Everyone, I really appreciate it. Hope the morning's treating you well. My name's Akash Tewari. I'm a Pharma and Biotech Analyst here at Jefferies. This is day one of at least the public portion of our New York City Healthcare Conference. Very pleased to have Jazz Pharmaceuticals, one of our high conviction bets in biotech, and a company that I think is really at a point where they're seeing a transition to becoming really a full-fledged biotech story scaling and I think something that investors should be paying attention to. Rob, why don't I hand it off to you to give some introductory remarks, and then we'll get started with Q&A.
Thanks, Akash, for having us. Just a quick comment that Rob and I will be making some forward-looking statements today, so please do refer to our risk factors in our SEC documents and any guidance we refer to as our first quarter guidance that we provided. Thanks, Rob.
Yeah, Akash, thank you for having us. I don't have any introductory comments. Happy to get right into your questions.
I love it. All right. Look, I think this is a question that I think I'll often hear from investors, which is, "I haven't looked at Jazz in five, 10 years. I remember they had some sleep drug. Has the story changed?" It's kind of remarkable to me because you've done the GW transaction, you have a billion-dollar oncology franchise, even ex the Zymeworks acquisition, and yet I think intellectually, a lot of investors who haven't seen your story recently still think about sodium oxybate as the primary focus. This question is really the Jazz of the last 20 years doesn't need to be the Jazz of the next 10- 15 years.
When you think about your investment and your interest, whether it's in rare oncology, orphan, neuroscience, or just wholesale Zymeworks development, what's that mix in the next 5-10 years for you as Chief Medical Officer versus what we've seen historically? What are investors getting wrong?
Thanks for the question. For me, I started seven years ago. This was my eighth ASCO as Jazz CMO and Head of R&D. When I started, as you said, we had some important products in oncology, niche products like Defitelio at the time, ERWINAZE, and VYXEOS. We had XYREM, not yet XYWAV. I came to Jazz really to build an innovative biopharma company and really expand R&D out so that we could be doing development in innovative areas from the very beginning of research through medical affairs. To your point, Akash, I think we've been even more successful than I thought we might have.
We've done some very important things internally, developed XYWAV in-house as a safer oxybate for patients with narcolepsy, extended its label in idiopathic hypersomnia, addressed a critical need for ERWINAZE, where there were drug shortages, by developing in-house a novel manufacturing process that gave us Rylaze, began to build the pipeline around core competencies in new areas to diversify our business ultimately. Some notable things there, one of the earliest oncology deals we did was for ZEPZELCA. That was intended to be a second-line product for small cell lung cancer. We had the vision of saying, "This really could be used in frontline maintenance." That was something that had never been done in small cell lung cancer before because those patients have a pretty rough induction with chemotherapy and typically need a break.
Because ZEPZELCA's well-tolerated, we were able to weave that into a maintenance study, did that in partnership with Genentech, and of course, now have a frontline label there. Interesting data at ASCO this year showing that it's having a benefit even in patients with an immunosuppressed phenotype, so-called tumor-associated macrophage high, and really positioned well in that frontline. We, of course, brought zanidatamab in on the basis of biliary tract data, saw that through an approval, executed on the frontline GEA study, which we're pleased is the first ever Jazz The New England Journal of Medicine paper published last Thursday, I think definitively showing that this should be the HER2 agent of choice in frontline chemo and should be combined with a PD-1 antagonist. I think we've been able to diversify and get into new areas in oncology.
Of course, there was the Chimerix acquisition l ast summer, MODEYSO is off to a terrific start as a pediatric oncologist to see that we now have a treatment option for these patients is amazing, and very excited to see that action could bring that into the frontline. Of course, a major transformative deal for us was the GW Pharmaceuticals deal, where we brought in what's now the largest grossing epilepsy drug in EPIDIOLEX, and importantly, created for us an in-house expertise from research, literally discovery chemistry, through commercial in epilepsy that we're now leveraging. We announced we have JZP047, which is an in-house invented, discovered molecule for absence epilepsy, and we've positioned ourselves as a real partner for choice in a rapidly expanding epilepsy field with new opportunities coming from our improved understanding of genetics and epilepsy.
Deals like Saniona and others that I think we will be well positioned to be a partner of choice for. In those, as you say, 5- 10 years, I think we've shown that we know where to focus. We can select good deals for partnerships. We're discovering and developing molecules in-house. We're executing well, not only on the commercial side, but when we have an opportunity like HERIZON-GEA-01, we can go from data to a final submission in essentially three months.
Understood. One thing I do want to close the loop on, it's interesting, I cover Lilly, and certainly, I think their perspective on orexins and the importance of really modulating cognition and sleep is far more broad than just, let's say, an orphan market. We think about ADHD or 25% of patients with Alzheimer's suffer from somnolence, right? I do think there's probably going to be that wider perspective. I know your team's been working on your own internal orexin programs that have had some safety issues in the past. It does seem like you may need different PK and you may need a different product profile. You're not thinking about just MWT measured four times to have coverage in these other indications. Can you talk about your long-term approach with what we're seeing with orexin biology?
Yeah. Thanks for the question, I think great insights about where the field's going and what the optimal molecule might be. It's interesting. We certainly started by saying we're very interested in this because the early data showed it's a very potent wake-promoting agent. Also that it's likely to be complementary to XYWAV. It's not likely to improve disrupted nighttime sleep. In patients with narcolepsy, type 1 or type 2, idiopathic hypersomnia, the root cause is disrupted nighttime sleep. There's no wake-promoting agent that can address that, and it's certainly not the case for orexins. We started to talk about that, and I think now that's taken more as a given. Your point also that whether you're talking about hypersomnias or other potential applications, it does matter the clinical pharmacology and the PK profile.
For us, we think there's an opportunity still to have a best-in-class. What we've seen so far is drugs that have a long enough half-life for even on that first day, you're seeing reports of insomnia.
To your point, NT1 is very, very sensitive to these agents because of the loss of orexin neurons and the massive upregulation that happens with orexin two receptors, very, very sensitive. Once you get into other hypersomnias or diseases like ADHD or cognition and Alzheimer's disease, you're going to need to push that dose. You're going to need to be able to do that and still have the exposure come down at night so that you don't disrupt sleep in any of those conditions, which would be counterproductive.
I saw this when I was working at Merck on the H3 inverse agonist programs. We had five, none of which progressed, all for the same reason. The half-life was just too long. We did, with the Sumitomo collaboration, we did have a molecule that was in the clinic that failed due to safety reasons. We do have a backup compound that's preclinical that we hope to comment further on in the near future, and it's our aspiration to have a compound that's differentiated, in many ways, inclusive of a more suitable half-life across indications. I do think there's time. Remember, the first approval is NT1 only. We still haven't seen any data, even in other hypersomnias. Plenty of opportunity for the field.
Understood. Now, maybe getting into Ziihera development, I'll give you a near-term question first, which is really the label that you expect with Ziihera. The question we'll often get is, could there be a narrower label in IHC 2+ versus 3+? I have my own view given your clinical data, but I'd love to get your take. How should investors think about the label you'll be getting with your PDUFA date coming?
We wouldn't comment on specific label negotiations, and it's still early enough in the process that that will play out. I'll tell you my view of what I think the label should be, and I think that starts with what do we think we've proven with this clinical trial? The clinical trial, first and foremost, was a test of Zani versus HERCEPTIN. Definitively, no matter how you measure that, we believe Zani replaces HERCEPTIN. I think there's a role, and most of every GI oncologist I speak to says that trastuzumab is historical regimen here. The second question, even though it wasn't powered, was does tislelizumab as a PD-1 inhibitor had benefit? I think those results are also clear. Not surprisingly to me, even though it might've been a surprise to others, we see benefit in the PD-L1 negative patients.
Which is notable because the prior studies with KEYTRUDA and HER2-positive and HER2-negative and nivolumab, tislelizumab in the HER2-negative populations, none of them showed benefit in PD-L1-negative. We think this is because of the differentiated mechanism of action for zanidatamab, which is highly immune active. It's the only antibody that fixes complement and activates the complement cascade, and also triggers ADCC and ADCP. You have this massive recruitment of NK cells and macrophages causing inflammation at the tumor site and synergizing with immunotherapy. We think that is the new standard of care, the triplet. Your question about what to expect from the label. I expect both drugs to be approved.
I also expect it to be Well, let me say this. I think the data support, because I can't speak for the FDA, the data support that both drugs will be approved. The data support its use irrespective of PD-L1 status. You asked specifically about IHC 3+ and IHC 2+.
Here we have a trial where the great majority of patients, more than 80%, were IHC 3+, so a very small subset. When we look at that subset of IHC 2+, the surprising results of the IHC 2+ over-performing, I think, can be easily explained by small sample size variation, some confounding factors there. We certainly are positioning it that way with the FDA.
Ultimately, if it's somehow the label is not inclusive of IHC 2+, I think the data and information are out there in a meaningful way that docs understand that Zani is superior to HERCEPTIN, regardless of IHC 3+ or IHC 2+.
Understood. No, that's something I think we hear with our KOL work is that biological question has been seemingly answered. This is better than HERCEPTIN. When we think about really uptake, and I know you're not on the commercial side, but I can't help but think this is something where you've shown a clear benefit over standard of care. This is a well-defined patient population. You have a pretty robust clinical data. When you think about your time at Merck and how fast KEYTRUDA uptake was in some of these indications, how should we be thinking about that for Jazz here in first-line GEA?
Yeah. This is the first study to show median survival is over two years. Over 24 months for arm B and over 26 months for arm C. We think it's definitively better, and we're acting with a great deal of urgency, and so is the FDA.
We had data end of November, and our submission was complete, even with an intervening holiday, by the end of February. We're moving with great speed. The FDA gave us RTOR, which meant we were able to give them data ahead of finalizing the submission. They gave us breakthrough designation and priority review. I also see them moving with speed. We had submitted to NCCN based on the abstract, even knowing that NCCN typically likes to have the full publication, but we wanted to get them thinking about it at least. As soon as we had the publication in New England Journal last week, we've updated it.
The situation, I won't speak to the commercial because that's not my expertise, but we're approved in BTC. These are the same doctors who are treating GEA. We're on formularies. They have the drug in their hands. They know how to use it. This is a tight community. They're super excited about the results. You certainly appreciated that at the recent ASCO meeting. We hope NCCN acts quickly. We feel the FDA should act on it before the PDUFA date based on where we are.
Okay. Very interesting. Now, then maybe just lastly, two other points on this. Number one, I know for the doublet, there's a potential another OS interim that's occurring. Can you frame expectations? You've already hit on OS on the triplet. What are your expectations for that second interim? Roughly when would that occur? Is that something we should expect a positive interim OS?
Yeah. First of all, the survival data are not needed for approval in the U.S., especially given the magnitude of the PFS benefit. We also have an interim look at survival, even though arm C and A was quote, "stat sig".
Arm B versus A was not stat sig. Statistical significance has also to do with how much alpha you put against that. This was the first of three survival analyses, so we clearly didn't put much alpha against it. Still, we have the opportunity to see the data, to see the magnitude of benefit, which was the median more than 24 months versus less than 20 months. The precision around that, given the large size of the study and the number of the events, I think this is convincingly having a survival benefit, even if it wasn't quote, "stat sig" at this first interim. I believe the FDA appreciates that as well. We do have a second interim that is still expected mid-year this year. Will that come before the approval?
In a sense, I hope not, because I want the approval to come as quickly as possible. If it does come before the approval, we'll try to work it in. If it doesn't, there is a mechanism for a rapid update to the label through what's called a post-approval label supplement. We'll get the data out there as soon as we can, and update the FDA as well.
Just to be clear, I know obviously we have to see where the data plays out. Let's put two points on that. A, it seems like you're extremely confident that this will show an OS benefit, whether it's in the second or third interim. B, it does seem like you're also reasonably confident, and I am putting words in your mouth, literally. Agree or disagree that you could potentially show that benefit in that second interim.
We do our own probability calculations which I don't necessarily share, but I would say it's still an interim the biggest amount of alpha is at the final, and that also is contributed to by the fact that you have more events, and so overall, you have more power. I think there's a meaningful opportunity here or we wouldn't be doing it. I think the more important point is, I'm not sure stat sig is the important issue because. From a statistics perspective, I look at the point estimate and the confidence bounds around that, and that tells me the precision of that estimate, and it's clear there's a survival benefit even after the first interim.
Understood. Rob, you previously worked at Merck, which you alluded to, I think it's funny. We talk so much about the PD-1/VEGFs and this idea that, hey, wherever KEYTRUDA's worked, we're going to replace that with a VEGF bispecific. No one really says, "Hey, let's look at wherever HERCEPTIN's worked, why isn't Zani there?" At least that discussion doesn't happen enough. I think part of bridging into that, when you really look at how KEYTRUDA generates revenue, I think there's a shockingly high amount which is in a maintenance setting. Which is neoadjuvant, post resection, and I don't think that's well appreciated by the street. You're actually developing that kind of adjuvant strategy with Zani. Can you talk a bit about that?
What are those big readouts you have, and what are the sizes of those adjuvant opportunities relative to, let's say, first-line GEA, where I think investors think about this as, let's say, a $1 billion, $1.5 billion opportunity?
Yeah. That's a great question, and we are thinking about it that way. Now that we have head-to-head data with HERCEPTIN, wherever HERCEPTIN is the backbone, we think Zani could do better. By the way, there are places where HERCEPTIN wasn't quite good enough to ultimately get a foothold where we also think. The example there is frontline BTC. No approved HER2 therapy. The strength of the data we have in second line BTC suggests that our ongoing frontline trial has a high probability of success, especially since it's combined with an immunotherapy. The lessons from 301, as you say, are anywhere where HERCEPTIN goes, we should be able to compete. Also, we think we're triggering a synergy, as I explained before. Again, that frontline BTC trial bodes well.
To your point, though, on neoadjuvant, adjuvant settings, Zani is especially well suited for that, because remember, this is often a curative setting. You want well-tolerated drugs that can contribute not only to the cure, but also to the overall tolerability of the regimen. In the breast cancer space, we think we have an opportunity there. It's a little bit crowded, and it certainly is a little bit complicated when you look at various subtypes, ER-positive or negative, or the various molecular subtypes, which is why we're starting with a phase II. We have our own phase II in that setting, as well as partnering with I-SPY and MD Anderson to generate additional data. We do hope that on the back end of that, we will have an opportunity to do a pivotal trial in that setting, and that would be very valuable.
I want to come back to maybe other opportunities in breast cancer as well. You asked specifically about neoadjuvant. While we haven't committed to a neoadjuvant, adjuvant trial in the gastric space, if you're using the same principle you raised, which is wherever HERCEPTIN is alone or hasn't yet had a foothold, and wherever you can combine with immunotherapy, now we see how active it is in gastric. That's a logical place for us to explore as well. I want to make sure you get to all your questions, but I'm also happy to talk about, at some point, the rest of the development program, where we might go in breast cancer from here, other indications.
Yeah. Actually, I do want to hit on post ENHERTU. Talk to us about why you're so confident that study will be successful. Again, I think a lot of people haven't done work on that study. That's reading out next year. That's 2027 Akash problem. This seems like the next big revenue driver for Ziihera. What's the biology showing that makes you confident that trial's going to work? How has HERCEPTIN PERJETA done in a similar setting so far? I know a lot of people looked at the JACOB study and some of these prior trials with GEA and applied it, but zanidatamab obviously outperformed. What's the precedent here in a post ENHERTU trial?
Again, as the principle you raised, which I think is very insightful, that if HERCEPTIN is the standard, you should be able to beat it. That is the premise of JZP598-303, is this is against HERCEPTIN. Patients come in, they're assigned their chemotherapy, they get randomized as Zani versus HERCEPTIN. Couple important things around why that might work. We do have data with zanidatamab in a couple different places, a late-line monotherapy study, combination with anti-CD47.
In the ER-positive group combo with fulvestrant and palbociclib, showing that we have activity after multiple prior HER2 agents, inclusive of growing data showing activity after ENHERTU. That makes sense because while there can be some mutations that occur that make cancers resistant to HER2 agents broadly, typically the resistance mechanism for ENHERTU is resistance to the chemotherapy, to the TOP1. That's why we think there's a rationale to use it there. The other rationale to study it, for this to be the first major study we've done in breast cancer, is how the treatment landscape is evolving.
You mentioned what happens to CLEOPATRA. CLEOPATRA is the frontline regimen now, HERCEPTIN, PERJETA, taxane. If ENHERTU becomes entrenched in the frontline, ENHERTU is essentially HERCEPTIN with a topo payload. The study actually included PERJETA, so patients might be getting HERCEPTIN PERJETA up front. So what haven't they gotten by the time they get to second line? They haven't gotten a taxane.
They haven't gotten other agents. They haven't gotten Zani, obviously, but other agents that might synergize with Zani. We've become very interested in best in class HER2 TKIs, which is why we have the partnership with Boehringer and the partnership with Iambic to look at what should be best in class.
If you're in that setting, Zani plus a TKI that may actually increase receptor expression play right into the MOA for Zani. That's a promising combination. Clearly we went to JZP598-303, which is, at the moment, a third line, fourth line study because it's the highest unmet need, and docs were saying, "We don't know what to give in this setting." We're also interested in studying breast in other areas, as I mentioned in the neoadjuvant, adjuvant. I think there's, pending the data that we're generating in our phase I-B, I think there's an opportunity to be in an earlier line even, which could be helpful because frontline GEA, you saw the amazing effects in a naive population.
You want to give your best therapies up front. As you get to third and fourth line, that's a more challenging population to study and just like for ZEPZELCA, where it's effective in second line, but much more effective in front line. You want to progress the drug earlier if you can.
A couple points on that. What is your general confidence for the phase III trial you have in that more refractory post-ENHERTU setting? Are you confident that trial is going to be successful? Number two, you mentioned you have data sets that are emerging with HER2 TKIs. What patient populations are you running those combination approaches in that might inform a frontline strategy there?
Yeah. I wouldn't have started a pivotal trial, Jazz, if I wasn't confident. We started it before the GEA data, and given how well Zani did against HERCEPTIN in GEA. It does give me even more confidence for the ongoing trial. The initial evaluation of the two TKI programs, the zongertinib and the Iambic compound, is in breast cancer. I think that these are both brain penetrant molecules that could address the specific problem of brain mets. If you think about HER2CLIMB.
HERCEPTIN and chemotherapy, you have the opportunity to replace HERCEPTIN with best in class and replace the tucatinib with the best in class, not only for efficacy, but better tolerability because the greater selectivity of the new TKIs. You could be better positioned in a true second line inclusive of patients with brain mets.
Understood. You talked to Exelixis, and they had to develop CABO, and now they're having to develop Ziihera, not as large cap pharmaceutical companies. It becomes this idea that, look, partnerships are not a nice to have. They're necessary because we need to get entrenched with standard of care and also how the field evolves. When you think about potential partnerships with pharma, where you're split economics in certain indications, let's say similar to CheckMate-9ER with Bristol and Exelixis, is that possible when we think about the broader opportunity for Ziihera? What's your take about potentially combining Ziihera with a PD-1/VEGF ?
Yeah. Great questions. Just looking at the clock. I'm very open to these partnerships. In fact, I think the Genentech partnership on IMforte was fabulous for both companies.
We both had expertise we brought to the table. We both had molecules that made sense to put together. We collaborated on the execution. We shared the cost, and it was sort of flawless. What happens in the commercial setting may depend a little bit. In the case of ZEPZELCA and atezolizumab, we are collaborative, but it's not a formal arrangement. I think, we're both promoting, and that's working out just fine. There absolutely is more opportunity to do that, especially when you get into novel combinations, right? If you think about we published in our phase I, only five patients with non-small cell lung cancer, but we had activity there. Now, those are the overexpressing patients.
There is a separate population of non-small cell lung cancer where there's activating mutations. That's of interest too, but in patients who overexpress HER2, we think we're going to be active. In the basket trial that we have ongoing, we are enrolling lung cancer patients. We'll get some additional data there. The path there, which is much more open than the patients with activating mutations, would be in combination with immunotherapy. Currently that would be with a PD-1 inhibitor.
If you're thinking about skating to where the puck's going, so to speak, you would consider a novel immunotherapy that might be even more effective. Very open to partnership development in that kind of setting.
Are those potential announcements we could get this year about broader partnerships with Ziihera?
We're having lots of conversations about this. No commitments there, but we have a fair amount of inbound interest, and we have a clear idea of how we think this should be optimally developed. We're having conversations where it makes sense.
Understood. Last question, I'm going to sneak it in because I'm staying in the same room. In terms of the basket trial and that pan-tumor trial, I think a lot of people look at it, they're like, "Okay, well, cool. They're running a dose finding, signal finding study." Your team's been very insistent, "No, no. There's a registrational path forward with this trial. Talk to me about what that disconnect is. How are you going to be able to take that data set and actually go into the market in certain tumor types?
Yeah. Just so you know, we've had interactions with FDA, so we're clear on what their expectations are. We know what we have to do to get there.
It includes having a broad enough range of patients and having strong enough data. Time will tell. We do have interim analyses where we can go back to them and check, say how we doing here, how many more patients do you need, et cetera. Remember also, you described it correctly, it's a basket trial. The goal of which is to get a tumor agnostic indication. The other goal is also signal finding. We have colorectal cancer patients being enrolled there. We have non-small cell lung cancer patients being enrolled there.
Who will contribute to the agnostic indication, but might in and of themselves ultimately get an accelerated approval. It can be used for multi-purposes.
Got it. We're out of time, but I really did enjoy the conversation. Thanks so much