Jazz Pharmaceuticals plc ($JAZZ)

Hello everyone. I really appreciate it. I hope the morning bring you well. My name is Akash Tiwari. I'm a pharma and biotech analyst here at Jefferies. Today is day 1 of at least the public portion of our New York City Healthcare Conference. Very pleased to have Jazz Pharmaceuticals; one of our high conviction bets in biotech and a company that I think is really at a point where they're seeing a transition to becoming really a full-fledged biotech story scaling and I think something that investors should be paying attention to. Rob, why don't I hand it off to you to give some introductory remarks, and then we'll get started with Q&A.

Thanks, Akash, for having us. And just a quick comment that Rob and I will be making some forward-looking statements today. So please do refer to our risk factors in our SEC documents and any guidance we refer to as our first quarter guidance that we provided.

Yes, Akash, thank you for having us. I don't have any introductory comments. Happy to get right into your questions.

I love it. All right. So look, I think this is a question that I think I'll often hear from investors, which is, I haven't looked at Jazz in 5, 10 years. Remember, they had some sleep drug, has the story changed? And it's kind of remarkable to me because you've done the GW transaction, you have $1 billion oncology franchise, even ex the Zahira acquisition. And yet I think intellectually, a lot of investors who haven't seen your story recently, still think about sodium oxybate as kind of the primary focus. So this question is really like the jazz of the last 20 years doesn't need to be the jazz of the next 10 to 15. So when you think about your investment and your interest, whether it's in rare oncology, orphan, neuroscience or just wholesale Ziihera development, what's that mix in the next 5, 10 years for you as few Medical Officer versus what we've seen historically? What are investors getting wrong?

Yes. Thanks for the question. So for me, I started 7 years ago, this was my eighth ASCO as Jazz CMO and Head of R&D. When I started, as you said, we had some important products in oncology, niche products like Defitelio at the time, Erwinaze and Vyxeos and we had Xyrem, not yet Xywav and I came to Jazz really to build an innovative biopharma company and really expand R&D out so that we could be doing development in innovative areas from the very beginning of research through medical fairs. And to your point, Akash, I think we've been even more successful than I thought we might have. We've done some very important things internally. So develop Xywav in-house as a safer oxybate for patients with narcolepsy and then extended its label in idiopathic hypersomnia, addressed a critical need for, Erwinaze where there were drug shortages by developing in-house, a novel manufacturing process that gave us Rylaze and then began to build the pipeline around core competencies in new areas to diversify our business ultimately, and some notable things there. One of the earliest oncology deals we did was for Zepzelca. That was intended to be a second-line product for -- for small cell lung cancer. With the vision of saying this really could be used in frontline maintenance. And that was something that had never been done in small cell lung cancer before because those patients have a pretty rough induction with chemotherapy and typically need a break. We -- because Zepzelca is well tolerated, we were able to weave that into a maintenance study, did that in partnership with Genentech and of course, now have a frontline label there. interesting data at ASCO this year showing that it's having a benefit even in patients with an immunosuppressed phenotype, so-called tumor-associated macrophage high. and really positioned well in that front line. We, of course, brought zanidatamab in on the basis of biliary tract data, saw that through an approval executed on the frontline GA study, which we're pleased is the first ever Jazz New England Journal of Medicine paper published last Thursday, I think definitively showing that this -- this should be the HER2 agent of choice in frontline chemo and should be combined with PD-1 antagonist. And so I think we've been able to diversify and get into new areas in oncology. Of course, there was the Chimerix acquisition last summer, and Modeyso is off to a terrific start as a pediatric oncologist to see that we now have a treatment option for these patients is amazing and very excited to see that action could bring that into the frontline. Of course, a major transformative deal for us was the GW Pharma deal where we brought in what's now the largest grossing epilepsy drug in Epidiolex and importantly, created for us an in-house expertise from research, literally discovery chemistry through commercial in epilepsy, we're now leveraging. We announced we have JZP-047, which is an in-house invented, discovered molecule for absence epilepsy, and we've positioned ourselves as a real partner for choice in a rapidly expanding epilepsy field with new opportunities coming from our improved understanding of genetics and epilepsy. So deals like San Diona and others that I think we will be well positioned to be a partner of choice for it. So in those, as you say, 5 to 10 years, I think we've shown that we know where to focus, we can select good deals for partnerships. We're discovering and developing molecules in-house. And we're executing well, not only on the commercial side, but when we have an opportunity like zanidatamab in GEA, we can go from data to a final submission in essentially 3 months.

Understood. One thing I do want to kind of close the loop on -- it's interesting, I cover Lilly, and certainly, I think their perspective on orexins and the importance of really modulating cognition and sleep is far more broad than just, let's say, an orphan market. We think about ADHD or 25% of patients with Alzheimer's suffer from insominia, right? And I do think there's probably going to be that wider perspective. I know your team has been working on your own internal orexin programs that have had some safety issues in the past. But it does seem like you may need different PK and you may need a different product profile. You're not thinking about just MWT, you measured 4x to have coverage in these other indications. So can you talk about your long-term approach with what we're seeing with orexin biology.

Yes. Thanks for the question, and I think great insights about where the field is going and what the optimal molecule might be. So it's interesting. We certainly started by saying we're very interested in this because the early data showed it's a very potent wake-promoting agent, but also that it's likely to be complementary to to Xyrem. It's not likely to improve disrupted nighttime sleep. And in patients with narcolepsy type 1 or type 2, idiopathic hypersomnia, the root cause is disrupted nighttime sleep. And there's no wake-promoting agent that can address that, and it's certainly not the case for orexins. So we started to talk about that. And I think now that's taken more as a given. Your point also that whether you're talking about hypersomnias or other potential applications, it does matter the clinical pharmacology and the PK profile. And so for us, -- we think there's an opportunity still to have a best in class. What we've seen so far is drugs that have a long enough half-life or even on that first day, you're seeing reports of insomnia. And to your point, NT1 is very, very sensitive to these agents because of the loss of orexin neurons and the massive upregulation that happens with orexin-2 receptors very, very sensitive. But what you get into other hypersomnias old diseases like ADHD or cognition in Alzheimer's disease, you're going to need to push that dose. And you're going to need to be able to do that and still have the exposure come down at night so that you don't disrupt sleep in any of those conditions, which would be counterproductive. And I saw this when I was working at Merck on the H3 inverse agonist program we had 5, none of which progressed all for the same reason, the half life is just too long. And so we did with the Sumitomo collaboration, we did have a molecule that was in the clinic that failed due to safety reasons. We do have a backup compound that's preclinical that we hope to comment further on in the near future. And it's our aspiration to have a compound that's differentiated in many ways, inclusive of a more suitable half-life across indications. So I do think there's time -- remember the first approval is NT1 only. We still haven't CNA data, even in other hypersomnia. plenty of opportunity for the field.

Understood. Now maybe getting into Ziihera development, and I'll give you kind of a near-term question first, which is really the label that you expect with Ziihera. And the question we'll often get is like could there be a narrow label in ICHs versus 3 plus. I mean, I have my own view given your clinical data, but I'd love to get your take, how should investors think about the label you'll be getting with your PDUFA date?

We wouldn't comment on specific label negotiations, and it's still early enough in the process that that will pay out. I'll tell you my view of what I think the label should be. And I think that starts with what what do we think we've proven with this clinical trial. So the clinical trial, first and foremost, was a test of zani versus Herceptin. And definitively, no matter how you measure that, we believe, Zani replaces Herceptin's. I think there's a role in most of the -- really every GI oncologist, I speak to says that tislelizumab is a historical regimen here. The second question, even though it wasn't powered was tislelizumab as a PD-1 inhibitor had benefit. I think those results are also clear. And not surprisingly to me, even though it might have been a surprise to others, we see benefit in the PD-L1 negative patients, which is notable because the prior studies with KEYTRUDA and HER2+ and negative and nivolumab, atezolizumab in the HER2 negative populations, none of them showed benefit in PD-L1 negative. And we think this is because of the differentiated mechanism of action for zanidatamab, which is highly immune active. It's the only antibody that fixes complement and activates the complement cascade and also triggers ADCC and ADCP. So you have this massive recruitment of NK cells and macrophages, causing inflammation at the tumor site and synergizing with immunotherapy. So we think that is the new standard of care, the triplet. And your question about what to expect from the label? I expect both drugs to be approved. And I also expect it to be -- well, let me say this. I think the data support because I can't speak for the FDA, the data support that both drugs will be approved, the data support its use irrespective of PD-L1 status. And you asked specifically about IHC 3 plus 2 plus. Here, we have a trial where the great majority of patients, more than 80% were 3-plus were a very small subset. And when we look at that subset of IAC 2-plus the surprising results of the IHC 2 plus overperforming, I think, can be easily explained by small sample size variation and then some compounding factors there. And we certainly are positioning it that way with FDA.

Understood.

Now ultimately, if it's somehow the label is not inclusive of 2 plus, I think the data and information are out there way that docs understand that Zani is superior to Herceptin regardless of 3 plus or 2 plus. .

Understood. And that's something I think we hear with our KOL work is that biological questions has been seemingly answered. This is better than Herceptin. Now when we think about really uptake, and I know you're not on the commercial side, -- but I can't help but think this is something where you've shown a clear benefit over standard of care. This is a well-defined patient population. And you have kind of pretty robust clinical data. When you think about your time at Merck and how fast KEYTRUDA uptake was in some of these indications, how should we be thinking about that for Jazz here in first-line GEA?

Mean this is the first study to show median survivals over 2 years. Over 24 months for Arm B and over 26 months for Arm C, we think it's definitively better, and we're acting with a great deal of urgency and so is the FDA. So we had data at end of November, and our submission was complete, even with the intervening holiday by the end of February. So we're moving with great speed. The FDA gave us RTOR, which meant we were able to give them data ahead of the final ahead of finalizing the submission that gave us breakthrough designation and priority review. So I also see them moving with speed. We had submitted to NCCN based on the abstract even knowing that NCCN typically likes to have the full publication, but we wanted to get them thinking about it at least. And as soon as we had the publication in New England Journal last week, we've updated it. And so the situation, I won't speak to the commercial because that's not my expertise. But were approved in BTC. These are the same doctors who are treating DEA. So we're on formularies. They have the drug in their hands. They know how to use it. this is a tight community. They're super excited about the results. You certainly appreciated that at the recent ASCO meeting. We hope NCCN acts quickly, and we feel the FDA should act on or before the PDUFA date. -- on where we are.

Okay. Very interesting. Now -- and then maybe just lastly, couple -- 2 other points on this. Number one, I know for the doublet, there's a potential another OS interim that's occurring. Can you kind of frame expectations? You've already hit on OS on the triplet. What are your expectations for that second interim roughly when would that occur? And is that something we should expect a positive interim OS?

Yes. So first of all, the survival data are not needed for approval in the U.S., especially given the magnitude [Audio Gap]

Let's look at wherever Herceptin worked. And why isn't any there? Or at least that discussion doesn't happen enough. And I think part of bridging into that, -- when you really look at how KEYTRUDA makes -- generates revenue, I think there's a shockingly high amount, which is in a maintenance setting, which is neoadjuvant post resection. And I don't think that's well appreciated by the Street. And you're actually developing that kind of adjuvant strategy with zani. And can you talk a bit about that like what are those big readouts you have and what are the sizes of those adjuvant opportunities relative to, let's say, first-line GEA where I think investors think about this as like, let's say, $1.1 billion, $1.2 billion opportunity?

Yes, that's a great question. And we are thinking about it that way. Now that we have head-to-head data with Herceptin, wherever Herceptin is the backbone, we think zani could do better. So I definitely think -- and by the way, -- there are places where Herceptin wasn't quite good enough to ultimately get a foothold where we also think. So that -- the example there is frontline BTC. No approved HER2 therapy. The strength of the data we have in second-line BTC suggests that our ongoing frontline trial has a high probability of success, especially since it's combined within immunotherapy. So the lessons from 301, as you say, anywhere where Herceptin goes, we should be able to compete. But also we think we're triggering a synergy, as I explained before. So the opportunity to combine with the PD-L1 may create synergy. So again, that frontline BTC trial bodes well. To your point, though, on neoadjuvant-adjuvant setting, Zani is especially well suited for that. Because remember, this is often a curative setting. So you want well-tolerated drugs. -- that can contribute not only to the cure, but also to the overall tolerability of the regimen. So in breast cancer space, we think we have an opportunity there. It's a little bit crowded, and it certainly is a little bit complicated when you look at various subtypes, ER positive or negative or the various molecular subtypes, which is why we're starting with a Phase II. So we have our own Phase II in that setting, as well as partnering with Ispy and MD Anderson to generate additional data. And we do hope that on the back end of that, we will have an opportunity to do a pivotal trial in that setting, and that would be very valuable. I want to come back to maybe other opportunities in breast cancer as well. But you asked specifically about neoadjuvant. So while we haven't committed to a neoadjuvant-adjuvant trial in the gastric space, if you're using the same principle you raised, which is wherever Herceptin is alone or hasn't yet had a foothold and wherever you can combine with immunotherapy, now we see how active it is in gastric, that's a logical place for us to explore as well. I want to make sure you get all your questions, but I'm also happy to talk about at some point, the rest of the development program where we might go in breast cancer from here. Other indications that are there.

Yes. I mean actually, I do want to hit on kind of post in HER2 and talk to us about why you're so confident that study will be successful. Again, I think a lot of people haven't done work on that study that's reading out next year. That's 2027, a cash problem. But this seems like the next big revenue driver for Ziihera. What's the biology showing that makes you confident that, that trial is going to work -- and how has kind of Herceptin Perjeta done in a similar setting so far? Because I know a lot of people looked at the JACOB study and some of these prior trials with GEA and applied it, but Zani, obviously outperformed, what's the precedent here in a post-NHER2 trial?

Yes. So -- and again, as the principal you raised, which I think is very insightful, if Herceptin is the standard, you should be able to beat it. And so that is the premise of 303 is -- this is against herceptin patients come in, they assign their chemotherapy, they get randomized zani versus Herceptin. A couple of important things around why that might work. We do have data with zanidatamab in a couple of different places, a late-line monotherapy study, combination with anti-CD47 and then the ER-positive group combo fulvestrant and palbociclib, showing that we have activity after multiple prior HER2 agents, inclusive of growing data showing activity after and HER2. And that makes sense because while there can be some mutations that occur that make cancers resistant to HER2 agents broadly. p Typically, the resistance mechanism for HER2 is resistance to the chemotherapy couple of ones. So that's why we think there's a rationale to use it there. The other rationale to study it for this to be the first major study we've done in breast cancer is how the treatment landscape is evolving. So you mentioned like what happens to Cleopatra, Cleopatra is frontline renal Herceptin Perjeta taxi. Well, if HER2 becomes entrenched in the front line and HER2 is essentially Herceptin with a topo payload, the study actually included Perjeta. So patients might be getting Herceptin Perjeta upfront. So what haven't they gotten by the time they get to second line? Well, they haven't gotten a taxi. -- and they haven't gotten other agents that haven't gotten Zani, obviously, but other agents that might synergize with them. So we've become very interested in best-in-class HER2 TKIs, which is why we have the partnership with Beringer and the partnership with iambic to look at what should be best-in-class. So if you're in that setting, zani plus a TKI that may actually increase receptor expression, play right into the MOA for Zani, that's a promising combination. So clearly went to 303 which at the moment third-line, fourth-line study because it's the highest unmet need and docs were saying, "We don't know what to give in this setting." we're also interested in studying breast in other areas. As I mentioned in the neoadjuvant adjuvant -- but I think there's pending the data that we're generating in our Phase Ibs. I think there's an opportunity to be in an earlier line even, which could be helpful because frontline GEA, you saw the amazing effects in the naive population. You want to give your best therapies upfront. As you get to third and fourth line, that's a more challenging population to study. And just like for Zepzelca where it's effective in second line, but much more effective line. You want to progress the drug earlier.

So a couple of things on that. what is your general confidence for the Phase III trial you have in that kind of more refractory post-HER2 setting? Are you confident that trial is going to be successful? And then number two, you mentioned you have data sets that are emerging with HER2 TKIs. What what patient populations are you running those combination approaches and that might inform a frontline strategy there?

So I mean, I wouldn't have started a pivotal trial just was confident. We started it before the GA data and given how well zani did against Herceptin and GA, it does give me even more confidence for the ongoing trial. The initial evaluation of the 2 TKI programs, the zangartinib and the Impac compound is in breast cancer. And I think that could -- these are both brain penetrant molecules that could address the specific problem of brain mets. So if you think about HER2CLIMB, which is tucatinib, Herceptin and chemotherapy, you have the opportunity to replace Herceptin with best-in-class and replace the tucatinib with a best-in-class, not only for efficacy but better tolerability because the greater selectivity of the new you could then be better positioned in a second line inclusive of true second line inclusive of patients with brain mets.

Understood. Now this is a -- like you talked to Exelixis is they had to develop cabo now they're having to develop Sanza, not as large-cap pharmaceutical companies, and it becomes this idea that, look, partnerships are not a nice to have, they're necessary because we need to get entrenched with standard of care and also how the field evolves. When you think about potential partnerships with pharma, where you're split economics, intern indications, let's say, similar to CheckMate 9ER with Bristol and Exelixis -- is that possible when we think about a broader opportunity for Ziihera?And what's your take about potentially combining Ziihera with APD-1/VEGF? ,

Great questions. looking at the clock. So I'm very open to these partnerships. In fact, I think the Genentech partnership on FORTE was fabulous for both companies. We both had expertise we brought to the table. We have both had molecules that made sense to put together we collaborated on the execution. We shared the cost and it was sort of flawless. What happens then in the commercial setting may depend a little bit in the case of Zibelca and artiso we are collaborative, but it's not a formal arrangement. And I think we're both promoting and that's working out just fine. But there absolutely is more opportunity to do that, especially when you get into novel combinations. And so if you think about -- so we published in our Phase I, only 5 patients in non-small cell lung cancer, but we had activity there. Now those are the overexpressing patients. There is a separate population of non-small cell lung cancer, whether it's activating mutations, that is of interest, too. But in patients who overexpress HER2, we think we're going to be active. And so in the basket trial that we have ongoing, we are enrolling lung cancer patients. We'll get some additional data there. But the path there, which is much more open than the patients with activating mutations would be in combination with immunotherapy. And currently, that would be with a PD-1 inhibitor. But if you're thinking about skating to where the puck is going, so to speak, you would consider a novel immunotherapy that might be even more effective. And so very open to partnership development and that kind of sense.

Are those potential announcements we could get this year about broader partnerships with Ziihera?

We're having lots of conversations about this, so possible. No commitments there. But we have a fair amount of inbound interest, and we have a clear idea of how we think this should be optimally developed. So we're having conversations where it makes sense. .

Understood. Last question going to sneak it in because I'm staying in the same room. In terms of the basket trial and that pan-tumor trial, I think a lot of people look at it, they're like, okay, well, cool, they're running a dose finding, signal finding study. And your team has been very insistent No, there's a registrational path forward. This trial? Talk to me about what that disconnect is? What is -- and how are you going to be able to take that data set and actually go into the market in terms of

Yes. And just so you know, we've had interactions with FDA, so we are clear what their expectations are. So we know what we have to do to get there. And it includes having a broad enough range of patients and having strong enough data. And so time will tell. We do have interim analysis where we can go back to them and check how we do in here, how many more patients team, et cetera. Remember also it is -- you described it correctly. It's a basket trial, the goal of which is to get a tumor-agnostic indication. But the other goal is also signal finding. So we have colorectal cancer patients being enrolled there. We have non-small cell lung cancer patients being enrolled there, who would contribute to the agnostic indication, but might in and of themselves, ultimately get an accelerated approval. So it can be used for multipurposes.

Got it. We're out of time, but I really did enjoy the conversation. Thanks so much.