Jazz Pharmaceuticals plc 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the notes to condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10‑Q. This discussion contains forward-looking statements that involve risks and uncertainties. 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, 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. Forward-looking statements are statements that attempt to forecast or anticipate future developments in our business, financial condition or results of operations. See the “Cautionary Note Regarding Forward-Looking Statements” that appears at the end of this discussion. These statements, like all statements in this report, speak only as of the date of this Quarterly Report on Form 10‑Q (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments. Overview Jazz Pharmaceuticals plc is a global biopharmaceutical company whose purpose is to innovate to transform the lives of patients and their families. 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, 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. We focus on patient populations with high unmet needs. We identify and develop differentiated therapies for these patients that we expect will be long-lived assets and that we can support with an efficient commercialization model. In addition, we leverage our efficient, scalable operating model and integrated capabilities across our global infrastructure to effectively reach patients around the world. 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; • Expanding and advancing our pipeline to achieve a valuable portfolio of durable, highly differentiated products; • Continuing to build a flexible, efficient and productive development engine for targeted therapeutic areas to identify and progress early-, mid- and late-stage assets; • Identifying and acquiring novel product candidates and approved therapies to complement our existing pipeline and commercial portfolio; • Investing in an efficient, scalable operating model and differentiated capabilities to enable growth; and • Unlocking further value through indication expansion and entry into global markets. 32 Table of Contents In 2024, consistent with our strategy, we are continuing to focus on research and development activities within our neuroscience and oncology therapeutic areas. Our lead marketed products, listed below, are approved in countries around the world to improve patient care. Product Indications Initial Approval Date Markets NEUROSCIENCE Xywav® (calcium, magnesium, potassium, and sodium oxybates) Treatment of cataplexy or excessive daytime sleepiness, or EDS, in patients seven years of age and older with narcolepsy. July 2020 U.S. Treatment of idiopathic hypersomnia, or IH, in adults. August 2021 U.S. Treatment of cataplexy in patients with narcolepsy. May 2023 Canada Epidiolex® (cannabidiol) Treatment of seizures associated with Lennox-Gastaut syndrome, or LGS, Dravet syndrome, or DS, or tuberous sclerosis complex, or TSC, in patients 1 year of age and older. 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. 1 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 ONCOLOGY Rylaze® (asparaginase erwinia chrysanthemi (recombinant)- rywn) A component of a multi-agent chemotherapeutic regimen for the treatment of acute lymphoblastic leukemia, or ALL, and lymphoblastic lymphoma, or LBL, in adult and pediatric patients 1 month or older who have developed hypersensitivity to E. coli-derived asparaginase. June 2021 U.S. Rylaze® (crisantaspase recombinant) A component of a multi-agent chemotherapeutic regimen for the treatment of ALL and LBL, in adults and pediatric patients 1 year or older who have developed hypersensitivity to E. coli-derived asparaginase. September 2022 Canada Enrylaze® (recombinant crisantaspase) A component of a multi-agent chemotherapeutic regimen for the treatment of ALL and LBL in adult and pediatric patients (1 month and older) who have developed hypersensitivity or silent inactivation to E. coli-derived asparaginase. September 2023 EU, 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 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. September 2021 Canada (licensed from PharmaMar) 4 1 The clobazam restriction limited to EU and Great Britain 2 European Economic Area 3 Accelerated approval received from U.S. Food and Drug Administration, or FDA 4 Conditional approval received from Health Canada 33 Table of Contents Neuroscience 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 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. In August 2021, Xywav became the first and only therapy approved by FDA for the treatment of IH in adults. Xywav is an oxybate therapy that contains 92% less sodium than Xyrem. Xywav has become a standard of care for patients with narcolepsy and IH. 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 for cardiovascular morbidity. 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. ODE extends through January 2028. 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, 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. Xywav is the only approved oxybate therapy that does not carry a warning and precaution related to high sodium intake. On August 12, 2021, FDA approved Xywav for the treatment of IH in adults. Xywav remains the first and only FDA-approved therapy to treat IH. We initiated the U.S. 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), severe sleep inertia, and prolonged and non-restorative nighttime sleep. An estimated 37,000 people in the U.S. have been diagnosed with IH and are actively seeking healthcare. We have agreements in place for Xywav with all three major pharmacy benefit managers, or PBMs, in the U.S. To date, we have entered into agreements with various entities and have achieved benefit coverage for Xywav in both narcolepsy and IH indications for approximately 90% of commercial lives. 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 2024, there were approximately 13,625 patients taking Xywav, including approximately 10,075 patients with narcolepsy and approximately 3,550 patients with IH. We acquired Epidiolex (Epidyolex outside the U.S.) in May 2021 as part of the acquisition of GW Pharmaceuticals plc, or GW, which we refer to as the GW Acquisition, which expanded our growing neuroscience business with a global, high-growth childhood-onset epilepsy franchise. Epidiolex was approved in the U.S. in June 2018 for the treatment of seizures associated with two rare and severe forms of epilepsy, LGS and DS, in patients two years of age and older, and subsequently approved in July 2020 for the treatment of seizures associated with TSC in patients one year of age and older. FDA also approved the expansion of all existing indications, LGS and DS, to patients one year of age and older. The rolling European launch of Epidyolex is also underway following European Commission, or EC, approval in September 2019 for use as adjunctive therapy of seizures associated with LGS or DS, in conjunction with clobazam, for patients two years of age and older. The clobazam restriction is limited to the EU and Great Britain. Epidyolex is now launched in all five key European markets: United Kingdom, Germany, Italy, Spain and France. Epidyolex was also approved for adjunctive therapy of seizures associated with TSC for patients 2 years of age and older in the EU in April 2021 and Great Britain in August 2021, and is approved or under review for this indication in other markets. Outside the U.S. and Europe, Epidiolex/Epidyolex is approved in Israel, Canada, Australia, New Zealand and Taiwan. Oncology Rylaze was approved by FDA in June 2021 under the Real-Time Oncology Review program, and was launched in the U.S. in July 2021 for use as a component of a multi-agent chemotherapeutic regimen for the treatment of patients with ALL or LBL in pediatric and adult patients one month and older who have developed hypersensitivity to E. coli-derived asparaginase. 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 34 Table of Contents 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 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. development and commercialization rights to Zepzelca in early 2020, and launched six months thereafter, with an indication for treatment of patients with SCLC with disease progression on or after platinum-based chemotherapy. Our education and promotional efforts are focused on SCLC-treating physicians. We are continuing to raise awareness of Zepzelca across academic and community cancer centers. In collaboration with F. Hoffmann-La Roche Ltd, or Roche, we have an ongoing Phase 3 pivotal clinical trial in maintenance treatment for extensive-stage SCLC of Zepzelca in combination with Tecentriq® (atezolizumab) following induction therapy with carboplatin, etoposide and Tecentriq. In October 2024, we announced positive top-line results from the trial showing a statistically significant and clinically meaningful benefit for Zepzelca and atezolizumab in combination in the first-line maintenance setting. We plan to submit a supplemental New Drug Application, or sNDA, in the first half of 2025 to support this combination in the first-line maintenance setting. 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. Moving forward, while HSCT procedures are gradually returning to pre-pandemic numbers, we expect changes in chemotherapy regimens and the increasing use of cell therapies to potentially lower the incidence of sVOD; additionally, there has been a reduction of prophylactic use of Defitelio in Europe. Vyxeos is a treatment for adults with newly-diagnosed t-AML, or AML-MRC. 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 continue to expand into new markets internationally as the product receives approvals and reimbursement in relevant markets. 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 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 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. 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. 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. Zymeworks is also eligible to receive regulatory and commercial milestone payments of up to $1.4 billion, for total potential payments of $1.76 billion. Pending approval, Zymeworks is eligible to receive tiered royalties between 10% and 20% on our net sales. 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 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 35 Table of Contents zanidatamab plus chemotherapy or trastuzumab plus chemotherapy in patients with HER2-positive breast cancer whose disease has progressed on previous trastuzumab deruxtecan, or T-DXd, treatment. 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 October 2024, we announced positive top-line results from the trial showing a statistically significant and clinically meaningful benefit for Zepzelca and atezolizumab in combination in the first-line maintenance setting. We plan to submit an sNDA in the first half of 2025 to support this combination in the first-line maintenance setting. 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 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. Preliminary findings from this study presented at the 2024 World Conference on Lung Cancer demonstrated Zepzelca provided clinical benefit when administered as second-line SCLC therapy. The safety and tolerability profile observed in this study was consistent with prior findings, with no new safety signals reported. 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. JZP815 is an investigational stage pan-RAF kinase inhibitor that targets specific components of the mitogen-activated protein kinase pathway that, when activated by oncogenic mutations, can be a frequent driver of human cancer. 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. 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. 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. 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. In August 2024, we announced top-line results from the trial. The trial did not meet the primary efficacy endpoint of a pre-specified percentage change in indication-associated seizure frequency during the treatment period (up to 16 weeks) compared to baseline in Japanese pediatric patients; however, numeric improvements were observed in the primary and several secondary endpoints. No new safety signals were observed in the trial. We are continuing to collect data in Japanese patients and plan to engage with regulatory authorities in Japan regarding a potential new drug application. 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. 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. 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 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. Following additional review of the trial findings and input from FDA, we plan to initiate a small Phase 1b trial of JZP441 in narcolepsy Type 1 patients in 2025. 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. 36 Table of Contents 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 ONCOLOGY Regulatory Review Zanidatamab Previously treated, advanced HER2-expressing BTC (ongoing trial) (pivotal trial) Phase 3 Zanidatamab First-line HER2-positive GEA (ongoing trial) 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) Confirmatory second-line trial (PharmaMar study) (ongoing trial) Vyxeos AML or high-risk Myelodysplastic Syndrome, or MDS (AML18) (cooperative group studies) (ongoing trial) Newly diagnosed adults with standard- and high-risk AML (AML Study Group cooperative group study) (ongoing trial) Newly diagnosed pediatric patients with AML (Children’s Oncology Group cooperative group study) (ongoing trial) Phase 2 Zanidatamab HER2-expressing GEA, BTC or colorectal cancer in combination with standard first-line chemotherapy (ongoing trial) Zanidatamab Basket trial including HER2-positive solid tumors (DiscovHER-Pan-206) (ongoing trial) Vyxeos High-risk MDS (European Myelodysplastic Syndromes) (cooperative group 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) Phase 2a Zanidatamab Previously treated HER2+ HR+ breast cancer in combination with palbociclib (ongoing trial) Phase 1b/2 Zanidatamab First-line breast cancer and GEA (BeiGene trial) (ongoing trial) Zanidatamab HER2-expressing breast cancer in combination with ALX148 (ongoing trial) Phase 1 JZP815 Raf and Ras mutant tumors (acquired from Redx Pharma plc, or Redx) (ongoing trial) Zanidatamab Previously treated metastatic HER2-expressing cancers in combination with select antineoplastic therapies (cooperative group study) (ongoing trial) JZP341 (long-acting Erwinia asparaginase) Solid tumors (licensed from Ligand Pharmaceuticals Incorporated) (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) Preclinical KRAS inhibitor targets G12D selective and pan-KRAS molecules (acquired from Redx) Undisclosed targets Oncology CombiPlex ® Hematology/oncology exploratory activities 37 Table of Contents Product Candidates Description NEUROSCIENCE Phase 3 Epidyolex LGS, TSC and DS (ongoing trial in Japan) Phase 2 Suvecaltamide (JZP385) Parkinson's disease tremor (ongoing trial) Phase 1 JZP324 Oxybate extended-release formulation (planned trial) JZP441* Potent, highly selective oral orexin-2 receptor agonist (paused) Preclinical Undisclosed targets Sleep Epilepsy Other Neuroscience *Also known as DSP-0187 Challenges, Risks and Trends Related to Our Business 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 oxybate revenues will remain at current levels. Our ability to successfully commercialize Xywav depends 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 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. Avadel’s Lumryz was launched in the U.S. market in June 2023. On June 22, 2023, we filed a complaint in the United States District Court for the District of Columbia seeking a declaration that FDA’s approval of the New Drug Application, or NDA, for Avadel's Lumryz was unlawful. In the complaint, we alleged 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. On September 15, 2023, we filed a motion for summary judgment. On October 20, 2023, Avadel and FDA filed cross motions for summary judgment. Oral argument on these motions was held on May 10, 2024, and on October 30, 2024, the District Court issued an order denying Jazz’s motion for summary judgment and granting Avadel’s and the FDA’s cross-motions for summary judgment. Jazz respectfully disagrees with the Court’s decision and is evaluating potential options for appeal. 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 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 product; 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. 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 (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 38 Table of Contents 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 to be paid to us. Amneal launched its AG version of high-sodium oxybate in July 2023. At this time, Amneal has rights to sell a low-single-digit percentage of historical Xyrem sales over each 6-month sales period. At this time, Lupin and Par have elected not to launch an AG product. AG products will be distributed through the same REMS as Xywav and Xyrem. We also granted each of Amneal, Lupin and Par a license to launch its own generic sodium oxybate product under its ANDA on or after December 31, 2025, or earlier under certain circumstances, including the circumstance where Hikma elects to launch its own generic product. If Amneal, Lupin or Par elects to launch its own generic product under such circumstance, it will no longer have the right to sell an AG product. In addition, any company commercializing a generic version of high-sodium oxybate would need to establish its own REMS, or join an existing REMS operated by another company. In the future, we expect our oxybate products to 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 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. Our financial condition, results of operations and growth prospects are also dependent on our ability to maintain or increase sales of Epidiolex/Epidyolex in the U.S. and Europe, which is subject to many risks and there is no guarantee that we will be able to continue to successfully commercialize Epidiolex/Epidyolex for its approved indications. The commercial success of Epidiolex/Epidyolex depends on the extent to which patients and physicians accept and adopt Epidiolex/Epidyolex as a treatment for seizures associated with LGS, DS and TSC, and we do not know whether our or others’ estimates in this regard will be accurate. Physicians may not prescribe Epidiolex and patients may be unwilling to use Epidiolex/Epidyolex if coverage is not provided or reimbursement is inadequate to cover a significant portion of the cost. Additionally, any negative development for Epidiolex/Epidyolex in the market, in clinical development for additional indications, or in regulatory processes in other jurisdictions, may adversely impact the commercial results and potential of Epidiolex/Epidyolex. Moreover, we expect that Epidiolex will face competition from generic products in the future. 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. Thus, significant uncertainty remains regarding the commercial potential of Epidiolex/Epidyolex. In addition to our neuroscience products and product candidates, we are commercializing a portfolio of oncology products, including Rylaze, Zepzelca, Defitelio and Vyxeos. An inability to effectively commercialize Rylaze, Zepzelca, Defitelio and Vyxeos and to maximize their potential where possible through successful research and development activities could have a material adverse effect on our business, financial condition, results of operations and growth prospects. 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 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. 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. Nonetheless, Epidiolex and the other products and technologies acquired may not be successful or continue to grow at the same rate as if our companies operated independently or they may require significantly greater resources and investments than originally anticipated. For example, in the third quarter of 2022, we 39 Table of Contents recorded a $133.6 million asset impairment charge as a result of the decision to discontinue the nabiximols program. As a result, the anticipated benefits of the GW Acquisition may not be realized at the expected level, within the expected timeframe or at all or may take longer to realize or cost more than expected, which could materially and adversely affect our business, financial condition, results of operations and growth prospects. Our industry has been, and is expected to continue to be, subject to healthcare cost containment and drug pricing scrutiny by regulatory agencies in the U.S. and internationally. 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, 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 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. If we fail to obtain and maintain adequate formulary positions and institutional access for our current products and future approved products, we will not be able to achieve a return on our investment and our business, financial condition, results of operations and growth prospects would be materially adversely affected. While certain preparations of cannabis remain Schedule I controlled substances, if such products are approved by FDA for medical use in the U.S. they are rescheduled to Schedules II-V, since approval by FDA satisfies the “accepted medical use” requirement; or such products may be removed from control under the Controlled Substances Act entirely. If any of our product candidates receive FDA approval, the Department of Health and Human Services and the U.S. Drug Enforcement Administration will make a scheduling determination. U.S. or foreign regulatory agencies may request additional information regarding the abuse potential of our products which may require us to generate more clinical or other data than we currently anticipate to establish whether or to what extent the substance has an abuse potential, which could increase the cost, delay the approval and/or delay the launch of that product. Finally, business practices by pharmaceutical companies, including product formulation improvements, patent litigation settlements, and REMS programs, have increasingly drawn public scrutiny from legislators and regulatory agencies, with allegations that such programs are used as a means of improperly blocking or delaying competition. Government investigations with respect to our business practices, including as they relate to the Xywav and Xyrem REMS, the launch of Xywav, our Xyrem patent litigation settlement agreements or otherwise, could cause us to incur significant monetary charges to resolve these matters and could distract us from the operation of our business and execution of our strategy. 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. It is possible that additional lawsuits will be filed against us making similar or related allegations. We cannot predict the outcome of these or potential additional lawsuits; 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. 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. 40 Table of Contents Results of Operations The following table presents our revenues and expenses (in thousands, except percentages): Three Months Ended September 30, Increase/ Nine Months Ended September 30, Increase/ 2024 2023 (Decrease) 2024 2023 (Decrease) Product sales, net $ 989,707 $ 938,398 5 % $ 2,795,953 $ 2,769,604 1 % Royalties and contract revenues 65,262 33,742 93 % 184,824 52,665 N/A(1) Cost of product sales (excluding amortization of acquired developed technologies) 111,611 102,153 9 % 317,000 328,334 (3) % Selling, general and administrative 325,772 308,310 6 % 1,016,007 947,071 7 % Research and development 199,919 234,402 (15) % 643,500 633,050 2 % Intangible asset amortization 157,457 154,883 2 % 468,410 456,731 3 % Acquired in-process research and development — — — 10,000 1,000 N/A(1) Interest expense, net 58,702 71,497 (18) % 186,841 219,114 (15) % Foreign exchange loss 701 1,377 (49) % 1,887 566 233 % Income tax benefit (14,533) (47,176) (69) % (33,517) (86,823) (61) % Equity in loss (gain) of investees 285 (126) N/A(1) 1,644 2,548 (35) % ____________________________ (1) Comparison to prior period not meaningful. Revenues The following table presents our net product sales, royalties and contract revenues, and total revenues (in thousands, except percentages): Three Months Ended September 30, Increase/ Nine Months Ended September 30, Increase/ 2024 2023 (Decrease) 2024 2023 (Decrease) Xywav $ 388,466 $ 331,633 17 % $ 1,072,238 $ 935,958 15 % Xyrem 58,114 125,110 (54) % 184,526 463,009 (60) % Epidiolex/Epidyolex 251,558 213,711 18 % 697,376 604,846 15 % Sativex 4,586 4,627 (1) % 13,704 14,531 (6) % Total Neuroscience 702,724 675,081 4 % 1,967,844 2,018,344 (3) % Rylaze/Enrylaze 98,780 104,859 (6) % 309,359 292,479 6 % Zepzelca 85,843 77,994 10 % 241,990 215,523 12 % Defitelio/defibrotide 65,818 47,730 38 % 158,915 132,917 20 % Vyxeos 34,313 29,827 15 % 109,348 100,583 9 % Total Oncology 284,754 260,410 9 % 819,612 741,502 11 % Other 2,229 2,907 (23) % 8,497 9,758 (13) % Product sales, net 989,707 938,398 5 % 2,795,953 2,769,604 1 % High-sodium oxybate AG royalty revenue 58,157 28,921 101 % 162,268 36,531 N/A(1) Other royalty and contract revenues 7,105 4,821 47 % 22,556 16,134 40 % Total revenues $ 1,054,969 $ 972,140 9 % $ 2,980,777 $ 2,822,269 6 % ___________________________ (1) Comparison to prior period not meaningful. Product Sales, Net Xywav product sales increased in the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to increased sales volumes of 17% 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. 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 10,075 patients taking Xywav for narcolepsy and 3,550 taking Xywav for IH, an increase of approximately 6% and 39%, respectively, compared to the same period in 2023 . Xyrem product sales decreased 41 Table of Contents in the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to decreased sales volumes of 53% and 59% in the respective periods, due to high-sodium oxybate competition, the adoption of Xywav by existing Xyrem patients and higher gross to net deductions, partially offset by a higher selling price. Epidiolex/Epidyolex product sales increased in the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to increased sales volumes of 13% and 12% in the respective periods, due to increased demand and geographic expansion and a higher average selling price. Rylaze/Enrylaze product sales decreased in the three months ended September 30, 2024, compared to the same period in 2023, primarily due to decreased sales volumes of 2%, partially offset by a higher average selling price. Rylaze/Enrylaze product sales increased in the nine months ended September 30, 2024, compared to the same period in 2023, due to a higher average selling price and increased sales volumes of 6%, partially offset by higher gross to net deductions. Rylaze sales volumes in the three and nine months ended September 30, 2024, have been affected by a recent update to the Children’s Oncology Group, or COG, pediatric treatment protocols for ALL which impact the timing of asparaginase administration. While this will have a temporary negative impact on Rylaze revenue in the third and fourth quarters of 2024, we do not expect it will affect ongoing demand and we anticipate our revenue will normalize by early 2025. We expect that Rylaze demand will continue to be driven by widespread utilization in pediatric asparaginase-based oncology protocols in the U.S. and the opportunity for future growth in the adolescent and young adult market. Zepzelca product sales increased in the three and nine months ended September 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 increased in the three months ended September 30, 2024, compared to the same period in 2023, primarily due to increased sales volumes. Defitelio/defibrotide product sales increased in the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to increased sales volumes and, to a lesser extent, a higher average selling price. Vyxeos product sales increased in the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to an increase in sales volumes, partially offset by a lower average selling price due to regional mix. 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 the impact of the update to the COG treatment protocol on the timing of Rylaze administration, which we expect to be primarily limited to the third and fourth quarters of 2024 and to normalize by early 2025, and a decrease in sales of Xyrem due to the impact of high-sodium oxybate competition and continued Xywav adoption. Royalties and Contract Revenues Royalties and contract revenues increased in the three and nine months ended September 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 oxybate AG. 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 increased in the three months ended September 30, 2024, compared to the same period in 2023, primarily due to higher product sales, net and an increase in the acquisition accounting inventory fair value step-up expense, or fair value step-up expense. Cost of product sales decreased in the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to a reduction in the fair value step-up expense, partially offset by changes in product mix. Gross margin as a percentage of net product sales was 88.7% for both the three and nine months ended September 30, 2024, compared to 89.1% and 88.1% for the same periods in 2023. Cost of product sales for 2024 is expected to be in line with 2023. 42 Table of Contents Selling, General and Administrative Expenses Selling, general and administrative expenses for the three months ended September 30, 2024, increased compared to the same period in 2023, primarily due to increased compensation-related expenses of $15.3 million, primarily driven by higher headcount in support of our key growth drivers. Selling, general and administrative expenses for the nine months ended September 30, 2024, increased compared to the same period in 2023, primarily due to increased compensation-related expenses of $36.7 million, primarily driven by higher headcount in support of our key growth drivers, increased marketing investment in our priority programs of $18.5 million, increased litigation costs of $16.9 million, offset by costs related to program terminations of $23.5 million incurred in the nine months ended September 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 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. We do not track fully-burdened research and development expenses on a project-by-project basis. We manage our research and development expenses by identifying the research and development activities that we anticipate will be performed during a given period and then prioritizing efforts based on our assessment of which development activities are important to our business and have a reasonable probability of success, and by dynamically allocating resources accordingly. We also continually review our development pipeline projects and the status of their development and, as necessary, reallocate resources among our development pipeline projects that we believe will best support the future growth of our business. The following table provides a breakout of our research and development expenses by major categories of expense (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Clinical studies and outside services $ 108,362 $ 140,036 $ 373,946 $ 366,659 Personnel expenses 71,081 65,945 212,382 192,435 Milestone expense — 5,000 — 5,500 Other 20,476 23,421 57,172 68,456 Total $ 199,919 $ 234,402 $ 643,500 $ 633,050 Research and development expenses decreased by $34.5 million in the three months ended September 30, 2024, compared to the same period in 2023. Clinical studies and outside services costs decreased in the three months ended September 30, 2024, compared to the same period in 2023, primarily due to the inclusion of costs related to JZP150 (post-traumatic stress disorder, or PTSD) in the three months ended September 30, 2023 and lower costs related to zanidatamab. Research and development expenses increased by $10.5 million in the nine months ended September 30, 2024, compared to the same period in 2023. Clinical studies and outside services costs increased in the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to higher costs related to zanidatamab programs, offset by the inclusion of costs related to JZP150 (PTSD) incurred in the nine months ended September 30, 2023. Personnel expenses increased in the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily driven by increased compensation costs 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 and nine months ended September 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. 43 Table of Contents Acquired In-Process Research and Development Acquired in-process research and development, or IPR&D, expense in the nine months ended September 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 $12.8 million and $32.3 million in the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to higher interest income on investments driven by our increased deposits and higher interest rates and lower interest expense on the seven-year $2.7 billion term loan B facility, or the Tranche B-2 Dollar Term Loans. We expect interest expense, net to decrease in 2024 compared to 2023, primarily due to higher interest income on investments driven by our increased deposits and higher interest rates and lower interest expense following the repricing of the Tranche B-2 Dollar Term Loans. For further information on this, please refer to Liquidity and Capital Resources. Foreign Exchange Loss The foreign exchange loss is primarily related to the translation of sterling and euro-denominated net monetary liabilities, primarily intercompany balances, held by subsidiaries with a U.S. dollar functional currency and related foreign exchange forward contracts not designated as hedging instruments. Income Tax Benefit Our income tax benefit was $14.5 million and $33.5 million for the three and nine months ended September 30, 2024, respectively, compared to $47.2 million and $86.8 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. The decrease in the income tax benefit for the three and nine months ended September 30, 2024 compared to the same periods in 2023 resulted primarily from changes in the mix of pre-tax income and losses across tax jurisdictions. Liquidity and Capital Resources As of September 30, 2024, we had cash, cash equivalents and investments of $2.6 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 $6.2 billion. Our long-term debt included $2.7 billion aggregate principal amount of the Tranche B-2 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 2.000% exchangeable senior notes due 2026, or 2026 Notes, and $1.0 billion principal amount on our 3.125% exchangeable senior notes due 2030, or 2030 Notes. We generated cash flows from operations of $997.3 million during the nine months ended September 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 seven-year €625.0 million ($753.0 million) term loan B facility, or the Euro Term Loan, made voluntary and mandatory repayments of $300.0 million and $100.8 million, respectively, relating to our Tranche B-2 Dollar Term Loans (formally our seven-year $3.1 billion term loan B facility, or Dollar Term Loan). In August 2024, we repaid the $575.0 million aggregate principal amount of our 1.50% exchangeable senior notes due 2024, or the 2024 Notes. 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 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 44 Table of Contents 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. To continue to grow our business over the longer term, we plan to commit substantial resources to product acquisition and in-licensing, product development, clinical trials of product candidates and expansion of our commercial, development, manufacturing and other operations. In this regard, we have evaluated and expect to continue to evaluate a wide array of strategic transactions as part of our strategy to acquire or in-license and develop additional products and product candidates. Acquisition opportunities that we pursue could materially affect our liquidity and capital resources and may require us to incur additional indebtedness, seek equity capital or both. We regularly evaluate the performance of our products and product candidates to ensure fit within our portfolio and support efficient allocation of capital. In addition, we may pursue new operations or continue the expansion of our existing operations. Accordingly, we expect to continue to opportunistically seek access to additional capital to license or acquire additional products, product candidates or companies to expand our operations or for general corporate purposes. Raising additional capital could be accomplished through one or more public or private debt or equity financings, collaborations or partnering arrangements. 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 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, including at the time we are required to make repurchases of the 2026 Notes, the 2030 Notes and/or the Secured Notes, are required to repay outstanding amounts under the Amended Credit Agreement (as defined below), or pay cash upon exchange of the 2026 Notes or the 2030 Notes, could likewise be adversely affected. In any event, an inability to borrow or raise additional capital in a timely manner and on attractive terms could prevent us from expanding our business or taking advantage of acquisition opportunities and could otherwise have a material adverse effect on our business and growth prospects. In addition, if we use a substantial amount of our funds to acquire or in-license products or product candidates, we may not have sufficient additional funds to conduct all of our operations in the manner we would otherwise choose. Furthermore, any equity financing would be dilutive to our shareholders, and could require the consent of the lenders under the Amended Credit Agreement that provides for (i) the Tranche B-2 Dollar Term Loans, (ii) the Euro Term Loan (iii) the Revolving Credit Facility, and the indenture for the Secured Notes for certain financings. 45 Table of Contents In July 2024, our board of directors authorized a share repurchase program to repurchase ordinary shares having an aggregate purchase price of $500.0 million, exclusive of any brokerage commissions, or the New Repurchase Program. Under the New Repurchase Program, which has no expiration date, we may repurchase ordinary shares from time to time by any methods and/or structures permitted by applicable law. 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 Amended Credit Agreement and the indenture for our Secured Notes, corporate and regulatory requirements and market conditions. The New Repurchase Program may be modified, suspended or discontinued at any time without our prior notice. The New Repurchase Program replaces and supersedes the share repurchase program authorized by our board of directors in November 2016, which, as of the date of it being superseded by the New Repurchase Program, had authorized the repurchase of ordinary shares having an aggregate purchase price of up to $1.5 billion, exclusive of any brokerage commissions, or the Old Repurchase Program, and, together with the New Repurchase Program, the “repurchase programs”. During the three months ended September 30, 2024, we spent a total of $150.0 million to repurchase 1.4 million of our ordinary shares, all under the New Repurchase Program, at a purchase price, including commissions, of $109.32 per share. The repurchases during the three months ended September 30, 2024 were effected in privately negotiated transactions with or through one of the initial purchasers of the 2030 Notes concurrently with the pricing of the offering of the 2030 Notes. During the nine months ended September 30, 2024, we spent a total of $311.4 million to purchase 2.8 million of our ordinary shares under the share repurchase programs at an average total purchase price, including commissions, of $110.06 per share. During the nine months ended September 30, 2023, we spent a total of $170.0 million to purchase 1.3 million of our ordinary shares under the Old Repurchase Program at an average total purchase price, including commissions, of $128.89 per share. All ordinary shares repurchased were cancelled. As of September 30, 2024, the remaining amount authorized for repurchases under the New Repurchase Program was $350.0 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, 2024 2023 Net cash provided by operating activities $ 997,328 $ 924,668 Net cash used in investing activities (314,908) (264,860) Net cash provided by (used in) financing activities 28,791 (204,948) Effect of exchange rates on cash and cash equivalents 614 (652) Net increase in cash and cash equivalents $ 711,825 $ 454,208 Operating activities Net cash provided by operating activities increased by $72.7 million in the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to cash received from increased sales of our products and the timing of payment of accrued expenses. Investing activities Net cash used in investing activities increased by $50.0 million in the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to the following: • $30.1 million net increase in the acquisition of investments, driven by time deposits; • $10.9 million increase in purchases of property, plant and equipment; and • $10.0 million upfront payment to Redx related to our asset purchase and collaboration agreement in the nine months ended September 30, 2024. Financing activities Net cash provided by (used in) financing activities increased by $233.7 million in the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to: • An increase of $405.8 million in debt financing due to net proceeds from issuance of the 2030 Notes of $980.8 million, offset by the repayment of the 2024 Notes of $575.0 million; partially offset by • An increase of $141.5 million in share repurchases; and • A decrease of $26.2 million in proceeds from employee equity incentive and purchase plans. 46 Table of Contents Debt 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 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 exchanged and (ii) any combination of cash and/or our ordinary shares, for any exchange consideration in excess of $1,000 per $1,000 principal amount of the 2026 Notes. In August 2024, we repaid the $575.0 million aggregate principal amount of the 2024 Notes at maturity, plus accrued and unpaid interest thereon. In September 2024, Jazz Investments I Limited, our wholly owned subsidiary, or Jazz Investments, completed a private offering of an aggregate $1.0 billion principal amount of the 2030 Notes. During the nine months ended September 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 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. The Credit Agreement initially provided for (i) the Dollar Term Loan which was drawn by Jazz Lux on the closing date thereof in U.S. dollars (ii) the Euro Term Loan which was drawn by Jazz Lux on the closing date thereof in Euros and (iii) the Revolving Credit Facility. In January 2024, Jazz Lux entered into an amendment, or the Repricing Amendment No.1, to the Credit Agreement. Upon entry into the Repricing Amendment No.1, certain existing lenders converted a portion of the outstanding Dollar Term Loan 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 portion of the outstanding Dollar Term Loan that was not converted. In July 2024, Jazz Lux entered into an amendment, or the Repricing Amendment No. 2, to the Credit Agreement, or the Amended Credit Agreement. Upon entry into the Amended Credit Agreement, certain existing lenders converted a portion of 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 portion of 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 Loan incurred on May 5, 2021, with the interest rate amended as described below and the credit spread adjustment removed. 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 Loans are subject to a Term SOFR floor of 0.50%. As of September 30, 2024, the interest rate and effective interest rate on the Tranche B-2 Dollar Term Loans were 7.10% 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 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, any loans under the Revolving Credit Facility are not subject to a Term SOFR 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 September 30, 2024, we had an undrawn Revolving Credit Facility totaling $500.0 million. 2030 Notes In September 2024, Jazz Investments completed a private placement of $1.0 billion principal amount of the 2030 Notes. 47 Table of Contents Interest on the 2030 Notes is payable semi-annually in cash in arrears on March 15 and September 15 of each year, beginning on March 15, 2025, at a rate of 3.125% per year. In certain circumstances, we may be required to pay additional amounts as a result of any applicable tax withholding or deductions required in respect of payments on the 2030 Notes. The 2030 Notes mature on September 15, 2030, unless earlier exchanged, redeemed or repurchased. The holders of the 2030 Notes have the ability to require us to repurchase all or a portion of their 2030 Notes for cash at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date in the event we undergo a fundamental change (as defined in the indenture related to the 2030 Notes), such as specified change of control transactions, our liquidation or dissolution or the delisting of our ordinary shares from any of The New York Stock Exchange, The Nasdaq Global Market, The Nasdaq Global Select Market or The Nasdaq Capital Market (or any of their respective successors). Additionally, the terms and covenants in the indenture related to the 2030 Notes include certain events of default after which the 2030 Notes may be due and payable immediately. Prior to September 15, 2030, we may redeem the 2030 Notes, in whole but not in part, in connection with certain tax-related events. We also may redeem the 2030 Notes on or after September 20, 2027 and prior to June 15, 2030, in whole or in part (subject to the partial redemption limitation described in the indenture related to the 2030 Notes), if the last reported sale price per ordinary share has been at least 130% of the exchange price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The 2030 Notes are exchangeable at an initial exchange rate of 6.5339 ordinary shares per $1,000 principal amount of 2030 Notes, which is equivalent to an initial exchange price of approximately $153.05 per ordinary share. Upon exchange of the 2030 Notes, we will pay cash up to the aggregate principal amount of the 2030 Notes to be exchanged and pay or deliver, as the case may be, cash, ordinary shares or a combination of cash and ordinary shares, at our election, in respect of the remainder, if any, of our exchange obligation in excess of the aggregate principal amount of the 2030 Notes being exchanged. The exchange rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain make-whole fundamental changes (as defined in the indenture related to the 2030 Notes) that occur prior to the maturity date or upon our issuance of a notice of redemption, we will, in certain circumstances, increase the exchange rate for a holder who elects to exchange its 2030 Notes in connection with that make-whole fundamental change or exchange its 2030 Notes called (or deemed called) for redemption during the related redemption period. Prior to June 15, 2030, the 2030 Notes will be exchangeable only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Contractual Obligations During the nine months ended September 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 To understand our financial statements, it is important to understand our critical accounting estimates. The preparation of our financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in determining the amounts to be deducted from gross revenues and also with respect to the acquisition and valuation of intangibles and income taxes. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates. For any given individual estimate or assumption we make, there may also be other estimates or assumptions that are reasonable. Although we believe our estimates and assumptions are reasonable, they are based upon information available at the time the estimates and assumptions were made. Our critical accounting policies and significant estimates are detailed in our Annual Report on Form 10‑K for the year ended December 31, 2023. Our critical accounting policies and significant estimates have not changed substantially from those previously disclosed in our Annual Report on Form 10‑K for the year ended December 31, 2023. 48 Table of Contents Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10‑Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. Forward-looking statements are based on our management’s current plans, objectives, estimates, expectations and intentions and on information currently available to our management. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “propose,” “intend,” “continue,” “potential,” “possible,” “foreseeable,” “likely,” “unforeseen” and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. These known and unknown risks, uncertainties and other factors include, without limitation: • 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. 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. • 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 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. • 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. • 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. • Our future success depends on our ability to successfully develop and obtain and maintain regulatory approvals for our late-stage product candidates and, if approved, to successfully launch and commercialize those product candidates. • We may not be able to successfully identify and acquire or in-license additional products or product candidates to grow our business, and, even if we are able to do so, we may otherwise fail to realize the anticipated benefits of these transactions. • Conducting clinical trials is costly and time-consuming, and the outcomes are uncertain. A failure to prove that our product candidates are safe and effective in clinical trials, or to generate data in clinical trials to support expansion of the therapeutic uses for our existing products, could materially and adversely affect our business, financial condition, results of operations and growth prospects. • It is difficult and costly to protect our proprietary rights, and we may not be able to ensure their protection. • We have incurred, and may in the future incur, substantial costs as a result of litigation or other proceedings relating to patents, other intellectual property rights and related matters, and we may be unable to protect our rights to, or commercialize, our products. 49 Table of Contents • Significant disruptions of information technology systems or data security breaches could adversely affect our business. • We are subject to significant ongoing regulatory obligations and oversight, which may subject us to civil or criminal proceedings, investigations, or penalties and may result in significant additional expense and limit our ability to commercialize our products. • If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate program or other governmental pricing programs, we could be subject to additional reimbursement requirements, penalties, sanctions and fines, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. • 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. • 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. Also, these forward-looking statements represent our plans, objectives, estimates, expectations and intentions only as of the date of this filing. You should read this Quarterly Report on Form 10‑Q completely and with the understanding that our actual future results and the timing of events may be materially different from what we expect. We hereby qualify our forward-looking statements by our cautionary statements. Except as required by law, we undertake no obligation to update or supplement any forward-looking statements publicly, or to update or supplement the reasons that actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.