What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-01 compared with 2024-05-02 · 136 added, 123 removed, 436 unchanged (37% of the section changed)

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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.

Risk Factors in Part II of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

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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In addition, we leverage our efficient, scalable operating model and integrated capabilities across our global infrastructure to effectively reach patients around the world.

In January 2022, we announced our Vision 2025, which aims to deliver sustainable growth and enhanced value, driving our continued transformation to an innovative, high-growth global pharmaceutical leader.

The three core components of our Vision 2025 focus on commercial execution, pipeline productivity and operational excellence.

Our strategy to deliver sustainable growth and enhanced value is focused on:

In January 2022, we announced Vision 2025, which outlined our key priorities to deliver sustainable growth and enhanced value across three pillars:

commercial execution, pipeline productivity and operational excellence.

In recent quarters, Vision 2025 has created significant focus on one single year in our future and achievement of near-term financial metrics, rather than how management is running the business for long-term value creation.

Consequently, in July 2024, we announced that we will no longer be providing Vision 2025 metrics, and that 2025 financial guidance will be provided on our fourth quarter 2024 earnings call as we continue to focus on creating long-term value.

Our strategy to deliver sustainable growth and enhanced value continues to be focused on:

• 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;

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September 2022 Canada

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.

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September 2021 Canada (licensed from PharmaMar) 4

Product Indications Initial Approval Date Markets

Defitelio® (defibrotide) Treatment of severe hepatic veno-occlusive disease, or VOD, also known as sinusoidal obstruction syndrome, or SOS, following hematopoietic stem cell transplantation, or HSCT, therapy.

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Since there is no cure for narcolepsy and long-term disease management is needed, we believe that Xywav represents an important therapeutic option for patients with this sleep disorder.

Our commercial efforts are focused on educating patients and physicians about the lifelong impact of high sodium intake, and how the use of Xywav enables them to address what is a modifiable risk factor.

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.

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

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.

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 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 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.

Exiting the second quarter of 2024, there were approximately 13,225 patients taking Xywav, including approximately 9,925 patients with narcolepsy and approximately 3,300 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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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.

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 25/25/50 mg/m2 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 and the rolling launch in Europe is ongoing.

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

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

This product has also been approved in Great Britain, Canada and Switzerland.

We acquired U.S.

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

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

With ongoing trends in the U.S.

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

We continue to expand into new markets internationally as the product receives approvals and reimbursement in relevant

In the U.S., with ongoing trends 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

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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.

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 completed a BLA submission in second-line BTC in March 2024.

In May 2024, FDA granted Priority Review of the BLA and set a target action date of November 29, 2024.

The European Medicines Agency, or EMA, has validated our Marketing Authorization Application, or MAA, for zanidatamab in second-line BTC;

we anticipate a response to our MAA in 2025.

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.

In July 2024, we announced the initiation of the Phase 3 EmpowHER-BC-303 to evaluate zanidatamab plus chemotherapy or trastuzumab plus chemotherapy in patients with HER2-positive breast cancer whose disease has progressed on previous trastuzumab deruxtecan (T-DXd) treatment.

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

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If approved, Werewolf is eligible to receive a tiered, mid-single-digit percentage royalty on net sales of JZP898.

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.

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.

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

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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.

In December 2021, we initiated a Phase 2 clinical trial 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 June 2024, we announced the ET trial did not achieve statistical significance on the primary and key secondary endpoint for the 30 mg dose.

We are continuing to evaluate data from this trial and await results from the ongoing Parkinson's disease tremor trial to determine next steps, if any, for the suvecaltamide program.

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.

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no liver toxicity signals were observed.

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

Following additional review of the trial findings, in July 2024, we announced that pending additional input from FDA, we plan to initiate a small Phase 1b trial of JZP441 in narcolepsy Type 1 patients.

We expect data from this trial will further our understanding of JZP441 and orexin-2 receptor agonism, providing learnings that could inform future development efforts.

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:

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

Zanidatamab Previously treated HER2-positive breast cancer in patients whose disease has progressed on previous T-DXd treatment (EMPOWHER-BC-303) (ongoing trial)

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

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

Product Candidates Description

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

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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

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Suvecaltamide (JZP385)

ET (ongoing trial)

Suvecaltamide (JZP385)

Parkinson's disease tremor (ongoing trial)

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

Undisclosed cannabinoids Other neuroscience (ongoing trials)

Undisclosed targets Sleep

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*Also known as DSP-0187

Operational Excellence

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 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 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.

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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.

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

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

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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.

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 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.

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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

We have the right to receive a meaningful royalty from Hikma on net sales of the Hikma AG product;

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

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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 addition, Hikma would need to set up its own REMS (or join an existing REMS operated by another company), 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.

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For example, in November and December 2022, we received notices from ten ANDA filers that they have each filed with FDA an ANDA for a generic version of Epidiolex.

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

In addition, there are non-FDA approved cannabidiol preparations being made available from companies through

the state-enabled medical marijuana industry, which might attempt to compete with Epidiolex.

Thus, significant uncertainty remains regarding the commercial potential of Epidiolex/Epidyolex.

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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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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.

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

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

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

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

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

The investigation by the U.S.

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

We may also become

subject to similar investigations by other state or federal governmental agencies.

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.

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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, 2023, as supplemented by the risks and

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

uncertainties described in "Risk Factors" in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.

Results of Operations

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Three Months Ended

March 31, Increase/

2024 2023 (Decrease)

June 30, Increase/ Six Months Ended

June 30, Increase/

2024 2023 (Decrease) 2024 2023 (Decrease)

Product sales, net $ 964,144 $ 946,987 2 % $ 1,806,246 $ 1,831,206 (1) %

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

Royalties and contract revenues 59,681 10,330 N/A(1) 119,562 18,923 N/A(1)

Cost of product sales (excluding amortization of acquired developed technologies) 109,902 97,537 13 % 205,389 226,181 (9) %

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Foreign exchange (gain) loss (507) 2,382 (121) % 1,186 (811) (246) %

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

Income tax benefit (30,653) (24,323) 26 % (18,984) (39,647) (52) %

Equity in loss of investees 12 1,669 (99) % 1,359 2,674 (49) %

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Three Months Ended

March 31, Increase/

2024 2023 (Decrease)

June 30, Increase/ Six Months Ended

June 30, Increase/

2024 2023 (Decrease) 2024 2023 (Decrease)

Xywav $ 368,472 $ 326,564 13 % $ 683,772 $ 604,325 13 %

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Product sales, net 964,144 946,987 2 % 1,806,246 1,831,206 (1) %

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

High-sodium oxybate AG royalty revenue 54,164 5,514 N/A(1) 104,111 7,610 N/A(1)

Other royalty and contract revenues 5,517 4,816 15 % 15,451 11,313 37 %

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Product Sales, Net

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.

Xywav product sales increased in the three and six months ended June 30, 2024, compared to the same periods in 2023, primarily due to increased sales volumes of 14% and 15% in the respective periods 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.

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Exiting the quarter, there were 9,925 patients taking Xywav for narcolepsy and 3,300 taking Xywav for IH, an increase of approximately 7% and 50%, 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.

Xyrem product sales decreased in the three and six months ended June 30, 2024, compared to the same periods in 2023, primarily due to decreased sales volumes of 57% and 61% in the respective periods, due to high-sodium oxybate competition, the adoption of Xywav by existing Xyrem patients and higher gross to net deductions, offset by a higher selling price.

Epidiolex/Epidyolex product sales increased in the three and six months ended June 30, 2024, compared to the same periods in 2023, primarily due to increased sales volumes of 17% and 11% in the respective periods, due to increased demand and geographic expansion and a higher average selling price.

Rylaze/Enrylaze product sales increased in the three months ended June 30, 2024, compared to the same period in 2023, primarily due to a higher average selling price.

Rylaze/Enrylaze product sales increased in the six months ended June 30, 2024, compared to the same period in 2023, primarily due to increased sales volumes of 11% and a higher average selling price.

Rylaze demand is driven by widespread adoption in pediatric asparaginase-based oncology protocols in the U.S.

and adoption of the Monday/Wednesday/Friday dosing regimen.

Zepzelca product sales increased in the three and six months ended June 30, 2024, compared to the same periods in 2023, due to increased sales volumes and a higher average selling price, offset by higher gross to net deductions.

Defitelio/defibrotide product sales decreased in the three months ended June 30, 2024, compared to the same period in 2023, primarily due to decreased sales volumes offset by a higher average selling price.

Defitelio/defibrotide product sales increased in the six months ended June 30, 2024, compared to the same period in 2023, primarily due to a higher average selling price, offset by decreased sales volumes.

Vyxeos product sales increased in the three months ended June 30, 2024, compared to the same period in 2023, primarily due to an increase in sales volumes and lower gross to net deductions, offset by a lower average selling price due to regional mix.

Vyxeos product sales increased in the six months ended June 30, 2024, compared to the same period in 2023, primarily due to an increase in sales volumes, partially offset by a lower average selling price due to regional mix and higher gross to net deductions.

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 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

Royalties and contract revenues increased in the three and six months ended June 30, 2024, compared to the same periods 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 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.

Cost of product sales increased in the three months ended June 30, 2024, compared to the same period in 2023, primarily due to an increase in the acquisition accounting inventory fair value step-up expense, or fair value step-up expense, and changes in product mix.

Cost of product sales decreased in the six months ended June 30, 2024, compared to the same period in 2023, primarily due to a reduction in the fair value step-up expense.

Gross margin as a percentage of net product sales was 88.6% for the three and six months ended June 30, 2024 compared to 89.7% and 87.6% for the same periods in 2023.

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 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.

Selling, general and administrative expenses for the three months ended June 30, 2024, decreased compared to the same period in 2023, primarily due to costs related to program terminations of $23.5 million incurred in the three months ended June 30, 2023, partially offset by increased investment in our priority programs including higher marketing expense of $10.8 million.

Selling, general and administrative expenses for the six months ended June 30, 2024, increased compared to the same period in 2023, primarily due to an increase in compensation-related expenses of $21.4 million primarily driven by higher headcount in support of our key growth drivers, increased marketing investment in our priority programs of $20.5 million offset by costs related to program terminations of $23.5 million incurred in the six months ended June 30, 2023.

For 2024, 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

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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

June 30, Six Months Ended

2024 2023 2024 2023

Clinical studies and outside services $ 134,118 $ 120,278 $ 265,584 $ 226,623

Personnel expenses 68,305 66,099 141,301 126,490

Milestone expense — 500 — 500

Other 18,311 22,361 36,696 45,035

Total $ 220,734 $ 209,238 $ 443,581 $ 398,648

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.

Research and development expenses increased by $11.5 million and $44.9 million in the three and six months ended June 30, 2024, compared to the same periods in 2023.

Clinical studies and outside services costs increased in the three and six months ended June 30, 2024, compared to the same periods in 2023, primarily due to higher costs related to zanidatamab programs.

Personnel expenses increased in the three and six months ended June 30, 2024, compared to the same periods 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 March 31, 2024, compared to the same period in 2023, primarily due to the impact of foreign currency translation adjustments.

Intangible asset amortization increased in the three and six months ended June 30, 2024, compared to the same periods 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 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.

Acquired in-process research and development, or IPR&D, expense in the six months ended June 30, 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 $8.0 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.

Interest expense, net decreased by $11.4 million and $19.5 million in the three and six months ended June 30, 2024, compared to the same periods 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 higher interest income as a result of higher interest rates on our deposits and 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

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

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.

Income Tax Benefit

Our income tax benefit was $30.7 million and $19.0 million for the three and six months ended June 30, 2024, respectively, compared to $24.3 million and $39.6 million for the same periods in 2023, relating to tax arising on income or losses in Ireland, the U.K., the U.S.

and certain other foreign jurisdictions and tax deficiencies from share based compensation, offset by deductions on subsidiary equity, foreign derived intangible income benefits and tax credits.

Liquidity and Capital Resources

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.

As of June 30, 2024, we had cash, cash equivalents and investments of $2.0 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, or 2026 Notes, and $575.0 million principal amount on our 1.50% exchangeable senior notes due 2024.

We generated cash flows from operations of $598.6 million during the six months ended June 30, 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 of €625.0 million, or $753.0 million, and made voluntary and mandatory repayments of $300.0 million and $93.0 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.

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 Condensed Consolidated Financial Statements, included in Part I, Item 1 of this Quarterly Report on Form 10‑Q.

This substantial level of debt could have important consequences to our business, including, but not limited to the factors set forth in “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023, under the heading “We have incurred substantial debt, which could impair our flexibility and access to capital and adversely affect our financial position, and our business would be adversely affected if we are unable to service our debt obligations.”

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.

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.

obligations for the foreseeable future.

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 our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, 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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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.

At our annual general meeting of shareholders in July 2024, our shareholders voted to approve our proposal to dis-apply the statutory pre-emption obligation.

This current pre-emption opt-out authority is due to expire in January 2026.

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

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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 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.

In November 2016, our board of directors authorized a share repurchase program and as of June 30, 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.

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

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.

During the three and six months ended June 30, 2024, we spent a total of $161.4 million to purchase 1.5 million of our ordinary shares under the share repurchase program at an average total purchase price, including commissions, of $110.75 per share.

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

All ordinary shares repurchased were cancelled.

As of June 30, 2024, the remaining amount authorized under the share repurchase program was $47,475, exclusive of any brokerage commissions.

In July 2024, our board of directors authorized a new share repurchase authorization to repurchase ordinary shares having an aggregate purchase price of $500 million, exclusive of any brokerage commissions.

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

Three Months Ended

Six Months Ended

Net cash provided by operating activities $ 598,581 $ 617,473

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Operating activities

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.

Net cash provided by operating activities in the six months ended June 30, 2024, was broadly in line with the same period in 2023.

Investing activities

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:

Net cash used in investing activities increased by $438.4 million in the six months ended June 30, 2024, compared to the same period in 2023, primarily due to the following:

• $425.0 million net increase in the acquisition of investments, driven by time deposits;

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

• $10.0 million upfront payment to Redx related to our asset purchase and collaboration agreement in the six months ended June 30, 2024.

Financing activities

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:

Net cash used in financing activities increased by $91.2 million in the six months ended June 30, 2024, compared to the same period in 2023, primarily due to:

• An increase of $65.8 million in share repurchases;

• 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.

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.

In January and July 2024, we entered into amendments to the Credit Agreement, as described below.

In July 2024, we made an irrevocable election to fix the settlement method for exchanges of the 2026 Notes and, as a result, an exchanging noteholder will receive (i) up to $1,000 in cash per $1,000 principal amount of the 2026 Notes and (ii) any combination of cash and/or ordinary shares of the Company, for any exchange consideration in excess of $1,000 per $1,000 principal amount of the 2026 Notes.

During the six months ended June 30, 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

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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.

In January 2024, Jazz Lux entered into an amendment, or Repricing Amendment No.1, to the Credit Agreement.

Upon entry into the Repricing Amendment No.1, certain existing lenders converted outstanding Dollar Term Loan into a new tranche of U.S.

In July 2024, Jazz Lux entered into an amendment, or Repricing Amendment No.

2, to the Credit Agreement, or the Amended Credit Agreement.

Upon entry into the Amended Credit Agreement, certain existing lenders converted the outstanding Tranche B-1 Dollar Term Loans into a new tranche of U.S.

dollar term loans, or the Tranche B-2 Dollar Term Loans, and Jazz Lux borrowed $289.6 million aggregate principal amount of additional Tranche B-2 Dollar Term Loans, the proceeds of which were used to repay the outstanding Tranche B-1 Dollar Term Loans that were not converted.

The Tranche B-2 Dollar Term Loans are a separate class of term loans under the Amended Credit Agreement with the same material terms (including with respect to maturity, prepayment, security, covenants and events of default) as the previously outstanding Tranche B-1 Dollar Term Loans and the initial Dollar Term Loans incurred on May 5, 2021, with the interest rate amended as described below and the removal of the credit spread adjustment.

The principal amount of Tranche B-1 Dollar Term Loans outstanding immediately prior to the Repricing Amendment No.

2 and the outstanding principal amount of Tranche B-2 Dollar Term Loans immediately following the Repricing Amendment No.2, each totaled $2.7 billion.

The Tranche B-2 Dollar Term Loans bear interest at a rate equal to either (a) Term SOFR, or (b) the prime lending rate, in each case, plus an applicable margin.

The applicable margin for the Tranche B-2 Dollar Term Loans is 2.25% (in the case of Term SOFR borrowings) and 1.25% (in the case of borrowings at the prime lending rate), a decrease of 75 basis points from the applicable margin on the Tranche B-1 Dollar Term Loans.

The Tranche B-2 Dollar Term Loan is subject to a Term SOFR floor of 0.50%.

As of June 30, 2024, the interest rate and effective interest rate on the Tranche B-1 Dollar Term Loans were 8.46% and 9.04%, respectively.

At the closing of Repricing Amendment No.

2, the interest rate and effective interest rate on the Tranche B-2 Dollar Term Loans were 7.59% and 8.27%, respectively.

The Tranche B-2 Dollar Term Loans will amortize in quarterly installments equal to 0.286294791% of the initial aggregate principal amount thereof, with the remaining balance payable on May 5, 2028.

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.

As of June 30, 2024, we had an undrawn Revolving Credit Facility totaling $500.0 million.

Contractual Obligations

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.

During the six months ended June 30, 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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These known and unknown risks, uncertainties and other factors include, without limitation:

• Our inability to maintain or increase sales from our oxybate franchise would have a material adverse effect on our business, financial condition, results of operations and growth prospects.

• Our inability to maintain revenues from our oxybate franchise together with high-sodium oxybate AG royalty revenue would have a material adverse effect on our business, financial condition, results of operations and growth prospects.

• The introduction of new products in the U.S.

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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 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.

• While we expect Xywav 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.

• We face substantial competition from other companies, including companies with larger sales organizations and more experience working with large and diverse product portfolios, and competition from generic drugs.

• Adequate coverage and reimbursement from third party payors may not be available for our products and we may be unable to successfully contract for coverage from pharmacy benefit managers and other organizations;

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.

conversely, to secure coverage from these organizations as they consolidate and gain negotiating leverage, 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 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.

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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, 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 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.

During the six months ended June 30, 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