization is firing on all cylinders, and we're making targeted investments to continue our momentum. Our R&D organization is working with urgency to generate practice-changing clinical data, highlighted by the NEJM publication of the zani first-line GEA results, and speed new medicines to market while also expanding indications for existing medicines to benefit even more patients, and we're deploying capital in a disciplined manner to enhance our growth prospects, most recently with the AbCellera deal. Turning to the financial results for the quarter. I'll start with high-level comments on our non-GAAP adjusted P&L, as shown on Slide 17. Please note that our full financial results are available in today's press release and 10-Q. The outstanding execution of our field-based teams was reflected in record quarterly revenue of $1.21 billion, an increase of 16% over the second quarter of 2025, driven by 32% growth in our oncology portfolio, 13% growth in Xywav and 16% growth in Epidiolex. Moving down the P&L. Our non-GAAP adjusted gross margin declined slightly year-on-year, due to higher sales of Zepzelca and Modeyso, which carry third-party royalties. Non-GAAP adjusted SG&A and R&D expenses, both grew 11%, with the increase in SG&A driven by higher expenses for Modeyso and Ziihera first-line GEA, and to a lesser extent, by investments in key commercial capabilities and digital and AI, while the increase in R&D was driven by higher expenses related to clinical trial costs primarily related to zanidatamab. Our non-GAAP adjusted effective tax rate this quarter was moderately higher than our full year 2026 guidance due to shifts in the expected geographic mix of income and expenses. While our shares outstanding for the quarter reflect the accounting effect of our higher share price on our convertible notes and employee stock plans. At the bottom line, we posted very robust non-GAAP adjusted EPS of $5.71, which included IPR&D charges totaling $0.94. Beyond the income statement, I'd highlight that we generated operating cash flow of $824 million in the first half of the year. And during the second quarter, we paid off our 2026 convertible notes. With our strong financial position, we're able to continue to invest in our currently marketed products and our existing pipeline as well as in corporate development. Turning to Slide 18 and our 2026 financial guidance. I'll focus my comments on those guidance elements that have changed since our last earnings call. We now expect total revenues in the range of $4.60 billion to $4.75 billion. This significant upward revision is largely driven by the outstanding execution of our Xywav field teams driving home the unique benefits of Xywav offers as the only low sodium oxybate. To date, uptake of high sodium generics has been quite limited, and we continue to post strong net patient adds. We now anticipate double-digit growth for Xywav in 2026 and rare sleep revenue of between $2.025 billion and $2.125 billion. Strong first half results of our rare oncology and epilepsy portfolio further support our revised total revenue guidance range. On the expense side, we've modestly increased our SG&A expense guidance. This reflects deliberate strategic investments to build upon momentum in Xywav and Epidiolex as well as to drive implementation of our rare disease strategy and our corporate development efforts. Finally, our updated share count guidance is 69 million to 70 million shares, reflecting the increase in our stock price since our last earnings call and its accounting effect on our convertible notes and employee stock compensation plans. I will now turn the call back to Renee for closing remarks. Renée Galá: Thank you, Phil. I'll conclude our prepared remarks on Slide 20. Our second quarter results demonstrated the strength and continued diversification of our product portfolio, delivering record quarterly revenue, including a 32% increase from our oncology products compared to 2Q '25 and consistent execution across our commercial and R&D pipeline. Importantly, we entered the second half of the year with significant momentum, highlighted by the anticipated zanidatamab approval and launch in GEA and multiple upcoming clinical readouts. Building on our proven scientific capabilities and strong financial position, we are making a meaningful impact for patients. Over the past 12 months, we have embarked on a period of rapid and deliberate transformation. I am incredibly proud of the execution by the entire Jazz team during this time and deeply grateful for the trust you have placed in our shared vision. That concludes our prepared remarks. I would now like to turn the call over to the operator to open the line for Q&A.

[Operator Instructions] Now first question in the queue coming from the line of Marc Goodman with Leerink.

Yes. Could you guys give us a little more color on Epidiolex? Just give us a sense of was there any inventory in the U.S. or anything strange in the quarter? I mean, what was really just driving it? Were there new indication? Just give us a sense of what's happening here because the quarter was much better than expected.

Marc, this is Sam. Yes, thanks for the question. Yes, very pleased with the continued momentum that we've seen for Epidiolex a 16% revenue growth, taking us to $292 million for the quarter. This is 12% volume growth, which again, just reflects really good strong demand in both the pediatric and the adult settings, reinforcing our position as the #1 branded antiseizure medication in refractory epilepsy. I think some of this growth is coming from -- continues to come from our focus on the long-term care setting. As you know, we've generated some good data there beyond seizure benefits really resonate with adult, and we continue to see good headroom for growth actually in that segment as well. There were no really significant unusual inventory movements. But I'll hand over to Phil. If you want to comment further on that topic.

Yes. Thanks, Sam. Just to note, Mark, ex U.S., you may recall that in the second quarter last year, we had talked about some onetime pricing adjustments that were made in a couple of the ex U.S. markets that did depress second quarter 2025 revenue that led to some of the favorability on the compare in the second quarter of this year for ex U.S. revenue. We also did have a decent effect in this first half of the year coming from FX that was most pronounced in the first quarter and came down pretty significantly here in the second quarter, but did also help drive a little bit of the ex U.S. revenue growth.

Our next question coming from the line of Jessica Fye with JPMorgan.

I wanted to ask about zani and just hoping you could speak to your confidence in approval heading into the upcoming PDUFA there has been some talk about the possibility of maybe approval before the PDUFA date, we're getting pretty close now. So just wanted to hear your confidence there. And then maybe related to zani, can you speak to your confidence in the zani doublet hitting on OS with the upcoming interim?

Good question, Jess. So we've been productively engaged with the FDA, and it does feel like we're in the home stretch. We're highly confident in the approval. I would still say on or before the PDUFA date, and we are certainly ready to launch. On your second question around the second interim for the doublet, certainly, we have -- we had a great result at the very first interim. And certainly, we have more power at this next turn. So looking forward to those results in 3Q of this year.

Our next question coming from the line of Jason Gerberry with Bank of America.

Maybe one for Phil. Just -- when you look at the strength of Xywav in the first half, how do you see that carrying over into next year? Should investors look at like the outperformance is more or less just the delayed generics and more of a headwind in 2027? Or do you think that this is -- the strength that offers a rebasing of numbers going into 2027 for Xywav?

Yes. Appreciate the question. Definitely extremely pleased with the performance of our field teams driving Xywav. It really is a pretty astounding and amazing story. And really based on the unique benefits that Xywav offers as the only low sodium oxybate. We've been seeing this resonate with physicians as well as patients. I think we've continued to see that during this year. Probably leading to even slower uptake of generics than we might have originally anticipated, which is leading to some of the raise we have for the guidance this year. I would say that continues to put us in a really strong position as we think about the go-forward discussions that we might have with payers as well. Given that the market continues to highly value the unique position that only as Xywav occupies. So not ready to sort of give specific guidance on '27 yet. We'll do that when we get to the fourth quarter '26 call early next year, but the momentum we've got gives us increasing confidence in the position that Xywav have in this market on a go-forward basis.

Our next question coming from the line of Ash Verma with UBS.

Congrats on the progress here. Maybe just on the GEA market dynamic, can you talk about in terms of how many patients are in the major academic centers versus the large community practice network? And if you think that the adoption is going to look different one way or the other in either of these channels.

Yes. Thanks for the question, Ash. Yes, we do believe that for the GEA launch obviously, having a strong foundation of support from those academic centers is key. And of course, the data really has been well received by those physicians following the publication in new England Journal of Medicine, and they're easily anticipating the launch. But what will be very important with this launch and something we really appreciate is how important it will be for the community physicians to really understand the data and to quickly adopt -- Ziihera as the new standard of care in GEA. This is something that we're quite well prepared for because it pretty much mirrors the situation with Zepzelca. So we have a team already out there who very well positioned to a very strong overlap, as you know, between Zepzelca and Ziihera. So they're well positioned to communicate the benefits of Ziihera through community physicians and we anticipate good strong uptake there for the reasons that we've talked about previously, the overlap, the fact that we have the permanent J-code already established, and we have those relationships already in place.

Our next question coming from the line of Joe Thome with TD Cowen.

Can you talk a little bit about the breakdown between frontline and second-line Zepzelca patients that are presenting at this point? Just trying to understand a little bit how much the second-line label update will impact sort of your thoughts on the long-term value of Zepzelca and kind of your peak sales estimates there?

Yes. Thanks for the question. I'll take that one. Yes, I mean, we're very, very pleased, obviously, since we launched Zepzelca in the first-line maintenance segment in October last year. We've seen really strong adoption of Zepzelca with those patients. And that's really what's driven the growth that we've seen over the last few quarters. 42% growth this quarter, taking on $106 million. And that growth is really all being down to our success in that first-line segment. We estimate now that between 30% to 40% of our overall U.S. sales are coming from that first-line maintenance segment. And of course, that's growing. And that is reinforced by the recent NCCN category listing elevated to category 1 as a preferred regimen in first-line maintenance in combination with Tecentriq. So whilst we have been seeing a gradual decline in that second-line business, as a result of competition, but also as patients get initiated on to Zepzelca in the frontline segment, they're not going to get retreated in that second-line segment. We can expect the second-line business to erode. That's what we were anticipating. Of course, with the announcement today, we may expect that to accelerate. But of course, all of that factored into the guidance that we've provided for this year. Rob, would you like to add anything from your perspective on that?

Yes. I mean I would just say that we designed the IMforte trial because we really felt that it was important to preempt progression in this pretty aggressive disease. And had a strong hypothesis that Zepzelca would synergize with a PD-L1 inhibitor like atezolizumab, and that is what we observed in IMforte. So we think frontline maintenance is the best place to use to Zepzelca for patients to get the best benefit and the longest treatment duration. We think there is a synergy with PD-L1 antagonist, and there was important data published at ASCO showing just that, looking at the impact of tumor-associated macrophages of Zepzelca [indiscernible] explaining the potential synergy with the PD-L1 agent. So we do think frontline is the best place to use Zepzelca.

Our next question in queue coming from the line of Sean Laaman with Morgan Stanley.

Congratulations on the number and hope everyone is well. My question is on the durability of Xywav. So it seems that most of the net patient adds came in IH. And I guess just given the biology of the disease, we have normal levels of orexin and then you do have a pretty competitive bar there on perusal of medical literature in terms of MWT. How do you think that evolves the mix of Xywav for patients on IH and how defendable or otherwise, do you think it may be as orexin-2 agonist advance.

Yes, thanks for the question. Yes, of course, we're very pleased with the durability that we've seen for Xywav. We did, as you mentioned, we had really good solid patient adds this quarter, 200 for narcolepsy, 325 for idiopathic hypersomnia in total 525 net patient adds, actually the highest number of adds that we've had for a year. So very happy to see that continued momentum. Obviously, the brand is proving itself to be very durable in the face of multisource generics. That's perhaps not surprising given the differentiation factors for Xywav haven't changed with the availability of multisource generics. We're still the only low sodium oxybate on the market, the only products approved for IH. Obviously, as we look ahead, we are anticipating the launch of the orexin. And I'll maybe get Rob to comment a little bit on how he's seeing the potential combinability of orexins with Xywav. Rob?

Yes. Thanks, Sam. Across the hypersomnia, NT1, NT2, IH, the root cause really is disrupted nighttime sleep. And Xywav is the only approach to address the disruptive nighttime sleeping. So we think it's a cornerstone of therapy there. It's been the case that patients will also use daytime stimulating agents. And we think that orexin offers another opportunity to complement the potential benefit of oxybate and specifically Xywav.

Our next question in queue coming from the line of Mohit Bansal with Wells Fargo.

This is Will Zhang on for Mohit. So I guess, like looking at zani's Phase III trial in breast cancer, I just want to understand, given that you guys are developing in this like post T-DXd post-Enhertu setting, what is kind of the patient pool? What is the size of the patient population that you're looking to address here, since HER2 still beginning its -- in the early phases of this launch into the first-line breast cancer setting.

You want to jump in a bit on the trial?

Yes. So the trial is positioned in patients who have been treated with Enhertu, the current treatment paradigm that's typically third-line plus patients. I'll remind you that we have data showing the zanidatamab, given its unique mechanism of action is active even in patients who've progressed on Enhertu. And that comes from monotherapy data. It comes from combination data with standard of care, say, in the HER2-positive, ER-positive population that we published and also with novel agents like the ALX agent. We think this is roughly 150,000 patients annually. And we also feel that it's a significant unmet need as in HER2 progressively move to the front line that zanidatamab would be, I think, unique in having data demonstrating its activity versus standard of care in patients who progressed on Enhertu regardless of the line of therapy. So we're eager to see those results. We've said in the past that we expect to see the trial completed enrollment mid-2027. And we could see results depending on how the events progress late 2027 or early 2028.

Our next question coming from the line of Leonid Timashev with RBC Capital.

I wanted to ask on the Epidiolex strategy from here, maybe how the pieces there fit together? You guys are running a number of additional studies, LGS in adults, DEE, JME? And there's also this new capsule formulation. I guess what I'm trying to understand is how are -- to what extent is this growing the opportunity versus defending it from future branded entrants as the DE space sort of heats up competitively? And then is this new capsule formulation, something that's going to extend the IP runway as well? Renée Galá: Yes. Thanks. I'll start and then also welcome comments from Sam and Rob in terms of both the broader commercial opportunity and some of what we are investing in on the clinical side. But if you step back and think about Epidiolex as a growth driver for the company, with the visibility of long durability into the very late 2030s now with this franchise we believe we have multiple opportunities to invest. We talked today about multiple clinical programs underway, and we also believe having the capsule formulation allows us greater potential penetration into the adult market for certain patients who are more suitable for the capsule formulation. And if we step back and think about the impact that this business development transaction of bringing Epidiolex into the company has had for us, it's created now a major growth driver we paid a little over $7 billion for what is the franchise that is growing nicely over $1 billion a year with the opportunity to grow in multiple formulations through clinical data and also internationally. It's a really nice business for us to be in and also continue to build around when we think about future business development transactions. Sam, do you want to comment further on the capsule?

Yes, happy to. Yes, we're very, very excited about the potential for Epidiolex to continue its strong momentum into the future. We have seen and we continue to execute on our strategy to grow Epidiolex in the adult segment. We continue to see growth in keeping patients on treatment for longer and that persistency is really very material in terms of the long-term outlook. And we also identify an opportunity for patients to restart Epidiolex who may be a previously discontinued treatment. And when you look at the capsule formulation, the capsule formulation is going to enable us to do all of those things even better, particularly for those adolescent and adult patients where the oral liquid solution is a less convenient option for them. So we believe the capsule will enable us to capture naive patients, improve persistency in existing patients and encourage restarts for patients that may be started on the oral solid dose on the liquid and it wasn't the best treatment for them. So we do believe when you take all of those together, this is a material incremental opportunity that will drive more patients benefiting from Epidiolex. Renée Galá: And maybe to hit your IP question right before Rob jumps in. The capsule launch does not have any impact on IP. It does not have any impact on our ANDA agreements that extend the durability, as I mentioned, out to the 2030s -- the very late 2030s our patent estate contains method of use patents that are relevant to all approved indications, and that's relevant to both the existing oral solution as well as the new capsule formulation. But Rob, do you want to cover now the clinical programs?

Yes. So we're excited to be initiating a number of new clinical trials with Epidiolex, we're convinced of its broad activity across different seizure types based on prior data we have for the current indications in the EAP. And so as you know, about a year ago, we initiated a Phase II trial in focal onset seizure. We just announced a trial we initiated in juvenile myoclonic epilepsy that will be with the capsule formulation, and that's a Phase II/III seamless design, so potentially pivotal. We also are initiating a trial in a broad set of DEs that could lead to a broader label there that would be pivotal and doing some more work in adult LGS patients to really try to better characterize its efficacy there and support its use from adult prescribers. So confident in the activity that Epidiolex has its ability to combine and as has already been said, because of the longevity that we're initiating new trials in this space. And then since I have the mic, I just want to make sure my comments earlier on breast cancer for Ziihera were understood. 150,000 really represents the pool of metastatic patients globally. So obviously, it's a subset of that who would have progressed still are eligible for treatment after Enhertu.

Our next question in queue coming from the line of David Amsellem with Piper Sandler.

So I have a long-term question on the oxybate franchise, namely Xywav in IH. So obviously, we have the data in hand for Lumryz. And just wondering how you're thinking about the trajectory of IH? It's obviously growing nicely. There's good headroom here. That's definitely not lost on me, but the question is, once you do have that competition emerging in '28, how do you think about your growth trajectory longer term? And then even beyond that with potential availability of orexin. So if you could just comment on how you're thinking about the next several years for your IH part of your sleep business, that would be helpful.

I can certainly start, and then maybe hand over to Rob. Yes, I mean the differentiation for Xywav is twofold. And perhaps one of the most kind of important things about Xywav is the low sodium. And of course, that's going to be a component of its differentiation that will go beyond just another product having an IH indication. And this is a message that really does resonate with prescribers. We know that patients who are diagnosed with IH or narcolepsy, the majority of them do have a cardiometabolic or cardiovascular comorbidity. And so increasingly, I think physicians and patients recognize the importance of having a low sodium option. And that differentiation is obviously pretty durable. So -- in relation to the orexin question, maybe I'll hand that over to Rob.

I was -- Thanks, Sam. I was just going to add, again, that we are different Xywav differentiated on the basis of low sodium. And while it's well understood that not only narcolepsy but IH patients have a significant risk of negative cardiometabolic outcomes. We also demonstrated that in the Xywav study that after initiation of high sodium oxybate, you see a change in blood pressure, which is clinically meaningful. And so patients benefiting from Xywav now, I think that will be pretty sticky. Did I miss another aspect of the question on narcolepsy that you want to me to address, Sam?

I think there was a question just around the competition versus the longer-term availability of orexin.

Yes. I mean, again, I think I answered this earlier. Whether it be IH in narcolepsy, the root cause of the daytime sleepiness and symptoms such as cataplexy have to do a disruptive nighttime sleep and only oxybate and Xywav really the safest, oxybate could address that root cause. And so we continue to think that, that will have an important role in treating patients, even if they would additionally benefit from daytime wake promoting agents? Renée Galá: And just to build one last point here. With respect to the IH market, we are still very early in our overall penetration. We think there's probably 37,000-plus patients diagnosed and seeking treatment for IH. And while we've made significant progress and headway we do believe there's a lot of room still to grow here, and we believe that Xywav as we've seen with narcolepsy, including the patient support services supporting the overall journey that patients go through with a new diagnosis of idiopathic hypersomnia. We do believe that Xywav will continue to compete well in this market.

Our next question coming from the line of Ami Fadia with Needham & Company.

I had a question on zani and as you think about potential for indications beyond breast cancer, can you talk about what type of updates we could expect with regards to CRC or non-small cell lung cancer and how you might go about pursuing those indications?

Sure. So we have the ongoing basket trial, which is the 206 study. And in that trial, we continue to enroll patients with second-line colorectal cancer and non-small cell lung cancer. We had previously published on colorectal cancer, and those for some of the data that we brought to FDA, including -- and in addition, data from the emerging 206 trial that led to the breakthrough designation for colorectal cancer. So we'll continue to generate data in both of those indications through that study, and we'll work with FDA now that we have BTD to identify the path forward ultimately for approval in colorectal cancer. More broadly, we're very excited about the potential of zanidatamab. We have the ongoing frontline BTC trial that we're optimistic about. As you know, we're about to launch in GEA. We're contemplating other areas in gastric cancer, such as early gastric cancer where there's no approved HER2 therapy. Of course, we have the ongoing late-stage metastatic breast cancer trial as well as other Phase II trials looking to determine how else we might use zani in combinations, sometimes novel combinations in the breast cancer setting as well as the new indications such as CRC and non-small cell lung cancer, as you mentioned. So overall, we do you think this is a pipeline and a product and we're pursuing every opportunity to explore.

Our next question coming from the line of Gary Nachman with Canaccord.

So for Ziihera and GEA just back to that, if approved, how long before you think the NCCN guidelines will be updated since you already submitted the data for that? And how much would that impact the uptake? And I'm also curious, has there been any real off-label use in first-line GEA since the data came out late last year. Maybe just generally, a bit more on how you're thinking about the pace of the uptake in GEA, including with reimbursement because you obviously can leverage the BTC indication and have a lot in place already?

I can start on NCCN. We've been providing NCCN and all the data we have as soon as we have it, we share the data that went into the abstract and then we immediately share the New England Journal Publication. Obviously, we don't control their time lines, but we do think they have everything they need to adopt that into the guidelines potentially even before approval, but obviously, that's up to them.

Yes. And so just I'll follow up with the -- your question in relation to our kind of readiness to launch. I mean, we are ready to launch in GEA, we sized our team specifically with a GEA launch in mind. And made some investments to ensure that we can cover all of the customer groups that we want to cover very rapidly at launch. BTC has served for us more service for us is a powerful foundation for the next major growth phase in GEA. We have -- there's a number of features around our presence in BTC that make us very confident that we will be able to launch successfully and rapidly. We have more than 90% physician overlap between GEA treating centers. We obviously have access already established with the permanent J-code already acted from the BTC approval. We've submitted the data to oncology pathways. And we have onboarded a team of clinical nurse educators who are ready to support smooth, efficient access and patient onboarding really leveraging our JazzCares program. So we are ready, and we think our readiness combined with the data, the compelling nature of the data, which you're all familiar with by now, means that we should see really very rapid uptake, and we're committed to ensuring that patients who need this product can get it as soon as possible.

Our next question coming from the line of Akash Tewari with Jefferies.

This is Anastasia for Akash. Congrats on the quarter. So on the post-Enhertu trial, I know you comparator arm trastuzumab plus physician's choice chemo, I believe, but it looks like the NCCN guidelines list [indiscernible] as the preferred second, third-line regimen. Can you talk us through how you chose the comparator arm and what you consider the box for success in the trial as well as what is considered clinically meaningful. Also just verifying, you're still on track to complete enrollment in the first half of '27?

On the second part of the question, yes, we're on track to complete enrollment by midyear 2027. When we have results will depend on the events, but we haven't changed our guidance on that for end of 2027, 2028. In terms of the design of the trial, most of the data with other HER2 agents were generated before the availability of ENHERTU. So that's really the motivation for this trial. It's unclear what to use once patients have progressed on ENHERTU. The trial is set up to be third line plus trial. It's a global trial. So in some places, that will mean that patients they have gotten tucatinib previously. But in some parts of the world, such as South Korea, tucatinib's not commonly used. And so it will be a trial where you'd expect a third, fourth or even possibly fifth-line patients. While that's a poor prognosis group. We had prior data suggestion that zanidatamab can be active in that setting. And again, this is a head-to-head against Herceptin and so we continue to be confident in zani's ability to be what would be the standard of care in certain sets.

Our next question in queue coming from the line up. Etzer Darout with Barclays.

Great. Just a follow-up on comments on Xywav and guidance from Phil earlier. And just Wondering how much of that change is in the sleep franchise revenue guidance is revised expectations on generics? In 2026? And maybe related to that, if you could provide any additional color on the additional investments for Xywav and Epidiolex reflected in the SG&A guidance? That would be helpful.

Yes. This is Phil. Thanks for the question. Maybe I'll take the first part and then turn it over to Sam for color behind some of the additional investments to drive even further momentum and revenue growth for Xywav and Epidiolex. So the revised guidance really comes down to extremely strong execution in the field that's led to this unique benefit that Xywav has resonating with physicians and patients, which we believe is most likely leading to the very slow uptake that we're seeing of generic high sodium oxybate. We had said all along, we didn't expect really much of any impact in the first half of the year, and that impact has played out as we had expected. However, based on the pace of the introduction of the high-sodium generics, we're now expecting a much more muted impact in the back half of the year as well that is behind the guidance raise for Xywav where before we had expected the product to be flat to up mid-single digits this year, and now we're expecting double-digit growth for the full year. So really pleased with the momentum that we have and look for that to continue. Sam?

Yes. And in terms of the investments that we're making, obviously, given the strong resilience of Xywav and momentum, we are continuing to invest in some of the media spend that has been particularly effective in ensuring that patients diagnosed patients get treated with Xywav as well as some investments, continued investment in the patient support program. For Epidiolex, we have continued to invest and upgraded our investment in ensuring that we can fully penetrate the LTC adult segments, where we've started to see some good inroads. And also, we do see an opportunity to drive persistence, and we have invested to expand our JazzCares program so that more patients can get enrolled onto the JazzCares program. We know those patients generally do better on treatment. And in addition, of course, we're starting to prepare for the oral solid dose launch as well. So that's the nature of some of the additional investments that are outlined in the guidance.

Our next question is coming from the line of Brian Skorney with Baird.

This is Luke on for Brian. Just one quick one on business development strategy. Can you provide any color on particular areas of interest within rare disease or with regard to development stage you'd be looking for? Or would you say you're fairly agnostic? Renée Galá: Yes. This is Renee. Thanks for the question. So we won't comment on specific deals for obvious reasons, but I would say we do remain highly engaged on the BD front. I'll remind you that we hired a new CBO earlier this year to drive those efforts, and we do continue to expect to announce one or more deals still in 2026. In terms of the areas that we're interested in, we really do focus on where we believe there's a significant unmet need and where we believe we can have a meaningful impact with our unique, either expertise, global footprint or current other operations that we have underway. We generally will look for an efficiency of commercial call point, one where the support services that we do offer to our patients can also be relevant and valued. We are focused on strengthening our current areas of rare epilepsy, rare sleep, rare oncology. We think there's a lot of substrate there. But we are also looking into other areas of rare disease, and we'll delay on actually providing much commentary there because they're so many different areas that we could go into that I wouldn't want to be too specific there in terms of inadvertently commenting on specific deals we might be interested in. In terms of the stage, we were really excited to announce the AbCellera deal this last quarter. That is a preclinical collaboration looking at next-gen T-cell engagers, so very early in our pipeline, but it directly aligns with our overall rare disease strategy, really expanding our focus on GI cancers. We are also, though, looking at later pipeline deals as well as commercial and near commercial transactions. It really depends on the specific asset and the type of deal that we are interested in. Importantly, we have a strong track record of doing deals that have generated meaningful value. I mentioned Epidiolex, the GW earlier. Last year, we did the Modeyso Chimerix transaction. That was near commercial, obviously. And then we talked about quite a bit on this call about zani also came into our business via business development, which we're incredibly pleased by. And I'll just close with a reminder that we're in an incredibly strong financial position to be able to execute on BD, we generated $824 million in cash flow in the first half of this year. $2.2 billion of cash on the balance sheet. So supports our ability to execute in BD in addition to the investments that we've talked about throughout the call today behind our commercial brands as well as our pipeline.

And ladies and gentlemen, that's all the time we have for our Q&A session. I will now turn the call back over to Renee for any closing comments. Renée Galá: Great. Thank you, operator. Well, I'd like to close today's call by thanking all of our employees as well as our partners and stakeholders for their continued confidence and support. We look forward to sharing additional updates on the potential approval of zanidatamab and GEA as well as other progress in our business, looking forward to sharing those updates with you over the remainder of the year. Thank you for joining us today, and we can close the call.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.