Jazz Pharmaceuticals plc
Q3 2015 Earnings Call Transcript

Published: 10 Nov 2015

[Operator:]

Welcome to the Jazz Pharmaceuticals Plc Third Quarter 2015 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.

[Katherine A. Littrell:]

Thank you, Whitley, and thank you to each of you for joining us on our investor call today. We reported our third quarter financial results and updated our prior 2015 financial guidance in a press release. The release and the slide presentation accompanying this call are available in the News & Events section of our website. With me for today's call are

[Bruce C. Cozadd:]

Good afternoon, everyone, and thank you for joining us. During the third quarter, we achieved total revenues of $341 million, an increase of 11% compared to the third quarter of 2014, driven by solid sales of Xyrem and Erwinaze. We realized adjusted net income of $159 million in the third quarter of 2015. GAAP net income for the quarter was $88 million. In addition to the strong commercial sales of our key products, we accomplished a number of regulatory and clinical goals during the third quarter including

[Matthew P. Young:]

Thanks, Bruce, and good afternoon, everyone. We saw total revenues and adjusted EPS attributable to JAZZ increase by 11% and 10%, respectively, compared to the same period in 2014, driven primarily by growth in the sales of Xyrem. Net sales of Xyrem for the quarter were $243 million, up 19% from $204 million in the third quarter of last year. Bottle volume growth year-to-date is 8% compared to 9% in the same period in 2014. We currently expect mid to high single digit bottle volume growth for the full year 2015. To put this in perspective, I want to remind you that Xyrem had strong sales in the fourth quarter of 2014 due to a change in our early refill policy that created a one-time increase in bottle volume. We are narrowing our guidance for Xyrem net product sales to a range of $950 million to $965 million for 2015 from our prior guidance of $950 million to $970 million. Turning to Erwinaze, third quarter worldwide net sales were $56 million, up 8% from $52 million in the third quarter of 2014. Product sales increased primarily due to increased product demand as well as a $4 million impact of initial inventory build at a new independent distributor to about 16 days which is an increase of approximately one week above the inventory level held by our previous distributor and closer to industry norms. The volume increase in the third quarter of 2015 was partially offset by increased charge-backs and rebates resulting from increased utilization of 340B and Medicaid programs. Foreign exchange rates negatively impacted Erwinaze net sales by approximately $2 million and $6 million for the three and nine months ended September 30, 2015, compared to the same periods in 2014, respectively. We anticipate that we will see a further $3 million increase in Erwinaze inventory levels at the distributor in the fourth quarter of 2015 to an industry average of approximately 20 days. Taking these multiple factors into consideration, we are narrowing our guidance for Erwinaze net product sales to a range of $200 million to $210 million for 2015 from our prior guidance of $200 million to $215 million. For Defitelio, defibrotide, third quarter worldwide net sales were $20 million, an increase of 4% compared to net product sales of $19 million in the third quarter of 2014. We observed strong double-digit volume growth during the third quarter offset by foreign exchange headwinds that reduced our Defitelio net product sales by approximately $4 million in the quarter compared to the third quarter of 2014. Net product sales of $52 million year-to-date were reduced by approximately $11 million due to foreign exchange headwinds compared to the same period in 2014 on our pro forma basis. We are pleased with the continued volume growth of Defitelio in the EU. However, taking into account the continued FX headwinds, we are lowering our Defitelio net sales guidance to a range of $70 million to $75 million from our prior guidance of $73 million to $83 million. I'll remind you that foreign currency impact to our bottom-line is minimal as we incur non-U.S. dollar expenses in our European operations. Prialt net sales were $6 million in both the third quarter of 2015 and 2014. I want to note that the timing of sales to Eisai for the distribution of Prialt in Europe varies. In the fourth quarter of 2014, we had $3.8 million of Prialt sales to Eisai for distribution and sale in Europe. And in the fourth quarter of 2015, in part due to short-term management of our global supply, we are not expecting any sales to Eisai. For the full year 2015 we are tightening the range of our total revenue guidance to $1.32 billion to $1.34 billion compared to our prior guidance of $1.31 billion to $1.37 billion. Turning to operating expenses, cost of product sales for the third quarter of 2015 was $28 million which included approximately $3 million of inventory provisions or $0.04 per diluted share after tax, primarily due to the discontinuation of Leukotac. Adjusted SG&A expenses for the third quarter of 2015 were $85 million or 25% of total revenues compared to $79 million or 26% of total revenues for the same period in 2014. The dollar increase year-over-year in adjusted SG&A expenses was primarily due to higher head count and other expenses resulting from the expansion of our business. Adjusted R&D expenses for the third quarter were $23 million or 7% of total revenues compared to $18 million or 6% of total revenues for the same period in 2014. The increase was primarily due to increased costs for the development of our product candidates and lifecycle management activities related to our existing products as well as expenses related to the completed NDA submission for defibrotide in the U.S. Our 2015 guidance for adjusted SG&A remains a range of $355 million to $365 million, and adjusted R&D guidance remains a range of $95 million to $105 million. We are narrowing our adjusted EPS guidance to a range of $9.45 to $9.60 per diluted share from our prior guidance of $9.45 to $9.75 per diluted share. As of September 30, 2015, cash and cash equivalents increased to approximately $1 billion, primarily due to cash generated from the business. As of September 30, 2015, the principal balance of our outstanding indebtedness was $1.4 billion. Our revolving credit line had $80 million outstanding on September 30, 2015, which we repaid in full in October, leaving us with undrawn revolver capacity of $750 million. During the third quarter we completed our prior $200 million share repurchase program. Last week, our Board of Directors authorized a new share repurchase program under which we are authorized to repurchase up to $300 million of our company's shares. As with our previous program, we expect to repurchase shares over time subject to capital markets conditions and alternative uses of cash including corporate development. In closing, we continue to focus on investing to grow our key commercial products, advancing our development pipeline, including working toward regulatory approval of defibrotide in the U.S. and pursuing corporate development opportunities to further grow and diversify our product portfolio and pipeline. Thank you for joining us on the call today. I'll now ask Kathee to make a brief comment about our Q&A session.

[Katherine A. Littrell:]

Thank you, Matt. We request that you continue to limit your questions to a maximum of one at the time and then feel free to re-enter the queue if you have any further questions. With that said, I'll turn the call back to the operator to open the line up for your questions today. Operator?

[Operator:]

Our first question comes from the line of David Amsellem, Piper Jaffray. Please proceed.

[David A. Amsellem:]

Thanks. So, high level question about M&A. It's been some time since you've been active on the deal front in both – in sizes big and small. So, I guess the question here is, given the volatility in this group, given that you're talking more about share repurchases, is there anything that has changed regarding how you're you thinking about M&A, what you're looking at? Anything that's changed in terms of deal sizes, et cetera? Maybe help us understand your latest thinking? Thanks.

[Bruce C. Cozadd:]

Yeah. David, thanks for the question. So I would say in general, as we look at where we sit right now coming up closer to the end of the year, we've seen certainly a big change in asset prices, which as a buyer I think is a positive change. We've continued to strengthen as a company – growing top and bottom line, increased liquidity – so I think we're well positioned. And you mentioned it's been some time since we've been active – active as defined as closing deals I would agree with – but I would say we are active, very active in our evaluation process and in making sure we're identifying deals we think would be a great fit for us. On the share repurchase, I would say totally different topic. We've had a share repurchase program in place for years that we completed. We're now putting another one in place. I think that's a good thing for us to be able to do, but I certainly don't think of as a substitute for a very active corporate development effort. Maybe I'll turn it over to Matt to talk a little bit about your question about size of transactions that might make sense for us.

[Matthew P. Young:]

Yeah. Thanks, Bruce. So, consistent with what Bruce said, I think again, not a lot has changed in terms of the types of transactions we're going to be looking at in terms of continuing to seek out products that provide meaningful benefit for patients and are a strategic fit with JAZZ, but also have a strong likelihood of bringing a good ROI to our investors. So, that is the same. As it relates to size, clearly there has been some dislocation in the leveraged finance markets for healthcare in general. And while we believe our continued generation of cash flow shows we have a durable business, and as Bruce alluded to with a billion dollars of cash on the balance sheet and a $750 million undrawn revolver, we feel we're in a strong position from a liquidity perspective. And further that, strategic deals with the right kinds of asset targets with a well-financed transaction could certainly enable leverage levels above where we are today subject to market conditions at the time. We still believe we can look at meaningful and sizeable transactions and we'll continue to do so in this environment. But that said, again, we do recognize the environment's changed a bit.

[David A. Amsellem:]

Thank you.

[Operator:]

Your next question comes from the line of Louise Chen with Guggenheim. Please proceed.

[Louise Chen:]

Hi. Thanks for taking my question. First, curious if you could give us more color on defibrotide opportunity in the U.S. and how it can enhance your overall franchise, that would be helpful. Thanks.

[Bruce C. Cozadd:]

Sure. Maybe I can hand that over to Russ and Mike to comment a little bit, particularly given our experience in Europe and our plans for an upcoming launch.

[Russell J. Cox:]

Sure. So just to give a flavor for the U.S. potential, there's about 20,000 hematopoietic stem cell transplantations take place in the U.S., about 3,000 patients that are at high risk for VOD, and somewhere between 1,000 to 2,000 with the incidence of VOD. We anticipate that we'll have a label that'll be consistent with what we've seen in Europe. And so, we think that the opportunity in the U.S. is actually pretty exciting. So, we're gearing up and I'll turn it over to Mike just to give you a flavor for some of the activities that we're doing to get ready for that launch.

[Michael Patrick Miller:]

Thanks, Russ. Yeah, we are kicking off our unbranded disease awareness campaign around VOD. We think we can absolutely grow the diagnosis rate. And in Q4, we are expanding our sales force and it'll be the hemonic (26

[Operator:]

Your next question comes from the line of Marc Goodman with UBS. Please proceed.

[Marc Goodman:]

Bruce, it feels like we've been down this path before with respect to the hub and some problems in the short-term. Can you give us a sense of maybe what the volume growth you think would've been if there wouldn't have been this issue? Is there any way to have any idea about that? Obviously, this is the first time, I think, we've seen the number of patients on Xyrem actually down from a quarter to the other quarter. So maybe you can help us with that? And then just a very quick question, in the other product line that was $3.9 million, does that include the Gentium API revenues that was consistently like a couple million bucks a quarter and that's what in left in there, and there's barely any – I'm just trying to understand what the run rate is of that line item? Thank you.

[Bruce C. Cozadd:]

Very creative use of one question there, Marc. So let me hit the big part of your question first and I'll have Matt follow up at the end with the other line. So on the number of patients, maybe I'll ask Mike to comment a little bit about how we define that to give you a sense of what that is. It's really hard to know exactly what the volume growth would have been at without – or would have been without any operational disruption – because of course, we didn't run that experiment. I will say we felt really good about our volume growth right up until we implemented the REMS and we can track on a daily basis what that meant in terms of shipment of bottles, and it was very significant. So, a very meaningful impact, but I'm not sure we can tell you exactly what the volume growth would have been without it. So, Mike, maybe comment a little bit on how we define number of patients for that calculation?

[Michael Patrick Miller:]

Sure. The metric that we use is active patients, and those are patients who receive prescriptions, and as Bruce said, the timely fill of prescriptions was affected by the operational challenges we had at SDS. So consequently, the number of active patients as we define the metric would be affected as well.

[Bruce C. Cozadd:]

And Marc, just coming back to the last part of your question, in the Other line, you're really mostly seeing the impact of the divestiture of some of our European business earlier in 2015. The old revenue recovery program for defibrotide in the U.S., which you're correctly noting, we did stop part way through last year, did flow into the Defitelio, defibrotide line. So that's on a different line.

[Michael Patrick Miller:]

Bruce, let me add one thing is that right before we implemented the REMS in late August, our demand was quite good. And to be clear, after the REMS implementation, organic demand in new starts are still very good. But it is really the timely fill of these prescriptions to get out, if that makes sense. Okay.

[Operator:]

Your next question comes from the line of Gregg Gilbert with Deutsche Bank. Please proceed.

[Gregg Gilbert:]

Hi. Maybe just a follow-up on your most important product. Can you talk about what some of these logistics issues are in more detail? What's different this time versus last time? I'm sure folks want to hear a little bit more granularity. You sound confident in resolution but maybe some more detail's in order. Thanks.

[Michael Patrick Miller:]

Sure. This is Mike. So before we implemented the launch, we began an educational campaign in the field to prescribers letting them know of new changed forms and processes around the REMS. And despite that effort, which went on about a month, there's clearly a learning curve for patients and physicians to learn these forms. For example, there are a lot of common errors about not completing all the fields or missing signatures, and that created hard stops for these prescriptions in the pharmacy process. That resulted in increased call volume as the pharmacy then had to go out and contact these physicians and patients in an effort to actually fill in or correct missing items in the form. And all this resulted in timeliness of the fills. On the resolution side, we have identified the issues in Q3 and already have begun remedying those. We hired and trained new pharmacists starting in October. We began another concerted effort to educate or familiarize physicians and patients to the new change processes and forms. We've actually made changes on the online forms to catch missing items or not to allow incorrect information to be entered. And we've changed a number of processes in software to streamline the timely prescription fills. So, again, we have seen to date, in the fourth quarter we've seen improved metrics that we are pleased with and we expect to normalize by the end of Q4.

[Bruce C. Cozadd:]

And I'll just add to what Mike said. I think SDS, who's performing the pharmacy operations, has been a great partner through this – their hiring of new personnel and work, as Mike said, to ensure that this process does result in filling prescriptions for patients who rely on Xyrem – all of those efforts, I think, have already begun to pay off.

[Operator:]

Your next question comes from the line of Jessica Fye with JPMorgan. Please proceed.

[Jessica M. Fye:]

Hey, guys. Thanks for taking my question. The question is on Xyrem pricing. I notice you didn't take the second price increase this year and I was hoping you could just talk about sort of your view of the appropriate price for Xyrem, whether that's going to continue to move higher over time? It's been a focus in the sector, so I'm curious to hear your comments there.

[Michael Patrick Miller:]

Sure. This is Mike again. We do believe that the scrutiny generated by the news and the political stance will – I don't think it'll impact our ability to take appropriate price increases or in fact price our new products appropriately – based on the value they bring to patients. Right now, our managed care coverage remains strong and no change, and we see the PAs grew about 7% in Q3 year-over-year. We don't provide forward-looking comments on price increases obviously, but I think the trend that we have taken is pretty evident.

[Operator:]

Your next question comes from the line of Jason Gerberry with Leerink Partners. Please proceed.

[Jason M. Gerberry:]

Hi. Thanks for taking my question. On Xyrem line extension, I realize you guys aren't going to say much, but just curious directionally, if you guys can comment. Flamel has indicated they're going to start their pivotal Phase III on their once-nightly Micropump sodium oxybate in the fourth quarter of this year. So as you think about these 5 or 10 products that you have that you're working on behind the scenes, how comfortable are you that you're close to them in the race to have an improved version of sodium oxybate on the market, just in terms of the timing perspective and a competitive perspective as well, to have a competitive product offering? Thanks.

[Bruce C. Cozadd:]

Yeah, Jason, we obviously aren't saying too much publicly at this point other than the fact that we have multiple efforts underway that could include both a focus on the potential for once-nightly dosing but also other potential improvements over the existing Xyrem product. I think we've said for a while now our focus is on getting a product out that is differentiated in the minds of patients, prescribers, payers and regulators, and having that be the best product we can make it, rather than on just doing the fastest possible program. And in terms of the race, I would say, I don't think anyone's particularly close to the market yet and we feel confident that our efforts are the right efforts to position us in the best possible way.

[Jason M. Gerberry:]

Okay. Thank you.

[Operator:]

Your next question comes from the line of Gary Nachman, Goldman Sachs. Please proceed.

[Gary J. Nachman:]

Hi, Bruce. Can you just give an update on the shared REMS discussions with generic companies? Is there an actual target for that? And when could we potentially hear about a trial date with Roxane, typically how soon after discovery is completed? Thanks.

[Bruce C. Cozadd:]

So, Gary, on the first question which is a single shared system question, so our goal, as it has been, remains to work with the end applicants to develop a single system. We have said and continue to believe this would be the best outcome for patients and other stakeholders when generics enter the market. We are not the only party in those discussions and so we can't predict whether this will ultimately happen or how the FDA will handle the requirements for REMS for the ANDAs if we don't develop a shared REMS. So, can't say more at this point or we'd just be speculating. On when we might first hear of a trial date, it's conceivable we could hear that before the end of this year. That doesn't mean we necessarily will but that's a possibility. Once we are through the currently scheduled items, they'll be a status conference and it is possible that a trial date would be outlined at that point.

[Gary J. Nachman:]

Okay. Thank you.

[Operator:]

Your next question comes from the line of David Buck with Northland Capital Markets. Please proceed.

[David G. Buck:]

Yes. Thanks for taking the question. Bruce, for Xyrem it seems like you avoided taking the price increase perhaps due to the implementation of the REMS. Can you talk a little bit about whether there's been any other pricing moves during the reported quarter or during the fourth quarter to date? And anything else that led to the strength in Erwinaze besides the inventory? Was there any pricing there? Thanks.

[Bruce C. Cozadd:]

Yeah. No significant price increases on any of our products during that timeframe. And Erwinaze, Mike, you want to comment on the Erwinaze trend?

[Michael Patrick Miller:]

Yeah. There were two price increases that were small. One was Erwinaze in July, 3%; Prialt in July of 1.5%. Erwinaze, we've very pleased with the traction that we have gained with Erwinaze. I think the base demand is quite good. We think we are making inroads. As you probably know, the pediatric space is, we believe, is pretty close to penetrated. But we believe that there's a lot of adolescent, young adult patients who could benefit from Erwinaze therapy, and right now there is very much good literature out there around the adoption of pediatric protocols in these patients. So, it's a good thing.

[Operator:]

Your next question comes from the line of Corey Davis with Canaccord Genuity. Please proceed.

[Corey George Davis:]

Thanks very much. If you said it I missed it, but with respect to the timing on the two trials going on with JZP-110, I just see from the slide deck that they were started in Q2 2015. But any more comments about rates of enrollment, whether or not it's slower or faster than you expected? And when could we expect to see data and in which indication first?

[Bruce C. Cozadd:]

So, Corey. Let me hand that question over to Karen.

[Karen L. Smith:]

Hi, Corey. Thanks very much for the question. The – you may be aware that we have recently increased the number of sites and opened up sites into Europe for JZP-110. We obviously also have sites in Canada and the U.S. and all of the studies, the three phase III's and the open label extension are all recruiting patients into those studies. At the moment, all of our studies are on track and we are planning to submit the NDA in 2017.

[Corey George Davis:]

Are you having trouble at all finding patients? Or is it just a matter of finding the right sites?

[Karen L. Smith:]

No, we have a good list of sites; many of our sites are open and initiated. All of our U.S. sites are initiated; we are still in the process of initiating some of our European sites. The sites that have opened are actively recruiting, and already in Europe, we have our first patient randomized into one of the sites there. So I wouldn't say we're having trouble finding patients.

[Bruce C. Cozadd:]

Yeah, Corey, this is the timeline we've had all along.

[Corey George Davis:]

Yeah, okay. Thanks very much.

[Operator:]

Your next question comes from the line of Liav Abraham with Citi. Please proceed.

[Liav Abraham:]

Good afternoon. I just had a follow-up question on capital allocation. You mentioned your good liquidity earlier and your efforts on the M&A front, but given where valuations are at the moment, is perhaps a – or could your comment on the priority of M&A over the near term versus a buyback? Thanks very much.

[Bruce C. Cozadd:]

Sure. Our first priority will always remain corporate development. I think we want to bring additional growth drivers into the company so we will absolutely be ensuring we have the appropriate and available liquidity to pursue what we believe are the right investments as it relates to that. Obviously, that said, we certainly hope to be buying back our stock in the capital markets environment we're in and would expect to do so. But just as with our previous program which we took about two years to complete in terms of the $200 million program previously, we will repurchase stock at times depending on, again, the capital markets, our stock price and also what we're doing on the corporate development front. But that remains the priority.

[Liav Abraham:]

Thank you.

[Operator:]

Your next question comes from the line of Annabel Samimy with Stifel. Please proceed.

[Annabel Samimy:]

Hi. Thanks for taking my question. So we've heard a lot about discontinuations of several programs this year and you mentioned that you're reprioritizing your R&D dollars on programs with a great return. But I guess I haven't really seen any changes to your current investment programs, so can you give us a little more granularity there? Where are you prioritizing your R&D dollars that's different now? And we haven't heard any discussion about defibrotide in GvHD with the discontinuation of Leukotac. So is that still a focus for you? Thanks.

[Bruce C. Cozadd:]

Yeah. Thanks. So we discontinued one program which is Leukotac, which just as a reminder for anyone who followed us when we were doing the EUSA acquisition originally we valued that in terms of expectations for a future product launch at pretty near zero. We were – obviously wanted to finish the trial and look at the data – but you haven't heard us trumpeting the conclusion of that Phase III program over the last year. I think we've been pretty balanced in our disclosure. On other R&D programs, we haven't discontinued any. We certainly are looking at how best to move forward an improved asparaginase product and we've got some early work ongoing on that, but we still think that remains an opportunity. In terms of priorities, once we get by the clear first priorities, which are moving to an approval of defibrotide in the U.S. and completing our Phase III program for 110, I would say we also have a lot of excitement around programs that will build around existing products we have, whether that's the Xyrem-related programs, JZP-386 and other, whether that's around other potential indications for JZP-110, whether that's other places we can evaluate defibrotide. We specifically mentioned in the call today moving into prevention of VOD as one high-priority area. You brought up acute graft-versus-host disease as something where – there was a signal in an earlier study. Not a perfectly designed study for this purpose, but there was certainly a signal that there's potential utility there. We're going to follow up on that and make a determination as to whether we want to move that forward. But I think we've been clear in saying we see a number of opportunities for potential application of defibrotide that could be very exciting to us.

[Operator:]

Your next question comes from the line of Irina Koffler with Mizuho. Please proceed.

[Irina Rivkind Koffler:]

Hi. Thanks for taking the question. So it looks like a couple of the motions to dismiss your REMS patents and the Valproate patent, they've been terminated and just wondering if that gives you additional confidence as you're heading into the Roxane trial or if there's anything that you learned through that process that might be helpful? Thanks.

[Bruce C. Cozadd:]

Yeah. Good question. I'm probably not going to say much in response. The overall landscape with the ANDA filers and the various ways they're challenging our patents has a lot of different pieces to it. In general, I'd say we've been pleased with how things have been going, either in things not being picked up for review or being narrowed if they are picked up for review. We've had some motions in the court cases that have gone our way. So in general, I think we feel good about how things have been developing, but clearly this is a situation where we would say we have patents that the generics do infringe and that are valid patents and they're obviously going to try to prove the opposite. But I would say in general, we feel good about how things are going.

[Katherine A. Littrell:]

And operator, this will be our last call.

[Operator:]

Our final question comes from the line of Douglas Tsao with Barclays. Please proceed.

[Douglas D. Tsao:]

Hi. Good afternoon. Thanks for taking the question. So since I'm last, maybe I'll try to sneak in two. Just in terms of the REMS program and some of the disruption that you spoke about, do you have any color? Was this largely in – for refills of patients – or was this new patient starts? As well as, sort of potentially was it affecting primarily your lower decile writers who obviously just in some ways might not have had as much experience or didn't necessarily focus as much on in terms of the training? And then also, Mike, I think made a comment that you saw a 7% increase in PAs or prior-offs this quarter? And just curious in terms of what that 7% sort of represents? Is that covered lives? Is it the actual plans and just sort of trying to understand exactly what that reference is to? Thank you.

[Bruce C. Cozadd:]

Okay. So maybe I'll have Mike talk a little bit about whether the impact was on refill or new patient starts and a little bit of color on the PAs.

[Michael Patrick Miller:]

Sure. So with regard to the REMS impact, just by the math it has more impact on the refill because you're – of total prescriptions – refills are by far the greater number. So in that sense, it was the refills in terms of numbers. However, new's were impacted as well. It really had no bearing whether the patient was new or refill for that matter because in this case, the prescription forms had to be correct whether those prescriptions were for new or refill. So, on the Rx or on the prescriber side, that's a great question. I would say that based on the efforts that we put across our entire prescribing audience, we see actually pretty even error rates. We actually see in our high decile docs we see an error rate that would've surprised me given the amount of times we were in there and educating. And in lower, obviously, you do see if they're a new prescriber, they'll not be familiar with it. But what we've done is we've pulled back and we're now doing another wave of education in the field to everyone and I think that will bear some fruit. And we've already seen the error rate come down so we're very pleased with that. On the PAs, that is the absolute number of PAs generated that quarter for Xyrem and it's a number that we monitor. You do see it swell in Q1, so 7% year-over-year increases, I would not take that as a Xyrem specific direction. I would take that more around the continued interest in pharma cost and payer's response to it.

[Douglas D. Tsao:]

Okay. Great. Thank you very much.

[Bruce C. Cozadd:]

And since, Doug, you asked two questions instead of one, I'll provide a bonus answer, too, since you're the last question. Just say I just want to summarize the call by saying to people we're continuing to see good top and bottom-line growth. We did narrow our guidance a little bit but all on both top and bottom-line within our prior ranges. And our priority development programs defibrotide coming to the U.S. market and JZP-110 are moving along well. So I think the business is operating well. We obviously think our liquidity position continues to improve and that there are interesting corporate development opportunities out there for us to continue executing on a strategy that I think makes every bit as much sense in today's environment as it has over the last couple of years. So Kathee, let me turn it back over to you.

[Katherine A. Littrell:]

Thank you, Bruce, and thanks, Whitley. Thank you again everyone for joining us today. We will be participating in a number of conferences this quarter so we will be at Credit Suisse, Jefferies, and the Piper Jaffray's healthcare conferences and hope to see many of you at those. This now ends our call.

[Operator:]

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.