Company presenter at the BofA Annual Healthcare Conference. We were joined by Jazz Pharmaceuticals. We've got several members from the management team, Bruce Cozadd, Chairman and CEO, Phil Johnson, CFO, Rob Iannone, EVP and Global Head of R&D, Abiezer, I'm gonna really botch this, Gazzola?
Gazzola.
Gazzola. Very close.
Head, Head of U.S. Oncology, and P.J. Honerkamp, who's Head of Sleep Division. So gentlemen, you know, thanks for joining us for the conference, and for those listening, my name is Jason Gerber. I'm one of the mid-cap biotech and specialty pharma analysts at BofA, and I'm glad to host you guys today.
Glad to be here. Thank you.
So coming off of the 1Q update, overall everything seems to be kind of like, you know, generally performing in line, consistent with kind of your guidance outlook for the full year. We'll get into sort of the pivot to, you know, your 2025 numbers that you have out there. But you know, I think part of the Jazz story has always been, you know, you know, how you kind of plan for life beyond your sleep business. And M&A is a component of that, and diversification efforts, and most notably, the GW Pharma deal you did a few years ago.
Since then, in terms of larger M&A activity, we haven't really seen much activity, but maybe if you can just sort of frame, you know, now that you've come off that deal, you've gotten the leverage down, where the appetite is from a BD standpoint, be it, is it an expectation that you guys would be more meaningfully transacting over the course of the next year to kind of further complement the portfolio?
Yeah, thanks, Jason. And maybe I'll start with a couple of disclaimers. We'll make forward-looking statements, see our risk factors. We'll refer to non-GAAP, see our website for full reconciliations to GAAP. And there's a third one. Oh, if I refer to guidance, it's as of the time we gave it at, with our first quarter. The other thing I want to say is, you said, gentlemen, I just want to say over half of our executive committee is women, and our board is 50% diverse. So I don't know how we ended up with an all-male panel today, but I'll just say that's unusual. You know, you mentioned using corporate development as a way to grow the business, to diversify the business, to give us sustainable growth over the long term. You mentioned diversifying away from the sleep business.
I will point out that as of the fourth quarter of last year, the rest of our business is bigger than our sleep business, our oncology business growing double digits in particular. And the sleep business, of course, has been shifting towards Xywav, which we believe is a sustainably growable product in narcolepsy and especially in IH. But so I don't duck your question, I end up on corp dev. I will say it's been a pivotal part of our strategy for a long time, and the company's financial strength allows us to continue, to invest capital, not only in growing our commercial portfolio and advancing our R&D portfolio, but to continue to invest in other growth opportunities. Specifically, we ended the quarter with $1.8 billion in cash.
Our cash flow remains strong, $267 million in the first quarter, so I think financially, we're well-positioned. But we only want to do deals that make sense for our business, and for us, that means a product that really meets an unmet need, that fits well with neurology and oncology, our two therapeutic categories, or otherwise builds on some of our rare disease skill sets. That would be a good product to commercialize, and we often think about that as where patients funnel through a relatively concentrated group of prescribers that we can address efficiently. And then we look for long durability so that the investment we make to bring an asset in and/or to develop it and/or to launch it, has a long time to pay off for our shareholders.
We're disciplined about looking at things that we think are value-creating.
Yep. Maybe if I could just chime in real quick. This is Phil Johnson, CFO. Your focus on your question is primarily on acquisition, but we also are looking actively at licensing. In fact, we did a really unique, well-structured deal to get zanidatamab in-house.
Mm-hmm.
There are more capital-intensive but also less capital-intensive ways for us to go ahead and get great innovation into Jazz and then to patients.
As you think about the landscape, right? I mean, there's de-risk CNS assets. They're really expensive. There's unrisked assets, and they're very riskier. And then you have your oncology business, where you guys have found assets that have historically played in like niches that aren't super competitively intense, which have given you a way to build an oncology business together. When I think about what the Zani update could mean for your oncology business, it could really transform it from a growth standpoint. So I wonder how that maybe factors into the thought process with BD, you know, when you kind of think about those options there, and you have this important catalyst at the end of the year.
Yeah, I mean, do you in general, if we look at an opportunity that's in development, particularly if it's earlier in development and we've done deals all the way back to preclinical development, we are expecting that those offer a higher return potential for the risk we take. Typically, the amount of risk we take is smaller when we're doing those earlier deals, whether you're looking at how much we expend to do the transaction or our early-stage R&D expenses, and we view a portfolio of those opportunities as a good way to deploy capital. Low amounts of capital to things that are high risk but high reward, play the winners, right? Those things that have real potential. We think zanidatamab is something that's very de-risked, and yet we can continue to expand into new areas.
Mm-hmm.
We did the deal originally with a focus on BTC and GEA. We're progressing well there. BTC, we've got the BLA already submitted, hoping to get that approved and launched in second line next year or even earlier. We've got the GEA data coming targeted at the end of this year in frontline. But since we did the deal and have uncovered more data and given it more thought, we see that differentiated product profile-
Mm.
-based on mechanism of action and what else is in development, where we think we can carve out a really meaningful, better HER2 slot in breast cancer, and that's where we're going next.
Yeah. Yeah, I mean, one of the questions that I get often from investors is, what is the strategic benefit or rationale to having CNS and oncology under one roof? And if ZANI generates positive frontline GEA data, you know, the implied oncology value in your business would drastically dwarf probably where you are as a company today. So, maybe how would you frame that for investors? Do you think that there is? Are they missing something, you know, in terms of, or is this purely for diversification purposes?
Well, it does provide diversification. I do think there's value in that. But I would also say it gives us flexibility in corporate development to be looking in two therapeutic areas at once. And we've certainly seen, if you look back over the last 10 years alone, periods where one or another therapeutic area gets hot from a valuation standpoint. It gets harder to deploy your capital and earn a good return, and we've been able to sit that out and move the other direction. So I think there's flexibility there. And then, of course, we do have corporate G&A that's now spread across-
Mm-hmm
... these two areas, so there is some efficiency in that as well.
Maybe one other thing I'm gonna add on as well. From other instances that I either lived or seen, there can be dyssynergies if investment going into one part of the business is meaning that you're necessarily starving another part of the business. I don't see that being the case here at all. I think we're able to fund the opportunities that we have, given the strong financial results we have, the strong balance sheet that we have, and don't see dyssynergies coming from that sort of choking off investment in one part of our business.
Is it fair to say the preference at the moment might be towards oncology? I mean, valuation for publicly traded oncology companies has pulled back. A lot of the opportunities, like for the targeted oncology names, have gotten more fragmented and niche, but maybe that creates better pockets of opportunities versus the more late-stage advanced stuff, and CNS has gotten hot from a valuation standpoint. So is that a fair, kinda, high-level observation, or?
I think if you're looking exclusively at late stage, there might be some truth to that. You know, the great thing about the assets that we're looking at is it includes, in some cases, looking to acquire whole companies, sometimes acquire a single product, often license something earlier in technology. We've bought public companies, we've bought private companies, we've bought and divested in both ways. So we're flexible, and I think that helps us. You know, it feels to me like over the history of Jazz, if the last deal we did was an oncology deal, people say, "I see you're leaning oncology." If the last deal we did was neurology, they say, "I see you're leaning neurology." We've really kept our options open to do both.
Mm.
I do think there continue to be a lot of opportunities. For people that watch the capital markets over a long period of time, you know, the ideal setup for us is a period of easy capital availability to companies, where lots of companies get funded and aggressively pursue innovation, more clinical trials getting funded. Then if things pull back a little and capital is a little harder to come by, it's optimal for us-
Yeah
... because those companies have a tough time moving everything forward independently and are often looking for options as they come up to a later stage development trial that requires a bigger capital commitment as they come up to a product launch.
Yeah. And then maybe for Phil, you know, the company has Vision 25 out there.
Mm-hmm.
As we get another quarter out or two quarters out, does it make sense to? Is the company planning to provide some update on that, or just as every quarter goes by, we should just view that as an affirmation that Vision 25 still holds?
Yeah. It's been an interesting topic. I spent a good portion of my first month with Jazz speaking with a number of buy-side investors, as well as some of the sell-side analysts, to get some of their views on the company, priorities for the company, including Vision 2025. I do think as Bruce and Renee had rolled this out, it was really to make sure that people understood where our base business could head and to remind people that given our strong cash flow and the resources that we have on the balance sheet, we can engage in business development to further augment our growth profile, much like the company has done repeatedly, in the past. There's been increasing focus, I think, on that business development contribution, Vision 2025, the $500 million revenue amount that was provided as a placeholder.
Mm-hmm.
We've been pretty clear, Bruce, Renee, before I came on board, in the most recent calls on my comments, we're looking at business development to do deals, getting really good assets into the company that can substantially improve upon patient care and patient outcomes that we have the right capabilities to commercialize. We will make those bets based on the merits of those, investments, not based on artificially trying to get to numbers for Vision 2025. Having Vision 2025 out there is a bit awkward, I would agree, at this point in time. Normally, we would not give guidance for a year, 2025, until we get to the Q4 call, which would be in February of next year.
Mm-hmm.
We're hearing from investors, having some discussions internally, trying to figure out what the best course of action is going forward. First and foremost, we want people to understand we will make really good capital allocation decisions within the portfolio of products we have on the market, those we've already got in the pipeline.
... and then on BD to create value for shareholders. I wouldn't be looking too heavily at that $500 million from BD and thinking that's something we're gonna be pushing to get at all costs.
Yeah.
If it comes, great. If not, then that'll sort of be what it is. At this point, we've not made a commitment to update-
Yeah
... Vision 2025. We'll monitor that going forward.
Yeah, and I'm sure you-
The other thing I'll say, Jason, just to add on, again, when we did the Zanidatamab deal, which we did after we gave Vision 2025, and originally looked at it as a BTC GEA opportunity, it had more limited revenue potential than we now believe it has as we expand into breast cancer. And so in some ways, wanting to acquire assets that give you that revenue growth potential over the longer term-
Mm-hmm
... you know, we've got more in Zanidatamab than we originally thought. And and again, Vision 2025 was designed to say, "Here's what we think the products we already have can do, and remember, we'll add to that revenue potential as we go.
Sure. Okay. Well, maybe, shifting gears to the base business, and coming out of the quarter, I think some of the positives, I guess, were the, you know, the patient shifts over to Xywav. From my seat, the erosion of Xyrem, right?
Mm-hmm.
And so that seems like it's either shifting to the AG or it's shifting to other brands, and some of that's going to Xywav. So, you know, how are payers approaching the brand Xyrem? How can we think about the runoff of that? Because it seems important for investors that once you are kinda cleanly pivoted over to Xywav and Xyrem's kind of out of the story, it gets a lot cleaner.
Yeah, let me give a couple framing comments, then I'm gonna ask PJ to give some more detailed comments. Xywav grew 14% year-over-year in the first quarter. We reaffirmed our guidance. The older high sodium oxybate part of our business, which is Xyrem, plus AG royalties on Xyrem, was down to 13% of our revenue in the first quarter and continues to decline. So we're really happy that the focus is on Xywav and how we're doing on Xywav. PJ?
Yeah, I mean, when you, when you think about it from a payer perspective, for Xywav, you know, we have over 90% of commercial lives covered in both narcolepsy and idiopathic hypersomnia. And on top of that, 14% year-over-year growth that you saw, you know, Xywav remains the only low-sodium oxybate and the only therapy approved for idiopathic hypersomnia. And so we see it as remaining the oxybate of choice going forward and the number one treatment in narcolepsy. You saw the total number of Xywav patients reach 12,950 active patients, with 375 of those in narcolepsy and 275 in idiopathic hypersomnia.
Those are the incremental patients, not the total.
Yeah, and so those are net numbers. Some of our competitors like to talk about the gross numbers, and so what we see is a durable narcolepsy business and a growing idiopathic hypersomnia business. That really gives us confidence that as we think about our oxybate franchise, it really is about Xywav.
Mm-hmm. So you know, you, you, in 4Q, legacy or I should say the Xywav narcolepsy business, saw a slowdown in ads, and they saw a spike in ads in 1Q. Because of these transitioning dynamics, how does that, you know... Is 1Q a one-off, or do you see these payer dynamics driving more transitions, and will that continue to accelerate the shift from Xyrem to Xywav for the narcolepsy business?
Yeah, I mean, I sort of step back and think about it, not in any specific quarter. You know, we had obviously some market events in 2023 with the introduction of an authorized generic and then the introduction of a branded competitor. And what you saw is the XYWAV business grew through both of those events. Obviously, there was, I think, a one-time event in the first quarter, in terms of the volume of patient transitions. There will continue to be patient transitions from time to time, and we believe that as the only low-sodium oxybate, it's the oxybate, you know, will remain the oxybate of choice.
But that, you know, we're still seeing, and most importantly, you know, we don't have complete clarity in terms of the data around new to oxybate, but based on what we're seeing in our estimates, we remain— Xywav remains the oxybate of choice with-
Mm-hmm
...with respect to new patients in narcolepsy.
Now, the competitive dynamics with the new 505(b)(2) brand alternative, Lumryz, I don't know, do you need another quarter or two to kind of get to a sense of kind of how the competitive dynamics are shaking out, or do you feel like you have a firm handle on that and how that all kind of blends into both this year and Vision 2025 outlooks?
Yeah, I mean, we've been in-
Let me just jump in with historical context-
Yeah
... and say, even before either of those market events happened last year, we gave guidance, and we actually raised that neuroscience guidance during the year and then hit it. So that was before we had experience. I think we had a good, good handle on where things were headed, and I don't think anything that's happened recently, PJ, would shake our confidence that we have a pretty good idea of where things are headed.
Yeah, I mean, we've been in the oxybate business for over almost 20 years, and the market events that happened last year were events that we were well aware of well in advance and could prepare for. And I think if you look at any metric, Jason, whether it's the total number of active patients, the 12,950 that are on Xywav, if you look at consensus estimates that are published, as to the different brands, I think it's clear that, that Xywav, you know, remains the oxybate of choice by a significant margin.
Okay. Maybe the IH indication's really kinda the important aspect of where there might be some leakage, you know, in the other parts of the business to sort of defray that revenue loss. And so as I look at kind of 3,000 patients, there's some claims database numbers out there, like 37,000 is sort of a TAM. So when we look at that penetration rate, right, like high single digit, when I look at, like, the penetration rates of oxybates in narcolepsy, is that a good proxy for sort of how you see the market evolving over time? Is that a good proxy for peak? And this is, all these sleep markets are just, they're kind of like these slow, smoldering builds, right, that occur over a period of, say, 10, 12 years.
Let's divide that into two pieces. I'll take market size, and then you take penetration, PJ. On market size, we, we certainly have seen the claims data, 37,000 diagnosed with IH and interacting with the healthcare system. I want to be clear that we think the market opportunity is bigger than that. You know, as is typically true of a disease that's had no FDA-approved therapy in the past, you tend to see underdiagnosis. That tends to go up when you get promotion, good education of sleep specialists on proper diagnosis of the disease. When we ask sleep specialists: Do you have more narcolepsy patients, or do you have more IH patients? We often hear the answer: I have as many or more IH patients, and that's estimated to be closer to 80,000-90,000. Penetration?
Yeah, and I think, there's really a paradigm shift in how physicians are thinking about idiopathic hypersomnia because until there was an approved therapy, it was a symptoms-based approach. And often, it was around the excessive daytime sleepiness because those were the agents that they were used to using. And when Xywav was approved, it was approved for the treatment of idiopathic hypersomnia, which is not just any one symptom, but the treatment of the overall disease. And given our strong clinical efficacy, both on the primary endpoints but also the secondary endpoints, it's really about educating the physicians about the totality of the disease, that it's not just about excessive daytime sleepiness. While that might be the primary symptom they came in for, that you need to look beyond the excessive daytime sleepiness, things like sleep inertia.
I mean, what good's a wake-promoting agent if you can't get up to take it? And we're seeing that shift in mindset and confidence from physicians, and we're also seeing patients. I think the feedback we're getting from patients is, these are patients that were hungry. I mean, they were validated with a diagnosis but not with a treatment for so long, and now there's a treatment out there, and so we're seeing them actively engage with us in terms of their treatment and wanting to be an active participant in that treatment. So I think as that mindset shifts, I think it's really, as the only approved therapy, what we're seeing is, yes, it's slow built because it's a slow shift in the mindset and really focusing on this as an-
Mm-hmm
... independent disease with its own symptoms and the value that Xywav brings to that.
Okay. Well, let me pull Rob in the conversation here. Thinking about the Orexin update on the quarter, it sounds intriguing that there may be the potential to, you know, for this asset to still have some life. The QT interval prolongation issue that I guess you guys are further interrogating, I guess I'm struck by the... It sounds like both you and Takeda are prioritizing NT1 over NT2. And wondering, you know, I guess, is the thinking that perhaps QT interval prolongation might be a dose-dependent side effect? If. Just wondering if you could sort of characterize some of the consideration, knowing that you're in 2Q, you're gonna have a more formal update here.
Just to be sure the broader group has the full picture, what we said previously was that we had paused the healthy volunteer study because of a QTc signal that we saw on the automated reads. We took some time to go through the manual reads, get some expert input to really characterize that better. Having done so, and having assimilated some other information around where we think we'll need to dose, in NT-1 patients in particular. What the field is learning is that to sort of maximize the effect in a sleep-deprived, healthy volunteer model, that takes higher exposures and doses than it does to get somewhat more maximal effect in NT-1 patients, and that makes sense based on the hypocretin deficiency that occurs in NT-1 and the, and the probable upregulation of receptors.
So with all of that, we feel there could be a therapeutic index in NT-one patients in particular, and we are looking at the option with our partners. You know, we haven't decided yet what we're gonna do. We promised we would give an update next quarter, but you know, we're discussing whether we should evaluate NT-one patients-
Mm-hmm
... to really define whether there is a therapeutic index. You know, we haven't given the level of detail around whether we're seeing dose response or anything like that, but typically, QTC effects are, you know, they're mediated-
Mm-hmm
... by ion channels, and they are dose responsive. So it's really about understanding where do we think we need to be dosing, and where are we relative to the toxicity that we wanna stay away from?
Yeah. So is the issue with NT-two that maybe it's harder to find a therapeutic index, or is it more commercial, knowing that the unmet need is much higher in NT-one relative to NT-two?
It's more about having the therapeutic index in a disease that may not be as sensitive. But again, we're all learning as we go along. The field is still early, so, you know, were we to go into an NT-one population, we'll assimilate those data, have more information around, okay, could you even go beyond that? We don't know yet.
Mm-hmm. When you did put pause on the program, you did flag visual disturbances as well. Did you do ophthalmic assessments of these patients? Is it something that you understand is an AE that has fast onset and can be transient? Just wondering. I know that Alkermes is now building into their phase II trial, ophthalmic assessments, just to better understand and characterize that. So I asked because it was one of the AEs that you guys had flagged.
Yeah.
Mm-hmm.
I mean, we have limited data on that based on the healthy volunteer studies, and it's something that we'll need to continue to evaluate to really understand if there's an exposure that keeps you from that or whether it's persistent or whether it's interfering with important daily activities. I do think it's interesting that other molecules are seeing it.
Yeah.
And so we'll sort of learn as a field.
... I guess ultimately to me, anything cardiovascular seems more showstopping. Visual disturbances, when I think about these patients, I mean, they have a hard time operating hazardous machinery, things like that. So if you do have a transient blurriness, right? That seems to me less of a showstopper, right? Versus like if you had a signal with that was cardiovascular related, that gets more problematic. Is that a fair?
Yeah, I think it's fair. I mean, time, time will tell on that. Obviously, if it's a nuisance, that's one thing. If it impairs your ability to drive, that's another. But to your point, I mean, cardiovascular effects sometimes go unnoticed by the patient and then puts them at risk for a more serious consequence, like, you know, an arrhythmia. If a patient has experienced some visual disturbance, they may well know how to manage that and to avoid driving while-
Mm-hmm.
You know, while it's, while it's resolving.
Okay. Maybe shifting gears to your phase IIb essential tremor trial, which could be pivotal. It's a big market. Doesn't get a lot of love, I think, from an investment community because of some other calcium channel modulating approaches that had... maybe didn't hit their pre-specified primary endpoints, if I had to summarize. You get questions a lot about just like bogeys for success, and I know you guys deflect wanting to kind of pin-- box yourself in, but I guess maybe asking the question a little differently, when I talk to physicians, I generally hear, like, "You know, you got to at least show a 1, 1.5-point difference on these ADL and PS measures as sort of a minimal-
Yeah.
-clinical effectiveness, differentiation.
Yeah.
So is it fair to think about that as sort of a minimal threshold? And then as you kind of work your way up, that, that kind of builds the evidence case, right, for, for doctors to be compelled-
Yeah
...to use this versus the generic drug option that's the only alternative-
Yeah
that people use?
So, so where I would start is, I'm personally very excited to see those results. We're getting close. Obviously, this is, you know, an earlier stage asset. It's not like Xanodatumab, where we, we know we have a drug, we know it works, and it's a matter of, like, how we can, you know, create the most value out of it. This is certainly an earlier stage asset, but we've got a lot of reason to be excited, so I'm looking forward to those results. Why, why are we excited? Well, we think we have a best-in-class molecule. When we talk about selectivity, in this case, I think we have a special kind of selectivity in that, some of these molecules are more state-dependent than others. They tend to act in abnormal pathways in the brain rather than normal pathways on the calcium channel ion.
So we think that that could create a therapeutic index. The other thing is, we took what we learned from the T-CALM study, how to identify patients, what the most appropriate endpoints would be that would enable you to assess what's meaningful to patients and got agreement with FDA on that, created a new once-nightly formulation, which kind of flattens out those peaks, helps you to maintain a trough, should also create a therapeutic index, and then designed a really well, you know, well-designed trial that is long enough duration to see persistency effects over 12 weeks, where we're pushing the exposure, you know, to 30, whereas the total dose-
Mm-hmm
... was 20 previously. So, you know, we think we have a good trial there. You know, we're not dodging the question on what would be clinically meaningful. There, there are no effective therapies for this disease. I, I don't think I'm exaggerating when I say that. There are approved therapies, but they're not particularly effective. Things like propranolol or primidone didn't use the TETRAS endpoint. So it's not like we can say, "Here's the standard of care. This is what you saw on TETRAS there, and this is what we wanna be." We're really gonna be defining that, for the field. And, you know, I don't wanna be pinned down to saying exactly what would be clinically meaningful on a composite, because we have not only the primary endpoint, which is a modified composite of different components of TETRAS, we have clinician and patient-reported outcomes.
We have specific measures of distress that are designed to evaluate essential tremor. So I think we really need to look at the totality of the data. Just to give you an example, if you look at some of the subscales on the TETRAS, for example, drinking from a cup, a relatively small change on that scale is clearly meaningful. You know, the difference between spilling when you're drinking versus not spilling, or the difference being between, on the performance side, being able to write legibly, you know, sign a check legibly versus not. So we really need to look at the detailed data, and, you know, our commitment is when we present the results, because I know part of the reason people are asking is, "Are you gonna tell us the results?
How do we know what to do with it?" When we present the results, we'll put it into a more detailed context so you understand, you know, whether we think it's clinically meaningful and, you know, what we're likely to do as a next step.
Maybe later for a breather, just to get everybody in here. So on Zani, in the GEA study, you know, this is an interesting study, a much larger population than BTC. I guess the one thing that I think people are sort of stuck on is, you know, the Zani chemo arm, you know, that maybe represents about half the market, right? The triplet arm sort of allows you to compete more broadly in the other half of patients who are getting a Keytruda triplet. How do we think about the demographic differences of this study versus the other studies that are ongoing? I think the Merck trial had 85% of subjects were PD-L1 positive. And so I think one of the challenges that folks have are how the comparison is going to be drawn with the triplets.
Sure. Thanks for the question. On GEA, we feel really excited. Based on what we've seen in BTC and how this has performed against existing HER2 agents like Perjeta and Herceptin and trastuzumab, and what we've seen in the early data in GEA, and so what we think is based on that existing body of evidence, as Rob said, de-risked, we think, xanidatamab has a chance to be the HER2 agent of choice-
Mm-hmm
... irrespective of PD-L1 levels. Now, in a PD-L1 population that's high, that's some PD-L1 combination. We're doing it with tislelizumab
Mm-hmm.
We think we have a very differentiated, best-in-class HER2 agent, which will work in a PD-L1 population with a PD-L1 combination arm... or and without a PD-L1 low, where we have a chemo, and we think the data that we're doing in the front line will have both those kind of data sets differentiated. We'll speak to it, and we think we're gonna differentiate against standard of care in both those sets.
Yeah. So I guess the key is the doublet, it gets a win, but the triplet shows something incremental, relative to the doublet. Is that sort of a-
Yeah, I mean, again, I'll let Rob speak to how we're powering it, but we wanna see differences in relative to standard of care, which is KEYNOTE-811 .
Yeah.
And we will see how this pans out, but we would expect to see, based on what we've seen in keynote, some incremental benefit to adding a PD-L1 inhibitor.
Yeah
on top of a really good HER2 agent. Again, we think the fundamental driver, though, is the HER2 agent.
Yep.
It's gonna drive most of the effect. PD-L1 will add in a PD-L1 high, but it's really, really about HER2, because you've already defined a HER2 positive population.
Right.
That's the key oncogenic driver there, so.
Yeah, I mean, Zani will work regardless of PD-L1 status. What FDA or clinicians are gonna wanna know is, is it worth adding on a PD-1 inhibitor?
Mm-hmm.
So you certainly wanna be incrementally better than that. I would just highlight for the group who may not know this field in depth, in the KEYNOTE-811, it was 81% who were, quote, "PD-L1 positive," meaning they weren't a 0 TPS score. It hasn't been defined really what the optimal cutoff would be. You know, if you're less than 5, or how much benefit-
Mm-hmm
... are you driving? Regulators tend to look at that in terms of, did you cause a detriment? And certainly in the zeros, it looked like there was even a detriment, which can be because you're taking on different toxicity. So we don't know what that optimal cutoff is. Some of our data will help to define that. The other thing is, I don't believe that 81% even represents the true prevalence, and I've been working in this field from way back in my Keytruda days when we did a study in breast cancer, in HER2 positive patients with Sherene Loi, because we thought there might be an inflamed phenotype in HER2 positive breast cancer. We don't think it's that high. We think that for this trial, docs had available the PD-L1 results-
Mm-hmm
... because it's, it's routinely done and probably steered some of their PD-L1 patients toward that trial. So I don't think it's 81%.
Got it.
Jason, I'll add one last comment. In customers we talk to, when we talk about Zani, they're excited about what they see. So when we think about, again, how we're gonna go market this, if pending positive data, they're really excited. They see the opportunity across GI cancers and HER2s positive, so.
Great. We're out of time, but, gentlemen, thanks so much for joining us.
Thank you.
Thanks.
All right. We appreciate it.
Thank you.