Hello, and welcome to the Jazz Pharmaceuticals second quarter 2018 earnings conference call. Following an introduction from the company, we will open the call to questions. I will now turn the call over to Kathee Littrell, Head of Investor Relations at Jazz Pharmaceuticals.
Thank you, Andrew, and thanks to each of you for joining the investor call. Today, we reported our second quarter 2018 financial results and updated 2018 financial guidance. The press release and the slide presentation accompanying this call are available in the Investors section. On the call today are Bruce Cozadd, Chairman and CEO, and Matt Young, CFO, Dan Swisher, President and COO, Mike Miller, Executive Vice President, U.S. Commercial, Allen Yang, Head of Clinical Development and Acting CMO, and Jed Black, Senior Vice President, CNS and Sleep Medicine will join for the Q&A session. I'd like to remind you that some of the statements we will make on this call relate to future events and performance rather than historical facts and are forward-looking.
Examples of forward-looking statements include those related to our future financial and operating results, including 2018 financial guidance and goals, corporate development efforts, future growth and growth strategy, future product sales and volumes, inventory and supply challenges, product launches, regulatory submissions, ongoing and future clinical trials, and other product development and regulatory activities, and the timing of these matters. These forward-looking statements involve risks and uncertainties that could cause actual events, performance, and results to differ materially. They are identified and described in today's press release and the slide presentation accompanying this call and under Risk Factors in our Form 10-Q for the quarter ended March 31, 2018, and our Form 10-Q for the quarter ended June 30, 2018, which we will file shortly. We undertake no duty or obligation to update our forward-looking statements. On this call, we discuss non-GAAP financial measures.
We believe these non-GAAP financial measures are helpful in understanding our past financial performance and potential future results. They are not meant to be considered in isolation or as a substitute for the comparable reported GAAP measures. Reconciliations of GAAP to non-GAAP financial measures discussed on this call are included in today's press release and slide presentation found in the Investors section of our website. I'll now turn the call over to Bruce.
Thanks, Kathee. Good afternoon, everyone, and thank you for joining us. We had a highly productive second quarter with strong execution across the business. We're excited about the significant progress we've made this year toward meeting our 2018 corporate objectives and advancing our long-term growth strategy.
A few highlights since we last reported include double-digit top and bottom line growth on an adjusted basis, a positive opinion from CHMP recommending market authorization of Vyxeos, acceptance of our sNDA for Xyrem for pediatric narcolepsy patients with priority review and an October 27 PDUFA date, settlement with two additional Xyrem ANDA filers, leaving only one remaining ANDA filer in our Xyrem patent litigation, announcement of a collaboration with MD Anderson Cancer Center to evaluate potential treatment options for hematological malignancies with an initial focus on Vyxeos, the grant of a new technology add-on payment by CMS for Vyxeos, execution of an agreement to sell our rights related to Prialt, and presentation of key results at SLEEP 2018 regarding the long-term efficacy and safety of solriamfetol for adult patients with narcolepsy or obstructive sleep apnea and Xyrem for pediatric patients with narcolepsy.
Now I'll provide updates on some of our key commercial, regulatory, and R&D activities and then turn the call over to Matt to update you on our financials. Vyxeos is in the early stages of launch in the U.S., and we have confidence in our efforts to reinforce Vyxeos' differentiated product profile and the value it can offer patients with AML. We believe there is a significant upside opportunity as we expand globally and advance our multipronged data generation strategy to establish Vyxeos as the chemotherapy backbone for AML. In the second quarter, we saw community hospital demand continue to grow relative to previous quarters, due in part to some academic centers transferring patients to community oncologists for the consolidation courses of therapy. Academic centers continue to represent the majority of volume, although growth this quarter was relatively soft.
We believe the unprecedented introduction of multiple new agents has led to a more complex AML treatment environment, with multiple decisions and therapeutic options based on patient mutation status, phase of therapy, and treatment setting. While these changes have not directly impacted the overall Vyxeos market opportunity, they have added some near-term complexity and confusion. We recognize that for some physicians, changing decades-long clinical management behaviors and treatment practices and understanding how to incorporate new agents into the care of AML patients can take time. Additionally, recent market research indicates that some physicians are not treating in a manner consistent with the phase III study protocol, and we see this as an opportunity to emphasize the phase III study design, our product label, and the value that Vyxeos can bring to improving patients' outcomes, including, importantly, overall survival.
The recently published phase III data in the Journal of Clinical Oncology and the NCCN promotional materials will be important tools for conveying these key messages and expanding our penetration in the AML market. To amplify our outreach, we increased the Vyxeos dedicated field team by 20% in July. On the reimbursement side, we continue to see strong formulary uptake for on-label use and strong commercial payer support. Importantly, our new technology add-on payment application for Vyxeos was approved by CMS last week. This will support Medicare beneficiaries' access to Vyxeos and validate Vyxeos as a substantial clinical improvement over existing technologies. Our EU team is preparing for potential European Commission approval by early September. Hiring and training of our sales and medical teams to support the launch of Vyxeos are essentially complete.
Our rolling launch of Vyxeos in the EU will begin with select markets such as the Netherlands, Germany, France, UK, and the Nordics. We are looking forward to making Vyxeos available to AML patients in the EU, although we recognize it will take time to secure pricing and reimbursement across the individual markets. We have submitted our dossier for the UK NICE technology assessment and anticipate a final NICE appraisal decision in the fourth quarter. We're excited by the enthusiasm of key opinion leaders to study Vyxeos in a variety of settings, and we believe that working with key oncology groups and leaders in leukemia, such as our recently announced collaboration with MD Anderson, will allow us to accelerate the development and generation of key data for Vyxeos. We remain confident in the value that Vyxeos offers to patients and our ability to expand the use of Vyxeos over time.
Turning to Defitelio, we're pleased that our global VOD-related educational efforts are resonating with physicians. We believe these efforts, as well as the recent approvals of oncology medications with black box VOD warnings, have created greater physician awareness and vigilance for earlier recognition, diagnosis, and treatment of VOD. We've made strong progress in the U.S., and our adult transplant team remains committed to ensuring the benefits of Defitelio treatment are well understood to support improved patient outcomes. On the development side, patient enrollment in both our phase III study for the prevention of VOD and our phase II study for the prevention of acute graft versus host disease is ongoing. We are actively collaborating with regulatory authorities on optimal protocol development for our upcoming pivotal study for the treatment of TA-TMA.
For Erwinaze, while we unfortunately continue to have supply challenges, we are actively working with the manufacturer, PBL, to do everything that we can to improve future reliability of supply. Now on to our sleep therapeutic area, starting with Xyrem and JZP-258, our low-sodium oxybate program. Xyrem performance was strong in the second quarter of 2018, with bottle volume growth of 9% compared to the same period last year. The average number of active Xyrem patients increased to 13,900 in the second quarter, up 7% compared to the same period last year. During the second quarter, we observed consistent and high payer reimbursement approval rates. We are pleased that our unbranded disease awareness education program, which will run throughout 2018, has already led to increased diagnosis of new narcolepsy patients, and we expect that there is an opportunity for future diagnosis growth.
Our supplemental NDA for Xyrem for pediatric narcolepsy was accepted for priority review, and our PDUFA goal date is October 27. We expect to launch in this indication in the first half of 2019 following FDA approval and the implementation of a REMS modification to include information specific to the pediatric and caregiver populations. On the development front, patient enrollment in our phase III randomized withdrawal study of JZP-258 is ongoing. We plan to complete enrollment in adult narcolepsy patients with cataplexy and excessive sleepiness near year-end with a planned NDA submission next year, assuming positive safety and efficacy data. We expect to share top-line results from the JZP-258 phase III narcolepsy study in the spring of 2019. We are also preparing to initiate our phase III study evaluating JZP-258 in patients with idiopathic hypersomnia.
We plan to enroll approximately 140 patients in this double-blind, placebo-controlled, randomized withdrawal study. Primary endpoints will evaluate excessive sleepiness, activities of daily living, sleep inertia, and safety. We expect to begin patient enrollment this fall. Now on to solriamfetol. At the sleep meeting in June, we had multiple important data presentations from our phase III studies, TONES-2, TONES-3, and TONES-5. TONES-5 demonstrated the maintenance of efficacy after one year of treatment with a safety profile consistent with prior placebo-controlled studies and, importantly, a lack of rebound sleepiness or withdrawal-related effects after abrupt discontinuation of solriamfetol during the randomized withdrawal phase of the study after at least six months of treatment.
Additionally, maintenance of wakefulness test results across the day from the TONES-2 and TONES-3 studies were presented, and at all efficacious doses, solriamfetol demonstrated sustained improvement in wakefulness 1 hour to 9 hours post-dosing in both OSA and narcolepsy. Our U.S. pre-launch activities are well underway, including the hiring of our marketing team, developing and launching unbranded awareness programs, completing health economics research, conducting sales force sizing work, and developing our market access strategy. Our launch strategy will initially focus on establishing a strong foothold with physicians who are part of our current Xyrem call universe, some of whom currently manage both narcolepsy and OSA patients. As market access develops, we plan to expand into OSA by targeting additional healthcare providers and launching patient initiatives. The FDA PDUFA date is December 20, with anticipated DEA scheduling by late first quarter.
We are planning for a U.S. launch following the DEA scheduling decision. We expect our sales force expansion to take place in the first quarter next year. Our team is also progressing toward a planned regulatory submission for solriamfetol in the E.U. late this year. On the development side, we completed enrollment in our phase II proof of concept study evaluating solriamfetol for excessive sleepiness in Parkinson's disease. We expect to share top-line results early next year. The data from this study will help inform our decisions for future development programs. We are proud of the progress we've made this year toward identifying, developing, and commercializing innovative and meaningful new products to address the critical needs of patients globally.
We are heading into the second half of the year with multiple near-term milestones in sight, including the approval and rolling launch of Vyxeos in the EU, FDA approval of solriamfetol for excessive sleepiness in patients with OSA and narcolepsy, the approval of Xyrem for pediatric patients with narcolepsy in the U.S., submission of an MAA for solriamfetol in the EU, initiation of a phase III study of JZP-258 for excessive sleepiness and idiopathic hypersomnia, and activation of study sites for a pivotal phase II study of Defitelio for the treatment of TA-TMA. We also remain focused on further growing and diversifying our development portfolio through the commencement of new studies and corporate development opportunities. Matt, now I'll turn the call over to you.
Thanks, Bruce, and good afternoon, everyone. We're highly encouraged by our strong commercial performance and financial results so far this year. We delivered strong top and bottom line growth on an adjusted basis while continuing to make significant investments to drive the future growth of our business. We are pleased to report another strong quarter for Xyrem with net sales growth of 19% to $356 million compared to $298 million in the second quarter of last year. As a result, we are increasing our 2018 guidance for Xyrem net sales to a range of $1.35 billion-$1.38 billion, from a previous range of $1.32 billion-$1.35 billion, representing expected growth of 14%-16% over 2017.
In the second quarter, Xyrem bottle volume grew 9% over the same period last year, and we are increasing our 2018 volume growth guidance from mid-single digits to mid-to-high single digits. Turning to Erwinaze, second quarter net sales were $59 million compared to $49 million in the second quarter of 2017. During both periods, we experienced temporary global supply disruptions and anticipate these will continue to occur from time to time for the remainder of 2018. We are maintaining our guidance for Erwinaze net sales for 2018 in the range of $190 million-$220 million. Defitelio net sales increased 34% to $40 million in the second quarter of 2018 compared to $30 million in the same period of 2017.
We are encouraged by the strong performance in the US with net sales of $15 million in the quarter, nearly double the same period last year. We are maintaining our guidance for Defitelio net sales for 2018 in the range of $145 million-$165 million. The midpoint of our guidance reflects year-over-year growth of approximately 16%. Vyxeos net sales increased 7% to $28 million in the second quarter compared to $26 million in the first quarter of 2018. We are confident there is a significant long-term growth opportunity. However, as we understand that healthcare provider education is critical to these efforts and are taking more time than anticipated in our earlier guidance.
As a result, we are lowering our 2018 Vyxeos sales guidance to a range of $115 million-$135 million from a previous range of $130 million-$155 million. We look forward to building awareness and momentum for Vyxeos through our recently expanded U.S. field team, the use of NCCN promotional materials, the recent JCO publication, the new technology add-on payment, and our efforts in generating data through our collaboration with MD Anderson, as well as other initiatives. In the second quarter of 2018, we entered into an agreement to sell our rights related to Prialt. Closing remains subject to closing conditions reflected in our agreement, and we are working with TerSera to close the transaction in the third quarter.
Revenues for the second quarter totaled $500 million, representing an increase of 27% compared to the second quarter of 2017. For 2018, we expect strong top-line growth and are maintaining our total revenue guidance in the range of $1.88 billion-$1.93 billion. Turning to our operating expenses, adjusted SG&A expenses for the second quarter of 2018 were $138 million compared to $111 million in the second quarter of 2017, or 28% of total revenues in both periods. This increase reflects our investments in pre-launch activities for Vyxeos in the E.U., solriamfetol in the U.S., and Xyrem for pediatric patients in the U.S., as well as our ongoing launch of Vyxeos in the U.S.
For the second half of 2018, we expect SG&A spend to be higher than the first half of 2018. Our guidance for the year remains in the range of $525 million-$555 million. Adjusted R&D expenses for the second quarter of 2018 were $51 million, or 10% of total revenues, compared to $35 million, or 9% of total revenues, in the same period of 2017.
The increase in adjusted R&D expenses in the quarter reflects the continued progress and investment in our R&D programs and support of partner programs, as well as our planned EU solriamfetol regulatory submission. Our 2018 guidance for adjusted R&D expenses remains in the range of $205 million-$225 million, or approximately 11%-12% of 2018 revenue guidance. Second quarter 2018 adjusted net income increased 36% to $215 million, or $3.49 per diluted share, compared to $157 million, or $2.56 per diluted share, for the second quarter of 2017. We are maintaining our 2018 non-GAAP adjusted EPS guidance range of $12.75-$13.25 per diluted share.
Please note our guidance for weighted average shares outstanding has increased to $62 million from a previous estimate of $61 million. In the second quarter, we generated $192 million of cash from operations and used $110 million for the purchase of a priority review voucher and $21 million to repurchase shares. As of June 30, we had $815 million in cash equivalents and investments, and the outstanding principal balance of our long-term debt was $1.8 billion. In June, we refinanced our senior credit facilities, increasing our undrawn revolver to $1.6 billion from $1.25 billion and extending the maturity profile to June 2023 from July 2021.
These changes to our credit agreement will support our ability to move quickly on attractive corporate development opportunities and provide us with $2.4 billion in combined cash and borrowing capacity available through our revolver. We continue to expect 2018 adjusted net interest expense to be in the range of $40 million-$50 million. To summarize, we are pleased with our strong performance across the organization in the second quarter, and we expect to continue to build on our first- half momentum as the year progresses. We are well positioned to advance our strategic priorities, and our guidance for 2018 reflects our financial flexibility to pursue targeted investments that support our sustainable growth strategy. Thank you for joining us on the call today, and I'll now turn the call over to Kathee.
Thanks, Matt. With over 20 analysts covering our company, we kindly request that you limit yourself to one question during this call so that everyone has an opportunity to ask a question. We will gladly address any additional questions after the call, or you can reenter the queue. With that said, operator, please open the line for questions.
Ladies and gentlemen, if you have a question at this time, please press star then one on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Once again, if you have a question, that's star then one. Our first question comes from the line of Gary Nachman with BMO Capital Markets. Your line is now open.
Hi, good afternoon. For JZP-258, if the phase III data in narcolepsy are positive, would you look to file first just for that indication, or would you consider waiting to see the phase III data in idiopathic hypersomnia? Then maybe look to file for a broader indication for 258. Just generally, how big do you think the idiopathic hypersomnia opportunity is, and is Xyrem currently being used off label for that indication at all? Thanks.
Good question, Gary. You know, let's see our data from JZP-258, look at the timing and see where we are with the IH program as well. You know, our base assumption has been we'd file for narcolepsy and then look at an expanded indication later for IH. Obviously, we wanna see how things play out. On your question about use of the current product in IH, you know, is there any off-label use? You know, there may be occasional prescriptions for it, but we think payers probably don't cover it, and therefore, we don't expect there's significant use in IH.
Operator, we'll move on to the next call, please.
Certainly. Our next question comes from the line of Umer Raffat with Evercore. Your line is now open.
Hi. Thanks so much for taking the question. I wanted to ask on Vyxeos and on the ADCs, but since I only have one question, I'll ask the first one. Bruce, do you expect Vyxeos to still get to the same peak sales number as you anticipated, let's say, a few months ago? What do you think is driving somewhat slower adoption currently? Maybe you could speak to the academic versus community practices.
Yeah. Umer, first of all, thank you for limiting the question. We appreciate that from you and from everyone. The short answer to your question on Vyxeos market opportunity is, yes, we have absolutely the same expectations. You know, if anything, we're moving forward in what we think is a fairly broad-based effort to generate new data on the use of Vyxeos in a number of settings, including in combination with other agents, and we're excited to see where that'll take us. Maybe I can ask Mike to give a little more detail on what we're seeing in academic and community centers.
Sure, Bruce. In the quarter, we saw some slowing in the academic accounts, but that was offset by growth in the community accounts, which was probably largely driven by outpatient consolidation. We continue to hear that from our customers. You know, I think Vyxeos remains a highly differentiated drug with high clinical value, and the NTAP is a testament to this, and it'll be further reinforced with our JCO publication, which we got just a short time ago. I would say that there's probably two factors, and both can, will and can be addressed through education. First is a little bit of a learning curve around Vyxeos not being seven plus three. I think the important thing to remember is that we all know that Vyxeos has a longer half-life and lasts longer in the bone marrow.
In a challenge, you have to challenge old habits, and 40 years of 7 plus 3 can be ingrained. The example I would use is sometimes a biopsy can be done too early, and they may not see effect. At that point, they may switch out a patient to a different chemo, when in fact they could have seen a CR if they had waited a bit. The other is count recovery. It can take longer in our JCO pub to see that it takes about 6 days longer, but there was no difference in the rate of infection as a result of that. Again, I think physicians need to learn that this is not 7 plus 3. It is, in fact, a very different drug.
We are very much behind the JCO pub. That'll be critical in our education. We have a big push on speaker programs going into the fall. The other aspect I think that it was alluded to earlier was the AML market shakeup. As I said, 7+3 had been the standard of care for 40 years, and then you had five new market entries in 12 months. I think hemons, nurses, pharmacists, institutions are all trying to sort this out. I think all are being cautious about the patient type and making sure that they really understand exactly how to sequence and identify patients. Our NCCN standing remains very positive. We have our NCCN tools just recently available in June.
Again, coupled with NTAP, coupled with the JCO, we feel very good going into the institutions and teaching that.
Thank you.
Thank you. Our next question comes from the line of Jason Gerberry with Bank of America. Your line is now open.
Oh, good evening. Thanks for taking my questions. Can you just elaborate a little bit the comment on Vyxeos and patients' mutation status? Is it just that physicians are using Rydapt and using that upfront and not using Vyxeos as a maintenance treatment after that? Or is maybe the patients who have that FLT3 mutational status, is that maybe bigger than was expected? If you could just provide a little bit more clarity on that'd be helpful. Thanks.
Yeah, thanks for the question, Jason. I'll have Allen take this one.
Yeah, Jason, let me start off by sort of explaining or expanding from a physician's perspective, mutational treatments and some of these new targeted therapies and Vyxeos and why we were so interested in Vyxeos, and we thought it was important for us strategically. You know, as Bruce said, our vision is to make Vyxeos the backbone of AML therapy. What's unique about Vyxeos is it takes actually lower doses of cytarabine and daunorubicin and makes them more efficacious. Now, the indication, the initial indication is in a high-risk population of AML-MRC or myelodysplasia-related changes or therapy-related AML. In practice, as a physician, we didn't use those terms traditionally. We use a term called secondary AML. Whereas a mutation, let's say a FLT3 mutation or an IDH1 or IDH2 mutation, is fairly easy for the physician to learn.
I have this mutation, therefore I have this therapy. For us, in terms of our label, it's gonna be a little bit steeper in terms of the learning curve equating what AML-MRC is and identifying those patients. With that said, I think for academic physicians that treat a lot of leukemia, they're gonna learn very quickly. But the landscape or the environment in that space will be a little bit different. As more therapies come out and more clinical trials are initiated, the competition in academic centers will be other clinical trials.
However, in the community setting, where there'll be less clinical trials, it's really that learning curve of learning what AML-MRC, equating that to secondary AML, which is the sort of the lingo I'm more familiar with, and learning that as opposed to sort of just knee-jerk getting a mutational report and saying, "If there's a FLT3 mutation, I use this FLT3-targeted therapy." Now, you also alluded to, combination data. I think you're talking about Vyxeos and FLT3 combination data. So let's be, yeah, let's be clear here. There hasn't been that data reported in patients. There's been in vitro data that's very exciting. When we looked at the EV-301 study that was published recently in the JCO, the FLT3 population did very well with Vyxeos.
The onus is still on us to generate the safety and efficacy data of Vyxeos in combination with FLT3 inhibitors as well as other targeted therapies, and the team is moving very quickly to do that.
Thank you.
Thank you. Our next question comes from the line of Annabel Samimy with Stifel. Your line is now open.
Hi. Thanks for taking my question. I'm gonna switch tacks a little. On Xyrem, clearly you had some very, very solid volume growth. Now you're up in the mid- to high-single digits. How sustainable is that? Clearly, you raised guidance because of it. What's driving it as a diagnosis? What do you think the pediatric population can do to continue to maintain those high volume growth numbers? Thank you.
Yeah. Annabel, let me start, and then I'm gonna ask Mike to comment on the pediatric opportunity a little bit. You know, we're very pleased with the growth we see in Xyrem, and we think
The secular growth trend for Xyrem over a long period of time will be strong because of what we're seeing in increased diagnosis, because of what we're seeing in increased patient numbers, and really strong performance by our field teams. I will point out that we said coming into this year we might have a little bit of a tailwind due to the recovery of some government pay patients that are at higher levels in the first half of 2018 than they were in the first half of 2017. I think that's an effect we'll see this year but we won't see next year. You know, kind of a two-part answer. We like the ongoing growth of Xyrem.
We think ongoing growth of Xyrem should persist into future years, but perhaps with some decrement related to the piece of that that's one-time for 2018. Mike, you wanna talk about pediatric a little bit?
Sure. The pediatric opportunity in the U.S. is about 4,000 pediatric patients. We are aware of some current Xyrem patients being in the pediatric category. We believe that this is you know, really fulfilling a very important need for these patients. Most of them are managed by physicians that we currently call on, so this is not any implication to our sales force. If there are any others that we are not gonna call on, we're gonna add to our call audience.
Maybe I'll just take this opportunity, Jed, if you wanted to say a moment about the importance of the new data we did generate in our pediatric trial and how that will help physicians treat these patients.
Yes. Narcolepsy in children is highly similar to narcolepsy in adults, and prescribers have been interested in using Xyrem in the pediatric population for a long time, but haven't had that information. This study is the biggest controlled trial that has been executed in pediatric narcolepsy ever and provides a wealth of information to the prescriber on the safety profile and the efficacy profile, which is highly similar to the safety and efficacy profile in adults.
Thank you.
Thank you. Our next question comes from the line of Gregg Gilbert with Deutsche Bank. Your line is now open.
Thanks, Bruce and team. As you continue to ponder corporate development possibilities, should we assume that you'll let the cash build with your current capital structure, the way it is now? Given your planned launches of a couple of pipeline products, internationally, are you taking a more international look at sort of the BizD ev opportunities than you have in the past? Thanks.
Yeah. Gregg, let me have Matt take this one.
Yeah. Hey, Gregg. Thanks. Obviously, to the extent we're not deploying the capital, I'll remind you of first choice. We will continue to build cash, given our strong cash flow generation as quarters and the year progress. Relative to what we're looking at with our launches in the U.S. and ex-U.S., what are we looking at globally, I think we remain interested in global franchises, but certainly also transacting on a regional basis as expanding our footprint outside the U.S., directly and indirectly. I would say it's definitely on strategy for us to continue to pursue that.
I'll just add to Matt's answer. I think the, you know, refinancing we completed recently is particularly helpful to us 'cause it expands our firepower without us having to hang on to or borrow additional cash at the moment. A particularly efficient way of positioning us to be aggressive on opportunities that are a good fit for us.
Another way of saying share buybacks are on hold for now.
No. We have an ongoing share repurchase program, you know, $300 million that we're part of the way through. You know, we were more aggressive about buying stock at lower stock prices. We've been a little less aggressive at recent prices. We are still active in that share repurchase program.
Thanks.
Thank you. Our next question comes from the line of David Amsellem with Piper Jaffray. Your line is now open.
Thanks. Just had a question on 258 and specifically the idiopathic hypersomnia program. Can you talk about the extent to which Xyrem is used off-label in this setting and with what degree of success? Talk about it in that vein, how you would view the underlying opportunity, given that off-label usage and given that you're gonna have generics in the market at some point in the future. How would you think about that and maybe shed some light on, you know, existing usage in IH?
Yeah. Nice job, David, weaving a multi-part question in there.
There you go.
Let me start by just reiterating, we don't think there's significant off-label use today in the marketplace, mostly related to payer, you know, coverage decisions as opposed to physician interest. Past use of Xyrem in this patient population is in part what led us to confidently launch this trial with JZP-258. Jed, maybe you could talk a little bit about what we know about past use of oxybate in idiopathic hypersomnia patients.
Historically, there has been use in idiopathic hypersomnia. The clinical experience has been similar to what we saw in narcolepsy with respect to the impact on excessive sleepiness in that population. As Bruce mentions, that use has decreased over time as payers have become more focused on narcolepsy. There's a recent publication I might point you to, a couple years ago, by the group in France, headed up by Isabelle Arnulf, that characterized their experience in narcolepsy versus idiopathic hypersomnia. That paper provides some nice information that is very consistent with the clinical experience that we had years ago when the off-label use was occurring.
The last part of your question, David, was really, you know, how do we think about that if in some future state there's a generic oxybate available. You know, I'll remind you, and you know we're doing this trial with a 90% reduced sodium version of that molecule, and we think that is a very important aspect of treatment for patients who are gonna be on chronic medication. While there may be a generic sort of full salt version of Xyrem, we know that salt load for patients is, you know, north of the maximum recommended daily intake of sodium by the American Heart Association before you factor in dietary sodium. You know, we aren't anticipating generic competition for JZP-258 for a long time.
Okay, thanks.
Thank you. Our next question comes from the line of Dana Flanders with Goldman Sachs. Your line is now open.
Hi, thank you for the question. Mine is just back on Vyxeos, and I think you mentioned that you expanded the sales force in July. Where are you now? Just how does, I guess, what you're learning in the U.S. play into how you're planning to launch it in Europe and the number of reps needed there? Thank you.
Dana, let me have Mike take the first part of that in terms of what we've done in the U.S. and then have Dan talk a little bit about our plans for Europe.
Sure, Bruce. We expanded the sales force by about 20%,; July first, and that moves us to 29 reps. That does not include our MSLs or reimbursement managers. They're on top of that. We also importantly made the sales management team dedicated to Vyxeos. We saw the success that we had with Defitelio in the U.S. when we created a dedicated team, and I think focus is extremely important.
Yeah. As far as Europe goes, I mean, one positive here is the European team has been working very closely with the U.S. team to learn from the rollout, you know, learn about the importance of messages, et cetera, and so taking that learnings to task. Europe has also staffed up their organization. We've gone from 50 field personnel, which includes medical science liaisons as well as sales reps, and increased that force to 80. All of that force has been hired now and trained, and we're expecting a September approval from the European Commission, and we'll be ready for a rolling launch from that point forward.
Thanks.
Thank you. Our next question comes from the line of Randall Stanicky with RBC Capital Markets. Your line is now open.
Great. Thanks, Bruce. With one insight into the phase III data for JZP-258, what do you think you would need to see in the phase III data to have a credible argument for FDA to include some sort of differentiated safety language in the label? You know, are there studies that you could pursue either now or later that could help bolster your case for that? Thanks.
Yeah. Let me have Jed take that one.
Yes. As Bruce mentioned, there's a substantial reduction in the sodium load of 258, JZP-258. I think what's important to highlight is that in a recent publication by 11 health organizations, including the CDC and the AMA, the recommended daily intake of sodium is less than half of the current average intake. This is for all individuals. Substantial research has identified that over 50% of the population is sodium sensitive and is at risk based on current intake for cardiovascular disease. Xyrem adds to that another gram to a gram and a half, depending on the dose.
There's also substantial evidence across thousands of individuals in studies that have been conducted to identify the value in statistically significant impact of reducing sodium intake by one on a gram-by-gram basis down to the AMA and CDC recommended ranges.
The value is already well established for reducing sodium to the magnitude that we are with JZP-258. There are indeed some other evaluations that could be done to complement the information that already exists, and we're exploring those. We think that the data are overwhelmingly in favor of the value already with those data that exist.
I'll remind you, the current label does reference a high sodium load in Xyrem. That obviously would not exist in a new product at a very different sodium level. Now, as to other implications to the label, I think we'll leave that for future discussions.
Okay. Thank you.
Thank you. Our next question comes from the line of Ronny Gal with Bernstein. Your line is now open.
Hi, good afternoon, and thank you for taking my question. Welcome back from Vyxeos for a second. I was wondering if you guys can take us through the economics of the treating hospitals. That is, if they're using in their DRG code Vyxeos versus 7 + 3 today, how much does it cost them? Once the additional payment by this edit code comes in, how will that change the equation for them?
Yeah. Mike, you wanna take that?
Sure. Right now, a DRG, if DRGs are based on historical information, so it's a look back. The current AML DRGs do not include the treatment with Vyxeos, and that's why we pursued the NTAP or the new technology add-on payment. What that creates is a payment to the institution above and beyond the DRG and up to about half of what the Vyxeos cost would be for a full induction through consolidation cost of therapy. It's adding on a payment for the use of the drug on top of the DRG.
Does that make it profitable for the physicians, for the hospitals to use Vyxeos versus the current situation?
I think it certainly makes it more cost effective. This is very much, I think, an important milestone for the product. These are Medicare patients largely in that age group with AML. These institutions are seeing a lot of these patients, and this is an important win for Vyxeos.
Just as a reminder, Ronny, as I know you already appreciate, you know, the use of Vyxeos can be fundamentally different from 7+3 in terms of setting of treatment, particularly in consolidation phase, getting patients out of continuous hospitalization. There are implications other than drug spend in terms of the economic model for institutions and for the healthcare system as a whole that I think are helpful.
Yeah, just one other point, Ronnie. This is for inpatient use.
Right
Only. The outpatient is another ASP.
Okay. Thank you.
Thank you. Our next question comes from the line of Jessica Fye with JP Morgan. Your line is now open.
Hey there. Thanks for taking my question. Not sure if there's any color you can offer, but on the most recent Xyrem settlements, sorry if I missed this, but what are some of the high level terms and dates and/or volume provisions, if any, of those settlements?
Yeah. I think, Jess, if we look at the most recent couple of settlements and add them to all the settlements, you've got the first filer, Hikma, with a beginning of 2023 entry date with an authorized generic with economic sharing, substantial economic sharing with Jazz. They've got rights to that for a period of time, a number of years. Of the other settlements, most of them are for an entry December 31, 2025. For a couple we had limited volume authorized generic rights starting mid-2023. And again, with economics to Jazz.
Thank you.
Thank you. Our next question comes from the line of Ken Cacciatore with Cowen and Company. Your line is now open.
Hi. Thanks, guys. I know you've set expectations fairly low for Erwinaze around the manufacturing, but maybe a little bit more of an update. If the manufacturing can be corrected, can you give us a sense over the last few years what this market could or what the product could correct up to if you were able to fully supply it? Thank you.
Yeah, Ken, that sounds like an easy question, but it's actually a little more complicated to get to the answer. You know, while we have had some supply outages for periods of time, of course, at the conclusion of those outages, we've generally been able to ship significant product out and try to get it to all patients who need treatment. You know, while there have been periods of time we're not shipping, our intent has certainly been to minimize impact at a patient level, in terms of availability of product. Knowing we've not had sufficient product supply to meet all demand, we have chosen to reduce our promotional efforts around that. We don't wanna go out and create demand, particularly in new patient populations that we then can't satisfy.
The tricky part about answering your question is we haven't run the experiment to know if we were actively out doing the kind of education we'd like to do, which would focus, I think, in some part on the possibilities for adolescent and young adult patients to be treated with a pediatric-inspired regimen containing asparaginase, where we see that outcomes in clinical trials have been more positive to those patients. We'd like to be getting that story out more. You know, honestly, we've had to curtail some of our efforts to be a responsible company dealing with this thought leader community whose relationships we greatly value.
Thank you.
Thank you. Our next question comes from the line of Douglas Tsao with Barclays. Your line is now open.
Hi, good afternoon. Thanks for taking the questions. Bruce, obviously, you know, the ramp on Vyxeos is coming a little slower, and you're pursuing a number of initiatives to sort of get it back on track to the sort of peak sales potential that you see.
Just maybe help us understand a little bit on the timing and when do you see sort of some of these initiatives, be it, you know, sort of sales force expansion, NCCN guidelines, et cetera, sort of starting to have an impact and sort of help us sort of think that through as we think about, you know, not only just the remainder of this year, which obviously you've given us, some guideposts in terms of the guidance, but even, you know, sort of into 2019 and understand that you're not gonna give 2019 guidance, but, you know, sort of how we should think about the shape of the launch curve right now.
Yeah, it's really a great question, Doug. You know, we're only a couple quarters into the launch at this point. You know, the question is, what are we learning about the size of the opportunity, and what are we learning about what we need to do to get to that opportunity? I think it's important to differentiate between those two. I think what we're learning about the size of the opportunity confirms our enthusiasm, and I think we're doing the right thing to get there. Some of that is longer term-oriented work, like thinking about expanding the indication for the product by studying it in new populations within AML and outside AML, including MDS, where we've talked about starting a cooperative group trial later this year.
Some of that, as I think Mike was alluding to, involves educating treaters now on how to use this new treatment, relative to the way they've used the former, chemo backbone, which was 7 + 3. To do that education, we need a couple things. We need good tools, and I think Mike correctly highlighted, the JCO publication, the NCCN-related information, and while I won't call NTAP a promotional tool, I think it's significant that the government has said, "Yes, this in fact represents an important clinical advance in the treatment of this disease." Then you need the right, team, to do that education. I think the expansion of the field force, the change in focus, as Mike alluded to the management model we have, and importantly, our medical education efforts as well.
I think we've got the right tools. I think we've got the right team to go out and bring that message to physicians to make sure they're getting the benefit of this new treatment that's now available to them, but they might not yet understand when to use and how to use. How fast we can make an impact? I think we're making an impact already. We know we've obviously changed our guidance for the second half of the year to reflect the current pace of adoption, and we'll obviously continue to monitor that. I think we'll start seeing an effect soon. As always, when you learn during a launch process, we'll continue to adjust our efforts to make sure we're doing the best things for the product and patients.
Great. Thank you very much, Bruce.
Thank you. Our next question comes from the line of Corey Davis with Seaport. Your line is now open.
Thanks very much. Regarding solriamfetol, do you think that you could ever get a broad excessive sleepiness claim as opposed to getting ES associated with narcolepsy, OSA, Parkinson's, et cetera? Or are you gonna be relegated to each individual disease and its associated sleepiness?
Yeah, Corey, really great question. Obviously, we hope on the brink of approval in excessive sleepiness in two populations, narcolepsy and OSA. You know, we already have a trial up and running in Parkinson's. In fact, we've completed enrollment in that trial, and we said we're going to do additional clinical studies with solriamfetol. But let me have Jed address your question about the potential route of getting a non-disease population-specific excessive sleepiness indication.
Yes. It's a question that of course we think about a lot here. The symptom-based indications we like to call it seems to make sense as something that this drug would likely be able to deliver on. I think we need to understand it a little bit more in other populations. That's why we're looking at Parkinson's disease. It's definitely a topic that we have interest in bringing up with regulators. There's precedent in insomnia for a symptom-based indication. This is something that we'll be thinking about, but I think for now, we need to understand a little more about the drug in other populations.
Great. Thank you.
Yeah. Corey, I would just say in addition to everything Jed just said, you know, we then need to think about what's our best strategy in terms of what clinical trials would look like, which patients would be included in those clinical trials, size of trials, expense of trials, length of trials, and when the various directions we could go, whether that's, you know, disease population-specific or more broadly. You know, which of those is a better route for what we want to accomplish, which is to optimize the value of this molecule to Jazz and its shareholders, and also to get it in the hands of patients and start making a difference because we know existing agents leave something to be desired in many of these patient populations.
Yep, thank you.
Thank you. Our next question comes from the line of Irina Koffler with Mizuho. Your line is now open.
Hi. Thanks for taking the question. I was wondering if you could revisit the Xyrem pediatric REMS that you're gonna have to implement in 2019. Can you help us visualize what changes are gonna happen to the existing REMS, how you plan to roll it out, and if there's any risk for disruption of current operations? Thanks.
Yeah, I mean, I think there are a couple of obvious changes in terms of a future REMS versus our existing REMS. You know, our existing REMS assumes you're treating an adult patient, you're shipping drug and having that adult patient sign for drug. You know, in treating kids, that's a little bit different. Making sure that anyone who might be in the position of administering drug to that pediatric patient understands everything they need to understand about appropriate and safe use of that product. So there are some pieces of this that I think are pretty intuitive, and we wanna make sure we're doing a responsible job of getting a good but safe treatment in the hands of these pediatric patients with narcolepsy. Could there be opportunity for disruption?
You know, anytime you're making a change, as we saw, when we rolled out our final REMS several years ago, where we were asking people to re-enroll in that REMS, both patients and physicians, we certainly saw an impact. You know, to the extent, we're talking about a small percentage of the population with pediatric patients, you know, I feel like that's different from asking everyone to change what they're doing, in a significant way. You know, taking the experiences we've had historically and our learnings from those and the slightly different nature of this REMS modification, I'm less concerned about that. Any time you're making a change, it's important to think through, how that'll impact all relevant audiences and to prepare for that.
We think we've got a great team at Jazz at Express Scripts who provide some of these services to us to get this right.
Okay, thank you.
Thank you. Our next question comes from the line of Liav Abraham with Citi. Your line is now open.
Good afternoon. I think, Bruce, in the past, you've mentioned that you're considering whether to develop solriamfetol in European patient population. I was wondering if you have any update in this regard. Is it something that you are still considering? If so, what would the timeline be? Thank you.
I, you know, I mentioned that we are proceeding with a planned MAA submission for solriamfetol in Europe by year-end. But maybe I could ask Dan to expand a little bit on how we're thinking about the opportunity outside the U.S.
Yeah. Thanks, Bruce. We studied you know across different centers across different countries and it's clear that Europe there's a significant need as well for a best-in-class wake-promoting agent such as solriamfetol. We are very committed to moving forward with the filing. As we're doing that, we're assessing the market opportunity and hiring a few specific people to look you know outside of what's been a hematology-focused business. So far, as we dig into the data and think about it from the eyes of the European reimbursement authorities, which is an important factor, we actually think the data really holds up to that scrutiny.
We're encouraged and continuing to do market development work, and we'll make, you know, further decisions on what sort of investment and support Jazz will give specifically to the launch of the program next year.
Thank you.
Thank you. Our next question comes from the line of Bill Tanner with Cantor Fitzgerald. Your line is now open.
Thanks for taking the question. Bruce, you mentioned that you made a comment to the extent that payers don't reimburse for Xyrem and IH. I'm wondering if that's a price.
Issue or lack of data or an indication, 'cause if it's the former, then it seems like we might should expect that JZP-258 is gonna be priced at a level lower than that of Xyrem. Thanks.
Yeah. No, it's an issue of data. It's an issue that we have not specifically run clinical trials in IH patients and taken that data to FDA to get it on label. As Jed said, there is historical experience with Xyrem being used in this patient population, and we've seen, you know, certainly some positive treatment response, which has encouraged us to move forward with this trial. It's important for us to go ahead and generate that data. Now, we're doing it with JZP-258, which we think is an even better product. I wouldn't say, Bill, we're concerned about the market opportunity. We just need to go out and generate the data.
Yep. Okay, thanks.
Thank you. Our next question comes from the line of David Buck with B. Riley. Your line is now open.
Yes, thanks for taking the question. Maybe on Defitelio, maybe for Bruce. Can you talk a little bit about whether you see this getting a little bit more predictable, or whether this is still something that's gonna be staying rather lumpy in terms of quarterly progression? Can you talk a little bit about as you're in phase III and phase II for prevention of VOD and also graft versus host disease. Talk a little bit about how you see the market size and market dynamics of those additional indications for Defitelio. Thanks.
Yeah, I'll take the first part of that question. I might have Allen talk a little bit about the importance of studying the drug in these other indications. Thank you for asking the first part of that question 'cause I think it's important to remind people this is a very rare condition, and we have seen variability in quarterly results. We expect we'll continue to see that going forward. You know, occasionally we have a particularly strong quarter or particularly weak quarter. Overall, we like the growth of the product. It's performing very well. We think our message is resonating, and we're encouraged about where it can go. I don't want people to lose sight of the fact that we would expect variability in the results for Defitelio. Allen, you wanna little
Talk a little bit about the trials we're running and why they're important?
Yeah. I think you mentioned two specific trials. One is the HARMONY study for the prevention of VOD. This was based on data published by Selim Corbacioglu, I believe, in The Lancet Oncology in 2012, where he looked at a randomized study in pediatric patients, approximately 300 patients. We're replicating that in a broader population of adult patients. You know, I think the challenge in the transplant space is how you define patients that are at risk for VOD. Clearly, the population will be much larger in terms of treatment versus prevention of VOD. If you look at some of the criteria that puts you at risk, it has to do with the agents that are used prior to going to transplant. Things like inotuzumab or Gemtuzumab puts you at very high risk for VOD.
Depending on the use of those agents or the conditioning regimens or the disease specific for transplant, the population that will be eligible or may benefit from preventative use of defibrotide will vary. In terms of graft versus host disease, or prevention of acute graft versus host disease, this is still fairly early. But again, it was based on sort of observations in that original study by Korur-Bocakoglu, and that could be fairly large. Transplant, especially matched unrelated donors, is a need in heme malignancies, and it could be sort of the curative regimen for a lot of patients with relapsed disease. So we expect that to be much larger. But again, I think the program is still early, so we would have to determine the treatment effect and who exactly benefits.
Once we understand that, maybe we'll get a better picture of the potential in graft versus host disease. With that said, I think it's gonna be larger in both those populations, but the magnitude and size is dependent both on the data and the changing landscape in transplant.
Thank you. Our next question comes from the line of Ami Fadia with Leerink. Your line is now open.
Thank you for taking the question. Maybe on Xyrem, could you give us a sense of what's the current mix of use between type one and type two narcolepsy? With the launch of solriamfetol and also maybe a potential entry from competing products like pitolisant, how do you see the excessive sleepiness landscape or the type two narcolepsy treatment landscape evolving? Thank you.
Yeah. Ami, good questions. On the Xyrem mix of use, I'll say we don't get that data from every patient, so I don't have a particularly accurate answer on that. You know, I'll let Mike comment in a minute on what we believe and why, but we don't have super accurate data. On how the excessive sleepiness treatment landscape changes in the future, you know, let me ask Jed to comment on that too. Just as a reminder, our belief is that most patients today who are Xyrem treated also do use some stimulant or wake-promoting agent.
We also know based on our research over the years that, you know, a large fraction of those narcolepsy patients are dissatisfied with available treatment options on that wake-promoting agent side, and that's what really sparked our interest in the agent solriamfetol in the first place. Drove us to go get rights to the product and start the phase III program. You know, we're so excited to be on the precipice of the launch now and bringing this product to patients. I think it offers some real advantages, you know, based on our clinical trial data relative to what we've seen in other clinical trials, understanding they're not head-to-head. You know, we certainly like the data we've seen and think there's an important place for our agent. I think I'm gonna minimize comments about pitolisant. That's not our product.
We feel very confident in the data around Xyrem, and we feel very confident in the data around solriamfetol and think both those agents will be critical pieces of excessive sleepiness treatment for years to come. Mike or Jed, you wanna talk a little bit about type one versus type two narcolepsy?
Sure. As folks know, type two narcolepsy patients do not express cataplexy. The sleepiness that we see in type two and type one is highly similar. Our data from years ago identifies that the impact of Xyrem on excessive sleepiness is highly similar across those two patient types. As Bruce mentioned, we don't have data flowing back as to what percent of patients currently on Xyrem are type one versus type two, but we know the efficacy for sleepiness is highly similar for Xyrem. With respect to solriamfetol and its place, as Bruce mentioned exactly, we have patients with Xyrem.
Xyrem helps tremendously on the sleepiness, but the majority of patients need additional help with the sleepiness for which they are being prescribed other stimulants or wake-promoting agents. With the efficacy profile that we've seen and the tolerability profile with solriamfetol, we expect that solriamfetol will fill a great unmet need in that population as well as in other populations, such as sleepy populations such as obstructive sleep apnea.
Thank you.
Thank you. Our next question comes from the line of David Maris with Wells Fargo. Your line is now open.
Good afternoon. Bruce, maybe if you could just give us some comments on your thoughts on how the administration's doing with the overall blueprint and your interaction with the administration on moving different healthcare ideas ahead. Specifically, do you think that the pricing environment discussions, I know a lot of companies have said, "Well, we're not taking any more price for the rest of this year." But do you think it precludes the type of price increases that you've had next year? Do you think the environment's getting tougher for, if you just look at the price increases you took this year, taking the same price increases next year? Thank you.
Yeah, David, you know, a couple things. We've been moderating our price increases for a number of years now, so same price increases. In general, we haven't been taking the same price increases, to be clear. You know, in terms of the blueprint and our thoughts on that, you know, we continue to be primarily focused on can patients get access to the medications they need, often with a focus on what their out-of-pocket costs are. We think a lot of the frustration around pharmaceutical drug pricing really comes down to how it is impacting individual patients. I think the data on drug spending overall for the healthcare system would not be quite as alarming as the impact on some patients due to the complexity of how those out-of-pocket costs are determined.
So our focus remains, you know, make great medicines available to patients, make sure patients can get access to those medicines. We think we've had a good track record of doing that, including our support for patient assistance through free drug programs for patients who can't otherwise get access to drugs. We'll continue to do everything we can to make sure our medicines are available to appropriate patients.
All right. Thank you very much.
Thank you. Our next question comes from the line of David Risinger with Morgan Stanley. Your line is now open.
Great. Thanks very much. I was just curious, Bruce, if you could just provide some color on the M&A outlook, for Jazz, particularly in the face of what appears to be a very competitive environment for attractive assets in oncology. Thank you.
Yeah, David, maybe Matt and I could both take a shot at this. I'll say, you know, the supply of new opportunities is really tremendous. You know, the funding environment for new and important innovative research across a variety of diseases, but particular to oncology, has been a lot of interesting new approaches are being investigated, are generating clinical data, and many of those, I think, are interesting and would be a good fit with our capabilities. I think we represent a good partner for companies developing those therapies in terms of proving through the Celator deal, through the Gentium deal, that we can pick up an asset and make sure we bring it rapidly and successfully to patients and continue to develop it in additional indications and in additional geographies.
We're also a company that tends to focus on a smaller number of products, each of which is very important to us and receives a lot of focus. I think, again, as a partner for somebody with these opportunities, you know, we have a lot of things going for us to suggest that we'd be a good licensor, collaborator, partner, acquirer, as the case may be, of those opportunities. I think, you know, the set of opportunities is significant, and we're well positioned on a number of dimensions. It is absolutely true that there's also competition, other people who feel similarly. We never have felt that we would get every opportunity we went after. That's been true historically. I'm sure it will be true in the future.
through our broad-based efforts in terms of how we look at opportunities, where we look for opportunities, I think we remain confident that we're well positioned to execute on some and continue the sustainable growth model we've put in place. Maybe, Matt, you could comment on the different places we play to look for those opportunities.
Sure. I think importantly, as we've often said, we tend to be focused on within therapeutic areas, specific indications and opportunities where we see an opportunity for significant clinically differentiated product that can really do something different for patients. We start top-down looking at those areas and engage in dialogue for a long period of time with companies that have assets or companies focused on those domains. You know, as a result, value and risk in that equation and, you know, company's ability to execute, be it operational or capital needs or otherwise, all change and evolve with.
We tend to stay focused on that, and we do not need to win every opportunity, as Bruce said, but ultimately just need to be able to through relationship building, hearing what our partners are interested in and structure identify ways to secure assets at a pace that we think is appropriate to sustain us in terms of adding growth drivers to the company and building out both a pipeline and a broader commercial presence over time.
Great. Thank you.
Operator, this will be our last question.
Certainly. Our final question comes from the line of John Boris with SunTrust. Your line is now open.
Thanks for taking the question, and congratulations on the results. When you look at your last two launches, Defitelio and Vyxeos, you know, quite frequently when clinical hands off a product to commercial, you know, you uncover certain things that are needs for the physicians to prescribe. In other words, academic physicians may have participated in clinical trials, community physicians may not have, but quite frequently, a way of ameliorating, you know, the risk that someone doesn't have experience is by putting together a healthy phase IIIb or phase IV program for each asset, respectively, to get that experiential learning that leads to publication, that leads to increased prescribing.
The question really just has to do, are you adequately funding, you know, those studies to potentially get that experiential learning from the physician base in both VOD and AML?
Yeah, John, really great question. You know, I'll remind you, our strategy has relied on, in some cases, acquiring assets that are very close to the market, and in some cases, developing things from earlier on, and that goes back to, in some cases, as early as preclinical data. I think as we develop assets from early stages, our goal will be to be very cognizant of the importance of generating data that's useful not only to regulators, but to treaters and to payers, and make sure we are generating that data along the way. But it's also true that we're occasionally going to acquire assets that are largely already developed. The question is, what do we do to optimize the value of those assets over time?
I feel really great about what we're doing with Vyxeos to generate additional data and Defitelio to generate additional data. If I could go back in time and change anything, we would have gotten to that faster. I think that was more of a resourcing question than a financial question. We had the dollars, but we needed an R&D team that was ready to go and go quickly to broadly take advantage of these molecules which we remain very excited about. We've put in place a really great team on the sleep side and on the hem-on side that I think is ready to go with continued development of our existing molecules and bringing additional molecules in, whether those are early stage or late stage molecules, and to move faster to do that important work you're describing.
You know, again, this isn't a comment on the full potential of the molecules. It's not a comment on, you know, our existing organization. It's just saying, if I hit rewind a couple years, we weren't as ready to go with that. You know, our R&D transformation has really been remarkable at this company. It wasn't that many years ago that our total R&D spend was less than $20 million. It'll be well north of $200 million this year. And we've seen that R&D spend growth come with excellent productivity. So our clinical trial initiations, enrollments, completions, data, our regulatory submissions, our regulatory approvals, our ability to do that in markets outside the U.S. I think has been really remarkable over the past few years. We wanna keep improving.
To have the sustainable growth strategy we want as a company, it's important that we execute for each molecule a well-thought-through strategy, and that we do that in an efficient and timely way. I think we've got the team to do that. Thanks.
Okay.
That concludes our question and answer portion. With that, I'd like to turn the call back over to Miss Kathee Littrell for closing remarks.
Thanks, Andrew. Thank you all again for joining us today. We will be participating in the Wells Fargo Securities Healthcare Conference and the Morgan Stanley Global Healthcare Conference next month, and hope to see many of you. This now ends our call.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a wonderful day.