What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-09 compared with 2022-08-03 · 188 added, 135 removed, 405 unchanged (44% of the section changed)

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coli -derived asparaginase.

June 2021 U.S.

A component of a multi-agent chemotherapeutic regimen for the treatment of ALL and LBL, in adults and pediatric patients 1 year or older who have developed hypersensitivity to E.

coli -derived asparaginase.

September 2022 U.S.

Vyxeos ® (daunorubicin and cytarabine) liposome for injection

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Vyxeos ® Daunorubicin and cytarabine liposome for injection Powder, 44 mg daunorubicin and 100 mg cytarabine per vial, intravenous infusion

Treatment of newly-diagnosed therapy-related acute myeloid leukemia, or t-AML or AML with myelodysplasia-related changes (AML-MRC) in adults and pediatric patients one year and older.

Treatment of newly-diagnosed therapy-related acute myeloid leukemia, or t-AML or AML-MRC in adults and pediatric patients one year and older.

Treatment of adults with newly-diagnosed t-AML or AML-MRC.

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Defitelio® (defibrotide)

Treatment of adult and pediatric patients with hepatic veno-occlusive disease, or VOD, also known as SOS, with renal or pulmonary dysfunction following hematopoietic stem cell transplantation, or HSCT.

Treatment of adult and pediatric patients with hepatic veno-occlusive disease, or VOD, also known as sinusoidal obstruction syndrome, or SOS, with renal or pulmonary dysfunction following hematopoietic stem cell transplantation, or HSCT.

Treatment of severe hepatic VOD, also known as SOS, following HSCT therapy.

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*Clobazam restriction limited to EU and Great Britain

**TSC approval pending in certain markets

**TSC approval in certain markets

***In May 2022, we completed the U.S.

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We have seen strong adoption of Xywav in narcolepsy since its launch in November 2020, and increasing adoption in IH since its launch in November 2021.

Exiting the second quarter of 2022, there were approximately 8,700 patients taking Xywav, including approximately 7,550 patients with narcolepsy and approximately 1,150 patients with IH.

With respect to Xywav and Xyrem in the aggregate, the average number of active oxybate patients on therapy was approximately 17,100 in the second quarter of 2022.

Exiting the third quarter of 2022, there were approximately 9,500 patients taking Xywav, including approximately 8,050 patients with narcolepsy and approximately 1,450 patients with IH.

With respect to Xywav and Xyrem in the aggregate, the average number of active oxybate patients on therapy was approximately 17,600 in the third quarter of 2022.

We acquired Epidiolex (Epidyolex outside the U.S.) in May 2021 as part of the acquisition of GW Pharmaceuticals plc, or GW, which we refer to as the GW Acquisition, which expanded our growing neuroscience business with a global, high-growth childhood-onset epilepsy franchise.

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The rolling European launch of Epidyolex is also underway following European Commission approval in September 2019 for use as adjunctive therapy of seizures associated with LGS or DS, in conjunction with clobazam, for patients two years of age and older.

We successfully completed the pricing and reimbursement process for Epidyolex in France;

after commercial launch in France, expected by the end of 2022, Epidyolex will be commercially available and fully reimbursed in all five key European markets:

United Kingdom, Germany, Italy, Spain and France.

The clobazam restriction is limited to EU and Great Britain.

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and Europe, Epidiolex/Epidyolex is approved in Israel and Australia.

Sativex (nabiximols) is approved in more than 29 countries outside the U.S.

Sativex (nabiximols) is approved in 29 countries outside the U.S.

for the treatment of adult patients with moderate to severe spasticity due to MS who have not responded adequately to other anti-spasticity medication.

We market Sativex directly in the U.K.

We support the availability of Sativex directly in the U.K.

and through licensing agreements with partners in other countries.

We are working toward potential approval of nabiximols in the U.S.

with multiple Phase 3 clinical trials in progress.

In addition to our currently-marketed products, we previously marketed Sunosi® (solriamfetol) in the U.S.

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Under the terms of the sale agreement with Axsome, Axsome received the rights to Sunosi in all of the existing territories available to us.

We received an upfront payment of $53.0 million, and will receive a high single-digit royalty on Axsome’s U.S.

We received an upfront payment of $53.0 million, and have the right to receive a high single-digit royalty on Axsome’s U.S.

net sales of Sunosi in current indications and a mid-single-digit royalty on Axsome’s U.S.

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We also completed a Marketing Authorization Application, or MAA, submission to the European Medicines Agency, or EMA, in May 2022 for M/W/F and every 48-hour dosing schedules and IV and IM administration, with potential for approval in 2023.

In addition, we submitted a New Drug Submission, or NDS, to Health Canada in September 2021.

We are also advancing the program for potential submission, approval and launch in Japan, as well as planning additional submissions in other markets.

Vyxeos is a treatment for adults with newly-diagnosed t-AML, or AML-MRC.

In March 2021, FDA approved a revised label to include a new indication to treat newly-diagnosed t-AML, or AML with myelodysplasia-related changes in pediatric patients aged one year and older.

In March 2021, FDA approved a revised label to include a new indication to treat newly-diagnosed t-AML, or AML-MRC, in pediatric patients aged one year and older.

We have a number of ongoing development activities and continue to expand into new markets internationally.

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We have taken both Rylaze and Xywav from concept to commercialization.

Our neuroscience R&D efforts include the planned initiation of a pivotal Phase 3 clinical trial of Epidiolex for the treatment of Epilepsy with Myoclonic-Atonic Seizures, or EMAS, also known as Doose syndrome.

This trial is expected to evaluate Epidiolex in a fourth childhood-onset epileptic encephalopathy with high unmet need.

Our neuroscience R&D efforts include the initiation in August 2022 of an ongoing pivotal Phase 3 clinical trial of Epidiolex for the treatment of Epilepsy with Myoclonic-Atonic Seizures, or EMAS, also known as Doose syndrome.

This trial is evaluating Epidiolex in a fourth childhood-onset epileptic encephalopathy with high unmet need.

EMAS is characterized by generalized myoclonic-atonic seizures, and this trial is designed to provide the first randomized, controlled clinical data with Epidiolex in this syndrome type.

Seizure types including atonic, tonic, clonic, tonic-clonic and partial onset seizures are seen in LGS, DS, and TSC.

For nabiximols, we have multiple Phase 3 clinical trials in MS-related spasticity in progress.

Spasticity occurs in up to 84% of MS patients, and approximately one-third of those who experience spasticity live with uncontrolled symptoms.

In June 2022, we announced top-line results from the first and smallest trial, which evaluated the safety and efficacy of nabiximols in 68 patients with MS spasticity.

The trial did not meet the primary endpoint of change in Lower Limb Muscle Tone-6, or LLMT-6, between baseline and Day 21, as measured by the Modified Ashworth Scale, or MAS.

The safety profile of nabiximols in this trial was consistent with previously reported adverse events, with no new safety signals attributable to

nabiximols oromucosal spray observed in this population.

We continue to assess the trial results, which will be presented at a future medical meeting.

Additionally, in December 2021 we initiated Phase 2 clinical trials for suvecaltamide, or JZP385, for essential tremor, or ET, and for JZP150 for post-traumatic stress disorder, or PTSD.

These are both patient populations that suffer significant impacts to their quality of life and for whom there are limited current treatment options.

We enrolled the first patient in a Phase 3 trial of Epidyolex for LGS, DS and TSC in Japan in October 2022.

In October 2022, we announced an exclusive licensing agreement with Zymeworks Inc., or Zymeworks, under which we have the right to acquire development and commercialization rights to Zymeworks' zanidatamab across all indications in the United States, Europe, Japan and all other territories except for those Asia/Pacific territories previously licensed by Zymeworks.

Zanidatamab is a bispecific antibody that can simultaneously bind two non-overlapping epitopes of HER2, known as biparatopic binding.

Under the terms of the agreement, following clearance relating to the U.S.

Hart-Scott Rodino Antitrust Improvements Act of 1976, or HSR Clearance, Zymeworks is eligible to receive an upfront payment of $50.0 million, and should we decide to continue the collaboration following readout of the top-line clinical data from HERIZON-BTC-01, a

second, one-time payment of $325 million.

Zymeworks is also eligible to receive regulatory and commercial milestone payments of up to $1.4 billion, for total potential payments of $1.76 billion.

Pending approval, Zymeworks is eligible to receive tiered royalties between 10% and 20% on our net sales.

Subject to HSR Clearance, the upfront payment of $50.0 million would be expensed to acquired IPR&D in the fourth quarter of 2022.

On June 28, 2022, we announced the nabiximols Phase 3 RELEASE MSS1 trial in multiple sclerosis (MS)-related spasticity did not meet the primary endpoint of change in Lower Limb Muscle Tone-6 between baseline and Day 21, as measured by the Modified Ashworth Scale.

The analysis of the MSS1 trial has been completed.

We have assessed the nabiximols program's potential to support regulatory approval for MS-related spasticity in the U.S., as well as in the context of our broader pipeline opportunities, and have made the decision to discontinue the program.

Sativex (nabiximols) was approved outside the U.S.

for the treatment of MS-related spasticity based on a comprehensive clinical trial program, including multiple late-stage randomized, controlled trials completed in Europe.

We will continue to support the availability of Sativex in the 29 markets outside the U.S.

where it is approved.

We remain committed to the GW Cannabinoid Platform and are working to advance multiple early-stage cannabinoid programs with the potential to address critical unmet patient needs.

In December 2021 we initiated Phase 2 clinical trials for suvecaltamide, or JZP385, for essential tremor, or ET, and for JZP150 for post-traumatic stress disorder, or PTSD.

Additionally, in November 2022, we initiated a Phase 2 trial of suvecaltamide in patients with Parkinson's disease tremor.

These patient populations suffer significant impacts to their quality of life and there are limited current treatment options.

We are also pursuing early-stage activities related to the development of JZP324, an extended-release low sodium, oxybate formulation that we believe could provide a clinically meaningful option for narcolepsy patients.

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In 2022, we initiated a Phase 2 basket trial to explore Zepzelca monotherapy in patients with select advanced or metastatic solid tumors.

Cohorts will include advanced urothelial cancer, large cell neuroendocrine tumor of the lung and homologous recombination deficient, or HRD, cancers.

Cohorts include advanced urothelial cancer, large cell neuroendocrine tumor of the lung and homologous recombination deficient, or HRD, cancers.

In addition, we have initiated a Phase 4 observational study to collect real world safety and outcome data in adult Zepzelca monotherapy patients with SCLC who progress on or after prior platinum-containing chemotherapy.

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We completed a MAA submission to the EMA in May 2022.

In June 2022, we announced the FDA had cleared our Investigational New Drug, or IND, application for JZP815.

In June 2022, we announced the FDA had cleared our Investigational New Drug, or IND, application for JZP815 and in October 2022, we enrolled the first patient in a Phase 1 trial.

JZP815 is an investigational, pre-clinical stage pan-RAF kinase inhibitor that targets specific components of the mitogen-activated protein kinase, or MAPK, pathway that, when activated by oncogenic mutations, can be a frequent driver of human cancer.

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Product Candidates Description

Epidiolex EMAS, also known as Doose syndrome (planned study)

Nabiximols MS Spasticity (multiple studies ongoing)

Spinal cord injury spasticity (planned study)

Epidiolex EMAS, also known as Doose syndrome (ongoing trial)

LGS, TSC and DS (ongoing trial in Japan)

Suvecaltamide (JZP385)

ET (ongoing study)

PTSD (ongoing study)

Product Candidates Description

Additional cannabinoids Autism spectrum disorders (ongoing study)

JZP324 Oxybate extended-release formulation (planned study)

JZP441 (DSP-0187) Potent, highly selective oral orexin-2 receptor agonist (Japan)

Additional cannabinoids Neonatal hypoxic-ischemic encephalopathy (ongoing study)

Neuropsychiatry targets (ongoing study)

ET (ongoing trial)

PTSD (ongoing trial)

Suvecaltamide (JZP385) Parkinson's disease tremor (ongoing trial)

Additional cannabinoids Autism spectrum disorders (ongoing trial)

JZP324 Oxybate extended-release formulation (planned trial)

JZP441* Potent, highly selective oral orexin-2 receptor agonist (ongoing trial in Japan)

Additional cannabinoids Neonatal hypoxic-ischemic encephalopathy (ongoing trial)

Neuropsychiatry targets (ongoing trial)

Undisclosed targets Neuroscience

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completed MAA submission to EMA in May 2022

Zepzelca First-line extensive stage SCLC in combination with Tecentriq (collaboration with Roche) (ongoing study)

Confirmatory Study (PharmaMar study) (ongoing study)

Vyxeos AML or high-risk Myelodysplastic Syndrome, or MDS (AML18) (cooperative group studies) (ongoing study) Newly diagnosed adults with standard- and high-risk AML (AML Study Group cooperative group study) (ongoing study) Newly diagnosed pediatric patients with AML (Children’s Oncology Group cooperative group study) (ongoing study)

Zepzelca Basket trial including urothelial cancer, large cell neuroendocrine tumor of the lung, and HRD cancers (ongoing study)

Vyxeos High-risk MDS (European Myelodysplastic Syndromes (cooperative group study) (ongoing study)

Newly diagnosed older adults with high-risk AML (cooperative group study) (planned study)

Vyxeos + venetoclax De novo or relapsed/refractory, or R/R, AML (MD Anderson collaboration study) (ongoing study)

Vyxeos Low intensity dosing for higher risk MDS (MD Anderson collaboration study) (ongoing study)

Vyxeos + other approved therapies R/R AML or hypomethylating agent failure MDS (MD Anderson collaboration study) (ongoing study)

First-line, fit AML (Phase 1b study) (ongoing study)

Low intensity therapy for first-line, unfit AML (Phase 1b study) (ongoing study)

Zepzelca First-line extensive stage SCLC in combination with Tecentriq (collaboration with Roche) (ongoing trial)

Confirmatory Study (PharmaMar trial) (ongoing trial)

Zanidatamab** HER2-positive gastroesophageal adenocarcinoma, or GEA (ongoing trial)

Vyxeos AML or high-risk Myelodysplastic Syndrome, or MDS (AML18) (cooperative group studies) (ongoing trial) Newly diagnosed adults with standard- and high-risk AML (AML Study Group cooperative group study) (ongoing trial) Newly diagnosed pediatric patients with AML (Children’s Oncology Group cooperative group study) (ongoing trial)

Pivotal Phase 2

Zanidatamab** Previously treated, advanced HER2-expressing biliary tract cancer, or BTC (ongoing trial)

Zepzelca Basket trial including urothelial cancer, large cell neuroendocrine tumor of the lung, and HRD cancers (ongoing trial)

Vyxeos High-risk MDS (European Myelodysplastic Syndromes (cooperative group study) (ongoing trial)

Newly diagnosed untreated patients with high-risk AML (cooperative group study) (planned trial)

Vyxeos + venetoclax De novo or relapsed/refractory, or R/R, AML (MD Anderson collaboration study) (ongoing trial)

Zanidatamab** HER2-expressing GEA, BTC or colorectal cancer in combination with standard first-line chemotherapy (ongoing trial)

Zanidatamab** Previously treated HER2+HR+ breast cancer in combination with palbociclib

Product Candidates Description

Zanidatamab** First line breast cancer and GEA (BeiGene trial) (ongoing trial)

Zanidatamab** HER2-expressing breast cancer in combination with ALX148 (ongoing trial)

Vyxeos Low intensity dosing for higher risk MDS (MD Anderson collaboration study) (ongoing trial)

Vyxeos + other approved therapies R/R AML or hypomethylating agent failure MDS (MD Anderson collaboration study) (ongoing trial)

First-line, fit AML (Phase 1b study) (ongoing trial)

Low intensity therapy for first-line, unfit AML (Phase 1b study) (ongoing trial)

JZP815 Raf and Ras mutant tumors (acquired from Redx) (ongoing trial)

Zanidatamab** In previously treated metastatic HER2-expressing cancers in combination with select antineoplastic therapies (ongoing trial)

Hematology/oncology exploratory activities

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ALL and other hematological malignancies (collaboration with Ligand)

JZP815/Pan-Raf inhibitor program Raf and Ras mutant tumors (acquired from Redx)

JZP898 Conditionally-activated interferon alpha (IFNα) INDUKINE™ molecule

JZP898 Conditionally-activated IFNα INDUKINE™ molecule

Undisclosed target Ras/Raf/MAPK pathway (collaboration with Redx)

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Undisclosed targets Oncology

*Also known as DSP-0187

**Pending transaction close

Operational Excellence

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This includes a more integrated approach to brand planning, a heightened focus on launch and operational excellence and multichannel customer engagement.

We have fully adapted to virtual scientific congresses designed to ensure we can continue to provide promotional and non-promotional interactions and have supported our field-based teams with virtual customer interaction tools, training and content.

We have fully adapted to reaching our key audiences through both in-person and virtual initiatives.

This includes maintaining a virtual presence at scientific congresses, when appropriate, designed to ensure we can continue to provide promotional and non-promotional interactions and supporting our field-based teams with virtual customer interaction tools, training and content.

These initiatives mark a significant operational evolution that is directly linked to our corporate strategy and are designed to better enable our teams to work collaboratively on an aligned and shared agenda through both virtual and in-person interactions.

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The lack of access to health care providers has caused, and may continue to cause, delays in appropriate diagnosis, treatment and ongoing care for some patients, which has negatively impacted, and could continue to impact, prescribing and use of our products.

Our manufacturing facilities in Athlone, Ireland, which produces Xywav and Xyrem, Villa Guardia, Italy, which produces defibrotide, and Kent Science Park, U.K., which produces Epidiolex/Epidyolex and Sativex, are operational with essential staff onsite and office-based staff working onsite and virtually as business needs require.

Our manufacturing facilities in Athlone, Ireland, which produces Xywav and Xyrem, Villa Guardia, Italy, which produces defibrotide, and Kent Science Park, U.K., which produces Epidiolex/Epidyolex and Sativex, are operational with staff onsite and office-based staff working onsite and virtually as business needs require.

We currently expect to have adequate global supply of all of our products for 2022.

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Our future plans assume that Xywav, with 92% lower sodium compared to Xyrem, depending on the dose, absence of a sodium warning and dosing titration option, will become the treatment of choice for patients who can benefit from oxybate treatment, including current Xyrem patients and patients who previously were not prescribed Xyrem for whom sodium content is a concern.

In June 2021, FDA recognized seven years of ODE for Xywav in narcolepsy through July 21, 2027 stating that Xywav is clinically superior to Xyrem by means of greater safety due to reduced chronic sodium burden.

In June 2021, FDA recognized seven years of

ODE for Xywav in narcolepsy through July 21, 2027 stating that Xywav is clinically superior to Xyrem by means of greater safety due to reduced chronic sodium burden.

While we expect that our business will continue to be substantially dependent on oxybate product sales from both Xywav and Xyrem, there is no guarantee that we can maintain oxybate sales at or near historical levels, or that oxybate sales will continue to grow.

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Entering into agreements with PBMs and payors to ensure patient access has and will likely continue to result in higher gross to net deductions.

In addition to the COVID-19-related impacts described above, we expect our oxybate products to face near-term competition from generic and authorized generic versions of sodium oxybate pursuant to the settlement agreements we have entered into with multiple abbreviated new drug application, or ANDA, filers.

In addition to the COVID-19-related impacts described above, we expect our oxybate products to face competition from the near-term introduction of authorized generic versions of sodium oxybate and from generic versions of sodium oxybate pursuant to the settlement agreements we have entered into with multiple abbreviated new drug application, or ANDA, filers.

Generic competition can decrease the prices at which Xywav and Xyrem are sold and the number of prescriptions written for Xywav and Xyrem.

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and internationally.

If healthcare policies or reforms intended to curb healthcare costs are adopted or if we experience negative publicity with respect to pricing of our products or the pricing of pharmaceutical drugs generally, the prices that we charge for our products may be affected, our commercial opportunity may be limited and/or our revenues from sales of our products may be negatively impacted.

If new healthcare policies or reforms intended to curb healthcare costs are adopted or if we experience negative publicity with respect to pricing of our products or the pricing of pharmaceutical drugs generally, the prices that we charge for our products may be affected, our commercial opportunity may be limited and/or our revenues from sales of our products may be negatively impacted.

For example, on August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 into law, which, among other things, requires the U.S.

Department of Health and Human

Services Secretary to negotiate, with respect to Medicare units and subject to a specified cap, the price of a set number of certain high Medicare spend drugs and biologicals per year starting in 2026, penalizes manufacturers of certain Medicare Parts B and D drugs for price increases above inflation, and makes several changes to the Medicare Part D benefit, including a limit on annual out-of-pocket costs, and a change in manufacturer liability under the program, that could negatively affect our business and financial condition.

In addition, under the Medicaid Drug Rebate Program, rebates owed by manufacturers are currently capped at 100 percent of average manufacturer price, but, effective January 1, 2024, this cap will be lifted, which could adversely affect our rebate liability.

We are also subject to increasing pricing pressure and restrictions on reimbursement imposed by payors.

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or may be removed from control under the Controlled Substances Act entirely.

If any of our product candidates receive FDA approval, the U.S.

If any of our product candidates receive FDA approval, the Department of Health and Human Services, or HHS, and the U.S.

Drug Enforcement Administration, or DEA, will make a scheduling determination.

If any foreign regulatory authority determines that Epidyolex may have potential for abuse, or if DEA makes a similar determination for nabiximols, it may require us to generate more clinical or other data than we currently anticipate to establish whether or to what extent the substance has an abuse potential, which could increase the cost, delay the approval and/or delay the launch of that product.

In addition, there are non-FDA approved cannabidiol preparations being made available from companies through the state-enabled medical marijuana industry, which might attempt to compete with Epidiolex and, if approved by FDA, nabiximols.

or foreign regulatory agencies may request additional information regarding the abuse potential of our products which may require us to generate more clinical or other data than we currently anticipate to establish whether or to what extent the substance has an abuse potential, which could increase the cost, delay the approval and/or delay the launch of that product.

If we are unable to compete successfully, our commercial opportunities will be reduced and our business, results of operations and financial conditions may be materially harmed.

Finally, business practices by pharmaceutical companies, including product formulation improvements, patent litigation settlements, and risk evaluation and mitigation strategy, or REMS, programs, have increasingly drawn public scrutiny from legislators and regulatory agencies, with allegations that such programs are used as a means of improperly blocking or delaying competition.

If we become the subject of any future government investigation with respect to our business practices, including as they relate to the Xywav and Xyrem REMS, the launch of Xywav, our Xyrem patent litigation settlement agreements or otherwise, we could incur significant expense and could be distracted from operation of our business and execution of our strategy.

From June 2020 to May 2022, a number of lawsuits were filed on behalf of purported direct and indirect Xyrem purchasers, alleging that the patent litigation settlement agreements we entered with certain generic companies violate state and federal antitrust and consumer protection laws.

If we become the subject of any future government investigation with respect to our business practices, including as they relate to the Xywav and Xyrem REMS, the launch of Xywav, our Xyrem patent litigation settlement agreements or otherwise, we could incur significant monetary charges to resolve these matters and could be distracted from operation of our business and execution of our strategy.

For example, in July 2022, we received a subpoena from the U.S.

Attorney’s Office for the District of Massachusetts requesting documents related to Xyrem and U.S.

8,772,306 (“Method of Administration of Gamma Hydroxybutyrate with Monocarboxylate Transporters”), product labeling changes for Xyrem, communications with FDA and the U.S.

Patent and Trademark Office, pricing of Xyrem, and other related documents.

For more information, see the risk factor under the heading “ We are subject to significant ongoing regulatory obligations and oversight, which may subject us to civil or criminal proceedings, investigations, or penalties and may result in significant additional expense and limit our ability to commercialize our products ” in Part II, Item 1A.

We may also become subject to similar investigations by other state or federal governmental agencies.

The investigation by the U.S.

Attorney’s Office and any additional investigations or litigation related to the subject matter of this investigation may result in damages, fines, penalties, financial charges to resolve the matter or administrative sanctions against us, negative publicity or other negative actions that could harm our reputation, reduce demand for Xyrem and/or reduce coverage of Xyrem, including by federal health care programs and state health care programs.

In addition, from June 2020 to May 2022, a number of lawsuits were filed on behalf of purported direct and indirect Xyrem purchasers, alleging that the patent litigation settlement agreements we entered with certain generic companies violate state and federal antitrust and consumer protection laws.

For additional information on these lawsuits, see Note 10, Commitments and Contingencies-Legal Proceedings of the Notes to Condensed Consolidated Financial Statements, included in Part I of this Quarterly Report on Form 10‑Q.

It is possible that additional lawsuits will be filed against us making similar or related allegations.

We cannot predict the outcome of these or potential additional lawsuits or government action;

We cannot predict the outcome of these or potential additional lawsuits;

however, if the plaintiffs were to be successful in their claims, they may be entitled to injunctive relief or we may be required to pay significant monetary damages.

Moreover, we are, and expect to continue to be, the subject of various claims, legal proceedings, and government investigations apart from those set forth above that have arisen in the ordinary course of business that have not yet been fully resolved and that could adversely affect our business and the execution of our strategy.

Any of the foregoing risks and uncertainties could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

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Three Months Ended

June 30, Increase/ Six Months Ended

June 30, Increase/

2022 2021 (1)

September 30, Increase/ Nine Months Ended

September 30, Increase/

2022 2021 (Decrease) 2022 2021 (1)

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Intangible asset amortization 141,232 159,804 (12) % 461,782 368,476 25 %

Acquired in-process research and development 69,148 — N/A(2) 69,148 — N/A(2)

Acquired in-process research and development — — — 69,148 — N/A(2)

Impairment charge 133,648 — N/A(2) 133,648 — N/A(2)

Interest expense, net 80,244 93,372 (14) % 214,117 190,168 13 %

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(2) Comparison to prior period not meaningful.

(3) The fluctuations in the income tax expense (benefit) for the three and six months ended June 30, 2022 and 2021 are as a result of changes in the mix of pre-tax income and losses across our jurisdictions and the impact of the change in the statutory tax rate in the U.K.

on the 2021 periods.

(3) The fluctuations in the income tax expense (benefit) for the three and nine months ended September 30, 2022 and 2021 are primarily due to the impacts in 2022 of the impairment of our acquired IPR&D asset, costs related to restructuring and the impact in 2021 of the change in the statutory tax rate in the U.K.

The following table presents our net product sales, royalties and contract revenues, and total revenues (in thousands, except percentages):

Three Months Ended

June 30, Increase/ Six Months Ended

June 30, Increase/

2022 2021 (1)

September 30, Increase/ Nine Months Ended

September 30, Increase/

2022 2021 (Decrease) 2022 2021 (1)

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Total Oxybate 511,975 460,396 11 % 1,449,998 1,329,708 9 %

Epidiolex/Epidyolex 175,289 109,481 N/A(3) 333,182 109,481 N/A(3)

12,966 12,124 7 % 28,844 23,730 22 %

Sativex 4,142 1,961 N/A(3) 8,884 1,961 N/A(3)

Epidiolex/Epidyolex 196,218 160,378 22 % 529,400 269,859 N/A(3)

Sativex 3,220 6,097 (47) % 12,104 8,058 N/A(3)

— 19,251 N/A(3) 28,844 42,981 (33) %

Total Neuroscience 711,413 646,122 10 % 2,020,346 1,650,606 22 %

Zepzelca 70,320 71,714 (2) % 197,943 181,972 9 %

Rylaze 72,954 — N/A(3) 127,174 — N/A(3)

Rylaze 73,513 20,674 256 % 200,687 20,674 N/A(3)

Vyxeos 30,067 34,688 (13) % 97,714 99,296 (2) %

Defitelio/defibrotide 49,452 57,705 (14) % 153,637 155,420 (1) %

Erwinaze/Erwinase — 28,314 N/A(3) — 69,382 N/A(3)

Erwinaze/Erwinase — — — — 69,382 N/A(3)

Total Oncology 223,352 184,781 21 % 649,981 526,744 23 %

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Product Sales, Net

Total oxybate product sales increased by $46.1 million and $68.7 million in the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021.

Total o xybate revenue bottle volume increased by 5% and 4% in the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021.

Average active oxybate patients on therapy were approximately 17,100 in the second quarter of 2022, an increase of approxima tely 8% compared to the same period in 2021.

Xyrem product sales decreased in the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to a decrease in sales volume, reflecting the continued adoption of Xywav by existing Xyrem patients, partially offset by a higher average net selling price.

Total oxybate product sales increased by $51.6 million and $120.3 million in the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021.

Total o xybate revenue bottle volume increased by 7% and 5% in the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021.

Average active oxybate patients on therapy were approximately 17,600 in the third quarter of 2022, an increase of approxima tely 10% compared to the same period in 2021.

Xyrem product sales decreased in the three and nine months ended September 30, 2022 compared to the same periods in 2021 primarily due to a decrease in sales volume, reflecting the continued adoption of Xywav by existing Xyrem patients, partially offset by a higher average net selling price.

Price increases were instituted in January 2021 and January 2022.

Xywav product sales increased in the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to higher sales volume, with bottle volume increasing by 81% and 106%, respectively.

Xywav product sales increased in the three and nine months ended September 30, 2022 compared to the same periods in 2021 primarily due to higher sales volume, with bottle volume increasing by 61% and 87%, respectively.

Xywav product sales were positively impacted by the launch of Xywav for IH and continued strong adoption in narcolepsy driven by educational initiatives around the benefit of lowering sodium intake.

Epidiolex/Epidyolex product sales in the three and six months ended June 30, 2022 were $175.3 million and $333.2 million, respectively.

On a pro forma basis, Epidiolex/Epidyolex product sales increased by 12% and 10% in the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021, primarily due to an increase in commercial sales volume and a higher average net selling price, partially offset by higher gross to net deductions.

Epidiolex/Epidyolex product sales increased by $35.8 million in the three months ended September 30, 2022 compared to the same period in 2021 primarily due to an increase in commercial sales volume and a higher average net selling price, partially offset by higher gross to net deductions.

On a pro forma basis, Epidiolex/Epidyolex product sales increased by 14% in the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to an increase in commercial sales volume and a higher average net selling price, partially offset by higher gross to net deductions.

Price increases were instituted in January 2021 and January 2022.

We completed the U.S divestiture of Sunosi in May 2022.

Sunosi product sales increased in the three months ended June 30, 2022 compared to the same period in 2021 primarily due to lower gross to net deductions, driven by the release of the product returns reserve upon completion of the U.S.

divestment, partially offset by lower sales volume, and increased in the six months ended June 30, 2022 compared to the same period in 2021 primarily due to lower gross to net deductions.

Zepzelca product sales increased in the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to an increase in sales volume resulting from continued adoption of Zepzelca in the treatment of second-line SCLC and a higher average net selling price.

P rice increases were instituted in July 2021 and January 2022.

Rylaze product sales were $73.0 million and $127.2 million in the three and six months ended June 30, 2022, respectively, following its U.S.

launch in July 2021.

Vyxeos product sales increased in the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to an increase in sales volume, partially offset by the negative impact of foreign exchange rates.

Defitelio/defibrotide product sales increased in the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to a higher average net selling price and an increase in sales volume, partially offset by the negative impact of foreign exchange rates.

We completed the U.S.

divestiture of Sunosi in May 2022.

Zepzelca product sales in the three months ended September 30, 2022 decreased compared to the same period in 2021, primarily due to higher gross to net deductions, as a result of a returns accrual release in the three months ended September 30, 2021, partially offset by the impact of a higher average net selling price.

Zepzelca product sales increased in the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to a higher average net selling price and an increase in sales volume, partially offset by the impact of higher gross to net deductions.

P rice increases were instituted in July 2021, January 2022 and July 2022.

Rylaze product sales were $73.5 million and $200.7 million in the three and nine months ended September 30, 2022, respectively, following product launch in July 2021.

Rylaze net product sales increased in the three months ended September 30, 2022 compared to the same period in 2021 primarily due to higher sales volume reflecting the significant unmet patient need for a high-quality, reliable supply of Erwinia asparaginase for patients with ALL.

A p rice increase was instituted in July 2022.

Vyxeos product sales decreased in the three months ended September 30, 2022 compared to the same period in 2021 due to higher gross to net deductions, partially offset by an increase in sales volume.

Vyxeos product sales decreased in the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to higher gross to net deductions and the negative impact of foreign exchange rates, partially offset by increased sales volume.

P rice increases were instituted in August 2021, January 2022 and July 2022.

Defitelio/defibrotide product sales decreased in the three months ended September 30, 2022 compared to the same period in 2021 primarily due to the negative impact of foreign exchange rates and a decrease in sales volume.

Defitelio/defibrotide product sales in the nine months ended September 30, 2022 were in line with the same period in 2021 as the impact of a higher average net selling price and increased sales volume were offset by the negative impact of foreign exchange rates.

P rice increases were instituted in July 2021, January 2022 and July 2022.

We distributed our final Erwinaze inventory in June 2021 following expiration of our license and supply agreement.

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Cost of Product Sales

Cost of product sales increased in the three and six months ended June 30, 2022 compared to the same periods in 2021 primarily due to the cost of product sales acquired in the acquisition of GW, including increases in the acquisition accounting inventory fair value step-up expense, or fair value step-up expense, of $2.3 million and $66.3 million in the three and six months ended June 30, 2022, respectively.

Gross margin as a percentage of net product sales was 86.6% and 86.2% for the three and six months ended June 30, 2022 compared to 84.1% and 88.2% for the same periods in 2021.

The increase in our gross margin percentage in the three months ended June 30, 2022 was primarily due to a change in product mix.

The decrease in our gross margin percentage in the six months ended June 30, 2022 was primarily due to the impact of the fair value step-up expense.

Cost of product sales decreased in the three months ended September 30, 2022 compared to the same period in 2021 primarily due to a decrease in the acquisition accounting inventory fair value step-up expense, or fair value step-up expense, of $11.7 million.

Cost of product sales increased in the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to the cost of product sales acquired in the acquisition of GW, including an increase in the fair value step-up expense of $54.6 million.

Gross margin as a percentage of net product sales was 85.7% for the three months ended September 30, 2022 compared to 82.6% for the same period in 2021 primarily due to the reduction in the fair value step-up expense.

Gross margin as a percentage of net product sales of 86.0% for the nine months ended September 30, 2022 was in line

with the same period in 2021.

We expect our cost of product sales to increase in 2022 compared to 2021 primarily driven by the inclusion of a full year of fair value step-up expense.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased in the three and six months ended June 30, 2022 compared to the same periods in 2021, primarily due to lower transaction and integration expenses related to the acquisition of GW and lower Sunosi U.S.

marketing related costs in the 2022 periods, offset by the loss on disposal of Sunosi and an increase in compensation related expenses driven by the inclusion of GW related headcount costs for the full periods in 2022.

selling, general and administrative expenses in 2022 to decrease compared to 2021, primarily due to a reduction in transaction and integration expenses, together with synergies expected to be realized in connection with the acquisition of GW, partially offset by the inclusion of a full year of expense related to the acquired GW business.

Selling, general and administrative expenses decreased in the three months ended September 30, 2022 compared to the same period in 2021, primarily due to lower transaction and integration expenses related to the acquisition of GW, lower Sunosi related spend offset by restructuring costs and costs related to program terminations and increased marketing expenses relating to Xywav.

Selling, general and administrative expenses decreased in the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to lower transaction and integration expenses, lower Sunosi related costs partially offset by restructuring costs and costs related to program terminations, the loss on disposal of Sunosi and an increase in compensation related expenses driven by the inclusion of GW related headcount costs for the full period in 2022.

We expect selling, general and administrative expenses in 2022 to decrease compared to 2021, primarily due to a reduction in transaction and integration expenses, together with synergies expected to be realized in connection with the acquisition of GW, partially offset by the inclusion of a full year of expense related to the acquired GW business, the loss on disposal of Sunosi and restructuring costs.

Research and Development Expenses

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Personnel expenses 59,123 54,523 170,728 138,678

Restructuring expenses 11,891 — 11,891 —

Milestone expense 752 3,000 6,252 5,000

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Total $ 148,870 $ 141,036 $ 417,898 $ 350,305

Research and development expenses increased by $6.4 million and $59.8 million in the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021.

Clinical studies and outside services costs decreased in the three months ended June 30, 2022 compared to the same period in 2021 primarily due to a reduction in costs related to JZP458 (Rylaze) and JZP385 and increased in the six months ended June 30, 2022 compared to the same period in 2021 primarily due to the addition of costs related to clinical programs for Epidiolex, nabiximols and cannabinoids and an increase in costs related to JZP150.

Personnel expenses increased in the three and six months ended June 30, 2022, compared to the same periods in 2021 due to the inclusion of GW-related headcount costs for the full periods in 2022.

For 2022, we expect that our research and development expenses will continue to increase from previous levels due to the inclusion of a full year of expense with respect to the acquired GW business and as we prepare for anticipated data read-outs from clinical trials, initiate and undertake additional clinical trials and related development work and potentially acquire rights to additional product candidates.

Research and development expenses increased by $7.8 million and $67.6 million in the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021.

Clinical studies and outside services costs decreased in the three months ended September 30, 2022, compared to the same period in 2021, primarily due to a reduction in costs related to JZP458 (Rylaze) and solriamfetol related expenses and increased in the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to additional costs related to clinical programs for Epidiolex, nabiximols and cannabinoids and an increase in costs related to JZP150.

Personnel expenses increased in the three months ended September 30, 2022, compared to the same period in 2021, primarily due to share-based compensation related expenses.

Personnel expenses in the nine months ended September 30, 2022 increased compared to the same period in 2021 due to the inclusion of GW-related headcount costs for the full period in 2022.

There were restructuring costs of $11.9 million in the three and nine months ended September 30, 2022.

Other costs for the three months ended September 30, 2022 were in line with the same period in 2021 and increased in the nine months ended September 30, 2022 compared to the same period in 2021 primarily due to the inclusion of GW-related costs for the full period in 2022.

For 2022, we expect that our research and development expenses will continue to increase from previous levels due to the inclusion of a full year of expense with respect to the acquired GW business and initiate and undertake additional clinical trials and related development work and potentially acquire rights to additional product candidates.

Intangible Asset Amortization

Intangible asset amortization increased by $8.0 million and $111.9 million in the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021 primarily due to the inclusion of the amortization of the intangible assets arising from the acquisition of GW, primarily related to Epidiolex, offset by a decrease relating to the Erwinaze intangible asset that was fully amortized in June 2021.

Intangible asset amortization decreased by $18.6 million in the three months ended September 30, 2022, compared to the same period in 2021 due to movements in foreign exchange rates and increased by $93.3 million in the nine months ended September 30, 2022, compared to the same period in 2021 primarily due to the inclusion of the amortization of the intangible assets arising from the acquisition of GW, primarily related to Epidiolex, offset by a decrease relating to the Erwinaze intangible asset that was fully amortized in June 2021.

Intangible asset amortization is expected to increase in 2022 compared to 2021 primarily as a result of the inclusion of a full years amortization on the intangible assets acquired in the acquisition of GW.

Acquired In-Process Research and Development

Acquired in-process research and development, or IPR&D, expense in the three and six months ended June 30, 2022 primarily related to the upfront payments made in connection with our licensing agreements with Sumitomo and Werewolf of $50.0 million and $15.0 million, respectively.

Acquired in-process research and development, or IPR&D, expense in the nine months ended September 30, 2022 primarily related to the upfront payments made in connection with our licensing agreements with Sumitomo and Werewolf of $50.0 million and $15.0 million, respectively.

Impairment charge

In the three and nine months ended September 30, 2022, we recorded an IPR&D asset impairment charge of $133.8 million as a result of the decision to discontinue our nabiximols program.

Interest Expense, Net

Interest expense, net in the three months ended June 30, 2022, was in line with the same period in 2021.

Interest expense, net, increased by $37.1 million in the six months ended June 30, 2022, compared to the same periods in 2021, primarily due to higher interest expense from the seven-year $3.1 billion term loan B facility, or the Dollar Term Loan, the seven-year €625.0 million term loan B facility, or the Euro Term Loan, together with the Dollar Term Loan known as the Term Loan, and the 4.375% senior secured notes, due 2029, or the Secured Notes.

Interest expense, net in the three months ended September 30, 2022, decreased by $13.1 million, compared to the same period in 2021, primarily driven by a decrease in non-cash interest expense relating to the 1.50% exchangeable senior notes due 2024, or the 2024 Notes, and the 2.00% exchangeable senior notes due 2026, or the 2026 Notes, following the adoption of ASU No.

2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, or ASU 2020-06, on January 1, 2022.

Interest expense, net, increased by $23.9 million in the nine months ended September 30, 2022, compared to the same period in 2021, primarily due to higher interest expense from the seven-year $3.1 billion term loan B facility, or the Dollar Term Loan and the 4.375% senior secured notes, due 2029, or the Secured Notes, offset by a decrease in non-cash interest expense relating to the 2024 and 2026 Notes.

We expect interest expense, net for 2022 to be broadly in line with 2021.

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Income Tax Expense (Benefit)

Our income tax benefit was $16.1 million and $15.6 million for the three and six months ended June 30, 2022, respectively, compared to an income tax expense of $228.6 million and $246.6 million for the same periods in 2021.

Our income tax expense for the three and six months ended June 30, 2021 included an expense of $251.4 million arising on the remeasurement of our U.K.

Our income tax benefit was $43.0 million and $58.6 million for the three and nine months ended September 30, 2022, respectively, compared to an income tax benefit of $18.1 million and an income tax expense of $228.6 million for the same periods in 2021.

Our income tax benefit for the three and nine months ended September 30, 2022 included the tax impacts of the impairment of our acquired IPR&D asset and restructuring costs.

Our income tax expense for the three and nine months ended September 30, 2021 included an expense of $250.6 million arising on the remeasurement of our U.K.

net deferred tax liability, which arose primarily in relation to the GW Acquisition, due to a change in the statutory rate in the U.K.

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Finance Act 2021.

Excluding this impact, the increase in the income tax benefit resulted primarily from the mix of pre-tax income and losses incurred across tax jurisdictions.

Excluding these impacts, the decrease in the income tax benefit in the three months ended September 30, 2022 compared to the same period in 2021 resulted primarily from the mix of pre-tax income and losses incurred across tax jurisdictions.

The income tax benefit in the nine months ended September 30, 2022 is in line with the prior period.

We do not provide for Irish income taxes on undistributed earnings of our foreign operations that are intended to be indefinitely reinvested in our foreign subsidiaries.

Liquidity and Capital Resources

As of June 30, 2022, we had cash, cash equivalents and investments of $771.3 million, borrowing availability under our revolving credit facility of $500.0 million and long-term debt principal balance of $6.1 billion.

Our long-term debt included $3.1 billion in aggregate principal amount of the Dollar Term Loan, $1.5 billion in aggregate principal amount of the Secured Notes , $1.0 billion principal amount of the 2.00% exchangeable senior notes due 2026, or the 2026 Notes and $575.0 million principal amount of the 1.50% exchangeable senior notes due 2024, or the 2024 Notes.

We generated cash flows from operations of $512.0 million during the six months ended June 30, 2022, and we expect to continue to generate positive cash flows from operations which will enable us to operate our business and de-lever our balance sheet over time.

In the first quarter of 2022, we repaid €208.3 million, or $251.0 million which represents the remaining principal amount of the Euro Term Loan.

We have made voluntary repayments of €625.0 million, or $753.0 million, relating to Euro Term Loan and mandatory repayments of $31.0 million relating to the Dollar Term Loan since the closing of the acquisition of GW in May 2021.

As of September 30, 2022, we had cash, cash equivalents and investments of $899.4 million, borrowing availability under our revolving credit facility of $500.0 million and long-term debt principal balance of $5.8 billion.

Our long-term debt included $2.8 billion in aggregate principal amount of the Dollar Term Loan, $1.5 billion in aggregate principal amount of the Secured Notes , $1.0 billion principal amount of the 2026 Notes and $575.0 million principal amount of the 2024 Notes.

We generated cash flows from operations of $930.0 million during the nine months ended September 30, 2022, and we expect to continue to generate positive cash flows from operations which will enable us to operate our business and de-lever our balance sheet over time.

In 2022, we made voluntary repayments of $300.0 million of the Dollar Term Loan principal outstanding and €208.3 million, or $251.0 million, of the seven-year €625.0 million term loan B facility, or the Euro Term Loan, which represented the remaining principal amount.

We have made voluntary repayments of €625.0 million, or $753.0 million, relating to Euro Term Loan and voluntary and mandatory repayments of $300.0 million and $38.2 million, respectively, relating to the Dollar Term Loan since the closing of the acquisition of GW in May 2021.

We have a significant amount of debt outstanding on a consolidated basis.

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However, global economic conditions have been worsening, with disruptions to, and volatility in, the credit and financial markets in the U.S.

and worldwide resulting from the effects of COVID-19 and otherwise.

and worldwide resulting from the effects of inflationary pressures, the COVID-19 pandemic and otherwise.

If these conditions persist and deepen, we could experience an inability to access additional capital or our liquidity could otherwise be impacted, which could in the future negatively affect our capacity for certain corporate development transactions or our ability to make other important, opportunistic investments.

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Moreover, as a matter of Irish law, when an Irish public limited company issues ordinary shares to new shareholders for cash, the company must first offer those shares on the same or more favorable terms to existing shareholders on a pro-rata basis, unless this statutory pre-emption obligation is dis-applied, or opted-out of, by approval of its shareholders.

At our recent annual general meeting of shareholders in July 2022, our shareholders voted to approve our proposal to dis-apply the statutory pre-emption obligation on terms that are substantially more limited than our general pre-emption opt-out authority that had been in effect prior to August 4, 2021.

At our annual general meeting of shareholders in July 2022, our shareholders voted to approve our proposal to dis-apply the statutory pre-emption obligation on terms that are substantially more limited than our general pre-emption opt-out authority that had been in effect prior to August 4, 2021.

This current pre-emption opt-out authority is due to expire in December 2023.

If we are unable to obtain further pre-emption authorities from our shareholders in the future, or otherwise continue to be limited by the terms of new pre-emption authorities approved by our shareholders in the future, our ability to effectively use our unissued share capital to fund in-licensing, acquisition or other business opportunities, or to otherwise raise capital, could be adversely affected.

If we are unable to obtain further pre-emption authorities from our shareholders in the future, or otherwise continue to be limited by the terms of new pre-emption authorities approved by our shareholders in the future, our ability to use our unissued share capital to fund in-licensing, acquisition or other business opportunities, or to otherwise raise capital, could be adversely affected.

In any event, an inability to borrow or raise additional capital in a timely manner and on attractive terms could prevent us from expanding our business or taking advantage of acquisition opportunities, and could otherwise have a material adverse effect on our business and growth prospects.

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The following table presents a summary of our cash flows for the periods indicated (in thousands):

Six Months Ended

Nine Months Ended

September 30,

Net cash provided by operating activities $ 930,006 $ 600,752

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Operating activities

Net cash provided by operating activities increased by $185.3 million in the six months ended June 30, 2022 compared to the same period in 2021, primarily due to decreased transaction and integration-related costs associated with the GW Acquisition.

Net cash provided by operating activities increased by $329.3 million in the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to increased cash received on sales of our products and decreased transaction and integration-related costs associated with the GW Acquisition.

Investing activities

Net cash used in investing activities decreased by $5,048.8 million in the six months ended June 30, 2022 compared to the same period in 2021, primarily due to the following:

• $6,234.8 million outflow related to the net cash paid for the GW Acquisition in the six months ended June 30, 2021;

Net cash used in investing activities decreased by $5,080.2 million in the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to the following:

• $6,234.8 million outflow related to the net cash paid for the GW Acquisition in the nine months ended September 30, 2021;

• $53.0 million upfront payment from Axsome relating to the Sunosi U.S.

disposition in the six months ended June 30, 2022;

• $1,129.6 million decrease in net proceeds from maturity of investments, primarily time deposits in the six months ended June 30, 2022;

• $69.1 million in upfront payments for acquired IPR&D primarily driven by the $50.0 million and $15.0 million payments to Sumitomo and Werewolf, respectively, in connection with our licensing agreements in the six months ended June 30, 2022;

• $25.0 million milestone payment to PharmaMar in relation to our first sales-based milestone for Zepzelca in the six months ended June 30, 2022.

disposition in the nine months ended September 30, 2022;

• $1,129.3 million decrease in net proceeds from maturity of investments, primarily time deposits in the nine months ended September 30, 2022;

Financing activities

Net cash (used in) provided by financing activities decreased by $4,942.3 million in the six months ended June 30, 2022 compared to the same period in 2021, primarily due to:

• Net proceeds from issuance of borrowings under the Credit Agreement of $3,719.9 million and the Secured Notes of $1,471.5 million in the six months ended June 30, 2021;

Net cash (used in) provided by financing activities decreased by $4,766.2 million in the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

• Net proceeds from issuance of borrowings under the Credit Agreement of $3,719.9 million and the Secured Notes of $1,471.5 million in the nine months ended September 30, 2021;

• A decrease of $49.2 million in proceeds from employee equity incentive and purchase plans;

• An increase of $12.9 million in payment of employee withholding taxes related to share-based awards;

• Repayment of long-term debt of $266.5 million in the six months ended June 30, 2022, compared to $584.3 million in the six months ended June 30, 2021.

• Payments for repurchase of the 2021 Notes of $218.8 million in the nine months ended September 30, 2021;

• Repayments of long-term debt of $574.3 million in the nine months ended September 30, 2022, compared to $843.0 million in the nine months ended September 30, 2021.

The summary of our outstanding indebtedness under our financing arrangements is included in Note 9, Debt, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

During the six months ended June 30, 2022, there were no changes to the credit agreement, as set forth in Note 12, Debt, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

During the nine months ended September 30, 2022, there were no changes to the credit agreement, as set forth in Note 12, Debt, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Contractual Obligations

During the six months ended June 30, 2022, there were no material changes to our contractual obligations as set forth in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021.

During the nine months ended September 30, 2022, there were no material changes to our contractual obligations as set forth in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021.

Critical Accounting Estimates

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In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “propose,” “intend,” “continue,” “potential,” “possible,” “foreseeable,” “likely,” “unforeseen” and similar expressions intended to identify forward-looking statements.

These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, time frames or

achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements.

These statements involve

known and unknown risks, uncertainties and other factors which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements.

We discuss many of these risks, uncertainties and other risk factors in greater detail under Part II, Item 1A of this Quarterly Report on Form 10-Q.

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Quantitative and Qualitative Disclosures About Market Risk

During the six months ended June 30, 2022, there were no material changes to our market risk disclosures as set forth in Part II, Item 7A“Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2021.

During the nine months ended September 30, 2022, there were no material changes to our market risk disclosures as set forth in Part II, Item 7A“Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis