Jazz Pharmaceuticals plc (JAZZ) Earnings Call Transcript & Summary

Okay. So good morning, everyone. It's good to -- we finally got Pfizer out the building. Delighted to be here from the pharma team, delighted to be moderating and hosting Jazz Pharma. We have Renee, Rob and Abizer, who are the -- I get it right, CFO, Head of R&D and Oncology, respectively. Rene is going to make some opening remarks. You've heard me say this at times time. I'm here to moderate monopolize. So if any of you want to ask a question, stick your hand out, there's a microphone in the room, and we'll get your questions answered. But team Jazz, thank you very much for coming. Rene, over to you for some opening remarks.

Great. Thank you, and thanks for the invitation. So just a few reminders. We will be making forward-looking statements today please consult our website and the SEC filings for more information about our business, including risk factors. Should we make reference to financial guidance. We're not updating or reiterating today, we're making reference to guidance that was provided on August 9, which was our last earnings call. And then finally, should we make reference to non-GAAP financial measures, you can find full reconciliations on our website. So on to the business. We are very excited to be here today to give an update on Jazz. And as I reflect on where Jazz is as a company in our 20-year anniversary in 2023, I'm struck not only by how much the company has changed since it was first formed, but more importantly, just how much it's transformed just in the last several years. I started with the company 3.5 years ago. In 2020, the company had just under $2.5 billion of revenue and nearly 75% of that was coming from a single product in Xyrem. And if we fast forward to today, 2023, our full year revenue guidance at the midpoint is $3.8 billion approximately. But importantly, the composition of that revenue is completely different than what it looked like in 2020. 50% of that revenue, if you look at our most recent quarter, 50% of our revenue was coming from oncology and Epidiolex. And of the remaining 50% coming from our SLEEP franchise, the vast majority of that is coming from Xywav. Xyrem is just a very small portion of our business. So you can see how much not only have we grown our revenue, but also diversified it over that period of time now having multiple growth drivers within our business, Xywav, the only low sodium oxybate on the market, the only medicine approved for IH as well. Epidiolex and Rylaze contributing about 2/3 of our revenue. So in a very different position today and providing long-term growth opportunities for us. If we shift over to the R&D operations and our pipeline, that has also completely transformed over the last several years. We've invested heavily in our pipeline in R&D. We've dramatically expanded our capabilities. We now have end-to-end capabilities in research. And given the investments, we're positioned now to have up to 4 late-stage readouts over the next 18 months. Rob will talk about those shortly, but we have JZP150 and PTSD at the end of the year, followed up in the first half of next year with essential tremor reading out with suvecaltamide. We have a meaningful Zanidatamab readout in 2024 with GEA. And then at the end of '24, early '25 our first-line study of Zepzelca in combination with Tecentriq in extensive stage small cell lung cancer is positioned to read out another growth driver. So all of these indications, areas of significant unmet need, creating meaningful opportunity. And I'll also note that Xywav and Rylaze, 2 of our important commercial growth drivers, came from within our pipeline, concept through approval through the R&D operations. So it's a great place for us to be. And then just underpinning commercial and R&D is our focus on operational excellence, strategic allocation of capital. We've been highly focused on growth, investing behind our brands for top line growth, the pipeline for long-term growth as well as inorganic growth through select corporate development transactions where we're actively assessing opportunities. Importantly, we are well capitalized with a strong financial position to be able to execute on the strategy. We ended the second quarter with $1.4 billion in cash. We generated over $600 million in the first 6 months of this year, that was more than $100 million than what we generated in the prior 6 months in 2022. We fully delevered the balance sheet. So we're in a great position to continue to invest in growth coming out of the GW transaction. So all in all, we are incredibly excited. We have strong momentum in terms of our business, a lot of excitement within our employee base as well in terms of where we're headed. And with that, Peter, I'll turn it over to you for Q&A.

Yes. No, I noticed it from catching up with you last year, there's a lot going on in the pipeline, it's built up. But before we get all into the nitty-gritty, just a couple of -- just a follow-up on some of the points you made. I mean the guidance upgrade you gave this year, is that a function of is Xyrem not eroding as quickly as you expected? The performance of the growth drivers being better or a combination? And then to add on to that, if you were to sort of retires today, your confidence in meeting those 2025 targets and the current business with the pipeline get you there? Or you going to need further BD to get to targets?

Yes. So starting with the guidance, we did raise the guidance, both the top line and the bottom line, the top line driven by neuroscience and primarily by our continued confidence in the oxybate franchise. Xywav growth is strong. We continue to see healthy adoption in the face of authorized generics. And so sitting at the middle of the year, we felt very comfortable raising that guidance. And then as I mentioned, we also raised our adjusted net income as well as our adjusted earnings per share by about $1.20 a share. So bringing more and more capital down to the bottom line. In terms of Vision 2025, we reiterated our confidence in being able to meet that goal. We do expect meeting the revenue goal will likely require additional business development. We have a history of putting capital to work and doing that in order to generate more growth and diversification. In 2020, we closed the Zepzelca transaction, $200 million upfront. It's generated well over $700 million in revenue. So highly accretive and quickly. '21, of course, was GW. That was accretive in the first full calendar year and then at the end of last year. We executed the licensing agreement for Zanidatamab, which I'm sure we're going to talk about, we're all very excited about that. So likely some business development that will come to really optimize the portfolio, not something transformational as GW was because that was the right transaction for us at the time.

Very clear. And then just on BD, you talked about having over $1 billion of cash. But in terms of your capital allocation priorities or willingness to put leverage on the balance sheet, can you just remind us what they are?

Yes. So we ended Q2 with adjusted net leverage of 2.6x. So in a healthy position good cash, as I've mentioned. So while we don't have specific net leverage targets, we really think about ensuring that we maintain flexibility to invest in growth. That is our primary driver in terms of our capital allocation strategy, investing in our growth brands, Xywav, Epidiolex and Rylaze investing in our pipeline, in particular, with Zanidatamab, we, at our earnings recently announced, we expect that to be a $2 billion-plus peak product. And so you'll see us putting capital behind that. and long-term growth in the pipeline as well as corporate development. We did take the opportunity in Q2 to buy back shares. We reinitiated our buyback program, spent just under $100 million. So we'll continue to do that opportunistically as well. We have about $336 million left under that program.

And then just a separate discussion around the current business in the U.S., what is -- how skewed is it towards Commercial versus Medicare? And the reason for the question is from everyone, a big theme at the conference is IRA, and it's not just about the top 10 drugs that have been listed, but how it impacts capital allocation, Rob's business, how much of an impact -- how much is it impacting your thought process going forward? Now I believe for Jazz, it's probably less of an issue versus other companies. But can you just remind us what that Commercial, Medicare SKU looks like across your business?

Yes. The vast majority of our business is commercial. So we're relatively insulated from some of the Medicare drug policy changes that are coming or already in place, we don't expect to appear on a negotiation list anytime soon. But certainly, we take it strongly into consideration with respect to pipeline investments and prioritizations as well as with corporate development.

Maybe I could just bring Rob in, just before we go into the partner, but when you think about the implications of the IRA, how you do small molecule oncology development, I mean we all know the playbook about you start off in a very -- should we say, high unmet needs. Maybe commercially less attractive opportunity to go to the market and then you build towards frontline penetration. I mean that is going to be -- it's more difficult to do surely under the IRA.

Sort of a complex piece of legislation that may even evolve over time, we'll have to see about that. But we're certainly looking at that. I think in the near term, we're not seeing that, that will change our plans. If you think about Zanidatamab, for example, we think it still makes sense to have an early launch with BTC. That will set us up for compendium use right away, probably given all the data we have across different indications and then accelerate bringing GEA on not only through compendium, but through the review process with the FDA. So we think our plan to go fast with BTC, first, accelerate GEA as much as we can and then to move into several different cancer types after that still makes sense.

Clear. All right. So I do want to come back to the pipeline, but maybe let's just address the near-term commercial drivers and starting with oxybate. Could you just update us in terms of the trends that you're seeing, the volume penetration generics have achieved and how you're doing in the various indications and the potential of any for expansion beyond the U.S.?

Yes. So maybe I'll start and then ask Rob to comment as well. So with respect to oxybate, that is really primarily a U.S. North America brand for us, the dynamics outside the U.S. and Europe, et cetera, are a little different there. But we have, as I mentioned, we've raised guidance primarily based on our ongoing confidence and growing confidence in how the oxybate business is doing. We had a healthy adoption for narcolepsy and IH driven by underlying demand in the second quarter. So we're pleased with how the business is performing. We've done well in the face of authorized generics in the first half of the year. And in terms of the messaging and the understanding of low sodium and the importance of that within the medical community, that's resonating and well understood. Rob, do you want to comment further?

Yes, I would reiterate that this is a question of safety versus, I would say, potential convenience around once nightly. The negative cardiovascular impact of high sodium that you get with either the fixed dose formulation or with Xyrem is called out in the label and well understood amongst prescribers, especially in a population where the cardiovascular risk is higher than the general population. You may have seen the abstract we published at AAN, showing that even within 6 months, patients who are starting on a sodium oxybate versus other narcolepsy medications have a much higher risk of new onset hypertension. And so I think that's the key point of differentiation for Xywav. But beyond that, we know that the flexible dosing with Xywav, which is in the label is actually an important advantage and differentiator for patients who those day-to-day routine is not fixed. Sometimes narcolepsy patients are going to bed early. Sometimes they're going a bit later. Sometimes they're getting up earlier are getting up later and the ability to give uneven doses is really important. If you go to bed early and you wake up, taking that second dose adds a benefit in terms of consolidation and more normalization of sleep. If you have to go to bed early and still get up late, you have the option of skipping that dose, you can take uneven doses. Whereas with a fixed-dose formulation, you may not get the full benefit that you would from 2 doses. And you may, if you're going to bed late, have a challenge in terms of getting up. And so safety, I think, is the most important factor that's well established and well understood. But it's not clear that the potential convenience for once nightly is really an advantage for the great majority of narcolepsy patients.

So 2 -- just 2 follow-ons. One is a little bit of a selfish one because I do cover your authorized generic. So I have got a vested interest, and I saw them yesterday. But we were expecting 4 generics second half of the year, there's only 2. And we all know this what you said publicly about a royalty rate that you can drive free London buses through 10% to 90%. But Hikma is very pleased with the performance of their AG. You're very pleased with the performance of your franchise. So using mosaic theory would it be fair for me to assume that the royalty rate already now that you're receiving from Hikma is more towards the top end of that range because that seems to be the logical the way to -- I'm not asking you for a forecast or a precise number. I just want to make sure I got my math right.

So thank you for the question, and I like your analogy to the London bus driving through. So that increasing royalty rate, that 10% to 90% range, that existed in the first half of 2023. And of course, that was that rate increased as their volume percentage share increase. So that was the first 6 months of '23. Now the second 6 months of '23, the rate increases to a fixed rate where both we and Hikma are eligible for meaningful economics from their sale of authorized generics. So we do expect the second half of the year to be substantially higher based on the underlying nature of the royalty. And then of course, as we progress into 2024, the rate increases, again, pretty substantially to a high double-digit rate. And then Hikma, of course, is the only unlimited volume authorized generic. Of the other authorized generics, there were 3. Only 1 has launched, as you stated. Those are severely limited in volume. And so we haven't heard the intention of the other 2 to launch.

And then just my last question on the oxybate franchise, Rob. Just the competitive landscape, I think there's focus in the market on a couple of assets, Limerix and [indiscernible], I believe, just -- is this an area where you think more new competition grows the market stronger? Or do you see areas of differentiation for the oxybate?

Yes, I would certainly say that the market is likely to grow with new agents coming into and that's probably the most important factor. With regard to [indiscernible], which is potentially more near term, both for narcolepsy and IH, we think that a driver of the daytime symptoms is the abnormal nighttime sleep. Oxybate really addresses that effectively both in narcolepsy and in IH, I think of these things as complementary. Orexin, obviously, we find that very interesting. We have an orexin, we're developing it. Time will tell what's differentiating there and how that would be used in the context of oxybate. There's very little data on treatment with an orexin during the day and the impact on nighttime sleep. So still thinking about that also as potentially complementary for patients who are already benefiting from nighttime oxybate.

And can I just check because I cover dose as well. They've had to say an interesting experience with orexin, there's no plans for Jazz to try and explore orexin in insomnia. This is very much going to be a narcolepsy and [indiscernible].

Well, remember, our drug is an orexin agonist.

Okay. An agonist.

Okay. And so the antagonists are out there for insomnia. So this is really an alerting daytime, alerting agent. It's directly linked to biology that's, I would say, most dramatic in NT1, where you have loss of the ligand around the -- for the orexin receptor and you have upregulation of orexin receptors, which is the case primarily for NT1. But you see even in NT2, some changes in the orexin ligand, hypocretin lower levels than normal. And so we do think that potentially beneficial beyond NT1 maybe into other disorders like IH or any other sort of daytime sleepiness, but early days around that.

Okay. Just going to pause, see if any questions on oxybate before I move on. So Epidiolex that is more of a global brand. Can you start off by providing an update on how it's doing both in the U.S. and Europe and beyond geographic expansion, label expansion efforts, timelines on that, please?

Yes, absolutely. So maybe I'll start with respect to commercial performance and then pass it to Rob to talk about some of the expansion opportunities. So we grew 15% year-over-year. We're now approved and reimbursed in 23 different markets. So this is truly a global product for us. In the U.S., seeing growth in Europe seeing growth expanding in indications across Europe in different markets as well as entering new markets. And then in the U.S., we're seeing a lot of interest in our data that we've generated in combination with Clobazam and the seizure control, even beyond what we're seeing with seizures, the caregiver survey that become data talking about behavioral and cognitive benefits that's really resonating with HCPs and caregivers. But we are looking at opportunities to expand as well.

So certainly looking to expand in Japan and have a pivotal program there that's really designed to be a bridging study from the global program. So it's 3 single-arm cohorts that would ultimately lead to approval in our 3 indications. In [ BenisCastau ], we estimate 4,000 addressable patients in Japan, Travel another 3,000, TSC maybe between 10,000 and 15,000, and all of those will be covered by our ongoing pivotal program there. So that's very important.

When the day is coming over?

Haven't said when it's coming out, but relatively small. At some point, we will, but a relatively small study and accruing very well.

Soon-ish? My words, not yours. Okay. Fine. What about the competitive landscape? I mean UCB are out there with Fintepla, SK Bio and [indiscernible], I mean just how do you assess the competitive landscape or...

Yes. I mean from a medical perspective, Epidiolex is very well tolerated, very combinable. Patients tend to stay on it. The clinical context is really severely affected patients who need to be on more than one therapy. And so we're seeing good durability because patients may have it added to an existing regimen, they may have additional drugs added on top of it. And part of the durability has to do, as Renee alluded to, definitely really strong effects on seizures, especially combining with clobazam showing some synergy, but also the benefits that are outside of addressing seizures as was demonstrated in some of the data we presented around well-being behavior, communication, et cetera, from the caregiver survey. We're looking to extend some of that data by doing a study we call Epacom, which is now underway as well as supporting research through real-world evidence, for example, and investing in initiated research. So we think data accumulating there will certainly support its greater adoption moving forward.

Okay. And then just rounding out on the commercial side, the oncology franchise, Zepzelca and Rylaze. Just on Zepzelca, we just will leave the first one opportunities later on. But just in the second line, can you update us where you believe you are on penetration, average duration and Rylaze, I believe, got European CHMP. So just contrast the Europe opportunity versus the U.S. And I think you're trying to expand into adolescents and adults. So just could you provide an update on the oncology portfolio?

Sure. Great. So thanks for the question. Yes. Zepzelca, we're really happy where we are. We're the #1 agent in second line small cell lung cancer. We have been and we continue to be that and we continue to see continued penetration and uptake. So I would say, as Renee said, $750, about $750 million cumulative sales since we launched the product in the U.S. We did about $70 million in Q2, single-digit growth over a year-on-year quarter. So again, we feel really good. I won't -- we haven't really disclosed our duration of therapy, but what I'd say is it's in line with what we expect, and we continue to kind of see good progress there. If I switch gears to Rylaze, yes, we did a CHMP positive opinion. We expect EC approval sometime by the end of the year. Really excited about taking what we've seen in the U.S. in terms of tremendous uptake and great customer feedback on Rylaze and [indiscernible] in Europe in terms of having a high quality, reliable or winner non-icon-based beroginase, which is critical for treatment of ALL. What I'd say, though, is there are some differences in some of the market dynamics in Europe than the U.S. We -- it's a competitive landscape along with some different market access dynamics. So we do think it's going to be a growth driver, but it will be a little bit different than what we've seen in the U.S. If I can maybe switch gears back to the adult young adult market, the AYA segment. I think just to kind of give a high level, we had a fantastic Q2 $100 million in the U.S. on Rylaze. And we continue to see growth in particular, this AYA segment, where in the pediatric segment, we see asparaginase universally adopted protocols. In the AYA, it's not universal, but what we do and we're continuing to focus on those AYA treaters who use asparaginase-based protocols to educate around the urgency of switching to a Rylaze when you have a hypersensitive reaction. We continue to see good traction with that. We continue to roll out new materials, new tactics to educate that urgency to switch. And we're seeing growth in that segment as well. So we're still in the middle of what we think is a great launch on Rylaze in the U.S. and looking forward to Europe.

Great to hear.

If I can just chime in. Really proud of the execution on Rylaze. When I started Jazz a little more than 4 years ago, we hadn't even yet started the pivotal program. So now we have more than a year of experience in the U.S. and soon to have adoption in the EU. Also back to Zepzelca, the main -- the leader in second line, the main competition is very poor choice of repeating platinum in some patients who had a very good platinum response upfront. We think that Zepzelca is a better choice there, much better tolerated drug and efficacy that's certainly is good or better. Challenges. We don't have a lot of data there from a relatively small initial trial and we'll get more over time. But there is an observation -- prospective observational study that we started about a year ago. and we're expecting data on that to inform that question of at least add experience to that platinum-sensitive population.

Part of migrants, you've given like cumulative sales, but have you given any sort of peak sales targets on either asset or Zepzelca?

I don't believe we can give peak sales targets.

I had a feeling that was the answer. Okay. Onto the pipeline, Rob, maybe Zanidatamab first, lots of indications, but let's just take it 1 at a time, just in terms of binary tracks, where are we? How are you thinking about the commercial opportunity, the proposition from a Jazz perspective?

Yes. Really exciting opportunity from my perspective, and I would say 9 months since the deal the data that have come back have even strengthened my optimism about how that's going to go. Core to this is understanding what Zanidatamab is. It's a very unique differentiated bispecific monoclonal antibody. The arms of the antibody bind familiar epitopes and that they correspond to what Herceptin and PERJETA bind. But the differentiation really comes from the fact that when you deliver it that way, the arms of that antibody must bind different receptors because they're too close to each other. And so what you get that's differentiated from giving site 2 separate antibodies together is receptor clustering, much more effectively shuts down HER2 signaling through internalization as well as interfering with HER3 signaling because it prevents dimerization with HER2 and is a much more effective immune agent and that it induces better ADCC, CDC and phagocytosis. So you see that preclinically and Zymeworks have published on that. We also see it clinically, if you look, say, cross studies at the data we have in BTC, response rates over 40% versus Herceptin, which are in the low 20%. If you look at our frontline GEA data comparing those to with chemo to Herceptin with chemo, clearly differentiated. If you look at some of the other data where we see activity after patients have failed both Herceptin and PERJETA even after they've failed in HER2, it's clearly best-in-class HER2 antibody that's differentiated. . I love the strategy that Zymeworks put in place, leveraging the very strong data in BTC to get on the market fast. We've been talking to FDA about this. We believe the data we have will support approval in the U.S. and likely beyond the U.S. We needed to establish with FDA what the confirmatory trial would be that wasn't established by Zymeworks in part because that frontline treatment landscape has been changing with the introduction of Imfinzi. We now have agreed to a frontline trial, and that opens a path for us to begin the BLA planning for BTC. So we do think that's going to be the first approval.

How that trial be set up, given your comments about...

The first line trial?

About the landscape changing?

Yes. So the -- so currently standard of care is PD-L1 Imfinzi plus chemo and BTC. We're likely to see KEYTRUDA approval. So that trial will be set up to be most likely choice of I/O with chemo as a backbone plus or minus Zanidatamab in the front line.

Got it. And then the Commercial opportunity when you think about patient addressable market in the HER2 positive space in second line and last...

For BTC, we think of that at about 12,000 patients, that will be our initial...

G7 or U.S.?

G7. That will be our initial population. Of course, that expands and increases duration of therapy as you get into a frontline. But nearer term than that frontline BTC would be our GEA. So we published, as I mentioned, frontline single-arm data with an plus chemo, where we saw results that certainly look better than standard of care. We had 83% survival at 18 months. I hadn't yet reached a medium where Herceptin should be in that 14 to 16 months range. That trial is very -- is progressing well, and we've said we expect data in 2024.

Have we said much more than that when in '24?

We haven't. And there's obviously as we get further along, will be a little easier. It's an events-driven trial based on PFS. So we'll be able to add color to that as we get a little bit closer. I think the news around Keynote-811 is actually positive overall for us because, for one, in that, what I think is a sizable population of PD-L1 negative patients, the standard of care is still Herceptin, and I spoke to why we think we're superior to Herceptin. But I think also the news that PD-1 is adding substantially in that population is actually very important. Our trial has a third arm with BeiGene's PD-1 inhibitor tozalizumab. And I think PD-1 tozalizumab is every bit as good as KEYTRUDA. So I don't think that -- which PD-1 use really differentiates, but which HER2 agent use does differentiate. So we think PD-L1 negative will be the treatment of choice PD-L1 positive. We're likely to be the treatment of choice as well.

Can I add just a couple of points on the commercial differentiation. What we feel really excited what Rob has just explained on the science, we've already seen it play out at ASCO when the BTC data was presented. It was called the best of ASCO presentation and a really tough to treat tumor. If you kind of play that forward, we have talked to a number of large oncology providers in the U.S. they're very excited. They see this as a unique HER2 agent, not just a HER2. So we feel really good around -- even though the HER2 space has other agents. We think this is a really unique molecule that already stands out that has clinical data that sends up that will help kind of build that aspiration of the $2 billion plus opportunity starting with BTC and then quickly pulling to other indications.

You talked about other HER2 agents, and I think everyone in the room, the whole market is stoked around ADCs and in HER2 story and what others are trying to do around that. So how do you fit in the because the data is pretty compelling. And I do believe, correct me if wrong, you're trying to go into breast. I mean how sort of that's a pretty tough landscape.

I think there's a lot of spaces for Zanidatamab across other indications. The thing about HER2 amplified cancers is, they remain HER2 amplified. The macna resistance is not around other mutations typically. They remain HER2 amplified. It continues to be a driver and you have to address the HER2 signaling one way or another. . I mentioned that Zanidatamab is active even when patients have progressed on prior agents. And HER2 strength is that it's an ADC. It uses chemotherapies. It's a primary mode of action. It's essentially a Herceptin antibody with chemotherapy. Resistance there in the great majority of cases is likely to be resistant to the payload to the [indiscernible] inhibitor. And that's why we think we see activity even after in HER2 like we do after Herceptin or PERJETA. So clearly, there's room across different tumor types for Zanidatamab. Breast is probably the example since you brought it up, if there being a lot of different agents in there. We still think we have an opportunity because, again, later lines of therapy breast cancer patients tend to make it into later lines. So wherever in HER2 is ultimately positioned. We think we can follow it and we'll be planning to do studies in those later line. Zymeworks has published on chemo plus Zanidatamab as a late line agent with very encouraging results. Also interesting data that were presented at San Antonio last December, in those patients who are HER2-positive and estrogen receptor-positive chemo-free regimen combining palbo fulvestrant. Zani was highly effective. And so we think there's an opportunity to change the treatment paradigm into a chemo-free regimen.

And just to add, there's a different benefit risk profile with antibody drug conjugates, you get a lot of the chemotoxicities on a cumulative basis as you're starting to use these HER2-directed agents in other tumors longer term, those toxicities build, that's where we love Zani because it is truly a bispecific that's a naked antibody, not conjugated and gives us a lot of flexibility or clinician's flexibility to use this product in different ways.

Where I think that potentially becomes pretty important as early stage disease. So Shortly after Jazz in-licensing, we were approached by [indiscernible], which is a cooperative group that runs early-stage experimental breast cancer studies. In early-stage breast cancer, the prognosis is actually great. The challenge is that's with a pretty intensive therapy that results in hair loss, significant GI toxicity, sometimes over at least 6 months. And so the field is really looking to de-intensify get away -- the intensified chemo, potentially eliminate chemotherapy. So we think Zani is a better choice in that setting than even in ADC. And so we're already pursuing early-stage breast cancer as well. I think you can view that as a paradigm for where we might go, say in gastric cancer, which also has similar dynamics in the early stage. And then lastly, because Zani looks so much better than Herceptin in places where Herceptin was kind of not pursued, we think Zani as potential as well. So if you think about high rates of expression in ovarian, endometrial, other tumors where Herceptin was just never adopted, there's open white space there as well.

Clear. I'm just keeping it on the time realize we're fast running out and there's quite a lot of assets still to talk about. So let's do Zepzelca in first line. What can you talk about to the study that you've designed with PD1 combo with [indiscernible]. Can you just remind people how you've designed the study? What you would consider to be clinically meaningful and then just the commercial opportunity?

Yes. So first rationale than how we design it. Rationale there is there is an opportunity to preemptively treat those frontline patients with a highly active drug and to do it in a way that potentially synergizes with PD-1, for which we have data. So the scenario in front-line small cell is patients tend to get a very good response to the platinum doublet with etoposide during that 3 months of therapy or about 4 cycles. Almost everybody responds or less than 10% progressed through that. Yes, patients can only get those 4 months of therapy because of the poor tolerability, then they have to stop. Virtually everyone has active residual disease, and they're just waiting to relapse. And if you look at, say, the ATS pivotal trial, the relapses start really fast as soon as you stop chemotherapy. So the idea is a switch maintenance study where rather than waiting for those patients to progress and then catching them in second line, you get them while they're still healthy, have a reduced disease burden and then you add in an active agent, in this case, [ abselCa ]. We know already that times are benefit from ongoing cytotoxic drugs. As cells die as the so-called immunogenic cell death, antigens are presented to the immune system, which allows for continued benefit. So you really want to have cytotoxic drug on for as long as you can. And that's why we think it's not just additive, but potentially synergistic with atezolizumab. From a design perspective, this is add-on. So our comparison is against nothing, not a placebo-controlled trial, but it's against nothing. And we know that our path is to approval is through PFS, where there's an enormous potential opportunity to change that curve. So we think it's a great opportunity, highly likely to succeed, and we're expecting a readout late 2020 -- as early as late 2024.

And what would you like to -- I mean, for you a minimum requirement on PFS, it would be 3 months longer. I mean can you give any ballpark figure you'd like to...

Yes. It's always a discussion with the FDA. And the way we set up the trial is we'll have an interim analysis on OS at the same time, and then there'll be later a final analysis. You want to see some supportive trend at least or at least not a detriment on OS. So depending on what that shows, certainly 3 months would be compelling.

Okay. Can we round out with maybe the 2 neuro assets, Zomacaltimide and JZP150. And quite topics [ Lundbeck ] had some PTSD data this morning. A big market opportunity, but it does feel like it's fraud with danger in terms of the endpoint, how you -- the heterogeneous the population. So -- in the last 4 minutes, can we talk about the newer pipeline and those too assets?

Well, in PTS, I'll start there. JZP150 is a FAAH Inhibitor. It's an irreversible FAAH Inhibitors, which is differentiated from other inhibitors that are out there. We think there's a strong hypothesis around the role of the endocannabinoid system in PTSD. You see that anandamide levels, which is the ligand for CB1, CB2 are depressed and associated with symptoms in PTSD, inhibiting FAAH elevates anandamide level. So it reverses one of the core pathologic states in PTSD. Supporting that, we saw benefits on anxiety associated with cannabis use disorder in a small study in an experimental model that's designed to predict benefit in PTSD, so-called fear extension model. We saw benefits, and so it's a strong hypothesis. This is the first time we're ever evaluating PTSD with the drug. So it's relatively early days. But we think it's a good study design. It's a large study, 270 patients. It's well controlled, 2 dose levels, placebo, and it uses the registration endpoint. So we think we'll learn a lot from that. And if we see something positive, we'll be able to go to pivotal trials with a pretty good...

When do you hope to hear something on that?

Going to turn that card this year essential tremor with our CAP3 inhibitor is actually further along because we had proof-of-concept data at the time that we had licensed it. We had the opportunity to reformulate it once a day. We have the benefit of learning from the proof-of-concept in terms of our study design. So we have 3 dose levels, 12 weeks of treatment, a composite endpoint that's been agreed upon with FDA. And that trial, we expect to read out first half of next year.

And have you done anything [indiscernible] word, but have you anything in terms of patient selection to try and sort of...

Yes, we certainly looked at the data from the proof of concept to make sure we have a degree of severity that where we think we can show a benefit. And I would just say last on that is that there are other CAP3 inhibitors out there. We think 385 is highly differentiated in that it's a state-dependent inhibitor. Essential tremor is a disease where the underlying pathophysiology involves hyperactive calciums and I need to address those hyperactive calcium channels. We think a state-dependent inhibitor preferentially hits those versus resting state calcium channels. And that just allows you to drive dose with a better therapeutic index.

Is there anything else in the pipeline that you want to highlight? I know it's going to be early stage. You've got a few assets. I'm not going to list them all out -- but in the last 45 seconds, the one to watch on the...

Yes. On the oncology side, we have a pan-RAF inhibitor that's in the clinic. That pathway essential to many different types of cancer. And so we're excited about that progressing. We're about to dose for JZP898, which is an interferon alpha that is conditionally activated in the tumor potentially providing a much bigger therapeutic index. We know interferon alpha is effective in multiple different tumor types. And so by delivering more drug to the tumor, we think that it becomes then a much more active agent and good potential...

How do you differentiate? What's the magic source? How do you get the differential activation?

There are proteases in tumors that don't exist outside of tumors. And so there's a linker that's clean, it's only active in the tumor.

Cool. And is that very early stage? Or can we see that when we...

That's about to enter the clinic.

Okay. Cool. Look, unless there are any questions in the room, we've just run out of time. On behalf of everyone here, thank you very much for your time.

Thank you for having us.

Thank you.