What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-08 compared with 2023-08-09 · 151 added, 135 removed, 408 unchanged (41% of the section changed)

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When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business.

In particular, we encourage you to review the risks and uncertainties described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, as supplemented by the risks and uncertainties described in "Risk Factors" Item 1A.

Risk Factors in Part II of this Quarterly Report on Form 10-Q.

In particular, we encourage you to review the risks and uncertainties described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 as supplemented by the risks and uncertainties disclosed in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023.

These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking statements contained in this report or implied by past results and trends.

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• Strong commercial execution to drive diversified revenue growth and address unmet medical needs of our patients across our product portfolio, which focuses on neuroscience and oncology medicines;

• Expanding and advancing our pipeline to achieve a valuable product portfolio of durable, highly differentiated programs;

• Expanding and advancing our pipeline to achieve a valuable portfolio of durable, highly differentiated products;

• Continuing to build a flexible, efficient and productive development engine for targeted therapeutic areas to identify and progress early-, mid- and late-stage assets;

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June 2021 U.S.

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

Rylaze® (crisantaspase recombinant) A component of a multi-agent chemotherapeutic regimen for the treatment of ALL and LBL, in adults and pediatric patients 1 year or older who have developed hypersensitivity to

coli-derived asparaginase.

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Product Indications Initial Approval Date Markets

Enrylaze® (recombinant crisantaspase) A component of a multi-agent chemotherapeutic regimen for the treatment of ALL and LBL in adult and pediatric patients (1 month and older) who have developed hypersensitivity or silent inactivation to E.

coli-derived asparaginase.

September 2023 EU

Zepzelca® (lurbinectedin) Treatment of adult patients with metastatic small cell lung cancer, or SCLC, with disease progression on or after platinum-based chemotherapy.

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July 2017 Canada, Brazil

Defitelio® (defibrotide) Treatment of haptic sinusoidal obstruction syndrome (hepatic VOD).

Defitelio® (defibrotide) Treatment of haptic SOS (hepatic VOD).

June 2019 Japan

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On August 12, 2021, FDA approved Xywav for the treatment of IH in adults.

Xywav is the first and only FDA-approved therapy to treat IH.

Xywav remains the first and only FDA-approved therapy to treat IH.

We initiated the U.S.

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

Exiting the second quarter of 2023, there were approximately 11,500 patients taking Xywav, including approximately 9,300 patients with narcolepsy and approximately 2,200 patients with IH.

With respect to Xywav and Xyrem in the aggregate, the average number of active Jazz oxybate patients on therapy was approximately 16,200 in the second quarter of 2023, reflecting the expected decline of Xyrem due to strong adoption of Xywav and availability of high-sodium oxybate authorized generics.

Exiting the third quarter of 2023, there were approximately 12,050 patients taking Xywav, including approximately 9,500 patients with narcolepsy and approximately 2,550 patients with IH.

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

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FDA also approved the expansion of all existing indications, LGS and DS, to patients one year of age and older.

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

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

Epidyolex is now launched in all five key European markets:

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coli -derived asparaginase.

Rylaze is the only recombinant erwinia asparaginase manufactured product that maintains a clinically meaningful level of

asparaginase activity throughout the entire duration of treatment.

Rylaze is the only recombinant erwinia asparaginase manufactured product that maintains a clinically meaningful level of asparaginase activity throughout the entire duration of treatment.

We developed Rylaze to address the needs of patients and health care providers for an innovative, high-quality erwinia asparaginase with reliable supply.

The initial approved recommended dosage of Rylaze was for an intramuscular, or IM, administration of 25 mg/m2 every 48 hours.

In November 2022, FDA approved a supplemental Biologics License Application, or sBLA, for a Monday/Wednesday/Friday, or M/W/F, IM dosing schedule.

November 2022, FDA approved a supplemental Biologics License Application, or sBLA, for a Monday/Wednesday/Friday, or M/W/F 25/25/50 mg/m 2 , IM dosing schedule.

In April 2022, we submitted a separate sBLA for intravenous, or IV, administration.

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There is no impact on the approved product labeling for Rylaze IM administration.

In July 2023, we announced the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, granted a positive opinion for JZP458 (marketed as Rylaze in the U.S.) recommending the marketing authorization to the European Commission, or EC.

We anticipate EC approval this year.

In September 2023, the EC granted marketing authorization for JZP458 under the trade name Enrylaze.

We acquired U.S.

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We have a number of licensing and collaboration agreements with third parties, including biotechnology companies, academic institutions and research-based companies and institutions, related to preclinical and clinical research and development activities in hematology and in precision oncology, as well as in neuroscience.

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

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

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

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

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

Our neuroscience R&D efforts include an ongoing Phase 3 clinical trial of Epidyolex for the treatment of LGS, DS, and TSC in Japan.

We have discontinued the Phase 3 clinical trial of Epidiolex in Epilepsy with Myoclonic-Atonic Seizures based on recruitment challenges.

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

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

JZP441, also known as DSP-0187, a potent, highly selective oral orexin-2 receptor agonist with potential application for the treatment of narcolepsy, IH and other sleep disorders.

In May 2022, we announced that we had entered into a licensing agreement with Sumitomo Pharma Co., Ltd, or Sumitomo, to acquire exclusive development and commercialization rights in the United States, Europe and other territories for JZP441, also known as DSP-0187, a potent, highly selective oral orexin-2 receptor agonist with potential application for the treatment of narcolepsy, IH and other sleep disorders.

In November 2022, the first participant was enrolled in a Phase 1 development program to assess the safety, tolerability, pharmacokinetics and pharmacodynamics of JZP441 in sleep-deprived healthy volunteers.

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In April 2022, we submitted a separate sBLA for IV administration.

In February 2023, we received a complete response letter from FDA requesting additional clinical data on the IV administration of Rylaze.

In February 2023, we received a complete

response letter from FDA requesting additional clinical data on the IV administration of Rylaze.

There is no impact on the approved product labeling for Rylaze IM administration.

In July 2023, we announced the CHMP of the EMA granted a positive opinion for JZP458 (marketed as Rylaze in the U.S.) recommending the marketing authorization to the EC.

We anticipate EC approval this year.

We are executing a robust development plan for Zepzelca.

In September 2023, the EC granted marketing authorization for JZP458 under the trade name Enrylaze.

Our development plan for Zepzelca continues to progress.

We are collaborating with Roche on a pivotal Phase 3 clinical trial evaluating Zepzelca in combination with Tecentriq in first-line extensive stage SCLC.

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Data from either the first-line trial of Zepzelca in combination with Tecentriq or the PharmaMar trial could serve to confirm clinical benefit of Zepzelca and secure full approval in the U.S.

We have elected to close the Phase 2 basket trial evaluating Zepzelca as monotherapy in select relapsed/refractory solid tumors based on limited response in three solid tumor cohorts.

We are analyzing findings from the basket trial and continuing to explore additional tumor types that may benefit from treatment with Zepzelca.

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

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On April 25, 2023, Jazz and Zymeworks entered into a Stock and Asset Purchase Agreement to, among other things, transfer to Jazz certain assets, contracts and employees associated with the development of zanidatamab.

We plan to initiate a rolling BLA submission for zanidatamab this year for accelerated approval in second-line biliary tract cancers, or BTC.

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

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Product Candidates Description

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

LGS, TSC and DS (ongoing trial in Japan)

Epidyolex LGS, TSC and DS (ongoing trial in Japan)

Suvecaltamide (JZP385)

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PTSD (ongoing trial)

JZP541 Irritability associated with autism spectrum disorder, or ASD (ongoing trial)

Additional cannabinoids ASD (ongoing trial)

JZP324 Oxybate extended-release formulation (planned trial)

JZP441* Potent, highly selective oral orexin-2 receptor agonist (ongoing trials in Japan and the U.S.)

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

Additional cannabinoids Neuropsychiatry targets (ongoing trial)

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received complete response letter from FDA requesting additional data on IV administration in February 2023

submitted MAA to EMA in May 2022

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

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

Confirmatory Study (PharmaMar study) (ongoing trial)

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

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

Vyxeos AML or high-risk Myelodysplastic Syndrome, or MDS (AML18) (cooperative group studies) (ongoing trial)

Newly diagnosed adults with standard- and high-risk AML (AML Study Group cooperative group study) (ongoing trial)

Newly diagnosed pediatric patients with AML (Children’s Oncology Group cooperative group study) (ongoing trial)

Pivotal Phase 2

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

Zanidatamab Previously treated, advanced HER2-expressing BTC (ongoing trial) (pivotal trial)

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

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

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

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

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

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

Product Candidates Description

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

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

Zanidatamab Previously treated HER2+HR+ breast cancer in combination with palbociclib (ongoing trial)

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

Product Candidates Description

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

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

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

JZP815 Raf and Ras mutant tumors (acquired from Redx Pharma plc, or Redx) (ongoing trial)

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

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

JZP341 (long-acting Erwinia asparaginase)

Solid tumors (licensed from Ligand Pharmaceuticals Incorporated, or Ligand) (ongoing trial)

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

Hematology/oncology exploratory activities

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Operational Excellence

We remain focused on continuing to build excellence in areas that we believe will give us a competitive advantage, including building an increasingly agile and adaptable commercialization engine and strengthening our customer-focused market expertise across patients, providers and payors.

We are refining our approach to engaging our customers by strengthening alignment and integration across functions and across regions.

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

We remain focused on continuing to build excellence in areas that we believe will give us a competitive advantage, including maintaining an increasingly agile and adaptable commercialization engine and strengthening our customer-focused market expertise across patients, providers and payors.

We are continuously refining our approach to engaging our customers by strengthening alignment and integration across functions and across regions.

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

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

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

While we expect that our business will continue to meaningfully depend on oxybate revenues, there is no guarantee that we can maintain oxybate revenues at or near historical levels, or that oxybate revenues will grow.

Our ability to successfully commercialize Xywav will depend on, among other things, our ability to maintain adequate payor coverage and reimbursement for Xywav and acceptance of Xywav by physicians and patients, including of Xywav for the treatment of IH in adults.

In an effort to support strong adoption of Xywav, we are focused on providing robust patient copay and savings programs and facilitating payor coverage for Xywav.

Xywav and Xyrem also face increased competition from branded products for treatment of cataplexy and/or EDS in narcolepsy, such as Avadel’s recently approved Lumryz, in the U.S.

In addition, in January 2023 our oxybate products began to face competition from an authorized generic, or AG, version of high-sodium oxybate pursuant to a settlement agreement we entered into with an abbreviated new drug application, or

ANDA, filer, and in July 2023, an additional AG version of high-sodium oxybate entered the market, which has negatively impacted the number of prescriptions written for Xyrem and could impact Xywav prescriptions.

Xywav and Xyrem face competition from a branded product for treatment of cataplexy and/or EDS in narcolepsy.

Avadel’s Lumryz was launched in the U.S.

market in June 2023.

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 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 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.

In addition, in January 2023 our oxybate products began to face competition from an AG version of high-sodium oxybate pursuant to a settlement agreement we entered into with an abbreviated new drug application, or ANDA, filer, and in July 2023, an additional AG version of high-sodium oxybate entered the market, which has negatively impacted and is expected to continue to negatively impact Xyrem sales and could impact Xywav sales.

Specifically, a wholly owned subsidiary of Hikma Pharmaceuticals PLC, or Hikma, launched its AG version of sodium oxybate in January 2023 and Amneal Pharmaceuticals LLC, or Amneal, launched its AG version of sodium oxybate in July 2023.

Hikma has elected to continue to sell the Hikma AG product, with royalties back to us, for a total of up to four years beginning in January 2024, which election may be terminated by Hikma in accordance with the notice provisions in the agreements between the parties.

We have the right to receive a meaningful royalty from Hikma on net sales of the Hikma AG product, with the royalty rate fixed for the second half of 2023.

There will also be a substantial increase in the royalty rate beginning in January 2024, which will remain fixed for the duration of the agreement's term.

We are also paid for supply of the Hikma AG product and reimbursed by Hikma for a portion of the services costs associated with the operation of the Xywav and Xyrem risk evaluation and mitigation strategy, or REMS, and distribution of the Hikma AG product.

We also granted Hikma a license to launch its own generic sodium oxybate product, but if it elects to launch its own generic product, Hikma will no longer have the right to sell the Hikma AG product.

In addition, Hikma would need to set up its own REMS, which must be open to any other company seeking to commercialize a sodium oxybate product.

In our settlements with Amneal, Lupin Inc., or Lupin, and Par Pharmaceutical, Inc., or Par, we granted each party the right to sell a limited volume of an AG product in the U.S.

beginning on July 1, 2023 and ending on December 31, 2025, with royalties back to us.

Amneal launched its AG version of sodium oxybate in July 2023.

At this time, Amneal has rights to sell a low-single-digit percentage of historical Xyrem sales over each 6-month sales period.

At this time, Lupin and Par have elected not to launch an AG product.

AG products will be distributed through the same REMS, as Xywav and Xyrem.

We also granted each of Amneal, Lupin and Par a license to launch its own generic sodium oxybate product under its ANDA on or after December 31, 2025, or earlier under certain circumstances, including the circumstance where Hikma elects to launch its own generic product.

If Amneal, Lupin or Par elects to launch its own generic product under such circumstance, it will no longer have the right to sell an AG product.

In addition, any company commercializing a generic version of high-sodium oxybate would need to establish its own REMS, or join an existing REMS operated by another company.

In the future, we expect our oxybate products to face competition from generic versions of high-sodium oxybate pursuant to settlement agreements we entered into with multiple ANDA filers.

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

Moreover, generic or AG high-sodium oxybate products or branded high-sodium oxybate entrants in narcolepsy, such as Avadel’s recently approved Lumryz, have had and may continue to have the effect of changing payor or formulary coverage of Xywav or Xyrem in favor of other products, and indirectly adversely affect sales of Xywav and Xyrem.

Moreover, generic or AG high-sodium oxybate products or branded high-sodium oxybate entrants in narcolepsy, such as Avadel’s Lumryz, have had and may continue to have the effect of changing payor or formulary coverage of Xywav or Xyrem in favor of other products, and indirectly adversely affect sales of Xywav and Xyrem.

Our financial condition, results of operations and growth prospects are also dependent on our ability to maintain or increase sales of Epidiolex/Epidyolex in the U.S.

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A key aspect of our growth strategy is our continued investment in our evolving and expanding R&D activities.

If we are not successful in the clinical development of these or other product candidates, if we are unable to obtain regulatory approval for our product candidates in a timely manner, or at all, or if sales of an approved product do not reach the levels we expect, our anticipated revenue from our product candidates would be negatively affected, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

anticipated revenue from our product candidates would be negatively affected, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

In addition to continued investment in our R&D pipeline, we intend to continue to grow our business by acquiring or in-licensing, and developing, including with collaboration partners, additional products and product candidates that we believe are highly differentiated and have significant commercial potential.

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

Department of Health and Human

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

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

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

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

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

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

Government investigations with respect to our business practices, including as they relate to the Xywav and Xyrem REMS, the launch of Xywav, our Xyrem patent litigation settlement agreements or otherwise, could cause us to incur significant monetary charges to resolve these matters and could distract us from the operation of our business and execution of our strategy.

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

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

In addition, from June 2020 to May 2022, a number of lawsuits were filed on behalf of purported direct and indirect Xyrem

purchasers, alleging that the patent litigation settlement agreements we entered with certain generic companies violate state and federal antitrust and consumer protection laws.

For additional information on these lawsuits and other legal matters, see Note 9, Commitments and Contingencies-Legal Proceedings of the Notes to Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.

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

These risks and uncertainties are discussed in greater detail, along with other risks and uncertainties, in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, as supplemented by the risks and uncertainties described in "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q.

These risks and uncertainties are discussed in greater detail, along with other risks and uncertainties, in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 as supplemented by the risks and uncertainties described in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023.

Results of Operations

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Three Months Ended

June 30, Increase/ Six Months Ended

June 30, Increase/

September 30, Increase/ Nine Months Ended

September 30, Increase/

2023 2022 (Decrease) 2023 2022 (Decrease)

Product sales, net $ 938,398 $ 935,766 — % $ 2,769,604 $ 2,673,903 4 %

Royalties and contract revenues 10,330 4,578 126 % 18,923 8,462 124 %

Royalties and contract revenues 33,742 4,886 N/A(1) 52,665 13,348 N/A(1)

Cost of product sales (excluding amortization of acquired developed technologies) 102,153 133,661 (24) % 328,334 373,153 (12) %

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Intangible asset amortization 154,883 141,232 10 % 456,731 461,782 (1) %

Acquired in-process research and development — 69,148 N/A(1) 1,000 69,148 N/A(1)

Acquired in-process research and development — — — 1,000 69,148 (99) %

Impairment charge — 133,648 N/A(1) — 133,648 N/A(1)

Interest expense, net 71,497 80,244 (11) % 219,114 214,117 2 %

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

Income tax benefit (24,323) (16,112) N/A(1) (39,647) (15,576) N/A(1)

Equity in loss of investees 1,669 2,461 (32) % 2,674 6,603 (60) %

Foreign exchange loss 1,377 4,649 (70) % 566 16,532 (97) %

Income tax benefit (47,176) (43,027) 10 % (86,823) (58,603) 48 %

Equity in loss (gain) of investees (126) 2,545 (105) % 2,548 9,148 (72) %

____________________________

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Three Months Ended

June 30, Increase/ Six Months Ended

June 30, Increase/

September 30, Increase/ Nine Months Ended

September 30, Increase/

2023 2022 (Decrease) 2023 2022 (Decrease)

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Xyrem 125,110 256,039 (51) % 463,009 772,957 (40) %

Total Oxybate 486,333 504,446 (4) % 942,224 938,023 — %

Epidiolex/Epidyolex 213,711 196,218 9 % 604,846 529,400 14 %

Sativex 4,627 3,220 44 % 14,531 12,104 20 %

Sunosi — 12,966 N/A(1) — 28,844 N/A(1)

Sunosi — — — — 28,844 N/A(1)

Total Neuroscience 675,081 711,413 (5) % 2,018,344 2,020,346 — %

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Product Sales, Net

Xywav product sales increased in the three and six months ended June 30, 2023 compared to the same periods in 2022, primarily due to increased sales volumes of 34% and 39% in the respective periods.

We continue to see strong Xywav adoption

driven by educational initiatives around the benefit of lowering sodium intake.

Xywav product sales increased in the three and nine months ended September 30, 2023 compared to the same periods in 2022, primarily due to increased sales volumes of 24% and 33% in the respective periods and, to a lesser extent, a higher selling price.

We continue to see strong Xywav adoption driven by educational initiatives around the benefit of lowering sodium intake.

In addition, Xywav product sales were positively impacted by Xywav for IH as we see continued growth of new prescribers.

Xyrem product sales decreased in the three and six months ended June 30, 2023 compared to the same periods in 2022, primarily due to decreases in sales volumes of 48% and 40% in the respective periods, reflecting the continued adoption of Xywav by existing Xyrem patients and the launch of a high-sodium oxybate AG in January 2023, partially offset by a higher average selling price.

Price increases were instituted in January 2022 and January 2023.

Total oxybate product sales decreased by $18.1 million and increased by $4.2 million in the three and six months ended June 30, 2023, respectively, compared to the same periods in 2022.

Average active oxybate patients on therapy were approximately 16,200 in the second quarter of 2023, a decrease of approxima tely 5% compared to the same period in 2022.

Epidiolex/Epidyolex product sales increased by $26.9 million and $58.0 million in the three and six months ended June 30, 2023 compared to the same periods in 2022, respectively, primarily due to increased sales volumes of 13% and 18% in the respective periods.

Rylaze product sales increased in the three and six months ended June 30, 2023 compared to the same periods in 2022, primarily due to higher sales volumes and, to a lesser extent, a higher average selling price.

Price increases were instituted in July 2022 and January 2023.

Exiting the quarter there were 9,500 narcolepsy patients taking Xywav for narcolepsy and 2,550 taking Xywav for IH, an increase of approximately 18% and 76%, respectively, compared to the same period in 2022.

Xyrem product sales decreased in the three and nine months ended September 30, 2023 compared to the same periods in 2022, primarily due to decreased sales volumes of 57% and 45% in the respective periods, reflecting the strong adoption of Xywav by existing Xyrem patients and the availability of high-sodium oxybate competition, partially offset by a higher selling price.

Epidiolex/Epidyolex product sales increased in the three and nine months ended September 30, 2023 compared to the same periods in 2022, respectively, primarily due to increased sales volumes of 10% and 15% in the respective periods due to increased demand and expansion in European markets.

Rylaze product sales increased in the three and nine months ended September 30, 2023 compared to the same periods in 2022, primarily due to increased sales volumes of 43% and 42% in the respective periods and, to a lesser extent, a higher selling price, offset by higher gross to net deductions.

The increased volumes reflect the significant unmet patient need for a high-quality, reliable supply of Erwinia asparaginase for patients with ALL.

Zepzelca product sales increased in the three months ended June 30, 2023 compared to the same period in 2022, due to a higher average selling price, partially offset by lower sales volumes and higher gross to net deductions.

Zepzelca product sales in creased in the six months ended June 30, 2023 compared to the same period in 2022, due to a higher average selling price and increased sales volumes, partially offset by higher gross to net deductions.

P rice increases were instituted in January 2022, July 2022 and January 2023.

Defitelio/defibrotide product sales decreased in the three months ended June 30, 2023 compared to the same period in 2022, primarily due to a decrease in sales volumes.

Defitelio/defibrotide product sales decreased in the six months ended June 30, 2023 compared to the same period in 2022, primarily due to a decrease in sales volumes, partially offset by a higher average selling price.

Price increases were instituted in January 2022, July 2022 and January 2023.

Vyxeos product sales increased in the three months ended June 30, 2023 compared to the same period in 2022, primarily due a higher average selling price and higher sales volumes, partially offset by higher gross to net deductions.

Vyxeos product sales increased in the six months ended June 30, 2023 compared to the same period in 2022, primarily due to higher sales volumes and a higher average selling price, partially offset by higher gross to net deductions.

P rice increases were instituted in January 2022, July 2022 and January 2023.

We expect total product sales will increase in 2023 over 2022, primarily due to an increase in product sales of Xywav due to continuing growth in IH and as patients continue to transition to Xywav from Xyrem, expected growth in Epidiolex and our oncology products, primarily Rylaze, Vyxeos and Zepzelca, offset by the continued decline in Xyrem due to strong Xywav adoption and availability of high-sodium oxybate AGs and branded fixed-dose, high-sodium oxybate.

Zepzelca product sales increased in the three and nine months ended September 30, 2023 compared to the same periods in 2022, primarily due to increased sales volumes and a higher selling price, offset by higher gross to net deductions.

Defitelio/defibrotide product sales decreased in the three and nine months ended September 30, 2023 compared to the same periods in 2022, primarily due to a decrease in sales volumes, partially offset by a higher average selling price.

Vyxeos product sales in the three months ended September 30, 2023 were in line with the same period in 2022, as higher gross to net deductions and to a lesser extent, a decrease in sales volumes, were offset by a higher average selling price and the positive impact of foreign exchange rates.

Vyxeos product sales increased in the nine months ended September 30, 2023 compared to the same period in 2022, primarily due to a higher average selling price and an increase in sales volumes, partially offset by higher gross to net deductions.

We expect total product sales will increase in 2023 over 2022.

The increase is primarily due to higher product sales of Xywav due to continuing growth of new prescribers in IH, transition of narcolepsy patients to Xywav from Xyrem and adoption

of Xywav by oxybate-naïve patients, growth in Epidiolex and our oncology products, primarily Rylaze and Zepzelca;

offset by the continued decline in Xyrem due to strong Xywav adoption and availability of high-sodium oxybate competition.

Royalties and Contract Revenues

Royalties and contract revenues increased in the three and six months ended June 30, 2023 compared to the same periods in 2022, primarily due to royalty revenue received from Hikm a Pharmaceuticals plc on net sales of their high-sodium oxybate AG.

We expect royalties and contract revenues to increase in 2023 compared to 2022, primarily due to increased royalty revenues arising from the launch of a high-sodium oxybate AGs.

Royalties and contract revenues increased in the three and nine months ended September 30, 2023 compared to the same periods in 2022, primarily due to royalty revenue received from Hikm a on net sales of their high-sodium oxybate AG.

We expect royalties and contract revenues to increase in 2023 compared to 2022, primarily due to increased royalty revenues arising from the launch of high-sodium oxybate AGs.

Cost of Product Sales

Cost of product sales decreased in the three and six months ended June 30, 2023 compared to the same periods in 2022, primarily due to a reduction in the acquisition accounting inventory fair value step-up expense, or fair value step-up expense, offset by changes in product mix.

Gross margin as a percentage of net product sales was 89.7% and 87.6% for the three and six months ended June 30, 2023 compared to 86.6% and 86.2% for the same periods in 2022.

Cost of product sales decreased in the three and nine months ended September 30, 2023 compared to the same periods in 2022, primarily due to a reduction in the acquisition accounting inventory fair value step-up expense, or fair value step-up expense, offset by changes in product mix.

Gross margin as a percentage of net product sales was 89.1% and 88.1% for the three and nine months ended September 30, 2023 compared to 85.7% and 86.0% for the same periods in 2022.

We expect our cost of product sales to decrease in 2023 compared to 2022 primarily driven by a reduction in the fair value step-up expense.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased in the three and six months ended June 30, 2023 compared to the same periods in 2022, primarily due to Sunosi related spend of $42.2 million and $50.2 million incurred in the three and six months ended June 30, 2022, respectively, transaction and integration expenses related to the acquisition of GW of $6.3 million and $15.9 million incurred in the three and six months ended June 30, 2022, respectively, and a decrease in compensation related expenses primarily driven by lower headcount, partially offset by costs related to program terminations of $23.5 million, higher litigation related expenses and increased investment in our priority programs.

Selling, general and administrative expenses decreased in the three months ended September 30, 2023 compared to the same period in 2022, primarily due to the inclusion of restructuring costs of $22.2 million and program termination costs of $21.2 million in the three months ended September 30, 2022, and a reduction in compensation related expenses.

Selling, general and administrative expenses decreased in the nine months ended September 30, 2023 compared to the same period in 2022, primarily due to the inclusion of costs related to the disposal of Sunosi of $49.5 million, restructuring costs of $22.2 million and transaction and integration expenses related to the acquisition of GW of $21.1 million in the nine months ended September 30, 2022, together with a decrease in compensation related expenses, partially offset by higher litigation related expenses in the 2023 period.

We expect selling, general and administrative expenses in 2023 to decrease compared to 2022, primarily due to the removal of costs relating to the Sunosi business following its disposal, together with synergies realized following the GW Acquisition, continued disciplined approach in our capital allocation and our focus on operational efficiencies.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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Milestone expense 5,000 752 5,500 6,252

Restructuring expenses — 11,891 — 11,891

Other 23,421 19,989 68,456 58,333

Total $ 234,402 $ 148,870 $ 633,050 $ 417,898

Research and development expenses increased by $70.2 million and $129.6 million, respectively, in the three and six months ended June 30, 2023, compared to the same periods in 2022.

Clinical studies and outside services costs increased in the three and six months ended June 30, 2023, compared to the same periods in 2022, primarily due to the inclusion of costs related to zanidatamab, as well as JZP385, JZP898, JZP441 and JZP150 partially offset by a decrease in costs related to JZP458.

Personnel expenses increased in the three and six months ended June 30, 2023, compared to the same periods in 2022, primarily due to increased headcount in support of our development programs.

For 2023, we expect that our research and development expenses will continue to increase from previous levels as we prepare for anticipated data read-outs from clinical trials, initiate and undertake additional clinical trials and related development work primarily relating to zanidatamab, JZP385 and JZP441 and additional spend on new product candidates acquired.

Research and development expenses increased by $85.5 million and $215.2 million, respectively, in the three and nine months ended September 30, 2023, compared to the same periods in 2022.

Clinical studies and outside services costs increased in the three and nine months ended September 30, 2023, compared to the same periods in 2022, primarily due to the inclusion of costs related to zanidatamab, and, to a lesser extent, JZP441, JZP385 and JZP150, partially offset by a decrease in costs related to JZP458.

Personnel expenses increased in the three and nine months ended September 30, 2023, compared to the same periods in 2022, primarily due to increased headcount in support of our development programs.

Intangible Asset Amortization

Intangible asset amortization in the three months ended June 30, 2023 was in line with the same period in 2022.

Intangible asset amortization decreased by $18.7 million in the six months ended June 30, 2023, compared to the same period in 2022, primarily due to the inclusion of amortization relating to the Sunosi intangible asset in the six months ended June 30, 2022 prior to its disposal.

Intangible asset amortization increased in the three months ended September 30, 2023, compared to the same period in 2022, primarily due to the impact of foreign currency translation adjustments.

Intangible asset amortization for the nine months ended September 30, 2023 was in line with the same period in 2022.

Intangible asset amortization for 2023 is expected to be in line with 2022.

Acquired In-Process Research and Development

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

Impairment charge

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

Interest Expense, Net

Interest expense, net increased by $10.3 million and $13.7 million, in the three and six months ended June 30, 2023 compared to the same periods in 2022, primarily driven by higher interest rates on our outstanding term loan borrowings, partially offset by higher interest income on investments and the inclusion of interest expense on the now repaid seven-year €625.0 million term loan B facility, or the Euro Term Loan, in the six months ended June 30, 2022.

We expect interest expense, net for 2023 to increase compared to 2022 primarily due to higher interest rates on our term loan borrowings.

Foreign Exchange Loss (Gain)

The foreign exchange loss (gain) is primarily related to the translation of sterling and euro-denominated net monetary liabilities, primarily intercompany balances, held by subsidiaries with a U.S.

Interest expense, net decreased by $8.7 million in the three months ended September 30, 2023, compared to the same period in 2022, primarily driven by higher interest income on investments, offset by higher interest rates on our outstanding term loan borrowings.

Interest expense, net increased by $5.0 million in the nine months ended September 30, 2023, compared to the same period in 2022, primarily driven by higher interest rates on our outstanding term loan borrowings, partially offset by higher interest income on investments and the inclusion of interest expense on the now repaid seven-year €625.0 million term loan B facility, or the Euro Term Loan, in the nine months ended September 30, 2022.

We expect interest expense, net for 2023 to increase compared to 2022 primarily due to higher interest rates on our term loan borrowings, offset by higher interest income on investments.

Foreign Exchange Loss

The foreign exchange loss is primarily related to the translation of sterling and euro-denominated net monetary liabilities, primarily intercompany balances, held by subsidiaries with a U.S.

dollar functional currency and related foreign exchange forward contracts not designated as hedging instruments.

Income Tax Benefit

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.

Our income tax benefit was $47.2 million and $86.8 million for the three and nine months ended September 30, 2023, compared to an income tax benefit of $43.0 million and $58.6 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 disposal of Sunosi in 2022.

Our effective tax rate was (47.4)% and (36.7)% for the three and nine months ended September 30, 2023 compared to effective tax rates of 71.6% and 178.7% for the same periods of 2022.

The increase in the income tax benefit for the three and nine months ended September 30, 2023, resulted primarily from the mix of pre-tax income and losses across tax jurisdictions partially offset by the impairment of our acquired IPR&D asset 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.

Liquidity and Capital Resources

As of June 30, 2023, we had cash, cash equivalents and investments of $1.4 billion, borrowing availability under our revolving credit facility of $500.0 million and long-term debt principal balance of $5.8 billion.

As of September 30, 2023, we had cash, cash equivalents and investments of $1.6 billion, borrowing availability under our five-year $500.0 million revolving credit facility, or the Revolving Credit Facility, of $500.0 million and long-term debt principal balance of $5.8 billion.

Our long-term debt included $2.7 billion aggregate principal amount of the seven-year $3.1 billion in aggregate term loan B facility, or the Dollar Term Loan, $1.5 billion in aggregate principal amount of 4.375% senior secured notes, due 2029, or the Secured Notes, $1.0 billion principal amount on our 2.00% exchangeable senior notes due 2026 and $575.0 million principal amount on our 1.50% exchangeable senior notes due 2024, or 2024 Notes.

We generated cash flows from operations of $617.5 million during the six months ended June 30, 2023, and we expect to continue to generate positive cash flows from operations which will enable us to operate our business and de-lever our balance sheet over time.

Since the closing of the acquisition of GW in May 2021, we have made voluntary repayments of €625.0 million, or $753.0 million, relating to the Euro Term Loan and voluntary and mandatory repayments of $300.0 million and $62.0 million, respectively, relating to the Dollar Term Loan.

We generated cash flows from operations of $924.7 million during the nine months ended September 30, 2023, and we expect to continue to generate positive cash flows from operations which will enable us to operate our business and de-lever our balance sheet over time.

Since the closing of the acquisition of GW in May 2021, we have fully repaid our Euro Term Loan €625.0 million, or $753.0 million and made voluntary and mandatory repayments of $300.0 million and $69.8 million, respectively, relating to the Dollar Term Loan.

For a more detailed description of our debt arrangements, including information relating to our scheduled maturities with respect to our long-term debt, see Note 8, Debt, of the notes to the condensed consolidated financial statements, included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.

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The adequacy of our cash resources depends on many assumptions, including primarily our assumptions with respect to product sales and expenses, as well as the other factors set forth in "Risk Factors" under the heading "Risks Related to our Lead Products and Product Candidates” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, as supplemented by the risks described in “Risk Factors" under the heading "The introduction of new products in the U.S.

market that compete with, or otherwise disrupt the market for, our oxybate products and product candidates has adversely affected and may continue to adversely affect sales of our oxybate products and product candidates” in Part II, Item 1A of this Quarterly Report on Form 10-Q, as well as those factors set forth in “Risk Factors" under the heading "To continue to grow our business, we will need to commit substantial resources, which could result in future losses or otherwise limit our opportunities or affect our ability to operate and grow our business” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022.

market that compete with, or otherwise disrupt the market for, our oxybate products and product candidates has adversely affected and may continue to adversely affect sales of our oxybate products and product candidates” in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023, as well as those factors set forth in “Risk Factors" under the heading "To continue to grow our business, we will need to commit substantial resources, which could result in future losses or otherwise limit our opportunities or affect our ability to operate and grow our business” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022.

Our assumptions may prove to be wrong or other factors may adversely affect our business, and as a result we could exhaust or significantly decrease our available cash resources, and we may not be able to generate sufficient cash to service our debt obligations which could, among other things, force us to raise additional funds and/or force us to reduce our expenses, either of which could have a material adverse effect on our business.

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Accordingly, we expect to continue to opportunistically seek access to additional capital to license or acquire additional products, product candidates or companies to expand our operations or for general corporate purposes.

Raising additional capital could be accomplished through one or more public or private debt

or equity financings, collaborations or partnering arrangements.

Raising additional capital could be accomplished through one or more public or private debt or equity financings, collaborations or partnering arrangements.

However, our ability to raise additional capital may be adversely impacted by worsening global economic conditions, with disruptions to, and volatility in, the credit and financial markets in the U.S.

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In addition, under Irish law we must have authority from our shareholders to issue any ordinary shares, including ordinary shares that are part of our authorized but unissued share capital.

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

shareholders.

At our annual general meeting of shareholders in August 2023, our shareholders voted to approve our proposal to dis-apply the statutory pre-emption obligation on terms that are substantially more limited than our general pre-emption opt-out authority that had been in effect prior to August 4, 2021.

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In addition, if we use a substantial amount of our funds to acquire or in-license products or product candidates, we may not have sufficient additional funds to conduct all of our operations in the manner we would otherwise choose.

Furthermore, any equity financing would be dilutive to our shareholders, and could require the consent of the lenders under our credit agreement, or the Credit Agreement, that provides for (i) the Dollar Term Loan, (ii) the Euro Term Loan and, together with the Dollar Term Loan, collectively known as the Term Loan and (iii) a five-year $500.0 million revolving credit facility, or the Revolving Credit Facility, and the indenture for the Secured Notes for certain financings.

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.

Furthermore, any equity financing would be dilutive to our shareholders, and could require the consent of the lenders under our credit agreement, or the Credit Agreement, that provides for (i) the Dollar Term Loan, (ii) the Euro Term Loan and, together with the Dollar Term Loan, collectively known as the Term Loan and (iii) the Revolving Credit Facility, and the indenture for the Secured Notes for certain financings.

In November 2016, our board of directors authorized a share repurchase program and as of September 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.

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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.

During the nine months ended September 30, 2023, we spent a total of $170.0 million to purchase 1.3 million of our ordinary shares under the share repurchase program at an average total purchase price, including commissions, of $128.89 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.

As of September 30, 2023, the remaining amount authorized under the share repurchase program was $261.2 million, exclusive of any brokerage commissions.

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

Six Months Ended

Nine Months Ended

September 30,

Net cash provided by operating activities $ 924,668 $ 930,006

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Operating activities

Net cash provided by operating activities increased by $105.5 million in the six months ended June 30, 2023 compared to the same period in 2022, primarily due to an increase in net cash inflow related to changes in operating assets and liabilities including the impact of the timing of receipts from customers.

Net cash provided by operating activities in the nine months ended September 30, 2023 was broadly in line with the same period in 2022.

Investing activities

Net cash used in investing activities decreased by $35.9 million in the six months ended June 30, 2023 compared to the same period in 2022, primarily due to the following:

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

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

Net cash used in investing activities increased by $143.0 million in the nine months ended September 30, 2023 compared to the same period in 2022, primarily due to the following:

• $189.0 million net increase in the acquisition of investments, driven by time deposits;

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

disposition in the six months ended June 30, 2022.

disposition in the nine months ended September 30, 2022;

partially offset by

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

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

Financing activities

Net cash used in financing activities decreased by $133.6 million in the six months ended June 30, 2023 compared to the same period in 2022, primarily due to:

• Repayments of long-term debt of $15.5 million in the six months ended June 30, 2023, compared to $266.5 million in the six months ended June 30, 2022;

• Share repurchases of $95.6 million in the six months ended June 30, 2023.

Net cash used in financing activities decreased by $344.1 million in the nine months ended September 30, 2023 compared to the same period in 2022, primarily due to:

• Repayments of long-term debt of $23.3 million in the nine months ended September 30, 2023, compared to $574.3 million in the nine months ended September 30, 2022;

partially offset by

• Share repurchases of $170.0 million in the nine months ended September 30, 2023.

In August 2023, we made an irrevocable election to fix the settlement method for exchanges of the 2024 Notes to a combination of cash and ordinary shares of the Company with a specified cash amount per $1,000 principal amount of the 2024 Notes of $1,000.

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The summary of our outstanding indebtedness and scheduled maturities with respect to our long-term debt principal balances is included in Note 8, Debt, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

During the six months ended June 30, 2023, there were no changes to the Credit Agreement and our other financing arrangements, as set forth in Note 12, Debt, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.

During the nine months ended September 30, 2023, there were no changes to the Credit Agreement and our other financing arrangements, as set forth in Note 12, Debt, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Contractual Obligations

During the six months ended June 30, 2023, there were no material changes to our contractual obligations as set forth in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.

During the nine months ended September 30, 2023, there were no material changes to our contractual obligations as set forth in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.

Critical Accounting Estimates

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10‑Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to

the “safe harbor” created by those sections.

Forward-looking statements are based on our management’s current plans, objectives, estimates, expectations and intentions and on information currently available to our management.

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• The distribution and sale of our oxybate products are subject to significant regulatory restrictions, including the requirements of a risk evaluation and mitigation strategy, or REMS, and safety reporting requirements, and these regulatory and safety requirements subject us to risks and uncertainties, any of which could negatively impact sales of Xywav and Xyrem.

• The distribution and sale of our oxybate products are subject to significant regulatory restrictions, including the requirements of a risk evaluation and mitigation strategy and safety reporting requirements, and these regulatory and safety requirements subject us to risks and uncertainties, any of which could negatively impact sales of Xywav and Xyrem.

• While we expect our oxybate products and Epidiolex/Epidyolex to remain our largest products, our success also depends on our ability to effectively commercialize our other existing products and potential future products.

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• To continue to grow our business, we will need to commit substantial resources, which could result in future losses or otherwise limit our opportunities or affect our ability to operate and grow our business.

Additional discussion of the risks, uncertainties and other factors described above, as well as other risks material to our business, can be found under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, as supplemented by the risks and uncertainties described in "Risk Factors" Item 1A.

Risk Factors in Part II of this Quarterly Report on Form 10-Q.

Additional discussion of the risks, uncertainties and other factors described above, as well as other risks material to our business, can be found under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 as supplemented by the risks and uncertainties described in Part II, Item 1A in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023.

Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements.

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Quantitative and Qualitative Disclosures About Market Risk

During the six months ended June 30, 2023, there were no material changes to our market risk disclosures as set forth in Part II, Item 7A“Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2022.

During the nine months ended September 30, 2023, there were no material changes to our market risk disclosures as set forth in Part II, Item 7A“Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2022.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis