Jazz Pharmaceuticals plc (JAZZ) Earnings Call Transcript & Summary

That you can get when using zanidatamab, a highly immune active antibody in conjunction with immune checkpoint inhibitor like izzi.

So really pleased with that. And on the heels of it, remember, we had over static overall survival benefit for the triplet arm at the time of the first interim analysis with 2 additional scheduled OS analyses -- and at that time, the Arm B or the doublet arm was trending very favorably, but not quite static. On the second interim analysis, we now have a stat sig result for the zani chemo versus metrolarm. And encouragingly, as we said in our press release, the hazard ratios for both of the experimental arms continue to improve even from the first interim analysis when you look at the overall survival, which is consistent with highly immune active drugs where you tend to see that benefit beyond the medians later on that curve, you see more dermal benefit, you start to see the curve separate. We're excited to publish those data as soon as we can in an upcoming medical conference. Just quickly mention some other areas. -- that we're leaning into on XYHara. We have our frontline BTC trial, which is well underway. We have our late line that pivotal trial. We have our late-line breast cancer pivotal trial. It's well underway. We also have a PAN tumor trial that could get us a tumor-agnostic indication, meaning any patient whose tumor overexpressed is HER2 and is refractory stamintherapies could potentially get it. Within that trial, we've had some interesting colorectal cancer results. So that combined with other data we had turn this breakthrough designation with the FDA, and we're working with them to plan on an approval path in colorectal cancer, while we pursue broader indications, potentially even including non-small cell lung cancer. So clearly, XYhera has made a lot of progress -- we think its unique mechanism of action that's highly differentiated is really best-in-class, going to be a new standard of care in biliary tract in gastric cancer. And we're investing heavily behind that, as I mentioned, in our pivotal trials. Super excited about our epilepsy portfolio as well. We announced recently that Epidiolex, which has a very long period of exclusivity into the late 2030s. We're initiating for new clinical trials as well as having submitted an application for a solid oral dose or capsule formulation. And those new trials include a Phase I and focal onset see here is a kind of evidence generation trial. It includes a Phase II/III potentially pivotal trial in juvenile myoclonic epilepsy. It includes a Phase III in a broad array of DE. So of course, we have an indication for seizures associated with 3 orphan DEs, and this potentially will broaden that label even further. And we have an evidence generation study in LGS in adults to further support the use in that setting. So super excited about Epidiolex and its impact that's happening in the longevity there. We certainly think of ourselves as an epilepsy company. We've mentioned in the past, we have 2 pipeline products, 1 perhaps on sepilepsy in Phase I, and we've now recently brought our plan to bring our into KV 7 into Phase 1, which we think is potentially a best-in-class Kv7 opener. In addition to that, very pleased to say that yesterday, we closed on the Axio deal. You haven't seen the data on that yet. We certainly have as part of the due diligence, and we hope those data will be published soon. But we were very excited to be in another rare epilepsy where, in this case, we think this inhibitor addresses specifically a single gene mutation, which is responsible not only for the epilepsy in these patients, but the developmental challenges that they experienced and a targeted personalized medicine here could make a tremendous difference based on the preclinical and clinical data that we've seen. I'm also excited that the ACTION trial from ODeso continues to progress as planned, and we've reiterated the timing next year on the interim analysis for overall survival that would give us an early opportunity for approval in frontline high-grade glioma currently, our approval is in refractory high-grade glioma. That's an interim analysis. So if it doesn't hit the trial continues. -- until completion. And lastly, just recently announced that our next-generation orexin 2 agonist is clear the IND is expected to go into halvolunteer studies. -- this year. Well, that's kind of the key highlights from my perspective. So maybe I'll pause there, and David open to any questions you might have.

Great. Thanks, Rob, for that intro. So maybe if we could unpack a little bit of the history on Sierra on Danny, -- could you remind us what got you interested initially in doing the deal with Conworx, bringing the asset -- and maybe you could also speak a little bit to the HER2 mechanism and its differentiation within the class and how that might, for instance, impact what we're seeing in both the PD-L1 positive as well as negative patients.

Yes, thanks. Great question. So we were interested in zanidatamab, I would say, in kind of the earlier stages because of the novel mechanism of action. So this is the first HER2 antibody that had a biparatopic engineering structure. So what that means is that each antibody actually has specificity for 2 different binding epitopes on the receptor. Now those binding epitopes were selected because they were clinically validated. It's echo domain 4; and two, those correspond to where Herceptin and Perjeta would bind what differentiates it is when you put it on the same antibody, each FAB fragment of the antibody has to bind different receptors, unlike giving Herceptin and Perjeta together. And when that happens, the antibody binds to 1 receptor, the other FAB fragment can reach that binding epitope on the same receptor, so grabs a different receptor and pulls it in and then sequentially happens with the additional antibodies. What that does is cause and this was demonstrated in the Nature Communication Paper it causes receptor capping and clustering internalization, but also importantly, fixation of complement. So what really differentiates this molecule is it triggers the complement cascade, and that does not happen with any other antibody. It was also engineered to have a highly active Fc fragment, if you think of the antibody is why the Fc fragments, but typically induces immune responses recruiting macrophages and NK cells. And so you have complement cascade activation, you have recruitment of NK cells and macrophages. And so you have an antibody that not only blocks HER2 and HER3 signaling internalization of the receptor that triggers the immune system in a way that other antibodies don't. And it's for that reason that we have the hypothesis that this could synergize with PD-1 inhibitors. So when people were surprised that we had activity in the frontline gastric trial in the PD-L1 negatives. And I can see why that would be a surprising result because for prior studies with 3 different PD-1 antibodies all showed no activity in PD-L1 low patients, including the KEYTRUDA trial in HER2-positive disease, and including tisolizumab in the all-comers population. Yet our Phase II show, we had activity in PD-L1 negative patients. And we think it's because of the immune activation that happens with zanidatamab. So that mechanism of action is what really first got us interested, it was early days though, and we hadn't seen much clinical data. So we did some -- our business development group made a $50 million bet to say we get an option once the biliary tract data come out. And if we don't like it, we walk away and we give up $50 million. Well, we were very pleased with the biliary track cancer data. as you know, over 40% response rate, very durable. If you look at the ICI population, which is what's in the label response rate. And that really is very differentiated from any historical data with Herceptin and Perjeta, which never achieved approval in that setting. We also thought they had very logical development path, so fast to market in biliary track going after some clear white space where it could win in frontline gastric cancer or only Herceptin was approved. And then we felt the deal paid for itself on the basis of those 2 indications. But we also saw in the Phase I data and based on the mechanism and the opportunity to go much further beyond that, as I described earlier.

Great. Great. And I know you've articulated a little bit about your thoughts on the label that you received for Zara. But as we think about how docs will employ the product in practice, you have a triplet as well as a doublet regimen. How do you think the physicians will start to utilize those regimens. And the doublet I noted is restricted to IT 3-plus patients. Is that in any way a limitation?

I'll address that first and then I'll talk about what I think is the best use for this drug. So I think it's not really a meaningful limitation. First of all, it's a very small proportion of patients from an epidemiologic perspective and the trial was less than 20%. But I also think it's clear from the data that in that small subgroup of the trial wasn't designed to address. There's clearly confounding factors that explain it. So for example, if you look in the label, you can see that the trastuzumab control arm was one. What do I mean by that? Well, the IHC 2+ did better on trans chemo than the 3-plus, which is not only biologically and plausible that has never been seen before. It's always been the case that Herceptin does better at 3s than 2s. So I tell you that small proportion of patients is not behaving the way you think. And when we look patient-by-patient because it's a small group, you can see that their baseline characteristics weren't balanced. And so we think that's not a meaningful result. We don't think it will impact practice anyhow. We certainly had that discussion with FDA, but they tend to follow the data, and we'll see maybe with additional uptake, we could revisit that. But in any case, I don't think it's meaningful, and I don't think it will impact practice. To your first question, which I think is the more important one. What's happened here is just a little bit maybe the victim of our own success. Tanychemo looks so good. Now we get the question, well, can you just use any chemo and not add teslizumab. And for me, absolutely, the answer is to use to triple for a number of different reasons. One is that the triple data are stronger in our trial. Clearly, it's adding. And you can't look at just the median for OS. You have to look at the whole hazard and you look at -- and you'll see when we put the update out, it persists, you get this flattening of the curve. Interestingly, with both the triple at and the double, it becomes pretty flat that's why you're seeing an improvement in the hazard ratios over time. And so over -- at those later time points is when you really start to see some differentiation. And you see that at a benefit of PD-1 inhibitor, which is highly consistent with all the results previously. There have been now 5 trials of PD-1 inhibitors in frontline gastric cancer and another in early-stage gastric cancer where PD-1s have a survival benefit. And we know that immune therapies are the potential curative therapy. So the idea of -- I talked about the synergy potentially between Zane and a PD-1. If you're a patient with -- by the way, still a very poor prognosis disease. -- where the risk and death is high at 5 years, you want to give all your therapies upfront, and you want to potentially take advantage of that synergy between Janie and a PD-1. So I think unless there's a contraindication to a PD-1 inhibitor, which is relatively rare patients to get that. There are some additional toxicity, but it's easy to distinguish what's coming from where, based on timing and the nature of the toxicities, and it's manageable on the right hand. So I do think that the right approach is to use the triplet irrespective of PD-L1 status and then IAC2+or3+. And that will certainly be the focus of our marketing and our education.

I want to get into the commercial dynamics a little bit of the Zara TEA launch. So I think you have talked about HER-2 positive patients as a population that came out there. You've also talked about, I think, a 3,000 to 4,000 number as perhaps as the retreatable population. And so can you help us understand how you -- what cuts you pay to get to the 3,000 to 4,000 addressable patients and is there any consideration, for example, for potential competition, let's say, from ADCs? I'm thinking, for example, the [indiscernible] 5 trial of the NIR.

Yes. Maybe I can jump in there, David. Thanks for the question. When we think about that 8,000 patient population, that's really an incidence of HER2-positive GEA. And we think commercially that 3,000 to 4,000 treatable patients, that's really taking into account unresectable disease treatment in the first line and testing rates. So it's a true treatable population. And we do think to Rob's point, we do have a differentiated asset here. So we did just launch 3 weeks ago. I know Tumi and Sam and team are -- they were out there on the first day, and I think we're all quite excited to get that out in the market. When we think -- when we look forward and we think about competition, I do want to be very clear. We are the only -- we do expect to be the standard of care. We're the only regimen that's being actively promoted in the first line. We do think antidata should replace trastuzumab in every patient in first line. And to Rob's point, I think most patients should be treated with triplet in combination with tizolizumab. When we look to the future, there are some first-line trials. David, you mentioned TDX or in HER2. Those don't read out until 2029. And frankly, we've set a very high efficacy bar to which they will need to beat the data we've seen to date has been Phase II data. And I think our data certainly speak for themselves when we look at the marketplace in the future.

And I would just add, both on the addressable population and the future competition. So -- we do see opportunities to grow this market. And 1 thing that's personally frustrating to me as a practicing oncologist is that the utilization rate in frontline GEA of HER2 drugs in general is lower than you'd expect. I mean, for me, it should be 100% even before the aging data, but especially with the having data, and it hasn't been for 1 reason or another -- even though testing rates are high, not everyone's benefiting from for 2 therapies. Now could that be because maybe the benefit wasn't as significant as we now know it is with zanidatamab. And so we're certainly going to get out there and educate around your patient who has HER2 positive disease as defined in the trial should get Tiara and it's going to benefit from it, not only directly but through the synergy with the PD-1 and hopefully increase those treatment rates. So I think there's an opportunity to grow that market a bit -- and then with regard to the competition, ultimately we'll have to see the data, and I think the data will win the day. Jack's point, there is -- Sahara has a head start and it has very strong data. The other thing I would point out is that frontline chemotherapy, whether it's FOLFOX or Cox or metastatic GEA is quite good. And the practice here has been to use a targeted therapy and a PD-1 inhibitor on top of that backbone chemo and to give the chemo for a period of time, and there's probably some interaction there. And we've learned over the years that giving some chemo there especially the right kind of chemo can help synergize with PD-1 inhibitors. And so that's generally practice is to give some chemotherapy for a period of time. And then as patients begin not to tolerate it, you can modify the dose. You can drop it entirely, you can stop it. And then the paradigm really is continue the HER2 in this case, anadatimab, continue the PD-1. These are the drugs that drive long-term survival. When you use an ADC, you don't have that opportunity. We're talking about gastric cancer. It's true for frontline breast cancer as well. You give an ADC, you're stuck with the chemotherapy. You can't drop the chemotherapy component. So we think the treatment paradigm is pretty well entrenched and the flexibility that you get from zanidatamab, which is highly immune active yet not an ADC doesn't carry that toxic payload, is a real advantage there. And we're also thinking about that in the breast cancer context. We're really the paradigm even in frontline breast cancer has been to drop chemotherapy over time and continue the HER2, which I hear more and more talk about that for HER2 induction with Inter and then move to a maintenance non-ADC HER2 agent.

Well, investors are certainly looking forward to seeing the GA launch play out. So we'll definitely keep count on that. But I want to spend some time on the next chapter for any, and that's in breast cancer, as you pointed out. So I believe coming late '27 or early '28, you should see results from the Phase III EMPOWER 303 trial in HER2 -- post in HER2 metastatic breast cancer as we now approach this next -- this next key readout, how should we think about the probability of success here for this study and keeping in mind that this is a later line population that has previously been exposed to prior HER2 therapies. How should we think about the performance of the Zane arm versus the comparative arm, which is perception...

Yes. Thanks for that question. I mean I love your first question because it took me back 3-plus years where it's sort of like what did you see there that others didn't see. And as we started to get data, I've asked myself what are we learning from these data. And as a principle, what we've learned is that wherever HER2 is the backbone or wherever there's cancers that that overexpress HER2, but don't get Herceptin as a backbone, zanidatamab is going to compete very well. The other principle is when you can combine with a PD-1 inhibitor, that's that's going to do well. And I'll come back to other settings where we think we have an opportunity to do that. But what's relevant to your current question is why do we think this trial is likely to succeed? Well, -- this is another opportunity to go head-to-head with Herceptin in the design of the trial. Now we've acknowledged that this is a later line trial. It was, to me, the obvious first place to go, and it certainly I would say, very consistent advice we got from all of our breast cancer experts to say in a world where patients get in HER2 upfront, at least upfront or in second line it's unclear what to give as a HER2 agent. And every one of these breast cancer patients will continue to get HER2 therapy even as their subsequent line chemotherapy changes. And so it was the obvious first place to go, and we think that our chances are good because, again, we're head-to-head against Herceptin. It gets our foot in the door and breast cancer. But by no means, and we revised our projections on what we think the potential is for SAHARA by no means is that the only area of breast cancer that we're interested in. So we are planning to get into earlier lines of breast cancer. And we think our path to do that will be in combination with a novel or TKI. So why is that? Well, we know when you're combining with the TKI, there is some synergy there because TKIs tend to at least stabilize HER2 on the cell surface -- they sometimes cause up regulation of TKIs. And that really plays right into Danny's mechanism of action, where when you have a lot of HER2 on the surface, it clusters, triggers the complement cascade. So we think that combination makes a lot of sense. We're now seeing next-generation TKIs that are much safer because they're -- and more effective because you can go to higher exposures because they're more targeted. They don't hit EGFR, for example, and so we have a collaboration with Boehringer Ingelheim on sangurtinib, that's ongoing in breast cancer. We also partner with iambic on their IM-1363.A and both of those have the potential to be best-in-class TKI. So we think that through a combination with a novel TKI, we can move not only up in line in breast cancer, but we could also potentially get into more difficult-to-treat population such as brain mets. We're also interested in early-stage breast cancer because zanidatamab is a monotherapy so well tolerated. We talked about the advantage of not being linked to a chemotherapy payload that, in some cases, causes fatal pneumonitis as in the case of HER2. You can then use that as a de-escalation strategy in a highly curative setting. So that's the whole goal of the ISP collaboration is can you use Annie upfront as a more effective therapy and minimize ultimately the amount of chemotherapy that a patient gets which would be a super advantage. But it also has the flexibility then to be used in other settings. So we've got the IP collaboration. We've got an MD Anderson collaboration. And we've got a Phase 2 of our own in that presurgical or so-called neoadjuvant and adjuvant breast cancer setting. And we'll look at those data and decide what our best path forward is in terms of a registration trial there. So very excited about breast cancer. I'm really pleased that -- we took that step of starting the breast cancer trial when we did even before we saw the gastric data, but I think opportunities to lean in there as well.