Good day, and welcome to the Fourth Quarter 2021 Jazz Pharmaceuticals Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. As a reminder, this call may be recorded. I would now like to turn the call over to Andrea Flynn, Head of Investor Relations. You may begin.

Thank you, and good afternoon, everyone. Today, Jazz Pharmaceuticals reported its fourth quarter and full year 2021 financial results. The slide presentation accompanying this webcast is available on the Investors section of our website. Investors may also refer to the press release we issued earlier today, which is also posted to our website. On the call today are Bruce Cozadd, Chairman and Chief Executive Officer; Renée Galá, Executive Vice President and Chief Financial Officer; Dan Swisher, President; and Rob Iannone, Executive Vice President, Global Head of R&D. Kim Sablich, Executive Vice President and General Manager, North America, will join the team for Q&A. On Slide 2, I'll remind you that today's webcast includes forward-looking statements, such as those related to our future financial and operating results, including expectations related to Vision 2025 and our guidance for 2022, growth potential and anticipated development and commercialization milestones and goals, which involve risks and uncertainties that could cause actual events, performance and results to differ materially from those contained in these forward-looking statements. We encourage you to review the statements contained in today's press release, in our slide deck and in our latest SEC disclosure documents, which identify certain factors that may cause the company's actual events, performance and results to differ materially from those contained in the forward-looking statements made on today's webcast. We undertake no duty or obligation to update our forward-looking statements. Turning to Slide 3, on this webcast, we'll discuss non-GAAP financial measures. Reconciliations of GAAP to non-GAAP financial measures are included in today's press release and in the slide presentation available on the Investors section of our website. I'll now turn the call over to Bruce.

Thanks, Andrea. Good afternoon, everyone, and thank you for joining us today. I'll start on Slide 5. 2021 was a transformative year for Jazz with strong performance and consistent execution. In the fourth quarter and throughout 2021, we made substantial progress across commercial, R&D, and corporate development continuing our evolution to a diversified, innovative global biopharmaceutical company. Beginning with our overall 2021 financial performance. For the first time, we exceeded $3 billion in annual revenue delivering top line performance at the upper end of our guidance range and recorded nearly $1 billion of adjusted net income on a non-GAAP basis. Renée will discuss our financial results in more detail later in the call. Our exceptional top line results were driven by strong commercial execution across our portfolio. We met our ambitious target of 5 key launches in 2020 and 2021. Two of those launches, Rylaze and Xywav in idiopathic hypersomnia, or IH, are therapies that Jazz advanced from concept to commercialization. Coupled with the addition of Epidiolex to our commercial portfolio, through the GW Pharmaceuticals acquisition, we have significantly diversified our revenue and are on track to meet our goal of at least 65% of net product sales in 2022 coming from newly approved or acquired products. On the regulatory side, we secured FDA approval for Rylaze for the treatment of ALL and Xywav in IH and in June and August 2021, respectively. We also received orphan drug exclusivity from FDA for Xywav for narcolepsy in June, with FDA citing the clinical benefits of Xywav as a lower sodium oxybate therapy compared to Xyrem. Subsequently, we received orphan drug exclusivity for Xywav in IH. In addition, in January of this year, we submitted the sBLA for Rylaze to support an updated dosing regimen in the U.S. In concert with delivering strong commercial results, and achieving important regulatory milestones, we continue to advance our R&D pipeline, which now comprises 18 novel candidates being studied in 36 active clinical trials. On the neuroscience side, we initiated 2 important clinical programs in 2021, beginning Phase 2 trials for suvecaltamide, or JZP385 in essential tremor, and for JZP150 in post-traumatic stress disorder. We also initiated the third Phase 3 nabiximols clinical trial in multiple sclerosis-related spasticity. And as part of our ongoing growth in oncology, we have a robust development effort for Zepzelca, headlined by the initiation of a Phase 3 trial in collaboration with our partner, Roche, evaluating Zepzelca in combination with Tecentriq as maintenance therapy in first-line extensive-stage small cell lung cancer. A noteworthy milestone in 2021 that contributed to our growth was the acquisition of GW Pharmaceuticals. The integration of GW has proceeded exceptionally well. As I've noted in the past, there is a superb cultural fit between the Jazz and GW teams. The acquisition is proving to be highly complementary to our existing commercial portfolio and has added the industry-leading GW cannabinoid platform to our R&D pipeline. Just as important, we're thrilled that many talented and experienced members of the GW team are in leadership positions across our combined enterprise. These accomplishments, all of which were underpinned by strategic allocation of capital and strong cash flow, have set the stage for an exciting year ahead. We continue to be laser-focused on executing our strategy to build a high-value portfolio of differentiated commercial and clinical-stage therapies that deliver sustainable growth and enhanced value. At the JPMorgan Healthcare Conference this January, we introduced Vision 2025, which included commercial pipeline and operational components. On Slide 6, we've called out several upcoming value drivers that we believe will enable us to deliver on this vision. For commercial, we are focused on execution across our neuroscience and oncology portfolios, including maintaining the strong momentum of our Xywav, Zepzelca, and Rylaze launches, as well as continuing the growth of Epidiolex in the U.S. and global markets. With respect to our pipeline, we are advancing multiple mid- and late-stage programs and anticipate the first clinical data from our nabiximols program in the first half of this year, and we will continue to focus on operational excellence, including advancing our goal of achieving less than 3.5x net leverage by the end of 2022. Turning to Slide 7. Vision 2025 will frame our business for the next several years as we strive to bring new and innovative therapies to patients in critical need. As I noted, there are 3 core components to our vision: commercial, pipeline, and operational excellence. First, commercial. After achieving over $3 billion in revenue in 2021, we're positioned to grow revenue to $5 billion in 2025. We expect to generate revenue from current products as well as realized contributions from pipeline candidates that we expect to advance to market and products that we may acquire through strategic corporate development transactions. The $5 billion also includes anticipated organic sales growth of existing products in our commercial portfolio as well as indication and geographic expansion. Second, our pipeline. In 2021, our R&D organization advanced key programs addressing significant patient needs in neuroscience and oncology. With a solid foundation in place, we believe we will deliver at least 5 novel product approvals in areas of critical unmet need and significant market opportunity by the end of the decade. In addition to legacy compounds in our pipeline, we're excited about promising assets emerging from the GW cannabinoid platform, and we are continuing to evaluate and pursue novel neuroscience and oncology programs through potential corporate development opportunities. Finally, operational excellence. Our 2021 adjusted operating margin was 43%, and we plan to improve our adjusted operating margin by 5 percentage points from 2021 to 2025, delivering more of our top line through to the bottom line. Our track record of strong execution and accomplishments gives us confidence in our ability to achieve Vision 2025. Our 2022 guidance, which Renée will cover shortly, is in line with this vision. I'll now turn the call over to Dan for an overview of our commercial performance, after which Rob will share an update on progress of our R&D programs. Renée will provide a financial overview, and then we'll open the call to Q&A. Dan?

Thanks, Bruce. Well, I'm excited to share the continued progress across our commercial portfolio. So starting with neuroscience, we continue to build momentum in our oxybate franchise as highlighted on Slide 9. This includes market-leading adoption of Xywav and narcolepsy and the commercial launch of Xywav in IH in November 2021, enabling us to deliver this important therapy to another patient population with significant need. Average active oxybate patients increased to approximately 16,200 in the fourth quarter, an approximate 6% increase compared to the same period last year. With the introduction of Xywav in narcolepsy in late 2020 and we meaningfully advance patient care with a lower sodium oxybate product and are pleased with its exceptional adoption. We remain focused on educating physicians in narcolepsy patients across a lifelong burden of high sodium intake in this patient population who live with an increased risk of cardiovascular comorbidities. The benefits of lowering sodium intake are resonating strongly with patients and prescribers, and we exited the year with approximately 6,650 active Xywav patients with narcolepsy. Our commercial launch of Xywav for adults with IH began on November 1, 2021, and we're excited to bring the first and only FDA-approved IH treatment to patients. We've been encouraged by the positive early launch momentum and feedback we've received from prescribers in the IH community. Based on the reports from the field, prescribers have been impressed with the profile of this medicine. Health care providers are excited to have a treatment option that addresses IH and not just its symptoms. Importantly, prescribers have also been pleased with the initial coverage and access of Xywav for their IH patients. Xywav and narcolepsy currently has approximately 90% of commercial lives covered. We anticipate that Xywav and IH will have similar coverage to narcolepsy and expect this to occur in a similar or faster time frame. While payers continue to update their policies to include IH, we're encouraged to see a higher percentage of commercial claims approved than originally anticipated during this phase of launch. Exiting the quarter, there were approximately 250 active Xywav patients with IH. While still early in the IH launch, we're pleased with the positive feedback from both health care professionals and patients. Unlike the recent launch of narcolepsy, where there was a significant number of oxybate experienced patients transitioning over to Xywav, we expect that the cadence of new patient starts in IH to be more in line with a rare disease launch where there have been previously no approved therapies. IH represents a significant growth driver for Xywav. Our initial focus is on driving awareness and adoption among existing oxybate prescribers and the approximately 37,000 people diagnosed with IH that are actively seeking health care. Expanding the market beyond diagnosed IH patients who are actively seeking treatment provides us with a longer-term growth opportunity as we estimate that the total diagnosed IH patient population is likely close to the diagnosed narcolepsy market, which is approximately 70,000 to 80,000 patients. Turning to Slide 10. In Epidiolex, we saw 35% revenue growth in the fourth quarter compared to the same period in 2020 on a pro forma basis. In the fourth quarter, Epidiolex net product sales benefited from a temporary increase in specialty pharmacy inventory levels. Excluding this inventory effect, we were pleased that revenue increased 10% on a sequential basis in the fourth quarter versus third quarter 2021, with growth in both the U.S. and international markets. 2021 was the first full year of the COVID-19 pandemic, which has changed how our industry engages with customers and how healthcare professionals engage with their patients. Despite the challenges of this new environment, we were able to achieve robust full-year revenue growth of 29% compared to 2020 on a pro forma basis. In the U.S., where we have seen access to customers impacted by surges of COVID-19, our non-personal promotion continues to have a high level of engagement. We've adjusted our commercial initiatives to adapt to a new normal that includes more hybrid and virtual engagement with health care providers. In addition to strong revenue growth, we continue to add new prescribers and grow Epidiolex's active prescriber base. We expect that as new prescribers gain experience and understanding of the therapeutic benefits of Epidiolex and broaden its use within their practices, this will contribute to continued adoption. As underlying growth drivers continue to build momentum, we remain confident in this medicine's blockbuster potential. I also want to highlight that we continue to strengthen the IP durability of Epidiolex. In December, a new patent was issued covering the composition of the botanically derived CBD preparation used in Epidiolex and the treatment of indicated disorders using that CBD preparation. This patent, now listed in the U.S. FDA Orange Book, extends through 2039. We are also continuing to make significant progress in Europe. During the third quarter, we successfully launched Epidiolex in Italy, Spain, and Switzerland with our most recent launch in Ireland in January of this year. In addition, we expect to launch in France later this year, pending final pricing, reimbursement, and access discussions, at which point, Epidiolex will be launched and reimbursed in all 5 major European markets. Overall, we continue to be excited about the future growth potential of Epidiolex as a significant contributor to both our top line in 2022 and Vision 2025. Even as we navigate the challenges of the pandemic, we're encouraged by the steady growth and positive customer feedback for the brand. We remain confident we can achieve blockbuster status as the standard of care in treatment-resistant epilepsies. The increasing use of Epidiolex earlier in the treatment algorithm and positive experiences in real-world settings are based on its unique mechanism of action, efficacy and safety profile, and ability to be combined with other therapies. So now moving to oncology and starting with Zepzelca on Slide 11, we are continuing to see strong demand for Zepzelca with net revenue for the fourth quarter of $64.8 million, 21% growth compared to the same period in 2020. We have established steps as the treatment of choice in second-line small cell lung cancer and have a robust development plan in place to evaluate additional patients who can benefit from this therapy, which Rob will cover in more depth. Within our current indication of second-line small cell lung cancer, we see opportunities for growth with Zepzelca continuing to displace topotecan and immuno-oncology products being used as monotherapy. We also see potential among patients being rechallenged with platinum-based chemotherapies or receiving other chemotherapy regimens. Findings from the pivotal Zepzelca trial support use in this setting and our ongoing Phase 4 trial will provide additional clinical data on Zepzelca in this patient population. Turning to Slide 12. We launched Rylaze, our recombinant erwinia asparaginase therapy, in July 2021. Fourth quarter net product sales, which was the first full quarter on the market, were $65 million. We continue to receive encouraging feedback from customers with commentary on the ease of both ordering and dose preparation as well as our suite of support services. As we discussed previously, there was a notable uptick in Rylaze orders beginning in September as remaining supply of Erwinaze was depleted. Fourth quarter '21 revenues showed strong performance for Rylaze, reflecting increased brand awareness among customers and its position in the market as the only therapy available to patients in the U.S. who have a hypersensitivity reaction to E. coli-derived asparaginase. We also saw an initial buildup of inventory, which is typical for new products. We're very pleased with the launch to date, expect a strong performance in 2022, and we're excited to evolve our launch messaging based on the potential label update to Monday, Wednesday, Friday dosing, which Rob will cover in more detail. So in summary, our team delivered strong results in 2021, driven by successful launches and execution across our commercial portfolio. Now I'll turn the call over to Rob to discuss our R&D successes in 2021, near-term pipeline opportunities and anticipated milestones for 2022. Rob?

Thanks, Dan. On Slide 14, we've detailed the mid- and late-stage clinical programs in our pipeline. On today's call, I'm going to recap a few key accomplishments in 2021 and then focus on 2022 milestones. It was a very productive year for our R&D organization. We received 2 FDA approvals for Rylaze in ALL and Xywav in IH, both of which we brought from concept to approval. We initiated multiple clinical trials, including Phase 2 trials for Suvecaltamide or JZP385 in essential tremor and for JZP150 for post-traumatic stress disorder. Both of these compounds were acquired through corporate development efforts, and our team is excited to build upon the existing clinical data for these promising therapies. In addition, the acquisition of GW Pharmaceuticals has added a number of clinical and preclinical programs to our pipeline, the industry-leading GW cannabinoid platform, and talented professionals with deep expertise in drug development in the cannabinoid space. The integration between Jazz and GW R&D organizations has progressed even better than we could have predicted. Our combined group has many exciting program milestones ahead of us in 2022 and beyond. We are also advancing a robust development effort for Zepzelca. Three separate trials were initiated in 2021: a Phase 3 trial supported by Jazz and our partner, Roche, to evaluate Zepzelca in combination with Tecentriq in first-line extensive-stage small cell lung cancer; a confirmatory Phase 3 trial in second-line small cell lung cancer being run by our partner, PharmaMar; and our own post-marketing observational trial in second-line small cell lung cancer that Dan noted earlier. In addition, earlier this year, we have initiated our Phase 2 basket trial evaluating Zepzelca as monotherapy in several solid tumor types. One area of particular focus for our team is the treatment of movement disorders where there is a significant unmet need and potential to deliver new therapies. Our nabiximols program now has 3 active trials focused on multiple sclerosis-related spasticity. Spasticity, which occurs in up to 84% of MS patients, is a major issue with limited treatment options. Despite the critical need, no new oral anti-spasticity medicines have been approved in the U.S. in the last 20 years. We expect data from our first trial in the first half of 2022. This trial, which is smaller and shorter relative to 2 others, is assessing change in muscle tone using elements of the modified Ashworth scale. If results from this trial are positive, there is the potential for a regulatory submission in the U.S. later this year. We expect data from 2 additional trials, which have larger sample sizes, to read out in late 2022 and early 2023. As Dan mentioned earlier, we also have submitted an sBLA for Rylaze to update our label to an intramuscular Monday, Wednesday, Friday dosing schedule, with patients receiving 25 milligrams per meter squared on Monday and Wednesday, and 50 milligrams per meter square on Friday. This schedule, which is more in line with current clinical practice to avoid weekend dosing, allows patients to maintain a clinically meaningful level of serum asparaginase activity through the entire duration of treatment. Currently, the labeled dosing schedule is every 48 hours to 25 milligrams per meter squared. Similar to the review of our original BLA, the sBLA will be reviewed under the real-time oncology review process. We're also planning another regulatory application to FDA to support intravenous administration later this year, as well as an application in Europe for both IV and IM administration in mid-2022. Now I will pass the call off to Renée.

Thanks, Rob. I'll begin on Slide 16. We have made significant strides in transforming our business throughout 2021, and we finished the year with positive momentum entering 2022. As Bruce noted, we achieved the top end of our 2021 total revenue guidance as well as our neuroscience and oncology guidance. Our total 2021 revenues of $3.1 billion represented growth of 31% compared to 2020. This included neuroscience and oncology revenues of $2.3 billion and $734 million, respectively, with both franchises delivering more than 30% growth compared to 2020. Turning to operating expense. Our 2021 adjusted SG&A expense was 36% of total revenues, which reflects a 3 percentage point increase from 2020 driven by strategic investments across multiple product launches. 2021 adjusted R&D expense increased to 15% of revenues, reflecting the initiation of multiple mid- and late-stage clinical trials and the addition of the GW pipeline and cannabinoid platform. Through our strategic investments in commercial launches, pipeline expansion and transformative M&A, we are demonstrating our ability to generate significant revenue while remaining disciplined in our approach to capital allocation. This focus on both the top and bottom line drove nearly $1 billion in full-year adjusted net income with ANI and adjusted EPS growth of 41% and 30%, respectively, compared to 2020. Turning to Slide 17. Our strong performance in 2021 positions us for continued growth in 2022. On the top line, our total revenue guidance range for 2022 is $3.46 billion to $3.66 billion. This represents approximately 15% year-over-year growth at the midpoint, driven by both our neuroscience and oncology franchises. For neuroscience, our net sales guidance is $2.56 billion to $2.76 billion, representing growth of 14% at the midpoint compared to 2021. Our guidance reflects conviction in the opportunity for further Epidiolex growth and confidence in the durability of our oxybate franchise. Our oncology net guidance is $840 million to $920 million, representing growth of 20% at the midpoint compared to 2021. Our oncology franchise continues to grow towards being a $1 billion-plus business aligned to our Vision 2025, and we're excited to have rapidly established Zepzelca as the second-line small cell lung cancer treatment of choice and by the significant demand for Rylaze, both of which demonstrate our commercial execution capabilities. Turning to OpEx. On a non-GAAP basis, our SG&A guidance is $1.12 billion to $1.19 billion or approximately 32% of revenue at our midpoint. And our R&D guidance is $560 million to $600 million, approximately 16% of revenue at our midpoint. Our expense guidance reflects continued focus on driving sustainable revenue growth, advancing our pipeline, and optimizing our operations. I would note our guidance does not include any new corporate or business development transactions. However, we do expect to be active in this area across 2022. We are projecting 2022 non-GAAP adjusted net income of $1.13 billion to $1.2 billion, which represents a 17% increase at the midpoint compared to 2021, reflecting our continued focus on delivering improved bottom line growth and our commitment to operational excellence. With multiple important product launches underway and gaining momentum, we feel confident in our ability to effectively scale our operations and improve our adjusted operating margin, driving towards our Vision 2025 target of achieving a 5 percentage point improvement from 2021 to 2025. I'd like to note several important assumptions underlying our guidance. First, with respect to our neuroscience guidance and Xyrem authorized generics. The first AG launch is slated for January 1, 2023, or earlier under certain circumstances. Given the continued strong launch of Xywav, which has the direct effect of reducing Xyrem sales, our guidance assumes the potential for AG entry in the second half of 2022. We do not anticipate AG entry before the second half of 2022. Even accounting for AG entry and other future potential oxybate competition, we continue to expect Xywav to be the oxybate therapy of choice in 2023. As a reminder, Hikma is the first AG allowed onto the market, and they are volume unlimited. The following Hikma royalty components are relevant to our neuroscience guidance. During the first 6 months of the AG term, the AG royalty rate paid to Jazz is tiered and wide-ranging, starting at 10% and going to 90% based on the total volume of AG units sold as a percentage of total oxybate units, with that total volume referring to Xywav, Xyrem, and Xyrem AG. During the second 6-month period, the royalty rate to Jazz would become fixed at a rate where we and Hikma each have substantial economics regardless of the AG volumes. Should the AG term be extended beyond 1 year, the Hikma royalty rate paid to Jazz will then increase considerably to a higher fixed rate in the high double digits for the remaining 4 years of the AG period. With respect to our EPS guidance, it is important to note that beginning in 2022, under the new accounting standard for convertible debt, we will include the full approximately 9 million shares underlying our convertible debt instruments as part of our share count for calculating EPS. This accounting change results in dilution of approximately $2 per share in our 2022 adjusted EPS guidance. Adjusting our 2021 results for this accounting change implies 2022 growth of 14% in our non-GAAP adjusted EPS at the midpoint. Turning to Slide 18. Our strong cash flow and disciplined capital allocation are enabling us to strategically invest in our business to drive sustainable growth and enhanced value, as well as deliver on our near-term financial objectives. We have significantly advanced our revenue diversification with 59% of net product sales in the fourth quarter generated from products launched or acquired since 2019. We are on track to meet our diversification target of 65% in 2022. In just 8 months following the close of the GW acquisition, we reduced our non-GAAP net leverage ratio by nearly a full turn to approximately 4.1x at the end of 2021, keeping us on track to achieve our stated target of being below 3.5x by the end of this year. In summary, we delivered strong financial results in 2021 and expect significant growth on the top and bottom line in 2022, positioning us well to deliver our Vision 2025 targets. I'd now like to turn the call back to Bruce.

Thanks, Renée. I'll conclude our prepared remarks on Slide 20. 2021 was a year of transformation and execution. We achieved double-digit revenue growth, expanded our pipeline and expertise, and executed key transactions to grow our business and capabilities, most notably the acquisition of GW Pharmaceuticals. With FDA approval of Rylaze and Xywav for IH, we achieved our ambitious goal of 5 key launches in 2 years. Our commercial teams demonstrated strong performance on the launches of Xywav for narcolepsy and Zepzelca. We expect that successful execution will continue with the launches of Rylaze and Xywav for IH. The addition of Epidiolex to our commercial portfolio provides us with the opportunity to deliver an important therapy to patients with refractory epilepsies. Our R&D organization continues to deliver and expand its capabilities. Trials for multiple important products are underway, and we are planning to initiate additional mid- and late-stage clinical trials over the next 12 months. Looking forward, we have a clear road map with Vision 2025. We are optimistic about the year ahead, and we're focused on delivering across the business. We're excited about our future, and I look forward to updating you on our progress as we advance. That concludes our prepared remarks. I'd now like to turn the call over to the operator to open the line for Q&A.

Our first question comes from Ken Cacciatore with Cowen and Company.

Hey, Bruce and Kim, congratulations on all the progress. I just wanted to ask about Xywav in IH. Our recent clinical and survey work indicates that they believe Xywav in IH could be as big as Xyrem in narcolepsy. So wondering if you could share even a little bit more of your internal data. And your expectations, I know you categorized the markets at the same size, but wondering kind of your hopes for the eventual potential for Xywav. And then, Dan, you mentioned that Xywav in IH could look like an orphan launch. Can you put a little bit more granularity on that, if you could, as we try to frame out the next few years?

Yes, Ken, thanks for the questions. And maybe I'll just start and remind people that there are a couple of similarities as we think about Xywav for narcolepsy and Xywav for idiopathic hypersomnia. The first is to remember that both of these are really debilitating sleep disorders, right? These are very life-altering conditions, high level of disability, and patients are really motivated to find effective treatments, right, that reduce their symptoms and improve their ability to function. So need is high in both cases. The second thing I'd remind you in terms of a similarity is we've seen excellent efficacy of the agent in both these conditions. Our Phase 3 data were very strong in terms of the benefit provided to patients. So we start with those similarities. As for the specific size of the opportunity in front of us and where we get that data, maybe I'll ask Kim to comment on that. Kim?

Sure. Since our launch in November, we have received very positive feedback from prescribers and the IH community. We are observing a growing momentum. Reports indicate that prescribers are impressed with the profile of our medicine and are excited to have a treatment option that demonstrates strong clinical trial results addressing the full spectrum of the IH condition, not just one or two symptoms. Initially, we are focusing our launch on our existing pool of about 30,700 adult patients diagnosed with IH who are actively seeking care. However, we estimate that the total diagnosed IH patient population could be similar in size to the diagnosed narcolepsy market, which consists of about 70,000 to 80,000 patients. This approval is a major milestone for Jazz. With our oxybate franchise being a cornerstone of our value, we are already seeing successful execution of a strong launch in evaluated narcolepsy and will continue to enhance our brand recognition as we introduce IH into the market for the remainder of the year.

Dan?

Yes, Bruce. Regarding the orexin side, it resembles Xyrem's introduction in narcolepsy. We are creating a new market with the first and only approved therapy for idiopathic hypersomnia (IH). Although patients are diagnosed, our approach is to familiarize them with Xywav, integrate them into the REM system, and gradually increase their dose to an effective level. We do not have a large group of existing oxybate experience patients to transition immediately. However, we are encouraged by the growing awareness and the experiences we've observed so far, and we look forward to enhancing that momentum in the upcoming quarters.

Our next question comes from Jessica Fye with JPMorgan.

It looks like Rylaze came in well above our expectation this quarter. How should we think about the trajectory of that product off of the 4Q run rate?

Yes, thanks for the question. We are very pleased with Rylaze's performance in its first full calendar year on the market, which confirms our belief that doctors treating pediatric ALL patients needed a reliable treatment option available to them. I can let Kim share some insights on the early launch trajectory and our views on the fourth quarter results.

Sure. So 2021 revenues, I'll say, reflect both the strong demand that we saw for Rylaze in the marketplace and as well as some initial inventory build as part of the launch, which is typical for new products. But we believe our strong performance really reflects increased brand awareness among our customers and appreciation for the strong product profile and really recognition that Rylaze is the only therapy available following the depletion of Erwinaze supply. Feedback from clinicians has been quite positive and revolves around both the high quality and reliable supply of Rylaze. And we've received positive reports on the ease of ordering and dose preparation for Rylaze. So overall, we're very pleased with the launch to date, and I'll say that our commercial strategy does account for and is prepared for a competitive market. But overall, we believe Rylaze represents a clinically significant advance as the only recombinant erwinia asparaginase manufactured product that maintains a clinically meaningful level of asparaginase activity through the entire duration of treatment, and we think customers are really starting to recognize and appreciate that.

Yes, Rob, you just might want to comment on where we're going to because we're not done with our strategy on Rylaze.

Yes, happy to, Bruce. So as you know, our indication now, which was based on an ongoing trial, is for every 48 hours of Rylaze. And so we also evaluated a regimen that allows for Monday, Wednesday, Friday IM dosing, where we give twice as much on Friday to ensure optimal coverage through that 3-day weekend with the 50 milligrams per meter squared on the Friday. We've submitted that as an sBLA to the FDA and we were granted real-time oncology review, which is underway. We'll follow that with IV data as a supplement in the U.S., but also in Europe and with IM and IV as well.

Our next question comes from Akash Tewari with Jefferies.

If we assume that Epidiolex contributes the same percent of sales for your neuro franchise as it did in 2022, as it did in 2021, we get implied sales of about $700 million or only about 5% growth year-over-year from a pro forma perspective. That said, for you to hit your 2025 guidance, it looks like neuro needs to grow at an 11% CAGR. So can you comment on what Epidiolex growth looks like post-2022? And what would drive an inflection in Epidiolex growth long term? Additionally, can you comment if GW ended up being accretive in 2022 as previously guided?

Yes, let me start with the first part of that. Then, Renée, you can address the EPS accretion. We were very pleased with Epidiolex's performance in the fourth quarter, which increased by 10% sequentially from the third quarter, even when considering higher inventories at the pharmacy level. On an annual basis, if we had reported a full year of Epidiolex sales, the growth would still be 29%. We're excited about Epidiolex's ongoing growth in the U.S. market, and we are also expanding into more international markets. Even in places where we have launched, we are still in the early stages with strong pricing and reimbursement support. While we haven't provided a specific breakdown of projections for the upcoming years, we believe there is a significant growth opportunity for Epidiolex. Renée?

Yes, we mentioned that we expect the GW transaction to be accretive in 2022, the first full calendar year, and significantly accretive in the years that follow. Our guidance for 2022 still reflects this expectation. However, I want to point out that there is an accounting change which will increase the underlying shares used in our EPS for 2022 by about 9 million shares, related to our convertibles, as I previously explained.

Our next question comes from Marc Goodman with SVB Leerink.

Yes, Bruce, can you talk about this new Epidiolex patent? How you think we should view this patent? And then just a follow-up on the Rylaze question. Should we be thinking that this is the new run rate? You said that there was some inventory build in the quarter. Can you help us understand how much inventory was in there, so we can understand what a real kind of underlying demand quarter was and how we should think about the run rate there?

Yes, Marc, thanks for the question. On the patent, this is a patent on the composition of botanically derived CBD and its use in treating certain disorders, meaning those that are in our label, and has a different expiration date from prior patents listed in the Orange Book. This one going out to 2039. I'll remind you, this is part of a significant IP estate established over time that we believe is relevant to thinking about the durability of Epidiolex. So very pleased that, that patent issued at the tail end of 2021 and was included in the Orange Book earlier this year. So one more piece of the puzzle around why we're confident that Epidiolex is a durable asset. And then on Rylaze, I'll just say that we don't really know what the true run rate for this erwinia-derived asparaginase can be because we've always been supply constrained in the past, right? Before the launch of Rylaze, we did not have access to stable supply of the agent and clinicians, in some cases, adjusted their practice to try to minimize use or save available product for patients most in need. Ideal use of the product would be at a higher level. And people are just adjusting to the fact that Rylaze is now available, that it's a more modern manufactured product with high quality, with substantial supply available. I'm not surprised to see that there's some buildup as people want to stock a Rylaze and have it immediately available. That's a luxury they've not had in the past couple of years. But we're also excited to expand use over time now as people get used to the fact that they can use it in all appropriate patients rather than trying to delay use by premedication or other means. And then Rob talked about obviously trying to get to more ideal dosing with Monday, Wednesday, Friday, giving an IV option as well. And then also submitting in Europe. So we go back to having more of a worldwide product, which is just today, a U.S. opportunity for us. So lots of progress ahead of us. Could not be more pleased with the initial response, but we just don't have a basis, Marc, for a more accurate view of what that run rate will be.

Our next question comes from Jason Gerberry with Bank of America.

Bruce, just a request, if you could put that pick from a settlement structure in a slide in future earnings calls, that would be great. So we have the schematic updated. But so my questions are, is oxybate growing in 2022? And then on Epidiolex, this IP update, I guess, your thoughts on whether we'll get a patent challenge this year just in terms of feet to the ground, whether someone has the capability of filing. And my understanding, is this the patent that includes compositions with trace amounts of TSC, which showed in monkeys, I think, a benefit versus synthetic or synthetical. I believe that that might have some synergism with the FDA guidance requirements for generic expense.

Yes. So Jason, thanks for the suggestion on the royalty structure. On oxybate, we're continuing to grow oxybate use. We see it in narcolepsy. Obviously, IH is brand new, just weeks into that launch in terms of our fourth quarter results. So we do expect substantial growth during the year. As we said in our guidance, we've made room in our guidance for an assumed second half launch of an authorized generic. And while we do have economics in that, we don't have 100% economics in that as we do of the current Xyrem product. So it's growth in the whole market, but not with complete revenue pull-through to Jazz. And so that's what you're seeing and how we think about that going forward. In terms of Epidiolex, I think we gave the patent number. If we didn't, we can give it. So you can look up that patent and see everything that's included there, but we do believe there's relevance to the entire composition of that product, which is largely but not completely cannabidiol. And in terms of potential challenge, there's the opportunity for people to step in and submit as early as later this year. Whether that will happen, we don't know. It could. But of course, again, we feel confident that we've got good protection of that product.

Our next question comes from Ami Fadia with Needham.

I had 1 main and 1 follow-up. Just with regards to Xywav about the hypersomnia. We saw about 250 patients on that indication in the fourth quarter. Is that a precedent for the type of cadence you expect in terms of new patient adds in the upcoming quarters? How should we think about that? And then secondly, just with regards to Rylaze. Can you give us some color on whether you saw utilization beyond pediatric into teenagers or young adults?

Yes. Regarding Xywav IH, I want to emphasize that we are still in the early stages of the launch, which began in November. This is the first drug ever marketed for idiopathic hypersomnia. Therefore, trying to predict the exact number of new patients added each quarter so soon after launch is likely premature. We are very optimistic about the potential of this opportunity, the effectiveness of the drug, the positive early feedback we are receiving, and the successful reimbursement process. We are mainly targeting the same prescribers for narcolepsy and idiopathic hypersomnia. We still have work to do in educating physicians and patients about this new and effective treatment, but it's too soon to forecast a specific growth rate. As for Rylaze and its use beyond pediatric patients, I'll turn it over to Kim to see if she has any insights to share.

No, we don't have any data specifically by age or patient type, just really the overall positive feedback in the marketplace. And the notion that we are seeing some customers start to utilize second line of asparaginase and go to Rylaze faster than they had when the market was supply constrained.

Yes, I'll just remind people that one of the great things about the approval of Rylaze is we can get back to promoting the appropriate use of this product, which in our mind certainly includes all the pediatric patients who are experiencing hypersensitivity response to E. coli-derived asparaginase, but also include adolescent and young adult patients as well. We turned off our promotional efforts for several years because we didn't believe it would be ethical to try to create demand that we couldn't supply. So we have that opportunity now to go out and remind people of the data that you see when you do use an asparaginase containing regimen kind of a pediatric-inspired regimen for the AYA patients. We can also make sure people understand silent inactivation where you're creating an antibody response that may be inactivating the very enzyme you're counting on for efficacy. And then over time, as we pursue an ex-U.S. registration strategy, again, to broaden in the markets where Erwinaze was never commercialized because of lack of adequate supply. So we really do believe there's an opportunity going forward to increase that utilization. But as Kim says, we don't have specific data on what we saw in the fourth quarter.

Our next question comes from Ronny Gal with Bernstein.

Two if you don't mind. First, picking up with that 250 initial patient on idiopathic hypersomnia. I wonder if you could share with us kind of a couple of numbers around that first. How many of those 250 were actually in the clinical trial program? And on the other hand, given how long it takes for patients to get on the drug. Roughly, how many patients have you had at the end of the year in the pipeline of trying to get those patients on the drug just so we could get a better feel for the early adoption? And separately, oxybate and Epidiolex both saw price increases in the end of the year, kind of what percentage of that price increase do you expect to realize in that given the rebate structures?

Ronny, I was co-processing. Remind me which product you were talking about at the end of that question?

Oxybate and Epidiolex?

Yes. Okay. So on the first, somebody from the team jump in, if we know how many patients came out of the clinical trial. I'm not sure I've heard that, that was a significant contributor to our early adoption. We're not going to give more data, Ronny, than we've already given in terms of patients on drug at the end of the year. We sometimes have patients starting the process of enrolling in the REMS. We don't sort of count those as patients until we know they actually get a shipment of drug. Not everyone that starts the process for the REMS ends up getting a shipment of drugs. So not sure that would be accurate information. And on realized price increase, our gross price increase does not flow all the way down in the net sales given that we've contracted, particularly in recent years around oxybate, but we do receive some bottom line benefit. I think historically, we said it's a meaningful percentage, but certainly don't assume that we realize all of the gross price increase.

Our next question comes from Balaji Prasad with Barclays.

Congratulations. I have a couple of questions. First, regarding Epidiolex, you mentioned challenges with patient visits in the previous quarter. Can you provide an update on the current situation regarding visits for Q1 or how acuity looks so far? Second, there appears to be a decision from the Texas court regarding the litigation between Canopy and GW, which suggests that Canopy's case has been dismissed. Does this resolve all existing legal challenges, or is there something else we should know?

I don't have the exact numbers, but there has definitely been ongoing impact, particularly regarding customer engagement. We saw that with Omicron, where people were getting infected and unavailable for work, resulting in temporary office closures even in locations that usually remained open. The good news is that the situation appears to peak early and decrease quickly. Therefore, our outlook for the remainder of the year is fairly positive, anticipating that patients will return to the offices at a more regular rate. The main exception is the vaccination rates for children under 5, as we have several patients in that age group and the vaccines are currently unavailable. For those aged 5 to 11, vaccinations are occurring, but at a slower rate compared to the general population. However, the trends are moving in the right direction.

And then on the litigation side, we were pleased with where the court came out on the final judgment in the litigation with Canopy. They do have the right to appeal that, but we're certainly pleased with where we stand. And I'm not sure if there's some other litigation you're particularly interested in, but we have had other litigation. It's not been something we've been significantly concerned about, and that remains the case.

Our next question comes from Annabel Samimy with Stifel.

Just going back to Epidiolex and hoping to get a little bit more color there. So obviously, you cut some win this quarter, 10%, I guess, excluding the inventory. And I know that you mentioned that there's still some COVID headwinds, but can you maybe talk about where you're seeing the most penetration? Is it in primarily the new indications? Is it new patients? Or is it persistence of treatment? We have heard from KOLs that the persistence is not as high. So can you tell us what work you're doing there in terms of that persistence as well as where the new patients are coming from?

Yes. Annabel, that's the new information to me. We continue to be exceptionally pleased with what we're seeing in terms of up persistence, and we think it's one of the hallmarks of this drug when we talk to KOLs about how they use it, remembering that most of these patients are going to be treated with multiple agents in combination. One of the things we've noted before, and we believe still remains the case is that you'll often see Epidiolex added into a treatment regimen. If they want to sub anything out later as they add new agents, they tend to hang on to the Epidiolex at the AEs meeting in Chicago in early December, there was data presented that really went out to multiple years of continued and in some cases, increasing efficacy over time of the agent. So I'd be surprised to hear data that goes in the other direction. Kim or Dan, does one of you want to jump in on where we're seeing growth in terms of indications?

Yes, sure. I'll basically say that the growth, we believe, is coming from everywhere. We're not sharing specific penetration numbers, but we do continue to see room for growth across all of our indications, particularly the greatest growth opportunity in the 2 largest indications, LGS and TSC, which is still early in the launch phase. This is a well-tolerated treatment with high persistency, as Bruce said, that can be added in a polypharmacy setting. It's important to remember that, on average, treatment-resistant patients are on 3 anti-seizure medication. So overall, we are seeing that our customer base is getting more and more comfortable with Epidiolex, and as they're doing so and getting experience with it, they're moving it up earlier in the treatment regimen. We remain very confident that we can achieve blockbuster status and really become a standard of care in treatment-resistant epilepsy. Dan, you want to talk about...

And just as a reminder, outside the U.S., we're earlier in the launch cycle, but importantly, in the second half, we had additional launches in Spain, Italy, Switzerland, and Ireland this quarter. We are seeing continued penetration in four of the five major countries, with France anticipated in 2022. With the value proposition for Epidiolex in those markets, we've achieved more than 70% of the U.S. WAC in those reimbursed markets. This is also contributing to growth as we move into 2022.

Rob, anything you'd like to add in terms of how treaters are looking at this drug based on what you're hearing?

You referred to AEs, Bruce, and certainly...

Correct. Yes.

Yes, I mean we spend a lot of time with docs who are very familiar with this drug and have been using it. And my impression was yours is that not only do they see it as highly effective, but as you say, well-tolerated and very sticky patients are staying with it. So that's certainly what we continue to hear from a medical affairs perspective.

Our next question comes from Gary Nachman with BMO Capital Markets.

So Xywav was at about 43% conversion of the oxybate franchise in the fourth quarter, how much do you see that conversion accelerating over this year? And how much are you trying to manage that conversion if at all, when considering the trigger for the AG sometime in the second half of this year? And then specifically for IH, what initiatives are you taking to increase diagnosis and improve awareness? And will you be doing that as aggressive as you've been with narcolepsy?

Yes. Maybe I'll take the first part of that, Gary, and then ask Kim to talk about efforts around increasing diagnosis in IH and when it might be appropriate for us to invest significantly in that. On the first part of your question, you referred to conversion, and I'll just remind you that our growth in Xywav comes from multiple sources. It certainly does come largely from existing Xyrem or oxybate-experienced patients moving over to this newer agent with a 92% reduction in sodium with the safety benefit that FDA highlighted in the orphan drug exclusivity decision. But we're also seeing brand-new patients, narcolepsy patients who may never have been on oxybate. We're seeing narcolepsy patients who may have not been on oxybate historically, even though they had a diagnosis because they were concerned about that high sodium load. Now on top of that, we're seeing IH patients as well. So I'd hesitate to just call it conversion because it's really multi-component. To the second part of your question around that, we are not managing that at all. We would like as many patients to be benefiting from what we believe is a better, safer product in Xywav as possible. So we know that takes time. We've been very pleased with how the rollout in narcolepsy has progressed in just over a year on the market now to see how far we've come. But we want as many patients to get that benefit as soon as possible and in no way are holding back on that. Kim, you want to talk about how we're thinking about our efforts in IH?

Yes, sure. So to your question about whether we're focusing on increased diagnosis, the answer is right now, no, because as we talked about earlier, there's a substantial population of already diagnosed patients out there. Specifically, 37,000 patients that have a formal diagnosis of idiopathic hypersomnia and not only that, that we can see through claims data that in the last year, they've been actively engaging with the health care system. So the market is there. Many of these patients are currently taken or have tried products, traditional stimulants, and wake-promoting agents or antidepressants off-label. We hear back from the patients and the health care providers, that's just not meeting their needs and there's still a tremendous unmet need for greater relief for these patients. So the market is there. So we're out there really educating more about the product profile. If anything, just trying to help HCPs become more confident in their diagnosis and to identify those patients that are diagnosed and that would benefit from a try with Xywav for idiopathic hypersomnia.

Our next question comes from David Amsellem with Piper Sandler.

So just a couple. On Epidiolex, can you talk about the extent of off-label usage? In our KOL conversations, it's clearly happening. How much of that is a factor in the overall growth trajectory of the product in the United States? That's number one. And then number two is on IH. I apologize if I missed this, but can you talk to the kind of patients who are getting on therapy? I know it's early days. Are these patients mainly have been exposed to modafinil and/or stimulants or are they newly diagnosed, treatment-naive patients? Is there a mix? If you could talk to that, that would be helpful.

Yes. Maybe David, I'll have Rob take both of these. On the Epidiolex side, again, just talking about how the drug is being used based on our understanding. And then on the idiopathic hypersomnia side, super early in the launch, and I'm not sure we've got that granular data, but we can certainly refer back to what we saw in clinical trials in terms of what patients have tried other agents and how often we think they've already tried modafinil or other stimulants. So Rob?

Yes. So starting with Epidiolex, the indications are across syndromes, but practitioners, neurologists treat seizure types, and what is, I think, notable about Epidiolex is the activity across different seizure types within those syndromes. And so it's viewed as being broadly active across a number of different major types of seizures that occur. And so certainly, while we wouldn't promote off-label, that information is available for prescribers. With regard to IH in the clinical trial, the majority of patients came in on daytime wake-promoting agents. And despite that, had severity scores sufficient for trial enrollment. Whether or not they were on daytime alerting agents, they derived benefit from Xywav.

Our next question comes from Navann Ty with Citi.

Just a clarification on Epidiolex outside of the U.S. Do you expect the launch in France in the second half? And do you expect to launch in other key European markets? And then a second one on BD from your comments, can we expect bolt-ons this year and potentially more substantial billing once you reach the 3.5 leverage target?

Yes. Regarding the launch in France, we are looking at 2022 and are actively engaged with the French authorities. However, the timing depends on the progress of that dialogue. Securing the right launch price is very important, as there is only one opportunity to set that price in France. We are optimistic about reaching a suitable price and launching in 2022. Notably, we have received approval in 34 countries, but have only launched in 13 so far. France will be the last of the major European markets to launch, although there are several smaller countries that can contribute to meaningful growth. We also have active development plans for the Asia Pacific region, including Japan, which could lead to significant growth in the future.

Yes. This is Renée. I will add to the second part of your question regarding corporate development. As I mentioned in our prepared remarks, we expect to be active in corporate and business development throughout 2022. We are looking to enhance our pipeline and expand opportunities within neuroscience, particularly in sleep, essential tremor studies, and PTSD, as well as maintaining a leading position in epilepsy. On the oncology front, we are exploring additional opportunities in solid tumors that align with our future commercial strategies and R&D expertise. We anticipate being active in smaller transactions throughout 2022, with opportunities similar to SpringWorks or Redx, and potentially larger deals like our partnership with PharmaMar for Zepzelca, which involved a couple of hundred million dollars upfront. This approach allows us to convert cash into revenue-generating assets, which are crucial. Our focus on capital allocation this year includes deleveraging while supporting ongoing launches and expanding the pipeline. We are well-positioned to meet our net leverage target of below 3.5x, and we expect to remain active. Looking into 2023 and beyond, we have significant cash flow generation, and we have shown our ability to leverage for transactions like GW and to rapidly deleverage and integrate their operations afterward.

And then our last question comes from Greg Fraser with Truist Securities.

On Xywav for IH, what has been the early trends in terms of the mix between once and twice nightly dosing if you have data on that? And where would you expect the average dose per patient to normalize at over time?

Yes. I would say, Greg, in answer to that, we haven't seen anything since launch that would tell us anything different from what we saw in our clinical trials in terms of once-nightly and twice-nightly dosing or on what dose people end up with. So maybe I could ask Rob to jump in and just remind people what we did see on that. I'll steal the thunder on the second half, which is to say we saw essentially the same nightly dosing very slightly lower in idiopathic hypersomnia than we see in narcolepsy.

Yes. That's right, Bruce. So by and large, it's very similar overall total dosing to narcolepsy. The great majority of patients on the clinical trial ended up on twice nightly. With idiopathic hypersomnia, which might be a little different than narcolepsy, some of the patients on the clinical trial were started once nightly, titrated up. As they derive benefit from the drug, they're then in a better position to take that and benefit from that second dose. Even those who were started on once nightly tended to transition over to twice nightly.

At this time, I'd like to turn the call back over to Bruce Cozadd for any closing remarks.

All right. Thanks, operator, and thanks, everyone, for joining us. I couldn't be happier with our strong fourth quarter and year revenue up 31%, ANI up 41% year-over-year with guidance for this year that contemplates 15% midpoint revenue growth, ANI, about 17%, and I think really puts us right on track to achieve Vision 2025. Let me close today's call by recognizing all of our Jazz colleagues for their tenacity, dedication and creativity in successfully delivering these new therapeutic options to patients. I also want to thank our partners and shareholders for their continued confidence and support. We look forward to updating you on our progress this year as we drive toward our 2022 guidance and Vision 2025. Thank you all for joining us and stay well.

This concludes the program. You may now disconnect.