Katherine A. Littrell - Jazz Pharmaceuticals Plc Bruce C. Cozadd - Jazz Pharmaceuticals Plc Matthew P. Young - Jazz Pharmaceuticals Plc Michael P. Miller - Jazz Pharmaceuticals Plc Allen Yang - Jazz Pharmaceuticals Plc Jed Black - Jazz Pharmaceuticals Plc Daniel N. Swisher, Jr. - Jazz Pharmaceuticals Plc

Gary Nachman - BMO Capital Markets (United States) Umer Raffat - Evercore Group LLC Jason M. Gerberry - Bank of America Merrill Lynch Annabel Eva Samimy - Stifel, Nicolaus & Co., Inc. Gregg Gilbert - Deutsche Bank Securities, Inc. David A. Amsellem - Piper Jaffray & Co. Dana Flanders - Goldman Sachs & Co. LLC Randall S. Stanicky - RBC Capital Markets LLC Aharon Gal - Sanford C. Bernstein & Co. LLC Jessica M. Fye - JPMorgan Securities LLC Ken Cacciatore - Cowen & Co. LLC Douglas D. Tsao - Barclays Capital, Inc. Corey George Davis - Seaport Global Securities LLC Irina R. Koffler - Mizuho Securities USA LLC Liav Abraham - Citigroup Global Markets, Inc. William Tanner - Cantor Fitzgerald Securities David George Buck - B. Riley FBR, Inc. Ami Fadia - Leerink Partners LLC David Maris - Wells Fargo Securities LLC David R. Risinger - Morgan Stanley & Co. LLC John T. Boris - SunTrust Robinson Humphrey, Inc.

Hello and welcome to the Jazz Pharmaceuticals second quarter 2018 earnings conference call. Following an introduction from the company, we will open the call to questions. I will now turn the call over to Kathee Littrell, Head of Investor Relations at Jazz Pharmaceuticals.

Thank you, Andrew, and thanks to each of you for joining our investor call. Today, we reported our second quarter 2018 financial results and updated 2018 financial guidance. The press release and the slide presentation accompanying this call are available in the Investors section of our website. On the call today are Bruce Cozadd, Chairman and CEO, and Matt Young, CFO. Dan Swisher, President and COO; Mike Miller, Executive Vice President, U.S. Commercial; Allen Yang, Head of Clinical Development and Acting CMO; and Jed Black, Senior Vice President of CNS and Sleep Medicine, will join for the Q&A session. I'd like to remind you that some of the statements we will make on this call relate to future events and performance rather than historical facts and are forward-looking. Examples of forward-looking statements include those related to our future financial and operating results, including 2018 financial guidance and goals, corporate development efforts, future growth and growth strategy, future product sales and volumes, inventory and supply challenges, product launches, regulatory submissions, ongoing and future clinical trials, and other product development and regulatory activities and the timing of these matters. These forward-looking statements involve risk and uncertainty that could cause actual events, performance, and results to differ materially. They are identified and described in today's press release, in the slide presentation accompanying this call, and under Risk Factors in our Form 10-Q for the year ended March 31, 2018, and our Form 10-Q for the quarter ended June 30, 2018, which we will file shortly. We undertake no duty or obligation to update our forward-looking statements. On this call, we discuss non-GAAP financial measures. We believe these non-GAAP financial measures are helpful in understanding our past financial performance and potential future results. They are not meant to be considered in isolation or as a substitute for the comparable reported GAAP measures. Reconciliations of GAAP to non-GAAP financial measures discussed on this call are included in today's press release and slide presentation found in the Investors section of our website. I'll now turn the call over to Bruce.

Thanks, Kathee. Good afternoon, everyone, and thank you for joining us. We had a highly productive second quarter, with strong execution across the business. We're excited about the significant progress we've made this year toward meeting our 2018 corporate objectives and advancing our long-term growth strategy. A few highlights since we last reported include: double-digit top and bottom line growth on an adjusted basis; a positive opinion from CHMP recommending market authorization of Vyxeos; acceptance of our sNDA for Xyrem for pediatric narcolepsy patients with Priority Review and an October 27 PDUFA date; settlement with two additional Xyrem ANDA filers, leaving only one remaining ANDA filer in our Xyrem patent litigation; announcement of a collaboration with MD Anderson Cancer Center to evaluate potential treatment options for hematological malignancies, with an initial focus on Vyxeos; the grant of a New Technology Add-on Payment [NTAP] by CMS for Vyxeos; execution of an agreement to sell our rights related to Prialt; and presentation of key results at SLEEP 2018 regarding the long-term efficacy and safety of solriamfetol for adult patients with narcolepsy or obstructive sleep apnea and Xyrem for pediatric patients with narcolepsy. Now I'll provide updates on some of our key commercial, regulatory, and R&D activities, and then turn the call over to Matt to update you on our financials. Vyxeos is in the early stages of launch in the U.S., and we have confidence in our efforts to reinforce Vyxeos's differentiated product profile and the value it can offer patients with AML. We believe there is significant upside opportunity as we expand globally and advance our multi-pronged data generation strategy to establish Vyxeos as the chemotherapy backbone for AML. In the second quarter, we saw community hospital demand continue to grow relative to previous quarters, due in part to some academic…

Thanks, Bruce, and good afternoon, everyone. We're highly encouraged by our strong commercial performance and financial results so far this year. We delivered strong top and bottom line growth on an adjusted basis while continuing to make significant investments to drive the future growth of our business. We are pleased to report another strong quarter for Xyrem, with net sales growth of 19% to $356 million compared to $298 million in the second quarter of last year. As a result, we are increasing our 2018 guidance for Xyrem net sales to a range of $1.35 billion to $1.38 billion from a previous range of $1.32 billion to $1.35 billion, representing expected growth of 14% to 16% over 2017. In the second quarter, Xyrem bottle volume improved 9% over the same period last year, and we are increasing our 2018 volume growth guidance from mid-single digits to mid to high single digits. Turning to Erwinase, second quarter net sales were $59 million compared to $49 million in the second quarter of 2017. During both periods, we experienced temporary global supply disruptions and anticipate these will continue to occur from time to time for the remainder of 2018. We are maintaining our guidance for Erwinase net sales for 2018 in the range of $190 million to $220 million. Defitelio net sales increased 34% to $40 million in the second quarter of 2018 compared to $30 million in the same period of 2017. We are encouraged by the strong performance in the U.S., with net sales of $15 million in the quarter, nearly double the same period last year. We are maintaining our guidance for Defitelio net sales for 2018 in the range of $145 million to $165 million. The midpoint of our guidance reflects year-over-year growth of approximately 16%. Vyxeos net sales…

Thanks, Matt. With over 20 analysts covering our company, we highly request that you limit yourself to one question during this call so that everyone has an opportunity to ask a question. We will gladly address any additional questions after the call or you can reenter the queue. With that said, operator, please open the line for questions.

And our first question comes from the line of Gary Nachman with BMO Capital Markets. Your line is now open.

Hi, good afternoon. For JZP-258, if the Phase 3 data in narcolepsy are positive, would you look to file first just for that indication, or would you consider waiting to see the Phase 3 data in idiopathic hypersomnia, and then maybe look to file for a broader indication for JZP-258? And just generally, how big do you think the idiopathic hypersomnia opportunity is, and is Xyrem currently being used off-label for that indication at all? Thanks.

Good question, Gary, let's see our data from JZP-258, look at the timing, and see where we're with the IH program as well. Our base assumption has been we'd file for narcolepsy and then look at an expanded indication later for IH. But obviously, we want to see how things play out. On your question about use of the current product in IH, is there any off-label use, there may be occasional prescriptions for it, but we think payers probably don't cover it, and therefore we don't expect their significant use in IH.

Operator, we'll move on to the next call, please.

Certainly, our next question comes from the line of Umer Raffat with Evercore. Your line is now open.

Hi, thanks so much for taking the question. I wanted to ask on Vyxeos and on the ADCs, but since I only have one question, I'll ask the first one. Bruce, do you expect Vyxeos to still get to the same peak sales number as you anticipated, let's say, a few months ago? And what do you think is driving somewhat slower adoption currently? Maybe you could speak to the academic versus community practices.

So, Umer, first of all, thank you for limiting the question. We appreciate that from you and from everyone. The short answer to your question on Vyxeos market opportunity market is yes, we have absolutely the same expectations. If anything, we're moving forward in what we think is a fairly broad-based effort to generate new data on the use of Vyxeos in a number of settings, including in combination with other agents, and we're excited to see where that will take us. Maybe I can ask Mike to give a little bit more detail on what we're seeing in academic and community centers.

Sure, Bruce. In the quarter, we saw some slowing in academic accounts, and that was offset by growth in community accounts, which was probably largely driven by outpatient consolidation, and we continue to hear that from our customers. I think Vyxeos remains a highly differentiated drug with high clinical value, and the NTAP is a testament to this, and it will be further reinforced with our JCO publication, which we got just a short time ago. I would say that there's probably two factors, and both can (24:08) and can be addressed through education. First is a little bit of a learning curve around Vyxeos not being 7+3. And I think the important thing to remember is that we all know that Vyxeos has a longer half-life and lasts longer in the bone marrow. And you have to challenge old habits, and 40 years of 7+3 can be ingrained. And the example I would use is sometimes a biopsy can be done too early and it may not see effect, and at that point they may switch out a patient to a different chemo, when in fact they could have seen a CR if they waited a bit. The other is count recovery. It can take longer. In our JCO pub, you'll see that it takes about six days longer but there was no difference in the rate of infection as a result of that. So again, I think physicians need to learn that this is not 7+3. It is, in fact, a very different drug. And we are very much behind the JCO pub. That will be critical on our education. We have a big push on speaker programs going into the fall. The other aspect I think that it was alluded to earlier was the AML market shakeup. As I said, 7+3 had been the standard of care for 40 years, and then you had five new market entries in 12 months. And I think heme/oncs, nurses, pharmacists, institutions are all trying to sort this out, and I think all are being cautious about the patient type and making sure that they really understand exactly how to sequence and identify patients. Our NCCN standing remains very positive. We have our NCCN tools just recently available in June. And again, coupled with NTAP, coupled with the JCO, we feel very good going into the institutions and teaching that.

Thank you.

Thank you. And our next question comes from the line of Jason Gerberry with Bank of America. Your line is now open.

Good evening, thanks for taking my questions. Can you just elaborate a little bit the comment on Vyxeos and patients' mutation status? Is it just that physicians are using right apps and using that up front and not using Vyxeos as a maintenance treatment after that, or is maybe the patients who have that FLT3 mutational status, is that maybe bigger than was expected? If you can just provide a little bit more clarity on that, that would be helpful. Thanks.

Thanks for the question, Jason. I'll have Allen take this one.

Jason, let me start off by explaining or expanding from the physician's perspective mutational treatments and some of these new targeted therapies and Vyxeos and why we were so interested in Vyxeos and we thought it was important for us strategically. As Bruce said, our vision is to make Vyxeos the backbone of AML therapy. And what's unique about Vyxeos is it takes actually lower doses of cytarabine and daunorubicin and makes them more efficacious. Now the indication, the initial indication is in a high-risk population of AML-MRC or myelodysplasia-related changes or therapy related to AML. And in practice as a physician, we don't use those terms traditionally. We use a term called secondary AML. So whereas a mutation, let's say a FLT3 mutation or an IDH1 or IDH2 mutation, it's fairly easy for the physician (27:56) to learn (27:57), I have this mutation, therefore I have this therapy. For us in terms of our label, it's going to be a little bit steeper in terms of the learning curve equating what AML-MRC is and identifying those patients. With that said, I think for academic physicians that treat a lot of leukemia, they're going to learn very quickly that the landscape or the environment in that space will be a little bit different. As more therapies come out and more clinical trials are initiated, the competition in academic centers will be other clinical trials. However, in the community setting, where there will be less clinical trials, it's really that learning curve of learning what AML-MRC, equating that to secondary AML, which is the lingo I'm more familiar with and learning that, as opposed to knee-jerk getting a mutational report and saying if there's a FLT3 mutation, I use this FLT3 targeted therapy. Now, you also alluded to combination data. I think you were talking about Vyxeos and FLT 3 combination data. So, yeah, let's be clear here, there hasn't been that data reported in patients. There's been in-vitro data that's very exciting. When we looked at the 301 study that was published recently in the JCO, the FLT3 population did very well with Vyxeos. So the onus is still on us to generate the safety and efficacy data of Vyxeos in combination with FLT3 inhibitors as well as other targeted therapies, and the team is moving very quickly to do that.

Okay. Thank you.

Thank you. And our next question comes from the line of Annabel Samimy with Stifel. Your line is now open. Annabel Eva Samimy - Stifel, Nicolaus & Co., Inc.: Hi. Thanks for taking my question. I'm going to switch tacks a little. Xyrem clearly had some very, very solid volume growth. Now you're up in the mid to high single digits. How sustainable is that? Clearly, you raised guidance because of it. What's driving it? Is it diagnosis? And what do you think the pediatric population can do to continue to maintain those high volume growth numbers? Thank you.

Yeah. So, Annabel, let me start, and then I'm going to ask Mike to comment on the pediatric opportunity a little bit. We're very pleased with the growth we see in Xyrem, and we think the secular growth trend for Xyrem over a long period of time will be strong because of what we're seeing in increased diagnosis, because of what we're seeing in increased patient numbers, and really strong performance by our field teams. I will point out that we said coming into this year, we might have a little bit of a tailwind due to the recovery of some government pay patients that are at higher levels in the first half of 2018 than they were in the first half of 2017. I think that's an effect we'll see this year but we won't see next year. So a two-part answer, we like the ongoing growth of Xyrem. We think ongoing growth of Xyrem should persist into future years, but perhaps with some decrement related to the piece of that that's one-time for 2018. Mike, do you want to talk about pediatric a little bit?

Sure. So the pediatric opportunity in the U.S. is about 4,000 pediatric patients. And we are aware of some current Xyrem patients being in the pediatric category, but we believe that this is really fulfilling a very important need for these patients. Most of them are managed by physicians that we currently call on, so this is not any implication to our sales force. And if there are any others that we are not going to call on, we're going to add to our call audience.

And maybe I'll just take this opportunity. Jed, if you wanted to say a moment about the importance of the new data we did generate in our pediatric trial and how that will help physicians treat these patients.

Yes, so narcolepsy in children is highly similar to narcolepsy in adults, and prescribers have been interested in using Xyrem in the pediatric population for a long time but haven't had that information. And so this study is the biggest controlled trial that has been executed in pediatric narcolepsy ever and provides a wealth of information to the prescriber on the safety profile and the efficacy profile, which is highly similar to the safety and efficacy profile in adults. Annabel Eva Samimy - Stifel, Nicolaus & Co., Inc.: Thank you.

Thank you. And our next question comes from the line of Gregg Gilbert with Deutsche Bank. Your line is now open.

Thanks. Bruce and team, as you continue to ponder corporate development possibilities, should we assume that you'll let the cash build with your current capital structure the way it is now? And then given your planned launches of a couple of pipeline products internationally, are you taking a more international look at the biz-dev opportunities than you have in the past? Thanks.

Yeah, Gregg, let me have Matt take this one.

Hey, Gregg, thanks. Obviously, to the extent we're not deploying the capital, I'll remind you first choice, we will continue to build cash given our strong cash flow generation as the quarters and the year progress. Relative to what we're looking at with our launches in the U.S. and ex-U.S., what are we looking at globally, I think we remain interested in global franchises but certainly also transacting on a regional basis as (33:59) expanding our footprint outside the U.S. directly and indirectly. So I would say it's definitely on-strategy for us to continue to pursue that.

And I'll just add to Matt's answer. I think the refinancing we completed recently is particularly helpful to us because it expands our firepower without us having to hang on to or borrow additional cash at the moment. So a particularly efficient way of positioning us to be aggressive on opportunities that are a good fit for us.

So another way of saying share buybacks are on hold for now.

No, we have an ongoing share repurchase program, $300 million that we're part of the way through. We were more aggressive about buying stock at lower stock prices. We've been a little less aggressive at recent prices, but we are still active in that share repurchase program.

Thanks.

Thank you. And our next question comes from the line of David Amsellem with Piper Jaffray. Your line is now open. David A. Amsellem - Piper Jaffray & Co.: Thanks. So I just had a question on JZP-258 and specifically the idiopathic hypersomnia program. Can you talk about the extent to which Xyrem is used off-label in this setting and with what degree of success? And talk about in that vein how you would view the underlying opportunity given that off-label usage and given that you're going to have generics in the market at some point in the future. So how would you think about that and maybe shed some light on existing usage in IH?

Yes, so nice job, David, weaving a multipart question in there. David A. Amsellem - Piper Jaffray & Co.: There you go.

But all related. Let me start by just reiterating we don't think there's significant off-label use today in the marketplace, mostly related to payer coverage decisions as opposed to physician interest. But past use of Xyrem in this patient population is in part what led us to confidently launch this trial with JZP-258. And so, Jed, maybe you could talk a little bit about what we know about past use of oxybate in idiopathic hypersomnia patients.

Yes. So historically, there has been use in idiopathic hypersomnia. The clinical experience has been similar to what we saw in narcolepsy with respect to the impact on excessive sleepiness in that population. As Bruce mentioned, that use has decreased over time as payers have become more focused on narcolepsy. And there's a recent publication I might point you to a couple years ago by the group in France headed up by Isabelle Arnulf that characterized their experience in narcolepsy versus idiopathic hypersomnia. And that paper provides some nice information that is very consistent with the clinical experience that we had years ago when the off-label use was occurring.

And then the last part of your question, David, was really how do we think about that if in some future state there's generic oxybate available. I'll remind you, and you know we're doing this trial with a 90% reduced sodium version of that molecule. And we think that is a very important aspect of treatment for patients who are going to be on chronic medication. And so while there may be a generic full salt version of Xyrem, we know that that salt load for patients is north of the maximum recommended daily intake of sodium by the American Heart Association before you factor in dietary sodium. So we aren't anticipating generic competition for JZP-258 for a long time. David A. Amsellem - Piper Jaffray & Co.: Okay, thanks.

Thank you. And our next question comes from the line of Dana Flanders with Goldman Sachs. Your line is now open. Dana Flanders - Goldman Sachs & Co. LLC: Hi, thank you for the question. Mine is just back on Vyxeos, and I think you mentioned that you expanded the sales force in July. Where are you now? And just how does I guess what you're learning in the U.S. play into how you're planning to launch it in Europe and the number of reps needed there? Thank you.

Dana, let me have Mike take the first part of that in terms of what we've done in the U.S., and then have Dan talk a little bit about our plans for Europe.

Sure, Bruce. We expanded the sales force by about 20% July 1, and that moves us to 29 reps. That does not include our MSLs or reimbursement managers that are on top of that. And we also importantly made the sales management team dedicated to Vyxeos. We saw the success that we had with Defitelio in the U.S. when we created a dedicated team, and I think focus is extremely important.

As far as Europe goes, one positive here is the European team has been working very closely with the U.S. team to learn from the rollout, learn about the importance of messages, et cetera, and so taking that learnings to task. Europe has also staffed up their organization. So we've gone from 50 field personnel, which includes medical, science liaisons, as well as sales reps, and increased that force to 80. All of that force has been hired now and trained. And we're expecting a September approval from the European Commission, and we'll be ready for a rolling launch from that point forward. Dana Flanders - Goldman Sachs & Co. LLC: Thanks.

Thank you. And our next question comes from the line of Randall Stanicky with RBC Capital Markets. Your line is now open.

Great, thanks. Bruce, with line of sight into the Phase 3 data for JZP-258, what do you think you would need to see in the Phase 3 data to have a credible argument for FDA to include some sort of differentiated safety language in the label? And then are there studies that you could pursue, either now or later, that could help bolster your case for that? Thanks.

Yes, so let me have Jed take that one.

Yes, so as Bruce mentioned, there's a substantial reduction in the sodium load of JZP-258. And I think what's important to highlight is that in a recent publication by 11 health organizations, including the CDC and the AMA, the recommended daily intake of sodium is less than half of the current average intake, and this is for all individuals. That substantial research has identified that over 50% of the population is sodium sensitive and is at risk based on current intake for cardiovascular disease. So Xyrem adds to that another gram to gram and a half depending on the dose. There's also substantial evidence across thousands of individuals, and studies have been conducted to identify the value in significant – the statistically significant impact of reducing sodium intake by on a gram-by-gram basis, down to the recommended – the AMA and CDC recommended ranges. So the value is already well-established for reducing sodium to the magnitude that we are with JZP-258. There are indeed some other evaluations that could be done to complement the information that already exists, and we're exploring those. But we think that the data are overwhelmingly in favor of the value already with those data that exist.

And I'll remind you, the current label does reference a high sodium load in Xyrem. That obviously would not exist in the new product at a very different sodium level. As to other implications for the label, I think we'll leave that for future discussions.

Great, thank you.

Thank you. And our next question, from the line of Ronny Gal with Bernstein. Your line is now open. Aharon Gal - Sanford C. Bernstein & Co. LLC: Hi, good afternoon and thank you for taking my question. I want to come back to Vyxeos for a second. I was wondering if you guys can take us through the economics of the treating hospitals; that is, if they're using in their DRG code Vyxeos versus sodium substrate (43:38) today, how much does this cost them? And once the additional payment by this added code comes in, how will that change the equation for them?

Mike, do you want to take that?

Sure. So right now, DRGs are based on historical information, so it's a look-back. So the current AML DRGs do not include the treatment with Vyxeos. And that's why we pursued the NTAP, or the New Technology Add-on Payment. So what that creates is a payment to the institution above and beyond the DRG and up to about half of what the Vyxeos cost would be for a full induction through consolidation cost of therapy. So it's adding on a payment for the use of the drug on top of the DRG. Aharon Gal - Sanford C. Bernstein & Co. LLC: Does that make it profitable for the physicians – for the hospitals to use Vyxeos versus the current situation?

I think it certainly makes it more cost-effective. This is very much I think an important milestone for the product. These are Medicare patients largely in that age group with AML. So these institutions are seeing a lot of these patients, and this is an important win for Vyxeos.

And just as a reminder, Ronny, as I know you already appreciate, the use of Vyxeos can be fundamentally different from 7+3 in terms of setting of treatment, particularly in consolidation phase, getting patients out of continuous hospitalization. So there are implications other than drug spend in terms of the economic model for institutions and for the healthcare system as a whole that I think are helpful.

And just one other point, Ronny, this is for inpatient use only and the outpatient is the ASP. Aharon Gal - Sanford C. Bernstein & Co. LLC: Okay, thank you.

Thank you and our next question comes from the line of Jessica Fye with JPMorgan. Your line is now open.

Hey there, thanks for taking my question. I'm not sure if there's any color you can offer. But on the most recent Xyrem settlements, sorry if I missed this, but what are some of the high-level terms and dates and/or volume provisions, if any, of those settlements?

I think, Jess, if we look at the most recent couple of settlements and add them to all the settlements, you've got the first-filer Hikma with a beginning of 2023 entry date with an authorized generic, with economic sharing, substantial economic sharing with Jazz. They've got rights to that for a period of time, a number of years. Of the other settlements, most of them are for an entry December 31, 2025. And for a couple, we have limited volume authorized generic rights starting mid-2023, and again, with economics to Jazz.

Thank you.

Thank you and our next question comes from the line of Ken Cacciatore with Cowen and Company. Your line is now open. Ken Cacciatore - Cowen & Co. LLC: Hi. Thanks, guys. I know you've set expectations fairly low for Erwinase around the manufacturing, but maybe a little bit more of an update. And if it is corrected, if the manufacturing can be corrected, can you give us a sense over the last few years what this market could – or what the product could correct up to if you were able to fully supply it? Thank you.

Ken, it sounds like an easy question, but it's actually a little more complicated to get to the answer. While we have had some supply outages for periods of time, of course at the conclusion of those outages, we've generally been able to ship significant product out and try to get it to all patients who need treatment. So while there have been periods of time we're not shipping, our intent has certainly been to minimize impact at the patient level in terms of availability of product. Knowing we've not had sufficient product supply to meet all demand, we have chosen to reduce our promotional efforts around that. So we don't want to go out and create demand, particularly in new patient populations, that we then can't satisfy. So the tricky part about answering your question is we haven't run the experiment to know if we were actively out doing the kind of education we'd like to do, which would focus I think in some part on the possibility for adolescent and young adult patients to be treated with the pediatric inspired regimen containing asparaginase where we see that outcomes in clinical trials have been more positive to those patients. So we'd like to be getting that story out more. Honestly, we've had to curtail some of our efforts to be a responsible company dealing with this thought leader community whose relationships we greatly (49:38). Ken Cacciatore - Cowen & Co. LLC: Thank you.

Thank you. And our next question comes from the line of Douglas Tsao with Barclays. Your line is now open.

Hi, good afternoon. Thanks for taking the questions. So, Bruce, obviously the ramp on Vyxeos is coming a little slower, and you're pursuing a number of initiatives to get it back on track to the sort of peak sales potential that you see. Just maybe help us understand a little bit on the timing, and when do you see some of these initiatives, be it sales force expansion, NCCN guidelines, et cetera, starting to have an impact and help us think that through as we think of that, not only just the remainder of this year, which obviously you've given us some guideposts in terms of the guidance, but even into 2019. I understand you're not going to give 2019 guidance, but how we should think about the shape of launch curve right now?

It's really a great question, Doug. We're only a couple quarters into the launch at this point, and the question is what are we learning about the size of the opportunity and what are we learning about what we need to do to get to that opportunity. And I think it's important to differentiate between those two. I think what we're learning about the size of the opportunity confirms our enthusiasm, and I think we're doing the right thing to get there. Some of that is longer-term oriented work, like thinking about expanding the indication for the product, by studying it in new populations within AML and outside AML, including MDS, where we've talked about starting a cooperative group trial later this year. But some of that, as I think Mike was alluding to, involves educating treaters now on how to use this new treatment relative to the way they've used the former chemo backbone, which was 7+3. To do that education, we need a couple things. We need good tools, and I think Mike correctly highlighted the JCO publication, the NCCN-related information. And while I won't call NTAP a promotional tool, I think it's significant that the government has said yes, this in fact represents an important clinical advance in the treatment of this disease. And then you need the right team to do that education. And I think the expansion of the field force, the change in focus, as Mike alluded to, the management model we have, and importantly, our medical education efforts as well, I think we've got the right tools, I think we've got the right team to go out and bring that message to physicians to make sure they're getting the benefit of this new treatment that's now available to them, but they might not yet understand when to use and how to use. How fast we can make an impact, I think we're making an impact already. We've obviously changed our guidance for the second half of the year to reflect the current pace of adoption, and we'll obviously continue to monitor that. But I think we'll start seeing an effect soon. And then as always, when you learn during a launch process, we'll continue to adjust our efforts to make sure we're doing the best things for the product and patients.

Great, thank you very much, Bruce.

Thank you. And our next question comes from the line of Corey Davis with Seaport. Your line is now open.

Thanks very much. Regarding solriamfetol, do think that you could ever get a broad excessive sleepiness claim as supposed to getting ES associated with narcolepsy OSA, Parkinson's, et cetera, or are you going to be relegated to each individual disease and its associated sleepiness?

Corey, a really great question. Obviously, we hope on the brink of an approval in excessive sleepiness in two populations, narcolepsy and OSA, you know we already have a trial up and running in Parkinson's. In fact, we've completed enrollment in that trial. And we've said we're going to do additional clinical studies with solriamfetol. But let me have Jed address your question about the potential route of getting a non-disease population-specific excessive sleepiness indication.

Yes, it's a question that of course we think about a lot here. And the symptom-based indications, we like to call it, seems to make sense as something that this drug would likely be able to deliver on. And so I think we need to understand it a little bit more in other populations. That is why we are looking at Parkinson's disease. It's definitely a topic that we have interest in bringing up with regulators. There is precedent in insomnia for a symptom-based indication. And so this is something that we'll be thinking about, but I think for now we need to understand a little more about the drug in other populations.

Thank you.

Corey, I would just say in addition to everything Jed just said, we then need to think about what's our best strategy in terms of what clinical trials would look like, which patients would be included in those clinical trials, size of trials, expense of trials, length of trials, and the various directions we could go, whether that's disease population-specific, or more broadly, which of those is a better route for what we want to accomplish, which is to optimize the value of this molecule to Jazz and its shareholders and also to get it in the hands of patients and start making a difference because we know existing agents leave something to be desired in many of these patient populations.

Yes, thank you.

Thank you. And our next question comes from the line of Irina Koffler with Mizuho. Your line is now open.

Hi. Thanks for taking the question. I was wondering if you could revisit the Xyrem pediatric REMS that you're going to have to implement in 2019. Can you help us visualize what changes are going to happen to the existing REMS, how you plan to roll it out, and if there's any risk for disruption of current operations? Thanks.

Yeah. I think there are a couple of obvious changes in terms of the future REMS versus our existing REMS. Our existing REMS assumes you're treating an adult patient, you're shipping drug and having that adult patient sign for drug. In treating kids, that's a little bit different, making sure that anyone who might be in the position of administering drug to that pediatric patient understands everything they need to understand about appropriate and safe use of that product. So there are some pieces of this that I think are pretty intuitive, and we want to make sure we're doing a responsible job of getting a good but safe treatment in the hands of these pediatric patients with narcolepsy. Could there be opportunity for disruption? Anytime you're making a change, as we saw when we rolled out our final REMS several years ago, where we were asking people to reenroll in that REMS, both patients and physicians, we certainly saw an impact. To the extent we're talking about a small percentage of the population with pediatric patients, I feel like that's different from asking everyone to change what they're doing in a significant way. So taking the experiences we have had historically and our learnings from those and the slightly different nature of this REMS modification, I'm less concerned about that. But anytime you're making a change, it's important to think through how that will impact all relevant audiences and to prepare for that. And we think we've got a great team at Jazz, at Express Scripts, who provide some of these services to us, to get this right.

Okay. Thank you.

Thank you. And our next question comes from the line of Liav Abraham with Citi. Your line is now open.

Good afternoon. I think, Bruce, in the past you've mentioned that you're considering whether to develop solriamfetol in European patient population. I was wondering if you have any update in this regard. Is this something that you are still considering? And if so, what would the timelines be? Thank you.

So I mentioned that we are proceeding with a planned MAA submission for solriamfetol in Europe by year end. But maybe I could ask Dan to expand a little bit on how we're thinking about the opportunity outside the U.S.

Yeah. Thanks, Bruce. So we studied across different centers, across different countries. And it's clear that Europe there is a significant need as well for a best-in-class wake-promoting agent such as solriamfetol. So we are very committed to moving forward with the filing. And as we're doing that, we're assessing the market opportunity and hiring a few specific people to look outside of what's been a hematology-focused business. And so far as we dig into the data and think about it from the eyes of the European reimbursement authorities, which is an important factor, we actually think the data really holds up to that scrutiny. So we're encouraged and continuing to do market development work, and we'll make further decisions on what sort of investment and support Jazz will give specifically to the launch of the program next year.

Thank you.

Thank you. And our next question comes from the line of Bill Tanner with Cantor Fitzgerald. Your line is now open.

Thanks for taking the question. Bruce, you mentioned that – you made a comment to the extent that payers don't reimburse for Xyrem in IH. And I'm wondering if that's a price issue or a lack of data or an indication, because if it's the former, then it seems like we might should expect that JZP-258 is going to be priced at a level lower than that of Xyrem. Thanks.

No, it's an issue of data. It's an issue that we have not specifically run clinical trials in IH patients and taken that data to FDA to get it on-label. As Jed said, there is historical experience with Xyrem being used in this patient population, and we've seen certainly some positive treatment response which has encouraged us to move forward with this trial, but it's important for us to go ahead and generate that data. Now we're doing it with JZP-258, which we think is an even better product. But I wouldn't say, Bill, we're concerned about the market opportunity. We just need to go out and generate the data.

Yes, okay. Thanks.

Thank you. And our next question comes from the line of David Buck with B. Riley. Your line is now open.

Yes, thanks for taking the question. Maybe on Defitelio, maybe for Bruce, can you talk a little bit about whether you see this getting a little bit more predictable, or whether this is still something that's going to be staying rather lumpy in terms of quarterly progression? And then could you talk a little bit about, since you're in Phase 3 and Phase 2 for prevention of VOD and also graft-versus-host disease, talk a little bit about how you see the market size and market dynamics of those additional indications for Defitelio? Thanks.

Yeah. I'll take the first part of that question. I might have Allen talk a little bit about the importance of studying the drug in these other indications. But thank you for asking the first part of that question because I think it's important to remind people. This is a very rare condition, and we have seen variability in quarterly results. We expect we'll continue to see that going forward. Occasionally, we have a particularly strong quarter or a particularly weak quarter, but overall we like the growth of the product. It's performing very well. We think our message is resonating, and we're encouraged about where it can go. But I don't want people to lose sight of the fact that we would expect variability in the results for Defitelio. Allen, do you want to talk a little bit about the trials we're running and why they're important?

Yeah. So I think you mentioned two specific trials. One is the HARMONY study or the prevention of VOD. And so this was based on data published by Selim Corbacioglu, I believe, in Lancet Oncology in 2012, where he looked at a randomized study in pediatric patients, approximately 300 patients. So we're replicating that in a broader population of adult patients. I think the challenge in the transplant space is how you define patients that are at risk for VOD. And so clearly the population will be much larger in terms of treatment versus prevention of VOD. But if you look at some of the criteria that puts you at risk, it has to do with the agents that are used prior to going to transplant. Things like inotuzumab or gemtuzumab put you at very high risk for VOD. And depending on the use of those agents or the conditioning regimens or the disease specific for transplant, the population that will be eligible or may benefit from preventive use of defibrotide will vary. In terms of graft-versus-host disease or prevention of acute graft-versus-host disease, this is still fairly early. But again, it was based on observations in that original study by Corbacioglu and that could be fairly large. Transplant, especially matched unrelated donors, there is a need in heme malignancies, and it could be the curative regimen for a lot of patients with relapsed disease, so we expect that to be much larger. But again, I think the program is still early, so we would have to determine the treatment effect and who exactly benefits. And once we understand that, maybe we'll get a better picture of the potential in graft-versus-host disease. So with that said, I think it's going to be larger in both those populations, but the magnitude and size is dependent both on the data and the changing landscape in transplant.

Okay.

Thank you. And our next question comes from the line of Ami Fadia with Leerink. Your line is now open.

Thank you for taking the question. Maybe on Xyrem, could you give us a sense of what's the current mix of use between Type 1 and Type 2 narcolepsy? And with the launch of solriamfetol and also maybe a potential entry from competing products like pitolisant, how do you see the excessive sleepiness landscape or the Type 2 narcolepsy treatment landscape evolving? Thank you.

Ami, good questions. On the Xyrem mix of use, I'll say we don't get that data from every patient, so I don't have a particularly accurate answer on that. I'll let Mike comment in a minute on what we believe and why, but we don't have super-accurate data. On how the excessive sleepiness treatment landscape changes in the future, let me ask Jed to comment on that too. But just as a reminder, our belief is that most patients today who are Xyrem treated also do use some stimulant or wake-promoting agent. We also know based on our research over the years that a large fraction of those narcolepsy patients are dissatisfied with available treatment options on that wake-promoting agent side, and that's what really sparked our interest in the agent solriamfetol in the first place and drove us to go get rights to the product and start the Phase 3 program. We're so excited to be on the precipice of the launch now and bringing this product to patients, but I think it offers some real advantages based on our clinical trial data relative to what we've seen in other clinical trials, understanding they're not head to head. But we certainly like the data we've seen and think there's an important place for our agent. I think I'm going to minimize comments about pitolisant. That's not our product. We feel very confident in the data around Xyrem, and we feel very confident in the data around solriamfetol, and think both those agents will be critical pieces of excessive sleepiness treatment for years to come. Mike or Jed, do you want to talk a little bit about Type 1 versus Type 2 narcolepsy?

Sure. So as folks know, Type 2 narcolepsy patients do not express cataplexy. The sleepiness that we see in Type 2 and Type 1 is highly similar. And our data from years ago identifies that the impact of Xyrem on excessive sleepiness is highly similar across those two patient types. And so as Bruce mentioned, we don't have data flowing back as to what percent of patients currently on Xyrem are Type 1 versus Type 2, but we know the efficacy for sleepiness is highly similar for Xyrem. With respect to solriamfetol and its place, as Bruce mentioned, exactly we have patients with Xyrem. Xyrem helps tremendously on sleepiness, but the majority of patients need additional help with the sleepiness for which they are being prescribed other stimulants or wake-promoting agents. And with the efficacy profile that we've seen and the tolerability profile with solriamfetol, we expect that solriamfetol will fill a great unmet need in that population as well as in other populations such as – sleepy populations such as obstructive sleep apnea.

Thank you.

Thank you. And our next question comes from the line of David Maris with Wells Fargo. Your line is now open.

Good afternoon. Bruce, maybe if you could, just give us some comments on your thoughts on how the administration is doing with the overall blueprint and your interaction with the administration on moving different healthcare ideas ahead. And specifically, do you think that the pricing environment discussions, and I know a lot of companies have said we're not taking any more price for the rest of this year, but do you think it precludes the type of price increases that you've had next year? Do think the environment is getting tougher if you just look at the price increases you took this year, taking the same price increases next year? Thank you.

David, a couple things. We've been moderating our price increases for a number of years now. So (1:10:03) same price increases, in general we haven't been taking the same price increases, to be clear. In terms of the blueprint and our thoughts on that, we continue to be primarily focused on can patients get access to the medications they need, often with a focus on what their out-of-pocket costs are. We think a lot of the frustration around pharmaceutical drug pricing really comes down to how it is impacting individual patients. I think the data on drug spending overall for the healthcare system would not be quite as alarming as the impact on some patients due to the complexity of how those out-of-pocket costs are determined. So our focus remains make great medicines available to patients, make sure patients can get access to those medicines. We think we've had a good track record of doing that, including our support for patient assistance through free drug programs for patients who can't otherwise get access to drugs. And we'll continue to do everything we can to make sure our medicines are available to appropriate patients.

All right. Thank you very much.

Thank you. And our next question comes from the line of David Risinger with Morgan Stanley. Your line is now open. David R. Risinger - Morgan Stanley & Co. LLC: Great, thanks very much. I was just curious, Bruce, if you can just provide some color on the M&A outlook for Jazz, particularly in the face of what appears to be a very competitive environment for attractive assets in oncology. Thank you.

David, maybe Matt and I could both take a shot at this. I'll say the supply of new opportunities is really tremendous. The funding environment for new and important innovative research across a variety of diseases, but particular to oncology, has been a lot of interesting new approaches are being investigated, are generating clinical data. And many of those I think are interesting and would be a good fit with our capabilities. I think we represent a good partner for companies developing those therapies in terms of proving through the Celator deal, through the Gentium deal that we can pick up an asset and make sure we bring it rapidly and successfully to patients and continue to develop it in additional indications and in additional geographies. We're also a company that tends to focus on a smaller number of products, each of which is very important to us and receives a lot of focus. And so I think again as a partner for somebody with these opportunities, we have a lot of things going for us to suggest that we'd be a good licensor, collaborator, partner, acquirer as the case may be of those opportunities. So I think the set of opportunities is significant, and we're well positioned on a number of dimensions. It is absolutely true that there's also competition with other people who feel similarly. We never have felt that we would get every opportunity we went after. That's been true historically. I'm sure it will be true in the future. But through our broad-based efforts in terms of how we look at opportunities, where we look for opportunities, I think we remain confident that we're well positioned to execute on some and continue the sustainable growth model we've put in place. Maybe, Matt, you could comment on the different places we play to look for those opportunities.

Sure. I think importantly, as we've often said, we tend to be focused on within therapeutic areas specific indications and opportunities where we see an opportunity for significant clinical differentiated product that can really do something different for patients. And so we start top-down looking at those areas and often are in dialogue for a long period of time with companies that have assets or companies focused on those domains. And as a result, value and risk in that equation and the company's ability to execute, be that operational or capital needs or otherwise, all change and evolve with (1:15:22). We tend to stay focused on that, and we do not need to win every opportunity, as Bruce said, but ultimately just need to be able to through relationship building, hearing what our partners are interested in and the structure, identify ways to secure assets at a pace that we think is appropriate to sustain us in terms of adding growth drivers to the company and building out both the pipeline and a broader commercial presence over time. David R. Risinger - Morgan Stanley & Co. LLC: Great, thank you.

And, operator, this will be our last question.

Certainly. Our final question comes from the line of John Boris with SunTrust. Your line is now open.

Thanks for taking the question and congratulations on the results. When you look at your last two launches, Defitelio and Vyxeos, quite frequently when clinical hands off a product to commercial, you uncover certain things that are needs for the physicians to prescribe. So in other words, academic physicians may have participated in clinical trial, community physicians may not have, but quite frequently a way of ameliorating the risk that someone doesn't have experiences by putting together a healthy Phase 3b or Phase 4 program for each asset respectively to get that experiential learning that leads to publication that leads to increased prescribing. So the question really just has to do, are you adequately funding those studies to potentially get that experiential learning from the physician base in both VOD and AML?

John, really, really great question. And I'll remind you, our strategy has relied on, in some cases, acquiring assets that are very close to the market, and in some cases developing things from earlier on, and that goes back to in some cases as early as pre-clinical data. I think as we develop assets from early stages, our goal will be to be very cognizant of the importance of generating data that's useful not only to regulators but to treaters and to payers and make sure we are generating that data along the way. But it's also true that we're occasionally going to acquire assets that are largely already developed, and the question is what do we do to optimize the value of those assets over time. I feel really great about what we're doing with Vyxeos to generate additional data and Defitelio to generate additional data. If I can go back in time and change anything, we would have gotten to that faster, and I think that was more of a resourcing question than a financial question. We have the dollars but we needed an R&D team that was ready to go and go quickly to broadly take advantage of these molecules, which we remain very excited about. We've put in place a really great team on the sleep side and on the heme/onc side that I think is ready to go with continued development of our existing molecules and bringing additional molecules in, whether those are early-stage or late-stage molecules, and to move faster to do that important work you're describing. Again, this isn't a comment on the full potential of the molecules. It's not a comment on our existing organization. It's just saying if I hit rewind a couple years, we weren't as ready to go with that. Our R&D transformation has really been remarkable at this company. It wasn't that many years ago that our total R&D spend was less than $20 million. It will be well north of $200 million this year. And we've seen that R&D spend growth come with excellent productivity. So our clinical trial initiations, enrollments, completions, data, our regulatory submissions, our regulatory approvals, our ability to do that in markets outside the U.S. I think has been really remarkable over the past few years, but we want to keep improving. And to have the sustainable growth strategy we want as a company, it's important that we execute for each molecule a well thought through strategy and that we do that in an efficient and a timely way, and I think we've got the team to do that.

Thanks.

Okay.

And that concludes our question-and-answer portion. So with that, I'll like to turn the call back over to Ms. Kathee Littrell for closing remarks

Thanks, Andrew. Thank you all again for joining us today. We will be participating in the Wells Fargo, Citi Biotech, and Morgan Stanley Healthcare conferences next month and hope to see many of you. This now ends our call.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a wonderful day.