Jazz Pharmaceuticals plc

Good day and thank you for standing by. Welcome to Jazz Pharmaceuticals' second quarter 2026 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your first speaker today, John Bluth, VP and Head of Investor Relations. Please go ahead.

Thank you and good afternoon everyone. Today, Jazz Pharmaceuticals reported its second quarter 2026 financial results. The slide presentation accompanying this webcast is available on the investor section of our website along with the press release and quarterly report on form 10-Q for the second quarter ended June 30, 2026. On the call today are Renee Gala, President and Chief Executive Officer, Sam Pearce, Chief Commercial Officer, Robbie Iannone, Global Head of R&D and Chief Medical Officer, and Phil Johnson, Chief Financial Officer. 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, regulatory and commercial milestones, 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 these risks and uncertainties described in today's press release and under the caption risk factors in our annual report on Form 10-K for the fiscal year ended December 31st, 2025. We undertake no duty or obligation to update our forward-looking statements. As noted on slide three, we will discuss non-GAAP financial measures on this webcast. 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. Now, I'd like to turn the call over to Renee.

Thanks, John. Good afternoon, everyone, and thank you for joining today's conference call. We delivered another outstanding quarter, generating record revenue of $1.2 billion, representing 16% year-over-year growth. The momentum we've built in the first half of the year provides us with confidence to raise our full-year revenue guidance. Our results reflect an intense focus on aligned execution across our diversified portfolio, sustained demand of our commercial products, and progress in advancing our long-term priorities for value creation. As we approach a significant milestone with the August 25th Seduca Day for Zany DataMap in first-line HER2-positive metastatic GEA, our commercial, medical, and market access teams are fully prepared to successfully launch Zany DataMap. We're entering a new phase of growth created by the opportunity to deliver clinically meaningful outcomes for patients facing this highly aggressive, difficult to treat disease. Our consistent execution reflects the focus strategy we outlined at the beginning of the year. Expand our leadership in key therapeutic areas, advance differentiated innovation, and create durable long-term value. Across the business, our teams are delivering key therapies to patients advancing Xanidatamab and leveraging our financial strength to invest in both internal R&D and external innovation. An example of this approach is our preclinical research collaboration with Abcelera, which leverages their T-cell engager platform to discover novel multi-specific antibodies. This agreement directly complements our oncology expertise and supports our refined rare disease strategy. These exceptional results from the quarter position us to sustain our momentum while delivering meaningful benefits for patients and driving robust returns for our shareholders. With that, I'll turn the call over to Sam to share more details on our commercial performance.

Thank you, Renee. Our commercial teams delivered another impressive quarter of revenue with 16% growth across the portfolio and double digit growth from each of our key promoted brands. This performance is a result of focused investment and targeted impactful execution, which is driving sustained momentum across our increasingly diversified portfolio. I'll begin on slide seven with rare sleep. DyeWave's profile as the only low sodium oxibate on the market continues to resonate with physicians and patients. DyeWave net product sales increased 13% to $471 million in the second quarter of 2026 compared to the second quarter of 2025. Supported by targeted healthcare provider and patient-focused digital campaigns, our field execution continues to expand the narcolepsy and idiopathic hypersomnia markets and deliver sustained new patient ads. These efforts emphasize Zywaid's differentiated low sodium profile and the efficacy it provides by treating underlying disrupted nighttime sleep and addressing daytime symptoms for patients living with narcolepsy and idiopathic hypersomnia. Demand for ZyWave remains robust with approximately 525 net patient additions in the quarter. This brings our total active patients to approximately 17,125 representing more than 12% year over year growth. This momentum is supported by our targeted investments in high touch patient support services such as our field nurse educator program which deliver differentiated support to help patients achieve optimal dosing and sustained treatment. This first half performance underscores the durability of our sleep franchise with limited impact from high sodium generics. Whilst we will closely monitor second half market dynamics including generic availability, and potential new product launches, our confidence in Zyway's foundational role is unwavering. Its clinical profile remains differentiated as the only low sodium oxibate and the only FDA approved option for IH patients. Moving to slide eight and Epidiolex. Epidiolex delivered another outstanding quarter with net product sales growing 16% year-over-year to $292 million, driven primarily by robust underlying demand. This momentum is fueled by our field team's ongoing success in educating HCPs and caregivers on Epidiolex's broad spectrum efficacy and its meaningful beyond seizure benefits for new and existing patients. Concurrently, we are actively expanding the Epidiolex franchise. While Rob will cover our clinical expansion into new treatment-resistant seizures, I want to highlight a critical lifecycle initiative, our novel capsule formulation. Designed to unlock additional utilization within our approved indications, the capsule targets deeper penetration in certain segments of the adult patient population. By offering this convenient alternative alongside our oral solution formulation, we aim to improve accessibility and compliance for adult patients while firmly reinforcing our long-term leadership in the anti-seizure market. Turning to our oncology portfolio, we are extremely pleased with the ongoing launch of Zyhera in BTC as shown on slide nine. In the second quarter of 2026, Zyhera generated $15 million in net product sales Since launching in second line BTC, we have rapidly established clinical leadership, achieving more than 50% of the addressable market share in the US. This clinical momentum is driven by deepening utilization in academic centers and expanding adoption across community settings, supported by highly consistent, positive, real-world prescriber experiences. Critically, our success in BTC served as a powerful commercial foundation for our next major growth phase in GEA. Because there is significant direct overlap between existing BTC and GEA treating accounts, our commercial infrastructure is fully primed. On slide 10, you can see how our launch readiness framework is designed to drive rapid uptake. Our commercial footprint is highly optimized. with over 90% target physician overlap, allowing our team to rapidly generate clinician excitement and demand. And this enthusiasm is rooted in Danny Datamab's exceptional clinical data, specifically an unprecedented median overall survival exceeding two years, establishing it as the potential preferred backbone in HER2 positive GEA. To support immediate clinical adoption at launch, we've submitted this data to key oncology pathways, and we'll leverage our already established permanent J-code to minimize reimbursement barriers. Backed by our robust Jazz Cares patient support program, we are fully prepared to deliver seamless access to patients upon approval. Turning to slide 11 and Medazo. Medezo generated $48 million in net product sales in the second quarter of 2026, representing remarkable progress since our launch in August of last year. Driven by highly coordinated, disciplined execution, more than 600 patients have now been treated with Medezo through the end of the second quarter. To sustain this upward trajectory, we initiated additional non-personal promotion and peer-to-peer speaker programs in the second quarter. These initiatives are designed to educate community-based physicians and expand our reach to ensure timely referral of patients to academic centres of excellence. On the diagnostic front, while biomarker testing is already high in high-grade gliomas, we are actively working to establish reflexive testing across all gliomas. This systematic approach is critical to ensure every H3K27M patient is identified early and referred to targeted care. To support this, updated NCCN guidelines now endorse liquid biopsy for the H3K27M biomarker. This represents a major milestone that broadens diagnostic pathways, reduces patient risk, and accelerates time to treatment. Finally, Medezo continues to benefit from robust, highly favourable payer coverage. Combined with our dedicated patient support services, we are exceptionally well positioned to maintain this strong commercial momentum. Moving to slide 12 and Zepzelka. We are very pleased with Zepzelka's performance this quarter, achieving $106 million in net product sales, a 42% year-over-year increase. This robust growth was driven by highly positive prescriber feedback and rapid adoption in the first line maintenance setting, which more than offset the anticipated tapering of our historical second line business. The strength of our Mforte trial data clearly demonstrates that Zepzelka's greatest clinical value is in early intervention in combination with a PD-L1 inhibitor in the first line maintenance setting. a consensus recently reinforced by its elevation to a category one listing in the NCCN guidelines. Because metastatic small cell lung cancer progresses so rapidly, reaching patients earlier in their journey is critical. Later roles will provide an update on the second line indication. Overall, we are very pleased with the commercial performance across our portfolio in the second quarter. and we remain focused on sustaining this momentum throughout the remainder of the year. With that, I'll now turn the call over to Rob to provide an update on our pipeline. Rob?

Thanks, Sam. I'll start on slide 14. This is a very exciting time at Jazz, driven in part by the August 25th Bidoofis 8 presented data map. The phase three Horizon GEA-01 trial results were recently published in the New England Journal of Medicine. further characterizing the efficacy and safety profile of Xanadatamab in combination with chemotherapy with and without the PD-1 inhibitor Tizolizumab. Publication in the New England Journal of Medicine underscores the clinical significance of these results and we believe will support awareness and adoption of Xanadatamab among oncologists treating GEA patients. We also presented subgroup data at ASCO confirming that the Xani and Tisley combination delivers a consistent survival benefit irrespective of PD-L1 tumor expression. A 26.4 month median overall survival was observed with the Xanadatumab plus Tisulizumab arm, which was more than seven months longer than the control arm with Trastuzumab. The benefit was seen for all HER2 positive patients, irrespective of tumor PD-L1 status, and represents a remarkable advance for this patient population. Denodatumab plus chemotherapy showed a clinically meaningful survival benefit with a median OS of more than two years and a strong trend towards statistical significance at the time of the first interim OS analysis. We look forward to the upcoming top line results from the second interim OS analysis of this double arm, which are expected in 3Q26. In addition, we have submitted the New England Journal of Medicine manuscript for potential inclusion in the NCCN guidelines. Our belief in Xanadatamab increases as it was recently granted breakthrough therapy designation for adults with previously treated locally advanced unresectable or metastatic HER2 positive colorectal cancer. We look forward to sharing more on our development plans for colorectal cancer in the near term. Turning to slide 15, our R&D programs remain focused on building the next generation of growth drivers through internal innovation and external partnerships. We are leveraging our deep expertise in rare epilepsies to broaden our pipeline and extend the potential benefits of epidiolex, also known as cannabidiol, to more patients with treatment-resistant seizures. We are initiating three new clinical trials, including a phase four trial in adults with LGS, a phase three trial assessing the anti-seizure efficacy in a broad group of developmental and epileptic encephalopathies, and a seamless phase 2-3 trial that will explore the capsule formulation in juvenile myoclonic epilepsy. These new trials build on the phase 1b trial in focal onset seizures that was initiated at the end of last year and the phase 1 trial of JCP-047, a novel molecular entity discovered by Jazz being developed in absence epilepsy. In addition, we submitted an NDA to the FDA for a novel capsule formulation to broaden utilization of Epidiolex in currently approved indications of LGS, DS, and TSC to improve flexibility and provide a new administration option for patients. Moving to oncology and Zypselka. Based on the results of the Lagoon trial and in alignment with FDA, in 3Q26, we will submit for FDA's review and subsequent action a labeling supplement to remove the second line indication. The first line maintenance indication will not be affected. Lastly, on Modeso, our phase three action trial is progressing. Based on the latest estimate of event accrual, We now anticipate that the overall survival interim analysis will be in the first half of 2027. This trial is designed to confirm the benefit of MODESO and support regulatory approval as frontline therapy directly following radiation. We are making meaningful progress across our pipeline and in-house R&D efforts, and we look forward to sharing more updates as our programs advance. Now I will turn the call over to Phil for a financial update. Phil?

Thanks, Rob. Before diving into the financials for the quarter, I'd like to underscore our consistent progress delivering on our rare disease strategy. Our commercial organization is firing on all cylinders and we're making targeted investments to continue our momentum. Our R&D organization is working with urgency to generate practice changing clinical data. highlighted by the Nijam publication of the Zannie first-line GEA results and speed new medicines to market while also expanding indications for our existing medicines to benefit even more patients. And we're deploying capital in a disciplined manner to enhance our growth prospects, most recently with the Abcelera deal. Turning to the financial results for the quarter, I'll start with high-level comments on our non-GAAP-adjusted P&L as shown on slide 17. Please note that our full financial results are available in today's press release and 10Q. The outstanding execution of our field-based teams was reflected in record quarterly revenue of $1.21 billion, an increase of 16% over the second quarter of 2025, driven by 32% growth in our oncology portfolio, 13% growth in ZyWave, and 16% growth in Epidiolex. Moving down the P&L, our non-GAAP adjusted gross margin declined slightly year on year due to higher sales of Zepselka and Medeso, which carry third party royalties. Non-GAAP adjusted SG&A and R&D expenses both grew 11%, with the increase in SG&A driven by higher expenses for Medeso and Zahira first line GEA, and to a lesser extent by investments in key commercial capabilities and digital and AI. While the increase in R&D was driven by higher expenses related to clinical trial costs, primarily related to Zanydatamab. Our non-GAAP adjusted effective tax rate this quarter was moderately higher than our full year 2026 guidance due to shifts in the expected geographic mix of income and expenses. While our shares outstanding for the quarter reflect the accounting effect of our higher share price on our convertible notes and employee stock plans. At the bottom line, we posted very robust non-GAAP adjusted EPS of $5.71, which included IPR&D charges totaling $0.94. Beyond the income statement, I'd highlight that we generated operating cash flow of $824 million in the first half of the year, and during the second quarter, we paid off our 2026 convertible notes. With our strong financial position, we're able to continue to invest in our currently marketed products and our existing pipeline, as well as in corporate development. Turning to slide 18 and our 2026 financial guidance, I'll focus my comments on those guidance elements that have changed since our last earnings call. We now expect total revenues in the range of 4.60 to 4.75 billion dollars. This significant upward revision is largely driven by the outstanding execution of our Zywave field teams driving home the unique benefits ZyWave offers as the only low sodium oxidate. To date, uptake of high sodium generics has been quite limited and we continue to post strong met patient ads. We now anticipate double digit growth for ZyWave in 2026 in rare sleep revenue of between 2.025 and $2.125 billion. Strong first half results of our rare oncology and epilepsy portfolio further support our revised total revenue guidance range. On the expense side, we've modestly increased our SG&A expense guidance. This reflects deliberate strategic investments to build upon momentum in ZyWave and Epidiolex, as well as to drive implementation of our rare disease strategy and our corporate development efforts. Finally, our updated share count guidance is 69 to 70 million shares. reflecting the increase in our stock price since our last earnings call and its accounting effect on our convertible notes and employee stock compensation plans. I'll now turn the call back to Renee for closing remarks.

Thank you, Phil. I'll conclude our prepared remarks on slide 20. Our second quarter results demonstrated the strengths and continued diversification of our product portfolio. delivering record quarterly revenue including a 32% increase from our oncology products compared to 2q25 and consistent execution across our commercial and R&D pipeline. Importantly, we enter the second half of the year with significant momentum highlighted by the anticipated Zani DataMap approval and launch in GEA and multiple upcoming clinical readouts. Building on our proven scientific capabilities and strong financial position, we are making a meaningful impact for patients. Over the past 12 months, we have embarked on a period of rapid and deliberate transformation. I am incredibly proud of the execution by the entire Jazz team during this time and deeply grateful for the trust you have placed in our shared vision. That concludes our prepared remarks I would now like to turn the call over to the operators to open the line for Q&A.

Thank you. Ladies and gentlemen, to ask a question at this time, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 1 1 again. As a reminder, in the consideration of time, please limit yourself to only one question per person. One moment for our first question in queue. Now, first question in the queue coming from the line of Mark Goodman with Lyric. Your line is now open.

Yes, could you guys give us a little more color on Epidiolex? Just give us a sense of was there any inventory in the U.S. or anything strange in the quarter? I mean, what was really just driving it? Were there new indications? Just give us a sense of what's happening here because the quarter was much better than expected. Thanks.

Hi there, Mark. This is Sam. Yes, thanks for the question.

Yeah, very pleased with the continued momentum that we've seen for Epidiolex, 16% revenue growth taking up to $292 billion for the quarter. This is 12% volume growth, which again, just reflects really good, strong demand in both the pediatric and the adult settings. reinforcing our position as the number one branded anti-seizure medication in refractory epilepsy. I think some of this growth is coming from continues to come from our focus on the long-term care setting as you know we've generated some good data there beyond seizure benefits really resonates with adults and we can continue to see good headroom for growth actually in that segment as well. There were no really significant unusual inventory movements, but I'll hand over to Phil if he wants to comment further on that topic.

Yeah, thanks, Sam. Just a note, Mark, XUS, you may recall that in the second quarter last year, we had talked about some one-time pricing adjustments that were made in a couple of the XUS markets that did depress second quarter 2025 revenue. That led to some of the favorability on the compare in the second quarter of this year for ex-US revenue. We also did have a decent effect in this first half of the year coming from FX. That was most pronounced in the first quarter and came down pretty significantly here in the second quarter, but did also help drive a little bit of the ex-US revenue growth.

Thank you. Our next question coming from the line of Jessica Pye with JP Morgan. Your line is now open. Hey guys, good afternoon.

Thanks for taking my question. I wanted to ask about Zannie and just hoping you could speak to your confidence in approval heading into the upcoming PDUFA. There had been some talk about the possibility of maybe approval before the PDUFA date. We're getting pretty close now. So just wanted to hear your confidence there and then maybe related to Zannie. Can you speak to your confidence in the Zannie Doublet hitting on OS with the upcoming interim? Thank you.

So we've been productively engaged with the FDA and it does feel like we're in the home stretch. We're highly confident in the approval. I would still say on or before the PDUFA date, and we are certainly ready to launch. On your second question, around the second interim for the doublet. Certainly we had a great result at the very first interim and certainly we have more power at this next turn. So looking forward to those results in 3Q of this year.

Thank you. Our next question coming from the lineup, Jason Gerber with Bank of America. Your line is now open.

Hey guys, thanks for taking my question. Maybe one for Phil. When you look at the strength of Zywave in the first half, how do you see that carrying over into next year? Should investors look at the outperformance as more or less just the delayed generics and more of a headwind in 2027? Or do you think that this is the strength that offers a rebasing of numbers going into 2027 for Zywave? Thanks.

Yeah, appreciate the question. Definitely extremely pleased with the performance of our field teams driving ZyWave. It really is a pretty astounding and amazing story and really based in the unique benefits that ZyWave offers is the only low psyllium oxidate. We've been seeing this resonate with physicians as well as patients. I think we've continued to see that during this year, probably leading to even slower uptake of generics than we might have originally anticipated. which is leading to some of the raise we have for the guidance this year. I would say that continues to put us in a really strong position as we think about the go forward discussions that we might have with payers as well given that the market continues to highly value the unique position that only Zywave occupies. I'm not ready to sort of give specific guidance on 27 yet. We'll do that when we get to the fourth quarter 26 call early next year. But the momentum we've got gives us increasing confidence in the position that Zywave will have in this market on a go forward basis.

Thank you. Our next question coming from the lineup, Asperma with UBS, Yolanda Smallquin.

Hi, thanks for taking our questions and congrats on the progress here. Maybe just on the GEA market dynamic, can you talk about in terms of how many patients are in the major academic centers versus the large community practice network and if you think that the adoption is going to look different one way or the other in either of these channels?

Thanks.

Yes, thanks for the question, Ash. Yes, we do believe that for the GEA launch, obviously having a strong foundation of support from those academic centers is key. And of course, the data really has been well received by those physicians following the publication in the New England Journal of Medicine, and they're eagerly anticipating the launch. But what will be very important with this launch and something we really appreciate is how important it will be for the community physicians to really understand the data and to quickly adopt Zaheer as the new standard of care in GEA. This is something that we're quite well prepared for because it pretty much mirrors the situation with and Zeb Selker. So we have a team already out there who are very well positioned to very strong overlap as you know between Zeb Selker and Zyhera. So they're well positioned to communicate the benefits of Zyhera to community positions and we anticipate good strong uptake there for all the reasons that we've talked about previously. The overlap, the fact that we have the permanent J code already established and we have those relationships already in place.

Thank you. Our next question coming from the line of Joe Tomwitidikawa. Your line is now open.

Hi there, good afternoon, and thank you for taking my question. Can you talk a little bit about the breakdown between frontline and second-line sepsilca patients that are presenting at this point? Just trying to understand a little bit how much the second-line label update will impact sort of your thoughts on the long-term value of sepsilca and kind of your peak sales estimates there. Thank you.

Yes, thanks for the question. I'll take that one. Yeah, I mean, we're very, very pleased, obviously, since we launched Zepzelka in the first line maintenance segment in October last year, we've seen really strong adoption of Zepzelka with those patients. And that's really what's driven the growth that we've seen over the last few quarters, 42% growth this quarter, taking us to $106 million. and that growth is really all being down to our success in that first line segment. We estimate now that between 30 to 40% of our overall US sales are coming from that first line maintenance segment and of course that's growing and that is reinforced by the recent NCCN category listing elevated to category one as a preferred regimen and first line maintenance in combination with Tocentric. So whilst we have been seeing a gradual decline in that second line business as a result of competition, but also as patients get initiated onto Zeppelco in the frontline segment, they're not going to get retreated in that second line segment. We can expect the second line business to erode. That's what we were anticipating. And of course, with the announcement today, we may expect that to accelerate. But of course all of that is factored into the guidance that we've provided for this year. Rob, would you like to add anything from your perspective on that?

Yeah, I would just say that we designed the INFORTE trial because we really felt that it was important to preempt progression in this pretty aggressive disease. and had a strong hypothesis that Sysalka would synergize with a PD-L1 inhibitor like atezolizumab and that is what we observed in Inforte. So we think frontline maintenance is the best place to use Sysalka for patients to get the best benefit and the longest treatment duration. We think there is a synergy with PD-L1 antagonists and there was important data published ASCO showing just that, looking at the impact of tumor-associated macrophages of ZipCelca and explaining the potential synergy with PL1H. And so we do think Frontline is the best place to use ZipCelca.

Thank you. Our next question in queue coming from the line of Sean LeMond with Morgan Stanley. Your line is now open.

Good afternoon Renee and team. Congratulations on the numbers and I hope everyone's well. My question is on the durability of Zyways. It seems that most of the net patient ads came in IH and I guess just given the biology of the disease with normal levels of orexin and then you do have a pretty competitive bar there on perusal of the medical literature in terms of MWT. How do you think that evolves, the mix of ZyWave for patients on AH and how defendable or otherwise do you think it may be as Erexin II agonists advance? Thanks.

Hi, yes, thanks for the question. Yes, of course, we're very pleased with the durability that we've seen for Zywave. You know, we did, as you mentioned, we had really good solid patient ads this quarter, 200 for narcolepsy, 325 for idiopathic hypersomnia, in total 525 net patient ads, actually the highest number of ads that we've had for a year. So very happy to see that continued momentum. Obviously, the brand is Proving itself to be very durable in the face of multi-source generics, that's perhaps not surprising given the differentiation factors for Zywave haven't changed with the availability of multi-source generics. We're still the only low-sodium oxidate on the market, the only product approved for IH. Obviously, as we look ahead, we are anticipating the launch of the orexins. and I'll maybe get Rob to comment a little bit on how he's seeing the potential combinability of orexins with ZyWave. Rob?

Yeah, thanks, Sam. Across the hypersomnia, NT1, NT2-IH, the root cause really is disrupted nighttime sleep and ZyWave is the only approach to address the disrupted nighttime sleep and so we think it's a cornerstone of therapy there. It's been the case that patients will also use daytime stimulating agents and we think that norexin offers another opportunity to complement the potential benefit of Hoxibates and specifically CyWave.

Thank you. Our next question in queue coming from the lineup. Mohit Bansal with Wells Fargo. Your line is now open.

Hi, this is Will Vang on for Mohit. Thanks for taking our question. So I guess like looking at Xanny's phase three trial on breast cancer, just want to understand, given that you guys are developing in this like post-TDXT, post-NHR2 setting, like what is kind of the patient pool? What is the size of the patient population that you're looking to address here since NHR2 is still, you know, beginning in the early phases of its launch into the first line breast cancer setting? Thanks.

Do you want to jump in a bit on the trial?

Yeah, so the trial is positioned in patients who have been treated with NHER2. In the current treatment paradigm, that's typically third line plus patients. I'll remind you that we have data showing that Sanadatumab, given its unique mechanism of action, is active even in patients who've progressed on NHER2. And that comes from monotherapy data, it comes from combination We think this is roughly 150,000 patients annually and we also feel that it's a significant unmet need as in HER2 progressively moves to the front line that Zanadatamab would be I think unique in having data demonstrating its activity versus standard of care in patients who've progressed on an HER2 regardless of the Lyme's therapy. So we're eager to see those results. We've said in the past that we expect to see the trial complete enrollment mid-2027 and we could see results depending on how the events progress late 2027 or early 2028.

Thank you. Our next question coming from the lineup, Leonid Timoshev with RBC Capital. Your line is now open.

Hey guys, thanks for taking my question. I wanted to ask on the Epidiolex strategy from here, maybe how the pieces there fit together. You guys are running a number of additional studies, LGS and adults, DE, GME, and there's also this new capsule formulation. I guess what I'm trying to understand is how are you, To what extent is this growing the opportunity versus defending it from future branded entrances as the DE space sort of heats up competitively? And then is this new capsule formulation something that's going to extend the IP runway as well? Thanks.

Yeah, thanks. I'll start and then also welcome comments from Sam and Rob in terms of both the broader commercial opportunity and some of what we are investing in on the clinical side. But if you step back and think about Epidiolex as a growth driver for the company with the visibility of long durability into the very late 2030s now with this franchise, we believe we have multiple opportunities to invest. We talked today about multiple clinical programs underway, and we also believe having the capsule formulation allows us greater potential penetration into the adult market for Certain patients who are more suitable for the capsule formulation. And if we step back and think about the impact that this business development transaction of bringing Epidiolex into the company has had for us, it's created now a major growth driver. We paid a little over $7 billion for what is a franchise that is growing nicely over a billion dollars a year with the opportunity to grow and multiple formulations through clinical data and also internationally. It's a really nice business for us to be in and also continue to build around when we think about future business development transactions. Sam, do you want to comment further on the capsule?

Yes, happy to. Yeah, we're very, very excited about the potential for Epidiolex to continue its strong momentum into the future. We have seen and we continue to execute on our strategy to grow Epidiolex in the adult segments. We continue to see growth in keeping patients on treatment for longer and that persistency is really very material in terms of the long-term outlook. And we also identify an opportunity for patients to restart Epidiolex who maybe have previously discontinued treatment. And when you look at the capsule formulation, The capsule formulation is going to enable us to do all of those things even better, particularly for those adolescent and adult patients where the oral liquid solution is a less convenient option for them. So we believe the capsule will enable us to capture naive patients, improve persistency in existing patients. and encourage restarts for patients that maybe started on the oral solid dose on the liquid and it wasn't the best treatment for them. So we do believe when you take all of those together, this is a material incremental opportunity that will drive more patients benefiting from Epidiolex.

And maybe just to hit your IP question right before Rob jumps in, the capsule launch does not have any impact on IP. It does not have any impact on our ANDA agreements that extend the durability, as I mentioned, out to the 2030s, the very late 2030s. Our patent estate contains method of use patents that are relevant to all approved indications and that's relevant to both the existing oral solution as well as the new capsule formulation. So, Rob, do you want to cover now the clinical programs?

Yeah, so we were excited to be initiating a number of new clinical trials with Epidiolex. You know, we're convinced of its broad activity across different seizure types based on prior data we have for the current indications and the EAP. and so as you know about a year ago we initiated a phase two trial on focal onset seizure. We just announced a trial we initiated in juvenile myoclonic epilepsy that will be with the capsule formulation and that's a phase two, three seamless design so potentially pivotal. We also are initiating a trial in a broad set of DEs that could lead to a broader label there that would be pivotal and doing some more work in adult LDS to really try to better characterize its efficacy there and support its use from adult prescribers. So confident in the activity that Epidiolex has, its ability to combine, and as has already been said, because of longevity that we're initiating new trials in this space. And then since I have the mic, I just want to make sure my comments earlier on breast cancer for Zyhera were understood. 150,000 really represents the pool of metastatic patients globally. So obviously it's a subset of that who would have progressed and still are eligible for treatment after an HER2.

Thank you. Our next question in queue coming from the line of David Anselin with Piper Sandler. Your line is now open.

Thanks. So I have a long term question on the Oxibate franchise, namely Zywave in IH. So obviously we have the data in hand for Lumerize. And just wondering how you're thinking about the trajectory of IH. It's obviously growing nicely. There's good headroom here. That's definitely not lost on me. But the question is, once you do have that competition, Emerging in 28, how do you think about your growth trajectory longer term and then even beyond that with potential availability of orexin? So if you could just comment on how you're thinking about the next several years for your IH part of your suite business, that would be helpful. Thanks.

I can certainly start and then maybe hand over to Rob. Yeah I mean the differentiation for Zywave is twofold and perhaps one of the most kind of important things about Zywave is the low sodium and of course that's going to be a component of its differentiation that will go beyond just another product having an IAH indication and this is a message that really does resonate with prescribers. We know that patients who are diagnosed with IH or narcolepsy the majority of them do have a cardiometabolic or cardiovascular comorbidity and so increasingly I think physicians and patients recognize the importance of having a low sodium option and that differentiation is obviously pretty durable so in relation to the orexin question maybe I'll hand that over to Rob I was just going to add

Again, that we are differentiated on the basis of low sodium. And while it's well understood that not only narcolepsy but IH patients have a significant risk of negative cardiometabolic outcomes, we also demonstrated that in the xylo study that after initiation of high sodium oxovate, you see a change in blood pressure, which is clinically meaningful. And so Patients benefiting from ZyWave now, I think that will be pretty sticky. Did I miss another aspect of the question on narcolepsy that you wanted me to address, Sam?

I think there was a question just around the competition versus the long-term availability of orexins.

Yeah. I mean, again, I think I answered this earlier. Whether VIH or narcolepsy, the root cause of the daytime Sleepiness and symptoms such as cataplexy have to do with disrupted nighttime sleep and only oxibates and Zioid being really the safest oxibate can address that root cause. And so we continue to think that that will have an important role in treating patients, even if they would additionally benefit from daytime weight promoting agents.

And just to build one last point here, with respect to the IH market, we are still very early in our overall penetration. We think there's probably 37,000 plus patients diagnosed and seeking treatment for IH. And while we've made significant progress in headway, we do believe there's a lot of room still to grow here. And we believe that Zywaid, as we've seen with narcolepsy, including the patient support services Supporting the overall journey that patients go through with a new diagnosis of idiopathic hypersomnia, we do believe that ZyWave will continue to compete well in this market.

Thank you. Our next question coming from the line of Amifadia with Needham & Company, Yolanda Smallman.

Hi, good afternoon. Thanks for taking my question. I had a question on Xani and as we think about potential for indications beyond breast cancer, can you talk about what type of updates we could expect with regards to CRC or non-small cell lung cancer and how you might go about pursuing those indications?

Sure so we have the ongoing basket trial which is the 206 study and in that trial we continue to enroll patients with second line colorectal cancer and non-small cell lung cancer. We had previously published on colorectal cancer and those were some of the data that we brought to FDA including and in addition data from the emerging 206 trial that led to the breakthrough designation and colorectal cancer. So we'll continue to generate data in both of those indications through that study and we'll work with FDA now that we have BTD to identify the path forward ultimately for approval in colorectal cancer. More broadly, we're very excited about the potential of XanaDatamab. We have the ongoing frontline BTC trial that we're optimistic about. As you know, we're about to launch in GEA. contemplating other areas in gastric cancer such as early gastric cancer where there's no approved HER2 therapy. Of course we have the ongoing late stage metastatic breast cancer trial as well as other phase two trials looking to determine how else we might use Xanion combinations, sometimes novel combinations in the breast cancer setting as well as the new indications such as CRC and non-small cell lung cancer as you mentioned. Overall, we do think this is a pipeline and a product, and we're pursuing every opportunity to its fullest.

Thank you. Our next question coming from the lineup, Gary Neffman with Canon Cloud. Your line is now open.

Hey, thanks. Good afternoon. So for Zaheer and GEA, just back to that. If approved, how long before you think the NCCN guidelines will be updated since you already submitted the data for that? And how much would that impact the uptake? And I'm also curious, has there been any real off-label use in first-line GEA since the data came out late last year? Maybe just generally, you know, a bit more on how you're thinking about the pace. of the uptake in GEA, including with reimbursement, because you obviously can leverage the BTC indication and have a lot in place already. Thank you.

I can start on NCCN. We've been providing NCCN all the data we have as soon as we have it. You know, we shared the data that went into the abstract, and then we immediately shared the New England Journal publication. obviously we don't control their timelines but we do think they have everything they need to adopt that into the guidelines potentially even before approval but obviously that's that's up to them yeah and so just I'll follow up with the your question in relation to our kind of readiness to launch I mean we are

We are ready to launch in GEA. We sized our team specifically with a GEA launch in mind and made some investments to ensure that we can cover all of the customer groups that we want to cover very rapidly at launch. BTC has served as a powerful foundation for the next major growth phase in GEA. There's a number of Thank you very much. Smooth, Efficient Access and Patient Onboarding, really leveraging our JAWS CARES program. So we are ready and we think our readiness combined with the data, the compelling nature of the data, which you're all familiar with by now, means that we should see really very rapid uptake and we're committed to ensuring that patients who need this product can get it as soon as possible.

Thank you. Our next question coming from the lineup, Akash Tiwari with Jeffrey. Your line is now open.

Hey, this is Anastasia on for Akash. Thanks for taking the question. Congrats on the quarter. So on the post and HER2 trial, I know your comparator arm is the TRAS plus physician's choice chemo, I believe, but it looks like the NCCN guidelines list Bucatinib plus TRAS and CAPE as the preferred second, third line regimen. Can you talk us through how you chose the comparator arm and what you consider the bars for success in the trial as well as What is considered clinically meaningful? Also just verifying you're still on track to complete enrollment in the first half of 27? Thanks.

On the second part of the question, yes, we're on track to complete enrollment by mid-year 2027. You know, when we have results will depend on the events, but we haven't changed our guidance on that for end of 2027. in terms of the design of the trial you know most of the data with other HER2 agents were generated before the availability of an HER2 so that's really the motivation for this trial is it's unclear what to use once patients have progressed on an HER2 the trial is set up to be a third line plus trial it's a global trial so in some places that will mean that patients may have gotten Ducatinib previously. But in some parts of the world, such as South Korea, Ducatinib is not commonly used. And so it'll be a trial where you'd expect third, fourth, or even possibly fifth line patients. While that's a poor prognosis group, we have prior data suggesting that Xanadatamab can be active in that setting. And again, this is a head-to-head against Terceptin, and so we continue to be confident in Xani's ability Thank you.

Our next question in queue coming from the lineup, Ed Serder with Barclays. Your line is now open.

Ed Serder Great. Thanks for taking the question. Just a follow-up on comments on ZyWave and guidance from Phil earlier. Wondering how much of that change is in the sleep franchise revenue guidance is revised expectations of generics in 2026 and maybe related to that, if you could provide any additional color on the additional investments for Zywave and Epidiolex reflected in the SG&A guidance, that would be helpful. Thank you.

Yeah, this is Phil. Thanks for the question. Maybe I'll take the first part and then turn it over to Sam for color behind some of the additional investments to drive even further momentum and revenue growth for ZyWave and Epidiolex. So the revised guidance really comes down to extremely strong execution in the field that's led to this unique benefit that ZyWave has resonating with physicians and patients, which we believe is what's likely leading to The very slow uptake that we're seeing of generic high sodium oxidates. We had said all along that we didn't expect really much of any impact in the first half of the year and that in fact has played out as we had expected. However, based on the pace of introduction of the high sodium generics, we're now expecting a much more muted impact in the back half of the year as well that is behind the guidance raise for Zywave were before we had expected the product to be flat up mid single digits this year and now we're expecting double digit growth for the full year so really pleased with the momentum that we that we have and look for that to continue. Sam?

Yeah and in terms of the investments that we're making obviously given the strong resilience of Zywave and Momentum We are continuing to invest in some of the media spend that has been particularly effective in ensuring that patients, diagnosed patients get treated with with Zywave as well as some investments, continued investment in the patient support program. For Epidiolex, we have continued to invest and upgraded our investment in ensuring that we can fully penetrate the LTC adult segment where we've started to see some good inroads. and also we do see an opportunity to drive persistence and we have invested to expand our Jazz Cares program so that more patients can get enrolled onto the Jazz Cares program. We know those patients generally do better on treatment and in addition of course we're starting to prepare for the oral solid dose launch as well so that's the nature of some of the additional investments that are outlined in the guidance.

Thank you. Our next question in queue coming from the line of Brian Scorning with Barrett. Your line is now open.

Hi, this is Luke on for Brian. Thanks for the question. Just one quick one on business development strategy. Can you provide any color on particular areas of interest within rare disease or with regard to development stage you'd be looking for? Or would you say you're fairly agnostic? Thank you.

Yeah, this is Renee. Thanks for the question. So we won't comment on specific deals for obvious reasons, but I would say we do remain highly engaged on the BD front. I'll remind you that we hired a new CBO earlier this year to drive those efforts, and we do continue to expect to announce one or more deals still in 2026. In terms of the areas that we're interested in we really do focus on where we believe there's a significant unmet need and where we believe we can have a meaningful impact with our unique either expertise global footprint or current other operations that we have underway. We generally will look for an efficiency of commercial call point One where the support services that we do offer to our patients can also be relevant and valued. We are focused on strengthening our current areas of rare epilepsy, rare sleep, rare oncology. We think there's a lot of substrate there. But we are also looking into other areas of rare disease and we'll delay on actually providing much commentary there because there are so many different areas that we could go into that I wouldn't want to be too specific there in terms of inadvertently commenting on specific deals we might be interested in. In terms of the stage, we were really excited to announce the Abcelera deal this last quarter. That is a preclinical collaboration looking at next gen T cell engagers so very early in our pipeline but it directly aligns with our overall rare disease strategy really expanding our focus on GI cancers. We are also though looking at later pipeline deals as well as commercial and near commercial transactions. It really depends on the specific asset and the type of deal That we are interested in. Importantly, we have a strong track record of doing deals that have generated meaningful value. I mentioned Epidiolex, the GW earlier. Last year we did the Medeso Kinerix transaction that was near commercial, obviously. And then we talked about quite a bit on this call about Zanny that also came into our business. via Business Development, which we're incredibly pleased by. And I'll just close with a reminder that we're in an incredibly strong financial position to be able to execute on BD. We generated $824 million in cash flow in the first half of this year, $2.2 billion of cash on the balance sheet, so supports our ability to execute in BD in addition to the investments that we've talked about throughout the call today behind our commercial brands as well as our pipeline.

Thank you. And ladies and gentlemen, that's all the time we have for our Q&A session. I will now turn the call back over to Renee for any closing comments.

Great. Thank you, operator. Well, I'd like to close today's call by thanking all of our employees as well as our partners and stakeholders for their continued confidence and support. We look forward to sharing additional updates on the potential approval of Zany Datamab and GEA as well as other progress in our business. Looking forward to sharing those updates with you over the remainder of the year. Thank you for joining us today and we can close the call.

Ladies and gentlemen, this concludes this conference call. Thank you for your participation and you may now disconnect.