What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-09 compared with 2023-05-10 · 204 added, 100 removed, 671 unchanged (31% of the section changed)

6 unchanged sentences

Cash and cash equivalents $ 1,282,304 $ 881,482

Investments 80,000 —

Accounts receivable, net of allowances 610,389 651,493

38 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Product sales, net $ 946,987 $ 928,300 $ 1,831,206 $ 1,738,137

11 unchanged sentences

Foreign exchange gain (loss) ( 2,382 ) ( 1,343 ) 811 ( 11,883 )

Income before income tax expense (benefit) and equity in loss of investees 55,101 6,325

Income tax expense (benefit) ( 15,324 ) 536

Income before income tax benefit and equity in loss of investees 81,784 21,014 136,885 27,339

Income tax benefit ( 24,323 ) ( 16,112 ) ( 39,647 ) ( 15,576 )

Equity in loss of investees 1,669 2,461 2,674 6,603

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net income $ 104,438 $ 34,665 $ 173,858 $ 36,312

2 unchanged sentences

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

Unrealized gain on cash flow hedging activities, net of income tax expense of $ 1,887 , $ — , $ 1,887 and $ — , respectively

5,679 — 5,679 —

Gain on cash flow hedging activities reclassified from accumulated other comprehensive income (loss) to interest expense, net of income tax expense of $ 256 , $ — , $ 256 and $ — , respectively

( 771 ) — ( 771 ) —

Other comprehensive income (loss) 113,407 ( 515,309 ) 258,686 ( 705,669 )

19 unchanged sentences

Balance at March 31, 2023 63,987 $ 6 4,000 $ 55 $ 472 $ 3,511,732 $ ( 980,230 ) $ 803,006 $ 3,335,041

Issuance of ordinary shares in conjunction with exercise of share options 28 — — — — 2,003 — — 2,003

Issuance of ordinary shares under employee stock purchase plan 81 — — — — 8,863 — — 8,863

Issuance of ordinary shares in conjunction with vesting of restricted stock units 58 — — — — — — — —

Shares withheld for payment of employee's withholding tax liability — — — — — ( 4,188 ) — — ( 4,188 )

Share-based compensation — — — — — 61,705 — — 61,705

Shares repurchased ( 756 ) — — — 1 — — ( 95,595 ) ( 95,594 )

Other comprehensive income — — — — — — 113,407 — 113,407

Net income — — — — — — — 104,438 104,438

Balance at June 30, 2023 63,398 $ 6 4,000 $ 55 $ 473 $ 3,580,115 $ ( 866,823 ) $ 811,849 $ 3,525,675

JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

Ordinary Shares Non-voting Euro Deferred Capital

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Balance at March 31, 2022 62,244 $ 6 4,000 $ 55 $ 472 $ 3,239,327 $ ( 590,720 ) $ 959,347 $ 3,608,487

Issuance of ordinary shares in conjunction with exercise of share options 194 — — — — 16,640 — — 16,640

Issuance of ordinary shares under employee stock purchase plan 81 — — — — 8,234 — — 8,234

Issuance of ordinary shares in conjunction with vesting of restricted stock units 104 — — — — — — — —

Shares withheld for payment of employee's withholding tax liability — — — — — ( 6,289 ) — — ( 6,289 )

Share-based compensation — — — — — 54,407 — — 54,407

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

Other comprehensive loss — — — — — — ( 515,309 ) — ( 515,309 )

Net income — — — — — — — 34,665 34,665

Balance at June 30, 2022 62,623 $ 6 4,000 $ 55 $ 472 $ 3,312,319 $ ( 1,106,029 ) $ 993,958 $ 3,200,781

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Operating activities

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Intangible asset amortization 301,848 320,550

Acquisition accounting inventory fair value step-up adjustment 60,458 63,943

Share-based compensation 117,785 103,757

Acquisition accounting inventory fair value step-up adjustment 88,272 132,225

Other non-cash transactions 48,156 ( 29,095 )

3 unchanged sentences

Acquired in-process research and development 1,000 69,148

Loss on disposal of a business — 40,814

Deferred tax benefit ( 145,395 ) ( 82,315 )

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Purchases of property, plant and equipment ( 9,561 ) ( 24,570 )

Acquisition of investments ( 80,000 ) ( 60,736 )

Proceeds from sale of a business — 53,000

Acquisition of intangible assets — ( 25,000 )

4 unchanged sentences

Payment of employee withholding taxes related to share-based awards ( 47,454 ) ( 40,065 )

Share repurchases ( 95,595 ) ( 54 )

Net cash used in financing activities ( 126,455 ) ( 260,034 )

Effect of exchange rates on cash and cash equivalents 365 ( 5,710 )

Net increase (decrease) in cash and cash equivalents 286,429 ( 100,613 )

Net increase in cash and cash equivalents 400,822 119,817

Cash and cash equivalents, at beginning of period 881,482 591,448

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• Defitelio® (defibrotide sodium) , 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 VOD).

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 VOD).

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 in HSCT therapy.

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GAAP, can be condensed or omitted.

The information included in this Quarterly Report on Form 10‑Q should be read in conjunction with our annual consolidated financial statements and accompanying notes included in our Annual Report on Form 10‑K for the year ended December 31, 2022.

In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of our financial position and operating results.

The results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, for any other interim period or for any future period.

The information included in this Quarterly Report on Form 10‑Q should be read in conjunction with our annual audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10‑K for the year ended December 31, 2022.

In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of our financial position and operating results.

The results for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, for any other interim period or for any future period.

Our significant accounting policies have not changed substantially from those previously described in our Annual Report on Form 10‑K for the year ended December 31, 2022, other than as described below.

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Significant Risks and Uncertainties

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, or AG, version of Xyrem and in the future from additional AG versions of high-sodium oxybate and generic versions of high-sodium oxybate and new products, such as Avadel’s recently approved Lumryz, for treatment of cataplexy and/or EDS in narcolepsy in the U.S.

market and from other competitors;

Historically, our business has been substantially dependent on Xyrem and while we expect that our business will continue to meaningfully depend on oxybate revenues from both Xywav and Xyrem, there is no guarantee that we can maintain oxybate revenues at or near historical levels, or that oxybate revenues will grow.

In this regard, 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 IH in adults and adoption in that indication;

competition from the recent introduction of two authorized generic, or AG, versions of high-sodium oxybate and new products, such as Avadel’s recently approved Lumryz, for treatment of cataplexy and/or EDS in narcolepsy in the U.S.

market, as well as potential future competition from additional AG versions of high-sodium oxybate and from generic versions of high-sodium oxybate and from other competitors;

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 and Xyrem;

increased rebates required to maintain access to our products;

challenges to our intellectual property around Xywav and/or Xyrem, including

from 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 .

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.

A significant decline in oxybate revenues 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:

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

In addition, the success of the acquisition of GW, or the GW Acquisition, will depend, in part, on our ability to realize the anticipated benefits from the combination of 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.

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

As of March 31, 2023, we had foreign exchange forward contracts with notional amounts totaling $ 183.2 million.

As of March 31, 2023, the outstanding foreign exchange forward contracts had a net asset fair value of $ 4.3 million.

As of June 30, 2023, we had foreign exchange forward contracts with notional amounts totaling $ 365.3 million.

As of June 30, 2023, the outstanding foreign exchange forward contracts had a net asset fair value of $ 0.5 million.

As of June 30, 2023, we had interest rate swap contracts with notional amounts totaling $ 500 million.

These outstanding interest rate swap contracts had an asset fair value of $ 6.6 million as of June 30, 2023.

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

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We monitor economic conditions in certain European countries which may result in variability of the timing of cash receipts and an increase in the average length of time that it takes to collect accounts receivable outstanding.

Historically, we have not experienced significant credit losses on our accounts receivable and as of March 31, 2023 and December 31, 2022, allowances on receivables were not material.

As of March 31, 2023, three customers accounted for 73 % of gross accounts receivable, Express Scripts Specialty Distribution Services, Inc.

and its affiliates, or ESSDS, which accounted for 51 % 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.

As of December 31, 2022, three customers accounted for 74 % of gross accounts receivable, ESSDS, which accounted for 55 % of gross accounts receivable, Cardinal, which accounted for 10 % of gross accounts receivable and McKesson, which accounted for 9 % of gross accounts receivable.

Historically, we have not experienced significant credit losses on our accounts receivable and as of June 30, 2023 and December 31, 2022, allowances on receivables were not material.

As of June 30, 2023, five customers accounted for 81 % of gross accounts receivable, including Express Scripts Specialty Distribution Services, Inc.

and its affiliates, or ESSDS, which accounted for 49 % of gross accounts receivable, Cardinal Health, Inc., or Cardinal, which accounted for 11 % of gross accounts receivable and ASD Specialty Healthcare LLC, which accounted for 9 % of gross accounts receivable.

As of December 31, 2022, five customers accounted for 87 % of gross accounts receivable, including ESSDS, which accounted for 55 % of gross accounts receivable, Cardinal, which accounted for 10 % of gross accounts receivable and McKesson Corporation and affiliates, which accounted for 9 % of gross accounts receivable.

We depend on single source suppliers for most of our products, product candidates and their active pharmaceutical ingredients, or APIs.

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Cash and Available-for-Sale Securities

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

March 31, 2023

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

June 30, 2023

Losses Estimated

Fair Value Cash and

Equivalents Investments

Cash $ 331,370 $ — $ — $ 331,370 $ 331,370 $ —

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Totals $ 881,482 $ — $ — $ 881,482 $ 881,482

Cash equivalents are considered available-for-sale securities.

Cash equivalents and investments 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 condensed consolidated statements of income.

Interest income from available-for-sale securities was $ 10.6 million and $ 0.2 million in the three months ended March 31, 2023 and 2022, respectively.

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 $ 14.7 million and $ 25.3 million in the three and six months ended June 30, 2023, respectively, and $ 0.7 million and $ 0.9 million in the three and six months ended June 30, 2022, respectively.

Fair Value Measurement

The following table summarizes, by major security type, our available-for-sale securities and derivative contracts as of March 31, 2023 and December 31, 2022 that were measured at fair value on a recurring basis and were categorized using the fair value hierarchy (in thousands):

March 31, 2023 December 31, 2022

The following table summarizes, by major security type, our available-for-sale securities and derivative contracts as of June 30, 2023 and December 31, 2022 that were measured at fair value on a recurring basis and were categorized using the fair value hierarchy (in thousands):

June 30, 2023 December 31, 2022

(Level 1) Significant

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Time deposits — 380,000 380,000 — 30,000 30,000

Interest rate contracts — 6,555 6,555 — — —

Foreign exchange forward contracts — 2,137 2,137 — 17,356 17,356

2 unchanged sentences

Totals $ — $ 1,654 $ 1,654 $ — $ — $ —

As of March 31, 2023, 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.

As of June 30, 2023, 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.

Our derivative assets and liabilities include foreign exchange derivatives that are measured at fair value using observable market inputs such as forward rates and based on these inputs, the derivative assets and liabilities are classified within Level 2 of the fair value hierarchy.

Our derivative assets and liabilities include 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.

There were no transfers between the different levels of the fair value hierarchy in 2023 or 2022.

As of March 31, 2023 and December 31, 2022, the carrying amount of investments measured using the measurement alternative for equity investments without a readily determinable fair value was $ 5.5 million.

As of June 30, 2023 and December 31, 2022, the carrying amount of investments measured using the measurement alternative for equity investments without a readily determinable fair value was $ 5.5 million.

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

As of March 31, 2023, the estimated fair values of the 1.50 % exchangeable senior notes due 2024, or 2024 Notes, the 2.00 % exchangeable senior notes due 2026, or 2026 Notes, which we refer to collectively as the Exchangeable Senior Notes, the 4.375 % senior secured notes, due 2029, or the Secured Notes, and the seven-year $ 3.1 billion term loan B facility, or the Dollar Term Loan, were approximately $ 556 million, $ 1.1 billion, $ 1.4 billion and $ 2.7 billion respectively.

As of June 30, 2023, the estimated fair values of the 1.50 % exchangeable senior notes due 2024, or 2024 Notes, the 2.00 % exchangeable senior notes due 2026, or 2026 Notes, which we refer to collectively as the Exchangeable Senior Notes, the 4.375 % senior secured notes, due 2029, or the Secured Notes, and the seven-year $ 3.1 billion term loan B facility were approximately $ 549 million, $ 1.0 billion, $ 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).

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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.

dollar functional currency and fluctuations in interest rates on our outstanding term loan borrowings.

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

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Hedge accounting is not applied to these derivative instruments as gains and losses on these hedge transactions are designed to offset gains and losses on underlying balance sheet exposures.

As of March 31, 2023 and December 31, 2022, the notional amount of foreign exchange contracts where hedge accounting is not applied was $ 183.2 million and $ 505.0 million, respectively.

The foreign exchange gain (losses) in our condensed consolidated statements of income included the following gains (losses) associated with foreign exchange contracts not designated as hedging instruments (in thousands):

As of June 30, 2023 and December 31, 2022, the notional amount of foreign exchange contracts where hedge accounting is not applied was $ 365.3 million and $ 505.0 million, respectively.

The foreign exchange gain (loss) in our condensed consolidated statements of income included the following gains (losses) associated with foreign exchange contracts not designated as hedging instruments (in thousands):

Three Months Ended

June 30, Six Months Ended

Foreign Exchange Forward Contracts:

2023 2022 2023 2022

Gain (loss) recognized in foreign exchange gain (loss) $ 353 $ ( 34,180 ) $ 4,628 $ ( 55,205 )

In order to hedge our exposure to foreign currency exchange risk associated with our seven-year € 625.0 million term loan B facility, or the 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.

To achieve a desired mix of floating and fixed interest rates on our variable rate debt, we entered into interest rate swap agreements in April 2023 which are effective until April 2026.

These agreements hedge contractual term loan interest rates.

As of June 30, 2023 , the interest rate swap agreements had a notional amount of $ 500.0 million.

As a result of these agreements, the interest rate on a portion of our term loan borrowings was fixed at 3.9086 %, plus the borrowing spread, until April 30, 2026.

The impact on accumulated other comprehensive income (loss) and earnings from derivative instruments that qualified as cash flow hedges for the three and six months ended June 30, 2023 was as follows (in thousands):

Interest Rate Contracts:

Three and Six Months Ended

June 30, 2023

Gain recognized in accumulated other comprehensive income (loss), net of tax $ 5,679

Gain reclassified from accumulated other comprehensive income (loss) to interest expense, net of tax ( 771 )

Assuming no change in USD Secured Overnight Financing Rate based interest rates from market rates as of June 30, 2023 , $ 4.9 million of gains, net of tax, recognized in accumulated other comprehensive income (loss) will be reclassified to earnings over the next 12 months.

In order to hedge our exposure to foreign currency exchange risk associated with our seven-year € 625.0 million term loan B facility, or the Euro Term Loan, we entered into a cross-currency interest rate swap contract in May 2021, which matured in March 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.

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Cross-Currency Interest Rate Contract:

Three Months Ended

March 31, 2022

Six Months Ended

June 30, 2022

Loss reclassified from accumulated other comprehensive income (loss) to foreign exchange loss, net of tax $ 128

Loss recognized in foreign exchange loss 2,646

The cash flow effects of our derivative contracts for the three months ended March 31, 2023 and 2022 are included within net cash provided by operating activities in the condensed 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 financing activities.

The cash flow effects of our derivative contracts for the six months ended June 30, 2023 and 2022 are included within net cash provided by operating activities in the condensed 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 financing activities.

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

Classification March 31,

Classification June 30,

2023 December 31,

Derivatives designated as hedging instruments:

Interest rate contracts Other current assets $ 6,510 $ —

Other non-current assets 45 —

Derivatives not designated as hedging instruments:

Foreign exchange forward contracts Other current assets 2,137 17,356

Total fair value of derivative asset instruments $ 8,692 $ 17,356

Derivatives not designated as hedging instruments:

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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 condensed consolidated balance sheets of offsetting our foreign exchange forward contracts subject to such provisions as of March 31, 2023 (in thousands):

March 31, 2023

The following table summarizes the potential effect on our condensed consolidated balance sheets of offsetting our interest rate and foreign exchange forward contracts subject to such provisions as of June 30, 2023 (in thousands):

June 30, 2023

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

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Total inventories $ 657,214 $ 714,061

As of March 31, 2023 and December 31, 2022 inventories included $ 409.1 million and $ 457.6 million, respectively, related to the purchase accounting inventory fair value step-up on inventory acquired in the GW Acquisition.

As of June 30, 2023 and December 31, 2022 inventories included $ 390.3 million and $ 457.6 million, respectively, related to the purchase accounting inventory fair value step-up on inventory acquired in the GW Acquisition.

Goodwill and Intangible Assets

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Foreign exchange 50,013

Balance at March 31, 2023 $ 1,723,444

Balance at June 30, 2023 $ 1,742,675

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Average Useful

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Total finite-lived intangible assets $ 7,767,864 $ ( 2,062,087 ) $ 5,705,777 $ 7,506,287 $ ( 1,711,850 ) $ 5,794,437

The increase in the gross carrying amount of intangible assets as of March 31, 2023 compared to December 31, 2022 primarily reflects the positive impact of foreign currency translation adjustments due to the strengthening of sterling and euro against the U.S.

The increase in the gross carrying amount of intangible assets as of June 30, 2023 compared to December 31, 2022 reflects the positive impact of foreign currency translation adjustments due to the strengthening 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.

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.

Based on finite-lived intangible assets recorded as of March 31, 2023, and assuming the underlying assets will not be impaired and that we will not change the expected lives of the assets, future amortization expenses were estimated as follows (in thousands):

Based on finite-lived intangible assets recorded as of June 30, 2023, and assuming the underlying assets will not be impaired and that we will not change the expected lives of the assets, future amortization expenses were estimated as follows (in thousands):

Year Ending December 31, Estimated Amortization Expense

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Manufacturing equipment and machinery $ 77,484 $ 73,580

Land and buildings 69,513 68,935

Construction-in-progress 73,783 67,385

Land and buildings 69,912 68,935

Leasehold improvements 66,989 64,776

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Employee compensation and benefits 80,559 143,243

Accrued collaboration expenses 39,806 33,205

Accrued facilities expenses 54,612 25,864

Sales return reserve 28,868 26,164

Consulting and professional services 23,406 22,278

Clinical trial accruals 22,182 31,338

Accrued collaboration expenses 41,407 33,205

Accrued interest 35,069 35,614

Clinical trial accruals 25,754 31,338

Accrued royalties 23,693 57,347

Sales return reserve 21,613 26,164

Consulting and professional services 21,425 22,278

Current portion of lease liabilities 16,982 15,938

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

During the three months ended March 31, 2023 and 2022, we recognized interest expense of $ 5.5 million, of which $ 5.0 million related to the contractual coupon rate and $ 0.5 million related to the amortization of debt issuance costs.

During the three months ended June 30, 2023 and 2022, we recognized interest expense of $ 5.6 million, of which $ 5.0 million related to the contractual coupon rate and $ 0.6 million related to the amortization of debt issuance costs, respectively.

During the six months ended June 30, 2023 and 2022, we recognized interest expense of $ 11.1 million, of which $ 10.0 million related to the contractual coupon rate and $ 1.1 million related to the amortization of debt issuance costs, respectively.

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

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

During the three months ended March 31, 2023 and 2022, we recognized interest expense of $ 2.5 million, of which $ 2.1 million related to the contractual coupon rate and $ 0.4 million related to the amortization of debt issuance costs.

Scheduled maturities with respect to our long-term debt principal balances outstanding as of March 31, 2023 were as follows (in thousands):

During the three months ended June 30, 2023 and 2022, we recognized interest expense of $ 2.5 million, of which $ 2.1 million related to the contractual coupon rate and $ 0.4 million related to the amortization of debt issuance costs, respectively.

During the six months ended June 30, 2023 and 2022, we recognized interest expense of $ 5.0 million, of which $ 4.2 million related to the contractual coupon rate and $ 0.8 million related to the amortization of debt issuance costs, respectively.

Scheduled maturities with respect to our long-term debt principal balances outstanding as of June 30, 2023 were as follows (in thousands):

Year Ending December 31, Scheduled Long-Term Debt Maturities

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Assuming the applicability of coverage, the willingness of the insurer to assume coverage, and subject to certain retention, loss limits and other policy provisions, we believe the fair value of these indemnification obligations is not significant.

Accordingly, we did not recognize any liabilities relating to these obligations as of March 31, 2023 and December 31, 2022.

Accordingly, we did not recognize any liabilities relating to these obligations as of June 30, 2023 and December 31, 2022.

No assurances can be given that the covering insurers will not attempt to dispute the validity, applicability, or amount of coverage without expensive litigation against these insurers, in which case we may incur substantial liabilities as a result of these indemnification obligations.

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On March 24, 2021, the U.S.

Judicial Panel on

Multidistrict Litigation conditionally transferred the UHS Lawsuit to the United States District Court for the Northern District of California, where it was consolidated for discovery and pre-trial proceedings with the other cases.

Judicial Panel on Multidistrict Litigation conditionally transferred the UHS Lawsuit to the United States District Court for the Northern District of California, where it was consolidated for discovery and pre-trial proceedings with the other cases.

On August 13, 2021, the United States District Court for the Northern District of California granted in part and denied in part the Company Defendants' motion to dismiss the complaints in the cases referenced above.

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On March 22, 2023, we filed motions to dismiss and to strike portions of the amended complaint.

The court has not yet issued a final ruling on these motions.

On April 19, 2023, the Court held a hearing on class certification in the consolidated multi-district litigation referenced above, but has not issued a ruling.

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

On June 26, 2023, the Court granted our motions, and granted Aetna leave to further amend its complaint.

On April 19, 2023, the Court held a hearing on class certification in the consolidated multi-district litigation referenced above.

On May 12, 2023, the Court granted the plaintiffs’ motion and preliminarily certified classes of Xyrem purchasers seeking monetary and injunctive relief.

The Court excluded Xywav purchasers from the classes.

The Court has not yet set a trial date in this matter.

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.

On April 19, 2023, the court held a hearing on a motion for preliminary approval of this proposed settlement, but has not issued a ruling.

On April 19, 2023, the Court held a hearing on a motion for preliminary approval of this proposed settlement.

On May 12, 2023, the Court granted the motion for preliminary approval of the proposed settlement.

The plaintiffs in certain of these lawsuits are seeking to represent a class of direct purchasers of Xyrem, and the plaintiffs in the remaining lawsuits are seeking to represent a class of indirect purchasers of Xyrem.

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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 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.

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.

The plaintiffs in the Transaction Litigation sought various remedies, including injunctive relief to prevent the consummation of the GW Acquisition unless certain allegedly material information was disclosed, or in the alternative, rescission or damages.

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On March 20, 2023, the plaintiffs in the Ziegler Lawsuit filed a motion for preliminary approval of the settlement.

The court has not yet issued a decision.

On July 28, 2023, the Court granted the motion for preliminary approval, which conditionally certified a class for settlement purposes.

A hearing on whether final approval should be granted is scheduled for December 11, 2023.

Patent Infringement Litigation

Avadel Patent Litigation

Avadel Litigation

On May 13, 2021, we filed a patent infringement suit against Avadel Pharmaceuticals plc, or Avadel, and several of its corporate affiliates in the United States District Court for the District of Delaware.

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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 July 8, 2022, we filed a motion for judgment on the pleadings.

On February 2, 2023, the Court held a hearing on our motion.

The Court has not yet ruled on the motion.

On July 8, 2022, we filed a motion for judgment on the pleadings, which the Court denied on July 18, 2023.

The denial is not a ruling that Jazz misappropriated Avadel‘s trade secrets or breached any contract.

The case will go forward in discovery and the Court instructed the parties to submit a proposed scheduling order.

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.

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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 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.

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The Court has not yet ruled on the motion.

As noted above, on March 3, 2023, we and Avadel stipulated to the dismissal without prejudice of the claims and counterclaims related to infringement and validity of the delisted patent.

As noted above, on March 3, 2023,

we and Avadel stipulated to the dismissal without prejudice of the claims and counterclaims related to infringement and validity of the delisted patent.

The Court scheduled a trial regarding our patent infringement claims against Avadel for February 26, 2024.

No trial date has been set for Avadel’s trade secret misappropriation claims or Avadel’s counterclaims related to unlawful monopolization.

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.

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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

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.

No trial date has been set in the consolidated case against Lupin.

In February 2023, we received notice from Teva Pharmaceuticals, Inc., or Teva, that it had filed with FDA an ANDA for a generic version of Xywav.

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As a result of this lawsuit, we expect that a stay of approval of up to 30 months will be imposed by FDA on Teva’s ANDA.

Otsuka Patent Litigation

In October 2021, Otsuka Pharmaceutical Co., Ltd., or Otsuka, filed claims against GW Pharma Limited and GW Pharmaceuticals Limited, or collectively, the GW Parties, in the English High Court, Patents Court.

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, 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.

On May 23, 2023, Teva 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.

No trial date has been set in the case against Teva.

Alkem Patent Litigation

In April 2023, we received notice from Alkem Laboratories Ltd., or Alkem, that it has filed with FDA an ANDA, for a generic version of Xyrem.

The notice from Alkem included a paragraph IV certification with respect to six of our patents listed in FDA’s Orange Book for Xyrem on the date of our receipt of the notice.

The asserted patents relate generally to methods of treatment when Xyrem is administered concomitantly with certain other medications.

In June 2023, we filed a patent infringement suit against Alkem in the United States District Court for the District of New Jersey.

The complaint alleges that by filing its ANDA, Alkem has infringed six of our Orange Book listed patents.

We are seeking a permanent injunction to prevent Alkem from introducing a generic version of Xyrem that would infringe our 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 Alkem’s ANDA.

Epidiolex Patent Litigation

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The answers include defenses and counterclaims asserting that the Epidiolex ANDA Filers’ products, if launched would not infringe our patents, that our patents are invalid, and in one instance, counterclaims related to allegations of inequitable conduct and improper listing of patents in the Orange Book.

The Court in the Epidiolex Patent Litigation set an initial scheduling conference for June 5, 2023.

No other case schedule has been set.

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.

On May 25, 2023, we filed a motion to dismiss certain of the counterclaims, which remains pending.

The Court in the Epidiolex Patent Litigation scheduled trial for September 2025.

In June and July 2023, we received notice from certain of the Epidiolex ANDA Filers that they had each filed a paragraph IV certification regarding a newly-issued patent listed in the Orange Book for Epidiolex.

On July 21, 2023, we filed an additional lawsuit against all of the Epidiolex ANDA Filers in the United States District Court for the District of New Jersey alleging that, by filing its ANDA, each Epidiolex ANDA Filer infringed the newly-issued patent related to a method of treatment using Epidiolex.

The suit seeks an order that the effective date of FDA approval of each Epidiolex ANDA Filer’s application shall be a date no earlier than the expiration of the newly-issued patent.

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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MSP seeks monetary damages, restitution, disgorgement, and a declaration that the conduct alleged is unlawful.

On July 25, 2023, we and certain other defendants filed motions to dismiss MSP's complaint.

No trial date has been set for this matter.

FDA Litigation

On June 22, 2023, we filed a complaint in the United States District Court for the District of Columbia seeking a declaration that FDA’s approval on May 1, 2023 of the New Drug Application, or NDA, for Avadel's Lumryz was unlawful.

In the complaint, we allege that FDA acted outside its authority under the Orphan Drug Act, when, despite the orphan drug exclusivity, or ODE, protecting Jazz’s low-sodium oxybate product Xywav, FDA approved the Lumryz NDA and granted Lumryz ODE based on FDA’s finding that Lumryz makes a major contribution to patient care and is therefore clinically superior to Xywav and Xyrem.

Jazz further alleges that in doing so, FDA failed to follow its own regulations, failed to follow established agency policy without providing a reasoned explanation for the departure, reversed prior decisions by its own staff and experts without a reasoned explanation, and disregarded the relevant scientific literature and data.

The complaint, filed pursuant to the Administrative Procedure Act, seeks to have the Court vacate and set aside FDA’s approval of the Lumryz NDA and seeks a declaration that FDA’s approval of the Lumryz NDA was arbitrary, capricious, an abuse of discretion and otherwise not in accordance with law;

and that approval of the Lumryz NDA was in excess of FDA’s statutory authority and was made without observance of procedure required by law.

From time to time we are involved in legal proceedings arising in the ordinary course of business.

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Shareholders’ Equity

Share Repurchase Program

In November 2016, our board of directors authorized a share repurchase program and as of June 30, 2023 had authorized the repurchase of ordinary shares having an aggregate purchase price of up to $ 1.5 billion, exclusive of any brokerage commissions.

Under this program, which has no expiration date, we may repurchase ordinary shares from time to time on the open market.

The timing and amount of repurchases will depend on a variety of factors, including the price of our ordinary shares, alternative investment opportunities, restrictions under the May 2021 credit agreement, corporate and regulatory requirements and market conditions.

The share repurchase program may be modified, suspended or discontinued at any time without prior notice.

During the three and six months ended June 30, 2023, we spent a total of $ 95.6 million to purchase 0.8 million of our ordinary shares under the share repurchase program at an average total purchase price, including commissions, of $ 126.37 per share.

All ordinary shares repurchased were canceled.

As of June 30, 2023, the remaining amount authorized under the share repurchase program was $ 335.6 million.

Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss as of March 31, 2023 and December 31, 2022 were as follows (in thousands):

The components of accumulated other comprehensive loss as of June 30, 2023 and December 31, 2022 were as follows (in thousands):

Net Unrealized

Hedging Activities Foreign

Adjustments Total

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Other comprehensive income before reclassifications 5,679 253,778 259,457

Balance at March 31, 2023 $ ( 980,230 ) $ ( 980,230 )

During the three months ended March 31, 2023, other comprehensive income reflects foreign currency translation adjustments, primarily due to the strengthening of the sterling and the euro against the U.S.

Amounts reclassified from accumulated other comprehensive income (loss) ( 771 ) — ( 771 )

Other comprehensive income, net 4,908 253,778 258,686

Balance at June 30, 2023 $ 4,908 $ ( 871,731 ) $ ( 866,823 )

During the six months ended June 30, 2023, other comprehensive income primarily reflects foreign currency translation adjustments, primarily due to the strengthening of the sterling and the euro against the U.S.

Net Income per Ordinary Share

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net income $ 104,438 $ 34,665 $ 173,858 $ 36,312

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Potentially dilutive ordinary shares from the Exchangeable Senior Notes are determined by applying the if-converted method to the assumed issuance of ordinary shares upon exchange of the Exchangeable Senior Notes.

The potential issue of ordinary shares upon exchange of the Exchangeable Senior Notes was anti-dilutive and had no impact on diluted net income per ordinary share for the three months ended March 31, 2022.

The potential issue of ordinary shares upon exchange of the Exchangeable Senior Notes was anti-dilutive and had no impact on diluted net income per ordinary share for the three and six months ended June 30, 2022.

The following table represents the weighted-average ordinary shares that were excluded from the calculation of diluted net income per ordinary share for the periods presented because including them would have an anti-dilutive effect (in thousands):

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Employee equity incentive and purchase plans 5,700 2,041 3,386 2,275

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Xywav $ 326,564 $ 235,025 $ 604,325 $ 421,105

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Sativex 2,806 4,142 9,904 8,884

— 12,966 — 28,844

Total Neuroscience 691,365 696,843 1,343,263 1,308,933

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

United States $ 884,706 $ 858,340 $ 1,694,822 $ 1,598,923

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

ESSDS 51 % 56 % 51 % 56 %

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Selling, general and administrative $ 40,485 $ 36,233 $ 77,887 $ 71,018

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

RSUs granted (in thousands) 66 62 1,637 1,950

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

PRSUs granted (in thousands) 5 4 257 285

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The Company evaluated the performance targets in the context of its current long-range financial plan and its product candidate development pipeline and recognized expense based on the probable number of awards that will ultimately vest.

As of March 31, 2023, compensation cost not yet recognized related to unvested RSUs, PRSUs, share options and ESPP was $ 424.8 million, $ 67.4 million, $ 6.7 million and $ 4.5 million, respectively, which is expected to be recognized over a weighted-average period of 3.0 years, 1.9 years, 1.1 years and 0.9 year, respectively.

Our income tax benefit was $ 15.3 million for the three months ended March 31, 2023, compared to an income tax expense of $ 0.5 million for the same period in 2022, 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, foreign derived intangible income, or FDII, and patent box benefits.

The increase in the income tax benefit resulted primarily from the mix of pre-tax income and losses incurred across tax jurisdictions and increases in our FDII and patent box benefits.

As of June 30, 2023, compensation cost not yet recognized related to unvested RSUs, PRSUs, ESPP and share options was $ 386.3 million, $ 59.5 million, $ 8.1 million and $ 5.0 million, respectively, which is expected to be recognized over a weighted-average period of 2.8 years, 1.6 years, 1.2 years and 0.9 years, respectively.

Our income tax benefit was $ 24.3 million and $ 39.6 million for the three and six months ended June 30, 2023, compared to an income tax benefit of $ 16.1 million and $ 15.6 million for the same periods in 2022, 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, Foreign Derived Intangible Income and patent box benefits.

Our effective tax rate was ( 29.7 )% and ( 29.0 )% for the three and six months ended June 30, 2023 compared to effective tax rates of ( 76.7 )% and ( 57.0 )% for the same periods of 2022.

The increases in the effective tax rates, resulted primarily from the impact of the disposal of Sunosi in 2022.

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

Our net deferred tax liability is primarily related to acquired intangible assets, and is net of deferred tax assets related to U.S.

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In October 2022 and in January 2023, we received tax assessment notices from the Luxembourg taxing authorities for all years under examination relating to certain transfer pricing and other adjustments.

The notices propose additional Luxembourg income tax of approximately $ 24.4 million, translated at the foreign exchange rate as March 31, 2023.

The notices propose additional Luxembourg income tax of approximately $ 24.3 million, translated at the foreign exchange rate as June 30, 2023.

We disagree with the proposed assessments and are contesting them vigorously.

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

What changed 10-Q

Item 1. Financial Statements