Jazz Pharmaceuticals plc

Good afternoon. My name is Krista and I'll be your conference operator today. At this time, I would like to welcome everyone to the Jazz Pharmaceuticals third quarter 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Andrea Flynn, Vice President, Head of Investor Relations. You may begin.

Thank you, Operator, and good afternoon, everyone. Today, Jazz Pharmaceuticals reported its third quarter 2023 financial results. The slide presentation accompanying this webcast is available on the Investors section of our website. Investors may also refer to the press release we issued earlier today, which is also posted to our website. On the call today are Bruce Kozad, Chairman and Chief Executive Officer, Rene Galla, President and Chief Operating Officer, and Rob Younone, Executive Vice President, Global Head of R&D. Kim Sablich, Executive Vice President and General Manager, United States, will join the team for Q&A. On slide two, I'd like to remind you that today's webcast includes forward-looking statements, such as those related to our future financial and operating results, growth potential and anticipated development and commercialization milestones and goals, which involve risks and uncertainties that could cause actual events, performance, and results to differ materially from those contained in these forward-looking statements. We encourage you to review the statements contained in today's press release, in our slide deck, and in our latest SEC disclosure document, which identify certain factors that may cause the company's actual events, performance, and results to differ materially from those contained in the forward-looking statements made on today's webcast. We undertake no duty or obligation to update our forward-looking statements. Turning to slide three on this webcast, we'll discuss non-GAAP financial measures. Descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release and the slide presentation available on the investor section of our website. I'll now turn the call over to Bruce.

Thanks, Andrea. Good afternoon, everyone, and thank you for joining us today. I'll start on slide five. In the third quarter of 2023, we delivered strong commercial results advanced multiple late-stage programs within our pipeline, and maintain our focus on driving operational excellence. Our results for the quarter exemplify the successful execution that has led to an exciting transformation and diversification of our business across our commercial portfolio and R&D pipeline, and we remain well-positioned to achieve Vision 2025. As we highlighted in today's press release, we have updated our 2023 guidance. raising our full-year total revenue and oncology revenue guidance at the midpoints. And as our pipeline continues to advance, we are increasing our R&D guidance, primarily driven by investments in Xanidatamab development across multiple HER2-expressing cancers that we believe will allow us to deliver an important new therapeutic option with the potential to raise the standard of care for patients and create long-term value for JAS. It's important to note that our disciplined approach to capital allocation has allowed us to invest in R&D, as well as key commercial franchises, while remaining on track to deliver on our full-year gap net income and non-gap adjusted net income guidance. With regard to our commercial business, we are seeing strong momentum across all three key growth drivers, ZyWave, Epidiolex, and Rylase. Combined, revenue from these products grew 24% in the third quarter compared to the same period last year. We remain confident in the durability of our Oxibate franchise and the growth of Zywave in both narcolepsy and idiopathic hypersomnia, or IH, even as high-sodium branded and authorized generic competition has entered the narcolepsy market. Zywave is annualizing at $1.3 billion in revenue, remains the Oxibate of choice, and is the only approved treatment for IH. Underlying demand continues to drive Epidiolex growth. We remain confident in its potential to reach blockbuster status and contribute more than a billion dollars in revenue to our Vision 2025 revenue target. Outside the U.S., we expect additional launches and indication expansions through 2024. In oncology, Rylase has continued to grow in the U.S., supported by strong demand from pediatric patients and our increasing emphasis on the adolescent and young adult market. In addition, we recently received marketing authorization for the product in Europe under the trade name Enrylase. The performance of these products, together with Zepselca revenues, is fueling the ongoing diversification of our commercial business. More than half of net product revenue this quarter came from Epidiolex and our oncology products combined. and ZyWave represented more than two-thirds of our Oxibate revenue. This marks a significant shift from just a few years ago when ZyREM represented three-quarters of total revenue. This diversified revenue stream is a direct result of our outstanding commercial execution along with successful corporate development and internal R&D efforts. Moving to our pipeline, we now expect up to five late-stage readouts through the end of 2024. Rob will cover our R&D progress in more detail later in the call, but I want to highlight that we view Xanidatamab as the most de-risked and highest priority program in our pipeline. We plan to initiate a rolling biologics license application, or BLA, submission this year for accelerated approval of Xanidatamab for second-line treatment of biliary tract cancers, or BTC. This is an important step in delivering Xanidatamab to patients with BTC and other HER2-expressing cancers with limited treatment options. Given the strength of clinical data to date and its promise in multiple indications, we believe Zannie has the potential to deliver more than $2 billion in peak revenues. On the operational front, our commercial execution, along with attention to operational excellence, has put us in strong financial position. We continue to generate significant cash flow from operations, which combined with our strong balance sheet gives us the capacity to invest in the products, pipeline programs, and corporate development opportunities with the highest potential to deliver sustainable growth and enhance value. Turning to slide six, we are very pleased with our progress in the third quarter and believe it has advanced us toward achieving all three components of Vision 2025 as we continue our transformation into a high-growth global biopharma leader. I'll now turn the call over to Renee to review our commercial performance, after which Rob will share an update on our R&D progress. I'll provide a financial overview, and then we'll open the call to Q&A. Renee?

Thanks, Bruce. It's been an exciting few weeks as I'd assume my new role, and while I'm working across a different part of the organization, my focus remains the same, driving the continued growth and transformation of our business. Starting on slide eight, our confidence in the durability of our Oxibate franchise has only increased as we gain more visibility into how market dynamics are evolving with the availability of branded and AG high-sodium Oxibate. Total Oxibate revenue, which includes ZyWave and ZyRum revenues together with royalties from ZyRum authorized generics, is annualizing at $1.9 billion and we are well positioned to achieve our stated goal of $2 billion in Oxibate revenues as part of Vision 2025. ZyWave revenue was approximately $332 million for the third quarter of 2023, representing growth of 30% compared to the same period in 2022, driven by continued adoption in both Narcolepsy and IH. Exiting the third quarter, there were approximately 9,500 narcolepsy patients taking ZyWave. Our focus on educating patients and prescribers about the benefits of reducing sodium intake continues to drive growth, and we recently launched a new campaign to support these initiatives. Importantly, we are seeing adoption from both high-sodium oxobates and oxobate-naive patients, In IH, we see continued growth of new prescribers, and exiting the third quarter, there were approximately 2,550 active IH patients on ZyWave. ZyWave is uniquely positioned to address the multiple symptoms of IH, including sleep inertia, excessive daytime sleepiness, and cognitive impairment, all of which have a significant impact on patients' quality of life and daily function. Based on the opportunity to improve the lives of people living with IH and our confidence that the IH indication represents a durable growth driver for ZyWave, we are increasing our investment to further build the market. This will include educational initiatives and expanding our field team to include members specifically focused on IH to increase the breadth of prescribers. Slide nine highlights our latest educational campaign for narcolepsy treaters, Less is More, which reinforces the compelling low sodium health benefits of ZyWave. Narcolepsy is a debilitating chronic condition, and we have focused our educational efforts around the lifelong burden of high sodium intake for narcolepsy patients who live with a two to three times higher risk than the general population of cardiovascular comorbidities, such as stroke and heart failure. ZyWave is the only approved low-sodium oxidate containing 92% less sodium than high-sodium oxidates, and importantly, is the only oxidate without a labeled warning about high-sodium intake. You've heard us use a number of comparisons for the sodium load of high-sodium oxidate versus ZyWave, including eating four large orders of fast food French fries, or five large bags of potato chips every night before bed, or that it would take 12 years of treatment with ZyWave to equal the sodium intake of one year of high sodium oxibate treatment. Regardless of the parallels we draw, the bottom line is clear. The sodium reduction offered by ZyWave has significant potential health benefits, including lower blood pressure and improved cardiovascular health. We recently presented data at the World Sleep Meeting that built on our body of research demonstrating the clear relationship between sleep disorders and increased cardiovascular risk, as well as the meaningful improvements possible with treatment plans that consider a patient's holistic health, such as reducing sodium intake. And earlier this year, we shared data at the American Academy of Neurology meeting that showed narcolepsy patients treated with high sodium oxibate had a higher risk of new onset hypertension diagnosis or antihypertensive medication initiation within 180 days of starting therapy when compared to a matched control group of narcolepsy patients not being treated with high sodium oxibate. The risk of those taking high sodium oxibate was approximately twice that of the control group. We believe that the majority of patients and healthcare providers will continue to prioritize long-term health when evaluating oxibate therapy, and we are finding the direct competitive messaging in the less is more campaign to be effective. Additionally, since we know this disease and its treatment are complex, The campaign also highlights the advantages of individualized dosing regimens for ZyWave patients and the support services that Jazz makes available for HCPs and their office staff to have ZyWave prescriptions approved, reimbursed, and delivered to patients. We also offer a range of patient services that include copay assistance and disease education. Turning to slide 10 in Epidiolex, we achieved another quarter of growth with net product sales increasing 9% year-over-year to approximately $214 million, driven by underlying demand in both our US and European markets. Key drivers of this demand growth include Epidiolex's strong product profile, including data around benefits beyond seizure control, increased penetration in the long-term care setting, and strong uptake in key European markets, all of which provide us with continued confidence in the blockbuster potential of the product. Turning to slide 11, we are focused on multiple opportunities to drive Epidiolex to blockbuster status, including continued data generation, and we expect to present several datasets at the upcoming American Epilepsy Society meeting in December. Our educational efforts around caregiver-reported outcomes beyond seizure control from the BECOM survey have been especially impactful, further differentiating Epidiolex from other anti-seizure medicines. To accompany this caregiver-reported data on improvements in cognition, behavior, and other non-seizure benefits in LGS and DS, we have initiated the post-marketing EPICOM trial in TSC. EPICOM was designed in collaboration with HCPs and patient advisory groups to evaluate the impact of Epidiolex on behavioral and cognitive functioning and outcomes using a range of validated scales. Our commercial team also has an enhanced focus on dosing optimization, further penetration in the adult setting, and continued growth outside the U.S. Turning to slide 12 and our oncology franchise, net product sales for Rylase were approximately $105 million for the third quarter, a 43% increase year-over-year. Demand for Rylase remains strong, and we see a number of factors that are driving what we believe is sustainable growth. Healthcare providers have indicated that they are returning to best clinical practice and switching therapy at the first signs of hypersensitivity, which was often not possible under the supply limitations with Irwinase. Second, while Rylase has been almost universally adopted in pediatric oncology protocols, we are now also seeing increased pediatric usage in several other areas. These areas include physicians switching patients from E. coli-based asparaginase due to other treatment-related issues that arise, as well as some use of Rylase in first-line treatment based on its advantages of having a short-acting profile relative to current first-line asparaginase therapies. Third, we continue to see increased adoption of the Monday, Wednesday, Friday 25-25-50 milligrams per meter squared dosing, which is more in line with preferred clinical practice and allows for a dosing schedule that ensures sustained asparaginase levels through the course of treatment, which is essential to improved outcomes for patients. Fourth, we are seeing increased use of Rylase in the treatment of adolescents and young adults or the AYA market, and we expect continued growth in this segment. Our field teams have been expanding their educational efforts to AYA treaters this year with a focus on physicians who have previously used asparaginase therapy. Outside the U.S., we recently received European Commission approval under the trade name Inrylace and are planning to begin a rolling launch later this year. With respect to the market opportunity, the commercial landscape in Europe has a number of differences compared to the U.S., including competition and market access dynamics. Turning to slide 13, Zepselka remains the treatment of choice in second-line small cell lung cancer and has generated more than $800 million in revenue since launch. proving to be a highly creative and well-executed corporate development transaction for Jazz. Net product sales for the third quarter increased 11% year-over-year to $78 million, driven by an increase in underlying demand. A portion of this demand relates to the continued shortage of platinum chemotherapy. which has led to oncologists choosing Zepselca for some patients they may have historically re-challenged with platinum therapy. Although this dynamic may be temporary in nature, it is currently resulting in greater use of Zepselca, particularly in the community setting where its clinical profile and ease of administration have been well received. While we have achieved significant penetration in the second line setting, there remains an important unmet need for patients diagnosed with small cell lung cancer. We expect top line PFS data from our pivotal phase three trial of Zepselka in combination with Dicentric in first line small cell lung cancer at the end of 2024 or early 2025. A positive outcome in this trial would provide a further opportunity to both improve patient lives and outcomes as well as drive future growth in our oncology franchise. With that, I'll turn it over to Rob for an update on our pipeline and upcoming milestones. Rob?

Thank you, Renee. Slide 15 provides an overview of our robust, diversified pipeline that includes neuroscience and oncology programs across all phases of development. Consistent with our mission and strategy, These programs are focused on advancing the treatment of serious diseases for which there are limited or no options. Moving to slide 16, this is an exciting time for our organization as we approach multiple catalysts across the pipeline. We now expect up to five late-stage data readouts through 2024, with all five addressing areas of significant unmet need. Starting with neuroscience, recruitment in our phase three trial of Epidiolex in Japan is progressing well, and we now expect top line data in the second half of 2024. We are pleased to announce that we have completed enrollment in our ongoing phase two trial of JCP150 and PTSD. Based on timing of the last patient last visit, We are updating the anticipated timing of our top-line data readout to January 2024. We also have ongoing trials for suvacaltamide, or JZP385, in both essential tremor and Parkinson's disease tremor, with top-line data from the ET trial expected in the first half of 2024. If results are positive, we believe this trial could serve as part of a pivotal package. In addition, we anticipate initial proof of concept and healthy volunteers later this year for JZP441, our orexin-2 receptor agonist. Moving to oncology and Xanadatamab, we expect to report top-line data from the ongoing Phase III frontline gastroesophageal adenocarcinoma trial next year. Later in the call, I'll provide an overview of our regulatory strategy for Xanadatamab, including an update on BTC. As Renee just mentioned, top-line progression-free survival data in Sub-Celta in combination with Ticentric as first-line maintenance therapy for extensive stage small cell lung cancer is expected at the end of 2024 or early 2025. I'll now discuss some of our key programs in detail, starting on slide 17 with the end of data map. our highest priority pipeline asset. Given its potential across multiple HER2-positive tumor types, we are expanding and accelerating our development plans for this exciting molecule. Xanadatumab is a novel bispecific antibody that can simultaneously bind two non-overlapping epitopes of HER2, known as biparotopic binding. This unique design results in multiple mechanisms of action, including dual HER2 signal blockade, receptor clustering on the cancer cell surface leading to internalization via bi-paratopic binding, and potent immune activation, including antibody-dependent cellular cytotoxicity, antibody-dependent cellular phagocytosis, and complement-dependent cytotoxicity. leading to encouraging anti-tumor activity in patients. Additionally, then a data map can prevent HER2 from combining with other HER2 proteins and with ERB receptor family members like HER3, which can further block growth signaling. Then a data map has shown compelling activity across a broad range of HER2-expressing tumors. And we presented promising efficacy and early survival data at ASCO and BTC, and ASCO-GI and GEA earlier this year. Most recently, Beijing, which has development rights in some Asia-Pacific markets outside of Japan, reported results at this year's ESMO meeting from a Phase II trial of Xanadatumab in combination with chemotherapy and Tizolizumab, Beijing's anti-PD-1 antibody, in first-line gastric and gastroesophageal junction cancers. Data included an overall response rate of 76% with a median duration of response of 22.8 months and a median progression-free survival of 16.7 months at the time of data cutoff. These data, along with our own GEA program, are building a body of evidence supporting the potential of XANA data map in treating first-line GEA. Based on compelling Phase II data, we plan to initiate a rolling BLA submission this year for accelerated approval of Xanadatamab for second-line treatment of biliary tract cancer. We expect to complete the submission in the first half of 2024 and anticipate that our confirmatory trial in first-line BTC will be open and enrolling patients prior to the completion of the rolling BLA submission. Turning to slide 18, BTC and GEA are the first of multiple indications we plan to pursue for Xanadatamab. We believe Xanadatamab has the potential to raise the standard of care for some of the most difficult to treat HER2-expressing cancers, including breast cancer, where we see a significant potential to help patients in both early and late stage disease. We're executing a comprehensive development plan and are excited about delivering this innovative therapy to patients. If approved, we expect to initially enter the market in second-line BTC, where physicians would gain important experience with Xanadatamab. Following BTC, we expect to have a path to approval in first-line GEA with a supplemental BLA submission, which provides a more streamlined approval process compared to a full BLA. We strongly believe that a substantial opportunity remains to address the unmet patient need in first-line GEA, including in the HER2-positive PD-L1-negative patient population, where the standard of care remains trastuzumab plus chemotherapy. For patients who are PD-L1-positive, we believe that Sanidatumab has the potential to be the HER2-targeted treatment of choice, while also combining with a PD-1 inhibitor. in order to treat those patients with GEA whose tumors expressed PD-L1. There also remains an opportunity to move into earlier stages of GEA, where we see the potential to help those patients in the neoadjuvant and adjuvant settings. GEA represents a significantly larger patient opportunity compared to BTC, and a prior approval in BTC may accelerate adoption into GEA treatment guidelines and protocols. We look forward to data from the ongoing pivotal Phase III GEA trial expected in 2024, which may support U.S. and global regulatory submissions. Breast cancer also represents a considerable opportunity, supported by promising early data for Xanadatamab as monotherapy in multiple combinations and across stages of disease and lines of therapy. Based on the efficacy and safety seen in studies to date, we believe Xanadatumab is well suited for early stage disease, including potential use as neoadjuvant and adjuvant therapy. Xanadatumab has also shown promise in HER2 positive and hormone receptor positive breast cancer as part of a novel combination. Based on these encouraging signs of activity, We have ongoing trials in neoadjuvant breast cancer, including an arm in the ISPI platform trial, which is studying Xanadatumab for the neoadjuvant treatment for locally advanced breast cancer. We are also evaluating the opportunity to expand into both combination regimens and later lines of therapy in HER2-positive and HER2-HR-positive breast cancer. We're also evaluating Xanadatamab in multiple early phase trials in other tumor types where few HER2 targeted treatment options are available. We are impressed with the strength of data and clinical activity Xanadatamab has shown across a diverse set of HER2 expressing indications, such as colorectal cancer, non-small cell lung cancer, and multiple other cancers where there continues to be a need for safe and effective targeted treatment options for patients. In summary, we are committed to rapidly advancing and expanding our development program for a molecule that has the potential to transform the current standard of care in multiple HER2-expressing cancers. Turning to slide 19, JZP150 is our novel, highly selective fatty acid amide hydrolase, or FAW inhibitor. We are developing JZP150 as a once-daily oral medication with the potential to impact the pathophysiology and symptoms of PTSD. By addressing the underlying cause of PTSD, impairment of fear extinction and its consolidation, JCP150 has the potential to improve patients' associated symptoms such as anxiety, insomnia, and nightmares. Preclinical and early clinical data showed activity on fear extinction and stress response. JCP150 has a novel and promising mechanism of action, providing irreversible inhibition of PHA, which we believe may have advantages over reversible PHA inhibitors in development, and we anticipate top-line data readout in January 2024. On slide 20, I'll highlight JCP441, a potent, highly selective orexin-2 receptor agonist designed to activate and restore impaired erection signaling. Through this mechanism of action, JZP441 has the potential to exert pronounced weight-promoting effects in people with sleep disorders. Erections are excitatory neuropeptides that play an important role in the regulation of sleep and wakefulness. Patients with type 1 narcolepsy have a loss of erection-producing neurons, with impaired orexin signaling. And clinically, these patients often present with chronic disabling symptoms that significantly impact patient's ability to function normally during the day. Slide 21 illustrates the design of our phase one program, evaluating safety, tolerability, pharmacokinetics, and pharmacodynamics of JCP441 in Healthy Volunteers. Our single ascending dose study is being conducted in sleep deprived healthy volunteers and includes an evaluation of the weight promoting effects of JZP441 using the maintenance of wakefulness test or MWT. This is a recognized disease model that historically has translated to patient efficacy. We also have an ongoing study evaluating multiple ascending daytime doses in healthy volunteers intended to provide safety of chronic dosing in support of a multiple-dose study in patients. Importantly, we have structured the program to maximize our learnings at this stage, including identifying appropriate dose ranges, which we believe will accelerate later development in patients. We're excited about the potential of JCP441 and look forward to updating you on our progress later this year. Turning to slide 22. Our team is advancing multiple preclinical compounds toward clinical stage development. JCP815, a molecule that has emerged from our collaboration with Red X, is one of our most recently initiated phase one trials. JCP815 is a highly selective, potent pan-RAF inhibitor with a differentiated mechanism of action. It targets specific components of the mitogen-activated protein kinase pathway that are known oncogenic drivers. active against multiple ARAF, BRAF, and CRAF mutants, and a spectrum of BRAF fusions. Activity against ARAF mutants may be an important point of differentiation, as recent data suggests the importance of ARAF in the context of mutant RAS activation. JCP815 also potently inhibits both monomer and dimer-driven RAS signaling and prevents paradoxical pathway activation induced by BRAF selective inhibition. Slide 23 illustrates the design of the ongoing JCP815 phase 1 trial, evaluating the safety, dosing, pharmacokinetics, pharmacodynamics, and initial antitumor activity of JCP815 in participants with advanced or metastatic solid tumors harboring mutations in the MAP kinase pathway. It consists of two parts. Part A will characterize the safety and tolerability of JZP815, determining a maximum tolerated dose and PK profile, and determine a recommended Phase II dose to be further investigated in the expansion phase, or Part B. Part B will investigate the anti-tumor activity at the recommended Phase II dose in various tumor types based on mutation status. Overall, our R&D team has been advancing multiple programs from our neuroscience and oncology pipeline, and we have multiple upcoming catalysts and near-term data readouts. Now I will turn the call over to Bruce for a financial update. Bruce?

Thanks, Rob. I'll start with our top and bottom line results on slide 25. As a reminder, our full financial results are available in our press release and 10Q. In the third quarter of 2023, We achieved $972 million in total revenues, driven by continued growth of our key products in both neuroscience and oncology. We're pleased with the continued trajectory of ZyWave during a period when high sodium oxidate competition has been introduced into the market. Coupled with Epidiolex Momentum, the strong growth of Rylase, and solid performance of Zepselca, total revenue increased 3% compared to the third quarter of 2022. Our adjusted net income for the quarter was $340 million, and we reported adjusted EPS of $4.84. The decreases in ANI and EPS this quarter compared to the same period last year were driven primarily by an increase in R&D investment, partially offset by higher revenues and lower effective tax rate. The majority of our R&D increase this quarter is related to ZanyDataMap. Our adjusted EPS also reflects a lower number of diluted shares outstanding compared to the same period last year. We continue to generate significant cash from our business. We recorded $307 million of cash from operations in the quarter and $925 million through the first three quarters of the year. Our strong overall financial position means we have significant flexibility to invest in priority commercial and R&D programs, as well as corporate development opportunities. Turning to slide 26, we have raised the midpoint of our full year 2023 revenue guidance to a range of $3.75 billion to $3.875 billion. As a reminder, we raised revenue guidance last quarter and have continued our strong commercial execution on key growth drivers, ZyWave, Epidiolex, and Rylase. Our guidance represents year-over-year total revenue growth, even as we face the headwind of OxyVate competition. Our 2023 neuroscience guidance remains unchanged and reflects expectations of continued growth of ZyWave and Epidiolex offset by the expected decline in ZyREM with a revenue range of $2.715 billion to $2.825 billion. With regard to high-sodium authorized generics, royalties from high-sodium oxidate AGs were $29 million in third quarter of 23 which reflect a significant increase over the first half as we move to a six-month fixed-rate royalty for the AG agreement with HCMA. The royalty rate will increase again after this six-month period, at which point it will remain fixed for the duration of this agreement. AG royalties are included in our neuroscience guidance. We have raised the midpoint of our 2023 oncology revenue guidance to a range of $975 million to $1.05 billion. which reflects 16% growth at the midpoint. I'd like to draw your attention to several items on slide 27. Our strong cash generation, combined with our disciplined capital allocation, provides us with flexibility to make strategic investments in our business. This includes an increase to our R&D guidance and an increase to the midpoint of our SG&A guidance, while remaining on track to deliver ANI growth in 2023 compared to 2022. Our updated guidance midpoints equate to an adjusted operating margin of approximately 44%. While margins will vary over time, we believe we are well positioned to achieve our vision 2025 goal of driving a 5% improvement from 2021 to 2025. One note regarding ANI as we look to the future. In the third quarter, we benefited from a lower effective tax rate primarily driven by tax benefits derived from our increased R&D expenditure, expiration of statutes of limitation, and changes in product mix. We expect that our ETR will increase next year as global tax rates are harmonized. Consistent with our capital allocation strategy, our enhanced investment in R&D is a direct result of our success in diversifying and advancing our pipeline. We've increased our R&D guidance for 2023 to a range of $780 million to $820 million, reflecting our confidence in our pipeline programs. In particular, we are making substantial investments in Xanadatamab to more aggressively pursue development opportunities that we believe will benefit patients and create long-term value for JAVS. Looking at SG&A, we are updating our guidance to a range of $1.065 billion to $1.105 billion as we invest in a disciplined manner to drive further growth in key brands. We believe there is tremendous unrecognized value potential in our stock. We therefore continued share repurchases under our existing repurchase program. In the third quarter, we completed approximately $75 million of share repurchases. At the end of the third quarter, approximately $261 million remained available for share repurchases under our current plan. Importantly, given our strong overall financial position, we are able to include share repurchases in our capital allocation strategy without compromising our ability to execute business development opportunities and invest in our innovative R&D programs. Additionally, we are reiterating our adjusted EPS guidance of $18.15 to $19. I'll conclude our prepared remarks on slide 29. Our top-line performance this quarter was driven by focused execution and strong commercial results, evidenced by the durability of our Oxibate franchise, continued growth of Epidiolex, and strength of our oncology business. We continue to advance our pipeline, invest in long-term growth, and we expect up to five late-stage data readouts through 2024 that have the potential to further diversify and transform our business. We remain focused on strategic capital allocations, With our strategic investments expanding product portfolio, R&D progress, and focus on operational excellence, we believe we are well-positioned to achieve Vision 2025 and deliver further diversification, sustainable growth, and enhanced value to patients and shareholders. That concludes our prepared remarks. I'd now like to turn the call over to the operator to open the line for Q&A.

As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. We ask that you limit yourself to one question. Your first question comes from the line of Jessica Fai from JP Morgan. Please go ahead.

Hey, guys. Good afternoon. Thanks so much for taking my question. This might be a little tricky to respond to, but recently there were some headlines stating that Jazz might be exploring various strategic options, including breaking up the company or sale of a business unit. I generally think of Jazz as more likely to buy a business than to sell a business, but is there anything you want to clarify for folks with respect to how you're thinking about business development and the strategy? Thanks.

Jess, welcome back. Good to hear your voice. So I'll point out that Jazz made no such announcement. There were A story in one place with unnamed sources. I'll also remind you as an Irish takeover panel company that we can be forced to clarify publicly if there's something actually going on in pretty short order and that did not happen. We remain very focused on corporate development as a way to grow our business. That's been part of our strategy historically. It's specifically called out as part of Vision 2025. And we think the strong financial position of the company, ending the quarter with $1.6 billion in cash, the strong cash flow of $925 million over the first three quarters, the substantial continued deleveraging of the company put us in really good position to continue to put cash to work to grow our business.

Your next question comes from the line of Jason Gerbery from Bank of America. Please go ahead.

Hey, guys. Thank you for taking my question. I guess mine will be around the evolving competitive landscape in the Oxivate space with Loom Rise. They had an update this morning about 1,000 patient enrollment forms. Just curious, your guidance suggests that nothing's really changed relative to your assumptions regarding competition from the start of the year till now. But just curious, you know, if you would, you know, if you're seeing anything in the marketplace worth noting, or if you think that ultimately maybe the competitor is just getting more of its business from either naives or patients who have discontinued ZyWave historically, that would be helpful. Thanks.

Yeah, Jason, thanks for the question. And before I turn it over to Kim for a little more color, I'll just say in your comments, you're exactly right that we foresaw competition in the Oxibate space this year, both from authorized generics of Xyrem and the branded fixed-dose high-sodium product and built that into our guidance. We've actually raised our neuroscience guidance last quarter and continue to perform in line with our guidance. But, Kim, maybe you could give a little more color on the oxibate landscape.

Yeah, sure. So, yes, ZyWave is still growing, and Narcolepsy we're pleased to see, you know, despite the additional competition from the high-sodium oxibates were introduced this year. You know, our growth in Narcolepsy has slowed in line with our expectations, you know, in our own forecasts. as there remain fewer available patients to transition from Zyrem, given our early success with Zywave. And some patients have decided to go ahead and give FT218 a try. Generally, in terms of what we're hearing from healthcare providers right now is that they're still telling us that they place a high value on both the low sodium value proposition of Zywave, as well as on the fact they've gotten used to being able to individualize or customize the dosing regimens for individual patients depending on their needs. Many ACPs have expressed an interest in gaining eventually some experience with the new fixed-dose high-sodium oxibate product. And where they're typically doing that, they're telling us, you know, is among those patients that have come in and really insisted on giving it a try. So, overall, you know, we remain, you know, very confident in the strength and durability of our oxibate franchise. We do see ZyWave continuing to be the oxidative choice now and in the future, and it is still the only one approved for treatment of idiopathic hypersomnia. And lastly, when we continue to look at our data in terms of those portion of patients who are naive to oxidate treatment, they're being started on their first oxidate treatment, the vast majority of these patients continue to be being initiated on ZyWave. So we think that's, you know, very strong evidence that overall overwhelmingly physicians still feel it's most important to focus on the patient's long-term health.

Your next question comes from the line of Ami Fadia from Niedermann Company. Please go ahead.

Hi. Good evening. Thanks for taking my question. Mine is on JCP150. Can you talk about sort of mechanistically why you think that BCP150's mechanism is perhaps differentiated than irreversible PHY inhibition? And with regards to your ongoing trial, with regards to the CAHPS5 endpoint, what would you say, you know, what would you consider as a clinically meaningful change that you would like to see? And with regards to your trial, can you talk about powering, you know, should we expect to see a significantly meaningful result? And if you could go back and explain why the lower dose, why you have two doses in the trial and not just the higher dose.

Thank you. Rob? Yeah, thanks for, thank you for the question, Ami.

So starting with the first part of that around why the mechanism is differentiated, I would first say that we think we're interested in JCPOA1-5-0 because of PHA as an underlying part of the pathophysiology potentially. So we know that PTSD patients have low levels of anandamide, and by inhibiting PHA, you can raise those levels. So we think this is one of the mechanisms that potentially directly addresses the underlying pathophysiology. We think we're differentiated in being irreversible, as you mentioned, because you can create a more sustained pha inhibition. In other words, you ultimately have to resynthesize pha in order to get back to baseline levels. It just allows for consistent inhibition of pha, which we think is more important. In terms of, you know, clinically meaningful, You know, we haven't said what we're necessarily striving for in this, but you could certainly look across different mechanisms and see what, you know, what has been achieved in terms of the CAHPS-5. In our trial, we think we're certainly well-powered, you know, for a clinically meaningful effect, given the 270 patients that we've enrolled across those three arms. And to your point about a low dose and a high dose, in this trial we included two dose levels because we wanted to evaluate what we felt was based on prior receptor occupancy data, full constant inhibition of PHA versus a lower dose that would be, you know, just under that full inhibition. And that sort of brackets the range of exposures that you might want to see, allows us to collect safety data. in that range and then would put us in a better position to select doses for a pivotal trial if and when we move forward with that.

Your next question comes from the line of Mark Goodman from LearRink Partners. Please go ahead.

Yeah, I was hoping you could give us a little flavor on what's going on with Zebzelka. It seems to finally have grown after many quarters. It's just seeming flat, so if you could just give us a little color there. And then could you just give us the total OxyBait patient number for us, please? Thanks.

Yeah, I'll take the second part of the question first, and then, Kim, maybe you could jump in on Zebzelka growth, which I agree looked really nice this quarter. On total oxidative patients, we've stopped giving that number. As you noticed in the royalty revenue off the AG of $29 million during the quarter, that has jumped up significantly. And that revenue, of course, is derived from patients that would not be included across Zywave and Zyrem. So essentially, total patients doesn't track to our revenues anymore because that Zyrem plus Zyrem royalty is a little bit distinct. We've continued to give patient numbers in narcolepsy and idiopathic hypersomnia as we exit a quarter to give you a sense of growth of the ZyWave asset, but I'll just point out total revenues and total patients don't track the way they have historically for Jazz until this quarter. In the first half of the year at the much lower Royalty rate on the AG and earlier at the AG launch, the difference wasn't significant. It is significant now and will only continue to be. On Zepzelka, I'll just point out we're really happy with this deal. When I talk about why we do corporate development and add new growth assets to the company, I think Zepzelka having generated over $800 million in revenue since launch has shown that to be a deal that was highly accretive. and continues to reward our investors. So, Kim, you want to talk about dynamics there?

Yeah, really happy with the 11% year-over-year growth we saw in the third quarter. And, you know, we'll say that the increased demand this quarter is partially attributed to the temporary platinum chemotherapy shortage that unfortunately the U.S. is going through. which did lead, you know, ZipZelta to be used in some patients who oncologists may have historically re-challenged with another round of platinum therapy after their first-line platinum treatment. And we've really been emphasizing for some time that this is where the results with ZipZelta are, you know, most impressive, but it's been, you know, difficult getting some of the customers to make this switch. We did roll out this past few months some new data that we hadn't shared with customers before in this platinum sensitive patient population to help them feel more comfortable using it. We shared the secondary endpoint results we had around overall survival and progression-free survival. So I think the combination of that data with the shortage of chemotherapy did lead many customers to give it a try there. And largely, we think that they're seeing positive results that even when the platinum supply shortage continues to improve, which we hope it does, we do anticipate that some of these healthcare providers Some of them may revert back to their previous practice of re-challenge with platinum. Others may now reach for ZebZelka more often. In addition, we saw many HCPs getting experience with this product in the community and outpatient setting. And we're really impressed with the ease of administration as well as the clinical profile. Remember, ZebZelka doesn't require any inpatient service. monitoring. So again, that business that we think, you know, may continue to be a bit sticky after the shortage. So overall, you know, ZipDelta is well established as the treatment of choice and second line small cell lung cancer. And we think we've gotten some nice momentum here from this market event. But we really do see most of the opportunity for future growth in this brand coming from the first line setting. And we've got, you know, a phase three trial going on there now.

Your next question comes from the line of Balaji Prasad from Barclays Capital. Please go ahead.

Hi. Thank you for the questions. Looking at what's not covered on Epidiolex, could we, unlike the well-defined patient populations in narcolepsy or IH or oncology, this is one where the market sizing still seems incomplete? So can you discuss the opportunity in the adult settings as you spoke about this afternoon and the additional ex-U.S. launches and what would this translate to in terms of an expansion of market size? Maybe an extended related question as you continuously call out that it's well on its way to a billion dollars. What can we expect beyond this in terms of longer term growth trajectory? Is it going to be mid single digits or high single digits? How can we think about it? Thank you.

Thanks for the question Balaji. I'll jump in on that one. So I'll just note as you know we don't provide product specific guidance, but I will comment on the broader opportunity and then I'll turn it to Kim to talk about some of the very specific dynamics that we're seeing in the U.S. So when you think about the growth that we saw in the current quarter, We had 9% year over year, but importantly, we had 14% if you look at the first nine months of this year compared to the prior period. So we are confident we're on track for blockbuster status and in line with our vision 2025 expectations. And I think when you think about epidiolex, there are three areas to keep in mind in terms of important growth drivers. One, this is a global product. As you've noted, that means global opportunities for expansion and growth were now approved and reimbursed in 24 different countries. We have the pivotal study. underway in Japan, which we expect to read out at the end of next year. And then we have strong underlying demand growth also in the U.S., which Kim will comment on in a moment. We also view Epidiolex, continue to view this as very much a long-lived, durable asset. We have a robust portfolio of Orange Book-listed patents, the majority of which go out to 2035, but also 2039. We do see this as something that is very much a long-term revenue driver for the company. And then third, perhaps most importantly, it's a highly differentiated treatment. Epidiolex is very well characterized and tolerated, which of course lends itself well to polypharmacy, which is the norm in this area. We've generated significant data around its use, which HCPs are finding helpful. And this really underpins our investment in data such as the EPICOM study that I mentioned before. And all three of these main factors give us collective confidence in that long-term potential. Specific to some of the ex-US dynamics, we had a number of launches in different countries and across different indications across 23, and we expect that to continue in 2024. So, maybe I'll turn it to Kim to comment on adults' long-term care segments and other drivers of demand.

Sure. Thanks, Renee. So, yes, I think we've talked about for the last year or so, we've really been putting, I'd say, an increased focus on the adult segment there, and particularly as it pertains in CUS to the long-term care setting where many of the adults with these conditions And we're seeing really nice growth there in that population and disproportionate to what we're seeing in the brand overall. So that is a nice growth driver. But across both the pediatric and adult market, there are, I'd say, three other things that are really driving the growth and I think speak well for the future. Renee mentioned the data. We've talked quite a bit with you about the data. We are sharing the data regarding combination with Clobizam and the Beyond. seizure benefits of Epidiolex, particularly as it relates to behavioral improvements and cognition improvements, specifically because we're trying to expand the definition of efficacy and really differentiate the brand from existing products today. And I'd say both of these pieces of data really are eye-opening and do a great job of that, you know, in the marketplace, particularly that beyond seizure data in the LGS and Dravet space. The third one is that we have done a really nice job, I think, over the last couple of years of expanding, I would say, or improving the quality of access to Epidiolex. Pretty much since launch, we've had a very high percentage of commercial lives that have coverage, as well as Medicaid lives that have coverage for Epidiolex. But what we've really seen in the last couple of years, and this year in particular, is that the quality of that coverage is improving in terms of the utilization management criteria becoming less burdensome, the utilization management criteria being broader in terms of providing easier access to epidiolex for a broad range of patients with refractory conditions. And ultimately, we are hearing from our customers' feedback that they are finding it easier to get their patients on EpidioLix, which, of course, only reinforces, you know, their confidence in prescribing it. And then lastly, you know, Persistency has been really a hallmark of this brand since it was launched, you know, similar to Oxibate. Once patients get through the early titration period, they tend to stay on EpidioLix for a long time. But despite this, we still have seen rooms for opportunity to invest in improving that Persistency, both at the beginning of the treatment and you know, when patients have been on it for some time and we're seeing nice improvements there, particularly if we can get, you know, ACPs to support patients and get them up through that titration period. Overall, you know, we see them stay on the drug for a pretty long time. So lots of things there to point to as current and I think future growth drivers in the U.S.

Your next question comes from the line of Akash Tiwari from Jefferies. Please go ahead.

Hi, thanks for taking our questions. This is . So, we have one quick question on . So, you are guiding to data for JZP441 in Health and Volunteers by year end. I guess, what level of MWT do you need to see to move this program forward? Also, what makes you feel comfortable about the liver tox profile? Thanks.

Sure. Should I take that one, Bruce? Yes, please.

Yeah, so, you know, we have certainly some benchmarks with other erection agonists that are in the clinic. So, in terms of what we'd be looking for in the healthy volunteer MWT study is, you know, comparable efficacy. And I think that model translates pretty well into patients. And so, we have the benefit of benchmarking across a range of doses that we're evaluating versus other compounds. not only in the erection class, but also other ways promoting agents. So I think we'll have a good sense of, you know, when we hit a level of efficacy that we're confident, you know, moving forward with.

And then, sorry, the second part of the question was?

Liver tox profile. Oh, liver tox, yeah. Yeah.

We don't think the liver toxicity is a class effect, and we think based on what has been said from the Takeda compound that it's likely to be related to that specific structural class. And so, even at the time that we unlicensed from Sumitomo, we knew we were operating in a different chemical series. And so, we don't think any of that risk is carried over. In our preclinical toxicology studies, there was no concern based on liver toxicity either.

Your next question comes from the line of David Amselen from Piper Sandler. Please go ahead.

Hey, thanks. So, also had a question on the orexin agonist JZP441. So, we've seen some early tolerability data at world sleep for the other compounds, urinary urgency being one that comes to mind, also visual disturbance. I wanted to pick your brain on how you're thinking about those as, you know, being on target effects or something else going on and just your general level of, I guess, vigilance is the right word, on those kinds of AEs? Thanks.

Yeah. So, I mean, look, in the early days across these compounds, we have a lot to learn. But I would say that therapeutic index is going to be very important, whether that be to what we perceive as on-target effects, like the urinary frequency that you mentioned, or potential off-target, like hepatotoxicity. The therapeutic index is going to be important. Part of that may relate the half-life of the compound. I mean, if you have something that is too long a half-life, you may see residual effects into the evenings, causing even insomnia, which is obviously counterproductive from the therapeutic intent. And so, having a favorable half-life and being able to dose in a way that creates therapeutic index, you know, for either on target or any potential off-target toxicity will be important. And that's part of what we're doing in our healthy volunteer studies, both of the single dose as well as the multiple dose. It's really exploring the therapeutic range and various dosing that will allow us to select then an optimal regimen to be evaluated in patients.

Your next question comes from the line of June Lee from Truist Securities. Please go ahead.

hi this is jeremy on for june thanks for taking our questions how are you looking at the oxybeat market evolving both in terms of xy waving xyrem and has the eg impact been as expected thanks yeah i'll i'll start uh on that one and just say again uh the way things have played out this year has been very much in line with our expectations you know xyrem has been declining uh for years now largely because we've been successful with Zywave, giving patients a healthier lifelong treatment option. That decline has continued this year, obviously, complemented by having new entrants in the marketplace. But that revenue stream for us is now very small relative to our total business at about 16% of our revenues this quarter, if you add up Zyrem and our royalties on the AG. And we're focused on growing Zywave. We think the product has great durability as an asset. We are very excited about the opportunity to continue growing the idiopathic hypersomnia market. We know there are more patients to reach. We know diagnosis can improve. And as physicians gain more experience using this product and seeing the benefit in their patients, the mirrors, what we saw in clinical trials, You know, we think that's very favorable for their intended increased use of the product. And we still think there's growth left in the narcolepsy market. We haven't seen much of a change in the overall growth dynamics since the Avidel launch, but it's usually true that having multiple companies out talking about, you know, a disease that is sometimes underdiagnosed can be helpful. So we're, you know, we're excited to continue to grow ZyWave.

Your next question comes from the line of Gary Notchman from Raymond James. Please go ahead.

Hi, good afternoon. First, can you talk about Rileys expanding in Europe and specifically your expectations on how much that product will contribute ex-U.S. over time? You know, what's a reasonable target there? And then just on your point, Bruce, on Zywave in idiopathic hypersomnia, how concentrated is the current prescribing base And what are some of your initiatives to try and expand that further? And at what pace do you think you'll be able to do that to tap into more of those patients?

Thank you. So two different questions.

Maybe I'll hit Zywave first and say the prescriber base for IH is very overlapping with the narcolepsy prescriber base, about 90%. You know, as you heard in our comments on the call, we are increasing our effort behind IH to have some folks focus on that, specifically get out to some physicians who may be a little less familiar with using Oxibate to support them. But the prescriber base is very similar. Renee, you want to talk about Rileys a little bit?

Yeah, I'm happy to. So we're really pleased to be able to make this product available in Europe. And as we stated, we expect to begin that rolling launch later this year. I will stress that the market dynamics are very different in Europe versus the U.S. So in Europe, we have Erwin Ace on the market as a competitor. We have quite a different pricing scheme and then certain steps to take from a market access perspective, to ensure that Enrylase is secured on protocols, which will take some time. So taking all of these things in consideration, I would say being on the market in Europe will provide growth, but characterize that as relatively small and something that would be achieved over time relative to the overall opportunity in the U.S. And then on the topic of the U.S., maybe I'll turn to Kim to provide a few comments of what we're seeing there.

Oh, on IH or on Rylase? I can do both.

On Rylase, yeah.

Oh, on Rylase specifically. Okay, great. Thanks. I'm happy to do that. So, yeah, we're, you know, we continue to be, you know, just very pleased with how this product has performed. You know, we never really had the opportunity to understand what the peak of this market could be given it was always supply constrained. So, you know, we've obviously don't give product-specific guidance. We haven't talked about the peak, but we're, you know, just continuing to see strong demand, which we think reflects significant patient need. I think Renee mentioned in the presentation that some of the growth drivers we've seen and the demand that's being driven was expected, and some of it was a bit unexpected. And in this unsupply constrained market, you know, we did expect to see health care providers switching patients, you know, more rapidly due to, you know, hypersensitivity responses. But we are also seeing quite a bit of switching going on in terms of other types of treatment related issues from E. coli based asparaginase. In addition, you know, again, while we don't promote it that way and we don't promote the product for first-line use, we are seeing, you know, a fair amount of first-line use based on the advantages of this product having a forward-acting profile relative to current first-line asparaginase therapies and the concern that, you know, some providers have, particularly in some patient populations like the adult patient population around, you know, the potential for treatment-related issues. And then lastly, we've been seeing some really nice growth in the overall efforts we've made this year in the adolescent and young adult market. We're seeing this population starting to increase usage in these patients. And as I mentioned, this is one of the places where we see them using the products a little bit differently than we had originally anticipated. So overall, the market has embraced it, especially in the pediatric market where it's been adopted universally in pediatric protocols, but really seeing, you know, increased usage of erwinia-based asparaginases in the adolescent and young adult markets of Rylades.

Your next question comes from the line of Gregory Renza from RBC Capital Markets. Please go ahead.

Hey, good evening, Bruce and Tima. Congrats on the update, and thanks for taking my question. Bruce, maybe just a more specific one on the competitive dynamics of OxyBait that you've described this evening. Just curious how you would put into context the value or maybe the value lost of that LumeRise FT218 patient. If that is, how important is that patient who's tried LumeRise or was trying LumeRise and the corresponding prescriber, how important is that patient to the market strategy that Renee laid out? Would you see, if anything, an opportunity to capture or maybe recapture such patients as that option becomes established in the marketplace? Thanks again.

Yeah, I love the way you ended your question, which is right where I was going to go with my answer, which is we absolutely expect a new product to get some use. But we think all high-sodium patients, be they on Xyrem, AG Xyrem, or the Lumerize product, Our potential future ZyWave, you know, as we saw from the data we shared earlier this year at the neurology meeting, we can see even in as little as 180 days an increase in hypertension diagnosis or initiation of antihypertensive therapy when starting on a high sodium oxibate So, you know, as physicians and patients have already discovered, this matters, and we believe that will continue to be important, making ZyWave the oxidative choice.

Your next question comes from the line of Charles Duncan from Cantor Fitzgerald. Please go ahead.

Hi, this is Elaine Kim. I'm for Charles. Congrats on the quarter, and thank you for taking our questions. Regarding PTSD, what are your perspectives on the unmet need and the potential for psychedelic medicine, such as MAPS MDMA and possibly COMPASS's psilocybin-based therapy? And where do you see JCP-150 fitting in the emerging treatment landscape? Thank you.

Rob, you want to jump in on that? Sure.

So, you know, when I think about a treatment like MDMA and what is associated with that in terms of the support that one needs, ultimately I think that that's going to be appropriate for a subset of the population. PTSD is overall very, very common. And so, we think JCP150 could potentially be much more, you know, broadly applicable.

Your next question comes from the line of Jeff Hung from Morgan Stanley. Please go ahead.

Thanks for taking my question. What's the bar for success in the essential tremor study, and can you talk about what gives you confidence that the phase 2B will read out positively? Thanks.

Yeah, I think we have a good sense of what's a meaningful change on the Tetris

and more focused on ADL and a subset of the performance scale as well. And so, from our phase two and from interactions with KOLs and FDA, we have a good sense of what's, you know, what's going to be a meaningful change there. And you've seen, you know, other studies that have been published, you know, that could be relative benchmarks. You know, why do we think that JZP385 is differentiated? Well, a couple of things. One is that it's a state-dependent inhibitor, so it selectively acts on active ion channels, which should ultimately create a better therapeutic index. We have a once-daily formulation, and based on our prior studies, we selected a three-fold dose range for the Phase IIb, 10, 20, and 30 milligrams, which I think has really allowed us to kind of push that dosing and exposure up to really get maximal efficacy. So, we think it's differentiated on that basis. And, you know, hope to see pretty robust efficacy across that dose range.

Your next question comes from the line of Mohit Banzal from Wells Fargo. Please go ahead.

Great. Thanks for taking my question. So, I have a question regarding the optimistic franchise. So can you comment on if there is anything going on with the pricing of CyWave with Lumerize and Oxide Generics on the market? I'm asking because this is probably the first time since the launch of AGs we have seen a sequential decline in this franchise. So just want to understand how do you see growth to get to the 2 billion number that you talked about in 2025? Thank you.

So the quick answer on pricing is there has not been a significant change in terms of sort of our revenue per patient in the past few quarters. In terms of the revenue decline, that's driven by a loss of Xyrem revenues, which, as I've said, have been going down for a long time and are now representing a smaller and smaller portion of our overall revenues while ZyWave continues to grow. So those two things at present, as was built into our guidance for the year, you know, essentially are offsetting each other to some degree. But, you know, our focus is on growing that ZyWave business in narcolepsy and importantly in idiopathic hypersomnia, even as we see royalty income off the AG continue to increase.

Your next question comes from the line of Troy Langford from TD Cowan. Please go ahead.

Troy Langford, Hi. Congrats on all the progress in the quarter, and thanks for taking our questions. Just with respect to the opportunity with XANA DataMap, I guess what else do you think you need to check off that list before you can complete the regulatory submission for the product in H-124 or H-1 next year? Related to that, do you all think that you would need to significantly amplify your current oncology sales force to effectively commercialize the product?

Yeah, I'll jump in on that 1 and just make some comments about our level of excitement about Danny and then ask Rob to comment on the path forward from. a regulatory perspective. So as we mentioned on the call, we are extremely excited about this opportunity. This is a highly de-risked asset, a global asset for us, and then also one with significant revenue potential. We talked a bit about the data that's been generated to date since doing this transaction. We continue to be impressed with what we're seeing in terms of just robust anti-tumor activity in HER2. That's in both monotherapy and in combination with other agents, and that gives us a ton of confidence to put both significant investment behind the molecule, but then also to outline the opportunity as having peak revenue potential of over $2 billion. In terms of the near-term need from a commercialization perspective, we don't believe that this is going to require significant augmenting of our current field force. We believe that that will be quite efficient. And of course, we are focused on going to market first with BTC, as Rob outlined, and then we'll build from there. So Rob, you want to comment on development?

Yeah, I think the specific question was what else is needed to complete the BLA submission for BTC. And it's just the usual components. As you might expect, some of those components are going to be available sooner than others. And with Breakthrough Designation, we've been given the opportunity to do a rolling submission. That allows us to submit components as soon as they're ready to give the FDA sort of a head start on reviewing those components. And then, as we said, within the first half of the year, expect to be able to provide everything that's needed to complete that submission.

And we have no further questions in our queue at this time. I will now turn the call over to Bruce for closing remarks.

Thank you so much. I'd like to close today's call by recognizing our JAWS colleagues for their efforts in delivering new therapeutic options to patients. and also thank our partners and shareholders for their continued confidence and support. Thank you all for joining us today.

This concludes today's conference call. Thank you for your participation and you may