Image source: The Motley Fool.
DATE
Wednesday, Nov. 5, 2025 at 4:30 p.m. ET
CALL PARTICIPANTS
President and Chief Executive Officer — Renee Gala
Executive Vice President and Chief Commercial Officer — Sam Pierce
Executive Vice President, Global Head of R&D and Chief Medical Officer — Rob Iannone
Executive Vice President and Chief Financial Officer — Phil Johnson
Need a quote from a Motley Fool analyst? Email [email protected]
RISKS
The company explicitly acknowledged: "the availability of generics could result in payer actions that cause some level of disruption to Xywav's revenue," according to Sam Pierce, introducing uncertainty for its key sleep therapeutic segment in 2026.
Zepzelca net product sales decreased 8% year over year in 2025 due to "continued competitive dynamics in the second-line setting," according to Sam Pierce, signaling ongoing market pressures in oncology.
TAKEAWAYS
Total Revenue -- $1.126 billion in total revenue in the third quarter of 2025, reflecting 7% growth compared to the same period in 2024.
Xywav Net Product Sales -- $431 million for Q3 2025, up 11% year over year; net patient adds totaled 450 for Q3 2025 (125 from narcolepsy, 325 from idiopathic hypersomnia).
Epidiolex Net Product Sales -- $303 million in net product sales for Q3 2025, marking a 20% increase compared to the same period in 2024; volume growth reached 10% for Q3 2025, with additional revenue benefit attributed to U.S. accrual refinements.
Sleep Therapeutic Area Revenue -- $520 million for Q3 2025, with performance largely led by Xywav and Xyrem.
Modesto Net Product Sales -- $11 million in net product sales generated in 2025 following FDA approval; over 200 patients received the therapy as of Q3 2025, with most being new starts.
Zepzelca Net Product Sales -- $79 million in net product sales for 2025, down 8% year over year; received FDA approval for combination with atezolizumab as first-line maintenance for extensive-stage small cell lung cancer.
Rylaze Net Product Sales -- $100 million net product sales for 2025, representing 1% growth compared to 2024, with pediatric usage stable despite overall class declines.
Oncology Product Revenue -- primarily from Modesto and Zepzelca additions, offset by lower Defitelio and Zepzelca sales.
Adjusted Net Income (ANI) -- Adjusted net income (non-GAAP) was $501 million for Q3 2025; results included discrete impacts from deferred tax assets (Chimerix acquisition), litigation settlements, and the SANEONA license in non-GAAP results, collectively increasing non-GAAP EPS by $0.66 per share.
Cash Flow -- Nearly $1 billion generated in the first nine months of 2025 (cash flow); quarter-end cash and investments totaled $2 billion.
Full-Year 2025 Revenue Guidance -- Narrowed to $4.175 billion-$4.275 billion, reflecting increased confidence with one quarter remaining.
FDA Approvals -- Both Modesto (for recurrent H3K27M mutant diffuse midline glioma) and Zepzelca plus atezolizumab (first-line maintenance for extensive-stage small cell lung cancer) received FDA approval in the quarter, with both included in NCCN guidelines.
Pipeline Progress -- Top-line Phase III results for zanadatumab Horizon GEA trial in gastroesophageal adenocarcinoma are expected later in the quarter, following an FDA-aligned change expanding intent-to-treat analysis to all 920 enrolled patients for PFS in the Horizon GEA-one trial.
Litigation Settlements -- Comprehensive settlements were achieved in Xyrem antitrust litigation and with Avadel, resolving outstanding legal exposures in those areas.
Corporate Development -- Acquisition of Chimerix strengthened the portfolio via the Modesto launch; global SANEONA licensing expands the early-stage epilepsy pipeline with the SAM-2355 preclinical candidate.
Royalty Arrangements -- An amendment with HICMA extends Jazz's authorized generic agreement for high sodium oxybate by two years and maintains current royalty rates through 2025 (with later stepdowns), enabling continued participation in the narcolepsy market segment.
Guideline and Label Changes -- American Heart Association and American College of Cardiology guidelines published in August reinforce the market positioning of low sodium Xywav, supported by Xylo study data.
Upcoming Catalysts -- Interim analysis for the Phase III confirmatory dirdevaprone trial in H3K27M mutant glioma is targeted for late 2026 or early 2027 following proposed sample size adjustment, subject to FDA alignment.
SUMMARY
Jazz Pharmaceuticals (JAZZ 0.43%) delivered a quarterly revenue record, fueled by double-digit sales growth for Xywav and Epidiolex during the third quarter of 2025, while successfully launching Modesto and expanding Zepzelca's label through key FDA approvals. Notable litigation settlements removed material overhangs from Xyrem antitrust and Avadel disputes, and disciplined capital allocation allowed the company to further invest in both its pipeline and external innovation. The guidance range for full-year revenue was narrowed, and upcoming data readouts—particularly for zanadatumab in gastroesophageal adenocarcinoma—represent significant near-term catalysts for the company.
Phil Johnson stated, "In the fourth quarter, we'll have thirteen shipping weeks for our US oncology products," which is fewer than in both the prior quarter (Q3 fiscal 2025, period ended Sept. 30, 2025) and the previous year's fourth quarter (Q4 fiscal 2024, period ended Dec. 31, 2024), and may affect sequential comparisons.
Rob Iannone confirmed, As we announced today and after alignment with FDA, we have updated the intent-to-treat patient population for PFS to include all enrolled patients, increasing the PFS cohort from the targeted 714 to 920, which is the actual number of enrolled patients as detailed on clinicaltrials.gov, enabling the progression-free survival endpoint to be analyzed across all 920 randomized subjects.
The SANEONA deal introduces a preclinical epilepsy candidate with targeted KV7.2/7.3 specificity, which company leadership describes as potentially best in class due to anticipated improved tolerability over less selective molecules according to Rob Iannone.
An expanded authorized generic agreement with HICMA for high sodium oxybate enables Jazz to retain a royalty stream as generics enter the narcolepsy market and enhances control through new termination rights and set royalty rate reductions after 2025.
INDUSTRY GLOSSARY
PFS (Progression-Free Survival): The length of time during and after treatment in which a patient lives with a disease without it worsening.
Overall Survival (OS): Duration from the start of treatment or trial enrollment until death from any cause.
NCCN Guidelines: Clinical practice guidelines published by the National Comprehensive Cancer Network, providing evidence-based recommendations for cancer care professionals.
Kv7 (KCNQ) Channels: Potassium channel subtypes involved in neuronal excitability, with Kv7.2/7.3 specifically targeted for improved efficacy and tolerability in epilepsy treatments.
IH (Idiopathic Hypersomnia): A chronic sleep disorder characterized by excessive daytime sleepiness not caused by other medical conditions.
Full Conference Call Transcript
Renee Gala, President and Chief Executive Officer; Sam Pierce, Executive Vice President and Chief Commercial Officer; Ravi Anon, Executive Vice President, Global Head of R&D and Chief Medical Officer; and Phil Johnson, Executive Vice President and Chief Financial Officer. On slide two, I'd like to remind you that today's webcast includes forward-looking statements, such as those related to our future financial and operating results, which involve risks and uncertainties that could cause actual events to differ materially from those contained in the forward-looking statements made on today's webcast.
We encourage you to review these risks and uncertainties described in today's press release and under the caption Risk Factors in our annual report on Form 10-K for the fiscal year ended 12/31/2024, and our subsequent filings with the SEC, including our quarterly report on Form 10-Q for the fiscal quarter ended 09/30/2025. We undertake no duty or obligation to update our forward-looking statements. As noted on Slide three, we will discuss non-GAAP financial measures on this webcast. Descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release and the slide presentation available on the Investors section of our website. I'll now turn the call over to Renee.
Renee Gala: Thanks, Jack. Good afternoon, everyone, and thank you for joining us to discuss Jazz Pharmaceuticals' third quarter 2025 results. I'm delighted to be speaking with you today as Jazz's CEO. The past three months have been energizing and productive. We delivered two FDA approvals that underscore Jazz's ability to bring highly differentiated therapies to patients with serious unmet needs. These milestones reflect the strength of our execution, dedication of our teams, and our continued momentum to drive sustainable growth and meaningful value for our patients and our shareholders. Beginning on Slide five, the results of the quarter reflect that momentum.
Starting with commercial, we achieved our highest ever revenue quarter, over $1.1 billion, driven by robust growth from Xywav, Epidiolex, and the early successful launch of Modesto, the first and only drug treatment for recurrent H3K27M mutant diffuse midline glioma, an ultra-rare and aggressive brain tumor. Approval of Modesto followed the acquisition of Chimerix earlier this year, reinforcing our ability to strengthen our portfolio through corporate development. We also secured FDA approval for Zepzelca in combination with atezolizumab as a first-line maintenance therapy for extensive-stage small cell lung cancer. Both therapies are now included in NCCN guidelines, reflecting the meaningful advancements these therapies bring to patients.
Moving on to our pipeline, we look forward to sharing the highly anticipated top-line results from the Phase III zanidatumab horizon trial in gastroesophageal adenocarcinoma or GEA later this quarter. In addition, we strengthened our early-stage epilepsy pipeline through a global licensing agreement with SANEONA. This agreement provides Jazz with worldwide rights to develop and commercialize SAM-2355, a promising preclinical candidate designed to overcome the limitations of nonselective KD7 targeting compounds. On the financial front, we remain strongly positioned to invest in the growth drivers of our business. We narrowed our 2025 revenue guidance to a range of $4.175 billion to $4.275 billion, reflecting increased confidence in our outlook at this point in the year.
In addition, we were pleased to have reached settlement agreements across the entirety of the Xyrem antitrust litigation and the litigation with Avadel. With these matters behind us, we can focus squarely on executing our strategy, maximizing our impact for patients, and creating meaningful value for our shareholders. Finally, we're thrilled to welcome Dr. Ted Love to our Board of Directors. Ted's extensive leadership in the biopharmaceutical industry and track record of driving scientific innovation, commercial success, and shareholder value will complement the capabilities of our existing Board and deepen our commitment to innovating for patients. In summary, we delivered a highly productive third quarter, and in October, litigation settlements and first-line maintenance combination approval for Zepzelca. Sam?
Sam Pierce: Thank you, Renee. I'm looking forward to sharing the progress of our growing and increasingly diversified commercial portfolio today. Starting on slide seven, during the third quarter, we continued to build on the positive momentum we've seen across our sleep portfolio this year. Total revenue from our sleep therapeutic area, which includes Xywav and Xyrem, was $520 million. Xywav net product sales grew 11% year over year to $431 million. We're pleased with the strong execution of our field teams, which drove an increase of 450 net patient adds exiting the third quarter, with 125 net patient adds from narcolepsy and 325 from IH.
Our field team's efforts have been bolstered by our disease awareness digital campaign that has now been expanded to include narcolepsy in addition to IH. Our field nurse educator program continues to drive positive impact for patients starting therapy. This program enables new Xywav patients to interact in person with a registered nurse to receive education on titrating and optimizing their oxybate therapy and has been effective in helping patients remain on treatment. The health benefits of reducing sodium continue to resonate with HCPs and patients, solidifying Xywav's position in the market as the only oxybate that provides the significant and clinically meaningful reduction of sodium.
In August, the American Heart Association and American College of Cardiology published the 2025 high blood pressure guidelines, which recommend daily sodium intake should not exceed 2,300 milligrams per day. For patients predisposed to high blood pressure, the daily intake of sodium should be less than 1,500 milligrams per day, a level which is exceeded by the recommended daily dose of all high sodium treatment options. These recommendations are supported by the recently published Xylo study that showed switching to low sodium Xywav from high sodium oxybate was associated with a clinically meaningful reduction in blood pressure.
These guidelines, alongside the Xylo data, reinforce our belief that every patient taking an oxybate to treat narcolepsy or IH should have the opportunity to benefit from Xywav. We carry very strong momentum with low sodium Xywav into 2026, which is a year that brings the potential entry of one or more generic versions of our high sodium Xyrem. As a reminder, the revenue impact to Jazz will depend on which companies enter the market, how many may enter, and how these products will be priced. We therefore recognize that the availability of generics could result in payer actions that cause some level of disruption to Xywav's revenue.
However, even in a market with generic competitors, Xywav offers a differentiated profile, and we will partner with payers to ensure that patients continue to have strong access to Xywav, the only low sodium oxybate on the market and the only FDA-approved treatment for IH. Moving to slide eight and Epidiolex, net product sales were $303 million, resulting in a 20% increase compared to 2024. We continue to see healthy underlying demand for Epidiolex, with 10% volume growth in the quarter. Revenue this quarter also benefited from the release of reserves following refinements of certain accrual rates here in the US.
We are seeing the same benefit from the robust body of real-world evidence supporting both seizure and non-seizure benefits of Epidiolex, with new data from the Epicon study expected at the AES annual meeting next month. In addition, the nurse navigator program has driven a meaningful improvement in persistency among Epidiolex patients enrolled in the program. Given our solid year-to-date performance, we remain confident that Epidiolex will reach blockbuster status this year. Moving to oncology on slide nine, for 2025, Rylaze net product sales were $100 million, representing a 1% increase compared to 2024. While overall asparaginase use has declined following implementation of updated pediatric protocols, the use of Rylaze within the asparaginase class for pediatric treatment has remained stable.
Our efforts continue to be focused on ensuring optimal use of Rylaze in the pediatric setting, ensuring patients are switched to Rylaze at the first sign of a hypersensitivity reaction, and increasing Rylaze use in the adolescents and young adult population. On slide 10, net product sales for Zepzelca for 2025 were approximately $79 million, a decrease of 8% year over year due to continued competitive dynamics in the second-line setting. We were pleased to have received FDA approval for the combination of Zepzelca plus Tecentriq, expanding Zepzelca's indication into first-line maintenance therapy for extensive-stage small cell lung cancer.
Data from the phase three ENFORCH trial demonstrated a statistically significant improvement in overall survival for Zepzelca in combination with Tecentriq, reducing the risk of death by 27% compared to the Tecentriq-only arm of the trial. We believe these data are practice-changing, and we are excited about the opportunity to help improve patient outcomes. We currently have the right team and capabilities in place to deliver a successful launch of Zepzelca in this new indication. Turning to slide 11, Modesto became commercially available less than two weeks after receiving accelerated approval, generating $11 million in net product sales during 2025.
We were pleased to receive early inclusion into the NCCN guidelines as a preferred treatment for both adult and pediatric use. Given the very high unmet need, exceptionally high awareness of Modesto, and strong patient advocacy support, we've seen rapid uptake in this early phase of the launch, with more than 200 patients having received Modesto at the end of the third quarter. The majority of these patients were new patients, with a smaller proportion transitioning from the early access program. We're hearing positive early feedback amongst physicians.
Our comprehensive launch plan includes direct engagement with about 3,000 healthcare providers, with an additional 7,000 targeted to non-personal promotion, focusing primarily on academic centers of excellence where these complex cases are treated. We've implemented robust patient access and support services through our exclusive distribution partnership with Onco360. These investments were made to ensure patients can access treatment quickly and easily, and we're pleased with the strong payer access thus far. The launch of Modesto highlights Jazz's proven ability to advance rare disease and oncology programs through regulatory approval and commercial launch. I'll now turn it over to Rob for an update on our pipeline and upcoming milestones. Rob?
Rob Iannone: Thank you, Sam. Slide 13 provides an overview of the key clinical programs in our diversified pipeline, including the comprehensive clinical development program that is underway for zanadatumab. There are multiple ongoing registrational trials for zanadatumab, including the confirmatory first-line BTC trial, the Horizon GEA-one trial in first-line GEA, efficacy and the advanced breast cancer trial evaluating zanadatumab following treatment with TDXD. In addition, we have earlier trials like the DISCOVER PAN-206 PAN tumor trial and the neoadjuvant adjuvant breast cancer trial. These trials are progressing well with significant interest from sites, and we look forward to sharing an update on potential timelines for these trials as appropriate.
Regarding our confirmatory Phase III trial of dirdevaprone in newly diagnosed H3K27M mutant diffuse glioma, we are in active dialogue with the FDA regarding potential updates to the trial. Pending regulatory alignment, our intent is to increase the sample size to power the trial for a primary endpoint of overall survival, which we view as the most appropriate endpoint for this confirmatory trial. Based on these proposed updates, we currently estimate an interim analysis of the overall survival to occur in late 2026 or early 2027. The trial is active at more than 95 international sites and remains on track with more than 50% of patients enrolled.
Moving to slide 14, our next major catalyst is the top-line readout of the Phase III zanadatumab Horizon GEA-one trial. As we announced today and after alignment with FDA, we have updated the intent to treat patient population for PFS and now include the fully enrolled patient population, increasing the PFS cohort from the targeted 714 to 920 patients, which is the actual number of enrolled patients as detailed on clinicaltrials.gov. As a reminder, we previously took the opportunity to expand the patient population for the overall survival analysis by expanding the sample size for that endpoint.
With progression events accruing more slowly than anticipated, combined with the study being fully enrolled with sufficient follow-up on enrolled patients, we aligned with the FDA to conduct the PFS analysis on the entire randomized patient population. Following this change, we continue to have robust powering to show a benefit for PFS, and we remain highly confident that we will announce top-line results later this year, consistent with our prior guidance. With that, I will turn the call over to Phil for a financial update. Phil?
Phil Johnson: Thanks, Rob. I'll start on Slide 16 with our top-line financial results. As a reminder, our full financial results are available in our press release and in our 10-Q. During the third quarter of 2025, we generated $1.126 billion in total revenues. This represents an increase of 7% compared to 2024. Epidiolex grew 20%, and Xywav grew 11% compared to the third quarter of last year. Continued strong performance of these products positions us well for the rest of 2025 and beyond. In total, revenue from our oncology products increased 1% compared to 2024. This modest increase was driven primarily by the inclusion of Modesto and Zepzelca, partially offset by lower sales of Defitelio and Zepzelca.
Adjusted net income or ANI for the third quarter of this year was $501 million. ANI was affected by several items that you'll see outlined in our press release and 10-Q, including the recognition of deferred tax assets related to the Chimerix acquisition, charges related to litigation settlements, and the SANEONA licensing agreement. Cumulatively, these items increased our third-quarter non-GAAP adjusted EPS by $0.66 per share. We continue to generate robust cash flow with nearly $1 billion recorded for the first nine months of 2025, and our balance sheet remains strong with $2 billion in cash and investments at quarter-end. Turning to slide 17 and guidance, revenue is tracking to our expectations.
So with just one quarter left in the year, we're narrowing our full-year revenue guidance to $4.175 billion to $4.275 billion. We've also made several adjustments to our non-revenue guidance. In terms of ongoing run rate, we've reflected lower litigation costs in our revised SG&A guidance, as well as continued portfolio optimization and prioritization in our reduced R&D guidance range. In addition, we've also incorporated the additional anti as well as Avadel litigation settlements into our revised SG&A guidance. We've included the additional IPR&D charge from the SANEONA deal and have reflected the Chimerix income tax benefit I mentioned earlier. To help as you refine your models, I'd like to reiterate a point I made on last quarter's call.
In the fourth quarter, we'll have thirteen shipping weeks for our US oncology products. While this is a normal number of shipping weeks, it is one less week than we had in the third quarter of this year as well as in the fourth quarter of last year. Finally, I'll close by providing a shout-out to our internal teams who played a key role both in our acquisition of Chimerix and in the licensing of SANEONA's potentially best-in-class KD7 molecule. These transactions have strengthened our oncology and epilepsy portfolios, and we remain focused on improving Jazz's growth outlook by investing in external innovation.
I'm confident that in the months and quarters ahead, we'll leverage our strong financial position to execute value-creating deals that benefit patients and shareholders. With that, I'll turn the call back to Renee for closing remarks.
Renee Gala: Thank you, Phil. I'll conclude our prepared remarks on Slide 19. Jazz's third-quarter results underscore the strength of our diverse portfolio and the exceptional execution of our team. We've delivered meaningful progress across our commercial portfolio, including the launches of Modesto and Zepzelca, and we'll continue to focus on ensuring our therapies reach more patients quickly. Looking ahead, we remain on track to share top-line results from the Phase III GEA trial of zanadatumab later this quarter, an important milestone for Jazz and for patients facing this aggressive cancer. Our focus on strong execution and disciplined capital allocation, combined with the momentum we've built, positions us to deliver meaningful value to shareholders. That concludes our prepared remarks.
I'd now like to turn the call over to the operator to open the line for Q&A. Thank you.
Operator: At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. As a reminder, we ask that all analysts please limit themselves to one question. Please stand by while we compile the Q&A roster. First question comes from the line of Mark Goodman with Leary. Your line is now open.
Mark Goodman: Yeah. Rob, you mentioned the KB7 is potential best in class. Can you talk about how is that best in class? And on the Epidiolex, can you guys just quantify what that benefit was to gross to net? Thanks.
Rob Iannone: Thanks, Renee. We believe the KB7 that is in development after the Saneona deal is best in class because of the specificity for KV7.2 and KV7.3, differentiated from other molecules which have broader activity. The broader activity tends to give off-target toxicity without adding to the efficacy. So we think we're in a precedented validated mechanism that's potentially very impactful, but with higher specificity that will potentially allow us to hit the relevant targets harder and stay off of the targets that are causing unwanted side effects.
Sam Pierce: Thank you. And I'll just jump in on the Epidiolex question, Mark. It's Sam here. Yes, so for Epidiolex this quarter, it was a good quarter as you saw $303 million, 20% revenue growth. Important, I think, for us to highlight that we saw 10% volume growth this quarter. So you know, a good healthy double-digit volume growth. The revenue in the quarter was boosted not only by the volume growth but also by the refinement of certain accrual rates here in the US. That gave us an impact in that third quarter, and we don't expect that to have a very material impact on future quarters.
Mark Goodman: So you don't wanna quantify it?
Phil Johnson: Mark, this is Phil. I'd say it's the majority of that remaining difference between the 10% volume growth and the 20% revenue growth, but it's not all of it.
Mark Goodman: Thank you. Sure.
Operator: Thank you so much. Our next question comes from the line of Jessica Fye with JPMorgan. Your line is now open.
Jessica Fye: Hey, guys. Good afternoon. Thanks for taking my question. You mentioned that 2026 brings the generic entry of one or more generic serums. Can you just elaborate on how you're thinking about the potential for other filers to enter in '26? And is your base case that there is at least one ANDA entrant then if you'll indulge me, I am so curious. The change to the population being used for the PFS analysis for the Horizon GEH trial. Can you just walk through the potential benefits of using the IT population for the PFS analysis? In addition to OS. Given it seems like you were already well powered for PFS. So curious kinda what brought that about. Thank you.
Rob Iannone: Sure. And thanks for the question, Jess. So, as a reminder, when we first took the study over from ZymWorks, we knew we wanted to increase the sample size to ensure adequate power for overall survival even though the study was clearly well powered for the 714 for PFS. At the time, given our assumptions around how the PFS events would roll in, we thought there would be a big gap between the time that we were ready to read out PFS on 714 versus having enough maturity on the fully enrolled sample size. So over the course of time, the PFS events came in more slowly than we had predicted, as you know. And the trial enrolled very briskly.
So we found ourselves in a situation where we actually have enough maturity on the full sample size and so it only makes sense to look at all the patients enrolled rather than a subset. We checked that with health authorities, including the FDA, and they were aligned with that approach.
Sam Pierce: And just coming, Jess, to your question around Xywav. Yes, I mean, as you know and as a reminder, generics are able to enter into the market from the beginning of next year. At this stage, you know, we don't know the number of generics that would enter when they might enter, or the price at which they will enter. So there are some unknowns there. But the availability of generics could result in payer actions that cause some disruption to Xywav revenue. We are gonna continue to partner with payers to ensure that patients have access to low sodium Xywav. We believe that's important.
And we believe that of course, Xywav continues to offer a really differentiated proposition to patients being the only low sodium oxybate in the market and the only FDA-approved treatment for IH. Still some things that need to we need to see how they'll play out in practice.
Operator: Alright. Thank you so much. Our next question comes from the line of Andrea Newkirk with Goldman Sachs. Your line is now open.
Andrea Newkirk: Hi, everyone. Thanks so much for taking the question. Sam, maybe I can follow-up on Jess' question there. Just as you think about potential generic entrants, of you know, maybe these negotiations with payers, are there any other strategies you might be willing to contemplate to defend against competitive threat that might arise to the sleep franchise?
Sam Pierce: Yes. Thank you for the question, Andrea. We've been focused now, as you can see, that we've had very, very strong momentum with Xywav through the course of this year with 11% growth, and we continue to add net patient adds each quarter. We've got the highest number of active patients on treatment now. So we're carrying really strong momentum into the market. And the things that we've been doing are gonna be as relevant in 2026 as they are in 2025. The execution of our field teams has been very strong. The differentiation that we've been communicating to HCPs has really resonated well.
Even in a changing environment in 2026, Xywav is going to be the only low sodium oxybate on the market. We believe that's still a really important differentiating proposition for customers and for patients. And we're gonna continue to invest in ensuring that differentiation is understood. I think the guidelines, which just reinforce the importance of having a low sodium option as well as our Xylo data, which shows the impact of switching from a high sodium oxybate to a low sodium oxybate. These are all really very important, differentiating features and we'll continue to communicate those to HCPs as we enter 2026.
Renee Gala: And just to add on to that, while this is not a direct strategy relative to defend against impacts, I will say just noting that we did report in our Q that we entered into an amendment with HICMA and that amendment to our agreement extends the agreement by two years. We do recognize that a portion of the narcolepsy market does continue to choose high sodium oxybate. By providing more therapeutic options, we think that's a good thing for patients. And so, of course, our royalties on the sale of authorized generics by HICMA provide us the opportunity to continue to participate in that market. We've extended the agreement by two years.
Our royalty rates are the same through 2025 and then subject to specific reductions. Of course, Cigna does maintain a right to launch a generic. If they do so, they no longer have access to our authorized generic or our REMS. But as part of this, we also gained termination rights that we did not have previously, which allow us to better manage our business. So that's another element of our business that we think makes sense for Jazz and is important to understand.
Operator: Thank you so much. Our next question comes from the line of Akash Tewari with Jefferies. Your line is now open.
Akash Tewari: Hey. Thanks so much. So we've seen some increasingly unpredictable interactions with biotechs and the FDA recently. How confident is your team that the FDA is okay with Horizon GEA having no U.S. patients in the trial? And was that discussed when you updated the PFS analysis with the agency recently? Thank you.
Rob Iannone: Yeah. Happy to. Thanks for the question. We've had multiple interactions with FDA and other health authorities and we're aligned on the overall design. There was a clear rationale for not accruing patients from the U.S., you know, with the approval of Keytruda would have been a confounding factor. But the FDA is really focused on it's not so much whether patients are being enrolled from the U.S., but whether the enrolled patient population is representative of patients in the U.S.
In terms of disease characteristics, that the trial design is well controlled using a control that's relevant to U.S. patients and that the trial conduct including supportive care, is in line with typical supportive care so that, overall, the results would be applicable to the U.S. population. And we've had this discussion with FDA over multiple interactions, and I'm comfortable that it's not an issue for us.
Operator: Alright. Thank you so much. Our next question comes from the line of Jason Gerberry with BofA. Or Bank of America. Your line is now open.
Jason Gerberry: Hey, guys. Thanks for taking my question. Another follow-up on the oxybate generics next year. I would assume by now, like, November, I remember, like, around this time, March, ahead of Avadel coming the subsequent year, you guys had a line of sight on being a parity access as an oxybate. So yeah, I'm just wondering why that is. Maybe you don't have a line of sight and would it be your base case that to get Xywav, you're going to have to step through a generic with most insurers. And then I'd love to get your thoughts just on emerging Orexin data in narcolepsy type two.
I think NT1, the data and profiles pretty reasonably well understood, but, you know, I think, we are seeing less of a treatment effect size in NT2, and I'm just kind of curious how you think about the value proposition of that as a potential competitive threat to Xywav as well. Thanks.
Sam Pierce: Yes, we so far, there has been no change to our engagement with payers. You know, we continue to engage with them we normally would do, on, on 2026. We don't have a line of sight into, 2026 will play out. We know that generics are able to and the market, but we don't know yet how many there will be, when they might enter. And what the precise pricing conditions will be. And all of that, obviously, will have a bearing on the year ahead of us.
Of course, you know, we do expect that to have an impact on Xyrem revenue, but the materiality of impact to Xywav you know, will depend on all of those factors yet to be determined.
Rob Iannone: Yeah. And happy to answer the question. Related to NT2. So first of all, not a surprise that, NT1 is more sensitive than NT2 or IH would be given what we know about the underlying biology. And I'm also not surprised to see that his data emerged that, you know, we're learning still. It's fairly early days and still learning, you know, what we'll have which compound will have the best in class profile, you know, how to dose, what half-life is maybe most optimal. And, ultimately, the benefit of orexin agonists relative to other options such as oxybate and Xywav.
And I think all of the data that are emerging continue to reinforce our position that Xywav, oxybate, Xywav being the safest of all oxybates given the low sodium, It's really the only way to address NT1, NT2, the disruption and the abnormalities in nighttime sleep, which are the root cause of and idiopathic hypersomnia. Some of the data that we published on Xywav and World Sleep recently, I think, highlighted that. The benefit of Xywav in terms of improving those sleep parameters. Which appear not to be improved when you look at total sleep or deep sleep, which is important. Not to be improved based on the available data we have on orexin agonist.
In fact, orexin agonist especially depending on the half-life, can, cause insomnia and disruption. Sleep. So we continue to think that while orexin agonists are very potent weight promoting agent for the for daytime symptoms, that the combination could be very powerful. It's always been the case for oxybate. That patients sometimes, take wake promoting agents during the day, and we think that will continue to be the case and that our actions will be another option there. But it as data roll out, it continues to reinforce the value of Xywav for patients. Are benefiting from it.
Operator: Thank you so much. As a reminder, everyone, we ask that all analysts please limit themselves to one question. Please standby while we compile the Q&A roster. Our next question comes from the line of Ami Fadia with Needham and Company. Your line is now open.
Ami Fadia: Hi, good afternoon. Thanks for taking my question. Just a broader one, how have your development priorities between CNS and oncology evolved with some recent successes that you've had on the oncology side, the GEA data around the corner, but also looking a little bit ahead, the changing in the sleep space. So how are you thinking about sort of where your priorities might be?
Renee Gala: Thank you for the question. So first and foremost, we are highly focused on where we believe we can have a meaningful impact for patients and whether that is within oncology, neuroscience, or neuro-oncology, that's where our primary focus is. Rob, do you wanna comment further?
Rob Iannone: Sure. As we highlighted in our prepared comments, we're certainly very excited about some of the near-term readouts. The fact that we now have approval in frontline small cell lung cancer completely changed paradigm. A new standard of care for those patients who are desperate need of new therapies? Approval of dirdeviprone first drug therapy approved in high-grade gliomas already having huge impact and a very high unmet need. And that you know, zanadatumab approved in BTC and a lot of anticipation and excitement around the potential in GEA and beyond. So you know, certainly excited about our oncology franchise.
But also a lot of promise, on the CNS side as well with Epidiolex evolving into the critically important drug that it is and our capabilities. Around epilepsy enabling us to do deals like SANEONA and to develop other pipeline agents that we have that haven't necessarily disclosed the specifics of, but continue to make us excited about areas such as epilepsy as well.
Operator: Thank you so much. Our next question comes from the line of Mohit Bansal with Wells Fargo. Your line is now open.
Mohit Bansal: Great. Thank you very much for taking my question. I would love if you could comment on how should we think about the authorized generic royalties for next year. When would you know that Hikma has opted in or opted out at this point given that we are in November at this point? What should be our base case? Thank you.
Phil Johnson: Sure, Mohit. I'm happy to go ahead and take the questions, Phil. So at this point, our assumption is that we will have the AG provided by HICMA during 2026. The royalties, as Renee mentioned, for a state, their current rate here this year and then will be subject to step downs. We're not providing a specific percentages that will be applied. Other than this, it continues to be a meaningful royalty back to Jazz and a potential meaningful revenue stream for us moving forward.
Operator: Thank you so much. Our next question comes from the line of David Amsellem with Piper Sandler. Your line is now open.
David Amsellem: Oh, thanks. I wanted to come back to Xywav and Dynamics in 2026 with Xyrem generics in the market. So you made some comments about access shoring up access. So should we take that to mean that you're going to be making some concessions on Xywav pricing. In other words, you will see some degradation potentially in net realized price. For Xywav. And sort of a cost of, you know, continuing to have access and preventing switching away from Xywav. Is that a reasonable way to think about it, or is it just too early to go there? Thanks.
Renee Gala: Yeah. This is Renee. I'll jump in on that one. I would say go going into the year, we are feeling good about our current position. But I would emphasize some of the comments that Sam made previously that with the availability of generics, there could be additional actions that take place that could cause some disruption. And it really does depend on how the market evolves. We have a very high focus on ensuring that we have access, and that is strong access. Sam talked about where we are today with little to no step through in order to get access to 2026. We have not provided guidance for '26 yet, nor do we typically provide guidance by product.
But I would say based on where we sit today and we're poised to enter 2026, we're feeling good about the position that we're in.
Operator: Thank you so much. Our next question comes from the line of Annabel Samimy with Stifel. Your line is now open.
Annabel Samimy: Hi, great. Thanks for taking my question. Gonna shift gears to oncology. I'm wondering from Modesto that like it was a great start. Is this a bolus? Does it include stocking? And what can we expect for the cadence of uptake in the coming quarters? How familiar are docs with this treatment, And I guess in the same way for the new approval or expanded label for the Zepzelca. I realized that it's probably too early, but the data's been out for some time now. Has there been any contribution yet in the first-line setting?
And what can we expect on the cadence for approval, post-approval there with the compendia inclusion and the fact that it was already an available drug. Thanks.
Renee Gala: Thanks, Annabel. I'll start and then hand it over to Sam to cover Modesto. So why don't I just start with Zepzelca, which is it's it's pretty early given that we just received the actual approval. So we're excited about the reaction we're hearing from physicians. They're obviously already very comfortable in using Zepzelca in the second line. But too early to tell how much use is happening in the first line. With respect to Modesto, little to no stocking. That's not really how our distribution works, but super excited about this on the back of the successful corporate development transaction. Sam?
Sam Pierce: Yeah. I'll just add to that, Renee, in relation to Modesto. We're obviously really pleased with the launch so far, I think $11 million in the first quarter following FDA approval in August. And obviously, we received the NCCN guidance in pediatrics and adults as well. There's been, I think, really three factors that I'd like to kind of highlight. First of all, obviously, the very, very significant unmet need. You know, we've had very strong HCP and patient engagement. You had a question around awareness. Awareness of the product is exceptionally high. And we're seeing that in the rapid uptake. We have a really experienced team behind this product dedicated to Modesto.
And I think they're doing a terrific job. And access has been really, really very strong. We've got a very good partnership with our specialist distributor who are supporting patients to get on to treatment rapidly. In terms of, we did see, we had about 200 just of 200 patients by the end of the third quarter. Some of those did come from the expanded access program. But more than 60% of them were new patients or new to Modesto. And that's how we would continue now, and that's the outlook for the forthcoming quarters as these patients will all be new. To Modesto, and we're seeing a steady uptick there.
So confident launch and, you know, really just reinforces our belief in this product as a potentially $500 million plus, peak in the US.
Operator: Thank you so much. Our next question comes from the line of Brian Skorney with Baird. Your line is now open.
Brian Skorney: Hey. Thank you for taking my question. Maybe for Rob on the GEA readout, now the sample size of 920, can you just review, are there four separate comparative analyses here that or b versus a, c versus a for OS and PFS? And how to think about powering across them and outlet split? And is there any hierarchy to the analysis?
Rob Iannone: Yeah. I mean, while there were some early publications, that detailed the specifics, you know, since Jazz took on the trial, as is our usual. We get into the nitty-gritty of the statistics. But I would say that we do have the opportunity at this point to look at both PFS and an interim on overall survival. And I would say silver lining of the PFS events coming in a little more slowly is we probably have more maturity on overall survival than we might have had under protocol assumptions. And, yes, there is the opportunity to make the comparisons, but both of the experimental arms and the control arm.
Having said that, we think we're very, very well powered for PFS. Obviously, the trials at 09:18 is powered for overall survival, and that sometimes even makes it somewhat, quote, overpowered. For PFS. So we think we're well powered for PFS. And we have a well-timed first of three interim analyses for us.
Operator: Great. Thank you. Thank you so much. Our next question comes from the line of David Hong with Deutsche Bank. Your line is now open.
David Hong: Hi. Thanks for taking my question. I just wanted to ask, I guess, another one on Horizon GEA. Can you just help us, I guess, maybe set expectations for the level of disclosure you would have in the top-line data? Would we see things like subgroups broken out by PD-L1 expression status? And once the data in hand is your expectation to approach the FDA and be able to receive a full approval on this data? Thanks.
Rob Iannone: Yeah. Thanks for the question. So on the latter part of it, yes, we do expect this would, as a randomized controlled trial, with a primary PFS endpoint and supportive overall survival if we see a large enough benefit in PFS and we see meaningful support from OS, it should bring full approval. To remind you, the primary experimental question here is really is zanadatumab superior to Herceptin? Which we think we have lots of data to support that it would be. That's the primary comparison. And then, you know, between arms b and a, and then in arm c, we have the opportunity to see if the addition of a PD-1 inhibitor specifically tislelizumab, adds to the benefit.
We certainly will be measuring PD-L1 a subgroup. Those subgroups aren't powered or in any way, but we have an opportunity to look across subgroups. But the primary question is zanadatumab versus Herceptin. And then to your question of what would we be disclosing, know, we'll try to be as transparent as possible as I think we were with the recent Inforte data release where we indicated you know, stats say clinically meaningful and tried to provide some color around that. We wanna be careful about disclosing specific data in a press release ahead of a peer-reviewed publication because sometimes that can compromise our ability to publish at a high-impact congress and then a high-impact peer-reviewed journal.
Which then supports, of course, submission to NCC guidelines, etcetera.
Operator: Thank you so much for that. Our next question comes from the line of Ash Verma with UBS. Your line is now open.
Ash Verma: Hi. Yeah. Thanks for taking our Rob, just on the GEA study, if you can comment on this. So I think you said when you adopted from Xyme, the study, you wanted to change the powering assumption for OS. Is the PFS pounding assumption still the same that Dime had? What I mean is the 95% of for the HR of one six five for arm c and the 80% for point seven three for arm b.
Rob Iannone: Yes. Thanks for the question. Yeah. I mean, what I wanted to point out is that when we did the deal, we knew that the study of course, Cymeworks did as well. That the study was underpowered for OS. You know, it was for a three-arm study, it had a similar sample size to Keynote 811, which had only two arms. So we knew we wanted to increase the sample size to better support power for overall survival and give us an opportunity to have two interim analyses before the final and third overall survival. At that time, we felt that PFS was well powered even with seven hundred and fourteen patients. You know, under the specific protocol, assumption.
So, you know, with the full sample size, we continue to think that it's very well powered for PFS. I do acknowledge that there was a publication from Xymeworks that detailed some specifics of the statistics, but we haven't commented since then on specific details of the stats. But just to reinforce that very, very comfortable with the powering around PFS. And now we have, I think, a more robust opportunity for overall survival, including even, you know, the first two interim analyses before we have a final look.
Operator: Thank you so much. Our next question comes from the line of Joseph Thome with TD Cohen. Your line is now open.
Joseph Thome: Hi there. Good evening, and thank you for taking my question. Maybe one on the KB7 acquisition. Can you talk a little bit about where you are going to be looking at developing these therapies? Obviously, two competitors are reasonably ahead in the focal onset seizure space, but we've also seen companies look at ALS and pain. So is there any more room left in focal onset seizures, or are you even looking to look elsewhere? You maybe you have, you know, a little bit more of a timeline advantage? Thank you.
Rob Iannone: Yeah. We haven't detailed or disclosed our full development ambitions for that program yet, and we are certainly thinking through that as we bring it forward to the IND stage. I think what's critical, though, is what motivated us to do this particular partnership is that we feel it has the potential to be meaningfully best in class in a category where I feel there is substantial scientific and clinical proof of concept around the target. But what we do know is that when you hit KV7 broadly, you not only get efficacy, but you see unwanted tolerability issues, which have been observed in the clinic. And we think that we've been able to parse them out around the subtypes.
So that this particular molecule being specific for KV7.2 and 7.3 we think has the potential to be much more on target for producing maximal efficacy and avoiding KV7.4 and 7.5, which don't contribute meaningfully to efficacy and contribute to some of the tolerability issues that have been observed. So in short, we think we have best in class opportunity across certainly focal onset seizures, but in other areas where it would be relevant as well.
Operator: Thank you so much. Our next question comes from the line of Asim Rana with Truist Securities. Your line is now open.
Asim Rana: Congrats on the quarter, and thanks for taking the questions. This is Austin on for June. Just a couple from us. Where are you exactly with your orexin agonist JZP 441? I know it's an open label. Just curious when we can expect an update. And, as a luspalpamide recently reported positive top-line data in the central tremor. Is there any interest in reviving civacalcamide? Thank you.
Rob Iannone: Sure. Happy to. So, no new news yet on JZP 441. We are enrolling a small NT1 trial. And, you know, we're seeing data emerge. Nothing to disclose yet at the moment. But I would say we also have a backup program that we continue to pursue. Again, we think that the mechanism is of importance, has the potential to be a meaningful daytime alerting agent and very complementary to Xywav. So we continue to be interested in that area. You know, in terms of the recent announcement by Praxis around calf three and essential tremor. You know, we read what you did.
I still have some questions around what the data actually show given that the IDMC initially called the trial, futile. So it'll be ultimately interesting to see what data they have and what we can learn from that. You know, from our own study, we felt that the data just didn't support progressing that program relative to the other, you know, really meaningful opportunities that we have in our pipeline.
Operator: Thank you so much. Our next question comes from the line of Sean Lemon with Morgan Stanley. Your line is now open.
Michael Riad: Hi. This is Michael Riad on for Sean Norman. Thank you for taking our questions. Wanted to drill down on some of your prior commentary. The Xywav results from DUET at World Sleep seem really compelling. Can you help to contextualize the restoration of sleep architecture wake promotion with Orexhams? Are they, like, more of an accelerant instead of a competitor? And if so, would you ever think about getting like, the results from DUET formally into the label? And are the results from DUET sufficient in that regard? Thanks so much.
Rob Iannone: Yes. Thanks for the question, because I do agree that they are meaningful results. You know, we had prior data on the effect of oxybate at night, and we do think that Xywav is really the only oxybates are the only drug that really address the root cause of narcolepsy and idiopathic hypersomnia. Xywav, of course, is the safest best option to do that given that it's a low sodium oxybate. But, again, it reinforces that for patients like NT1 patients or even NT2 in idiopathic hypersomnia where nighttime sleep is severely disrupted if you take narcolepsy patients, for example, they might have over 80, on average, 80 awakenings a night.
And know, very, let's say, disrupted or less N3 or deep sleep than a typical patient. And when you give Xywav as the study showed, you meaningfully improve that, and that results in improved daytime symptoms, both wakefulness as well as cataplexy. So we think it's critical to address the underlying root cause of the disease. With any therapy, in these hypersomnias. And some patients certainly will benefit from additional weight promoting agents during the day. We just haven't seen that with any of the other wake promoting agents, and Orexin's included.
You know, the only data I've seen so far suggests that there may actually be insomnia, and that may be worse with drugs that have a longer half-life that just don't wash out in time for the evening. Even the PSG data which hasn't really been fully shared, suggests that there's not improvement in key parameters such as total sleep time or deep sleep. And it's concerning that the insomnia may be actually resulting in worsening sleep in that first part of the night at least. And so, again, we continue to think that it's an important new mechanism in hypersomnias.
But, ideally, will be used in combination with Xywav certainly for those patients who are finding meaningful benefit already from Xywav. As to whether this could ultimately end up in the label, we certainly think that it's important information for prescribers to have, and that's why we published it. You know, I won't comment on necessarily where we are in terms of discussions with FDA on label changes related to it.
Operator: Thank you so much. Our next question comes from the line of Gary Nachman with Raymond James. Your line is now open.
Dennis Resnick: Hey, everyone. This is Dennis Resnick on for Gary Nachman. Thanks for taking our question. Just on XANI, assuming a positive GA readout, how would you be thinking about pricing that scenario relative to what it currently is for BTC? Thanks so much.
Renee Gala: Yeah. When we this is Renee. When we priced Zanny for BTC, we were already looking at the GEA market. And keeping that broader opportunity in mind. So I would not to have different price as we are launching GEA. And I think with that, that was our last question. So I'd like to close today's call by thanking all our Jazz colleagues for their efforts all of our partners and stakeholders for their continued confidence and their support. Thank you all for joining us.
Operator: Thank you all for your participation in today's conference. This does conclude the program. You may now disconnect.