What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-02 compared with 2023-11-08 · 212 added, 212 removed, 347 unchanged (55% 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 disclosed in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023.

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, 2023, 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.

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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We are dedicated to developing life-changing medicines for people with serious diseases - often with limited or no therapeutic options.

We have a diverse portfolio of marketed medicines and novel product candidates, from early- to late-stage development, in neuroscience and oncology.

Within these therapeutic areas, we strive to identify new options for patients by actively exploring small molecules and biologics, and through innovative delivery technologies and cannabinoid science.

We have a diverse portfolio of marketed medicines, including leading therapies for sleep disorders and epilepsy, and a growing portfolio of cancer treatments.

Our patient-focused and science-driven approach powers pioneering research and development advancements across our robust pipeline of innovative therapeutics in oncology and neuroscience.

Our strategy for growth is rooted in executing commercial launches and ongoing commercialization initiatives, advancing robust research and development, or R&D, programs and delivering impactful clinical results, effectively deploying capital to strengthen the prospects of achieving our short- and long-term goals through strategic corporate development, and delivering strong financial performance.

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June 2018 U.S.

Epidyolex® (cannabidiol) For adjunctive therapy of seizures associated with LGS or DS, in conjunction with clobazam, for patients 2 years of age and older.* September 2019 EU, Great Britain, EEA**, Israel, Switzerland, Australia and New Zealand

Epidyolex® (cannabidiol) For adjunctive therapy of seizures associated with LGS or DS, in conjunction with clobazam, for patients 2 years of age and older.

September 2019 EU, Great Britain, EEA 2 , Israel, Switzerland, Australia and New Zealand

For adjunctive therapy of seizures associated with TSC for patients 2 years of age and older.

April 2021 EU, Great Britain, Israel and Switzerland

Epidiolex® (cannabidiol) For adjunctive therapy of seizures associated with LGS, DS or TSC for patients 2 years of age and older.

November 2023 Canada

Rylaze® (asparaginase erwinia chrysanthemi (recombinant)-

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coli-derived asparaginase.

September 2023 EU

September 2023 EU, Great Britain

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

June 2020 U.S.

(licensed from PharmaMar)***

(licensed from Pharma Mar S.A., or PharmaMar) 3

Treatment of adults with Stage III or metastatic SCLC who have progressed on or after platinum-containing therapy.

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July 2017 Canada, Brazil

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

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

June 2019 Japan

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44 mg/100 mg powder for concentrate for solution for infusion Treatment of adults with newly-diagnosed t-AML or AML-MRC.

August 2018 EU, Great Britain, Switzerland, Israel, Australia, South Korea

Vyxeos® Daunorubicin and cytarabine liposome for injection Powder, 44 mg daunorubicin and 100 mg cytarabine per vial, intravenous infusion Treatment of adults with newly diagnosed therapy-related t-AML or AML with AML-MRC.

August 2018 EU, Great Britain, Switzerland, Israel, Australia, South Korea, Saudi Arabia

Vyxeos® Daunorubicin and cytarabine liposome for injection Powder, 44 mg daunorubicin and 100 mg cytarabine per vial, intravenous, or IV, infusion Treatment of adults with newly diagnosed therapy-related t-AML or AML with AML-MRC.

April 2021 Canada

Vyxeos® Combination for I.V.

Injection High-risk AML March 2024 Japan (through licensing agreement) 5

1 The clobazam restriction limited to EU and Great Britain

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4 Conditional approval received from Health Canada

5 Development and commercialization rights held by Nippon Shinyaku Co.

We are the global leader in the development and commercialization of oxybate therapy for patients with sleep disorders.

Xyrem was approved by FDA in 2002 for treating EDS and cataplexy in narcolepsy.

Xyrem was approved by FDA in 2002 for treatment of cataplexy and in 2005 for treatment of EDS in narcolepsy.

In 2020, we received FDA approval for Xywav for the treatment of cataplexy or EDS, in patients seven years of age and older with narcolepsy.

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We view the adoption of Xywav in narcolepsy as a positive indication that physicians and patients appreciate the benefits of a low-sodium oxybate option.

In June 2021, FDA recognized seven years of Orphan Drug Exclusivity, or ODE, for Xywav in narcolepsy, which extends through July 2027.

Lumryz, a fixed-dose, high-sodium oxybate, was approved by FDA on May 1, 2023 for the treatment of cataplexy or EDS in adults with narcolepsy.

In June 2021, FDA recognized seven years of Orphan Drug Exclusivity, or ODE, for Xywav in narcolepsy.

ODE extends through July 2027.

Nevertheless, Lumryz, a fixed-dose, high-sodium oxybate, was approved by FDA on May 1, 2023, for the treatment of cataplexy or EDS in adults with narcolepsy.

FDA continues to recognize seven years of ODE for Xywav in narcolepsy.

In connection with granting ODE for Xywav, FDA stated that "Xywav is clinically superior to Xyrem by means of greater safety because Xywav provides a greatly reduced chronic sodium burden compared to Xyrem.” FDA's summary also stated that "the differences in the sodium content of the two products at the recommended doses will be clinically meaningful in reducing cardiovascular morbidity in a substantial proportion of patients for whom the drug is indicated." FDA has also recognized that the difference in sodium content between Xywav and Lumryz is likely to be clinically meaningful in all patients with narcolepsy and that Xywav is safer than Lumryz in all such patients.

In connection with granting ODE, FDA stated that "Xywav is clinically superior to Xyrem by means of greater safety because Xywav provides a greatly reduced chronic sodium burden compared to Xyrem.” FDA's summary also stated that "the differences in the sodium content of the two products at the recommended doses will be clinically meaningful in reducing cardiovascular morbidity in a substantial proportion of patients for whom the drug is indicated." FDA has also recognized that the difference in sodium content between Xywav and Lumryz is likely to be clinically meaningful in all patients with narcolepsy and that Xywav is safer than Lumryz in all such patients.

Lumryz has the same sodium content as Xyrem.

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We initiated the U.S.

commercial launch of Xywav for the treatment of IH in adults on November 1, 2021.

commercial launch of Xywav for the treatment of IH in adults in November 2021.

In January 2022, FDA recognized seven years of ODE for Xywav in IH that extends through August 2028.

IH is a debilitating neurologic sleep disorder characterized by chronic EDS, the inability to stay awake and alert during the day resulting in the irrepressible need to sleep or unplanned lapses into sleep or drowsiness.

IH is a debilitating neurologic sleep disorder characterized by chronic EDS (the inability to stay awake and alert during the day resulting in the irrepressible need to sleep or unplanned lapses into sleep or drowsiness), severe sleep inertia, and prolonged and non-restorative nighttime sleep.

An estimated 37,000 people in 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 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.

Exiting the first quarter of 2024, there were approximately 12,950 patients taking Xywav, including approximately 9,900 patients with narcolepsy and approximately 3,050 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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Outside the U.S.

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

and Europe, Epidiolex/Epidyolex is approved in Israel, Canada, Australia, New Zealand and Taiwan.

Rylaze was approved by FDA in June 2021 under the Real-Time Oncology Review program, and was launched in the U.S.

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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.

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

Rylaze is the only recombinant erwinia asparaginase manufactured product approved in the U.S.

that maintains a clinically meaningful level of asparaginase activity throughout the entire course 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/m 2 every 48 hours.

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.

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

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.

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

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

In September 2023, the EC granted marketing authorization for JZP458 under the trade name Enrylaze and the rolling launch in Europe is ongoing.

This product has also been approved in the United Kingdom and Canada.

We acquired U.S.

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Hoffmann-La Roche Ltd, or Roche, we have an ongoing Phase 3 pivotal clinical trial in first-line extensive stage SCLC of Zepzelca in combination with Tecentriq® (atezolizumab).

We are also developing Zepzelca in additional indications.

Defitelio is the first and only approved treatment for patients with severe VOD, or sVOD, following HSCT.

Defitelio is the first and only approved treatment for patients with VOD, severe VOD, or sVOD, or VOD with renal or pulmonary dysfunction following HSCT by regulatory authorities in the U.S., Europe, Japan and other markets.

There was a significant decline in the number of patients receiving HSCT due to the effects of the COVID-19 pandemic.

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With ongoing trends in the U.S.

towards lower-intensity treatments and away from intensive chemotherapy regimens for AML, we note increasing competition from other therapeutic options as we continue to educate providers on the clinical benefits of Vyxeos in appropriate patients.

towards lower-intensity treatments and away from intensive chemotherapy regimens for AML, we have seen increasing competition from other therapeutic options.

Research and Development Progress

Our research and development activities encompass all stages of development and currently include clinical testing of new product candidates and activities related to clinical improvements of, or additional indications or new clinical data for, our existing marketed products.

We also have active preclinical programs for novel therapies, including precision medicines in hematology and oncology and the GW Cannabinoid Platform.

We are increasingly leveraging our growing internal research and development function, and our proprietary GW Cannabinoid Platform, and we have also entered into collaborations with third parties for the research and development of innovative early-stage product candidates and have supported additional investigator-sponsored trials, or ISTs, that are anticipated to generate additional data related to our products.

We also have active preclinical programs for novel therapies, including neuroscience and precision medicines in oncology.

We are increasingly leveraging our growing internal research and development function, and we have also entered into collaborations with third parties for the research and development of innovative early-stage product candidates and have supported additional investigator-sponsored trials that are anticipated to generate additional data related to our products.

We also seek out investment opportunities in support of the development of early- and mid-stage technologies in our therapeutic areas and adjacencies.

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 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.

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

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

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

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.

Under the terms of the agreement, we made an upfront payment of $50 million to Sumitomo, and Sumitomo is eligible to receive development, regulatory and commercial milestone payments of up to $1.09 billion.

If approved, Sumitomo is eligible to receive a tiered, low double-digit royalty on Jazz's net sales of JZP441.

Within our oncology R&D program, in November 2022, FDA approved an sBLA for Rylaze, with a M/W/F IM dosing schedule.

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.

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

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.

In December 2021, our licensor Pharma Mar, S.A., or PharmaMar, initiated a confirmatory trial in second-line SCLC.

This is a three-arm trial comparing Zepzelca as either monotherapy or in combination with irinotecan to investigator's choice of irinotecan or topotecan.

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.

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.

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

Within our oncology R&D program, in October 2022, we announced an exclusive licensing and collaboration agreement with Zymeworks Inc., or Zymeworks, providing us the right to acquire development and commercialization rights to Zymeworks' zanidatamab across all indications in the United States, Europe, Japan and all other territories except for those Asia/Pacific territories previously licensed by Zymeworks.

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

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

Under the terms of the agreement, Zymeworks received an upfront payment of $50.0 million, and following the exercise of our option to continue the collaboration, a second, one-time payment of $325 million.

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

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.

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

Zanidatamab is currently being evaluated in multiple clinical trials as a treatment for patients with HER2-expressing cancers.

Following positive data from a pivotal Phase 2 clinical trial evaluating zanidatamab monotherapy in patients with previously treated advanced or metastatic HER2-amplified biliary tract cancer, or BTC, we initiated a rolling BLA submission for accelerated approval in second-line BTC which was completed in March 2024.

In addition, we have an ongoing Phase 3 randomized clinical trial evaluating zanidatamab in combination with chemotherapy plus or minus tislelizumab as a first-line treatment for HER2-expressing gastroesophageal adenocarcinoma, or GEA, and an ongoing Phase 2 trial examining zanidatamab in combination with chemotherapy in first-line patients with HER2-expressing metastatic GEA.

There are also multiple ongoing clinical trials exploring zanidatamab in breast cancer and other HER2-expressing tumor types.

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.

In December 2021, our licensor PharmaMar initiated a confirmatory trial in second-line SCLC.

This ongoing three-arm trial is comparing Zepzelca as either monotherapy or in combination with irinotecan to investigator's choice of irinotecan or topotecan.

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.

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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In April 2022, we announced that we had entered into a licensing and collaboration agreement with Werewolf Therapeutics, Inc., or Werewolf, to acquire exclusive global development and commercialization rights to Werewolf's investigational WTX-613, now referred to as JZP898.

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

Under the terms of the agreement, we made an upfront payment of $15.0 million to Werewolf, and Werewolf is eligible to receive development, regulatory and commercial milestone payments of up to $1.26 billion.

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This transaction underscores our commitment to enhancing our pipeline to deliver novel oncology therapies to patients, and also provides us with an opportunity to expand into immuno-oncology.

We have received clearance from FDA on the Investigational New Drug application for JZP898 and expect to initiate a Phase 1 clinical trial in 2023.

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

We initiated a Phase 1 clinical trial of JZP898 in late 2023.

Our neuroscience R&D efforts include an ongoing Phase 3 trial of Epidyolex for LGS, DS and TSC in Japan initiated in October 2022.

In December 2021, we initiated Phase 2 clinical trials for suvecaltamide (JZP385), for essential tremor, or ET.

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

In December 2023, we announced that our Phase 2 clinical trial for JZP150 for treatment of post-traumatic stress disorder, or PTSD, did not meet the primary endpoint.

We plan to fully evaluate these data;

however, based on top-line results we do not anticipate moving forward with additional JZP150 development in PTSD.

If approved, Sumitomo is eligible to receive a tiered, low double-digit royalty on our net sales of JZP441.

In November 2023, we announced that we achieved initial proof-of-concept in our Phase 1 clinical trial program in healthy volunteers as demonstrated by the Maintenance of Wakefulness Test (MWT).

At that time, we also noted the program was being paused as we analyze safety findings related to visual disturbances and cardiovascular effects;

no liver toxicity signals were observed.

We are committed to orexin-2 agonist development and have a backup orexin-2 receptor agonist program.

Below is a summary of our key ongoing and planned development projects related to our products and pipeline and their corresponding current stages of development:

Product Candidates Description

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

Suvecaltamide (JZP385)

ET (ongoing trial)

Suvecaltamide (JZP385)

Parkinson's disease tremor (ongoing trial)

PTSD (ongoing trial)

JZP324 Oxybate extended-release formulation (planned trial)

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

Additional cannabinoids Neuropsychiatry targets (ongoing trial)

Undisclosed targets Neuroscience

Regulatory Review

Rylaze ALL/LBL

FDA approval in June 2021;

approval for M/W/F IM dosing schedule in November 2022;

submitted an sBLA for IV administration in April 2022;

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

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

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

Zanidatamab First-line HER2-positive GEA (ongoing trial)

Zanidatamab First-line HER2-positive BTC (ongoing trial)

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

Confirmatory Study (PharmaMar study) (ongoing trial)

Confirmatory second-line trial (PharmaMar study) (ongoing trial)

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

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

Pivotal Phase 2

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 + 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)

Newly diagnosed untreated patients with intermediate- and high-risk AML (cooperative group study) (ongoing trial)

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

De novo 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)

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

JZP898 Conditionally-activated IFNα INDUKINE™ molecule in solid tumors (ongoing trial)

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

Hematology/oncology exploratory activities

JZP898 Conditionally-activated IFNα INDUKINE™ molecule

KRAS inhibitor targets G12D selective and pan-KRAS molecules (acquired from Redx)

Undisclosed target Ras/Raf/MAP kinase pathway (collaboration with Redx)

Undisclosed targets Oncology

Hematology/oncology exploratory activities

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

Suvecaltamide (JZP385)

ET (ongoing trial)

Suvecaltamide (JZP385)

Parkinson's disease tremor (ongoing trial)

JZP324 Oxybate extended-release formulation (planned trial)

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

Undisclosed cannabinoids Other neuroscience (ongoing trials)

Undisclosed targets Sleep

Other Neuroscience

*Also known as DSP-0187

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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.

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

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

In most geographies, our teams have increased the frequency of in-person interactions as medical congresses and healthcare practices have resumed in-person activities.

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

This includes deploying a mix of in-person and digital initiatives at scientific congresses designed to provide promotional and non-promotional interactions as well as supporting our field-based teams with digital customer interaction tools, training and content.

These initiatives are representative of our enterprise operating model evolution that is directly linked to our corporate strategy and are designed to better enable our teams to work collaboratively on an aligned and shared agenda through both in-person and digital interactions.

In most geographies, medical congresses and healthcare practices have resumed pre-pandemic levels of in-person activities.

Other Challenges, Risks and Trends Related to Our Business

Historically, our business has been substantially dependent on Xyrem, and our financial results have been significantly influenced by sales of Xyrem .

Historically, our business was substantially dependent on Xyrem and our financial results were significantly influenced by sales of Xyrem .

Our operating plan assumes that Xywav, with 92% lower sodium compared to high-sodium oxybates, depending on the dose, absence of a sodium warning and dosing titration option, will remain the treatment of choice for patients who can benefit from oxybate treatment.

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 in future periods.

While we expect that our business will continue to meaningfully depend on oxybate revenues, there is no guarantee that oxybate revenues will remain at current levels.

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.

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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.

In the complaint, we allege that FDA acted outside its authority under the Orphan Drug Act, when, despite ODE protecting 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.

We cannot at this time predict the timing or ultimate outcome of this litigation or the impact of this litigation on our business.

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.

In July 2023, a volume-limited ANDA filer launched an AG version of high-sodium oxybate.

These AG products have negatively impacted and are expected to continue to negatively impact Xyrem and Xywav sales for patients with narcolepsy.

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.

Hikma has elected to continue to sell the Hikma AG product, with royalties to be paid 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

the royalty rate was fixed for the second half of 2023.

There was 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.

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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.

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

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

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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.

Generic competition can decrease the prices at which Xywav and Xyrem are sold.

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

In addition, we received notices in June 2021 and February 2023, that Lupin and Teva, respectively, filed ANDAs for generic versions of Xywav.

On October 13, 2023, Lupin announced that it has received tentative approval for its application to market a generic version of Xywav.

Generic competition can decrease the net prices at which branded products, such as Xywav and Xyrem are sold, as can competition from other branded products.

In addition, we have increasingly experienced pressure from third party payors to agree to discounts, rebates or restrictive pricing terms, and we cannot guarantee we will be able to agree to commercially reasonable terms with PBMs, or similar organizations and other third party payors, or that we will be able to ensure patient access and acceptance on formularies.

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.

Entering into agreements with PBMs or similar organizations and payors to ensure patient access has and may continue to result in decreased net prices for some of our products.

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.

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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.

If we are not successful in the clinical development of our 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.

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.

Failure to identify and acquire, in-license or develop additional products or product candidates, successfully manage the risks associated with integrating any products or product candidates into our portfolio or the risks arising from anticipated and unanticipated problems in connection with an acquisition or in-licensing, such as the GW Acquisition, could have a material adverse effect on our business, results of operations and financial condition.

Failure to identify and acquire, in-license or develop additional

products or product candidates, successfully manage the risks associated with integrating any products or product candidates into our portfolio or the risks arising from anticipated and unanticipated problems in connection with an acquisition or in-licensing, such as the GW Acquisition, could have a material adverse effect on our business, results of operations and financial condition.

The success of 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.

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

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

For example, the Inflation Reduction Act of 2022 among other things, requires the U.S.

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

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

In addition, under the Medicaid Drug Rebate Program, rebates owed by manufacturers are no longer subject to a cap on the rebate amount, which could adversely affect our rebate liability.

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

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

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

Moreover, we are, and expect to continue to be, the subject of various claims, legal proceedings,

and government investigations apart from those set forth above that have arisen in the ordinary course of business that have not yet been fully resolved and that could adversely affect our business and the execution of our strategy.

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

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.

uncertainties described in "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q.

Results of Operations

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Three Months Ended

September 30, Increase/ Nine Months Ended

September 30, Increase/

2023 2022 (Decrease) 2023 2022 (Decrease)

March 31, Increase/

2024 2023 (Decrease)

Product sales, net $ 842,102 $ 884,219 (5) %

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

Royalties and contract revenues 59,881 8,593 N/A(1)

Cost of product sales (excluding amortization of acquired developed technologies) 95,487 128,644 (26) %

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Intangible asset amortization 155,730 149,786 4 %

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

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

Acquired in-process research and development 10,000 1,000 N/A(1)

Interest expense, net 66,116 74,147 (11) %

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) %

Foreign exchange (gain) loss 1,693 (3,193) (153) %

Income tax expense (benefit) 11,669 (15,324) (176) %

Equity in loss of investees 1,347 1,005 34 %

____________________________

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Three Months Ended

September 30, Increase/ Nine Months Ended

September 30, Increase/

2023 2022 (Decrease) 2023 2022 (Decrease)

March 31, Increase/

2024 2023 (Decrease)

Xywav $ 315,300 $ 277,761 14 %

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Sativex 2,735 7,098 (61) %

Sunosi — — — — 28,844 N/A(1)

Total Neuroscience 580,983 651,898 (11) %

Rylaze 104,859 73,513 43 % 292,479 200,687 46 %

Rylaze/Enrylaze 102,750 85,927 20 %

Zepzelca 75,100 67,181 12 %

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Product sales, net 842,102 884,219 (5) %

High-sodium oxybate AG royalty revenue 28,921 — N/A(2) 36,531 — N/A(2)

High-sodium oxybate AG royalty revenue 49,947 2,096 N/A(1)

Other royalty and contract revenues 9,934 6,497 53 %

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___________________________

(1) Divestiture of Sunosi U.S.

was completed in May 2022

(1) Comparison to prior period not meaningful.

Product Sales, Net

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.

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 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.

Xywav product sales increased in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to increased sales volumes of 16% and, to a lesser extent, a higher selling price, offset by higher gross to net deductions.

We continue to see Xywav adoption in patients with narcolepsy driven by educational initiatives around efficacy and the benefit of lowering sodium intake.

In addition, Xywav product sales were positively impacted by adoption in IH;

Xywav is the only oxybate therapy approved to treat IH and we see continued growth of new prescribers.

Exiting the quarter, there were 9,900 patients taking Xywav for narcolepsy and 3,050 taking Xywav for IH, an increase of approximately 9% and 53%, respectively, compared to the same period in 2023 .

Xyrem product sales decreased in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to decreased sales volumes of 63%, due to the adoption of Xywav by existing Xyrem patients, the availability of high-sodium oxybate competition, changes to formulary coverage impacting narcolepsy patients, and higher gross to net deductions, offset by a higher selling price.

Epidiolex/Epidyolex product sales increased in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to increased sales volumes of 5%, due to increased demand and geographic expansion, and a higher average selling price, partially offset by higher gross to net deductions.

Rylaze/Enrylaze product sales increased in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to increased sales volumes of 19% and, to a lesser extent, a higher selling price, offset by higher gross to net deductions.

The increased volumes reflect the strong demand for Rylaze driven by robust adoption in pediatric asparaginase-based oncology protocols in the U.S, adoption of the Monday/Wednesday/Friday dosing regimen, along with use of Rylaze in the first line setting and in the treatment of adolescents and young adults.

Zepzelca product sales increased in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to increased sales volumes and a higher selling price.

Defitelio/defibrotide product sales increased in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to increased sales volumes and a higher average selling price.

Vyxeos product sales decreased in the three months ended March 31, 2024, primarily due to a decrease in sales volumes and higher gross to net deductions, partially offset by a higher average selling price.

We expect total product sales will increase in 2024 over 2023, primarily due to our key growth drivers;

Xywav, through continued growth in the IH market, Epidiolex through growth in current markets and expansion into new markets and Rylaze through demand, offset by a decrease in sales of Xyrem due to the impact of high-sodium oxybate competition.

Royalties and Contract Revenues

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.

Royalties and contract revenues increased in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to royalty revenue received from Hikma Pharmaceuticals plc on net sales of their high sodium

We expect royalties and contract revenues to increase in 2024 compared to 2023, primarily due to increased royalty revenues arising from net sales of high-sodium oxybate AG, primarily due to higher royalty rates in 2024.

Cost of Product Sales

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.

Cost of product sales decreased in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to a reduction in the acquisition accounting inventory fair value step-up expense, or fair value step-up expense.

Gross margin as a percentage of net product sales was 88.7% for the three months ended March 31, 2024 compared to 85.5% for the same period in 2023, due to a reduction in fair value step-up expense.

We expect our cost of product sales to increase in 2024 compared to 2023, primarily driven by a change in product mix.

Selling, General and Administrative Expenses

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.

Selling, general and administrative expenses increased in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to an increase in compensation-related expenses of $18.3 million primarily driven by higher headcount in support of our key growth drivers, increased marketing investment in our priority programs of $9.6 million and litigation costs of $8.2 million.

We expect selling, general and administrative expenses in 2024 to increase compared to 2023, primarily due to continued investment in our key growth drivers, such as Xywav in IH, Epidiolex and Rylaze along with increased employee expenses.

Research and Development Expenses

Research and development expenses consist primarily of costs related to clinical studies and outside services, personnel expenses, milestone expenses and other research and development costs.

Research and development expenses consist primarily of costs related to clinical studies and outside services, personnel expenses and other research and development costs.

Clinical study and outside services costs relate primarily to services performed by clinical research organizations, materials and supplies, and other third party fees.

Personnel expenses relate primarily to salaries, benefits and share-based compensation.

Other research and development expenses primarily include overhead allocations consisting of various support and facilities-related costs.

Other research and development expenses primarily include

overhead allocations consisting of various support and facilities-related costs.

We do not track fully-burdened research and development expenses on a project-by-project basis.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Clinical studies and outside services $ 131,466 $ 106,345

Personnel expenses 72,996 60,391

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

Restructuring expenses — 11,891 — 11,891

Other 18,385 22,674

Total $ 222,847 $ 189,410

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.

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.

Research and development expenses increased by $33.4 million in the three months ended March 31, 2024, compared to the same period in 2023.

Clinical studies and outside services costs increased in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to higher costs related to zanidatamab programs, and, to a lesser extent, JZP385.

Personnel expenses increased in the three months ended March 31, 2024, compared to the same period in 2023, primarily driven by increased compensation costs and higher headcount in support of our development programs.

For 2024, we expect that our research and development expenses will continue to increase compared to 2023 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.

Intangible Asset Amortization

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 increased in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to the impact of foreign currency translation adjustments.

Intangible asset amortization for 2024 is expected to be in line with 2023.

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.

Acquired in-process research and development, or IPR&D, expense in the three months ended March 31, 2024, related to the upfront payment of $10.0 million made in connection with our asset purchase and collaboration agreement with Redx to acquire global rights to the Kirsten rat sarcoma virus, or KRAS, Inhibitor Program.

Interest Expense, Net

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.

Interest expense, net decreased by $8.0 million in the three months ended March 31, 2024, compared to the same period in 2023, primarily driven by higher interest income on investments.

We expect interest expense, net to decrease in 2024 compared to 2023, primarily due to lower interest expense following the repricing of the seven-year $3.1 billion term loan B facility, or the Dollar Term Loan, for further information on this please refer to Liquidity and Capital Resources.

Foreign Exchange (Gain) Loss

The foreign exchange (gain) 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 $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 (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.

Income Tax Expense (Benefit)

Our income tax expense was $11.7 million for the three months ended March 31, 2024, resulting primarily from tax d eficiencies from share-based compensation.

Our income tax benefit was $15.3 million for the same period in 2023, 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.

Liquidity and Capital Resources

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 $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.

As of March 31, 2024, we had cash, cash equivalents and investments of $1.8 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 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 $267.2 million during the three months ended March 31, 2024, 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 $85.3 million, respectively, relating to the Dollar Term Loan.

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

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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We believe that our existing cash, cash equivalents and investments balances, cash we expect to generate from operations and funds available under our Revolving Credit Facility will be sufficient to fund our operations and to meet our existing obligations for the foreseeable future.

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.

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, 2023, as supplemented by the risks described in “Risk Factors" under the heading “Delays or problems in the supply of our products for sale or for use in clinical trials, loss of our single source suppliers or failure to comply with manufacturing regulations could materially and adversely affect our business, financial condition, results of operations and growth prospects” 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 and “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, 2023.

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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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.

and worldwide resulting from the effects of inflationary pressures, recent and potential future bank failures and otherwise.

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

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.

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.

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

and worldwide resulting from the effects of inflationary pressures, potential future bank failures, or otherwise.

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

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, and we currently have such authorization.

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

At our 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.

This current pre-emption opt-out authority is due to expire in February 2025.

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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.

In November 2016, our board of directors authorized a share repurchase program and as of March 31, 2024 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 Credit Agreement, corporate and regulatory requirements and market conditions.

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

During the three months ended March 31, 2024, no shares were repurchased.

As of March 31, 2024, the remaining amount authorized under the share repurchase program was $161.4 million, exclusive of any brokerage commissions.

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

Nine Months Ended

September 30,

Three Months Ended

Net cash provided by operating activities $ 267,229 $ 320,708

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Effect of exchange rates on cash and cash equivalents (1,698) 331

Net increase in cash and cash equivalents $ 454,208 $ 247,910

Net increase (decrease) in cash and cash equivalents $ (62,925) $ 286,429

Operating activities

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

Net cash provided by operating activities decreased by $53.5 million in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to the payment of accrued facility expenses of $52.2 million in the three months ended March 31, 2024.

Investing activities

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:

Net cash used in investing activities increased by $267.1 million in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to the following:

• $255.0 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 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.

• $10.0 million upfront payment to Redx related to our asset purchase and collaboration agreement in the three months ended March 31, 2024.

Financing activities

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.

As a result, for the 2024 Notes exchanged subsequent to such notice, an exchanging noteholder will receive (i) up to $1,000 in cash per $1,000 principal amount of the 2024 Notes and (ii) ordinary shares of the Company, together with cash in lieu of any fractional shares, for any exchange consideration in excess of $1,000 per $1,000 principal amount of the 2024 Notes .

Net cash used in financing activities increased by $26.8 million in the three months ended March 31, 2024, compared to the same period in 2023, primarily due to:

• A decrease of $20.7 million in proceeds from employee equity incentive and purchase plans;

• An increase of $6.0 million in payment of employee withholding taxes related to share-based awards.

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 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.

In January 2024, we entered into an amendment to the Credit Agreement, as described below.

During the three months ended March 31, 2024, there were no other changes to our 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, 2023.

Credit Agreement

On May 5, 2021, the Company, Jazz Financing Lux S.à.r.l., or Jazz Lux, and certain of our other subsidiaries, as borrowers, or, collectively with the Company and Jazz Lux, the “Borrowers”, entered into the Credit Agreement by and among the Borrowers, the lenders and issuing banks from time to time party thereto, Bank of America, N.A., as administrative agent and U.S.

Bank Trust Company, National Association, as collateral trustee, or the Credit Agreement, that provided for (i) the Dollar Term Loan which was drawn by Jazz Lux on the Closing Date in U.S.

dollars (ii) the Euro Term Loan which was drawn by Jazz Lux on the Closing Date in Euros and (iii) the Revolving Credit Facility.

In January 2024, Jazz Lux entered into an amendment, or Repricing Amendment, to the Credit Agreement.

Upon entry into the Repricing Amendment, certain existing lenders converted outstanding Dollar Term Loans into a new tranche of U.S.

dollar term loans, or the Tranche B-1 Dollar Term Loans, and Jazz Lux borrowed $201.9 million aggregate principal amount of additional Tranche B-1 Dollar Term Loans, the proceeds of which were used to repay the outstanding Dollar Term Loans that were not converted.

The Tranche B-1 Dollar Term Loans are a separate class of term loans under the Credit Agreement with the same material terms (including with respect to maturity, prepayment, security, covenants and events of default) as the previously outstanding Dollar Term Loans, with the interest rate amended as described below.

The principal amount of Dollar Term Loans outstanding immediately prior to the Repricing Amendment and the outstanding principal amount of Tranche B-1 Dollar Term Loans immediately following the Repricing Amendment, each totaled $2.723 billion.

The Tranche B-1 Dollar Term Loans bear interest at a rate equal to either (a) U.S dollar Secured Overnight Financing Rate, or Term SOFR, or (b) the prime lending rate, in each case, plus an applicable margin.

The applicable margin for the Tranche B-1 Dollar Term Loans is 3.00% (in the case of Term SOFR borrowings) and 2.00% (in the case of borrowings at the prime lending rate), a decrease of 50 basis points from the applicable margin on the Initial Dollar Term Loans.

The Tranche B-1 Dollar Term Loans are subject to a Term SOFR floor of 0.50%.

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

The Tranche B-1 Dollar Term Loan is subject to a Term SOFR floor of 0.50% and loans under the Revolving Credit Facility are not subject to a floor.

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

As of March 31, 2024, the interest rate and effective interest rate on the Tranche B-1 Dollar Term Loans were 8.44% and 9.04%, respectively.

As of March 31, 2024, we had an undrawn Revolving Credit Facility totaling $500.0 million.

Contractual Obligations

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.

During the three months ended March 31, 2024, 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, 2023.

Critical Accounting Estimates

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conversely, to secure coverage from these organizations, we may be required to pay rebates or other discounts or other restrictions to reimbursement, either of which could diminish our sales or adversely affect our ability to sell our products profitably.

• The pricing of pharmaceutical products has come under increasing scrutiny as part of a global trend toward healthcare cost containment and resulting changes in healthcare law and policy, including recently enacted changes to Medicare, may impact our business in ways that we cannot currently predict, which could have a material adverse effect on our business and financial condition.

• The pricing of pharmaceutical products has come under increasing scrutiny as part of a global trend toward healthcare cost containment and resulting changes in healthcare law and policy, including changes to Medicare, may impact our business in ways that we cannot currently predict, which could have a material adverse effect on our business and financial condition.

• In addition to access, coverage and reimbursement, the commercial success of our products depends upon their market acceptance by physicians, patients, third party payors and the medical community.

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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 Part II, Item 1A in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023.

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, 2023, as supplemented by the risks and uncertainties described in "Risk Factors" Part II, Item 1A.in this Quarterly Report on Form 10-Q.

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 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.

During the three months ended March 31, 2024, 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, 2023.

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