Awesome. Thank you for joining us. My name is Mohit Bansal. I am one of the Biotech and Pharma Analysts here at Wells Fargo, and I am joined by Team Jazz today. So, I am joined by Sam Pearce, she is the EVP and Chief Commercial Officer, and John Bluth, the Head IR of the company. Thank you very much for joining us today.
Thank you for the invite.
Thank you for having us, Mohit. And just a quick word to note that Sam and I will be making some forward-looking statements today, so please do refer to the risk factors in our securities filings. If we do reference guidance, we are referencing guidance that we updated most recently in our last earnings update in early August, and any reference to non-GAAP measures are also reconciled in those recent earnings updates.
Awesome. Thank you, John. So, Sam, let us just start with the great things the sales and marketing team has achieved this year. You have raised the guidance last quarter. So, talk a little bit about the company, the setup, and what do you think is going right with the company right now?
Yeah. Thank you. Well, I think I'm first and foremost delighted with the way the teams are executing on the opportunities that we have across our entire portfolio at the moment. I think we've put together a run of really good commercial results recently.
Most recently, obviously, our second quarter earnings, where we delivered our best ever quarter with $1.2 billion of revenue, and that represented 16% growth. I think what's really great about the results that we're seeing now is that that growth is coming right across our portfolio. It's not isolated to one particular brand, but we're seeing really good growth right across all of our key brands. Double-digit growth from all of our key brands. I think the business has got really good, strong foundations. Xywav has proven itself to be a really durable, resilient product, continuing to deliver excellent growth this quarter. Now, of course, what we're also seeing is us really executing on some of the other launch opportunities that we've had recently. Most recently, obviously, Rylaze. Rylaze was launched just about a year ago, really delivering exceptionally well.
We also had the launch of ZEPZELCA in the first-line maintenance market, which also delivered really fabulous growth last quarter. I think as a team, we're proving our ability to really execute on these opportunities. I think as a result of that, and when you look at some of the new opportunities that we have coming, which I'm sure we'll talk about, we did, as you mentioned, have the confidence to raise our guidance for the full year. As we look ahead, we're very excited about Ziihera and the potential of Ziihera. Obviously, now we have the first-line metastatic GEA indication.
Obviously the data that we've seen there, the unprecedented overall survival benefit, we feel increasingly confident that Ziihera represents a new standard of care, and we're excited about executing that in the GEA indication, but then expanding our investment into other areas of opportunity for Ziihera. We've got those exciting development plans that we can touch on as well in R&D across breast cancer, colorectal cancer, non-small cell lung cancer. On the webcast, when we talked about the GEA indication, we talked about the peak potential of Ziihera now increasing to between $3 billion-$5 billion. I think an awful lot for us to be excited about with Ziihera. A lot also for us excited to be about for epilepsy as well and continuing the growth trajectory there.
With our label indications, we do continue to see good growth opportunity, but we are also making some targeted investments in expanding the reach of EPIDIOLEX to other patients with epilepsy. I think the business is in good shape, and I think we are executing on the strategy that Renée set out at JP Morgan at the beginning of this year really well.
Got it. This is amazing. Xywav has surprised us all in terms of three years ago, we were modeling a decline for Xywav, and we have not seen that yet. Can you paint a picture for us in the marketplace, like how between Xyrem, authorized generic and generics now on the market, how it is impacting the volume price, and then you have IH as well. There are many complications there, but can you help us paint a picture which is helping you here?
Yes. As we entered this year, I think there were question marks.
Right.
How resilient and durable would Xywav be in the face of high-sodium generics?
Right
Coming into the market? I think we have answered that question to a large part as we sit in the middle of the year. We have not really seen any material impacts from those generics coming into the market. The demand remains really strong. You saw in the second quarter of the year the net patient adds, 525 net patient adds. So we are continuing to add new patients to Xywav. I think our teams have done a really great job really communicating the differential benefits of Xywav. Low-sodium oxybate continues to resonate strongly. We know that the majority of patients, 80% or more patients with narcolepsy and IH have comorbidities, cardiovascular and cardiometabolic comorbidities. So offering them a low-sodium option continues to be really, really important. So as we sit in the middle of the year, I think we feel increasingly confident about the durability of Xywav.
Obviously, there are new entrants coming into the market as well, orexins. But from everything that we understand about this market and the feedback that we are having from healthcare providers, we do believe that oxybate and Xywav in particular will continue to play a really important part of treatment for narcolepsy and IH patients.
Got it. So durability of the franchise is still a little bit of question even before orexins come along. Between how much growth in IH market is still there, because most of the competition is on narcolepsy side, not so much on IH side.
Even with the orexins, it is a subset of narcolepsy for now, not the entire narcolepsy either. What are the puts and takes for this growth to be durable or this franchise to be durable for next few years here?
Yes. We have some new entrants, with orexins, and as you mentioned, they will be entering the market in the NT1 indication, which is less than half of the overall narcolepsy space.
Right.
Irrespective of that, I think, obviously the orexins do represent a new potent daytime alerting agent, and oxybate acts on the kind of disrupted nighttime sleep.
Right.
Looking at the science behind this, you can certainly see how these two drugs could be complementary.
Right.
We will have to see how that plays out in practice, of course, with payers. But we are very confident that Xywav will continue to have a place in treatment. And from what we understand and the way healthcare providers are thinking about this is that, they will not be considering, from what we understand, that the stable base of Xywav patients will be switched away from Xywav. What we may see is that it takes longer for patients to get to Xywav if they are trying the orexin first. But, we do not see this business being dramatically disrupted, in a significant way.
Got it. Very helpful. How much growth is left in IH here?
Yeah. So, there are estimates that say the overall prevalent patient population is very large,
Right
maybe similar to narcolepsy, maybe 100,000 patients.
Right.
We know there's around about
Some doctors even say it is not even a rare disease, basically.
Well, yes, exactly.
Right.
Diagnosed patients around about 37,000.
Right.
We see treated patients maybe 9,000. There is still significant opportunity for Xywav to grow into the full potential of opportunity within the IH segment. Even with potential new agents coming into the market, we would probably see the market continue to grow quite significantly.
Got it. Very helpful. Moving to EPIDIOLEX, even that franchise delivered strong volume growth in the quarter. Can you help us understand where you are finding this new growth? This market, the growth in last few years was a little bit slower. What are you seeing now, and how much of this growth is sustainable going forward?
Yeah. Really healthy growth in the second quarter. $292 million, 16% revenue growth, 14% volume growth. We are really very pleased to see that.
Right.
EPIDIOLEX, when it was launched, it was launched as a pediatric drug, and we have seen really good strong penetration in that segment. More recently, we have been focused on bringing EPIDIOLEX to adult patients. There is a very sizable opportunity there in the adult patient segment. That segment is more fragmented than the pediatric segment, but that is where we are seeing quite a significant amount of our growth, and there continues to remain significant headroom for us to grow there. In addition, we have been investing quite a bit in ensuring that patients can stay on treatment for longer. We have a JazzCares support, patient support around that to-
onboard patients onto JazzCares and really support them to make sure that they can get the optimal duration. In addition, we mentioned on our call that we had submitted an NDA for the novel capsule formulation.
Right.
Again, that formulation is going to be particularly beneficial for adults.
Right
Because this is a weight-based drug, adults can end up taking quite a large volume of the oral solution, which is sesame oil based.
That can limit the uptake in the adult segment. With the capsule formulation, we believe that addresses that issue. We do expect the capsule formulation to expand the overall patient pool that will be taking EPIDIOLEX. Looking ahead, more strategically, we have made some really important investments in some clinical development programs to expand the use of EPIDIOLEX. We have got a phase III DE study ongoing, a phase II/III study in juvenile myoclonic epilepsy, an additional study in adult LGS, as well as an earlier study in focal-onset seizures. When we recognized that we had a longer runway with EPIDIOLEX, when we did the ANDA settlements out to the late 2030s, it really did open up the opportunity for us to make these additional investments.
We feel very optimistic about the ability for us to really continue to demonstrate good, strong growth momentum for EPIDIOLEX over the longer term.
Got it. Really makes sense. Now, moving to the most anticipated launch
of the year, Ziihera in GEA. Early days so far, but with this first-line launch, the label that you wanted and all that, how should we think about the launch curve here? The product is already on the market, so doctors know about this and all that. You have all the infrastructure in place, but talk a little bit about how should we think about the launch here, and are there any bottlenecks in terms of some checkboxes that need to be ticked before it takes off? Is there anything like that here?
Yeah. We're very excited, obviously, about the GEA opportunity for Ziihera. We're excited about the label that we have.
The fact that we see that unprecedented overall survival benefit more than two years for both the triplet and the doublet-
Right
regimen, and the fact that with the triplet, that triplet regimen can be used irrespective of PD-L1 status. This really is a fabulous opportunity for us to make a meaningful difference for these patients. I think the fact that we've been out there in the market with Ziihera, with the BTC indication is very, very helpful for our launch uptake.
We sized our sales teams with the GEA launch in mind. They've already been out there developing the relationships. Physicians, there's a high degree of overlap, 90% overlap of prescribers, so many of them will have had experience with Ziihera already. This drug, it's going to be important for us to make a quick start, not only in the academic centers, but also in those community centers as well. I think the fact that we do have the permanent J-code in place already,-
mmh
we're not anticipating a lot of payer friction. We anticipate that patient access will be very much there from the beginning. Therefore, our ambition will be to really drive uptake rapidly and get to peak sales as quickly as we possibly can, really just reflecting the fantastic data that we have and the fact that this product is going to make a very, very significant impact for patients with this devastating diagnosis.
Is it a largely Medicare patient population, or it's a mix?
Yes. It's more of a mix. I don't know whether we've got those kind of numbers to hand exactly.
Oh, exactly, no.
But yeah. It's a significant commercial opportunity-
Okay
in this space.
Got it. I had a question about OS interim. We have already not seen the whole data, but congrats on the success of what both doublet and triplet now. When can we expect to see the detailed data for the OS, for the doublet as well? You already press released it, but again, the detailed data when we can see.
You are asking about the top line readout on-
Yeah
doublet and OS?
Yeah.
We reported that we hit that. You will expect to see it at a future medical meeting, but we have not shared which one.
Okay. Got it. Understood. Have you gone into details about the $3 billion-$5 billion? How much of this is in each individual indications versus, is it just GEA or is it even breast cancer?
Yeah
You see a higher opportunity there?
Yeah. A few years ago, when we initially looked at the potential for Ziihera, we did talk about it being-
Cool
a $2 billion-plus-
Right
opportunity. I think now with the data in hand and with the clinical development plan that we've initiated, we'll feel confident to raise that peak revenue expectation to $3 billion-$5 billion. Previously, when we talked about the $2 billion, that was including the BTC opportunity, the first-line GEA opportunity, as well as the metastatic breast cancer and the pan-tumor. Today, we also now including our expectations within colorectal cancer and non-small cell lung cancer, as well as early breast cancer. So together, with the data that we have, and we see the unprecedented survival benefit in GEA, and just thinking what that can mean for other HER2-expressing tumors, we feel confident to increase the peak revenue to the $3 billion-$5 billion range that we spoke about.
And correct me if I'm wrong, John, you have a basket trial also going on in multiple cancers.
A pan-tumor trial. That's correct.
Pan-tumor trial.
Yes.
Is there any thought on timelines there? When could we see data there?
No, it is enrolling nicely, but we have not provided readout timing specifically.
Got it. That will be interesting trial to see when the data come out. Awesome. I also want to pick up on Modeyso a little bit. I feel like you are already exceeding your expectation that you set out, like $500 million, but in second line alone, you are at a $200 million plus run rate at this point. Are you saturated with second line or, because 500, if I am understanding correctly, it was second line plus first line, right? Where is the next leg of growth there, and what are people underestimating with that around it?
Yeah. We are very, very pleased with the execution behind the Modeyso launch. It is about a year now since we launched. It was last August. Q2, $48 million. As you say, we are already annualizing at $200 million with more than 600 patients having been treated with Modeyso. That does enable, it kind of reinforces our belief around the $500 million peak sales opportunity in the U.S. That does include first line as well. We do continue to believe that we can grow Modeyso with the label that we have today. There is still the opportunity for us to improve testing rates in this space, and also improve the timeliness with which patients are referred to academic centers of excellence. There is still work for us to do there. But we are excited about the ACTION study. That will read out in the first half of 2027.
And that gives the opportunity for patients to receive Modeyso immediately after radiotherapy-
Right
as opposed to waiting until those patients have progressed. That will mean, I think, more patients being eligible, because in that time period, unfortunately, some patients may no longer be eligible, as well as improving the duration of treatment for patients on Modeyso. So, that inflection point we're excited about, and we believe that's going to be important to get to the $500 million peak.
And have you exhausted the market in second line yet, or are they still some
No, I think we're still seeing growth there. We're still enrolling patients onto treatment and getting them converted onto active treatment. As I mentioned, there is still the opportunity for us to improve testing rates.
Right.
NCCN recently approved liquid biopsy in this space, so that will help because there are some patients that it is difficult to do a definitive physical biopsy. There are areas for us to work on that will ensure more and more patients can benefit from this treatment.
Got it. Very helpful. Talk about ZEPZELCA as well a little bit. Now you have the first-line maintenance label as well. How should we think about the net effect? Because as you go more into first-line, then you say the second-line will decline, but again, the duration will help in the first-line. Help us understand the net growth. How should we see ZEPZELCA going forward at this point?
Yes. We have been seeing over time that second-line business taper down.
Right
As we experience increased competition in that second-line segment for a while now. It is almost a year since we launched-
Right
in the first-line maintenance segment.
Since that time, our focus has been 100% commercially on first-line. That is where we believe patients will get the most benefit from ZEPZELCA with longer duration of treatment and in combination with atezolizumab. Our focus has been there. The launch has been very successful. Around 30%-40% of our overall revenue in the second quarter was coming from the first-line maintenance segment. We will continue to focus on growing that part of our business. At the same time, we do anticipate seeing the second-line business taper away. Obviously, as we look ahead, the first-line segment will also become a little bit more competitive with the entrance of new competitors in that space. But we do believe ZEPZELCA offers something uniquely different for patients, and it is particularly appreciated in the community setting where they want something that is easier to use without the monitoring, et cetera.
We will continue to focus our promotional efforts there.
Got it. Very helpful. Let us just talk about the Actio acquisition as well a little bit here. Can you give us some color on what gives you confidence in the ABS-1230 assets, and where do you see the opportunity for this product in the rare epilepsy population basically, right? It is complementary for sure with your epilepsy franchise-
Yeah
but what attracted you towards this asset here?
Yeah. Well, we're very excited-
about this acquisition. I think when Renée Galá described our strategy at JP Morgan at the beginning of the year when we talked about our rare disease focus and really focusing on finding opportunities in our areas of expertise, of which epilepsy is absolutely one of them, but also looking for opportunities that kind of address a really significant unmet medical need where we can make a meaningful difference in that rare disease space, then Actio Biosciences falls very much in that area. And of course, we're excited about it, not only have obviously we've done the due diligence around what we think this drug can do for patients, but obviously we're able to leverage their epilepsy expertise as well as leverage our rare disease expertise. And of course, there is significant commercial synergies as we think about bringing this product to market in the future. So yeah, extremely excited.
I think it's exactly what we were talking about when we talked about a rare disease strategy. But John Bluth, would you like to add something?
No, just to add, Mohit, that the clinical data that we did see as we reviewed the due diligence for the transaction was very exciting to us. We saw meaningful improvements in the patients who were receiving this drug. We are very excited about the potential for it to have a transformative impact for patients who are suffering from a devastating disease. As we get through the closing of the transaction with Actio, the Jazz team will step in and drive the program forward and then look for opportunities down the road to present additional data at medical conferences.
Helpful. You have also talked about investing in the commercial infrastructure for Actio as well. What kind of synergies do you have with EPIDIOLEX here versus building up something new with this as well?
We believe there will be very significant commercial synergies in this space.
We have built real expertise in this area. We have the number one branded anti-seizure medication in EPIDIOLEX. This new opportunity obviously is for a different segment of patients, the KCNT1 epilepsy. But it will be something that has the same core point with pediatric epileptologists.
Right.
The overlaps are very significant. We haven't really got into what additional commercial investments we might want to make, but for sure there are very significant commercial synergies.
Got it. Very helpful. Then, obviously we used to have a lot more questions for Jazz on BD side, not as much anymore now that you have the pipeline is really vibrant. As a customary question, how is the company thinking about further BD transactions this year, next year? What is the core principle or core thought process behind it? If you do any BD, what would you be looking at at this point?
Yeah. It's really a focus on rare disease. Sam described some of those guiding principles that Renée outlined at the beginning of the year. Looking at those areas of rare disease where we have that existing competency in epilepsy and sleep and oncology, and if you look over the past 12 to 18 months, that's exactly where you've seen us do business development. You saw us bring in the Modeyso asset with the acquisition of Chimerix, Inc. You saw us bring in Saniona, to acquire Saniona and some early epilepsy opportunities. You've seen us acquire AbCellera, do a deal with AbCellera in the oncology space, and now most recently with Actio Biosciences in the epilepsy space. I think you should look for Jazz to continue to be active in business development, focused in those rare areas, and looking outside of our current core competencies in rare disease.
We're also looking there. I think if we are to look in rare outside the existing areas of core competency, we're probably less likely to go very early. We're more likely to be looking sort of at proof of concept or later, and if we're looking in the areas where we have the existing expertise, we're a little more wide open. We're open to doing earlier transactions and also looking closer to commercial. But we've got a very strong balance sheet and a very strong team in place running business development, and we're very focused on finding more and more, and we're very disciplined. Look for more from us going forward.
You are a massive company in oncology as well at this point, right? So you have two core competencies at this point. One question, Sam Pearce, I get a lot is between generic oxybates versus orexins, which one do you think is the bigger, which competitor is the bigger competitor for you right now?
Between the generic.
Oxybates-
Oxybates and.
Versus orexins.
Orexins? Very different prospects. I think as we looked at the beginning of this year to the entry of the generics, I think we felt quite confident in our differentiation. I think low sodium oxybate is a very significant and important differentiating feature-
Right
versus the generics. That played out in reality. That's what we're seeing now, is that physicians are reluctant to want to put their patients onto a high sodium generic
Right
when they have a low sodium available. I think with orexins, it's a different question. It's more of a clinical question around how can we optimize treatment for these patients for whom the condition is very debilitating. I think there is the opportunity for us to think about these two treatments as complementary, as we talked about before. I think there's still a lot for us to understand about how that will play out. We see in the data that these are potent daytime alerting agents, but also that there are question marks around the dose, the half-life, insomnia.
Right.
We also know that when patients get good quality nighttime sleep, then that has a positive impact on their daytime performance. So, it's a difficult question to answer. I think the two competitors are quite-
Quite different?
quite different propositions.
But I think overall what I would say is that we feel confident that Xywav will continue to be an important treatment for patients with narcolepsy and idiopathic hypersomnia.
Got it. Understood. One last question for both of you. So fast-forward one year, I hope you are here at Wells Fargo 2027 conference. At that conference, what would make you look back at the year and say, "It was a great year for us?
Yes. Well, I am responsible for commercial, so obviously I am going to be very focused on continuing to drive the momentum that we have seen over the last few quarters.
Over a kind of sustained period. Beyond that, obviously we are going to be looking to the way that we have executed the GEA launch.
I think this is such an important launch for Jazz. It is such an important launch for patients.
Right.
There is a strong promise with Ziihera, and I think our ability to demonstrate that not only does the data show that Ziihera is the new HER2 agent of choice, but we can actually execute on that and bring that to life for patients in the real world. A year from now, yeah, I definitely want to be looking back and seeing that we have delivered a standout launch and we have realized the potential that this asset offers us in GEA, and that will just give us even more confidence to do the same in other HER2-expressing cancers.
Makes sense. Yeah. I would add two things probably. The continued breadth of the execution.
I think if we are sitting here next year and continue to see the strength we are seeing across our franchises, I think that has been a real area of strength for Jazz in 2026 thus far. Then continued innovation. I think we are seeing more and more innovation from the company, both from our own programs that we are starting to put into the clinic and some of these assets that we are bringing on board through business development. So I think you are going to just continue to see more innovation layer up throughout the pipeline.
Got it. Awesome. On that high note, thank you very much for joining us today, and all the best.
Thanks for having us.
Thank you for having us.