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Item 9A. Controls and Procedures

2023-03-01 compared with 2022-03-01 · 426 added, 515 removed, 1708 unchanged (36% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures .

We have carried out an evaluation under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10‑K.

We have carried out an evaluation under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10‑K.

Based on their evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2022.

4 unchanged sentences

Changes in Internal Control over Financial Reporting.

As discussed above, the GW Acquisition closed on May 5, 2021.

The GW Acquisition was accounted for using the acquisition method of accounting.

The results of operations of the acquired GW business have been included in our results of operations since May 5, 2021, and we have evaluated and integrated GW’s historical internal controls with ours throughout the fiscal year.

During the quarter ended December 31, 2022, there were no changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting.

The following report is provided by management in respect of our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act):

The following report is provided by management in respect of our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act):

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

Our management used the Committee of Sponsoring Organizations of the Treadway Commission Internal Control - Integrated Framework (2013), or the COSO framework, to evaluate the effectiveness of internal control over financial reporting.

Management believes that the COSO framework is a suitable framework for its evaluation of

financial reporting because it is free from bias, permits reasonably consistent qualitative and quantitative measurements of our internal control over financial reporting, is sufficiently complete so that those relevant factors that would alter a conclusion about the effectiveness of our internal control over financial reporting are not omitted and is relevant to an evaluation of internal control over financial reporting.

Management believes that the COSO framework is a suitable framework for its evaluation of financial reporting because it is free from bias, permits reasonably consistent qualitative and quantitative measurements of our internal control over financial reporting, is sufficiently complete so that those relevant factors that would alter a conclusion about the effectiveness of our internal control over financial reporting are not omitted and is relevant to an evaluation of internal control over financial reporting.

Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 and has concluded that such internal control over financial reporting was effective.

2 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

To the Stockholders and Board of Directors

Jazz Pharmaceuticals plc:

24 unchanged sentences

Not applicable.

Item 9.C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

44 unchanged sentences

001-33500), as filed with the SEC on December 20, 2013).

2.6† Asset Purchase Agreement, dated January 13, 2014, by and among Jazz Pharmaceuticals International III Limited, Aerial BioPharma, LLC and Jazz Pharmaceuticals plc (incorporated herein by reference to Exhibit 2.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No.

001-33500), as filed with the SEC on January 13, 2014).

2.6† Assignment Agreement, dated July 1, 2014, by and among Jazz Pharmaceuticals International II Limited, Sigma-Tau Pharmaceuticals, Inc., Jazz Pharmaceuticals plc and Gentium S.p.A.

39 unchanged sentences

10.1# Settlement Agreement, dated as of April 5, 2017, by and between Jazz Pharmaceuticals, Inc.

and Jazz Pharmaceuticals Ireland Limited, and Roxane Laboratories, Inc., West-Ward Pharmaceuticals Corp., Eurohealth (USA), Inc., and Hikma Pharmaceuticals PLC (incorporated herein by reference to Exhibit 10.1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2017, as filed with the SEC on August 8, 2017).

1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 20 22 , as filed with the SEC on No vember 9 , 20 22 ).

10.2 Settlement Agreement, dated as of April 4, 2019, by and among United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General of the Department of Health and Human Services, Jazz Pharmaceuticals plc, Jazz Pharmaceuticals, Inc., and Jazz Pharmaceuticals Ireland Ltd.

7 unchanged sentences

001-33500) for the period ended March 31, 2010, as filed with the SEC on May 6, 2010).

10.5† Royalty Bearing Licence Agreement and Supply Agreement Re Erwinia-Derived Asparaginase, dated July 22, 2005, between Public Health England (formerly Health Protection Agency) and EUSA Pharma SAS (formerly OPi, S.A.), as amended on each of December 22, 2009, March 23, 2012 and August 8, 2012 (incorporated herein by reference to Exhibit 10.11 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q/A (File No.

001-33500) for the period ended June 30, 2012, as filed with the SEC on August 9, 2012).

Novation Agreement relating to Royalty Bearing Licence Agreement and Supply Agreement re Erwinia-Derived Asparaginase, dated as of May 13, 2015, by and among EUSA Pharma SAS, the Secretary of State for Health acting through Public Health England and Porton Biopharma Limited (incorporated herein by reference to Exhibit 10.3 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2015, as filed with the SEC on August 5, 2015).

10.7 Contract Variation Agreement by and between Porton Biopharma Limited and Jazz Pharmaceuticals France SAS, dated as of December 20, 2018 (incorporated herein by reference to Exhibit 10.5 in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 2018, as filed with the SEC on February 26, 2019).

Master Manufacturing Services Agreement, dated as of October 1, 2015, by and between Jazz Pharmaceuticals Ireland Limited and Patheon Pharmaceuticals Inc.

2 unchanged sentences

Clinical and Commercial Manufacturing and Supply Agreement, dated as of December 22, 2010, between Celator Pharmaceuticals, Inc.

and Baxter Oncology GmbH (incorporated herein by reference to Exhibit 10.8 in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the year ended December 31, 2017, as filed with the SEC on February 27, 2018).

and Baxter Oncology GmbH (incorporated herein by reference to Exhibit 10.

2 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 2022, as filed with the SEC on November 9, 2022).

Amendment No.

1 Clinical and Commercial Manufacturing and Supply Agreement, dated as of January 18, 2018, by and between Jazz Pharmaceuticals Ireland Limited and Baxter Oncology GmbH (incorporated herein by reference to Exhibit 10.3 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended March 31, 2018, as filed with the SEC on May 8, 2018).

3 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 2022, as filed with the SEC on November 9, 2022).

Contract Manufacturing Agreement, dated as of January 20, 2020, by and between Jazz Pharmaceuticals Ireland Limited and Siegfried AG (incorporated herein by reference to Exhibit 10.10 in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 2019, as filed with the SEC on February 25, 2020).

Pharmacy Master Services Agreement, dated as of July 1, 2020, by and between Jazz Pharmaceuticals, Inc.

and Express Scripts Specialty Distribution Services, Inc.

(incorporated herein by reference to Exhibit 10.2 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2020, as filed with the SEC on August 4, 2020).

10.11B Amendment No.

1, dated as of July 4, 2021 to Pharmacy Master Services Agreement, dated as of July 1, 2020, by and between Jazz Pharmaceuticals, Inc.

and Express Scripts Specialty Distribution Services, Inc.

(incorporated herein by reference to Exhibit 10.1A in Jazz Pharmaceuticals, plc ’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.11C Amendment No.

2, dated as of July 19, 2021 to Pharmacy Master Services Agreement, dated as of July 1, 2020, by and between Jazz Pharmaceuticals, Inc.

and Express Scripts Specialty Distribution Services, Inc.

(incorporated herein by reference to Exhibit 10.1 B in Jazz Pharmaceuticals, plc ’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.11D Amendment No.

3 , dated as of December 7 , 2021 to Pharmacy Master Services Agreement, dated as of July 1, 2020, by and between Jazz Pharmaceuticals, Inc.

Pharmacy Master Services Agreement, dated as of December 1, 2022 , by and between Jazz Pharmaceuticals, Inc.

and Express Scripts Specialty Distribution Services, Inc.

10.12A‡ Amended and Restated License Agreement, dated as of October 14, 2020, between Pharma Mar, S.A.

and Jazz Pharmaceuticals Ire land Limited (incorporated herein by reference to Exhibit 10.

12 in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

10.9‡ Amended and Restated License Agreement, dated as of October 14, 2020, between Pharma Mar, S.A.

and Jazz Pharmaceuticals Ireland Limited (incorporated herein by reference to Exhibit 10.12 in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 2020, as filed with the SEC on February 23, 2021).

10.12B‡ Amendment No.

10.10‡ Amendment No.

1, dated as of May 6, 2021, to Amended and Restated License Agreement, dated as of October 14, 2020, between Pharma Mar, S.A.

and Jazz Pharmaceuticals Ireland Limited (incorporated herein by reference to Exhibit 10.

2 in Jazz Pharmaceuticals, plc ’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.13A Credit Agreement, dated as of June 18, 2015, among Jazz Pharmaceuticals plc, Jazz Securities Limited, Jazz Pharmaceuticals, Inc., Jazz Financing I Limited, Jazz Pharmaceuticals Ireland Limited, the lenders party thereto and Bank of America, N.A., as Collateral Agent, Administrative Agent, Swing Line Lender and L/C Issuer (incorporated herein by reference to Exhibit 10.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No.

001-33500), as filed with the SEC on June 18, 2015).

10.13B Amendment No.

1, dated as of July 12, 2016, to Credit Agreement, dated as of June 18, 2015, among Jazz Pharmaceuticals plc, Jazz Securities Limited, Jazz Pharmaceuticals, Inc., Jazz Financing I Limited, Jazz Pharmaceuticals Ireland Limited, the lenders party thereto and Bank of America, N.A., as Collateral Agent, Administrative Agent, Swing Line Lender and L/C Issuer (incorporated herein by reference to Exhibit 10.1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2016, as filed with the SEC on August 9, 2016).

10.13C Amendment No.

2, dated as of June 7, 2018, to Credit Agreement, dated as of June 18, 2015 (as previously amended by Amendment No.

1, dated as of July 12, 2016), among Jazz Pharmaceuticals plc, Jazz Securities Designated Activity Company, Jazz Pharmaceuticals, Inc., Jazz Financing I Designated Activity Company, Jazz Pharmaceuticals Ireland Limited, the lenders party thereto and Bank of America, N.A., as Collateral Agent, Administrative Agent, Swing Line Lender and L/C Issuer (incorporated herein by reference to Exhibit 10.4 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

and Jazz Pharmaceuticals Ireland Limited (incorporated herein by reference to Exhibit 10.2 in Jazz Pharmaceuticals, plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.13D Amendment No.

3, dated as of April 20, 2021, to Credit Agreement, dated as of June 18, 2015 (as previously amended by Amendment No.

1, dated as of July 12, 2016 and Amendment No.2, dated as of June 7, 2018), among Jazz Pharmaceuticals plc, Jazz Securities Designated Activity Company, Jazz Pharmaceuticals, Inc., Jazz Financing I Designated Activity Company, Jazz Pharmaceuticals Ireland Limited, the lenders party thereto and Bank of America, N.A., as Collateral Agent, Administrative Agent, Swing Line Lender and L/C Issuer (incorporated herein by reference to Exhibit 10.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No.

001-33500), as filed with the SEC on April 20, 2021.

10.11# License and Collaboration Agreement, dated October 18, 2022, between Jazz Pharmaceuticals Ireland Limited and Zymeworks BC Inc.

(incorporated herein by reference to Exhibit 2.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No.

001-033500), as filed with the SEC on December 5, 2022).

10.12 Credit Agreement, dated as of May 5, 2021, by and among Jazz Pharmaceuticals Public Limited Company, the other borrowers from time to time party thereto, the lenders and issuing banks from time to time party thereto, Bank of America, N.A., as administrative agent, and U.S.

55 unchanged sentences

001-33500) for the period ended June 30, 2020, as filed with the SEC on August 4, 2020).

10.27A+ Service Agreement, dated as of May 5, 2021, by and between Chris Tovey and Jazz Pharmaceuticals UK Limited (incorporated herein by reference to Exhibit 10.

4 in Jazz Pharmaceuticals, plc’s Quarterly Report on Form 10-Q (File No.

10.25A+ Service Agreement, dated as of May 5, 2021, by and between Chris Tovey and Jazz Pharmaceuticals UK Limited (incorporated herein by reference to Exhibit 10.4 in Jazz Pharmaceuticals, plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.27B+ Participation Agreement, dated as of May 5, 2021, by and between Chris Tovey and Jazz Pharmaceuticals UK Limited (incorporated herein by reference to Exhibit 10.

5 in Jazz Pharmaceuticals, plc’s Quarterly Report on Form 10-Q (File No.

10.25B+ Participation Agreement, dated as of May 5, 2021, by and between Chris Tovey and Jazz Pharmaceuticals UK Limited (incorporated herein by reference to Exhibit 10.5 in Jazz Pharmaceuticals, plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

4 unchanged sentences

with the SEC on February 28, 2012).

10.28C+ Form of Notice of Grant of Stock Options and Form of Option Agreement (U.S.) under the Jazz Pharmaceuticals plc 2007 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.27C in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 2012, as filed with the SEC on February 26, 2013).

10.28D+ Form of Notice of Grant of Stock Options and Form of Option Agreement (Irish) under Jazz Pharmaceuticals plc 2007 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.27D in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 2012, as filed with the SEC on February 26, 2013).

10.28E+ Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Award Agreement (U.S.) under the Jazz Pharmaceuticals plc 2007 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.27E in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 2012, as filed with the SEC on February 26, 2013).

10.28F+ Form of Restricted Stock Unit Grant Notice and Form of Restricted Stock Unit Award Agreement (Irish) under the Jazz Pharmaceuticals plc 2007 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.27F in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 2012, as filed with the SEC on February 26, 2013).

10.28G+ Jazz Pharmaceuticals plc 2007 Equity Incentive Plan - Form of Non-U.S.

Option Grant Notice and Form of Non-U.S.

Option Agreement (approved July 31, 2013) (incorporated herein by reference to Exhibit 10.1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 2013, as filed with the SEC on November 5, 2013).

10.28H+ Jazz Pharmaceuticals plc 2007 Equity Incentive Plan - Form of Non-U.S.

Restricted Stock Unit Award Grant Notice and Form of Non-U.S.

Restricted Stock Unit Award Agreement (approved July 31, 2013) (incorporated herein by reference to Exhibit 10.2 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 2013, as filed with the SEC on November 5, 2013).

10.29A+ Jazz Pharmaceuticals plc 2011 Equity Incentive Plan (incorporated herein by reference to Exhibit 99.1 in Jazz Pharmaceuticals plc’s registration statement on Form S-8 (File No.

333-179075), as filed with the SEC on January 18, 2012).

10.29B+ Jazz Pharmaceuticals plc 2011 Equity Incentive Plan Sub-Plan Governing Awards to Participants in the Republic of Ireland (incorporated herein by reference to Exhibit 10.39B in the Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 2011, as filed by Jazz Pharmaceuticals plc on behalf of and as successor to Jazz Pharmaceuticals Inc.

with the SEC on February 28, 2012).

10.26C+ Form of Stock Option Grant Notice and Form of Option Agreement (U.S.) under the Jazz Pharmaceuticals plc 2011 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.7 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

42 unchanged sentences

001-33500) for the period ended September 30, 2016, as filed with the SEC on November 8, 2016).

10.29Q+ Form of U.S.

10.26Q+ Amended and Restated 2011 Equity Incentive Plan (approved November 2, 2022) .

10.26R+ Form of U.S.

Restricted Stock Unit Award Grant Notice and Form of U.S.

1 unchanged sentence

001-33500) for the period ended September 30, 2016, as filed with the SEC on November 8, 2016).

10.29R+ Form of U.S.

10.26S+ Form of U.S.

Option Grant Notice and Form of U.S.

1 unchanged sentence

001-33500) for the period ended September 30, 2016, as filed with the SEC on November 8, 2016).

10.29S+ Form of Non-U.S.

10.26T+ Form of Non-U.S.

Restricted Stock Unit Award Grant Notice and Form of Non-U.S.

1 unchanged sentence

001-33500) for the period ended September 30, 2016, as filed with the SEC on November 8, 2016).

10.29T+ Form of Non-U.S.

10.26U+ Form of Non-U.S.

Option Grant Notice and Non-U.S.

1 unchanged sentence

001-33500) for the period ended June 30, 2018, as filed with the SEC on August 7, 2018).

10.29U+ Form of Non-U.S.

10.26V+ Form of Non-U.S.

Restricted Stock Unit Award Grant Notice and Non-U.S.

1 unchanged sentence

001-33500) for the period ended June 30, 2018, as filed with the SEC on August 7, 2018).

10.29V+ Form of Non-U.S.

10.26W+ Form of Non-U.S.

Option Grant Notice and Non-U.S.

1 unchanged sentence

001-33500) for the period ended March 31, 2019, as filed with the SEC on May 7, 2019).

10.29W+ Form of Non-U.S.

10.26X+ Form of Non-U.S.

Restricted Stock Unit Award Grant Notice and Non-U.S.

1 unchanged sentence

001-33500) for the period ended March 31, 2019, as filed with the SEC on May 7, 2019).

10.29X+ Form of U.S.

10.26Y+ Form of U.S.

Restricted Stock Unit Award Grant Notice and Form of U.S.

1 unchanged sentence

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.29Y+ Form of Non-U.S.

10.26Z+ Form of Non-U.S.

Restricted Stock Unit Award Grant Notice and Form of Non-U.S.

1 unchanged sentence

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.29Z+ Form of Non-U.S.

10.26AA+ Form of Non-U.S.

Restricted Stock Unit Award Grant Notice and Form of Non-U.S.

Restricted Stock Unit Award Agreement under the Jazz Pharmaceuticals plc Amended and Restated 2011 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.

1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

Restricted Stock Unit Award Agreement under the Jazz Pharmaceuticals plc Amended and Restated 2011 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 2021, as filed with the SEC on November 9, 2021).

10.29AA+ Form of U.S.

10.26BB+ Form of U.S.

Performance Restricted Stock Unit Award Grant Notice and Form of U.S.

1 unchanged sentence

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.29BB+ Form of Non-U.S.

10.26CC+ Form of Non-U.S.

Performance Restricted Stock Unit Award Grant Notice and Form of Non-U.S.

Performance Restricted Stock Unit Award Agreement under the Jazz Pharmaceuticals plc Amended and Restated 2011 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.

7 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

Performance Restricted Stock Unit Award Agreement under the Jazz Pharmaceuticals plc Amended and Restated 2011 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.7 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

59 unchanged sentences

001-33500) for the period ended December 31, 2012, as filed with the SEC on February 26, 2013).

10.33B+ Jazz Pharmaceuticals plc 2007 Employee Stock Purchase Plan Sub-Plan Governing Purchase Rights to Participants in the Republic of Ireland (incorporated herein by reference to Exhibit 10.14C in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

10.30B+ Amended and Restated 2007 Employee Stock Purchase Plan (approved November 2, 2022) .

10.30C+ Jazz Pharmaceuticals plc 2007 Employee Stock Purchase Plan Sub-Plan Governing Purchase Rights to Participants in the Republic of Ireland (incorporated herein by reference to Exhibit 10.14C in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended March 31, 2012, as filed with the SEC on May 8, 2012 ).

5 unchanged sentences

10.31C+ Jazz Pharmaceuticals plc Cash Bonus Plan for U.S.

Affiliates (approved October 30, 2020) ( incorporated herein by reference to Exhibit 10.

33C in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

Affiliates (approved October 30, 2020) (incorporated herein by reference to Exhibit 10.33C in Jazz Pharmaceuticals plc’s Annual Report on Form 10-K (File No.

001-33500) for the period ended December 31, 2020, as filed with the SEC on February 23, 2021).

1 unchanged sentence

001-33500) for the period ended December 31, 2020, as filed with the SEC on February 23, 2021).

10.34E+ Jazz Pharmaceuticals plc Global Cash Bonus Plan (approved November , 202 1 ) .

10.35+ Amended and Restated Executive Change in Control and Severance Benefit Plan, dated as of July 31, 2019 (incorporated herein by reference to Exhibit 10.

5 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

10.31E+ Jazz Pharmaceuticals plc Global Cash Bonus Plan (approved November, 2021) (incorporated herein by referen ce to Exhibit 10.34E + in Jazz Pharmaceuticals plc ’ s Annual R eport on F o rm 10-K (File No.

001-33 500 ) for the period ended December 31, 2021, as filed with the SEC on March 1, 2022) .

10.32+ Amended and Restated Executive Change in Control and Severance Benefit Plan, dated as of July 31, 2019 (incorporated herein by reference to Exhibit 10.5 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended September 30, 2019, as filed with the SEC on November 5, 2019).

5 unchanged sentences

001-33500) for the period ended June 30, 2021, as filed with the SEC on August 3, 2021).

10.33D+ Amended and Restated Non-Employee Director Compensation Policy (approved April 28 , 202 2 ) (incorporated herein by reference to Exhibit 10.

2 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No.

001-33500) for the period ended June 30, 202 2 , as filed with the SEC on August 3, 202 2 ).

21.1 Subsidiaries of Jazz Pharmaceuticals plc.

17 unchanged sentences

‡ Certain portions of this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

# Portions of this document have been omitted pursuant to Item 601(b)(10) of Regulations S-K because they are both not material and are the type that the Company treats as private and confidential.

* The certifications attached as Exhibit 32.1 accompany this Annual Report on Form 10‑K pursuant to 18 U.S.C.

62 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

To the Stockholders and Board of Directors

Jazz Pharmaceuticals plc:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Jazz Pharmaceuticals plc and subsidiaries (the ‘Company’) as of December 31, 2021 and 2020, the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2021, and the related notes and financial statement schedules at Item 15(a)2 (collectively, ‘the consolidated financial statements’).

We have audited the accompanying consolidated balance sheets of Jazz Pharmaceuticals plc.

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2022, and the related notes and financial statement schedules at Item 15(a)2 (collectively, ‘the consolidated financial statements’).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2022, in conformity with U.S.

12 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

Critical Audit Matter

The critical audit matter communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Preliminary measurement of fair value of acquired developed technology assets related to a business combination

As discussed in Note 3 to the consolidated financial statements, on May 5, 2021, the Company acquired GW Pharmaceuticals plc (‘GW’) in a business combination for a purchase price of $7,190.7 million.

In allocating the purchase price, the Company recognized intangible assets at fair value in the amount of $5,640.0 million, including acquired developed technology of $5,480.0 million.

We identified the assessment of the preliminary measurement of fair value of acquired developed technology assets acquired in the GW Acquisition as a critical audit matter.

A high degree of auditor judgment was required in evaluating the key fair value assumptions, specifically revenue forecasts.

Changes to these assumptions could have a significant effect on the initial measurement of fair value.

Valuation of the Vyxeos intangible asset

As discussed in Note 10 to the consolidated financial statements, the finite-lived intangible assets balance as of December 31, 2022 was $5,794,437 thousand, a portion of which related to the finite-lived intangible asset in respect of Vyxeos.

As discussed in Note 2, the Company reviews finite-lived intangible assets for impairment when events or circumstances indicate that the carrying value of such assets may not be recoverable.

We identified the assessment of the carrying value of the Vyxeos intangible asset as a critical audit matter.

There was a high degree of subjectivity in assessing the carrying value of Vyxeos, specifically revenue forecast assumptions for Vyxeos, which are key inputs to the determination of estimated undiscounted future cash flows.

The following are the primary procedures we performed to address this critical audit matter:

– We evaluated the design and tested the operating effectiveness of certain internal controls related to the business combinations process, including the control over the development of the key assumptions;

– We evaluated the reasonableness of the Company’s revenue forecasts by comparing certain underlying assumptions to (1) company-specific operational information and management’s communications to the Board of Directors and (2) available industry or other third-party reports or data.

– evaluated the design and tested the operating effectiveness of certain internal controls related to the Vyxeos intangible asset impairment review process, including the Company’s control related to the development of the revenue forecast assumptions for Vyxeos;

– evaluated the reasonableness of the Company’s revenue forecast assumptions for Vyxeos by comparing certain underlying assumptions against (1) company-specific operational information and management’s communication to the Board of Directors and (2) available industry or other third-party reports;

– performed a sensitivity analysis over Vyxeos revenue forecast assumptions to assess the impact of changes to those assumptions on the Company’s determination of the carrying value of Vyxeos;

– challenged management’s ability to accurately forecast revenue by comparing historical projections to actual results.

We have served as the Company’s auditor since 2012.

6 unchanged sentences

Cash and cash equivalents $ 881,482 $ 591,448

Investments — 1,075,000

Accounts receivable, net of allowances of $ 17,843 and $ 13,813 at December 31, 2022 and 2021, respectively

55 unchanged sentences

Total operating expenses 3,724,902 2,923,960 1,985,494

Income from operations 170,278 378,073 532,374

Income (loss) from operations ( 65,528 ) 170,278 378,073

Interest expense, net ( 288,242 ) ( 278,766 ) ( 99,707 )

18 unchanged sentences

Foreign currency translation adjustments ( 725,277 ) ( 268,347 ) 90,183

Unrealized gain (loss) on cash flow hedging activities, net of income tax expense (benefit) of $ 353 , ($ 163 ) and ($ 697 ), respectively

Loss on fair value hedging activities reclassified from accumulated other comprehensive income (loss) to foreign exchange loss, net of income tax benefit of $ 43 , $ — , and $ — , respectively

Unrealized loss on cash flow hedging activities, net of income tax benefit of $ — , $ 2 and $ 649 , respectively

— ( 14 ) ( 4,543 )

Loss on cash flow hedging activities reclassified from accumulated other comprehensive income (loss) to interest expense, net of income tax expense of $ — , $ 355 and $ 486

— 2,482 3,401

Unrealized loss on fair value hedging activities, net of income tax benefit of $ — , $ 43 and $ — , respectively

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Balance at December 31, 2019 56,140 $ 6 4,000 $ 55 $ 472 $ 2,266,026 $ ( 223,393 ) $ 1,067,815 $ 3,110,981

Cumulative effect adjustment from adoption of new accounting standards — — — — — — — 4,848 4,848

Stock issued under directors deferred compensation plan 37 — — — — — — — —

Issuance of Exchangeable Senior Notes, due 2026 — — — — — 176,260 — — 176,260

Partial repurchase of Exchangeable Senior Notes, due 2021 — — — — — ( 12,513 ) — — ( 12,513 )

Issuance of ordinary shares in conjunction with exercise of share options 780 — — — — 86,984 — — 86,984

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Shares repurchased ( 1,201 ) — — — — — — ( 146,537 ) ( 146,537 )

Other comprehensive loss — — — — — — ( 25,602 ) — ( 25,602 )

Other comprehensive income — — — — — — 89,041 — 89,041

Net income — — — — — — — 238,616 238,616

Balance at December 31, 2020 56,171 6 4,000 55 472 2,633,670 ( 134,352 ) 1,159,894 3,659,745

Stock issued under directors deferred compensation plan 37 — — — — — — — —

Issuance of Exchangeable Senior Notes, due 2026 — — — — — 176,260 — — 176,260

Partial repurchase of Exchangeable Senior Notes, due 2021 — — — — — ( 12,513 ) — — ( 12,513 )

Issuance of ordinary shares in connection with the acquisition of GW Pharmaceuticals plc 3,798 — — — — 608,456 — — 608,456

Share-based payment - precombination service in connection with the acquisition of GW Pharmaceuticals plc — — — — — 3,555 — — 3,555

Issuance of ordinary shares in conjunction with exercise of share options 1,042 — — — — 119,058 — — 119,058

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Share-based compensation — — — — — 189,452 — — 189,452

Shares repurchased ( 1,201 ) — — — — — — ( 146,537 ) ( 146,537 )

Other comprehensive income — — — — — — 89,041 — 89,041

Net income — — — — — — — 238,616 238,616

Other comprehensive loss — — — — — — ( 266,008 ) — ( 266,008 )

Net loss — — — — — — — ( 329,668 ) ( 329,668 )

Balance at December 31, 2021 61,633 $ 6 4,000 $ 55 $ 472 $ 3,534,792 $ ( 400,360 ) $ 830,226 $ 3,965,191

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Balance at December 31, 2021 61,633 $ 6 4,000 $ 55 $ 472 $ 3,534,792 $ ( 400,360 ) $ 830,226 $ 3,965,191

Issuance of ordinary shares in connection with the acquisition of GW Pharmaceuticals plc 3,798 — — — — 608,456 — — 608,456

Share-based payment - precombination service in connection with the acquisition of GW Pharmaceuticals plc — — — — — 3,555 — — 3,555

Cumulative effect adjustment from adoption of ASU 2020-06 — — — — — ( 333,524 ) — 127,474 ( 206,050 )

Issuance of ordinary shares in conjunction with exercise of share options 832 — — — — 82,897 — — 82,897

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Share-based compensation — — — — — 223,279 — — 223,279

Shares repurchased — — — — — — — ( 54 ) ( 54 )

Other comprehensive loss — — — — — — ( 725,149 ) — ( 725,149 )

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Intangible asset amortization 599,169 525,769 259,580

Acquired in-process research and development 444,148 — 251,250

Acquisition accounting inventory fair value step-up adjustment 273,392 223,085 —

Share-based compensation 221,996 189,006 120,998

Impairment charge 133,648 — 136,139

Non-cash interest expense 37,973 92,655 61,748

Deferred tax expense (benefit) 69,198 ( 136,937 ) ( 236,610 )

Loss on disposal of a business 37,704 — —

Depreciation 30,302 26,714 18,673

Provision for losses on accounts receivable and inventory 14,537 19,668 15,000

Impairment charge — 136,139 —

Acquired in-process research and development — 251,250 109,975

Other non-cash transactions ( 14,486 ) 10,032 14,580

Deferred tax expense (benefit) ( 292,251 ) 69,198 ( 136,937 )

Distributions from equity method investees — — 5,438

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Proceeds from maturity of investments 60,000 1,095,000 1,755,000

Purchases of property, plant and equipment ( 27,641 ) ( 15,004 ) ( 40,135 )

Proceeds from sale of a business 53,000 — 14,259

Acquisition of intangible assets ( 25,000 ) ( 17,891 ) ( 113,000 )

Purchases of property, plant and equipment ( 29,046 ) ( 27,641 ) ( 15,004 )

Acquisition of investments ( 61,036 ) ( 26,819 ) ( 2,397,675 )

Acquisition of a business, net of cash acquired ( 6,234,792 ) — —

Acquired in-process research and development ( 444,148 ) — ( 251,250 )

Asset acquisition, net of cash acquired — — ( 55,074 )

Net proceeds from sale of assets — 14,259 14,209

Acquisition of a business, net of cash acquired — ( 6,234,792 ) —

Net cash used in investing activities ( 446,230 ) ( 5,212,143 ) ( 1,007,670 )

Financing activities

Net proceeds from issuance of borrowings under credit agreement 3,719,930 — —

Net proceeds from issuance of Senior Secured Notes, due 2029 1,471,533 — —

Proceeds from employee equity incentive and purchase plans 98,020 135,261 99,681

Share repurchases ( 54 ) — ( 146,537 )

Payment of employee withholding taxes related to share-based awards ( 45,443 ) ( 35,602 ) ( 16,877 )

Payments for repurchase of Exchangeable Senior Notes, due 2021 ( 218,812 ) ( 356,188 ) —

Repayments of long-term debt ( 582,014 ) ( 1,101,788 ) ( 33,387 )

Net proceeds from issuance of borrowings under credit agreement — 3,719,930 —

Net proceeds from issuance of Senior Secured Notes, due 2029 — 1,471,533 —

Payments for repurchase of Exchangeable Senior Notes, due 2021 — ( 218,812 ) ( 356,188 )

Net proceeds from issuance of Exchangeable Senior Notes, due 2026 — — 981,381

Net proceeds from revolving credit facility — — 500,000

Share repurchases — ( 146,537 ) ( 301,450 )

Repayments under revolving credit facility — — ( 500,000 )

Net cash provided by (used in) financing activities 3,970,522 528,073 ( 293,745 )

Net cash (used in) provided by financing activities ( 529,491 ) 3,970,522 528,073

Effect of exchange rates on cash and cash equivalents ( 6,222 ) ( 3,207 ) 374

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Food and Drug Administration, or FDA, in July 2020 and launched in the U.S.

in November 2020 for the treatment of cataplexy or excessive daytime sleepiness, or EDS, in patients with narcolepsy aged seven years of age and older, and also approved by FDA in August 2021 for the treatment of idiopathic hypersomnia, or IH, in adults and launched in the U.S.

in November 2020 for the treatment of cataplexy or excessive daytime sleepiness, or EDS, in patients with narcolepsy seven years of age and older, and also approved by FDA in August 2021 for the treatment of idiopathic hypersomnia, or IH, in adults and launched in the U.S.

in November 2021.

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• Xyrem (sodium oxybate) oral solution , a product approved by FDA and distributed in the U.S.

for the treatment of both cataplexy and EDS in patients seven years of age and older with narcolepsy;

for the treatment of cataplexy or EDS in patients with narcolepsy seven years of age and older;

Jazz also markets Xyrem in Canada for the treatment of cataplexy in patients with narcolepsy.

Xyrem is also approved and distributed in Europe, Great Britain and other markets through a licensing agreement;

Xyrem is also approved and distributed in the European Union, or EU (EU market authorizations include Northern Ireland), Great Britain and other markets through a licensing agreement;

• Epidiolex® (cannabidiol) oral solution , a product approved by FDA and launched in the U.S.

in 2018 by GW Pharmaceuticals plc, or GW, and currently indicated for the treatment of seizures associated with Lennox-Gastaut syndrome, Dravet syndrome, or tuberous sclerosis complex in patients one year of age or older;

in Europe (where it is marketed as Epidyolex®) and other markets, it is approved for adjunctive treatment of seizures associated with Lennox-Gastaut syndrome or Dravet syndrome, in conjunction with clobazam (EU and Great Britain only), in patients 2 years of age and older and for adjunctive treatment of seizures associated with tuberous sclerosis complex in patients 2 years of age and older;

• Sunosi® (solriamfetol) , a product approved by FDA and marketed in the U.S., Canada, Europe and Great Britain to improve wakefulness in adult patients with EDS associated with narcolepsy or obstructive sleep apnea;

• Sativex® (nabiximols) oral solution , a product approved and marketed in the U.K., Canada and other markets as treatment for symptom improvement in adult patients with moderate to severe spasticity due to multiple sclerosis, or MS, who have not responded adequately to other anti-spasticity medication and who demonstrate clinically significant improvement in spasticity-related symptoms during an initial trial of therapy.

• Zepzelca® (lurbinectedin) , a product approved by FDA in June 2020 and launched in the U.S.

in 2018 by GW Pharmaceuticals plc, or GW, and currently indicated for the treatment of seizures associated with Lennox-Gastaut syndrome, or LGS, Dravet syndrome, or DS, or tuberous sclerosis complex, or TSC, in patients one year of age or older;

in the EU and Great Britain (where it is marketed as Epidyolex®) and other markets, it is approved for adjunctive treatment of seizures associated with LGS or DS, in conjunction with clobazam (EU and Great Britain only), in patients 2 years of age and older and for adjunctive treatment of seizures associated with TSC in patients 2 years of age and older.

• Zepzelca® (lurbinectedin) , a product approved by FDA in June 2020 under FDA's accelerated approval pathway and launched in the U.S.

in July 2020 for the treatment of adult patients with metastatic small cell lung cancer, or SCLC, with disease progression on or after platinum-based chemotherapy;

i n Canada, Zepzelca was approved in September 2021 for the treatment of adults with Stage III or metastatic SCLC, who have progressed on or after platinum-containing therapy;

• Rylaze™ (recombinant Erwinia asparaginase), a product approved by FDA in June 2021 and launched in the U.S.

in July 2021 for use as a component of a multi-agent chemotherapeutic regimen for the treatment of acute lymphoblastic leukemia, or ALL, or lymphoblastic lymphoma, or LBL, in adults and pediatric patients who have developed hypersensitivity to E.

in Canada, Zepzelca received conditional approval in September 2021 for the treatment of adults with Stage III or metastatic SCLC, who have progressed on or after platinum-containing therapy;

• Rylaze® (asparaginase erwinia chrysanthemi (recombinant)-rywn) , a product approved by FDA in June 2021 and launched in the U.S.

coli -derived asparaginase;

• Vyxeos® (daunorubicin and cytarabine) liposome for injection , a product approved in the U.S., Canada, Europe and Great Britain (marketed as Vyxeos® liposomal in Europe and Great Britain) for the treatment of adults with newly-diagnosed therapy-related acute myeloid leukemia, or t-AML, or AML with myelodysplasia-related changes (AML-MRC).

• Vyxeos® (daunorubicin and cytarabine) liposome for injection , a product approved in the U.S., Canada, EU, Great Britain and other markets (marketed as Vyxeos® liposomal in the EU, Great Britain and other markets) for the treatment of adults with newly-diagnosed therapy-related acute myeloid leukemia, or t-AML, or AML with myelodysplasia-related changes, or AML-MRC.

An expanded indication was granted in the U.S.

for the treatment of newly diagnosed t-AML or AML-MRC in pediatric patients aged 1 year and older;

• Defitelio® (defibrotide sodium) , is a product approved in the U.S.

and Brazil for the treatment of hepatic veno-occlusive disease, or VOD, with renal or pulmonary dysfunction following hematopoietic stem cell transplantation, or HSCT, and in Japan for the treatment of hepatic sinusoidal obstruction syndrome (hepatic-veno occlusive disease).

It is currently approved in the EU, Great Britain, Canada, Israel, South Korea, Australia and Switzerland for the treatment of severe hepatic VOD, also known as sinusoidal obstructive syndrome, or SOS, in HSCT therapy.

• Defitelio® (defibrotide sodium) , a product approved in the U.S.

It is currently approved in the EU, Great Britain and other markets for the treatment of severe hepatic VOD, also known as sinusoidal obstructive syndrome, or SOS, in HSCT therapy.

It is indicated in adults and pediatric patients over 1 month of age.

In May 2021, we acquired GW Pharmaceuticals plc, or GW, with the objectives of broadening our neuroscience portfolio, further diversifying our revenue and driving sustainable, long-term value creation opportunities.

The total consideration paid by us for the entire issued share capital of GW was $ 7.2 billion.

The acquisition, which we refer to as the GW Acquisition, closed on May 5, 2021.

For further information regarding the GW Acquisition, please see Note 3.

Throughout this report, unless otherwise indicated or the context otherwise requires, all references to “Jazz Pharmaceuticals,” “the registrant,” "the Company", “we,” “us,” and “our” refer to Jazz Pharmaceuticals plc and its consolidated subsidiaries.

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generally accepted accounting principles, or U.S.

GAAP, and include the accounts of Jazz Pharmaceuticals plc and our subsidiaries and intercompany transactions and balances have been eliminated.

GAAP, and include the accounts of Jazz Pharmaceuticals plc and our subsidiaries.

Intercompany transactions and balances have been eliminated.

Our consolidated financial statements include the results of operations of businesses we have acquired from the date of each acquisition for the applicable reporting periods.

The results of operations of the acquired GW business, along with the estimated fair values of the assets acquired and liabilities assumed in the GW Acquisition, have been included in our consolidated financial statements since the closing of the GW Acquisition on May 5, 2021.

Use of Estimates

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Adoption of New Accounting Standards

In December 2019, the Financial Accounting Standards Board, or FASB, issued ASU No.

2019-12, "Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes", which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance for income taxes and making other minor improvements.

We adopted this standard on January 1, 2021 and adoption did not have a material impact on our consolidated financial statements.

In August 2020, the Financial Accounting Standards Board, or FASB, issued 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.

ASU 2020-06 simplifies the accounting for convertible instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital.

The Company adopted ASU 2020-06 on January 1, 2022, on a modified retrospective basis.

This impacted the accounting for our 1.50 % exchangeable senior notes due 2024, or the 2024 Notes, and our 2.00 % exchangeable senior notes due 2026, or the 2026 Notes, collectively known as the Exchangeable Senior Notes.

As a result of the adoption of ASU 2020-06, the Exchangeable Senior Notes are now accounted for entirely as liabilities measured at amortized cost.

ASU 2020-06 also removes certain settlement conditions that are required for contracts to qualify for equity classification and eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method.

The adoption of ASU 2020-06 resulted in the following adjustments to the consolidated balance sheet (in thousands):

Balance Sheet Item:

December 31, 2021 Adoption of ASU 2020-06 January 1, 2022

Deferred tax assets, net $ 311,103 $ 109 $ 311,212

Long-term debt, less current portion 6,018,943 206,159 6,225,102

Retained earnings 830,226 127,474 957,700

Additional paid-in capital 3,534,792 ( 333,524 ) 3,201,268

Interest expense on the Exchangeable Senior Notes will be lower as a result of adoption of this guidance.

During the year ended December 31, 2022 the effect of adoption reduced interest expense, net and increased net income by approximately $ 49 million and increased basic and diluted EPS by approximately $ 0.78 per share.

The Exchangeable Senior Notes were determined to be anti-dilutive for the year ended December 31, 2022.

The adoption of ASU 2020-06 did not impact our cash flows or compliance with debt covenants.

Significant Risks and Uncertainties

We have implemented a comprehensive response strategy designed to manage the ongoing impact of the COVID-19 pandemic on our employees, patients and our business.

The prolonged nature of the pandemic is negatively impacting our business in a varied manner due to the emergence of the Delta and Omicron variants and other variants with increased transmissibility, even in some cases in vaccinated people, limited access to health care provider offices and institutions and the willingness of patients or parents of patients to seek treatment.

We expect that our business, financial condition, results of operations and growth prospects may continue to be negatively impacted by the pandemic on a limited basis that may vary depending on the context.

However we have begun to observe, and expect to continue to observe, a gradual normalization in patient and healthcare provider practices, as providers and patients have adapted their behaviors and procedures to the evolving circumstances and as COVID-19 vaccines continue to be administered.

With respect to our commercialization activities, while there continues to be some negative impact on demand, new patient starts and treatments for our products arising from the pandemic, primarily due to the inherent limitations of telemedicine and a reprioritization of healthcare resources toward COVID-19, we have seen improvements as healthcare systems have adapted to cope with the ongoing situation.

We believe these dynamics have negatively impacted new patient starts in the U.S.

The extent of the impact on our ability to generate sales of approved products, execute on new product launches, our clinical development and regulatory efforts, our corporate development objectives and the value of and market for our ordinary shares, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time.

Such developments include continued spread of the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Delta and Omicron variants in the U.S.

and other countries and the potential emergence of other SARS-CoV-2 variants that may prove especially contagious or virulent, the ultimate duration and severity of the pandemic, governmental “stay-at-home” orders and travel restrictions, quarantines, social distancing and business closure requirements in the U.S., Ireland and other countries, and the effectiveness of vaccination programs and other actions taken globally to contain and treat the disease.

Our business has been substantially dependent on Xyrem and 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 revenues at or near current levels, or that oxybate revenues will continue to grow.

Our ability to maintain or increase oxybate revenues and realize the anticipated benefits from our investment in Xywav are subject to a number of risks and uncertainties including, without limitation, those related to the launch of Xywav for the treatment of idiopathic hypersomnia in adults and adoption in that indication;

competition from the introduction of authorized generic and generic versions of sodium oxybate and new products for treatment of cataplexy and/or EDS in narcolepsy in the U.S.

Historically, our business has been substantially dependent on Xyrem and 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.

In this regard, o ur ability to maintain or increase oxybate product sales and realize the anticipated benefits from our investment in Xywav are subject to a number of risks and uncertainties including, without limitation, those related to the launch of Xywav for the treatment of IH in adults and adoption in that indication;

competition from the recent introduction of an authorized generic version of Xyrem and in the future from additional authorized generic versions of sodium oxybate and generic versions of sodium oxybate and new products for treatment of cataplexy and/or EDS in narcolepsy in the U.S.

market and from other competitors;

the current and potential impacts of the COVID-19 pandemic, including the current and expected future negative impact on demand for our products;

increased pricing pressure from, changes in policies by, or restrictions on reimbursement imposed by, third party payors, including our ability to maintain adequate coverage and reimbursement for Xywav;

increased pricing pressure

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

from, changes in policies by, or restrictions on reimbursement imposed by, third party payors, including our ability to maintain adequate coverage and reimbursement for Xywav and Xyrem;

increased rebates required to maintain access to our products;

challenges to our intellectual property around Xyrem and/or Xywav, including pending antitrust and intellectual property litigation;

challenges to our intellectual property around Xywav and/or Xyrem, including from pending antitrust and intellectual property litigation;

and continued acceptance of Xywav and Xyrem by physicians and patients .

In addition to risks related specifically to Xywav and Xyrem, we are subject to other challenges and risks related to successfully commercializing a portfolio of oncology products and other neuroscience products, including Epidiolex, Sunosi, Defitelio, Vyxeos, Rylaze and Zepzelca, and other risks specific to our business and our ability to execute on our strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry with development and commercial operations, including, without limitation, risks and uncertainties associated with:

A significant decline in oxybate product sales could cause us to reduce our operating expenses or seek to raise additional funds, which would have a material adverse effect on our business, financial condition, results of operations and growth prospects, including on our ability to acquire, in-license or develop new products to grow our business.

In addition to risks related specifically to Xywav and Xyrem, we are subject to other challenges and risks related to successfully commercializing a portfolio of oncology products and other neuroscience products, and other risks specific to our business and our ability to execute on our strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry with development and commercial operations, including, without limitation, risks and uncertainties associated with:

ongoing clinical research activity and related outcomes, obtaining regulatory approval of our late-stage product candidates;

effectively commercializing our recently approved or acquired products such as Xywav, Epidiolex, Zepzelca and Rylaze;

effectively commercializing our approved or acquired products such as Epidiolex, Zepzelca and Rylaze;

obtaining and maintaining adequate coverage and reimbursement for our products;

contracting and rebates to pharmacy benefit managers that reduces our net revenue;

contracting and rebates to pharmacy benefit managers and similar organizations that reduce our net revenue;

increasing scrutiny of pharmaceutical product pricing and resulting changes in healthcare laws and policy;

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regulatory concerns with controlled substances generally and the potential for abuse;

future legislation, Drug enforcement agency, or DEA, action or FDA action authorizing the sale, distribution, use, and insurance reimbursement of non-FDA approved cannabinoid products;

future legislation, action by the U.S.

Drug Enforcement Agency, or DEA, or FDA action authorizing the sale, distribution, use, and insurance reimbursement of non-FDA approved cannabinoid products;

delays or problems in the supply of our products, loss of single source suppliers or failure to comply with manufacturing regulations;

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and possible restrictions on our ability and flexibility to pursue certain future opportunities as a result of our substantial outstanding debt obligations.

In addition, the success of the GW Acquisition will depend, in part, on our ability to realize the anticipated benefits from successfully combining our and GW's historical businesses and the integration of our business practices and operations with GW's so that we can fully realize the anticipated benefits of the acquisition.

The anticipated benefits to us of the GW Acquisition may not be realized fully within the expected timeframe or at all or may take longer to realize or cost more than expected, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.

Moreover, to the extent the COVID-19 pandemic continues to adversely affect our business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties discussed above.

In addition, the success of the GW Acquisition will depend, in part, on our ability to realize the anticipated benefits from our and GW's historical businesses.

The anticipated benefits to us of the GW Acquisition may not be realized at the expected levels, within the expected timeframe or at all or may take longer to realize or cost more than expected, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.

Concentrations of Risk

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As of December 31, 2022 and 2021, we had foreign exchange forward contracts with notional amounts totaling $ 505.0 million and $ 347.2 million, respectively.

As of December 31, 2021 and 2020, the outstanding foreign exchange forward contracts had a net liability fair value of $ 2.6 million and a net asset fair value of $ 11.1 million, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of December 31, 2021, we had a cross-currency interest rate swap with a notional amount of $ 251.0 million.

This outstanding cross-currency interest rate swap contract had a net liability fair value of $ 15.2 million as of December 31, 2021.

As of December 31, 2022 and 2021, the outstanding foreign exchange forward contracts had a net asset fair value of $ 17.4 million and a net liability fair value of $ 2.6 million, respectively.

We had no interest rate swap contracts outstanding as of December 31, 2022 and 2021.

As of December 31, 2021, we had a cross-currency interest rate swap outstanding with a notional amount of $ 251.0 million and a net liability fair value of $ 15.2 million.

The counterparties to these contracts are large multinational commercial banks, and we believe the risk of nonperformance is not significant.

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As of December 31, 2022, three customers accounted for 74 % of gross accounts receivable, Express Scripts Specialty Distribution Services, Inc.

and its affiliates, or ESSDS, which accounted for 52 % of gross accounts receivable, McKesson Corporation and affiliates, or McKesson, which accounted for 12 % of gross accounts receivable and Cardinal Health Inc., or Cardinal, which accounted for 10 % of gross accounts receivable.

and its affiliates, or ESSDS, which accounted for 55 % of gross accounts receivable, Cardinal Health Inc., or Cardinal, which accounted for 10 % of gross accounts receivable and McKesson Corporation and affiliates, or

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

McKesson, which accounted for 9 % of gross accounts receivable.

As of December 31, 2021, three customers accounted for 74 % of gross accounts receivable, ESSDS, which accounted for 52 % of gross accounts receivable, McKesson, which accounted for 12 % of gross accounts receivable and Cardinal which accounted for 10 % of gross accounts receivable.

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A liability resulting from contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved and changes in fair value are recognized in earnings.

Cash Equivalents and Investments

Cash Equivalents

We consider all highly liquid investments, readily convertible to cash, that mature within three months or less from date of purchase to be cash equivalents.

Investments consist of time deposits with initial maturities of greater than three months.

Collectively, cash equivalents and investments are considered available-for-sale and are recorded at fair value.

Unrealized gains and losses, net of tax, are recorded in accumulated other comprehensive loss in shareholders’ equity.

We use the specific-identification method for calculating realized gains and losses on securities sold.

Realized gains and losses and declines in value judged to be other than temporary on investments are included in interest expense, net in the consolidated statements of income (loss).

Derivative Instruments and Hedging Activities

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We designate cross-currency interest rate swaps as fair value hedges to hedge foreign currency risks related to our borrowings denominated in currencies other than the U.S.

Fair value hedge amounts included in the assessment of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

hedge effectiveness are recognized in foreign exchange gain (loss) within the consolidated statements of income (loss), along with the offsetting gains and losses of the related hedged item.

Fair value hedge amounts included in the assessment of hedge effectiveness are recognized in foreign exchange gain (loss) within the consolidated statements of income (loss), along with the offsetting gains and losses of the related hedged item.

We have elected to exclude the total forward points or currency basis from the assessment of hedge effectiveness and account for them as excluded components.

The initial fair value of the excluded component is amortized to foreign exchange gain (loss) and the difference between changes in fair value of the excluded component and the amount recorded in earnings is recorded in other comprehensive income (loss).

Derivatives that are not designated and do not qualify as hedges are adjusted to fair value through current earnings.

Derivatives that are not designated and do not qualify as hedges are adjusted to fair value through current e arnings.

Inventories are valued at the lower of cost or net realizable value.

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otherwise, such costs are expensed as research and development.

The determination to capitalize inventory costs is based on various factors, including status and expectations of the regulatory approval process, any known safety or efficacy concerns, potential labeling restrictions, and any other impediments to obtaining regulatory approval.

The determination to capitalize inventory costs is based on various factors, including status and expectations of the regulatory approval process, any known safety or efficacy concerns,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

potential labeling restrictions, and any other impediments to obtaining regulatory approval.

We had no pre-approval inventory on our consolidated balance sheet as of December 31, 2022 or 2021.

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Rent expense under short-term leases is recognized on a straight-line basis over the lease term.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Goodwill represents the excess of the acquisition consideration over the fair value of assets acquired and liabilities assumed.

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Intangible Assets

Intangible assets with finite useful lives consist primarily of purchased developed technology and are amortized on a straight-line basis over their estimated useful lives, which range from two to twenty years.

The estimated useful lives associated with finite-lived intangible assets are consistent with the estimated lives of the associated products and may be modified when circumstances warrant.

The estimated useful lives

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

associated with finite-lived intangible assets are consistent with the estimated lives of the associated products and may be modified when circumstances warrant.

Such assets are reviewed for impairment when events or circumstances indicate that the carrying value of an asset may not be recoverable.

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Reserves for government chargebacks and prompt payment discounts are shown as a reduction in accounts receivable.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Royalties and Contract Revenues

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At the end of each subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For arrangements that include sales-based royalties and milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties and sales-based milestones relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty or sales-based milestone has been allocated has been satisfied (or partially satisfied).

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Interest and penalties related to an underpayment of income taxes are included in the income tax expense and classified with the related liability on the consolidated balance sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Foreign Currency

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The related amortization expense is included in interest expense, net in our consolidated statements of income (loss).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Contingencies

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Based on our control and the structure of the protected cell, we concluded that Jazz is the primary beneficiary of the protected cell and is required to consolidate the protected cell.

The insurance premium payable to the protected cell for the year ended December 31, 2021 and the protected cell’s assets and liabilities as of December 31, 2021 were immaterial.

The insurance premium payable to the protected cell for the years ended December 31, 2022 and 2021 and the protected cell’s assets and liabilities as of December 31, 2022 and 2021 were immaterial.

Recent Accounting Pronouncements

In August 2020, the FASB issued 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”, which simplifies the accounting for convertible instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital.

By removing the separation model, a convertible debt instrument will be reported as a single liability instrument with no separate accounting for embedded conversion features.

This new standard also removes certain settlement conditions that are required for contracts to qualify for equity classification and eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method.

The Company adopted ASU 2020-06 on January 1, 2022, on a modified retrospective basis.

As a result of adoption, the Company

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

increased its convertible debt liabilities, retained earnings and deferred tax assets on January 1, 2022 by $ 206.2 million, $ 127.4 million and $ 0.1 million, respectively and decreased its additional paid-in capital by $ 333.5 million.

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805):

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The new guidance is not expected to have a material impact on our results of operations, financial position, or cash flows.

Business Combination, Asset Acquisitions and Collaborations

Business Combination, Disposition, Asset Acquisitions and Collaborations

GW Acquisition

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GW was a global leader in discovering, developing, manufacturing and commercializing novel, regulatory approved therapeutics from its proprietary cannabinoid research platform to address a broad range of diseases.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The aggregate consideration for the GW Acquisition was $ 7.2 billion as follows (all amounts in thousands except American Depositary Shares, or ADS, and per GW ADS amounts):

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The GW Acquisition was accounted for as a business combination using the acquisition method under which assets and liabilities of GW were recorded at their respective estimated fair values as of the Closing Date and added to the assets and liabilities of the Company, including an amount for goodwill representing the difference between the acquisition consideration and the estimated fair value of the identifiable net assets.

The results of operations of GW and the estimated fair values of the assets acquired and liabilities assumed have been included in our consolidated financial statements since the Closing Date.

The results of operations of GW have been included in our consolidated financial statements since the Closing Date.

In 2021, we incurred $ 81.9 million in acquisition-related costs related to the GW Acquisition, which primarily consisted of banking, legal, accounting and valuation-related expenses.

These expenses were recorded in selling, general and administrative expense in the accompanying consolidated statements of income (loss).

In 2021, our consolidated statements of

In 2021, our consolidated statements of income (loss) included revenues of $ 476.4 million and a net loss of $ 704.6 million from the acquired GW business, as measured from the Closing Date.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

income (loss) included revenues of $ 476.4 million and a net loss of $ 704.6 million from the acquired GW business, as measured from the Closing Date.

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed at the Closing Date before and after the measurement period adjustment (in thousands):

Before Measurement Period Adjustment Measurement Period Adjustment After Measurement Period Adjustment

The following table summarizes the fair values of assets acquired and liabilities assumed at the Closing Date (in thousands):

Fair Values of Assets Acquired and Liabilities Assumed

Cash and cash equivalents $ 343,898

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In-process research and development

160,000 — 160,000

Total acquired identifiable intangible assets 5,640,000

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Total purchase consideration $ 7,190,701

The fair value estimates for the assets acquired and liabilities assumed were based upon preliminary calculations, and our estimates and assumptions are subject to change as we obtain additional information for our estimates during the measurement period (up to one year from the Closing Date).

During the three months ended December 31, 2021, we recorded a measurement period adjustment which reduced deferred tax liabilities, net and goodwill by $ 14.6 million.

The measurement period adjustment primarily related to the refinement of the opening UK net operating loss position of GW.

Inventories acquired included raw materials, work in progress and finished goods.

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The fair value of acquired intangible assets was $ 5,640.0 million.

The intangible assets include acquired developed technologies, primarily related to Epidiolex, and IPR&D.

The intangible assets included acquired developed technologies, primarily related to Epidiolex, and IPR&D.

The fair value of the Epidiolex acquired developed technology asset was determined by applying the income approach, which recognizes that the fair value of an asset is premised upon the expected receipt of future economic benefits such as earnings and cash inflows based on current sales projections and estimated direct costs, using a discount rate of 9.4 % that reflects the return requirements of the market.

This intangible asset is being amortized over an estimated useful life of 12 years.

Acquired IPR&D relates to nabiximols, which is currently in Phase 3 clinical trials for the treatment of spasticity associated with multiple sclerosis and spinal cord injury.

The fair value of acquired IPR&D was determined using the income approach, including the application of probability factors related to the likelihood of success of nabiximols reaching final development and commercialization.

The fair value of acquired IPR&D was capitalized as of the Closing Date and is subsequently accounted for as an indefinite-lived intangible asset until completion or abandonment of the associated research and development efforts.

Accordingly, during the development period after the Closing Date, this asset will not be amortized into earnings;

instead, it will be subject to periodic impairment testing.

We acquired a nabiximols IPR&D asset in the acquisition.

In the third quarter of 2022, we recorded an impairment charge of $ 133.6 million to write off the value of this asset as a result of our decision to discontinue the program.

Some of the more significant assumptions inherent in the development of intangible asset fair values include:

the amount and timing of projected future cash flows (including revenue, cost of sales, research and development cost and sales and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

marketing expenses);

the amount and timing of projected future cash flows (including revenue, cost of sales, research and development cost and sales and marketing expenses);

probability of success;

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Other tangible assets and liabilities were valued at their respective carrying amounts as management believes that these amounts approximated their acquisition-date fair values.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Goodwill represents the excess of the total purchase consideration over the estimated fair value of net assets acquired and was recorded in the consolidated balance sheet as of the Closing Date.

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We do not expect any portion of this goodwill to be deductible for income tax purposes.

Pro Forma Financial Information (Unaudited)

The following unaudited supplemental pro forma information presents the combined historical results of income (loss) of the Company and GW for 2021 and 2020, respectively, as if the GW Acquisition had been completed on January 1, 2020.

The primary pro forma adjustments include:

• The exclusion of acquisition-related and integration expenses of $ 357.6 million in 2021 and related income tax expense of $ 23.6 million.

The inclusion of acquisition-related and integration expenses of $ 386.7 million in 2020 and related income tax benefit of $ 27.9 million.

• An increase in amortization expense of $ 159.1 million in 2021 and related income tax benefit of $ 30.2 million.

An increase in amortization expense of $ 464.6 million in 2020 and related income tax benefit of $ 88.3 million.

• An increase in cost of product sales of $ 81.9 million in 2021 and related income tax benefit of $ 12.4 million.

An increase in cost of product sales of $ 296.3 million in 2020 and related income tax benefit of $ 59.5 million.

• An increase in interest expense of $ 49.1 million in 2021 and related income tax benefit of $ 9.0 million.

An increase in interest expense of $ 241.0 million in 2020 and related income tax benefit of $ 51.9 million.

The increase in interest arose on additional borrowings made to partially fund the GW Acquisition as if the borrowings had occurred on January 1, 2020.

The unaudited pro forma results do not assume any operating efficiencies as a result of the consolidation of operations and are as follows (in thousands):

Total revenues $ 3,294,697 $ 2,890,772

Net loss $ ( 422,588 ) $ ( 980,481 )

Asset Acquisition and Exclusive License Agreement

In October 2020, we entered into an asset purchase and exclusive license agreement with SpringWorks Therapeutics, Inc., or SpringWorks, under which we acquired SpringWorks’ fatty acid amide hydrolase, or FAAH, inhibitor program.

Under the terms of the agreement, SpringWorks has assigned or exclusively licensed all assets relating to its FAAH inhibitor program to us, including assignment of SpringWorks’ proprietary FAAH inhibitor PF-04457845, or PF-’845, now named JZP150 and its license agreement with Pfizer, Inc., or Pfizer, under which Pfizer exclusively licensed PF-’845 to SpringWorks in 2017.

In addition to assuming all milestone and royalty obligations owed by SpringWorks to Pfizer, we made an upfront payment of $ 35.0 million to SpringWorks, which was recorded as acquired IPR&D expense in our consolidated statement of income for the year ended December 31, 2020, and may make potential milestone payments to SpringWorks of up to $ 375.0 million upon the achievement of certain clinical, regulatory and commercial milestones, and pay incremental tiered royalties to SpringWorks on future net sales of JZP150 in the mid- to high-single digit percentages.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

License Agreement

Sunosi Disposition

In March 2022, we entered into a definitive agreement to divest Sunosi to Axsome Therapeutics, Inc., or Axsome.

In May 2022, we completed the U.S.

divestiture and in November 2022, the ex-U.S.

divestiture was completed.

Under the terms of the sale agreement, 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 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.

net sales of Sunosi in future indications.

Upon closing, we recognized a loss on disposal of $ 40.8 million within selling, general and administrative expenses in our consolidated statements of income (loss) in the year ended December 31, 2022.

We are accounting for the contingent consideration in the form of the future royalty as it is earned.

We determined that the disposal of Sunosi does not qualify for reporting as a discontinued operation since it does not represent a strategic shift that has or will have a major effect on our operations and financial results.

License Agreements

In October 2022, we entered into a exclusive licensing and collaboration agreement with Zymeworks Inc., or Zymeworks, providing us 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.

In December 2022, we exercised the option to continue with the exclusive development and commercialization rights to zanidatamab.

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, Zymeworks received an upfront payment of $ 50.0 million, and, following our decision to continue the collaboration after the readout of the top-line clinical data from HERIZON-BTC-01, a second, one-time payment of $ 325.0 million.

We recorded the $ 375.0 million as acquired IPR&D expense in our consolidated statements of income (loss) for the year ended December 31, 2022.

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.

In May 2022, we entered into a licensing agreement with Sumitomo Pharma Co., Ltd, or Sumitomo, to acquire exclusive development and commercialization rights in the U.S., Europe and other territories for DSP-0187, now referred to as JZP441.

JZP441 is a potent, highly selective oral orexin-2 receptor agonist with potential application for the treatment of narcolepsy, IH and other sleep disorders.

Under the terms of the agreement, we made an upfront payment of $ 50.0 million to Sumitomo, which was recorded as acquired IPR&D expense in our consolidated statements of income (loss) for the year ended December 31, 2022.

Sumitomo is eligible to receive development, regulatory and commercial milestone payments of up to $ 1.09 billion and, if JZP441 is approved, a tiered, low double-digit royalty on Jazz's net sales of JZP441.

In April 2022, we entered into a licen sing and collaboration agreement with Werewolf Therapeutics, Inc., or Werewolf, to acquire exclusive global development and commercialization rights t o Werewolf's investigational WTX-613, now referred to as JZP898.

JZP898 is a differentiated, conditionally-activated interferon alpha (IFNα) INDUKINE™ molecule.

Under the terms of the agreement, we made an upfront payment of $ 15.0 million to Werewolf, which was recorded as acquired IPR&D expense in our consolidated statements of income (loss) for the year ended December 31, 2022.

Werewolf is eligible to receive development, regulatory and commercial milestone payments of up to $ 1.26 billion and, if JZP898 is approved, a tiered, mid-single-digit percentage royalty on net sales of JZP898.

In December 2019, we entered into an exclusive license agreement, or original license agreement, with Pharma Mar, S.A., or PharmaMar, for development and U.S.

commercialization of Zepzelca.

Zepzelca was granted orphan drug designation for relapsed SCLC by FDA in August 2018.

In December 2019, PharmaMar submitted a new drug application, or NDA, to FDA for accelerated approval of Zepzelca for relapsed SCLC based on data from a Phase 2 trial, and in February 2020, FDA accepted the NDA for filing with priority review.

In June 2020, FDA approved the NDA for Zepzelca for the treatment of adult patients with metastatic SCLC with disease progression on or after platinum-based chemotherapy.

Under the terms of the original license agreement, which became effective in January 2020 upon expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, we paid PharmaMar an upfront payment of $ 200.0 million, which was recorded as acquired IPR&D expense in our consolidated statement of income for the year ended December 31, 2020.

Under the terms of the original license agreement we paid PharmaMar an upfront payment of $ 200.0 million, which was recorded as acquired IPR&D expense in our consolidated statement of income for the year ended December 31, 2020.

In June 2020, we made a milestone payment of $ 100.0 million to PharmaMar following FDA accelerated approval of Zepzelca, which was capitalized as an intangible asset on our consolidated balance sheet.

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PharmaMar is eligible to receive potential future regulatory milestone payments of up to $ 150.0 million upon the achievement of continued U.S.

regulatory approval of Zepzelca following the successful completion of confirmatory trials within certain timelines.

regulatory approval of Zepzelca following the successful completion of confirmatory trials

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

within certain timelines.

PharmaMar is also eligible to receive up to $ 525.0 million in potential U.S.

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In October 2020, we entered into an amendment and restatement of the original license agreement with PharmaMar, or the amended license agreement, which expanded our exclusive license to include rights to develop and commercialize Zepzelca in Canada.

To date, we have paid PharmaMar an upfront payment of $ 1.0 million, which was recorded as acquired IPR&D expense in our consolidated statement of income for the year ended December 31, 2020, and a milestone payment of $ 1.0 million in September 2021 following the first NDA Approval by Health Canada, which was capitalized as an intangible asset on our consolidated balance sheet.

To date, we have paid PharmaMar an upfront payment of $ 1.0 million, which was recorded as acquired IPR&D expense in our consolidated statement of income for the year ended December 31, 2020, and a milestone payment of $ 1.0 million in September 2021 following the first New Drug Application Approval by Health Canada, which was capitalized as an intangible asset on our consolidated balance sheet.

PharmaMar is also eligible to receive up to $ 6.0 million in potential Canadian regulatory and commercial milestone payments, as well as incremental tiered royalties on future Canadian net sales of Zepzelca ranging from the high teens up to 30 percent.

Asset Acquisition

In August 2019, we announced the acquisition of Cavion, Inc., or Cavion, a clinical-stage biotechnology company, for an upfront payment of $ 52.5 million with the potential for additional payments of up to $ 260.0 million upon the achievement of certain clinical, regulatory and commercial milestones, for a total potential consideration of $ 312.5 million.

As a result of the acquisition, we added JZP385, a modulator of T-type calcium channels, for the potential treatment of essential tremor, to our clinical pipeline.

The acquisition of Cavion was accounted for as an asset acquisition because it did not meet the definition of a business.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the total consideration for the acquisition and the value of assets acquired and liabilities assumed (in thousands):

Consideration

Upfront payment for acquisition of Cavion's outstanding shares $ 52,500

Cash acquired 397

Working capital adjustment ( 255 )

Transaction costs 2,829

Total consideration $ 55,471

Assets Acquired and Liabilities Assumed

In-process research and development 48,275

Deferred tax assets 7,995

Other assets and liabilities ( 1,196 )

Total net assets acquired $ 55,471

The value attributed to in-process research and development related to JZP385 and was expensed as it was determined to have no alternative future use.

Collaboration and License Agreement

In January 2019, we entered into a strategic collaboration agreement with Codiak BioSciences, Inc., or Codiak, focused on the research, development and commercialization of exosome therapeutics to treat cancer.

Codiak granted us an exclusive, worldwide, royalty-bearing license to develop, manufacture and commercialize therapeutic candidates directed at five targets to be developed using Codiak's engEx™ precision engineering platform for exosome therapeutics.

Under the terms of the agreement, Codiak is responsible for the execution of preclinical and early clinical development of therapeutic candidates directed at all five targets through Phase 1/2 proof of concept studies.

Following the conclusion of the applicable Phase 1/2 study, we will be responsible for future development, potential regulatory submissions and commercialization for each product.

Codiak has the option to participate in co-commercialization and cost/profit-sharing in the U.S.

and Canada on up to two products.

As part of the agreement, we paid Codiak an upfront payment of $ 56.0 million in January 2019, which was recorded as acquired IPR&D expense in our consolidated statement of income for the year ended December 31, 2020.

Codiak is eligible to receive up to $ 20.0 million in preclinical development milestone payments.

Codiak is also eligible to receive milestone payments totaling up to $ 200.0 million per target based on investigational new drug application acceptance, clinical and regulatory milestones, including approvals in the U.S., the European Union and Japan, and certain sales milestones.

Codiak is also eligible to receive tiered royalties on net sales of each approved product.

Collaboration and Option Agreement

In 2017, we entered into a collaboration and option agreement with ImmunoGen, Inc.

and we paid them a non-refundable upfront payment of $ 75.0 million, which was charged to acquired IPR&D expense upon closing of the transaction.

This agreement was amended in November 2019.

Under the amended agreement we had the right to opt into an exclusive, worldwide license to develop and commercialize IMGN632, a CD123-targeted antibody-drug conjugate for hematological malignancies.

In December 2020, we exercised our opt-out rights with respect to IMGN632, thereby relinquishing the development and commercialization option.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Asset Acquisition and Exclusive License Agreement

In addition to assuming all milestone and royalty obligations owed by SpringWorks to Pfizer, we made an upfront payment of $ 35.0 million to SpringWorks, which was recorded as acquired IPR&D expense in our consolidated statement of income (loss) for the year ended December 31, 2021, and may make potential milestone payments to SpringWorks of up to $ 375.0 million upon the achievement of certain clinical, regulatory and commercial milestones, and pay incremental tiered royalties to SpringWorks on future net sales of JZP150 in the mid- to high-single digit percentages.

Cash and Available-for-Sale Securities

Cash and cash equivalents and investments consisted of the following (in thousands):

Cash and cash equivalents consisted of the following (in thousands):

December 31, 2022

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Fair Value Cash and

Equivalents Investments

Cash $ 334,018 $ — $ — $ 334,018 $ 334,018

Time deposits 30,000 — — 30,000 30,000

Money market funds 517,464 — — 517,464 517,464

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Fair Value Cash and

Equivalents Investments

Cash $ 510,747 $ — $ — $ 510,747 $ 510,747

Time deposits 1,360,000 — — 1,360,000 285,000 1,075,000

Money market funds 80,701 — — 80,701 80,701

Totals $ 591,448 $ — $ — $ 591,448 $ 591,448

Cash equivalents and investments are considered available-for-sale securities.

Cash equivalents are considered available-for-sale securities.

We use the specific-identification method for calculating realized gains and losses on securities sold and include them in interest expense, net in the consolidated statements of income (loss).

Our investment balances represent time deposits with original maturities of greater than three months and less than one year.

Interest income from available-for-sale securities was $ 11.5 million, $ 1.8 million and $ 11.1 million in 2022, 2021 and 2020, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fair Value Measurement

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Cross-currency interest rate contracts $ — $ — $ — $ — $ 15,232 $ 15,232

Interest rate contracts — — — — 2,835 2,835

Foreign exchange forward contracts — — — — 3,187 3,187

Totals $ — $ — $ — $ — $ 18,419 $ 18,419

As of December 31, 2021 our available-for-sale securities were comprised of money market funds and the carrying value was approximately equal to the fair values.

Money market funds were measured using quoted prices in active markets, which represent Level 1 inputs.

As of December 31, 2020 our available-for-sale securities comprised money market funds and time deposits.

Time deposits were measured at fair value using Level 2 inputs.

As of December 31, 2022 our available-for-sale securities included money market funds and time deposits and their carrying values were approximately equal to their fair values.

Money market funds were measured using quoted prices in active markets, which represent Level 1 inputs and time deposits were measured at fair value using Level 2 inputs.

Level 2 inputs are obtained from various third party data providers and represent quoted prices for similar assets in active markets, or these inputs were derived from observable market data, or if not directly observable, were derived from or corroborated by other observable market data.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of December 31, 2021, our available-for-sale securities were comprised of money market funds.

Our derivative assets and liabilities include cross-currency interest rate and foreign exchange derivatives that are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit risk as well as an evaluation of our counterparties’ credit risks.

Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the fair value hierarchy.

The interest rate swap agreements matured in July 2021.

The cross-currency interest rate swap contract matured on March 31, 2022.

There were no transfers between the different levels of the fair value hierarchy in 2022 or in 2021.

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The carrying amount, which is recorded within other non-current assets, is based on the latest observable transaction price.

As of December 31, 2021, the estimated fair values of our 1.50 % exchangeable senior notes due 2024, or the 2024 Notes, and our 2.00 % exchangeable senior notes due 2026, or the 2026 Notes, were approximately $ 576.0 million and $ 1.1 billion, respectively.

The 2024 Notes and the 2026 Notes, together with the 1.875 % exchangeable senior notes due 2021, or the 2021 Notes, that were repurchased on maturity on August 15, 2021, are collectively known as the Exchangeable Senior Notes.

As of December 31, 2021, the estimated fair value of the Secured Notes, the Dollar Term Loan and the Euro Term Loan, were approximately $ 1.6 billion, $ 3.1 billion and $ 236.0 million, respectively.

As of December 31, 2022, the estimated fair values of our 2024 Notes and our 2026 Notes, were approximately $ 568.0 million and $ 1.2 billion, respectively.

As of December 31, 2022, the estimated fair value of the Secured Notes and the Dollar Term Loan were approximately $ 1.3 billion and $ 2.7 billion , respectively.

The fair values of each of these debt facilities was estimated using quoted market prices obtained from brokers (Level 2).

Derivative Instruments and Hedging Activities

We are exposed to certain risks arising from operating internationally, including fluctuations in foreign exchange rates primarily related to the translation of the Euro Term Loan and sterling and euro-denominated net monetary liabilities, including intercompany balances, held by subsidiaries with a U.S.

We are exposed to certain risks arising from operating internationally, including fluctuations in foreign exchange rates primarily related to the translation of sterling and euro-denominated net monetary liabilities, including intercompany balances, held by subsidiaries with a U.S.

dollar functional currency.

We manage these exposures within specified guidelines through the use of derivatives.

All of our derivative instruments are utilized for risk management purposes, we do not use derivatives for speculative trading purposes.

In order to hedge our exposure to foreign currency exchange risk associated with our Euro Term Loan, we entered into a cross-currency interest rate swap contract in May 2021 with a maturity date of March 31, 2022.

The terms of this contract convert the principal repayments and interest payments on our Euro Term Loan into U.S.

As of December 31, 2021, the cross-currency interest rate swap had a notional amount of $ 251.0 million which is designated for accounting purposes as a fair value hedge.

The carrying amount of the Euro Term Loan and the fair value of the cross-currency interest rate swap contract will be remeasured with changes in the euro to U.S.

All of our derivative instruments are utilized for risk management purposes, and we do not use derivatives for speculative trading purposes.

In order to hedge our exposure to foreign currency exchange risk associated with our Euro Term Loan, we entered into a cross-currency interest rate swap contract in May 2021, which matured on March 31, 2022, and was de-designated as a fair value hedge.

The terms of this contract converted the principal repayments and interest payments on the Euro Term Loan into U.S.

The carrying amount of the Euro Term Loan and the fair value of the cross-currency interest rate swap contract

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

were remeasured on a monthly basis, with changes in the euro to U.S.

dollar foreign exchange rates recognized within foreign exchange loss in the consolidated statements of income (loss).

The impact on accumulated other comprehensive income (loss) and earnings from the cross-currency interest rate swap contract was as follows (in thousands):

Cross-Currency Interest Rate Contract:

Year Ended December 31,

Cross-Currency Interest Rate Contract:

Loss recognized in accumulated other comprehensive income (loss), net of tax $ — $ ( 375 )

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Loss recognized in foreign exchange loss 2,646 35,885

During the next 12 months, we expect to reclassify $ 0.1 million of losses, net of tax, on the cross-currency interest rate contract recognized in accumulated other comprehensive income (loss) to foreign exchange gain (loss).

We enter into foreign exchange forward contracts, with durations of up to 12 months, designed to limit the exposure to fluctuations in foreign exchange rates related to the translation of certain non-U.S.

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Gain (loss) recognized in foreign exchange loss $ ( 58,755 ) $ ( 19,585 ) $ 19,843

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The cash flow effects of our derivative contracts are included within net cash provided by operating activities in the consolidated statements of cash flows, except for the settlement of notional amounts of the cross-currency swap, which are included in net cash provided by (used in) financing activities.

The cash flow effects of our derivative contracts are included within net cash provided by operating activities in the consolidated statements of cash flows, except for the settlement of notional amounts of the cross-currency swap, which were included in net cash (used in) provided by financing activities.

To achieve a desired mix of floating and fixed interest rates on our variable rate debt, we entered into interest rate swap agreements in March 2017.

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Loss recognized in accumulated other comprehensive income (loss), net of tax $ — $ ( 14 ) $ ( 4,543 )

Loss (gain) reclassified from accumulated other comprehensive income (loss) to interest expense, net of tax $ 2,482 $ 3,401 $ ( 979 )

Gain reclassified from accumulated other comprehensive income (loss) to interest expense, net of tax — 2,482 3,401

The following tables summarize the fair value of outstanding derivatives (in thousands):

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Balance Sheet Location Fair Value Balance Sheet Location Fair Value

Derivatives designated as hedging instruments:

Cross-currency interest rate contracts Other current assets $ — Accrued liabilities $ 15,232

Derivatives not designated as hedging instruments:

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Total fair value of derivative instruments $ 17,356 $ —

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

December 31, 2021

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Derivatives designated as hedging instruments:

Interest rate contracts Other current assets $ — Accrued liabilities $ 2,835

Cross-currency interest rate contracts Other current assets $ — Accrued liabilities $ 15,232

Derivatives not designated as hedging instruments:

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Although we do not offset derivative assets and liabilities within our consolidated balance sheets, our International Swap and Derivatives Association agreements provide for net settlement of transactions that are due to or from the same counterparty upon early termination of the agreement due to an event of default or other termination event.

The following tables summarize the potential effect on our consolidated balance sheets of offsetting our interest rate contracts and foreign exchange forward contracts subject to such provisions (in thousands):

December 31, 2021

Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet Gross Amounts Not Offset in the Consolidated Balance Sheet

Description Derivative Financial Instruments Cash Collateral Received (Pledged) Net Amount

Derivative assets $ 580 $ — $ 580 $ ( 567 ) $ — $ 13

Derivative liabilities $ ( 18,419 ) $ — $ ( 18,419 ) $ 567 $ — $ ( 17,852 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

These provisions were not applicable as of December 31, 2022 since all derivatives were in an asset position.

The following table summarizes the potential effect on our consolidated balance sheets of offsetting our interest rate contracts and foreign exchange forward contracts subject to such provisions (in thousands) for 2021:

December 31, 2021

8 unchanged sentences

Total inventories $ 714,061 $ 1,072,721

As of December 31, 2021, inventories included $ 811.3 million related to the purchase accounting inventory fair value step-up on inventory acquired in the GW Acquisition.

As of December 31, 2022 and 2021, inventories included $ 457.6 million and $ 811.3 million, respectively, related to the purchase accounting inventory fair value step-up on inventory acquired in the GW Acquisition.

Other Current Assets

3 unchanged sentences

Total other current assets $ 267,192 $ 252,392

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):

Construction-in-progress $ 86,511 $ 7,262

Manufacturing equipment and machinery $ 73,580 $ 69,079

Leasehold improvements 66,318 54,113

Land and buildings 68,935 64,008

Construction-in-progress 67,385 86,511

Leasehold improvements 64,776 66,318

Computer software 34,116 25,646

5 unchanged sentences

Depreciation and amortization expense on property, plant and equipment amounted to $ 30.3 million, $ 26.7 million and $ 18.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Goodwill and Intangible Assets

1 unchanged sentence

Balance at December 31, 2021 $ 1,827,609

Goodwill arising from the GW Acquisition 933,234

Goodwill allocated to divestiture of Sunosi (1)

Foreign exchange ( 122,020 )

Balance at December 31, 2022 $ 1,692,662

________________________

(1) See Note 3 for further information relating to this divestiture.

The gross carrying amounts and net book values of our intangible assets were as follows (in thousands):

12 unchanged sentences

Total intangible assets $ 7,506,287 $ ( 1,711,850 ) $ 5,794,437 $ 8,365,678 $ ( 1,213,350 ) $ 7,152,328

The increase in the gross carrying amount of intangible assets as of December 31, 2021 compared to December 31, 2020 primarily reflects the intangible assets arising from the GW Acquisition, as described in Note 3, partially offset by the de-recognition of the fully amortized Erwinaze intangible assets and the negative impact of foreign currency translation adjustments due to the weakening of sterling and euro against the U.S.

The assumptions and estimates used to determine future cash flows and remaining useful lives of our intangible and other long-lived assets are complex and subjective.

The decrease in the gross carrying amount of intangible assets as of December 31, 2022 compared to December 31, 2021 primarily reflects the negative impact of foreign currency translation adjustments due to the weakening of sterling and euro against the U.S.

dollar, the impairment of our acquired IPR&D asset of $ 133.6 million as a result of the decision to discontinue our nabiximols program and the sale of the Sunosi acquired developed technology asset to Axsome.

The assumptions and estimates used to determine future cash flows including revenues and operating profits resulting from completed products and in-process projects, and remaining useful lives of our intangible and other long-lived assets are

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

complex and subjective.

They can be affected by various factors, including external factors, such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for specific product lines.

4 unchanged sentences

Total $ 5,794,437

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accrued Liabilities

2 unchanged sentences

Employee compensation and benefits 143,243 158,870

Accrued royalties 57,347 20,345

Accrued interest 35,614 48,640

Accrued collaboration expenses 33,205 1,386

Clinical trial accruals 31,338 25,612

Accrued milestones 25,000 —

Sales return reserve 26,164 15,814

Accrued facilities expenses 25,864 698

Consulting and professional services 22,278 22,507

Selling and marketing accruals 18,553 21,566

Accrued royalties 20,345 15,230

Derivative instrument liabilities 18,419 3,625

Inventory-related accruals 16,166 9,809

Sales return reserve 15,814 18,368

Current portion of lease liabilities 15,938 15,763

Inventory-related accruals 8,565 16,166

Accrued construction-in-progress 3,298 2,894

Accrued milestones — 25,000

Derivative instrument liabilities — 18,419

Other 68,672 57,227

Total accrued liabilities $ 803,255 $ 666,304

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the carrying amount of our indebtedness (in thousands):

2024 Notes $ 575,000 $ 575,000

Unamortized discount and debt issuance costs on 2021 Notes — ( 5,883 )

2021 Notes, net — 212,929

2024 Notes 575,000 575,000

Unamortized discount and debt issuance costs on 2024 Notes ( 71,237 ) ( 95,275 )

Unamortized - debt issuance costs ( 2,738 ) ( 4,401 )

Unamortized discount - equity component — ( 66,836 )

2024 Notes, net 572,262 503,763

2026 Notes 1,000,000 1,000,000

Unamortized discount and debt issuance costs on 2026 Notes ( 150,730 ) ( 179,518 )

Unamortized - debt issuance costs ( 8,932 ) ( 11,407 )

Unamortized discount - equity component — ( 139,323 )

2026 Notes, net 991,068 849,270

4 unchanged sentences

Total long-term debt $ 5,693,341 $ 6,018,943

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Credit Agreement

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Upon the repayment in full of loans under the Existing Credit Agreement, it was terminated and all guarantees and liens thereunder were released.

Loans under the Term Loan and Revolving Credit Facility bear interest at a rate equal to (A) in the case of the Dollar Term Loan and the Revolving Credit Facility, at the applicable Borrower’s option, either (a) London Inter-Bank Offered Rate, or LIBOR or (b) the prime lending rate and (B) in the case of the Euro Term Loan, Euro Inter-Bank Offered Rate, or EURIBOR, in each case, plus an applicable margin.

The applicable margin for the Term Loan is 3.50 % (in the case of LIBOR or EURIBOR borrowings) and 2.50 % (in the case of borrowings at the prime lending rate).

In 2021, we made voluntary prepayments on the Euro Term Loan totaling € 416.7 million, or $ 502.0 million, and in March 2022 we repaid the remaining outstanding principal of € 208.3 million, or $ 251.0 million.

The Euro Term Loan bore interest at the Euro Inter-Bank Offered Rate, or EURIBOR, plus an applicable margin.

The applicable margin for the Euro Term Loan was 3.50 %.

During the term of the Euro Term Loan, the interest rate and effective interest rate were 4.43 % and 4.93 %, respectively.

Loans under the Dollar Term Loan and Revolving Credit Facility bear interest at a rate equal to, at the applicable Borrower’s option, either (a) London Inter-Bank Offered Rate, or LIBOR or (b) the prime lending rate.

The applicable margin for the Dollar Term Loan is 3.50 % (in the case of LIBOR) and 2.50 % (in the case of borrowings at the prime lending rate).

The applicable margin for the Revolving Credit Facility ranges from 3.25 % to 2.75 % (in the case of LIBOR borrowings) and 2.25 % to 1.75 % (in the case of borrowings at the prime lending rate), depending on our first lien secured net leverage ratio level.

The Dollar Term Loan is subject to a LIBOR floor of 0.50 %, the Euro Term Loan and loans under the Revolving Credit Facility are not subject to a EURIBOR or LIBOR (as applicable) floor.

The Dollar Term Loan is subject to a LIBOR floor of 0.50 % and loans under the Revolving Credit Facility are not subject to a EURIBOR or LIBOR (as applicable) floor.

The Revolving Credit Facility has a commitment fee payable on the undrawn amount ranging from 0.50 % to 0.40 % per annum based upon our first lien secured net leverage ratio.

As of December 31, 2022, the interest rate and effective interest rate on the Dollar Term Loan were 7.88 % and 4.56 %, respectively.

The interest rate and effective interest rate on the Euro Term Loan were 4.43 % and 4.93 %, respectively.

As of December 31, 2022, we had an undrawn Revolving Credit Facility totaling $ 500.0 million.

The Borrowers’ obligations under the Credit Agreement and any hedging or cash management obligations entered into with any lender thereunder are guaranteed by the Company, the other borrowers, and each of the Company’s other existing or subsequently acquired or organized direct and indirect subsidiaries (subject to certain exceptions), or the Guarantors.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

subsequently acquired or organized direct and indirect subsidiaries (subject to certain exceptions), or the Guarantors.

We refer to the Borrowers and the Guarantors collectively as the “Loan Parties.”

2 unchanged sentences

Principal repayments of the Dollar Term Loan, which are due quarterly, began in September 2021 and are equal to 1.0 % per annum of the original principal amount of $ 3.1 billion with any remaining balance payable on the maturity date.

The Euro Term Loan does not have any mandatory principal repayments during its term, however in September and December 2021, we made voluntary prepayments totaling € 416.7 million or $ 502.0 million.

In September 2022, we made a voluntary repayment on the Dollar Term Loan totaling $ 300.0 million.

The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company and its restricted subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of junior indebtedness and dividends and other distributions.

4 unchanged sentences

We used the proceeds from the Secured Notes to fund, in part, the cash consideration payable in connection with the GW Acquisition.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Interest on the Secured Notes is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2022, at a rate of 4.375 % per year.

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If Jazz Securities or the Company’s restricted subsidiaries engage in certain asset sales, Jazz Securities will be required under certain circumstances to make an offer to purchase the Secured Notes at 100 % of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of December 31, 2022, the interest rate and effective interest rate on the Secured Notes were 4.375 % and 4.64 %, respectively.

1 unchanged sentence

In 2020 we completed a private placement of $ 1.0 billion principal amount of the 2026 Notes.

We used a portion of the net proceeds from this offering to repurchase for cash $ 332.9 million aggregate principal amount of the 2021 Notes through privately-negotiated transactions concurrently with the offering of the 2026 Notes.

We used a portion of the net proceeds from this offering to repurchase for cash $ 332.9 million aggregate principal amount of the 1.875 % exchangeable senior notes due 2021, or 2021 Notes, through privately-negotiated transactions concurrently with the offering of the 2026 Notes.

Interest on the 2026 Notes is payable semi-annually in cash in arrears on June 15 and December 15 of each year, beginning on December 15, 2020, at a rate of 2.00 % per year.

7 unchanged sentences

Upon exchange, the 2026 Notes may be settled in cash, ordinary shares or a combination of cash and ordinary shares, at our election.

Our intent and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

policy is to settle the principal amount of the 2026 Notes in cash upon exchange.

Our intent and policy is to settle the principal amount of the 2026 Notes in cash upon exchange.

The exchange rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.

1 unchanged sentence

Prior to March 15, 2026, the 2026 Notes will be exchangeable only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

In accounting for the issuance of the 2026 Notes, we separated the 2026 Notes into liability and equity components.

The carrying amount of the liability component was calculated by measuring the estimated fair value of a similar liability that does not have an associated exchange feature.

The carrying amount of the equity component representing the exchange option was determined by deducting the fair value of the liability component from the face value of the 2026 Notes as a whole.

The excess of the principal amount of the liability component over its carrying amount will be amortized to interest expense over the expected life of the 2026 Notes using the effective interest method with an effective interest rate of 5.98 % per annum.

We have determined the expected life of the 2026 Notes to be equal to the original 6 -year term.

The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

As of December 31, 2021, the “if converted value” of the 2026 Notes did not exceed the principal amount of the 2026 Notes.

As of December 31, 2022, the “if converted value” of the 2026 Notes exceeded the principal amount by $ 22.5 million.

We allocated the total issuance costs incurred of $ 18.6 million to the liability and equity components based on their relative values.

Issuance costs attributable to the liability component will be amortized to expense over the term of the 2026 Notes, and issuance costs attributable to the equity component were included with the equity component in our shareholders’ equity.

As of December 31, 2021 and 2020, the carrying value of the equity component of the 2026 Notes, net of equity issuance costs, was $ 176.3 million.

As of December 31, 2021, the “if converted value” of the 2026 Notes did not exceed the principal amount of the 2026 Notes.

Following the adoption of ASU 2020-06, the 2026 Notes are accounted for as a single liability measured at its amortized cost.

The total liability is reflected net of issuance costs of $ 15.3 million which will be amortized over the term of the 2026 Notes.

We have determined the expected life of the 2026 Notes to be equal to the original 6 -year term.

The effective interest rate of the 2026 Notes is 2.26 %.

Please see Note 2 for further information on the adoption of ASU 2020-06.

Exchangeable Senior Notes Due 2024

6 unchanged sentences

The holders of the 2024 Notes have the ability to require us to repurchase all or a portion of their 2024 Notes for cash in the event we undergo certain fundamental changes, such as specified change of control transactions, our liquidation or dissolution or the delisting of our ordinary shares from The Nasdaq Global Select Market.

Prior to August 15, 2024, we may redeem the 2024 Notes, in whole but not in part, subject to compliance with certain conditions, if we have, or on the next interest payment date would, become obligated to pay to the holder of any 2024 Notes additional amounts as a result of certain tax-related events.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

tax-related events.

We also may redeem the 2024 Notes on or after August 20, 2021, in whole or in part, if the last reported sale price per ordinary share has been at least 130 % of the exchange price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide the notice of redemption.

5 unchanged sentences

Prior to May 15, 2024, the 2024 Notes will be exchangeable only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

In accounting for the issuance of the 2024 Notes, we separated the 2024 Notes into liability and equity components.

The carrying amount of the liability component was calculated by measuring the estimated fair value of a similar liability that does

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

not have an associated exchange feature.

The carrying amount of the equity component representing the exchange option was determined by deducting the fair value of the liability component from the face value of the 2024 Notes as a whole.

The excess of the principal amount of the liability component over its carrying amount will be amortized to interest expense over the expected life of the 2024 Notes using the effective interest method with an effective interest rate of 6.8 % per annum.

We have determined the expected life of the 2024 Notes to be equal to the original seven -year term.

The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

As of December 31, 2022 and 2021, the “if-converted value” did not exceed the principal amount of the 2024 Notes.

We allocated the total issuance costs incurred of $ 15.6 million to the liability and equity components based on their relative values.

Issuance costs attributable to the liability component will be amortized to expense over the term of the 2024 Notes, and issuance costs attributable to the equity component were included with the equity component in our shareholders’ equity.

As of December 31, 2021 and 2020, the carrying value of the equity component of the 2024 Notes, net of equity issuance costs, was $ 149.8 million.

Exchangeable Senior Notes Due 2021

In 2014, we completed a private placement of the 2021 Notes with a maturity date of August 15, 2021.

Interest on the 2021 Notes was payable semi-annually in cash in arrears on February 15 and August 15 of each year, beginning on February 15, 2015, at a rate of 1.875 % per year.

The exchange rate was 5.0057 ordinary shares per $1,000 principal amount of 2021 Notes, which was equivalent to an exchange price of approximately $ 199.77 per ordinary share.

In accounting for the issuance of the 2021 Notes, we separated the 2021 Notes into liability and equity components.

The carrying amount of the liability component was calculated by measuring the estimated fair value of a similar liability that does not have an associated exchange feature.

The carrying amount of the equity component representing the exchange option was determined by deducting the fair value of the liability component from the face value of the 2021 Notes as a whole.

The excess of the principal amount of the liability component over its carrying amount was amortized to interest expense over the expected life of the 2021 Notes using the effective interest method with an effective interest rate of 6.4 % per annum.

We allocated the total issuance costs incurred of $ 16.1 million to the liability and equity components based on their relative values.

Issuance costs attributable to the liability component were amortized to interest expense, net over the term of the 2021 Notes, and issuance costs attributable to the equity component were included with the equity component in our shareholders’ equity.

In 2020 we repurchased $ 356.2 million aggregate principal amount of the 2021 Notes and we repurchased the remaining $ 218.8 million aggregate principal amount on maturity in August 2021.

Following adoption of ASU 2020-06, the 2024 Notes are accounted for as a single liability measured at its amortized cost.

The total liability is reflected net of issuance costs of $ 11.4 million which will be amortized over the term of the 2024 Notes.

We have determined the expected life of the 2024 Notes to be equal to the original seven-year term.

The effective interest rate of the 2024 Notes is 1.79 %.

Please see Note 2 for further information on the adoption of ASU 2020-06.

The Exchangeable Senior Notes were issued by Jazz Investments I Limited, or the Issuer, a 100 %-owned finance subsidiary of Jazz Pharmaceuticals plc.

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There is no assurance that in the future such restrictions will not be adopted.

For the years ended December 31, 2021, 2020 and 2019, we recognized $ 89.9 million, $ 87.6 million and $ 62.5 million, respectively, in interest expense, net related to the contractual coupon rate and the amortization of the debt discount and debt issuance costs on the Exchangeable Senior Notes.

For the years ended December 31, 2022, 2021 and 2020, we recognized $ 32.8 million, $ 89.9 million and $ 87.6 million, respectively, in interest expense, net related to the contractual coupon rate and the amortization of the debt issuance costs on the Exchangeable Senior Notes, and the years ended December 31, 2021 and 2020, also included the amortization of the debt discount costs.

Scheduled maturities with respect to our long-term debt are as follows (in thousands):

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De-recognition of operating lease liability on lease assignment — 68,064 —

_____________________________

(1) Includes the balances recognized on January 1, 2019 on adoption of ASU No.

Maturities of operating and finance lease liabilities were as follows (in thousands):

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Xyrem Class Action

From June 2020 to October 2021, 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 generic drug manufacturers who had filed Abbreviated New Drug Applications, or ANDA, violate state and federal antitrust and consumer protection laws, as follows:

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 generic drug manufacturers who had filed Abbreviated New Drug Applications, or ANDA, violate state and federal antitrust and consumer protection laws, as follows:

On June 17, 2020, a class action lawsuit was filed in the United States District Court for the Northern District of Illinois by Blue Cross and Blue Shield Association, or BCBS, against Jazz Pharmaceuticals plc, Jazz Pharmaceuticals, Inc., and Jazz Pharmaceuticals Ireland Limited, or, collectively, the Company Defendants (hereinafter referred to as the BCBS Lawsuit).

26 unchanged sentences

On February 17, 2022, Health Care Service Corporation filed a lawsuit in the United States District Court for the Northern District of California against the Company Defendants, Hikma Pharmaceuticals plc, Hikma Pharmaceuticals USA Inc., Hikma Labs, Inc., Eurohealth (USA), Inc., Amneal Pharmaceuticals LLC, Par Pharmaceutical, Inc., Lupin Ltd., Lupin Pharmaceuticals, Inc., and Lupin Inc, raising similar allegations.

The parties have submitted a proposed case schedule through briefing on class certification.

On May 9, 2022, Aetna Inc., or Aetna, filed a lawsuit in the Superior Court of California for the County of Alameda against the Company Defendants, Hikma Pharmaceuticals plc, Hikma Pharmaceuticals USA Inc., Hikma Labs, Inc., Eurohealth (USA), Inc., Amneal Pharmaceuticals LLC, Par Pharmaceutical, Inc., Lupin Ltd., Lupin Pharmaceuticals, Inc., and Lupin Inc, raising similar allegations (hereinafter referred to as the Aetna Case).

On November 7, 2022, the court in the Aetna Case issued a tentative ruling granting in part and denying in part our motion to dismiss.

On December 27, 2022, the Court issued a final order confirming that tentative ruling.

As a result of that ruling, the generic defendants have been dismissed from the case, and certain of Aetna’s claims against Jazz have been dismissed.

On January 27, Aetna filed an amended complaint against Jazz.

On January 13, 2023, Amneal Pharmaceuticals LLC, Lupin Ltd., Lupin Pharmaceuticals, Inc., and Lupin Inc, notified the court that they had reached a settlement-in-principle with the class action plaintiffs.

A hearing on class certification in the consolidated multi-district litigation referenced above is scheduled for April 2023.

A trial date will be set following a ruling on class certification.

13 unchanged sentences

LLC are named as defendants.

In addition to the Farrell Lawsuit and the Levy Lawsuit, ten additional suits have been filed in New York, California, and Pennsylvania federal courts by purported GW shareholders against GW Pharmaceuticals plc and its Board of Directors, but which do not name any Jazz Pharmaceuticals parties (hereinafter referred to as the GW Litigation, and collectively with the Farrell Lawsuit and the Levy Lawsuit, as the Transaction Litigation).

In addition to the Farrell Lawsuit and the Levy Lawsuit, ten additional suits have been filed in New York, California, and Pennsylvania federal courts by purported GW shareholders against GW Pharmaceuticals plc and its board of directors, but which do not name any Jazz Pharmaceuticals parties (hereinafter referred to as the GW Litigation, and collectively with the Farrell Lawsuit and the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Levy Lawsuit, as the Transaction Litigation).

In the Transaction Litigation, the plaintiffs allege that the Proxy Statement omitted material information and contained misrepresentations, and that the individual members of the GW board of directors breached their fiduciary duties, in violation of state and federal laws, including the Securities Exchange Act of 1934.

2 unchanged sentences

Pursuant to a memorandum of understanding between the parties, the Levy Lawsuit was dismissed on April 14, 2021.

On May 27, 2021, a class action lawsuit was filed in the United States District Court for the Southern District of California by plaintiff Kurt Ziegler against GW and its former Directors asserting claims under Sections 14(a) and 20(a) of the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Securities Exchange Act of 1934, referred to as the Ziegler Lawsuit.

The allegations in the Ziegler Lawsuit are similar to those in the previously dismissed Transaction Litigation.

In December 2022, the parties reached a settlement in principle.

Patent Infringement Litigation

4 unchanged sentences

Avadel filed an answer to the complaint and counterclaims asserting that the patents are invalid or not enforceable, and that its product, if approved, will not infringe our patents.

Avadel filed a motion for partial judgment on the pleadings on its counterclaim that one of our patents should be delisted from the Orange Book.

On November 18, 2022 the Court issued an order that we delist the patent from the Orange Book .

On November 22, 2022, we filed a notice of appeal to the United States Court of Appeals for the Federal Circuit.

The Federal Circuit temporarily stayed the district court’s delisting order.

Oral argument in the appeal took place on February 14, 2023.

On February 24, 2023, the Federal Circuit affirmed the district court’s delisting order, lifted the temporary stay, and gave Jazz 14 days to request that FDA delist the patent from the Orange Book .

Jazz complied with the Federal Circuit’s order and requested delisting on February 28, 2023.

On August 4, 2021, we filed an additional patent infringement suit against Avadel in the United States District Court for the District of Delaware.

1 unchanged sentence

The suit seeks an injunction to prevent Avadel from launching a product that would infringe this patent, and an award of monetary damages if Avadel does launch an infringing product.

Avadel filed an answer to the complaint and counterclaims asserting that the patents are invalid or not enforceable, and that its product, if approved, will not infringe our patent s.

Avadel filed an answer to the complaint and counterclaims asserting that the patents are invalid or not enforceable, and that its product, if approved, will not infringe our patents.

On November 10, 2021, we filed an additional patent infringement suit against Avadel in the United States District Court for the District of Delaware.

2 unchanged sentences

Avadel filed an answer to the complaint and counterclaims asserting that the patents are invalid or not enforceable, and that its product, if approved, will not infringe our patents.

On April 14, 2022, Avadel sued us in the United States District Court for the District of Delaware.

Avadel’s new suit alleges that we misappropriated trade secrets related to Avadel’s once-nightly sodium oxybate development program and breached certain contracts between the parties.

Avadel seeks monetary damages, an injunction preventing us from using Avadel’s confidential information, and an order directing the United States Patent and Trademark Office to modify the inventorship of one of our oxybate patents.

On June 7, 2022 we received notice from Avadel that it had filed a "paragraph IV certification" regarding one patent listed in the Orange Book for Xyrem.

A paragraph IV certification is a certification by a generic applicant that alleges that patents covering the branded product are invalid, unenforceable, and/or will not be infringed by the manufacture, use or sale of the generic product.

On July 15, 2022, we filed an additional lawsuit against Avadel asserting infringement of that patent.

The suit alleges that the filing of Avadel’s application for approval of FT218 is an act of infringement, and that Avadel’s product would infringe the patent if launched.

The suit seeks an injunction to prevent Avadel from launching a product that would infringe the patent, and an award of damages if Avadel does launch an infringing product.

Avadel filed an answer to the complaint and counterclaims asserting that the patent is invalid, that its product, if approved, would not infringe, and that by listing the patent in the Orange Book, we engaged in unlawful monopolization in violation of the Sherman Act.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On July 21, 2022, Avadel filed a lawsuit against FDA in the United States District Court for the District of Columbia, challenging FDA’s determination that Avadel was required to file a paragraph IV certification regarding one of our Orange Book listed patents.

Avadel filed a motion for preliminary injunction, or in the alternative, summary judgment, seeking relief including a declaration that FDA’s decision requiring patent certification was unlawful, an order setting aside that decision, an injunction prohibiting FDA from requiring such certification as a precondition to approval of its application for FT218, and an order requiring FDA to take final action on Avadel’s application for approval of FT218 within 14 days of the Court’s ruling.

On July 27, 2022, we filed a motion to intervene in that case, which the Court granted.

The Court held a hearing on the parties’ respective motions for summary judgment on October 7, 2022.

On November 3, 2022, the Court granted our and FDA’s motions for summary judgment and denied Avadel’s motion.

Canopy Patent Litigation

4 unchanged sentences

In October 2021, the United States District Court for the Western District of Texas held a claim construction hearing regarding the disputed term of the ‘632 patent.

In November 2021, the Court issued a claim construction order, which the Company views as generally favorable.

In November 2021, the Court issued a claim construction order.

On February 23, 2022, the parties filed a Joint Motion and Stipulation to Enter Final Judgment in favor of GW.

Pursuant to the stipulation, Canopy has the right to appeal the Court’s ruling on the disputed term.

On February 25, 2022, the Court granted the parties’ motion and entered final judgment in favor of GW.

Pursuant to the stipulation, Canopy filed a notice of appeal of the Court’s ruling on the disputed term in March 2022.

Lupin Patent Litigation

2 unchanged sentences

The asserted patents relate generally to the composition and method of use of Xywav, and methods of treatment when Xywav is administered concomitantly with certain other medications.

In July 2021, we filed a patent infringement suit against Lupin in the United States District Court for the District of New Jersey.

4 unchanged sentences

On October 4, 2021, Lupin filed an answer to the complaint and counterclaims asserting that the patents are invalid or not enforceable, and that its product, if approved, will not infringe our patents.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In April 2022, we received notice from Lupin that it had filed a paragraph IV certification regarding a newly-issued patent listed in the Orange Book for Xywav.

On May 11, 2022, we filed an additional lawsuit against Lupin in the United States District Court for the District of New Jersey alleging that by filing its ANDA, Lupin infringed the newly-issued patent related to a method of treatment when Xywav is administered concomitantly with certain other medications.

The suit seeks a permanent injunction to prevent Lupin from introducing a generic version of Xywav that would infringe our patent.

On June 22, 2022, the court consolidated the two lawsuits we filed against Lupin.

In November 2022, we received notice from Lupin that it had filed a paragraph IV certification regarding a newly-issued patent listed in the Orange Book for Xywav.

On January 19, 2023, we filed an additional lawsuit against Lupin in the United States District Court for the District of New Jersey alleging that by filing its ANDA, Lupin infringed the newly-issued patent referenced in its November 2022 paragraph IV certification, as well as another patent that issued in January 2023.

The suit seeks a permanent injunction to prevent Lupin from introducing a generic version of Xywav that would infringe the two patents in suit.

On February 15, 2023, the court consolidated the new lawsuit with the two suits we previously filed against Lupin.

No trial date has been set in the consolidated case.

Otsuka Patent Litigation

1 unchanged sentence

Otsuka alleges that under a now-expired Research Collaboration and License Agreement between Otsuka and the GW Parties, Otsuka and the GW Parties jointly own certain patents and other intellectual property, that Epidiolex is covered by that intellectual property, and that Otsuka is therefore due a royalty on net sales of Epidiolex.

In December 2021, we filed an application for an order declaring that the English High Court, Patents Court has no jurisdiction over the dispute with Otsuka, or should not exercise its jurisdiction.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In December 2021, GW filed an application contesting the jurisdiction of the Patents Court.

On May 3, 2022, the Patents Court denied GW’s application.

GW has filed papers with the Court of Appeal seeking leave to challenge the Patents Court’s decision.

The Court of Appeal held a hearing on GW’s appeal on October 12, 2022.

On November 8, 2022, the Court of Appeal ruled against GW on the jurisdictional challenge, so the case will continue in the Patents Court.

In January 2022, we filed a lawsuit against Otsuka in the Supreme Court of the State of New York, County of New York, seeking a declaration that Otsuka is not entitled to any royalties on sales of Epidiolex under the Research Collaboration and License Agreement.

In February 2023, we reached an agreement with Otsuka to settle all outstanding litigation and disputes between the parties related to Epidiolex royalties.

Pursuant to that agreement, Otsuka will assign to GW its rights in certain jointly-owned intellectual property, and GW will pay Otsuka royalties on net sales of Epidiolex from product launch through 2032 and, potentially, on certain future cannabidiol products.

Epidiolex Patent Litigation

In November and December 2022, we received notices from Teva Pharmaceuticals, Inc.;

Padagis US LLC;

API Pharma Tech LLC and InvaGen Pharmaceuticals, Inc.;

Lupin Limited;

Taro Pharmaceutical Industries Ltd.;

Zenara Pharma Private Limited and Biophore Pharma, Inc.;

MSN Laboratories Pvt.

and MSN Pharmaceuticals, Inc.;

Alkem Laboratories Ltd.;

and Ascent Pharmaceuticals, Inc.

(hereinafter referred to as the “Epidiolex ANDA Filers”), that they have each filed with FDA an Abbreviated New Drug Application, or ANDA, for a generic version of Epidiolex (cannabidiol) oral solution.

As of the date of this filing, we are not aware of other ANDA filers.

The notices from the Epidiolex ANDA Filers each included a “paragraph IV certification” with respect to certain of our patents listed in FDA’s Orange Book for Epidiolex on the date of the receipt of the notice.

The listed patents relate generally to the composition and method of use of Epidiolex, and methods of treatment using Epidiolex.

On January 3, 2023, we filed a patent infringement suit against the Epidiolex ANDA Filers in the United States District Court for the District of New Jersey.

The complaint alleges that by filing their ANDAs, the Epidiolex ANDA Filers have infringed certain of our Orange Book listed patents, and seeks an order that the effective date of FDA approval of the ANDAs shall be a date no earlier than the expiration of the last to expire of the asserted patents.

As a result of this lawsuit, we expect that a stay of approval of up to 30 months will be imposed by FDA on the Epidiolex ANDA Filers’ ANDAs.

Epidiolex also has Orphan Drug Exclusivity for the treatment of seizures associated with Lennox-Gastaut syndrome or Dravet syndrome in patients 2 years of age and older through September 28, 2025, and for the treatment of seizures associated with Lennox-Gastaut syndrome or Dravet syndrome in patients between 1 and 2 years of age and for the treatment of seizures associated with tuberous sclerosis complex through July 31, 2027.

The Company vigorously enforces its intellectual property rights but cannot predict the outcome of these matters.

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The share repurchase program may be modified, suspended or discontinued at any time without prior notice.

In 2021, we did no t repurchase any of our ordinary shares under the share repurchase program.

In 2020, we spent a total of $ 146.5 million to repurchase 1.2 million of our ordinary shares at an average total purchase price, including brokerage commissions, of $ 121.98 per share.

All ordinary shares repurchased were canceled.

In 2022, we spent a total of $ 0.1 million to repurchase 338 of our ordinary shares at a total purchase price, including brokerage commissions, of $ 160.70 per share.

In 2021, we did not repurchase any of our ordinary shares under the share repurchase program.

As of December 31, 2022, the remaining amount authorized under the share repurchase program was $ 431.2 million.

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Amended and Restated 2007 Non-Employee Directors Stock Award Plan 755 807

2007 Equity Incentive Plan — 5

Total 30,220 28,140

In 2021 and 2020, we did no t declare or pay cash dividends on our common equity.

In 2022 and 2021, we did not declare or pay cash dividends on our common equity.

Under Irish law, dividends may only be paid, and share repurchases and redemptions must generally be funded only out of, “distributable reserves.” In addition, the terms of our credit agreement restrict our ability to make certain restricted payments, including dividends and other distributions by us in respect of our ordinary shares, subject to, among other exceptions, (1) a general exception for dividends and restricted payments up to $ 30 million in the aggregate and (2) an exception that allows for restricted payments, subject to a cap equal to the sum of (i) $ 100 million plus (ii) so long as our secured leverage ratio (as defined in our credit agreement) does not exceed 3 :1 after giving pro forma effect to the restricted payment, a formula-based amount tied to our consolidated net income;

provided that such cap applies only if our total leverage ratio (as defined in our credit agreement) exceeds 2 :1 after giving pro forma effect to the restricted payment.

Any future determination as to the payment of dividends will, subject to Irish legal requirements, be at the sole discretion of our board of directors and will depend on our consolidated financial condition, results of operations, capital requirements, compliance with the terms our credit agreement or other future borrowing arrangements, and other factors our board of directors deems relevant.

Any future determination as to the payment of dividends will, subject to Irish legal requirements, be at the sole discretion of our board of directors and will depend on our consolidated financial condition, results of operations, capital requirements, compliance with the terms of our credit agreement or other future borrowing arrangements, and other factors our board of directors deems relevant.

Comprehensive Income (Loss)

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Balance at December 31, 2021 $ ( 128 ) $ ( 400,232 ) $ ( 400,360 )

Other comprehensive income (loss) before reclassifications ( 389 ) ( 268,347 ) ( 268,736 )

Other comprehensive loss before reclassifications — ( 725,277 ) ( 725,277 )

Amounts reclassified from accumulated other comprehensive income (loss) 128 — 128

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Balance at December 31, 2022 $ — $ ( 1,125,509 ) $ ( 1,125,509 )

In 2021, other comprehensive loss reflects foreign currency translation adjustments, primarily due to the weakening of the sterling and euro against the U.S.

In 2022, other comprehensive loss reflects foreign currency translation adjustments, primarily due to the weakening of sterling and the euro against the U.S.

Net Income (Loss) per Ordinary Share

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Diluted $ ( 3.58 ) $ ( 5.52 ) $ 4.22

Potentially dilutive ordinary shares from our employee equity incentive and purchase plans and the Exchangeable Senior Notes are determined by applying the treasury stock method to the assumed exercise of share options, the assumed vesting of outstanding restricted stock units, or RSUs and PRSUs, the assumed issuance of ordinary shares under our employee stock purchase plan, or ESPP, and the assumed issuance of ordinary shares upon exchange of the Exchangeable Senior Notes.

The average share price of our ordinary shares in 2021 exceeded the effective exchange price per ordinary share of the 2026 Notes.

However, the potential ordinary shares issuable upon exchange were excluded from the calculation of diluted net loss per ordinary share because their effect would have been anti-dilutive.

Potentially dilutive ordinary shares from our employee equity incentive and purchase plans are determined by applying the treasury stock method to the assumed exercise of share options, the assumed vesting of outstanding restricted stock units, or RSUs and PRSUs, and the assumed issuance of ordinary shares under our employee stock purchase plan, or ESPP.

We adopted ASU 2020-06 on January 1, 2022, on a modified retrospective basis, which eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method.

The potential issue of ordinary shares upon exchange of the Exchangeable Senior Notes was anti-dilutive and had no impact on diluted net loss per ordinary share for 2022.

In 2021 and 2020, potentially dilutive ordinary shares from the Exchangeable Senior Notes were determined by applying the treasury stock method to the assumed issuance of ordinary shares upon exchange of the Exchangeable Senior Notes.

The average price of our ordinary shares in 2021 exceeded the effective exchange price per ordinary share of the 2026 Notes.

However, the potential ordinary shares issuable upon exchange were excluded from the calculation of diluted net loss per ordinary shares because their effect would have been anti-dilutive.

The average price of our ordinary shares in 2021 did not exceed the effective exchange price per ordinary share of the 2021 Notes and 2024 Notes.

The potential issue of ordinary shares issuable upon exchange of the Exchangeable Senior Notes had no effect on diluted net income per ordinary share for 2020 and 2019 as the average price of our ordinary shares during those periods did not exceed the effective exchange prices per ordinary share of the Exchangeable Senior Notes.

The potential issue of ordinary shares issuable upon exchange of the Exchangeable Senior Notes had no effect on diluted net income per ordinary share for 2020 as the average price of our ordinary shares during 2020 did not exceed the effective exchange prices per ordinary share of the Exchangeable Senior Notes.

The following table represents the weighted-average ordinary shares that were excluded from the computation of diluted net income (loss) per ordinary share for the years presented because including them would have an anti-dilutive effect (in thousands):

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Epidiolex/Epidyolex 736,398 463,645 —

Sunosi 57,914 28,333 3,714

Sativex 16,825 12,707 —

Sunosi 28,844 57,914 28,333

Total Neuroscience 2,760,945 2,335,393 1,785,355

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Total revenues $ 3,659,374 $ 3,094,238 $ 2,363,567

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table presents a summary of total revenues attributed to geographic sources (in thousands):

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McKesson 11 % 12 % 12 %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financing and payment

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Balance as of December 31, 2021 $ 2,556

Additions 483

Amount recognized within royalties and contract revenues ( 2,093 )

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In connection with the Azur Merger, Jazz Pharmaceuticals, Inc.’s board of directors adopted the 2011 Equity Incentive Plan, or the 2011 Plan, in October 2011 and its stockholders approved the 2011 Plan at the special meeting of the stockholders held in December 2011 in connection with the Azur Merger.

The 2011 Plan became effective immediately before the consummation of the Azur Merger and was assumed and adopted by us upon the consummation of the Azur Merger.

The 2011 Plan became effective

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

immediately before the consummation of the Azur Merger and was assumed and adopted by us upon the consummation of the Azur Merger.

The terms of the 2011 Plan provide for the grant of stock options, stock appreciation rights, RSUs, other stock awards, and performance awards that may be settled in cash, shares, or other property.

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As of December 31, 2022, a total of 34,836,988 of our ordinary shares had been authorized for issuance under the 2011 Plan.

In addition, the share reserve under the 2011 Plan will automatically increase on January 1 of each year through January 1, 2022, by the least of (a) 4.5 % of the total number of ordinary shares outstanding on December 31 of the preceding calendar year, (b) 5,000,000 shares, or (c) such lesser number of ordinary shares as determined by our board of directors.

On January 1, 2022, the share reserve under the 2011 Plan automatically increased by 2,771,906 ordinary shares pursuant to this provision.

2007 Equity Incentive Plan

The 2007 Equity Incentive Plan, or the 2007 Plan, which was initially adopted by the Jazz Pharmaceuticals, Inc.

board of directors and approved by the Jazz Pharmaceuticals, Inc.

stockholders in connection with its initial public offering, was continued and assumed by us upon consummation of the Azur Merger.

The 2007 Plan provided for the grant of stock options, RSUs, stock appreciation rights, performance stock awards and other forms of equity compensation to employees, including

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

officers, non-employee directors and consultants.

Prior to the consummation of the Azur Merger, all of the grants under the 2007 Plan were granted to employees and vest ratably over service periods of three to five years and expire no more than 10 years after the date of grant.

Effective as of the closing of the Azur Merger on January 18, 2012, the number of shares reserved for issuance under the 2007 Plan was set to 1,000,000 ordinary shares.

The share reserve under the 2007 Plan will not automatically increase.

Since the Azur Merger, all of the new grants under the 2007 Plan were granted to non-employee directors, vest ratably over service periods of one to three years and expire no more than 10 years after the date of grant.

The 2007 Plan expired in April 2017, and accordingly, no new grants can be awarded under the 2007 Plan.

As of December 31, 2021, the number of shares reserved represents issuable shares from options granted but not yet exercised under the 2007 Plan.

2007 Employee Stock Purchase Plan

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As of December 31, 2022, a total of 7,029,250 of our ordinary shares had been authorized for issuance under the ESPP.

The share reserve under the ESPP will automatically increase on January 1 of each year through January 1, 2022, by the least of (a) 1.5 % of the total number of ordinary shares outstanding on December 31 of the preceding calendar year, (b) 1,000,000 shares, and (c) such lesser number of ordinary shares as determined by our board of directors or a duly-authorized committee thereof.

On January 1, 2022, the share reserve under the ESPP automatically increased by 923,968 ordinary shares pursuant to this provision.

Amended and Restated 2007 Non-Employee Directors Stock Award Plan

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Amounts deferred under the Directors Deferred Plan are credited as shares of Jazz Pharmaceuticals, Inc.’s common stock (or our ordinary shares following the Azur Merger) to a phantom stock account, the number of which are based on the amount of the retainer fees deferred divided by the market value of Jazz Pharmaceuticals, Inc.’s common stock (or our ordinary shares following the Azur Merger) on the first trading day of the first open window period following the date the retainer fees are deemed earned.

On the 10th business day following the day of separation from the board of directors or the occurrence of a change in control, or

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as soon thereafter as practical once the non-employee director has provided the necessary information for electronic deposit of the deferred shares, each non-employee director will receive (or commence receiving, depending upon whether the director has elected to receive distributions from his or her phantom stock account in a lump sum or in installments over time) a distribution of his or her phantom stock account, in our ordinary shares (i) reserved under the 2007 Directors Option Plan prior to August 15, 2010 and (ii) from a new reserve of 200,000 shares set up under the Directors Deferred Plan on August 15, 2010.

On the 10th business day following the day of separation from the board of directors or the occurrence of a change in control, or as soon thereafter as practical once the non-employee director has provided the necessary information for electronic deposit of the deferred shares, each non-employee director will receive (or commence receiving, depending upon whether the director has elected to receive distributions from his or her phantom stock account in a lump sum or in installments over time) a distribution of his or her phantom stock account, in our ordinary shares (i) reserved under the 2007 Directors Option Plan prior to August 15, 2010 and (ii) from a new reserve of 200,000 shares set up under the Directors Deferred Plan on August 15, 2010.

Since the consummation of the Azur Merger, we have not permitted non-employee directors to defer any annual retainer fees under the Directors Deferred Plan.

On October 31, 2019, our board of directors approved the termination of the Directors Deferred Plan, and all outstanding phantom stock was distributed to each applicable non-employee director on November 2, 2020.

On October 31, 2019, our board of directors approved the termination of the Directors

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred Plan, and all outstanding phantom stock was distributed to each applicable non-employee director on November 2, 2020.

We recorded no expense in 2022, 2021 and 2020 related to retainer fees earned and deferred.

Share-Based Compensation

The table below shows, for market strike price option grants, the weighted-average assumptions used in the Black-Scholes option pricing model and the resulting weighted-average grant date fair value of market strike price option grants granted in each of the past three years:

There were no share options granted in 2022.

Year Ended December 31,

2021 2020 2019

Grant date fair value $ 51.39 $ 34.68

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Outstanding at January 1, 2022 4,121 $ 134.48

Options granted 110 164.45

Options exercised ( 777 ) 106.76

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As of December 31, 2022, total compensation cost not yet recognized related to unvested share options was $ 9.6 million, which is expected to be recognized over a weighted-average period of 1.2 years.

As of December 31, 2021, total compensation cost not yet recognized related to grants under the ESPP was $ 4.4 million, which is expected to be recognized over a weighted-average period of 1.1 years.

As of December 31, 2022, total compensation cost not yet recognized related to grants under the ESPP was $ 6.3 million, which is expected to be recognized over a weighted-average period of 1.0 year.

Nominal Strike Price Options

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Outstanding at January 1, 2022 116 $ 0.02

Options granted 124 0.02

Options exercised ( 55 ) 0.02

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Exercisable at December 31, 2022 22 $ 0.02 6.3 $ 3,530

The aggregate intrinsic value of nominal strike price options exercised was $ 8.4 million and $ 0.2 million during 2022 and 2021, respectively.

We issued new ordinary shares upon exercise of nominal strike price options.

As of December 31, 2022, total compensation cost not yet recognized related to unvested nominal strike price options was $ 0.8 million, which is expected to be recognized over a weighted-average period of 0.2 years.

Restricted Stock Units

In 2021, we granted RSUs covering an equal number of our ordinary shares to employees with a weighted-average grant date fair value of $ 168.10 .

In 2022, 2021 and 2020, we granted RSUs covering an equal number of our ordinary shares to employees with a weighted-average grant date fair value of $ 152.08 , $ 168.10 and $ 117.23 , respectively.

The fair value of RSUs is determined on the date of grant based on the market price of our ordinary shares as of that date.

The fair value of the RSUs is recognized as an expense ratably over the vesting period of four years .

In 2021, 692,000 RSUs were released with 465,000 ordinary shares issued and 227,000 ordinary shares withheld for tax purposes.

In 2022, 2021 and 2020, 910,000 , 692,000 and 423,000 RSUs were

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

released, respectively, with 610,000 , 465,000 and 290,000 ordinary shares issued, respectively, and 300,000 , 227,000 and 133,000 ordinary shares withheld for tax purposes, respectively.

The total fair value of shares vested was $ 138.1 million, $ 109.2 million and $ 53.5 million during 2022, 2021 and 2020, respectively.

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Performance-Based Restricted Stock Units

In May 2021, the Compensation & Management Development Committee of our board of directors approved awards of PRSU's to certain employees of the Company, subject to vesting on the achievement of certain commercial and pipeline performance criteria to be assessed over a performance period from the date of the grant to December 31, 2023.

The Compensation & Management Development Committee of our board of directors approved awards of PRSUs to certain employees of the Company, subject to vesting on the achievement of certain commercial and pipeline performance criteria to be assessed over a performance period from the date of the grant to December 31, 2023 and December 31, 2024, respectively.

Following the determination of the Company’s achievement with respect to the performance criteria, the amount of shares awarded will be subject to adjustment based on the application of a relative TSR modifier.

The number of shares that may be earned ranges between 0 % and 200 % of the target number of PRSUs granted based on the degree of achievement of the applicable performance metric and the application of the relative TSR modifier.

The table below shows the number of PRSUs granted covering an equal number of our ordinary shares and the weighted-average grant date fair value of PRSUs granted:

The following table summarizes information as of December 31, 2022 and activity during 2022 related to our PRSUs:

Number of PRSUs (In thousands) Weighted-

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As of December 31, 2022, total compensation cost not yet recognized related to unvested PRSUs was $ 46.0 million, which is expected to be recognized over a weighted-average period of 1.6 years.

As the PRSUs granted in May 2021 are subject to a market condition, the grant date fair value for such PRSUs was based on a Monte Carlo simulation model.

As the PRSUs granted in 2021 and 2022 are subject to a market condition, the grant date fair value for such PRSUs was based on a Monte Carlo simulation model.

In 2022 and 2021, we granted PRSUs to employees with a weighted-average grant date fair value of $ 178.78 and $ 190.81 , respectively.

The Company evaluated the performance targets in the context of its current long-range financial plan and its product candidate development pipeline and recognized compensation expense based on the probable number of awards that will ultimately vest.

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Expenses related to contributions to such plans for the years ended December 31, 2022, 2021 and 2020 were $ 14.6 million, $ 11.4 million and $ 4.2 million, respectively.

The expense for employee benefit plans in 2021 included plans acquired in the GW Acquisition.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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Total income tax expense (benefit) $ ( 158,645 ) $ 216,116 $ 33,517

Our income tax expense of $ 216.1 million and $ 33.5 million in 2021 and 2020, respectively, and our income tax benefit of $ 73.2 million in 2019 related to tax arising on income in Ireland, the U.K., the U.S.

and certain other foreign jurisdictions, certain unrecognized tax benefits and various expenses not deductible for income tax purposes.

Our income tax benefit was $ 158.6 million in 2022 and our income tax expense was $ 216.1 million and $ 33.5 million in 2021 and 2020, respectively, relating to tax arising on income or losses in Ireland, the U.K., the U.S.

and certain other foreign jurisdictions, offset by deductions on subsidiary equity, originating tax credits and FDII benefits.

Our income tax benefit in 2022 increased primarily due to payments for acquired IPR&D made in the year and the impact of the impairment of our acquired IPR&D asset as a result of the decision to discontinue our nabiximols program.

Our income tax expense in 2021 included an expense of $ 259.9 million arising on the remeasurement of our U.K.

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Finance Act 2021.

Our income tax benefit in 2019 included a discrete tax benefit of $ 112.3 million resulting from an intra-entity intellectual property asset transfer.

The effective tax rates for 2021, 2020 and 2019 were ( 191.5 )% , 12.2 % and ( 16.1 )%, respectively.

The effective tax rate for 2021 was lower than the Irish statutory rate of 12.5 % primarily due to the impact of the remeasurement of our U.K.

net deferred tax liability due to the change in the statutory tax rate in the U.K.

The effective tax rate for 2020 was lower than the Irish statutory rate of 12.5 % primarily due to the impact of originating tax credits and deductions on subsidiary equity, partially offset by income taxable at a rate higher than the Irish statutory rate, the disallowance of certain interest deductions and a provision for a proposed settlement reached with the French taxing authorities.

The effective tax rate for 2019 was lower than the Irish statutory rate of 12.5 % primarily due to the impact of the intra-entity intellectual property asset transfer.

The decrease in the effective tax rate in 2021 compared to 2020 was primarily due to the impact of the U.K.

statutory rate change.

Excluding this impact, the increase in the benefit for income taxes in 2021 compared to 2020 resulted primarily from the mix of pre-tax income and losses incurred across tax jurisdictions, deductions on subsidiary equity and the impacts recognized in 2020 of the

Our income tax expense in 2020 included the impact of the disallowance of certain interest deductions and a provision for a proposed settlement reached with the French taxing authorities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

disallowance of certain interest deductions and a provision for a proposed settlement reached with the French taxing authorities.

The increase in the effective tax rate in 2020 compared to 2019 was primarily due to the impact of the intra-entity intellectual property asset transfer.

Excluding this effect, the increase in the effective tax rate for 2020 compared to 2019 was primarily due to the benefit recognized in 2019 from the application of the Italian patent box incentive regime 2015 through 2019 and the impacts recognized in 2020 of the disallowance of certain interest deductions and a provision for a proposed settlement reached with the French taxing authorities.

The reconciliation between the statutory income tax rate applied to income before the income tax expense (benefit) and equity in loss of investees and our effective income tax rate was as follows (in thousands):

The reconciliation between income tax expense (benefit) at the Irish statutory income tax rate of 12.5 percent, the jurisdiction of tax domicile of Jazz Pharmaceuticals, applied to income before the income tax expense (benefit) and equity in loss of investees and our reported income tax expense (benefit) was as follows (in thousands):

Year Ended December 31,

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Income tax expense (benefit) at the statutory income tax rate $ ( 46,598 ) $ ( 14,105 ) $ 34,387

Change in tax rate 261,663 ( 1,836 ) 6,923

Deduction on subsidiary equity ( 158,488 ) ( 116,438 ) ( 25,740 )

Change in valuation allowance 95,051 81,280 6,074

Foreign derived intangible income benefit ( 29,541 ) ( 3,416 ) —

Research and other tax credits ( 27,976 ) ( 31,069 ) ( 30,836 )

Non-deductible acquisition-related costs 20,929 — 11,738

Change in tax rate ( 16,790 ) 261,663 ( 1,836 )

Change in estimates ( 14,065 ) ( 2,653 ) ( 3,604 )

Non-deductible compensation 13,505 19,914 8,604

Financing costs 14,418 7,132 ( 7,615 )

Non-deductible facility expense 8,093 — —

Non-deductible royalty expense 6,274 — —

Patent box incentive benefit ( 6,203 ) — —

Foreign income tax rate differential 5,863 ( 4,343 ) 16,126

Change in unrecognized tax benefits 5,029 ( 6,436 ) 16,309

Non-deductible financing costs 4,504 14,418 7,132

Tax deficiencies/(excess tax benefits) from share-based compensation ( 1,690 ) ( 5,555 ) 5,274

Foreign income tax rate differential ( 4,343 ) 16,126 39,695

Foreign derived intangible income benefit ( 3,416 ) — —

Change in estimates ( 2,653 ) ( 3,604 ) 1,156

Intra-entity transfer of intellectual property assets — — ( 112,274 )

Patent box incentive benefit — — ( 31,642 )

Non-deductible acquisition-related costs — 20,929 —

Other 4,387 1,927 1,627

Reported income tax expense (benefit) $ ( 158,645 ) $ 216,116 $ 33,517

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Significant components of our net deferred tax assets (liabilities) were as follows (in thousands):

Deferred tax assets:

Tax credit carryforwards $ 284,155 $ 258,296

Operating loss carryforwards $ 263,235 $ 265,156

Intangible assets 236,462 176,904

Accrued liabilities 84,509 62,561

Tax credit carryforwards 189,792 284,155

Deduction on subsidiary equity carryforwards 157,367 78,514

Accrued liabilities 109,257 84,110

Capitalized research and development 88,009 13,453

Indirect effects of unrecognized tax benefits 47,224 46,876

7 unchanged sentences

Intangible assets ( 1,367,146 ) ( 1,652,297 )

Inventory ( 181,742 ) —

Inventories ( 110,927 ) ( 181,742 )

Operating lease assets ( 10,978 ) ( 12,657 )

2 unchanged sentences

Net of deferred tax assets and (liabilities) $ ( 568,090 ) $ ( 989,438 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The net change in valuation allowance was an increase of $ 80.5 million, $ 76.9 million and $ 11.0 million in 2022, 2021 and 2020, respectively.

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state NOL carryforwards will expire, if not utilized, in the tax years 2023 to 2041.

As of December 31, 2021, there were NOL and other carryforwards for income tax purposes of approximately $ 864.9 million, $ 224.3 million, $ 133.5 million and $ 45.7 million available to reduce future income subject to income taxes in the United Kingdom, Malta, Ireland and Luxembourg respectively.

The NOLs and other carryforwards generated in the United Kingdom, Malta, Ireland and Luxembourg have no expiration date.

As of December 31, 2022, there were NOL and other carryforwards for income tax purposes of approximately $ 927.1 million, $ 449.6 million and $ 188.3 million available to reduce future income subject to income taxes in the United Kingdom, Malta and Ireland respectively.

The NOLs and other carryforwards generated in the United Kingdom, Malta and Ireland have no expiration date.

We also had foreign tax credit carryforwards in Ireland, as of December 31, 2022, of $ 66.2 million, which may only be utilized against certain sources of income.

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Such an annual limitation may result in the expiration of certain NOLs and tax credits before future utilization.

In addition, as a result of the Azur Merger, until 2022 we are subject to certain limitations under the Internal Revenue Code in relation to the utilization of U.S.

In addition, as a result of the Azur Merger, until 2022 we were subject to certain limitations under the Internal Revenue Code in relation to the utilization of U.S.

NOLs to offset U.S.

taxable income resulting from certain transactions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Valuation allowances require an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable.

2 unchanged sentences

(federal and state) and foreign deferred tax assets which we maintain until sufficient positive evidence exists to support reversal.

During 2021, as part of the overall change in valuation allowance, we recognized a net income tax expense of $ 81.3 million relating primarily to the creation of a valuation allowance against certain deferred tax assets primarily associated with temporary differences related to foreign subsidiaries and foreign tax credit carryforwards.

During 2020, as part of the overall change in valuation allowance, we recognized a net income tax expense of $ 6.2 million relating primarily to the creation of a valuation allowance against certain deferred tax assets primarily associated with temporary differences related to foreign subsidiaries.

During 2019, as part of the overall change in valuation allowance, we recognized a net income tax expense of $ 6.3 million relating primarily to the creation of a valuation allowance of $ 15.7 million against certain deferred tax assets primarily associated with foreign tax credits and temporary differences related to foreign subsidiaries, partially offset by the net release of valuation allowances against certain deferred tax assets primarily associated with NOLs.

As part of the overall change in valuation allowance, we recognized a net income tax expense of $ 95.1 million and $ 81.3 million in 2022 and 2021, respectively, relating primarily to the creation of a valuation allowance against certain deferred tax assets primarily associated with temporary differences related to foreign subsidiaries and foreign tax credit carryforwards.

We periodically evaluate the likelihood of the realization of deferred tax assets and will adjust such amounts in light of changing facts and circumstances including, but not limited to, future projections of taxable income, tax legislation, rulings by relevant taxing authorities, the progress of tax examinations and the regulatory approval of products currently under development.

Realization of the deferred tax assets is dependent on future taxable income.

The Company believes that it is more likely than not to generate sufficient taxable income to realize the deferred tax assets carried as of December 31, 2022 for which no valuation allowance has been recognized.

No provision has been made for income tax on undistributed earnings of the Company’s foreign subsidiaries where such earnings are considered indefinitely reinvested in the foreign operations.

4 unchanged sentences

As a result, we have recorded an unrecognized tax benefit for certain tax benefits which we judge may not be sustained upon examination.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A reconciliation of our gross unrecognized tax benefits follows (in thousands):

9 unchanged sentences

The unrecognized tax benefits were included in income taxes payable, other non-current liabilities and deferred tax assets, net, in our consolidated balance sheets.

Interest related to our unrecognized tax benefits is recorded in the income tax expense (benefit) in our consolidated statements of income (loss).

As of December 31, 2021 and 2020, our accrued interest and penalties related to income taxes was $ 4.6 million and $ 11.3 million, respectively.

Interest and penalties related to income taxes benefits recognized in the consolidated statements of income (loss) were not significant.

Interest related to our unrecognized tax benefits is recorded in the income tax benefit in our consolidated statements of income (loss).

As of December 31, 2022 and 2021, our accrued interest related to income taxes was $ 5.8 million and $ 4.6 million, respectively.

Interest related to income taxes benefits recognized in the consolidated statements of income (loss) were not significant.

Included in the balance of unrecognized tax benefits were potential benefits of $ 91.7 million and $ 82.0 million at December 31, 2022 and 2021, respectively, that, if recognized, would affect the effective tax rate on income.

6 unchanged sentences

(at the federal level and in most states), carryforwards that were generated in 2018 and earlier may still be adjusted upon examination by the taxing authorities.

During 2021, certain of our subsidiaries were under examination by the French taxing authorities for the years ended December 31, 2012, 2013, 2015, 2016 and 2017.

Due to the subjective nature of the transfer pricing issues involved, the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Company reached an agreement with the French taxing authorities to settle the examinations for all open years.

The Company paid incremental taxes, interest and penalties of $ 19.7 million, during 2021 to close all periods under examination.

Certain of our Italian subsidiaries are currently under examination by the Italian taxing authorities for the year ended December 31, 2017.

Certain of our Luxembourg subsidiaries are currently under examination by the Luxembourg taxing authorities for the years ended December 31, 2017, 2018 and 2019.

Certain of our German subsidiaries are currently under examination by the German taxing authorities for the years ended December 31, 2017, 2018 and 2019.

In October 2022, we received tax assessment notices from the Luxembourg taxing authorities for 2017 and 2018 relating to certain transfer pricing and other adjustments.

The notices propose additional Luxembourg income tax of approximately $ 18.8 million, translated at the foreign exchange rate as December 31, 2022.

We disagree with the proposed assessments and are contesting them vigorously.

Valuation and Qualifying Accounts

(In thousands)

of period Additions

expenses Other Additions Deductions Balance at

of period Additions charged to costs and expenses Other Additions Deductions Balance at

For the year ended December 31, 2022

18 unchanged sentences

(federal and state) and other foreign deferred tax assets where we continue to maintain a valuation allowance until sufficient positive evidence exists to support reversal.

(3) Other additions to the deferred tax asset valuation allowance relate to currency translation adjustments recorded directly in other comprehensive income and, in 2019, additions resulting from the Cavion asset acquisition.

(4) Deductions from the deferred tax asset valuation allowance include movements relating to utilization of NOLs and tax credit carryforwards, release in valuation allowance and other movements including adjustments following finalization of tax returns.

(3) Other additions to the deferred tax asset valuation allowance in 2020 and 2021 relate to currency translation adjustments recorded directly in other comprehensive income.

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-K

Item 9A. Controls and Procedures