Bruce Cozadd: Well, Greg, we’re fortunate to have growth opportunities on both sides, places that are worth investing whether that’s commercial or R&D. And I also believe there is benefit in being able to look across these two therapeutic areas on the corporate development side as we’ve all seen over the past few decades. There are times when an area heats up and valuations get high. And if you can look more broadly across therapeutic categories and across stages of development, I think you’re often more likely to find an opportunity that’s both a strategic fit, but also offers a nice return profile. There are a number of services we provide across the company that are centralized and may provide some marginal benefit by not having to reproduce things across multiple therapeutic areas.
I would say that’s the strategic driver. But again, we’re in a position where we’ve got nice opportunities in front of us short and long-term on both sides of the business.
Operator: Your next question comes from the line of David Amsellem with Piper Sandler. Please go ahead.
David Amsellem: Hey, just have a quick question on the balance sheet and the cap structure. Can you talk to any potential long-term leverage targets that you have. You’ve done a lot of deleveraging in the year since the GW transaction. Obviously, you’re active on Biz Dev. But are you thinking about perhaps accelerating debt paydown as a means of potentially supporting the equity? Is that something you’re contemplating? And just help us better understand how you’re thinking about leverage ratios over time? Thank you.
Bruce Cozadd: Phil, do you want to take that?
Phil Johnson: Yes, happy to. So David, as you mentioned, when we had the GW acquisition, there was a really strong interest and communication that we would rapidly delever down to about 3.5 turns by the end 2022. You saw us actually beat that by about six months. We currently sit with about 2.5 times net leverage. I think still a very strong position at this point in time. We feel very good about the overall debt complex that we’ve got with about 60% of that being fixed, only about 40% of that being variable exposed to interest rate movements, with a weighted average cost of debt of south of 5.5% at this point in time. As you’re probably aware, we do have an upcoming maturity of our 2024 convert, and we’re in active planning as you’d expect, looking at some alternatives for how we might approach that particular financing opportunity or repayment opportunity.
I would say if we were to engage in additional business development, we have the debt increase in the near-term. I think like we did with GW, we have a strong plan to reduce that quickly to get back into the kind of levels that we currently got or below where we’ve got significant flexibility to continue to look at ways to build the business through business development or Corp Dev opportunities. To date, we have not specified any kind of a specific target below where we’re currently sitting and where we’d like to get to but this will be actively discussed and work through as we move forward, looking at the investment opportunities in front of us, both internal as well as external. Bruce, if you want to comment additionally?
Bruce Cozadd: No, Phil, I think you covered it well. I think we’ve seen some recent positive commentary from the rating agencies in general about the financial profile of the company. We’ve used leverage to do transactions when we thought that was the best thing for shareholders. But as Phil said, we’ve always tried to delever rapidly after that.
Operator: Your next question comes from the line of Gary Nachman with Raymond James. Please go ahead.
Gary Nachman: Thanks. Good afternoon. So on Xywav, understanding that the patient support program was the key factor for the lower revenue in 1Q. Is Xywav also still getting a lot of the oxybate naive patients in narcolepsy? And is that a factor that can impact revenue in coming quarters to consider? And then NIH, are physicians staying strictly on label? Or are you hearing there could be some off-label use with Lumryz, if it’s with younger patients, I guess, in particular? And maybe talk about the competitive dynamics in IH going forward since that space is going to get a lot more crowded, I guess, in the coming years? Thank you.
Renée Galá: Yes. Thanks for the question. I’ll hop right in there. So with respect to oxybate naive patients starting on Xywav for narcolepsy, while we don’t have full visibility into the new to oxybate patient numbers, based on our estimates we do believe we continue to capture more of those new to oxybate narcolepsy patients and any other available therapy. And I would say that speaks to the differentiation of the product. It speaks to our host of patient support services more broadly and being a leader in sleep, the high overlap when we’re looking at narcolepsy and IH of being in front of physicians and continuing to be able to educate them on the benefits of low sodium. With respect to IH, we don’t, we’re not really seeing much if any off-label use with Lumryz, given the payer restrictions on these products and the need for a validated week test for either narcolepsy or for IH, we tend to see – we tend to see that being required in order to receive a prescription.
And so it would be pretty unusual to be able to see a prescription for the AG or for Lumryz for idiopathic hypersomnia. And then with respect to competitive dynamics I think we’ll continue to probably see wake-promoting agents studied for idiopathic hypersomnia. Keep in mind, we had a rather large percentage of patients that came into our idiopathic hypersomnia study on wake-promoting agents and continue to see meaningful benefit while on therapy with Xywav in addition to being on that wake-promoting agent as part of their baseline. Very much like we’ve seen the wake-promoting agents end up being complementary to Xywav. In narcolepsy we would expect a very similar dynamic in idiopathic hypersomnia. For example, with Wakix coming on to the market for narcolepsy, we saw little to no impact to our oxybate franchise and would expect the same – largely the same dynamic with respect to IH.
Operator: Your next question comes from the line of Charles Duncan with Cantor Fitzgerald. Please go ahead.
Charles Duncan: Thank you. Good afternoon, Bruce and team thanks for taking our question. And congrats on the BLA submission being completed with zani. That said, the next data read is actually neuro with suvecaltamide and essential tremor – and so I’m going to ask for a little bit more granularity. I know others have tried, but I’m really wondering what would you like to see out of the Phase 2b to move forward? Is it – if it’s supportive of a registrational strategy, definitely seems like stat sig is important, but will you be looking at certain effect sizes and responder analysis. And of the two composites, which of the two are important to you? Thanks.
Bruce Cozadd: Yes. Charles, I’ll start with the dangerously general comments and then let Rob jump in if he wants to provide more specifics. What we want aside from a package that would generate a regulatory approval is something that really adds value, something that is of value to patients that patients and prescribers and payers will all see as providing a really meaningful benefit. And certainly, our trials are designed with prospective key endpoints that we need to hit. But – we measure lots of things in these trials that really go to establishing that benefit profile for patients against the backdrop, as Rob said, of really nothing that’s currently available that’s providing that kind of benefit. Rob, do you want to talk about anything specific?
Rob Iannone: Well, again, I don’t want to necessarily specify an effect size that we think is meaningful because it really is the holistic picture that matters. But what I would say is when you look at the T-CALM data; we thought there was an important effect there. We’ve optimized our trial in many respects, honing the primary endpoint in agreement with FDA, optimize the dose, made some changes to how we measure to be sure we get more accurate measurements. And I think all of that would bode well. For the trial, I think the other reference point you have is other T-type calcium channel inhibitors in development. We certainly think suvecaltamide is differentiated in a couple of respects. It’s a state-dependent inhibitor, which means it really targets the hyperactive iron channels that are pathologic in the essential tremor condition.
And with that, we think it potentially gives us a better therapeutic index, which is why we’ve been able to push the dose even to doses and exposures that are higher than we would have achieved in T-CALM. So again, it’s the totality of the data around the primary and secondary endpoints that we’ve included that will be meaningful to patients and we know acceptable to FDA.
Operator: Your next question comes from Balaji Prasad with Barclays. Please go ahead
Balaji Prasad: Hi. Good evening, everyone. Just a couple for me. On Epidiolex, can you comment on the adult opportunity either quantify it or qualify it, primarily asking because I’m curious at most, I thought the primary indications approved were childhood diseases that patients tend to outgrow and also when do you expect to see this additional data and what is the data that you’re expecting? Secondly, on the 2024 guide, can you help us understand the double-digit per stage growth that you provided for Xywav, Epidiolex and Rylaze combined since all three are in different categories, it would be helpful if you could dissect this further? Thanks.
Bruce Cozadd: Yes. Balaji, on the first part of your question, we often refer to these childhood onset seizure disorders to point out, they’re not only childhood disorders. They do persist into adulthood, and we think there’s substantial opportunity there, that I’m going to let Renée jump in on if she wants to. But let me also hit the second part of your question and say we were emphasizing the double-digit combined growth of our key growth drivers, Xywav, Epidiolex and Rylaze just because we don’t provide single product guidance for the year, as you know, and that’s not different this year from any other year. That’s why we do it on that basis. Obviously, each quarter, we’re reporting actual results for each of those products. Renée, anything you want to add on adult opportunity for Epidiolex?
Renée Galá: Yes. I’m not sure if we’ll quantify it here, Balaji, but I would just say that as we look at the broader growth drivers, we do see the adult population, the long-term care environment one that is currently underserved. With respect to Epidiolex. Epidiolex is weight-based dosing. So you do end up with higher dosing when it comes to that population. But at times, when you move from an environment of pediatric care into long-term care – there is, I would say, perhaps less attention placed on the actual indication of what the adult has, you would have heard in my prepared remarks, a focus on ensuring that we have the right diagnostic tools with respect to long-term care centers and continuing to ensure whether it’s getting the right diagnosis or getting to the right level of dosing where you can optimize results or better educating on the combined impact of clobazam and Epidiolex, those are all opportunities that we see going forward.
Operator: Ladies and gentlemen, that concludes our question-and-answer session. And I will now turn the call over to Bruce Cozadd for closing remarks.
Bruce Cozadd: Thanks, operator. As always, I’d like to close today’s call by recognizing our Jazz colleagues for their efforts on behalf of patients and their families and thank our partners and shareholders for their continued confidence and support. Thank you all for joining us today.
Operator: This concludes today’s conference call. Thank you for your participation and you may now disconnect.
