Jazz Pharmaceuticals plc (JAZZ) Earnings

Management highlights

- Commercial Highlights • ZyWave (rare sleep) maintains robust demand as the only low sodium oxibate and only FDA-approved option for idiopathic hypersomnia (IH), with limited impact to date from high sodium generics. Continued investment in targeted provider/patient campaigns and patient support services drives sustained new patient growth. • Epidiolex sees strong underlying demand across pediatric and adult segments, with growth driven by education on its beyond-seizure benefits and expansion in the long-term care setting. A new capsule formulation is being launched to improve accessibility and compliance for adult patients, supporting deeper market penetration. • Zyhera has rapidly established 50%+ U.S. market share in second-line BTC, building a strong commercial foundation for the upcoming first-line gastroesophageal adenocarcinoma (GEA) launch. Over 90% target physician overlap between BTC and GEA means the commercial team is fully prepared for rapid uptake, with existing J-code coding and the Jazz Cares patient support program in place to minimize reimbursement barriers. • Medazo, launched August 2025, has exceeded growth expectations, with updated NCCN guidelines now endorsing liquid biopsy for the H3K27M biomarker, expanding diagnostic access and accelerating time to treatment. • Zepzelka growth is driven by rapid adoption in first-line maintenance for metastatic small cell lung cancer, which has been elevated to Category 1 NCCN preferred status, offsetting expected declines in the historical second-line business. - R&D and Pipeline Highlights • Phase 3 Horizon GEA-01 trial results for Xanidatamab (Zany DataMap) in first-line HER2-positive metastatic GEA have been published in the New England Journal of Medicine, with a 26.4-month median overall survival for the Xanidatamab + Tislelizumab arm (7 months longer than the control arm). Xanidatamab has also received Breakthrough Therapy Designation for previously treated HER2-positive colorectal cancer. Top-line results from the second interim overall survival analysis for the doublet arm are expected in Q3 2026. • Three new Epidiolex clinical trials have been initiated to expand use to more patients with treatment-resistant seizures, including a phase 4 trial in adults with LGS, a phase 3 trial in developmental and epileptic encephalopathies, and a seamless phase 2-3 trial of the capsule formulation in juvenile myoclonic epilepsy. An NDA for the novel Epidiolex capsule formulation has been submitted to the FDA for currently approved indications. • A labeling supplement to remove Zepzelka's second-line indication will be submitted to the FDA in Q3 2026; the first-line maintenance indication remains unaffected. • Medazo's phase 3 ACTION trial for frontline use post-radiation is on track, with interim overall survival analysis now expected in H1 2027. • Jazz entered a preclinical research collaboration with Abcelera to discover novel multi-specific antibodies leveraging Abcelera's T-cell engager platform, complementing Jazz's oncology expertise and supporting its rare disease strategy. - Strategic Highlights • Management is focused on three core priorities: expand leadership in key therapeutic areas, advance differentiated innovation, and create durable long-term shareholder value, while maintaining disciplined capital allocation for internal R&D and external innovation.

Guidance

- Total full-year 2026 revenue guidance has been upwardly revised to $4.60 billion to $4.75 billion, from prior lower ranges, driven by stronger-than-expected ZyWave performance and limited uptake of high sodium generics to date. - Rare sleep (ZyWave) full-year 2026 revenue guidance is now $2.025 billion to $2.125 billion, with ZyWave now expected to deliver double-digit full-year growth, up from prior expectations of flat to mid-single digit growth. - SG&A expense guidance has been modestly increased to fund strategic investments to build on ZyWave and Epidiolex momentum, advance Zany DataMap's GEA launch, and implement Jazz's rare disease strategy and corporate development activities. - Updated full-year 2026 share count guidance is 69 to 70 million shares, adjusted for accounting impacts of the higher share price on convertible notes and employee stock compensation plans. - Management did not provide 2027 guidance, noting this will be shared on the Q4 2026 earnings call.

Segment performance

Jazz Pharmaceuticals generated total record Q2 2026 revenue of $1.21 billion, a 16% year-over-year increase. The overall oncology portfolio grew 32% year-over-year, while the rare sleep segment grew 13% and the epilepsy segment grew 16%. By product segment: 1. Rare Sleep (ZyWave): Net product sales of $471 million, 13% YoY growth, contributing ~38.9% of total Q2 revenue. Total active patients reached 17,125, a 12% YoY increase, with 525 net patient additions in the quarter. 2. Epilepsy (Epidiolex): Net product sales of $292 million, 16% YoY growth, contributing ~24.1% of total Q2 revenue. 3. Oncology: a. Zyhera: Net product sales of $15 million, contributing ~1.2% of total Q2 revenue, reaching over 50% addressable market share in the U.S. for second-line biliary tract cancer (BTC). b. Medazo: Net product sales of $48 million, contributing ~4.0% of total Q2 revenue, with over 600 total treated patients as of Q2 end. c. Zepzelka: Net product sales of $106 million, 42% YoY growth, contributing ~8.8% of total Q2 revenue, with 30-40% of current U.S. sales coming from the first-line maintenance segment.

Risks & headwinds

- Potential future uptake of high sodium generics for oxibate could pressure ZyWave revenue, though uptake has been far slower and more muted than originally expected through the first half of 2026. - Upcoming competitive launches of orexin II agonists and new branded competitors for idiopathic hypersomnia and rare epilepsy could impact market share for ZyWave and Epidiolex, respectively. - Clinical trial results for pipeline assets (including the upcoming Xanidatamab interim OS analysis and late-stage breast cancer trial) may not meet efficacy or safety expectations. - While management is highly confident in Xanidatamab approval, regulatory review could result in delays or unfavorable outcomes that impact the planned launch timeline. - Generic competition and market dynamics could lead to faster-than-anticipated erosion of Zepzelka's second-line business.

Analyst Q&A

• Q: What drove Epidiolex's stronger-than-expected Q2 performance, and were there unusual inventory movements? /

  A: 16% revenue growth to $292 million reflects 12% volume growth driven by strong underlying demand in both pediatric and adult settings, especially in the long-term care segment where data on Epidiolex's beyond-seizure benefits has resonated. There were no unusual inventory movements. The year-over-year comparison was modestly helped by one-time pricing adjustments that depressed ex-U.S. revenue in Q2 2025, plus a small favorable FX impact in the first half of 2026.

• Q: What is management's confidence in Xanidatamab approval ahead of the upcoming PDUFA, and what is the outlook for the upcoming interim OS analysis for the doublet arm? /

  A: Management has had productive engagement with the FDA and is highly confident in approval, which is expected on or before the August 25 PDUFA date, and the company is fully prepared to launch immediately. The first interim analysis already showed strong clinical benefit, and the upcoming second interim analysis (expected Q3 2026) will have greater statistical power, so management is optimistic for positive results.

• Q: How should investors view ZyWave's 2026 outperformance, and does it set a higher baseline for 2027 or just reflect delayed generic entry that will become a headwind in 2027? /

  A: ZyWave's outperformance is driven by its unique position as the only low-sodium oxibate, which continues to resonate strongly with physicians and patients, leading to slower generic uptake than originally anticipated. This strong position improves ZyWave's standing with payers going forward, giving management increasing confidence in its long-term market position. Full 2027 guidance will be provided on the Q4 2026 call.

• Q: What is Jazz's current business development strategy and areas of focus for rare disease deals? /

  A: Jazz remains highly active in BD, with a new CBO hired in 2026, and management expects to announce one or more deals before the end of 2026. The company prioritizes assets with significant unmet need that align with its existing expertise, commercial call points, and patient support infrastructure, with a focus on strengthening its core franchises of rare epilepsy, rare sleep, and rare oncology, though it will also consider other rare disease areas. Jazz is open to deals across all development stages, from preclinical collaborations like the recent Abcelera partnership to late-stage and commercial assets, and has a strong balance sheet with $2.2 billion in cash to support transactions.