Jazz Pharmaceuticals plc (JAZZ) Earnings Call Transcript & Summary

Awesome. Thank you for joining us. My name is Mohit Bansal. I'm one of the biotech and pharma analysts here at Wells Fargo. And I'm joined by team Jazz today. Music, please. So I'm joined by Sam Pearce. She's the EVP and Chief Commercial Officer; and John Bluth, the Head IR of the company. Thank you very much for joining us today.

Thank you.

Thank you for having us very much, Mohit. And just a quick word to note that Sam and I will be making some forward-looking statements today. So please do refer to the risk factors in our securities filings. And if we do reference guidance, we're referencing guidance that we updated most recently on our last earnings update in early August and any reference to non-GAAP measures are also reconciled in those recent earnings.

Okay. Awesome. Thank you, John. So Sam, let's just talk about -- like just start with like the great things in the sales and marketing team have achieved in this year. I mean you have raised the guidance last quarter. Talk a little bit about the company, the setup and what do you think is going right with the company right now?

Yes. Thank you. Well, I mean, I think I'm, first and foremost, delighted with the way the teams are executing on the opportunities that we have across our entire portfolio at the moment. I think we've put together a run of really good commercial results recently, most recently, obviously, our second quarter earnings where we delivered our best ever quarter with $1.2 billion of revenue, and that represented 16% growth. And I think what's really great about the results that we're seeing now is that, that growth is coming right across our portfolio. It's not isolated to one particular brand, but we're seeing really good growth right across all of our key brands. Double-digit growth from all of our key brands. I think the business has got really good strong foundations. I mean, Xywav has proven itself to be a really durable, resilient product, continuing to deliver excellent growth this quarter. And now, of course, what we're also seeing is us really executing on some of the other launch opportunities that we've had recently, most recently, obviously, Modeyso. Modeyso was launched just about a year ago, really delivering exceptionally well. And we also had the launch of Zepzelca in the first-line maintenance market, which also delivered really fabulous growth last quarter. So I think as a team, we're proving our ability to really execute on these opportunities. And I think as a result of that and when you look at some of the new opportunities that we have coming, which I'm sure we'll talk about, we did, as you mentioned, raise -- have the confidence to raise our guidance for the full year. And as we look ahead, we're very excited about Ziihera and the potential of Ziihera. Obviously, now we have the first-line metastatic GEA indication. And obviously, the data that we've seen there, the unprecedented overall survival benefit, we feel increasingly confident that Ziihera represents a new standard of care, and we're excited about executing that in the GEA indication, but then expanding our investment into other areas of opportunity for Ziihera. And we've got those exciting development plans that we can touch on as well in R&D across breast cancer, colorectal cancer, non-small cell lung cancer. And on the webcast, when we talked about the GAE indication, we talked about the peak potential of Ziihera now increasing to between $3 billion to $5 billion. So I think an awful lot for us to be excited about with Ziihera, a lot also for us excited to be about for epilepsy as well and continuing the growth trajectory there. With our label indications, we do continue to see good growth opportunity, but we're also making some targeted investments in expanding the reach of Epidiolex to other patients with epilepsy. So I think the business is in good shape, and I think we're executing on the strategy that Renee set out at JPMorgan at the beginning of this year really well.

Got it. And like this is amazing. So Xywav has surprised us all in terms of 3 years ago, we were modeling a decline for Xywav, and we have not seen that yet. So can you paint the picture for us in the marketplace, like how between Xyrem authorized generic and generics now on the market, how it is impacting the volume price and then you have IH as well. So there are many complications there. But can you help us paint a picture which is helping you here?

Yes. As we entered this year, I think there were question marks how resilient and durable would Xywav be in the face of high sodium generics coming into the market. I think we've answered that question to a large part as we sit in the middle of the year. We haven't really seen any material impacts from those generics coming into the market. The demand remains really strong. I mean you saw in the second quarter of the year, the net patient adds, 525 net patient adds. So we're continuing to add new patients to Xywav. I think our teams have done a really great job really communicating the differential benefits of Xywav, low sodium oxybate continues to resonate strongly. We know that the majority of patients, 80% or more patients with narcolepsy and IH have comorbidities, cardiovascular and cardiometabolic comorbidities. So offering them a low-sodium option continues to be really, really important. So as we sit in the middle of the year, I think we feel increasingly confident about the durability of Xywav. Obviously, there are new entrants coming into the market as well, orexin. But from everything that we understand about this market and the feedback that we're having from health care providers, we do believe that oxybate and Xywav in particular, will continue to play a really important part of treatment for narcolepsy and IH patients.

Got it. So durability of the franchise is still a little bit of question even before orexins come along. So between like how much growth in the IH market is still there? Because like most of the competition is on the narcolepsy side, not so much on IH side. Even with orexin, it is a subset of narcolepsy for now, not the entire narcolepsy either. So what are the puts and takes for this growth to be durable or this franchise to be durable for the next few years here?

Yes. So we have some new entrants with orexin. And as you mentioned, they'll be entering the market with -- in the NT1 indication, which is less than half of the overall narcolepsy space. Irrespective of that, I think obviously, the orexins do represent a new potent daytime alerting agent, and oxybates act on the kind of disruptive nighttime sleep. So looking at the science behind this, you can certainly see how these 2 drugs could be complementary. We'll have to see how that plays out in practice, of course, with payers. But we are very confident that Xywav will continue to have a place in treatment. And from what we understand and the way health care providers are thinking about this is that they will not be considering from what we understand that the stable base of Xywav patients will be switched away from Xywav. What we may see is that it takes longer for patients to get to Xywav if they're trying the orexin first. But we don't see this business being dramatically disrupted in a significant way.

Got it. Very helpful. And then like how much growth is left in IH here?

Yes. So I mean there are estimates that say the overall prevalent patient population is very, very large, very similar to narcolepsy, maybe 100,000 patients. We know there's a...

Some doctors even said it is not even a rare disease basically.

Well, yes, exactly. Diagnosed patients around about 37,000. And we see treated patients maybe 9,000. So there's still significant opportunity for Xywav to grow into the full potential opportunity within the IH segment. And even with potential new agents coming into the market, we would probably see the market continue to grow quite significantly.

Got it. Very helpful. Moving to Epidiolex. I mean, even that franchise delivered a strong volume growth in the quarter. Now again, same way. Can you help us understand where you are finding this new growth? And then also, I mean, this market has -- like the growth in the last few years was a little bit slower. So like what are you seeing now? And then how much of this growth is sustainable going forward?

Yes. Yes, really healthy growth in the second quarter, $292 million, 16% revenue growth, [ 14% ] volume growth. So we're really very pleased to see that. Epidiolex, when it was launched, it was launched as a pediatric drug, and we've seen really good strong penetration in that segment. More recently, we've been focused on bringing Epidiolex to adult patients, and there's a very sizable opportunity there in the adult patient segment. That segment is more fragmented than the pediatric segment, but that's where we are seeing quite a significant amount of our growth, and there continues to remain significant headroom for us to grow there. In addition, we've been investing quite a bit in ensuring that patients can stay on treatment for longer. So we have a JazzCares support, patient support around that to onboard patients on to JazzCares and really support them to make sure that they can get the optimal duration. In addition, we mentioned on our call that we have submitted an NDA for the novel capsule formulation. Again, that formulation is going to be particularly beneficial for adults because this is a weight-based drug. So adults can end up taking quite a large volume of the oral solution, which is sesame oil-based. That can limit the uptake in the adult segment. With the capsule formulation, we believe that addresses that issue. And so we do expect the capsule formulation to expand the overall patient pool that will be taking Epidiolex. Looking ahead, more strategically, we've made some really important investments in some clinical development programs to expand the use of Epidiolex into -- we've got a Phase III DEE study ongoing, a Phase II/III study in juvenile myoclonic epilepsy an additional study in adult LGS as well as an earlier study in focal onset seizures. So when we recognize that we had a longer runway with Epidiolex and we did the ANDA settlement, out to the late 2030s, it really did open up the opportunity for us to make these additional investments. And we feel very optimistic about the ability for us to really continue to demonstrate good strong growth momentum for Epidiolex over the longer term.

Got it. Really makes sense. So now moving to the most anticipated launch of the year, Ziihera in GEA. So early days so far, but I mean, with this first-line launch, I mean, the label that you wanted and all that, how should we think about the launch curve here? The product is already on the market, so doctors know about this and all that. You have all the infrastructure in place. But talk a little bit about like how should we think about the launch here? And are there any bottlenecks in terms of like some check boxes that need to be ticked before it takes off? Like is there anything like that?

Yes. Yes, we are very excited, obviously, about the GEA opportunity for Ziihera. We're excited about the label that we have. The fact that we see that unprecedented overall survival benefit more than 2 years for both the triplet and the doublet regimen and the fact that with the triplet, that triplet regimen can be used irrespective of PD-L1 status. So this really is a fabulous opportunity for us to make a meaningful difference for these patients. I think the fact that we've been out there in the market with Ziihera with the BTC indication is very, very helpful for our launch uptake. We sized our sales teams with the GEA launch in mind. So they've already been out there developing the relationships. Physicians, there's a high degree of overlap, 90% overlap of prescribers. So many of them will have had experience with Ziihera already. This drug is going to be -- it's important -- it's going to be important for us to make a quick start, not only in the academic centers, but also in those community centers as well. And I think the fact that we do have the permanent J-code in place already, then we should see -- we're not anticipating a lot of payer friction. We anticipate that patient access will be very much there from the beginning. And therefore, our ambition will be to really drive uptake rapidly and get to peak sales as quickly as we possibly can, really just reflecting the fantastic data that we have and the fact that this product is going to make a very, very significant impact for patients with this devastating diagnosis.

Is it a largely Medicare patient population? Or is it a mix?

Yes. It's more of a mix. I don't know whether we've got those kind of numbers to hand exactly.

Not exactly.

But yes, it's a significant commercial opportunity in this space.

Got it. And then I had a question about OS interim and then we have already seen -- like not seen the full data, but congrats on the success of both doublet and triplet now. When can we expect to see the detailed data from the -- for the OS for the doublet as well? So we already press released it, but again, the detailed data when we can see.

You're asking about the top line readout and OS. Yes. So we reported that we hit that. And you will expect to see it at a future medical meeting, but we haven't shared with you.

Got it. Got it. Understood. So have you gone into details about the $3 billion to $5 billion? How much of this is like in each individual indications versus like -- because is it just GEA? Or is it like even breast cancer, you see a higher opportunity there?

Yes. So a few years ago, when we initially looked at the potential with Ziihera, we did talk about it being a $2 billion-plus opportunity. I think now with the data in hand and with the clinical development plan that we've initiated, we feel confident to raise that peak revenue expectation to $3 billion to $5 billion. Previously, when we talked about the $2 billion, that was including the BTC opportunity, the first-line GA opportunity as well as the metastatic breast cancer and the pan tumor. Today, we're also now including our expectations within colorectal cancer and non-small cell lung cancer as well as early breast cancer. So together, with the data that we have and we see the unprecedented survival benefit in GEA and just thinking what that can mean for other HER2-expressing tumors, we feel confident to increase the peak revenue to the $3 billion to $5 billion range that we spoke about.

And correct me if I'm wrong, John, I mean, you have a basket trial also going on in multiple...