Jazz Pharmaceuticals plc (JAZZ) Earnings Call Transcript & Summary

Yes. To be honest, we're surprised that we're not on the NCCN guidelines yet, but they have all the information that they need -- and we're expecting that, that will happen any day now. We're obviously looking forward to the inclusion in the NCCN guidelines. However, in terms of adoption, it's really not a barrier for us again because there is access to the drug. The drugs already in market. We have an established J code. So it really isn't a barrier to uptake at this point.

Before I move on, is there anything that I didn't ask on Zane in the launch that perhaps I should have?

No, just that we are thrilled with the label that we got. Honestly, Jack spoke to it, the fact that we're indicated in both PD-L1 and PD-L1 positive and negative is great. We are very, very pleased. And really, there's nothing in the way for Zane to become standard of care and replestrastuzumab and treat every HER2 patients in GEA.

Maybe to move on to Zepzelca. So really strong growth. How much runway remains as physicians convert eligible patients?

Yes. So we've had over 40% growth as we've shared. 30% to 40% of that growth is actually coming from our new indication, the frontline indication in Forte regimen. Very pleased with our performance there. We've seen great adoption of that indication and have the ambition and believe that we can continue to grow that. And so our strategy has always been to shift into frontline for a -- so that is a growth opportunity for us as we look forward. And I think what's important to know is that it's also where we see a longer duration compared to second line. So -- it's a great opportunity for the small cell lung cancer patient, as you all know, unmet need is very high there. And Again, we're seeing very good uptake there, specifically in the community setting.

And looking at Amgen's Delphi 305 study, -- if the Phase III confirms the early survival signal, what is the strategy for maintaining durable growth?

Yes. I mean, first of all, I think it's great news for small cell lung cancer patients that they're going to have more choices. -- the tarlatimab regimen, and we'll wait to see the data. And hopefully, it will be positive for patients. However, IndaLTRa is not going to be right for every single patient. There's some biomarker data out there that says that tralatumab is better in DLL3 patients. Subsea doesn't really have that limition and then even though there have been some recent news around updating our monitoring, there's still a lot of monitoring required and follow-up for a which we don't see with Zepzelca. And this is 1 of the reasons why we lead in the community space, the operational issues with mdeLTRaareal. So again, we believe can compete in that setting, and there's patients that will benefit from Zepzelca. Frankly, probably what would be good from a sequence perspective is to use Upselcain frontline and then save IMDELTRA for the second line because patients need options.

Sure. And still on the Selco what are the key milestones over the next 6, 12, 24 months that could meaningfully change the peak sales expectations.

So I think it's continuing to compete with importer and really doubling down a frontline setting and driving that frontline use, that is really our main focus to drive the Selco business.

Moving on to Medaso, DDabi Brand. Since launch, what has surprised you the most versus your prelaunch expectations.

I don't know that we've had any major surprises. We're incredibly pleased with the launch uptake of Modeso. We've had great uptake in the academic setting, which is where most of our business is, great option there. I think 1 of the things that we're continuing to try to understand is what will be the duration of therapy in the real world. It's too early for us to say, but it's something that we're watching. And there's a potential for that to be an inflection point. This is ultra rare disease. It's what Jazz does really well. So the team is really focused on patient finding -- and so now we're also looking to leave no patient behind in the community setting. So that is another way that we're finding patients there. There's also been a lot of focus and investment on driving diagnostic testing. -- so that we fired PMG patients. So these are some of the inflection points for Modeo -- and then again, we're very excited about the ACTION trial that we'll read out next year that will put us in an earlier setting. So still very much in launch trajectory mode with both forecasted.

How large could the opportunity become if action reads out well?

I think what we've communicated at this point is a peak sales of $500 million -- anything else that we need to share there. .

No, I think it's $500 million plus in the U.S. That's first line and second line. I will note that the ACTION trial would serve as the basis for submission ex U.S. as well. So certainly an opportunity there should the ACTION trial be positive, which we're quite excited about. So hopefully, we get to flip that data card early next year in the first half of '27.

Yes. It's incredible progress in that space.

Okay. Maybe moving along to Riley. -- depo being the state product, what's the biggest remaining opportunity to grow the Olas franchise. Yes.

Yes. I mean BLA has been a real success. And obviously, is what we consider at this point, a stable business. And so that's what we continue to do. I think the team is focused on making sure that treaters are treating as soon as hyposensitivity appears. So again, a good success for us. And I would say what we would consider a stable business in the oncology portfolio.

Okay. I guess some more broadly, maybe a question for you, Jack, although it is oncology. Zehira Madasa, what do you believe is the most underappreciated asset investors. We know what the biggest opportunity is, but what do you get the least questions about, you wish there were more.

Yes, that's a really interesting question, Sean. Maybe I'll start and then Joe can add in here. There's a couple of areas that I think are underappreciated. I won't tell the roomful of investors what's undervalued, that's certainly for you to decide. But when I when I hear feedback we get, I mean, I still spend a lot of time helping people understand the zanidatamab opportunity. I recognize that we did just put out a peak potential. But -- when we think about this product, this is something we licensed in 2023 that I think many had expectations for just in BTC and GEA, and now we're looking at a very broad development program in late-line breast cancer, early breast cancer, colorectal, non-small cell lung I think anywhere HER2 agents are used, we see potential with Sahara. So I do think there's a lot of potential there. And maybe just taking a step back, I do think the overall portfolio, Jazz is something that we're still helping people to learn about because as Rene outlined this year, we have ambitions in rare disease to be looked at as an innovative biopharma company, something I think with a product like anetumab we're well on our way. But when you think about our portfolio and where we've come from 3, 4 years ago, a vast majority of our revenue is from a single product. Now we have a diversified portfolio with $3 billion-plus verticals that are all performing well. And I do think that's something that I spend a lot of time helping educate on -- maybe lastly, in Jumia be happy to toss it over to you. When I think about Epidiolex, I mean we obviously acquired this asset from GW a number of years ago. And last year, we did hit blockbuster status with that. But as I think about the runway we have here with the settlement of our 10 ANDA filers, we now run way into the very late 2030s -- we have a $1 billion drug today that's growing. And we just announced a number of new initiatives here from the clinical development -- or excuse me, clinical trial standpoint to continue to grow this asset. This is something that I think people have looked at us. It's currently indicated -- These 3 currently indicated indications and said, "Okay, that's it. But we obviously see a lot more there, both with Epidiolex and our broader epilepsy portfolio. So Jamie, I don't know if you have anything to add to that.

No, that was great. I think the only other thing is that I would mention is it's the how we do things at Jazz across oncology, neuroscience, which is, I think we're really showing that we can compete. So we might be rare disease, but we're not -- we are in competitive spaces. And so I'm incredibly proud of how our teams are competing and executing in the marketplace.

I've got some neuro questions here at Yes. So just maybe remind the audience where we are on the outlook for your oxybate franchise. And where are you seeing growth amongst T1 and T2 and IH? And maybe what's your latest perception on the potential impact of the rent agonists.

Yes. I think it's a great question. Obviously, Xywav has been an asset that's performed extremely well. And again, this is in light of 2 multisource generics that have come to market this year. I think we've been very clear at the outset of this year that there did exist some uncertainty in the sleep portfolio. And I think what we've seen is that Xi Wave's differentiation. It is the only low sodium oxybate. -- has been really meaningful. And Sam and her team have done an excellent job of going out there and really executing commercially. You've seen that through our patient adds this year. You asked about opportunity for growth. I mean, certainly, the IH front, I think there's still room to go there. I mean it's still fairly early on in the launch. And I think we have close to 6,000 patients today, but we do see that market as potentially as big as in narcolepsy. So I think on the Xywav front, we've been performing extremely well commercially. And when we do think about the Arthrex come to market. Certainly, we've seen data that is shown in NT1 patients, they are a potent wake-promoting agent. But when I think about Wave specifically, I think it's important to note here that ZieWaVis offering something that a wake-promoting agent is not, and that's the ability to get a better nighttime sleep. So when we think about that in light of wake promotingations that are used today with these narcolepsy patients, again, and these areas would be used in - I think we do see pretty resilient view. I mean, we've said for a number of years that we view these as complementary. There's still a number of things we'll need to see in the rec and front pricing scheduling. But I think where we sit today with Xywav in the broader market, we've obviously performed very well, and I think we're looking forward to next year. I will note that in -- on our second quarter earnings call, we didn't note that we expected Zio to grow double digits this year, which I think is incredible when you think of where folks thought we'd be last year with the launch of multi-source generics with the branded competition. So certainly, kudos goes to salon team as they look to continue that performance.

Sure. Thanks, Jack. Moving over to financials and capital allocation. So you've got full year revenue guidance was raised to $46 in $75 billion -- what are the largest second half swing factors we should be focused on? Is it the GA launch timing, is it edgeneric oxybate pressure or Modesodemand or something else?

Yes. I think it's a good question, Sean. I mean when I think about that guidance and the reason behind us raising that guidance in really was a number of things. It was performance of the portfolio, both on the sleep side where we did raise our guidance from -- to $2.025 billion to $2.125 billion with Zia growing double digits. -- our epilepsy and oncology portfolio combined, growing double digits. Tumi's team doing an excellent job on oncology performing. I mean you've really seen the business perform extremely well. So certainly, as we think about latter half of this year. You're right, there are a number of things that are ongoing, the Zepzelca transition and first-line maintenance where we see 30% to 40% of revenue today in first line. We expect that to grow -- we expect modes. It's still early in its launch. And to Tommy's earlier point, we just launched any Sandata 3 weeks ago was something we're extremely excited about. We'll only see a month of contribution or so in the third quarter. We'll get a full fourth quarter. But certainly, all of that's included in our expectations. -- and we certainly hope to continue on the trajectory commercially that we have been for the first half of this year where, again, it's been excellent across the portfolio from sleep to epilepsy to oncology.

Sure. still on capital allocation. So like $2.2 billion of cash, I believe, and $4.4 billion of debt in announcing a $1 billion convert and then a Concomillion 25 million share repurchase program which suggests confidence in both your balance sheet and your equity value. How are you thinking about target leverage and balance sheet capacity?

That's a great question. I don't know if I'm ready to give guidance to this audience on a target leverage. But I can give some of our thoughts on that leverage because I do think as we think about the cash we generate in the business, I think we generated $24 million in the first half of this year. To your point, we had $2.2 billion, and we just raised another $1 billion. I think what that allows us to do is invest in our commercial business, and I'm thinking about like our capital allocation priorities, invest behind Tummi nteam and Sam's brought her team to ensure that they're able to execute on their strategy. allow Rob to continue to develop on the R&D side. And then -- what we haven't talked to yet, Sean, which I do think is an important part of our strategy at Jazz is doing and continuing to do smart business development. As you may have seen this morning, we just closed the Acto acquisition, which, again, is exciting for us because it's another asset that we think really builds on our strength in epilepsy. And as I think about leverage over time, while I won't give you a target. What I can say is that we've been consistent in how we view business development, how we view capital allocation priorities. And I think we'd look to certainly continue to do smart business development, continue to generate cash from our business that allows us to invest further in it. So certainly, we'd love to see the leverage. I think we were less -- maybe less than 1x if you're looking at net leverage this last quarter. And I think as we look to execute on that strategy, certainly, it's something we think about. But I don't think we need to necessarily box ourselves in with a leverage right now.

And I guess you're able to characterize your preference for rare oncology or rare neuro and then there's certain metrics that you look at around deals, I mean, you will judge each 1 on its case? And how do you think about how fertile the ground is there out there for BD?

Yes, it's a great question, Sean. I think -- there's a lot of substrate right now. And I do think Jazz benefits when we think about BD, I mean, you all heard Renee speak to her rare disease strategy for Jazz. We think Jazz really has found differentiation in being able to take these rare disease products and commercialize them, develop them and Jazz has these 3 distinct verticals in sleep epilepsy and oncology. And what that allows us to do is we don't have to focus on any 1 area. We can say okay, oncology valuations are getting a little high. Well, maybe we can look at that epilepsy. And so I think that gives us a lot of flexibility on the business development side. And I think, again, another strength of Jazz is we can look at late-stage products like Medeco from the Chimerix acquisition, which we closed last year and is in its launch. We can also look to earlier stage like the Adeo acquisition in areas that we do have that expertise. So I would look at us to continue on the business development front. With these Jazz like deals, where I think we can compete and win. And Jamie, I know you have a lot of thoughts on how Jazz competes on the commercial side and that kind of phenotype .

Yes. Yes. I think just having worked in big pharma and now being at Jazz, like what we do really well is I think we're rightsizing the teams. It's not really about these huge sales teams anymore. But having a cross-functional collaboration, really leaning into omnichannel investing in the right channels. and doing patient funding exquisitely well. We have teams that are highly trained with very strong relationships, and I really think that, that's been our winning combination.

Wonderful. Well, we're just about out of time. Is there anything I didn't ask that I should have?

I don't think so. We didn't spend at the time on Epidiolex. But again, that's 1 of those products that I think we we're quite excited about. I think with the addition of the to The ABS 12/30, it really allows us to go deeper on the peso side. And looking to expand that program really. So, with that, Sean, thank you so much for the time today.

Thank you. call close there. Thank you. Thank you, everyone.