Jazz Pharmaceuticals plc (JAZZ) Earnings Call Transcript & Summary

Thank you, guys, for joining us. It's a pleasure to have Jazz management along with their new CEO with the shaved look, Bruce Cozadd, joining us. Bruce, thank you, guys, for being here.

Yes. Umer, really great to be here. And maybe before we hit Q&A, I'll just make a couple of opening remarks. For those of you who haven't seen me without a beard before, it is true that, while everyone else grew COVID beard, I lost a COVID beard, and so I'm beardless for the first time in 29 years. Before I start my official comments, I'll just point out we will make forward-looking statements today, and those are, of course, subject to risk factors you can read about in our SEC filings. I'll probably also refer to non-GAAP financial measures. See our website for a full reconciliation. And if and when I refer to guidance, I'm not updating. I'm referring to guidance we gave on November 9, which was our last earnings call. So this is a really exciting time for Jazz. We're about to exceed $3 billion in annual revenue for the very first time and are seeing strong performance underpinned by commercial execution, financial discipline and strategic allocation of capital across our business as well as prioritization of commercial and R&D opportunities that we think will have the most impact on our future growth. One of the things we're seeing right now is significant diversification of our revenues. We set the target coming into 2020 of doing 5 commercial launches in 2020 and 2021. And our IH launch in -- of Xywav this month completes the goal. 52% of our net sales in the third quarter were generated from products launched or acquired since 2019. This is a major shift in our portfolio. So a year ago, that 52% was 8%, just to give you a feeling for how quickly it's changed. And we are confident we'll reach our external goal of at least 65% of net product sales next year from our newer products. I'll point out that below the top line, we've also got better economics on some of these newer product launches due to patent domicile and effective tax rate. In the GW deal, we added a high-growth commercial product in Epidiolex and bolstered our clinical development pipeline with nabiximols and the GW cannabinoid platform. We expect that deal will be accretive to our EPS, adjusted EPS in 2022, the first full calendar year of combined operations, and substantially accretive thereafter. And I think we're really well positioned to capitalize on the transaction, and then it's a great example of us using M&A to transform and grow our business. We are on track to be at our deleveraging target of below 3.5x by the end of next year, and that's going to enable more corporate development going forward. And then on the pipeline side, we're advancing. JZP-385 has now initiated its Phase IIb trial. JZP-150 is expected to initiate a Phase II trial later this year. Of course, with nabiximols, we've got the 3 trials ongoing and our first readout upcoming next year. Zepzelca, we've got a robust development plan. It's already become the treatment of choice in second-line small cell lung cancer with the ability to continue growing, and that's setting. But we're very excited that, earlier today, we announced the first patient in for our first line Phase III trial in small cell lung cancer in combination with Tecentriq. This is a new setting and opportunity to help even more patients than would be true in second line. There are about 30,000 first line small cell lung cancer patients that are about 27,000 of whom are treated each year. We will enroll extensive stage small cell lung cancer patients. That's about 70% of first line patients. It'll be a 700-person randomized, placebo-controlled trial, potentially registrational. We've also obviously got an earlier-stage pipeline with a number of exciting opportunities, including our pan-RAF program. In conclusion, we're seeing strong execution across commercial, across R&D and across corporate development in 2021, and we think it's setting us up for an exciting 2022. We'll be continuing with the launch of Xywav in idiopathic hypersomnia, continuing with the launch of Rylaze, which we just launched this summer, and staying focused on strong commercialization efforts for Xywav in narcolepsy, and Zepzelca, and delivering on Epidiolex growth. I mentioned we've got a lot going on, on the R&D side, too. So look for continued updates on progress in trials and new data, and we will remain opportunistic on the corp dev side as we maintain financial discipline and delever. So with that, Umer, back to you, happy to start taking some questions along with Rob and Kim, our Head of R&D and our Head of North American Commercialization.

Outstanding. Bruce, maybe starting very big picture, and I want to drill down some very specific product lines, but if I were to think about the top line, $3 billion top line right now, of which, like you said, about half is in the oxybate franchise. And let's say, the oxybate franchise really does shrink 75% plus after -- I'm talking very big picture, let's say, shrink 75% with all the generics coming into the market, price erosion, et cetera, net of Xywav being on as well. So let's go over that extreme scenario. So if there's $1 billion plus in erosion on our oxybate franchise, even in that type of scenario, wouldn't that -- even in that scenario, get offset by sort of IH opportunity, offset by Sunosi opportunity. And even if Epidiolex grows very little bit. So I'm not even counting the pipeline. So even in a scenario like that, would you argue that -- there is a possibility Jazz would have a $3 billion top line even if the oxybate franchise is at an absolute extreme?

Well, thank you for clarifying the end that you're talking about in absolute extreme because I'm not sure I buy the case you just outlined. But you're right, Umer. We've got -- outside of narcolepsy, right, whether that's Xywav in idiopathic hypersomnia, Zepzelca, we were talking about, continued Epidiolex growth, both in the U.S. market and in our ex-U.S. launches, Rylaze finally being a sort of supply unconstrained asparaginase opportunity. We've got really good revenue drivers beyond the narcolepsy franchise. But let me be clear about our expectations. We think Xywav is the best treatment option for narcolepsy patients who want oxybate therapy. And we've said that, in 2023, even when we factor in availability of authorized generics and potentially FT218, we still think most patients will be getting our oxybate treatment in Xywav, the lower-sodium, clinically superior product that that's going to be the dominant oxybate product. So we think we've got a growth opportunity in front of us in IH. We're thrilled with how the narcolepsy launch has gone, but let's point out that has not generated net new revenue for Jazz, right? That's largely been Xywav revenue at the expense of Xyrem revenue. We're now in a different position with the idiopathic hypersomnia launch. These are new revenue opportunities for Jazz.

So Bruce, maybe let me deconstruct some of the assumptions that went into even that type of extreme scenario because I would really highlight some of the issues that everyone's really trying to figure out. The first one of them is, even before I get product specific, the first one of them is, to the extent market continues to retain some level of confusion around what that post-2025 looks like, and even in an extreme scenario, you feel like a $3 billion-plus top line is certainly very much in expectations. Would you and your board ever consider putting out some sort of a longer-term guidance to mark a floor, perhaps not a high level, but mark a floor that we will do at least this on revenues and EPS, no matter what happens?

So I don't want to promise we will, Umer. But I will point out, you saw us last year in 2020, really for the first time, put out some external targets that were multiyear in nature, whether that was diversification of our revenues, what oxybate share might look like in a future scenario, obviously, in conjunction with the acquisition, we talked about some earnings accretion and delevering that we're not current year base. So yes, I think we will consider over time giving longer-term forecasts for the business. But I want to be really clear. Our goal is to grow revenues, and we think we've got the product set to do that. So you were talking about a floor of flat revenues. That's not our strategic plan, right? Our strategic plan is continue to grow in neurology, continue to grow in oncology and then harness the pipeline to bring forward sustainable growth for the longer term.

Got it. Bruce, on -- and so I'm now going to go line by line. On Xywav itself, do you think there would be a gross-to-net impact from generics. Maybe not on volumes, but on a gross-to-net basis, do you think there could be an impact?

Yes. So let me come to Kim on what we think the dynamics are on the payer side with Xywav going forward.

Sure. So if we talk about the entry of the AG coming in, that's the most near-term event, in terms -- let's start with Xyrem. In terms of Xyrem, we anticipate the approach payers will take was to put it on formulary at parity with Xyrem, that is to say, not to advantage it or disadvantage it in any way. And if we shift over to Xywav, today, we are enjoying greater than 80% commercial coverage for that product, anticipate that in IH, we will have a similar level of coverage pretty rapidly. And we feel confident in the longevity of that coverage as we face the events that are -- you're talking about in the near-term future.

Got it. Okay. And then when additional generics enter, Kim, do you think gross to net would expand or not on Xywav?

So we believe that Xywav is differentiated in the marketplace. Certainly, you see that in the tremendous uptake that we've had among health-care providers. We've had conversations with payers about the reduction in the chronic sodium burden with the product. And we believe that they appreciate the benefits of reducing sodium long term in this population that's at risk -- high risk for cardiovascular disease. And certainly, when they look at their own utilization data, they will see that there is a preference right now in the marketplace, a strong preference in the marketplace among prescribers for Xywav over Xyrem. So we think all of that bodes well for us in terms of these events that we face in the future.

Got it.

Umer, if I can just jump in to go back to some of your opening question comments, you implied multiple generics price erosion, just as a reminder, we're expecting authorized generics in the near term, only one of which is volume unlimited, and that's Hikma. Six months after Hikma, we could have other authorized generics, but each of them and even collectively as a group, the 3 of them have a very small impact on volume. And so the traditional impact of people lowering price to gain a lot more volume doesn't really seem to apply during that period. It's out in 2026 that we're expecting potentially true generic competition, although even then, those generics would need to fashion their own REMS, right, which I'll remind you is an expensive and complicated thing to put together.

Got it. Excellent. On sort of some of the more once-nightly directions, I know there's a competitor, but I also know you guys have a Phase I. Is it reasonable to think there could be an abridged path to market, and you wouldn't necessarily need a full Phase III for that?

We haven't commented on that specifically, Umer, although I think we've got a track record of being creative in finding fast paths to market for good products as we did with Rylaze, for example. So I can't comment on the 324 program, specifically. Other than I do want to remind people, in our case, it's once-nightly low sodium, and that's an important distinction.

Got it. And Bruce, what should we make of the fact that FDA has not asked your competitor to certify on your REMS patent? Does that mean they can just set up their own REMS?

Well, unless something has happened while we're on the phone today, I don't think they've been approved yet. And I think approval brings with it a final label, and that final label will either require them or not require them to certify to our patents. In any case, they're going to need to set up a REMS that meets the objectives of the oxybate REMS, which are to really prevent abuse, misuse and diversion as well as safe use by appropriate patients. And they've said that will be a multimonth process to get up and running. I think they've also said publicly, they need to see the final labeling before they know exactly what that'll look like.

Makes sense. On Sunosi, I remember, Bruce, when you guys first launched it, I don't know if you guys formally put it on your slides, but I do remember hosting you back in the beard days, and we talked about a $500 million type sales potential, knowing that the price point is materially lower than sort of the oxybate. Is that still something you guys are sort of confirming and expressing confidence on?

I don't think we've done that in a while, Umer, but I will say in terms of the opportunity, both in narcolepsy and probably even larger in obstructive sleep apnea, we know that patients haven't been satisfied with the previously available daytime weight-promoting agents and stimulants. They've been looking for something with strong efficacy, and we think the characteristics of Sunosi, including that efficacy over a 9-hour period and its tolerability have been really favorably received by both patients and the physicians that treat them. And so if you look at the size of that opportunity, it is very large. We talked about that, and you do have a good memory. We talked about that specifically being the U.S. opportunity. Recall, we're in the midst of launches outside the U.S. as well.

Excellent. So $500 million should be good, even if U.S. falls a bit short on a worldwide basis, $500-plus million kind of thing.

Yes. I mean, we -- the launch has been slower as I think we've been fairly upfront in our comments over the last couple years because COVID hit right at the point where we were turning on promotion of that product. It made it harder for us to get in and have face-to-face interactions, particularly with the pulmonologists, which were a newer physician audience for us. Of course, we have longstanding sort of 15-year relationships with narcolepsy treaters. So that definitely impacted the slope of that, although we've been seeing good growth over the last couple quarters.

Got it. Okay. Next up, Zepzelca. I feel like oncology ramps are always -- I mean, of course, the launch has been amazing, but I have to admit it's not unsurprising based on sort of the precedency in oncology, especially when the unmet need is high. Jessica, you want to lead on oncology for a couple minutes?

I have 2 questions. Firstly, could you tell us more about Zepzelca's opportunity in the first line setting and with what type of market share could be expected? And then secondly, now that Par Pharma has come to an agreement with the FDA on confirmatory trial, could you provide more color on the trial design, such as are you including both platinum-resistant and sensitive population, does physicians choice include topotecan, and your expectations for a higher-dose lurbinectedin monotherapy versus lurbinectedin plus irinotecan combination.

Yes. So Rob, maybe I can hand it off to you, both to talk about the first line opportunity and why that makes sense and might be different from second line but also the broader R&D approach to Zepzelca?

So I'll start with small cell lung cancer. As you know, the treatment approach to first line extensive stage, which is about 70% of all newly diagnosed small cell lung cancer, the treatment approach there is pretty uniform. For decades, it was just a platinum doublet, given the improvement in overall survival when atezolizumab or Tecentriq was added. That's the new standard of care, and it's pretty universally applied, especially in the United States. Despite that important advance, prognosis is extremely poor. About half of the patients have died at the end of the first year. And more than half of the patients will have progressed even by 5 or 6 months into their treatment. And so we see it as a real opportunity to add Zepzelca, which we know is independently active in this tumor type above and beyond what is seen with the standard of care and add that during the maintenance period after chemotherapy is completed to really maintain that response in the majority of patients, maintain that progression for interval and give patients a longer treatment interval and even to access more patients because, as you know, many patients, once they progress after first line progress so rapidly that they don't move on to second line therapy. So that's the real opportunity to add on and the comparator, of course, would be standard of care, so essentially placebo control arm.

Got it.

There are a couple of questions in there about a confirmatory trial too. You might just give a little color on that.

Yes. So just to close out on the first line, we have first patient in as of today. So we're excited to see that trial progress, and we think it'll progress well. With regard to the confirmatory trial, the general framework is it'll be in the same indication. So you asked whether it would be in certain subgroups of platinum resistance. No, it will be in all second-line patients. There'll be 3 arms and your question around the Zepzelca dose is important because Zepzelca will be given as monotherapy in this trial, and it will be giving as full 3.2 milligrams per meter squared every 3 weeks as monotherapy. Additionally, there'll be a second experimental arm in combination with irinotecan, and that will be in comparison to investigators choice of chemotherapy.

And when should we expect the readout?

I don't know that we've said yet when the readout would be.

Okay, got it. And then as I think about sort of the FDA, the FDA bar from a regulatory -- just from the regulatory bar for Zepzelca on the market, is this a must-win, this study? Or would there be additional trials you might probably initiate as well?

Just clarify, Umer, when you're saying must, are you referring to the confirmatory trial?

Right.

Yes. So remember, we had just enrolled our first patient on the first line trial. And that first line trial has a PFS, a progression-free survival readout, which will come much sooner than the overall survival readout. And that would be an early opportunity for a first line approval. Of course, if we got a first line approval, that essentially preempts the need for a second line approval because patients will get that in first line. And then secondly, with regard to the second line trial to maintain the current indication, we would need to demonstrate efficacy in the confirmatory trial.

Got it. Would you agree, Robert, that, based on the observation that, in the second line setting, it was the chemo-free interval that was an important driver just because they were not chemo desensitized. If chemo desensitized was a framework that applied so well delivering irinotecan, theoretically first line trial is better primed than a second line trial would have ever been. Would you agree with that?

Well, I would agree that by selecting patients who have not progressed after their initial chemotherapy in first line. And that's how the trial is set up that you're essentially selecting patients who should do well, particularly on Zepzelca. And so you're enriching the population and then you're comparing to no additional therapy. So it does seem like quite a low bar, and that's why we thought that was a great opportunity for us to demonstrate the value of Zepzelca and a great opportunity for patients to preempt their progression. Remember, although small cell patients tend to respond well initially, none -- very few, less than 5% are in true remission or a complete response at the end of their platinum doublet. So most have residual disease essentially waiting to progress. And that's the time to preempt with another active therapy.

Got it. Maybe on GW then, [ Eric, ] perhaps you want to have...

Yes. So you mentioned earlier, one of your growth drivers being Epidiolex. We were wondering if you can give us some details on how you've seen uptake lately, especially with COVID impact and how you think about growth trends in the U.S. as well as in Europe and other countries.

So maybe we can split up the answer to that question, Eric. Maybe Kim, you can comment a little bit on the U.S. market dynamics, and I can fill in some of what's going on ex-U.S.?

Sure. Happy to. So I would say, since we brought Epidiolex in-house, specifically in the U.S., I can say that our confidence in the long-term potential of this product has only increased. That being said, we certainly acknowledge that there have been short-term pressures on the product due to COVID. For example, many of the children, the pediatric patients who are eligible for Epidiolex have not been able to be vaccinated yet until recently. And so this has certainly understandably caused parents to be hesitant to bring their patient into the doctor's office and risk exposure to COVID. So we're missing opportunities there for a discussion and a transition over to Epidiolex. At a more macro level, we're seeing in industry-wide that pediatric markets have really disproportionately been impacted by COVID in the last year or so, not just in the epilepsy space. And specifically in the epilepsy space, we're seeing a class effect in terms of sales across AEDs having been flat over the last several quarters. So this is not just an impact we're seeing on Epidiolex alone. And in addition to patient visits being down, the other thing that has been a challenge is just getting access to these offices in a COVID environment. They're hesitant to let reps in, or their operating from a distance via televisits and so forth. And so we've seen in the first 3 quarters of this year, our engagements with health-care providers have been down by 40% versus a year ago, and our most valuable interactions, those that are face-to-face, have been down 70%. So while we have certainly been trying to make up for this through other channels, and we think we're actually having some success given that the product is actually continuing to grow very nicely in this environment. And certainly, we know with a product that's in launch mode like this, any product that's in launch mode that like this is going to be affected in terms of not being able to get and do the education and provide the support to the offices that's needed, particularly when these offices have very little experience and usage with the product to-date. So that's been the background of the last 1.5 years or so. When we look into the future, we look at conversations with providers or market research, we still feel very encouraged about the future potential of the product, largely because we're getting very positive feedback from those who have prescribed the product, and then quantitatively, our market research shows that 40% of respondents in the survey indicated that, today, they're actually already starting to move Epidiolex up earlier in their treatment regimen. So this really tells us that, when providers have the opportunity to get firsthand experience with the product, it's very positive, and their intention is to utilize more of it moving forward is increased. So those are all really good signals. And then lastly, I said when we just look at the market at large and what we've accomplished to-date, we see opportunities for plenty of additional growth in our 3 indicated areas, particularly in the larger markets of LGS and the newest indication around TSC. So that, combined with continued very high persistency rates that we see in patients who start Epidiolex, all lead us to believe that if we can kind of come out of these COVID conditions whereon patients start to -- pediatric patients start to get vaccinated and go to the doctor, and doctors' offices start to open up towards reps more, that there's really no reason to believe this product can't become the blockbuster that we've envisioned.

And I'll just add a couple points for ex-U.S. We're currently registered in 34 countries outside the U.S. and launched in 11 of them. We're continuing our rolling launch across Europe and also are in discussions with relevant authorities to understand how to make Epidiolex available in Japan. We're now fully reimbursed and launched in 4 of the 5 largest European markets, Germany, U.K., Italy and Spain, and we're looking forward to launching in France next year once we receive reimbursement. We've been successful in our negotiations with European pricing exceeding 70% of the pricing we have in the U.S., which we think is indicative of the clinical value that Epidiolex is bringing to patients. And I'll just close by saying that, while Kim has detailed some of our historic difficulties in getting face-to-face interactions, a number of us will be heading to the AES meeting in Chicago at the end of this week, and it'll be really nice to be face-to-face with both U.S. and non-U.S. KOLs in the epilepsy space.

Sorry, do you have a follow-up?

Yes. Just real quick on moving it up in the algorithm. I was just wondering if you've seen any evidence on Epidiolex being combined with other antiepileptic agents: FINTEPLA, valproate, anything else like that.

Rob, you want to talk a little bit about that?

Yes. So for starters, we continue to be impressed with the overall safety profile for Epidiolex and its activity across really a whole range of seizure types. With this novel mechanism of action, and it's distinct unique compound features, Epidiolex is likely to be a cornerstone. And given how well tolerated it is, it's likely to be used in combination, which, as you know, combinations are typical for epilepsy. And I would also just remind you that, in the EU, the approval is actually in the context of a combination with clobazam. For example, 2 trials in LGS, where Epidiolex with clobazam showed a seizure reduction of 64% versus just clobazam alone is 31%. Likewise in Duvet syndrome, the combination with Epidiolex and clobazam low 60% versus clobazam alone in 38%. So certainly, it's already being combined. It's approved in some regions as a combination. And as we think about data generation and evidence moving forward, we'll continually be looking for opportunities to demonstrate safety and efficacy with different types of combinations.

And Robert, where are we with the -- I remember they used to -- I need to brush up on this more, but there was a Phase IIb cannabinoid in schizophrenia. Where are we with that trial?

That trial is ongoing. And there's no results at the moment to point out there. It's really a probe study to look for a signal of activity in schizophrenia. Of course, we're interested in cannabinoids across a whole host of other neurological conditions as well, not just schizophrenia.

I see. Is that -- I guess, is that something that's a high priority from a Jazz perspective, or it's a nice-to-have -- like, [indiscernible] GW used to go out of the way to flag that one I remember?

Yes. I mean schizophrenia is one of several indications where we're interested in sort of probing cannabinoids to see where else there would be activity. So it was not a pivotal trial, but it's one place where we're hoping to see where there's activity and where we may explore further.

Got it. And is there anything, I guess, else from their pipeline that we should just be like tracking very closely?

Maybe Rob, just make a couple of comments about where nabiximols is in...

Yes, that's where I would emphasize certainly, Bruce. So as you know, sativex is approved in 29 European countries for spasticity associated with multiple sclerosis. And we're in the process of leveraging the 4 pivotal trials that led to those approvals in Europe to bridge to an approval in the U.S. In order to do that and after consultation with the FDA, we're seeking to generate data with additional endpoints that would be relevant for approval in the United States, specifically muscle tone and spasm frequency, which are the endpoints that FDA prefers over other patient-reported outcomes, which were used in Europe. And so we have 3 ongoing trials, one that's rather small that could read out early and be kind of an early shot on goal. That's in muscle tone. Another larger study in muscle tone to be more definitive, evaluation of muscle tone with nabiximols. And then a separate study, which will be measuring spasm frequency.

Got it. Okay, that makes it very clear. Perhaps spending a quick second on a product I remember speaking to Bruce about at [ Leerink's ] a few years ago now. The opportunity with the recombinant Erwinaze. And I remember, Bruce, one of the things you said to me was, there are so many indications that sort of on paper would make a lot of sense, but because supply constraints, you guys just never did. I guess, where are we with sort of experimenting and trying to actually achieve those indications now?

Yes. Well, Umer, we are looking forward to the opportunity to be able to explore use of asparaginase even beyond ALL. But I want to make clear our emphasis right now is fully penetrating that ALL opportunity, both by improving the dosing regimen, where we've said early next year we'll complete a submission to FDA that we believe we'll enable Monday, Wednesday, Friday dosing, also getting back to promoting the product, which we had stopped doing for a number of years, including an AYA use, making sure we get the product registered worldwide so that we're in Europe and Japan, where the prior product was approved but never launched due to supply constraints. So we've got a lot to accomplish in ALL, but we do believe this opens up the opportunity that we could again see exploration of asparaginase more broadly. And Rob, let me just pause to see if you want to add anything on development side of Rylaze.

We'd just point out, I think everyone is well aware that we developed Rylaze as a superior product in terms of quality and manufacturing process. But we also studied it in a way to ensure that we had superior asparagine depletion relative to what one could expect with Erwinaze. And so in order to do that, we explored higher doses. We established the 25 milligrams per meters square would give adequate coverage for 48 hours, and that's the basis for the early approval from the FDA. And then we expanded that trial to give twice the dose on Friday to get that same level of coverage over a longer period of time, which we think will overall get better asparagine depletion than what one would expect with Erwinaze. And so having completed those, we now have agreement with the FDA on a supplemental submission to support Monday, Wednesday, Friday dosing with that regimen. And FDA has granted real-time oncology review to give you a sense of the priority it is for them. That submission has been initiated, and we're expecting to complete it early in 2022.

Got it. So I guess -- and a new indication is not something that's on the cards in the next couple years. Is that a fair assumption?

Yes, that's a little farther out Umer, and I will just tack on to what Rob said. Clinical data will be available at ASH for the first time. Remember, this is a unique product, and we got FDA approval without us ever having told you how the clinical trial went or publishing that data. So that data will be available for the first time this coming month or the soon.

Okay. Then maybe a couple of products which are sort of -- there's obviously more clinical risk involved in these, but Eric, did you want to touch up on the fine number? Or did you want me to -- on the 305?

Yes, sure. On the FAAH Inhibitor, JZP-150, we noticed that like previous attempts at this, particularly bioportella drug had been a similar inhibitor. Their Phase I ran into one death and a hospitalization of 5 others. But the FDA specifically said that it was uniquely toxic to adjust that product and not the entire drug class of foreign inhibitors. So I'm just curious how you've been thinking about that and if regulators have mentioned anything on safety for the 150 trials. And yes, I'll leave it there for now.

Yes. Happy to address that. You're exactly right about that. The product that you referenced, the toxicity was ultimately determined to be off target, not related to inhibition itself. One of the things that we were really excited about with JZP-150 is how highly selective it is as an inhibitor of FAAH with very little off-target activity. And that's supported by the comprehensive safety data package that we saw in one-time value . As you pointed out, FDA looked at those data and other data in the field, and in 2016, released the clinical hold from that class of drugs. As part of our due diligence, we reviewed carefully all the safety data, and we were quite comfortable with that. Safety is always the highest priority for us, and we continue to monitor that in clinical trials even as we progress a randomized proof-of-concept study with JZP-150, which we'll look at several dose levels as well as placebo.

And I was going to ask in that trial, is this measuring anandamide level as the most important biomarker to track?

I think so. I mean we have the ability to measure fine inhibition directly, and we've done that, and we'll do that. But anandamide is more distal, and it's a better measure of having the activity. Remember, there are differences between the FAAH inhibitors, and JZP-150 is an irreversible inhibitor. So you'll see extended effects on anandamide. FAAH is the main enzyme for degrading a anandamide, which is central to the underlying pathophysiology, we believe, for PTSD. So inhibiting FAAH and inhibiting it irreversibly has a significant impact on elevating the antibody levels, which tend to be low in PTSD patients.

Has there been another therapy which has shown a correlation between anandamide levels and PTSD?

It's not necessarily a study we conducted, but it's known from the medical.

Okay. There has been a direct correlation established.

Yes.

Okay. Excellent. And I want to be respectful of time. So we'll leave it there. Thank you guys so much for joining us. If we had more time, I would have loved to touch up on your pan-RAF, but I'll save it for the next time.

Awesome. We'll look forward to it, Umer. Thank you.

Thank you, guys. Good luck, and thank you again for joining us.

Okay. Bye-bye.