UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, ~~2021~~2022


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 001-33500

JAZZ PHARMACEUTICALS PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)


Ireland			98-1032470
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

Fifth Floor, Waterloo Exchange,

Waterloo Road, Dublin 4, Ireland D04 E5W7

011-353-1-634-7800

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary shares, nominal value $0.0001 per share	JAZZ	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 27, ~~2021, 56,895,944~~2022, 62,318,745 ordinary shares of the registrant, nominal value $0.0001 per share, were outstanding.

Table of Contents

JAZZ PHARMACEUTICALS PLC

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, ~~2021~~2022

INDEX


		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets – March 3 1 ~~, 202~~1 31, 2022 and December 31, 20 202021	3
	Condensed Consolidated Statements of Income (L ~~oss)~~– Three Months Ended March 3 1 ~~, 202~~1 31, 2022 and 20 202021	4
	Condensed Consolidated Statements of Comprehensive Income (L ~~oss)~~ (Loss) – Three Months Ended March 3 1 ~~, 202~~1 31, 2022 and 20 202021	5
	Condensed Consolidated Statements of Shareholders’ Equity -– Three Months ~~End~~e d Ended March 31,~~, 202~~1 2022 and 20 202021	6
	Condensed Consolidated Statements of Cash Flows – Three Months Ended ~~Mar~~ch 3 1 , ~~202~~1 March 31, 2022 and 20 202021	7
	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2729

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4244

Item 4.	Controls and Procedures	4244

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	4345

Item 1A.	Risk Factors	4345

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4445



Item 6.	Exhibits	4546

SIGNATURES		4748

We own or have rights to various copyrights, trademarks, and trade names used in our business in the U.S. and/or other countries, including the following: Jazz Pharmaceuticals®, Xyrem® (sodium oxybate) oral solution, Xywav® (calcium, magnesium, potassium, and sodium oxybates) oral solution, Epidiolex® (cannabidiol) oral solution, Epidyolex® (the trade name in Europe for Epidiolex), Sunosi® (solriamfetol), Defitelio® (defibrotide sodium), Defitelio® (defibrotide)~~, Erwinaze~~® ~~(asparaginase~~ ~~Erwinia chrysanthemi), Erwinase~~®, CombiPlex®, Vyxeos® (daunorubicin and cytarabine) liposome for injection, Vyxeos® liposomal 44 mg/100 mg powder for concentrate for solution for infusion, ~~Zepzelca™~~Zepzelca® (lurbinectedin), Rylaze® (recombinant Erwinia asparaginase) and ~~Xywav™ (calcium, magnesium, potassium, and sodium oxybates)~~Sativex® (nabiximols) oral solution. This report also includes trademarks, service marks and trade names of other companies. Trademarks, service marks and trade names appearing in this Quarterly Report on Form ~~10-Q~~10‑Q are the property of their respective owners.

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	2,097,533	$	1,057,769	Cash and cash equivalents	$	490,835	$	591,448
Investments		335,000		1,075,000

Accounts receivable, net of allowances	Accounts receivable, net of allowances	413,976		396,490		Accounts receivable, net of allowances	572,392		563,360
Inventories	Inventories	115,475		95,396		Inventories	985,454		1,072,721
Prepaid expenses	Prepaid expenses	57,185		62,422		Prepaid expenses	117,399		131,413
Other current assets	Other current assets	147,727		152,491		Other current assets	243,888		252,392

Assets held for sale						Assets held for sale	90,888		—
Total current assets	Total current assets	3,166,896		2,839,568		Total current assets	2,500,856		2,611,334
Property, plant and equipment, net	Property, plant and equipment, net	123,863		127,935		Property, plant and equipment, net	257,632		256,837
Operating lease assets	Operating lease assets	125,738		129,169		Operating lease assets	83,412		86,586
Intangible assets, net	Intangible assets, net	2,108,046		2,195,051		Intangible assets, net	6,783,057		7,152,328
Goodwill	Goodwill	938,398		958,303		Goodwill	1,782,444		1,827,609
Deferred tax assets, net	Deferred tax assets, net	258,454		254,916		Deferred tax assets, net	314,672		311,103
Deferred financing costs	Deferred financing costs	4,724		5,238		Deferred financing costs	11,336		12,029
Other non-current assets	Other non-current assets	30,351		25,721		Other non-current assets	35,508		40,813
Total assets	Total assets	$	6,756,470	$	6,535,901	Total assets	$	11,768,917	$	12,298,639
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	77,738	$	26,945	Accounts payable	$	73,336	$	100,298
Accrued liabilities	Accrued liabilities	374,035		352,732		Accrued liabilities	604,710		666,304
Current portion of long-term debt	Current portion of long-term debt	248,613		246,322		Current portion of long-term debt	31,000		31,000
Income taxes payable	Income taxes payable	49,334		25,200		Income taxes payable	26,677		9,608

Deferred revenue	Deferred revenue	2,373		2,546		Deferred revenue	1,686		2,093
Total current liabilities	Total current liabilities	752,093		653,745		Total current liabilities	737,409		809,303
Deferred revenue, non-current	Deferred revenue, non-current	1,852		2,315		Deferred revenue, non-current	347		463
Long-term debt, less current portion	Long-term debt, less current portion	1,853,033		1,848,516		Long-term debt, less current portion	5,992,868		6,018,943
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	136,020		140,035		Operating lease liabilities, less current portion	83,078		87,200

Deferred tax liabilities, net	Deferred tax liabilities, net	109,915		130,397		Deferred tax liabilities, net	1,222,084		1,300,541
Other non-current liabilities	Other non-current liabilities	105,868		101,148		Other non-current liabilities	124,644		116,998
Commitments and contingencies (Note 11)		0		0
Commitments and contingencies (Note 9)						Commitments and contingencies (Note 9)	0		0
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:

Ordinary shares	Ordinary shares	6		6		Ordinary shares	6		6
Non-voting euro deferred shares	Non-voting euro deferred shares	55		55		Non-voting euro deferred shares	55		55
Capital redemption reserve	Capital redemption reserve	472		472		Capital redemption reserve	472		472
Additional paid-in capital	Additional paid-in capital	2,694,858		2,633,670		Additional paid-in capital	3,239,327		3,534,792
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(179,428)		(134,352)		Accumulated other comprehensive loss	(590,720)		(400,360)
Retained earnings	Retained earnings	1,281,726		1,159,894		Retained earnings	959,347		830,226

Total shareholders’ equity	Total shareholders’ equity	3,797,689		3,659,745		Total shareholders’ equity	3,608,487		3,965,191
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	6,756,470	$	6,535,901	Total liabilities and shareholders’ equity	$	11,768,917	$	12,298,639

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED STATEMENTS OF INCOME ~~(LOSS)~~

(In thousands, except per share amounts)

(Unaudited)


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Revenues:	Revenues:						Revenues:
Product sales, net	Product sales, net	$	603,531	$	530,205		Product sales, net	$	809,837	$	603,531
Royalties and contract revenues	Royalties and contract revenues	4,050		4,521			Royalties and contract revenues	3,884		4,050
Total revenues	Total revenues	607,581		534,726			Total revenues	813,721		607,581
Operating expenses:	Operating expenses:						Operating expenses:
Cost of product sales (excluding amortization of acquired developed technologies)	Cost of product sales (excluding amortization of acquired developed technologies)	40,189		28,657			Cost of product sales (excluding amortization of acquired developed technologies)	115,284		40,189
Selling, general and administrative	Selling, general and administrative	260,508		208,400			Selling, general and administrative	308,813		260,508
Research and development	Research and development	76,573		86,107			Research and development	129,981		76,573
Intangible asset amortization	Intangible asset amortization	68,192		62,847			Intangible asset amortization	172,094		68,192
Acquired in-process research and development		0		202,250
Impairment charge		0		136,139

Total operating expenses	Total operating expenses	445,462		724,400			Total operating expenses	726,172		445,462
Income (loss) from operations		162,119		(189,674)
Income from operations							Income from operations	87,549		162,119
Interest expense, net	Interest expense, net	(27,376)		(18,496)			Interest expense, net	(70,684)		(27,376)
Foreign exchange gain (loss)	Foreign exchange gain (loss)	943		(1,132)			Foreign exchange gain (loss)	(10,540)		943

Income (loss) before income tax provision (benefit) and equity in gain of investees		135,686		(209,302)
Income tax provision (benefit)		18,019		(51,287)
Equity in gain of investees		(4,165)		(182)
Income before income tax expense and equity in loss (gain) of investees							Income before income tax expense and equity in loss (gain) of investees	6,325		135,686
Income tax expense							Income tax expense	536		18,019
Equity in loss (gain) of investees							Equity in loss (gain) of investees	4,142		(4,165)

Net income (loss)		$	121,832	$	(157,833)
Net income							Net income	$	1,647	$	121,832

Net income (loss) per ordinary share:
Net income per ordinary share:							Net income per ordinary share:
Basic	Basic	$	2.16	$	(2.82)		Basic	$	0.03	$	2.16
Diluted	Diluted	$	2.09	$	(2.82)		Diluted	$	0.03	$	2.09
Weighted-average ordinary shares used in per share calculations - basic	Weighted-average ordinary shares used in per share calculations - basic	56,468		55,956			Weighted-average ordinary shares used in per share calculations - basic	61,865		56,468
Weighted-average ordinary shares used in per share calculations - diluted	Weighted-average ordinary shares used in per share calculations - diluted	58,393		55,956			Weighted-average ordinary shares used in per share calculations - diluted	62,907		58,393

The accompanying notes are an integral part of these condensed consolidated financial statements.

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JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

Three Months Ended
March 31,
2021 2020
Net income (loss) $ 121,832 $ (157,833)
Other comprehensive loss:
Foreign currency translation adjustments (46,220) (29,990)
Unrealized gain (loss) on hedging activities, net of income tax provision (benefit) of $163 and ($579), respectively 1,144 (4,053)
Other comprehensive loss (45,076) (34,043)
Total comprehensive income (loss) $ 76,756 $ (191,876)


	Three Months Ended March 31,
	2022		2021
Net income	$	1,647	$	121,832
Other comprehensive income (loss):
Foreign currency translation adjustments	(190,488)		(46,220)

Loss on fair value hedging activities reclassified from accumulated other comprehensive income (loss) to foreign exchange gain (loss), net of income tax benefit of $43 and $—, respectively	128		—
Loss on cash flow hedging activities reclassified from accumulated other comprehensive income (loss) to interest expense, net of income tax benefit of $— and $166, respectively	—		1,160
Unrealized loss on cash flow hedging activities, net of income tax benefit of $— and ($3), respectively	—		(16)


Other comprehensive loss	(190,360)		(45,076)
Total comprehensive income (loss)	$	(188,713)	$	76,756

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)


		Ordinary Shares			Non-voting Euro Deferred			Capital Redemption Reserve			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings						Total Equity					Ordinary Shares						Non-voting Euro Deferred					Capital Redemption Reserve		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Equity
		Shares	Amount		Shares	Amount				Total Equity							Shares		Amount	Shares							Amount			Capital Redemption Reserve			Additional Paid-in Capital
Balance at December 31, 2020		56,171	$	6	4,000	$	55				$	472	$	2,633,670	$	(134,352)	$	1,159,894						$	3,659,745

Balance at December 31, 2021																							Balance at December 31, 2021		61,633			$	6		4,000			$	55	$	472	$	3,534,792	$	(400,360)	$	830,226	$	3,965,191
Cumulative effect adjustment from adoption of ASU 2020-06																							Cumulative effect adjustment from adoption of ASU 2020-06		—			—			—			—		—		(333,524)		—		127,474		(206,050)
Issuance of ordinary shares in conjunction with exercise of share options	Issuance of ordinary shares in conjunction with exercise of share options	408	—		—	—		—			50,407		—		—						50,407			Issuance of ordinary shares in conjunction with exercise of share options		207			—			—			—		—		21,729		—		—		21,729

Issuance of ordinary shares in conjunction with vesting of restricted stock units	Issuance of ordinary shares in conjunction with vesting of restricted stock units	294	—		—	—		—			—		—		—						—			Issuance of ordinary shares in conjunction with vesting of restricted stock units		404			—			—			—		—		—		—		—		—
Shares withheld for payment of employee's withholding tax liability	Shares withheld for payment of employee's withholding tax liability	—	—		—	—		—			(23,784)		—		—						(23,784)			Shares withheld for payment of employee's withholding tax liability		—			—			—			—		—		(33,776)		—		—		(33,776)

Share-based compensation	Share-based compensation	—	—		—	—		—			34,565		—		—						34,565			Share-based compensation		—			—			—			—		—		50,106		—		—		50,106

Other comprehensive loss	Other comprehensive loss	—	—		—	—		—			—		(45,076)		—						(45,076)			Other comprehensive loss		—			—			—			—		—		—		(190,360)		—		(190,360)
Net income	Net income	—	—		—	—		—			—		—		121,832						121,832			Net income		—			—			—			—		—		—		—		1,647		1,647
Balance at March 31, 2021		56,873	$	6	4,000	$	55	$	472		$	2,694,858	$	(179,428)	$	1,281,726					$	3,797,689
Balance at March 31, 2022																							Balance at March 31, 2022		62,244			$	6		4,000			$	55	$	472	$	3,239,327	$	(590,720)	$	959,347	$	3,608,487

Ordinary Shares Non-voting Euro Deferred Capital
Redemption
Reserve Additional
Paid-in
Capital Accumulated
Other
Comprehensive
Loss Retained
Earnings Total
Equity
Shares Amount Shares Amount
Balance at December 31, 2019 56,140 $ 6 4,000 $ 55 $ 472 $ 2,266,026 $ (223,393) $ 1,067,815 $ 3,110,981
Issuance of ordinary shares in conjunction with exercise of share options 145 — — — — 13,264 — — 13,264
Issuance of ordinary shares in conjunction with vesting of restricted stock units 214 — — — — — — — —
Shares withheld for payment of employee's withholding tax liability — — — — — (13,547) — — (13,547)
Share-based compensation — — — — — 28,731 — — 28,731
Shares repurchased (1,131) — — — — — — (139,053) (139,053)
Other comprehensive loss — — — — — — (34,043) — (34,043)
Net loss — — — — — — — (157,833) (157,833)
Balance at March 31, 2020 55,368 $ 6 4,000 $ 55 $ 472 $ 2,294,474 $ (257,436) $ 770,929 $ 2,808,500


	Ordinary Shares			Non-voting Euro Deferred			Capital Redemption Reserve		Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2020	56,171	$	6	4,000	$	55	$	472	$	2,633,670	$	(134,352)	$	1,159,894	$	3,659,745

Issuance of ordinary shares in conjunction with exercise of share options	408	—		—	—		—		50,407		—		—		50,407

Issuance of ordinary shares in conjunction with vesting of restricted stock units	294	—		—	—		—		—		—		—		—
Shares withheld for payment of employee's withholding tax liability	—	—		—	—		—		(23,784)		—		—		(23,784)
Share-based compensation	—	—		—	—		—		34,565		—		—		34,565

Other comprehensive loss	—	—		—	—		—		—		(45,076)		—		(45,076)
Net income	—	—		—	—		—		—		—		121,832		121,832
Balance at March 31, 2021	56,873	$	6	4,000	$	55	$	472	$	2,694,858	$	(179,428)	$	1,281,726	$	3,797,689

The accompanying notes are an integral part of these condensed consolidated financial statements.

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JAZZ PHARMACEUTICALS PLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Three Months Ended
March 31,
2021 2020
Operating activities
Net income (loss) $ 121,832 $ (157,833)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Intangible asset amortization 68,192 62,847
Share-based compensation 34,485 28,654
Impairment charge 0 136,139
Depreciation 4,779 4,527
Acquired in-process research and development 0 202,250
Deferred tax benefit (19,110) (63,976)
Provision for losses on accounts receivable and inventory 1,083 2,620
Amortization of debt discount and deferred financing costs 15,688 12,000
Other non-cash transactions 7,766 1,793
Changes in assets and liabilities:
Accounts receivable (18,245) 37,861
Inventories (22,014) (10,235)
Prepaid expenses and other current assets (2,897) (17,843)
Other non-current assets 157 505
Operating lease assets 3,690 3,195
Accounts payable 51,292 19,604
Accrued liabilities 13,719 (12,198)
Income taxes payable 24,625 20,829
Deferred revenue (637) (1,180)
Other non-current liabilities 4,774 7,316
Operating lease liabilities, less current portion (4,182) (3,906)
Net cash provided by operating activities 284,997 272,969
Investing activities
Proceeds from maturity of investments 760,000 345,000
Purchases of property, plant and equipment (2,168) (4,830)
Acquired in-process research and development 0 (202,250)
Acquisition of intangible assets 0 (13,000)
Acquisition of investments (20,700) (185,000)
Net cash provided by (used in) investing activities 737,132 (60,080)
Financing activities
Proceeds from employee equity incentive and purchase plans 50,407 13,264
Payment of employee withholding taxes related to share-based awards (23,784) (13,547)
Repayments of long-term debt (8,347) (8,347)
Share repurchases 0 (139,053)
Net cash provided by (used in) financing activities 18,276 (147,683)
Effect of exchange rates on cash and cash equivalents (641) (948)
Net increase in cash and cash equivalents 1,039,764 64,258
Cash and cash equivalents, at beginning of period 1,057,769 637,344
Cash and cash equivalents, at end of period $ 2,097,533 $ 701,602


	Three Months Ended March 31,
	2022		2021
Operating activities
Net income	$	1,647	$	121,832
Adjustments to reconcile net income to net cash provided by operating activities:
Intangible asset amortization	172,094		68,192
Acquisition accounting inventory fair value step-up adjustment	63,943		—
Share-based compensation	50,070		34,485
Deferred tax benefit	(45,339)		(19,110)
Non-cash interest expense	12,168		15,688
Depreciation	7,617		4,779
Provision for losses on accounts receivable and inventory	2,170		1,083






Other non-cash transactions	(14,701)		7,766
Changes in assets and liabilities:
Accounts receivable	(9,723)		(18,245)
Inventories	(24,812)		(22,014)
Prepaid expenses and other current assets	23,170		(2,897)
Operating lease assets	3,095		3,690
Other non-current assets	979		157
Accounts payable	(27,617)		51,292
Accrued liabilities	(23,241)		13,719
Income taxes payable	16,767		24,625
Deferred revenue	(523)		(637)
Operating lease liabilities, less current portion	(3,915)		(4,182)
Other non-current liabilities	5,130		4,774
Net cash provided by operating activities	208,979		284,997
Investing activities
Proceeds from maturity of investments	—		760,000

Purchases of property, plant and equipment	(12,292)		(2,168)
Acquisition of intangible assets	(25,000)		—

Acquisition of investments	—		(20,700)


Net cash (used in) provided by investing activities	(37,292)		737,132
Financing activities


Proceeds from employee equity incentive and purchase plans	21,729		50,407
Payment of employee withholding taxes related to share-based awards	(33,776)		(23,784)

Repayments of long-term debt	(258,764)		(8,347)






Net cash (used in) provided by financing activities	(270,811)		18,276
Effect of exchange rates on cash and cash equivalents	(1,489)		(641)
Net (decrease) increase in cash and cash equivalents	(100,613)		1,039,764
Cash and cash equivalents, at beginning of period	591,448		1,057,769
Cash and cash equivalents, at end of period	$	490,835	$	2,097,533

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

JAZZ PHARMACEUTICALS PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. The Company and Summary of Significant Accounting Policies

Jazz Pharmaceuticals plc is a global biopharmaceutical company ~~dedicated~~whose purpose is to ~~developing and commercializing life-changing medicines that~~innovate to transform the lives of patients and their families. We are dedicated to developing life-changing medicines for people with serious diseases –- often with limited or no therapeutic options. We have a diverse portfolio of marketed medicines and novel product candidates, from early- to late-stage development, in ~~key~~neuroscience and oncology. Within these therapeutic ~~areas. Our focus is in neuroscience, including sleep medicine and movement disorders, and in oncology, including hematologic malignancies and solid tumors. We actively explore~~areas, we strive to identify new options for patients ~~including novel compounds,~~by actively exploring small molecules and biologics, and through innovative delivery ~~technologies.~~technologies and cannabinoid science.

Our lead marketed products are:

Neuroscience

•~~Xyrem® (sodium oxybate)~~Xywav® (calcium, magnesium, potassium, and sodium oxybates) oral solution, a product approved by the U.S. Food and Drug Administration, or FDA, ~~and marketed~~ in ~~the U.S. for the treatment of both cataplexy and excessive daytime sleepiness, or EDS, in narcolepsy patients seven years of age and older;~~

•~~Xywav™ (calcium, magnesium, potassium, and sodium oxybates) oral solution, a product that contains 92% less sodium than Xyrem, approved by FDA~~July 2020 and launched in the U.S. in November 2020 for the treatment of cataplexy or excessive daytime sleepiness, or EDS, in patients with narcolepsy aged seven years of age and older, and also approved by FDA in August 2021 for the treatment of idiopathic hypersomnia, or IH, in adults and launched in the U.S. in November 2021. Xywav contains 92% less sodium than Xyrem®;

•Xyrem (sodium oxybate) oral solution, a product approved by FDA and distributed in the U.S. for the treatment of both cataplexy and EDS in patients seven years of age and older with narcolepsy; Jazz also markets Xyrem in Canada for the treatment of cataplexy in patients with narcolepsy. Xyrem is also approved and distributed in the EU, Great Britain and other markets through a licensing agreement;

•Epidiolex® (cannabidiol) oral solution, a product approved by FDA and launched in the U.S. in 2018 by GW Pharmaceuticals plc, or GW, and currently indicated for the treatment of seizures associated with Lennox-Gastaut syndrome, or LGS, Dravet syndrome, or DS, or tuberous sclerosis complex, or TSC, in patients one year of age or older; in the EU (where it is marketed as Epidyolex®) and other markets, it is approved for adjunctive treatment of seizures associated with LGS or DS, in conjunction with clobazam (EU and Great Britain only), in patients 2 years of age and older and for adjunctive treatment of seizures associated with TSC in patients 2 years of age and older;

•~~Sunosi®~~Sunosi® (solriamfetol), a product approved by FDA and marketed in the U.S., Canada, EU and ~~in Europe~~Great Britain to improve wakefulness in adult patients with EDS associated with narcolepsy or obstructive sleep ~~apnea;~~apnea, or OSA; and

•~~Zepzelca™~~Sativex® (nabiximols) oral solution, a product approved and marketed in more than 25 markets outside the U.S. as treatment for symptom improvement in adult patients with moderate to severe spasticity due to multiple sclerosis, or MS, who have not responded adequately to other anti-spasticity medication and who demonstrate clinically significant improvement in spasticity-related symptoms during an initial trial of therapy.

Oncology

•Zepzelca® (lurbinectedin), a product approved by FDA in June 2020 and launched in the U.S. in July 2020 for the treatment of adult patients with metastatic small cell lung cancer, or SCLC, with disease progression on or after platinum-based chemotherapy; in Canada, Zepzelca was approved in September 2021 for the treatment of adults with Stage III or metastatic SCLC, who have progressed on or after platinum-containing therapy;

•Rylaze® (recombinant Erwinia asparaginase), a product approved by FDA in June 2021 and launched in the U.S. in July 2021 for use as a component of a multi-agent chemotherapeutic regimen for the treatment of acute lymphoblastic leukemia, or ALL, or lymphoblastic lymphoma, or LBL, in adults and pediatric patients who have developed hypersensitivity to E. coli-derived asparaginase;

•Vyxeos® (daunorubicin and cytarabine) liposome for injection, a product approved in the U.S., Canada, EU, Great Britain, and recently in ~~Europe (where it is marketed~~Switzerland (marketed as Vyxeos® liposomal ~~44 mg/100 mg powder for concentrate for solution for infusion)~~in the EU and Great Britain) for the treatment of adults with newly-diagnosed therapy-related acute myeloid leukemia, or ~~AML,~~t-AML, or AML with myelodysplasia-related ~~changes;~~changes (AML-MRC). An expanded indication was granted in the U.S. for the treatment of newly diagnosed t-AML or AML-MRC in pediatric patients aged 1 year and older; and

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•Defitelio® (defibrotide sodium), a product approved in the U.S. and Brazil for the treatment of ~~adult and pediatric patients with~~ hepatic veno-occlusive disease, or VOD, ~~also known as sinusoidal obstruction syndrome,~~ with renal or pulmonary dysfunction following hematopoietic stem cell transplantation, or HSCT, and in ~~Europe (where it~~Japan for the treatment of hepatic sinusoidal obstruction syndrome (hepatic-veno occlusive disease). It is ~~marketed as Defitelio® (defibrotide))~~currently approved in the EU, Great Britain and other markets for the treatment of severe hepatic VOD, also known as sinusoidal obstructive syndrome, or SOS, in HSCT therapy. It is indicated in adults and ~~children undergoing HSCT therapy; and~~

•~~Erwinaze® (asparaginase Erwinia chrysanthemi), a treatment approved in the U.S. and in certain markets in Europe (where it is marketed as Erwinase®) for~~pediatric patients ~~with acute lymphoblastic leukemia, or ALL, who have developed hypersensitivity to E. coli-derived asparaginase.~~over 1 month of age.

Throughout this report, unless otherwise indicated or the context otherwise requires, all references to “Jazz Pharmaceuticals,” “the registrant,” "the Company", “we,” “us,” and “our” refer to Jazz Pharmaceuticals plc and its consolidated subsidiaries. Throughout this report, all references to “ordinary shares” refer to Jazz Pharmaceuticals plc’s ordinary shares.

Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared following the requirements of the U.S. Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by U.S. generally accepted accounting principles, or U.S. GAAP, can be condensed or omitted. The information included in this Quarterly Report on Form 10‑Q should be read in conjunction with our annual consolidated financial statements and accompanying notes included in our Annual Report on Form ~~10-K~~10‑K for the year ended December 31, ~~2020.~~2021.

In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair presentation of our financial position and operating results. The results for the three months ended March 31, ~~2021~~2022 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2021,~~2022, for any other interim period or for any future period.

Our significant accounting policies have not changed substantially from those previously described in our Annual Report on Form ~~10-K~~10‑K for the year ended December 31, ~~2020.~~

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2021, other than as described below.

These condensed consolidated financial statements include the accounts of Jazz Pharmaceuticals plc and our subsidiaries, and intercompany transactions and balances have been eliminated.

Our operating segment is reported in a manner consistent with the internal reporting provided to the chief operating decision maker, or CODM. Our CODM has been identified as our chief executive officer. We have determined that we operate in 1 business segment, which is the identification, development and commercialization of meaningful pharmaceutical products that address unmet medical needs.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.

Adoption of New Accounting Standards

In ~~December 2019,~~August 2020, the Financial Accounting Standards Board, or FASB, issued ASU No. ~~2019-12, "Income Taxes (Topic 740)~~2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): ~~Simplifying the~~ Accounting for ~~Income Taxes"~~Convertible Instruments and Contracts in an Entity’s Own Equity”, ~~which~~or ASU 2020-06. ASU 2020-06 simplifies the accounting for ~~income taxes~~convertible instruments by ~~removing certain exceptions~~eliminating the requirement to separate embedded conversion features from the ~~general principles~~host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in ~~the existing guidance~~substantial premiums accounted for ~~income taxes and making other minor improvements. We~~as paid-in capital. The Company adopted ~~this standard~~ASU 2020-06 on January 1, ~~2021~~2022, on a modified retrospective basis. This impacted the accounting for our 1.50% exchangeable senior notes due 2024, or the 2024 Notes, and our 2.00% exchangeable senior notes due 2026, or the 2026 Notes, collectively known as the Exchangeable Senior Notes. As a result of the adoption ~~did not have~~of ASU 2020-06, the Exchangeable Senior Notes are now accounted for entirely as liabilities measured at amortized cost. ASU 2020-06 also removes certain settlement conditions that are required for contracts to qualify for equity classification and eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method.

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The adoption of ASU 2020-06 resulted in the following adjustments to the condensed consolidated balance sheet (in thousands):


Balance Sheet Item:	December 31, 2021		Adoption of ASU 2020-06		January 1, 2022
Deferred tax assets, net	$	311,103	$	109	$	311,212
Long-term debt, less current portion	6,018,943		206,159		6,225,102
Retained earnings	830,226		127,474		957,700
Additional paid-in capital	3,534,792		(333,524)		3,201,268

Interest expense on the Exchangeable Senior Notes will be lower as a ~~material impact on our consolidated financial statements.~~

~~Variable Interest Entit~~y

Inresult of adoption of this guidance. During the three months ended March 31, ~~2021, we invested in a cell~~2022 the effect of ~~a protected cell company, or the protected cell, as part of our directors’~~adoption reduced interest expense, net and ~~officers’ liability risk financing strategy. Based on our control~~increased net income by approximately $12 million and ~~the structure of the protected cell, we concluded that Jazz is the primary beneficiary of the protected cell~~increased basic and ~~is required to consolidate the protected cell. The insurance premium payable to the protected cell for~~diluted EPS by approximately $0.19 per share. For the three months ended March 31, ~~2021 and~~2022, the ~~protected cell’s assets and liabilities as~~Exchangeable Senior Notes were determined to be anti-dilutive. The adoption of ~~March 31, 2021 were immaterial.~~ASU 2020-06 did not impact our cash flows or compliance with debt covenants.

Significant Risks and Uncertainties

~~With the global impact of the COVID-19 pandemic, we~~We have ~~developed~~implemented a comprehensive response strategy ~~including establishing cross-functional response teams and implementing business continuity plans~~designed to manage the ongoing impact of the COVID-19 pandemic on our employees, patients and our business. ~~Since the second quarter of 2020, we have been experiencing financial and other impacts~~The prolonged nature of the pandemic is negatively impacting our business in a varied manner due to the emergence of the Delta and ~~given the global economic slowdown, the overall disruption of global healthcare systems~~Omicron variants and other variants with increased transmissibility, even in some cases in vaccinated people, limited access to health care provider offices and institutions and the ~~other risks~~willingness of patients or parents of patients to seek treatment. We believe these dynamics have negatively impacted new patient starts in the U.S. and ~~uncertainties associated with the pandemic, we~~Europe. We expect that our business, financial condition, results of operations and growth prospects ~~will~~may continue to be ~~adversely affected~~negatively impacted by the pandemic on a limited basis that may vary depending on the context. However we have begun to observe, and expect to continue to observe, a gradual normalization in ~~future quarters.~~ patient and health care provider practices, as providers and patients have adapted their behaviors and procedures to the evolving circumstances and as COVID-19 vaccines continue to be administered. With respect to our commercialization activities, ~~the evolving effects of the COVID-19 pandemic continue~~while there continues to ~~have a~~be some negative impact on demand, new patient starts and treatments for our products arising from the pandemic, primarily due to the inherent limitations of telemedicine and a reprioritization of healthcare resources toward ~~COVID-19.~~COVID-19, we have seen improvements as healthcare systems have adapted to cope with the ongoing situation. The extent of the impact on our ability to generate sales of ~~and revenues from our~~ approved products, execute on new product launches, our clinical development and regulatory efforts, our corporate development objectives and the value of and market for our ordinary shares, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration and severity of the pandemic, governmental “stay-at-home” orders and travel restrictions, quarantines, social distancing and business closure requirements in the U.S., Ireland and other countries, and the effectiveness of vaccination programs and other actions taken globally to contain and treat the disease.time.

Our business has been substantially dependent on Xyrem and while we expect that our business will continue to be substantially dependent on oxybate product sales from both Xyrem and Xywav, there is no guarantee that we can maintain oxybate ~~sales~~revenues at or near ~~historical~~current levels, or that oxybate ~~sales~~revenues will continue to grow. Our ability to maintain or increase oxybate ~~sales is~~revenues and realize the anticipated benefits from our investment in Xywav are subject to a number of risks and uncertainties including, without limitation, those related to the launch of Xywav for the treatment of idiopathic hypersomnia in adults and adoption in that indication; competition from the introduction of authorized generic and generic versions of sodium oxybate ~~and/or~~and new products for treatment of cataplexy and/or EDS in narcolepsy in the U.S. market and from other competitors; the current and potential impacts of the ~~ongoing~~ COVID-19 pandemic, including the current and expected future negative impact on demand for our ~~products and the uncertainty with respect to our ability to meet commercial demand in the future,~~products; increased pricing pressure from, changes in policies by, or restrictions on reimbursement imposed by, third party ~~payers,~~payors, including our ability to ~~obtain and~~ maintain adequate coverage and reimbursement for Xywav and Xyrem; increased rebates required to maintain access to our products; challenges to our intellectual property around Xywav and/or Xyrem, including pending antitrust and ~~Xywav,~~intellectual property litigation; and continued acceptance of Xywav and Xyrem by physicians and patients ~~and~~ ~~acceptance of Xywav by payers, physicians and patients.~~.

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In addition to risks related specifically to ~~Xyrem~~Xywav and ~~Xywav,~~Xyrem, we are subject to other challenges and risks related to successfully commercializing a portfolio of oncology products and other neuroscience products, ~~including Sunosi, Defitelio, Erwinaze, Vyxeos and Zepzelca,~~ and other risks specific to our business and our ability to execute on our strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry with development and commercial operations, including, without limitation, risks and uncertainties associated with: ongoing clinical research activity and related outcomes, obtaining regulatory approval of our late-stage product candidates; effectively commercializing our recently approved or acquired products such as ~~Sunosi,~~Epidiolex, Zepzelca and ~~Xywav;~~Rylaze; obtaining and maintaining adequate coverage and reimbursement for our products; contracting and rebates to pharmacy benefit managers that reduces our net revenue; increasing scrutiny of pharmaceutical product pricing and resulting changes in healthcare laws and policy; market acceptance; regulatory concerns with controlled substances generally and the potential for abuse; future legislation, action by the U.S. Drug Enforcement Administration, or DEA, or FDA action authorizing the sale, distribution, use, and insurance reimbursement of non-FDA approved cannabinoid products; delays or problems in the supply of

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our products, loss of single source suppliers or failure to comply with manufacturing regulations; delays or problems with third parties that are part of our manufacturing and supply chain; identifying, acquiring or in-licensing additional products or product candidates; pharmaceutical product development and the inherent uncertainty of clinical success; the challenges of protecting and enhancing our intellectual property rights; complying with applicable regulatory requirements; and possible restrictions on our ability and flexibility to pursue certain future opportunities as a result of our substantial outstanding debt obligations. In addition, the ~~pending acquisition~~success of the GW ~~Pharmaceuticals plc, or GW, may not be completed~~Acquisition will depend, in part, on our ability to realize the ~~currently contemplated timeline or terms, or at all,~~anticipated benefits from successfully combining our and ~~even if consummated,~~GW's historical businesses and the integration of our business practices and operations with GW's so that we can fully realize the anticipated benefits of the ~~pending acquisition~~acquisition. The anticipated benefits to us of the GW Acquisition may not be realized fully within the expected timeframe or at all or may take longer to realize or cost more than expected, which could materially and adversely affect our business, financial condition, results of operations and growth prospects. Moreover, to the extent the COVID-19 pandemic continues to adversely affect our business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties discussed above. We discuss many of these risks, uncertainties and other risk factors in greater detail under Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2020.

Concentrations of Risk

Financial instruments that potentially subject us to concentrations of credit risk consist of cash, cash equivalents, investments and derivative contracts. Our investment policy permits investments in U.S. federal government and federal agency securities, corporate bonds or commercial paper issued by U.S. corporations, money market instruments, certain qualifying money market mutual funds, certain repurchase agreements, and tax-exempt obligations of U.S. states, agencies and municipalities and places restrictions on credit ratings, maturities, and concentration by type and issuer. We are exposed to credit risk in the event of a default by the financial institutions holding our cash, cash equivalents and investments to the extent recorded on the balance sheet.

We manage our foreign currency transaction risk and interest rate risk within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and we do not use derivatives for speculative trading purposes. As of March 31, ~~2021,~~2022, we had foreign exchange forward contracts with notional amounts totaling ~~$425.1~~$610.1 million. As of March 31, ~~2021,~~2022, the outstanding foreign exchange forward contracts had a net liability fair value of ~~$10.7~~$4.7 million. As of March 31, 2021, we had interest rate swap contracts with notional amounts totaling $300.0 million. These outstanding interest rate swap contracts had a net liability fair value of $1.5 million as of March 31, 2021. The counterparties to these contracts are large multinational commercial banks, and we believe the risk of nonperformance is not significant.

We are also subject to credit risk from our accounts receivable related to our product sales. We monitor our exposure within accounts receivable and record a reserve against uncollectible accounts receivable as necessary. We extend credit to pharmaceutical wholesale distributors and specialty pharmaceutical distribution companies, primarily in the U.S., and to other international distributors and hospitals. Customer creditworthiness is monitored and collateral is not required. We monitor ~~deteriorating~~ economic conditions in certain European countries which may result in variability of the timing of cash receipts and an increase in the average length of time that it takes to collect accounts receivable outstanding. Historically, we have not experienced significant credit losses on our accounts receivable and as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, allowances on receivables were not material. As of March 31, ~~2021, two~~2022, three customers accounted for ~~81%~~74% of gross accounts receivable, Express Scripts Specialty Distribution Services, Inc. and its affiliates, or ESSDS, which accounted for ~~67%~~55% of gross accounts receivable, ~~and~~ McKesson Corporation and affiliates, or McKesson, which accounted for ~~14%~~10% of gross accounts receivable, and Cardinal Health, Inc., or Cardinal, which accounted for 9% of gross accounts receivable. As of December 31, ~~2020, two~~2021, three customers accounted for ~~80%~~74% of gross accounts receivable, ESSDS, which accounted for ~~68%~~52% of gross accounts receivable, McKesson, which accounted for 12% of gross accounts receivable, and ~~McKesson,~~Cardinal, which accounted for ~~12%~~10% of gross accounts receivable.

We depend on single source suppliers for most of our products, product candidates and their active pharmaceutical ingredients, or APIs. With respect to ~~Xyrem,~~our oxybate products, the API is manufactured for us by a single source supplier and the finished ~~product is~~products are manufactured both by us in our facility in Athlone, Ireland and by our U.S.-based ~~Xyrem~~ supplier.

Recent Accounting Pronouncements

In ~~August 2020,~~October 2021, the FASB issued ASU ~~No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40)~~2021-08, “Business Combinations (Topic 805): Accounting for ~~Convertible Instruments~~Contract Assets and Contract Liabilities from Contracts with Customers”, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The update will generally result in an ~~Entity’s Own Equity”, which simplifies~~entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the ~~accounting for convertible instruments by~~

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~~eliminating~~acquiree immediately before the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. By removing the separation model, a convertible debt instrument will be reported as a single liability instrument with no separate accounting for embedded conversion features. Thisacquisition date rather than at fair value. The new standard also removes certain settlement conditions that are required for contracts to qualify for equity classification and eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. This new standard will beis effective ~~for us~~on a prospective basis for fiscal years beginning after December 15, ~~2021, including interim periods within those fiscal years. Early~~2022, with early adoption permitted. The new guidance is ~~permitted, but no earlier than the fiscal year beginning after December 15, 2020. We may elect~~not expected to ~~apply the amendments on~~have a ~~retrospective or modified retrospective basis. We are currently evaluating the timing, method of adoption and overall~~material impact ~~of this standard~~ on our ~~consolidated~~results of operations, financial ~~statements.~~position, or cash flows.

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2. ~~Acquisition Agreement~~

~~GW Transaction Agreement~~

On February 3, 2021, we announced that we have entered into a definitive transaction agreement, or the GW Transaction Agreement, with GW under which a wholly-owned subsidiary of ours, Jazz Pharmaceuticals UK Holdings Limited,or Acquisition Sub, agreed to acquire GW. The GW Transaction Agreement provides, among other things, that subject to the satisfaction or waiver of the conditions set forth in the GW Transaction Agreement, Acquisition Sub will acquire the entire issued share capital of GW pursuant to a scheme of arrangement under Part 26 of the United Kingdom Companies Act 2006, or Scheme of Arrangement, which we refer to as the GW Acquisition.

Under the GW Transaction Agreement, at the effective time of the Scheme of Arrangement, all GW ordinary shares issued and outstanding will be transferred to Acquisition Sub, and the holders of GW ordinary shares will have the right to receive, for each such share, (a) $16.662⁄3 ~~in cash and (b) an amount of our ordinary shares determined based on the exchange ratio, which exchange ratio will be determined as follows:~~

•If the volume-weighted weighted average sales price of our ordinary shares, as determined in accordance with the GW Transaction Agreement, or the Defined VWAP, is greater than $139.72 but less than $170.76, the exchange ratio will be an amount equal to the quotient obtained by dividing (x) $1.662⁄3 ~~by (y) the Defined VWAP;~~

•~~If the Defined VWAP is equal to or less than $139.72, the exchange ratio will be 0.011929; or~~

•~~If the Defined VWAP is an amount equal to or greater than $170.76, the exchange ratio will be 0.009760.~~

Because each American Depositary Share in GW, or GW ADSs, represents a beneficial interest in 12 GW ordinary shares, holders of GW ADSs will be entitled to receive 12 times the foregoing cash and share amounts, or (1) $200.00 in cash and (2) $20.00 in the form of our ordinary shares with the actual number of our ordinary shares being determined based on the exchange ratio set out above. The total consideration to be paid by us for the entire issued share capital of GW is approximately $7.2 billion.

~~The~~ ~~GW Transaction Agreement~~ ~~contains customary representations and warranties~~ ~~given by GW and us, covenants regarding the conduct of~~ GW~~’s business prior to the consummation of the GW Acquisition, termination rights and other customary provisions.~~ ~~The GW Acquisition is expected to close in the first half of May 2021, subject to the satisfaction or waiver of the conditions set forth in the GW Transaction Agreement.~~

3. Cash and Available-for-Sale Securities

Cash and cash equivalents ~~and investments~~ consisted of the following (in thousands):


		March 31, 2021													March 31, 2022
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cash and Cash Equivalents		Investments			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cash and Cash Equivalents
Cash	Cash	$	851,856	$	0	$	0	$	851,856	$	851,856	$	0	Cash	$	410,125	$	—	$	—	$	410,125	$	410,125
Time deposits		1,295,000		0		0		1,295,000		960,000		335,000

Money market funds	Money market funds	285,677		0		0		285,677		285,677		0		Money market funds	80,710		—		—		80,710		80,710
Totals	Totals	$	2,432,533	$	0	$	0	$	2,432,533	$	2,097,533	$	335,000	Totals	$	490,835	$	—	$	—	$	490,835	$	490,835

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		December 31, 2020													December 31, 2021
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cash and Cash Equivalents		Investments			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Cash and Cash Equivalents
Cash	Cash	$	517,117	$	0	$	0	$	517,117	$	517,117	$	0	Cash	$	510,747	$	—	$	—	$	510,747	$	510,747
Time deposits		1,360,000		0		0		1,360,000		285,000		1,075,000

Money market funds	Money market funds	255,652		0		0		255,652		255,652		0		Money market funds	80,701		—		—		80,701		80,701
Totals	Totals	$	2,132,769	$	0	$	0	$	2,132,769	$	1,057,769	$	1,075,000	Totals	$	591,448	$	—	$	—	$	591,448	$	591,448

Cash equivalents ~~and investments~~ are considered available-for-sale securities. We use the specific-identification method for calculating realized gains and losses on securities sold and include them in interest expense, net in the condensed consolidated statements of ~~income (loss). Our investment balances represent time deposits with original maturities of greater than three months and less than one year.~~income. Interest income from available-for-sale securities was ~~$1.2~~$0.2 million and ~~$4.4~~$1.2 million in the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

4.3. Fair Value Measurement

The following table summarizes, by major security type, our available-for-sale securities and derivative contracts as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 that were measured at fair value on a recurring basis and were categorized using the fair value hierarchy (in thousands):


		March 31, 2021				December 31, 2020						March 31, 2022						December 31, 2021
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Total Estimated Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total Estimated Fair Value
Assets:	Assets:														Assets:
Available-for-sale securities:	Available-for-sale securities:														Available-for-sale securities:
Time deposits		$	0	$	1,295,000	$	1,295,000	$	0	$	1,360,000		$	1,360,000
Money market funds	Money market funds	285,677		0		285,677		255,652		0			255,652		Money market funds	$	80,710	$	—	$	80,710	$	80,701	$	—	$	80,701

Foreign exchange forward contracts	Foreign exchange forward contracts	0		488		488		0		11,907			11,907		Foreign exchange forward contracts	—		3,712		3,712		—		580		580
Totals	Totals	$	285,677	$	1,295,488	$	1,581,165	$	255,652	$	1,371,907		$	1,627,559	Totals	$	80,710	$	3,712	$	84,422	$	80,701	$	580	$	81,281
Liabilities:	Liabilities:														Liabilities:
Interest rate contracts		$	0	$	1,527	$	1,527	$	0	$	2,835		$	2,835
Cross-currency interest rate contracts															Cross-currency interest rate contracts	$	—	$	—	$	—	$	—	$	15,232	$	15,232
Foreign exchange forward contracts	Foreign exchange forward contracts	0		11,149		11,149		0		790			790		Foreign exchange forward contracts	—		8,418		8,418		—		3,187		3,187

Totals	Totals	$	0	$	12,676	$	12,676	$	0	$	3,625		$	3,625	Totals	$	—	$	8,418	$	8,418	$	—	$	18,419	$	18,419

As of March 31, ~~2021,~~2022, our available-for-sale securities included ~~time deposits and~~ money market funds and their carrying values were approximately equal to their fair values. ~~Time deposits were measured at fair value using Level 2 inputs and money~~Money market funds were measured using quoted prices in active markets, which represent Level 1 inputs. Level 2 inputs, obtained from various third party data providers, represent quoted prices for similar assets in active markets, or these inputs were derived from observable market data, or if not directly observable, were derived from or corroborated by other observable market data.

Our derivative assets and liabilities include ~~interest rate and~~ foreign exchange derivatives that are measured at fair value using observable market inputs such as forward rates ~~interest rates, our own credit risk as well as an evaluation of our counterparties’ credit risks. Based~~and based on these inputs, the derivative assets and liabilities are classified within Level 2 of the fair value hierarchy. The cross-currency interest rate swap contract matured on March 31, 2022.

There were no transfers between the different levels of the fair value hierarchy in ~~2021~~2022 or ~~2020.~~2021.

As of March 31, 2022 and December 31, 2021, the carrying amount of investments measured using the measurement alternative for equity investments without a readily determinable fair value was ~~$4.5~~$5.0 million. The carrying amount, which is recorded within other non-current assets, ~~represents~~is based on the ~~purchase price paid in 2018.~~latest observable transaction price.

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As of March 31, ~~2021,~~2022, the estimated fair values of ~~our 1.875% exchangeable senior notes due 2021, or the 2021 Notes, our 1.50% exchangeable senior notes due 2024, or~~ the 2024 Notes, ~~and our 2.00% exchangeable senior notes due 2026, or~~ the 2026 Notes, the 4.375% senior secured notes, due 2029, or the Secured Notes, and the seven-year $3.1 billion term loan B facility, or the Dollar Term Loan, were approximately ~~$224~~$594 million, ~~$625 million~~$1.2 billion, $1.5 billion and ~~$1.3~~$3.1 billion respectively. The fair values of ~~the 2021 Notes, the 2024 Notes and the 2026 Notes, which we refer to collectively as the Exchangeable Senior Notes, were~~each of these debt facilities was estimated using quoted market prices obtained from brokers (Level 2).

As of March 31, 2022, assets measured at fair value on a non-recurring basis subsequent to initial recognition included assets classified as held for sale on the condensed consolidated balance sheet. These assets related to an asset purchase agreement with Axsome Therapeutics, or Axsome, pursuant to which Axsome will purchase certain assets related to Sunosi. Refer to Note 15, Assets Held for Sale, for additional information. The carrying amount of $90.9 million for assets held for sale is equal to estimated fair value, ~~of our borrowing under our term loan was approximately equal to its book value~~which is based on the ~~borrowing rates currently available for variable rate loans (Level 2).~~sales price agreed less costs to sell, and represents a Level 3 input.

5.4. Derivative Instruments and Hedging Activities

We are exposed to certain risks arising from operating internationally, including fluctuations in ~~interest rates on our outstanding term loan borrowings and fluctuations in~~ foreign exchange rates primarily related to the translation of sterling and euro-denominated net monetary liabilities, including intercompany balances, held by subsidiaries with a U.S. dollar functional currency. We manage these exposures within specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and we do not use derivatives for speculative trading purposes.

~~To achieve a desired mix of floating and fixed interest rates on~~In order to hedge our ~~variable rate debt,~~exposure to foreign currency exchange risk associated with our Euro Term Loan, we entered into a cross-currency interest rate swap ~~agreements~~contract in ~~March 2017~~May 2021, which ~~are effective until July 2021. These agreements hedge contractual term loan interest rates. As of~~matured on March 31, ~~2021~~2022. The terms of this contract converted the principal repayments and ~~December 31, 2020,~~interest payments on the ~~interest rate swap agreements had a notional~~Euro Term Loan into U.S. dollars. The carrying amount of ~~$300.0 million. As a result of these agreements,~~ the ~~interest rate on a portion of our term loan borrowings was fixed at 1.895%, plus the borrowing spread, until July 12, 2021.~~

~~The effective portion of changes in~~Euro Term Loan and the fair value of ~~derivatives designated as, and that qualify as, cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into earnings~~the cross-currency interest rate swap contract were remeasured on a monthly basis, with changes in the ~~period that~~euro to U.S. dollar foreign exchange rates recognized within foreign exchange gain (loss) in the ~~hedged forecasted transaction affects earnings.~~ condensed consolidated statements of income.

The impact on accumulated other comprehensive income (loss) and earnings from ~~derivative instruments that qualified as cash flow hedges for~~ the ~~three months ended March 31, 2021 and 2020~~cross-currency interest rate swap contract was as follows (in thousands):

Three Months Ended
March 31,
Interest Rate Contracts: 2021 2020
Loss recognized in accumulated other comprehensive loss, net of tax $ (16) $ (4,200)
Loss reclassified from accumulated other comprehensive loss to interest expense, net of tax 1,160 147

Assuming no change in London Inter-Bank Offered Rate, or LIBOR, based interest rates from market rates as of March 31, 2021, $1.3 million of losses, net of tax, recognized in accumulated other comprehensive loss will be reclassified to earnings over the next 12 months.



Cross-Currency Interest Rate Contract:	Three Months Ended March 31, 2022

Loss reclassified from accumulated other comprehensive income (loss) to foreign exchange gain (loss), net of tax	$	128
Loss recognized in foreign exchange gain (loss)	(2,646)

We also enter into foreign exchange forward contracts, with durations of up to 12 months, designed to limit the exposure to fluctuations in foreign exchange rates related to the translation of certain non-U.S. dollar denominated liabilities, including intercompany balances. Hedge accounting is not applied to these derivative instruments as gains and losses on these hedge transactions are designed to offset gains and losses on underlying balance sheet exposures. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the notional amount of foreign exchange contracts where hedge accounting is not applied was ~~$425.1~~$610.1 million and ~~$357.4~~$347.2 million, respectively.

The foreign exchange gain (loss) in our condensed consolidated statements of income ~~(loss)~~ included the following losses associated with foreign exchange contracts not designated as hedging instruments (in thousands):


		Three Months Ended March 31,				Three Months Ended March 31,
Foreign Exchange Forward Contracts:	Foreign Exchange Forward Contracts:	2021		2020			Foreign Exchange Forward Contracts:	2022		2021
Loss recognized in foreign exchange gain (loss)	Loss recognized in foreign exchange gain (loss)	$	(13,050)	$	(6,139)		Loss recognized in foreign exchange gain (loss)	$	(21,025)	$	(13,050)

The cash flow effects of our derivative contracts for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 are included within net cash provided by operating activities in the condensed consolidated statements of cash ~~flows.~~flows, except for the settlement of notional amounts of the cross-currency interest rate contract, which are included in net cash provided by (used in) financing activities.

To achieve a desired mix of floating and fixed interest rates on our variable rate debt, we entered into interest rate swap agreements in March 2017. In May 2021, we repaid the term loan to which these interest rate swap agreements related, at which point the interest rate swap contracts were de-designated as cash flow hedges. The interest rate swap agreements matured in July 2021.

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The impact on accumulated other comprehensive income (loss) and earnings from interest rate swap contracts for the three months ended March 31, 2021 was as follows (in thousands):



Interest Rate Contracts:	Three Months Ended March 31, 2021
Loss recognized in accumulated other comprehensive income (loss), net of tax	$	(16)
Loss reclassified from accumulated other comprehensive income (loss) to interest expense, net of tax	1,160

The following tables summarize the fair value of outstanding derivatives (in thousands):

March 31, 2021
Asset Derivatives Liability Derivatives
Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Derivatives designated as hedging instruments:
Interest rate contracts Other current assets $ 0 Accrued liabilities $ 1,527
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts Other current assets 488 Accrued liabilities 11,149
Total fair value of derivative instruments $ 488 $ 12,676

December 31, 2020

Classification

March 31,
2022

December 31,
2021

Asset Derivatives

Liability Derivatives

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate contracts

Other current assets

Accrued liabilities

2,835

Assets

Derivatives not designated as hedging instruments:

Foreign exchange forward contracts

Other current assets

11,907

Accrued liabilities

790

Foreign exchange forward contracts

Other current assets

3,712

580

Total fair value of derivative instruments

11,907

3,625

Liabilities

Derivatives not designated as hedging instruments:

Foreign exchange forward contracts

Accrued liabilities

8,418

3,187

Derivatives designated as hedging instruments:

Cross-currency interest rate contract

Accrued liabilities

—

15,232

Total fair value of derivative liability instruments

8,418

18,419

Although we do not offset derivative assets and liabilities within our condensed consolidated balance sheets, our International Swap and Derivatives Association agreements provide for net settlement of transactions that are due to or from the same counterparty upon early termination of the agreement due to an event of default or other termination event. The following tables summarize the potential effect on our condensed consolidated balance sheets of offsetting our cross-currency interest rate contracts and foreign exchange forward contracts subject to such provisions (in thousands):


		March 31, 2021																	March 31, 2022
		Gross Amounts of Recognized Assets/ Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet			Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet			Gross Amounts Not Offset in the Consolidated Balance Sheet									Gross Amounts of Recognized Assets/ Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet			Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet		Gross Amounts Not Offset in the Consolidated Balance Sheet
Description	Description							Derivative Financial Instruments			Cash Collateral Received (Pledged)			Net Amount		Description							Derivative Financial Instruments			Cash Collateral Received (Pledged)		Net Amount
Derivative assets	Derivative assets	$	488		$	0		$	488		$	(488)		$	0		$	0		Derivative assets	$	3,712		$	—	$	3,712	$	(3,100)	$	—	$	612
Derivative liabilities	Derivative liabilities	(12,676)		0			(12,676)			488			0			(12,188)	Derivative liabilities		(8,418)		—			(8,418)		3,100		—		(5,318)


		December 31, 2020																	December 31, 2021
		Gross Amounts of Recognized Assets/ Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet			Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet			Gross Amounts Not Offset in the Consolidated Balance Sheet									Gross Amounts of Recognized Assets/ Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet			Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet		Gross Amounts Not Offset in the Consolidated Balance Sheet
Description	Description							Derivative Financial Instruments			Cash Collateral Received (Pledged)			Net Amount		Description							Derivative Financial Instruments			Cash Collateral Received (Pledged)		Net Amount
Derivative assets	Derivative assets	$	11,907		$	0		$	11,907		$	(2,207)		$	0		$	9,700		Derivative assets	$	580		$	—	$	580	$	(567)	$	—	$	13
Derivative liabilities	Derivative liabilities	(3,625)		0			(3,625)			2,207			0			(1,418)	Derivative liabilities		(18,419)		—			(18,419)		567		—		(17,852)

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6.5. Inventories

Inventories consisted of the following (in thousands):


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Raw materials	Raw materials	$	23,415	$	16,003	Raw materials	$	26,335	$	21,550
Work in process	Work in process	52,117		45,758		Work in process	775,804		886,849
Finished goods	Finished goods	39,943		33,635		Finished goods	183,315		164,322
Total inventories	Total inventories	$	115,475	$	95,396	Total inventories	$	985,454	$	1,072,721

As of March 31, 2022 and December 31, 2021 inventories included $727.4 million and $811.3 million, respectively, related to the purchase accounting inventory fair value step-up on inventory acquired in the GW Acquisition.

7.6. Goodwill and Intangible Assets

The gross carrying amount of goodwill was as follows (in thousands):


Balance at December 31, ~~2020~~2021	$	~~958,303~~1,827,609

Goodwill allocated to assets held for sale (1)	(12,927)
Foreign exchange	~~(19,905)~~(32,238)
Balance at March 31, ~~2021~~2022	$	~~938,398~~1,782,444

________________________

(1) In March 2022, we entered into a definitive agreement to divest Sunosi to Axsome. See Note 15 for further information relating to this transaction.

The gross carrying amounts and net book values of our intangible assets were as follows (in thousands):


		March 31, 2021							December 31, 2020							March 31, 2022							December 31, 2021
		Remaining Weighted- Average Useful Life (In years)	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value			Remaining Weighted- Average Useful Life (In years)	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Acquired developed technologies	Acquired developed technologies	12.5	$	3,326,448	$	(1,218,402)	$	2,108,046	$	3,379,162	$	(1,184,111)	$	2,195,051	Acquired developed technologies	11.2	$	7,948,903	$	(1,316,734)	$	6,632,169	$	8,195,675	$	(1,198,333)	$	6,997,342
Manufacturing contracts	Manufacturing contracts	—	12,551		(12,551)		0		13,135		(13,135)		0		Manufacturing contracts	—	11,883		(11,883)		—		12,124		(12,124)		—
Trademarks	Trademarks	—	2,903		(2,903)		0		2,917		(2,917)		0		Trademarks	—	2,887		(2,887)		—		2,893		(2,893)		—

Total finite-lived intangible assets															Total finite-lived intangible assets		7,963,673		(1,331,504)		6,632,169		8,210,692		(1,213,350)		6,997,342
Acquired in-process research and development assets															Acquired in-process research and development assets		150,888		—		150,888		154,986		—		154,986
Total intangible assets	Total intangible assets		$	3,341,902	$	(1,233,856)	$	2,108,046	$	3,395,214	$	(1,200,163)	$	2,195,051	Total intangible assets		$	8,114,561	$	(1,331,504)	$	6,783,057	$	8,365,678	$	(1,213,350)	$	7,152,328

The decrease in the gross carrying amount of intangible assets as of March 31, ~~2021~~2022 compared to December 31, ~~2020~~2021 primarily reflects the reclassification of the Sunosi intangible asset to assets held for sale as a result of the execution of the definitive agreement to divest Sunosi to Axsome in March 2022, partially offset by the negative impact of foreign currency translation adjustments due to the weakening of ~~the~~sterling and euro against the U.S. dollar.

The assumptions and estimates used to determine future cash flows and remaining useful lives of our intangible and other long-lived assets are complex and subjective. They can be affected by various factors, including external factors, such as industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for specific product lines.

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Based on finite-lived intangible assets recorded as of March 31, ~~2021,~~2022, and assuming the underlying assets will not be impaired and that we will not change the expected lives of the assets, future amortization expenses were estimated as follows (in thousands):


Year Ending December 31,	Year Ending December 31,	Estimated Amortization Expense		Year Ending December 31,	Estimated Amortization Expense
2021 (remainder)		$	152,570
2022		172,486
2022 (remainder)				2022 (remainder)	$	455,447
2023	2023	172,486		2023	607,262
2024	2024	172,486		2024	607,262
2025	2025	172,486		2025	607,262
2026				2026	607,262
Thereafter	Thereafter	1,265,532		Thereafter	3,747,674
Total	Total	$	2,108,046	Total	$	6,632,169

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8.7. Certain Balance Sheet Items

Property, plant and equipment consisted of the following (in thousands):


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Construction-in-progress						Construction-in-progress	$	88,111	$	86,511
Manufacturing equipment and machinery						Manufacturing equipment and machinery	72,387		69,079
Leasehold improvements	Leasehold improvements	$	54,155	$	54,113	Leasehold improvements	65,425		66,318
Land and buildings	Land and buildings	47,440		47,555		Land and buildings	63,562		64,008
Manufacturing equipment and machinery		33,096		33,465
Computer software	Computer software	24,479		22,781		Computer software	29,604		25,646
Computer equipment	Computer equipment	16,785		18,749		Computer equipment	20,937		16,234
Furniture and fixtures	Furniture and fixtures	11,641		11,598		Furniture and fixtures	10,302		14,412
Construction-in-progress		6,256		7,262

Subtotal	Subtotal	193,852		195,523		Subtotal	350,328		342,208
Less accumulated depreciation and amortization	Less accumulated depreciation and amortization	(69,989)		(67,588)		Less accumulated depreciation and amortization	(92,696)		(85,371)
Property, plant and equipment, net	Property, plant and equipment, net	$	123,863	$	127,935	Property, plant and equipment, net	$	257,632	$	256,837

Other current assets consisted of the following (in thousands):


	March 31, 2022		December 31, 2021
Deferred charge for income taxes on intercompany profit	$	205,233	$	203,480
Other	38,655		48,912
Total other current assets	$	243,888	$	252,392

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Accrued liabilities consisted of the following (in thousands):


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Rebates and other sales deductions	Rebates and other sales deductions	$	137,337	$	127,534	Rebates and other sales deductions	$	258,649	$	215,397
Employee compensation and benefits	Employee compensation and benefits	81,155		102,601		Employee compensation and benefits	126,479		158,870
Sales returns reserve		20,278		18,368
Royalties		17,824		15,230
Consulting and professional services		14,201		6,660
Current portion of operating lease liabilities		14,048		14,457
Derivative instrument liabilities		12,676		3,625
Inventory-related accruals		11,199		9,809
Clinical trial accruals	Clinical trial accruals	10,722		9,108		Clinical trial accruals	27,741		25,612
Accrued interest	Accrued interest	7,539		5,722		Accrued interest	21,228		48,640
Accrued royalties						Accrued royalties	19,441		20,345
Sales return reserve						Sales return reserve	18,749		15,814
Inventory-related accruals						Inventory-related accruals	18,708		16,166
Consulting and professional services						Consulting and professional services	17,527		22,507
Current portion of lease liabilities						Current portion of lease liabilities	16,155		15,763
Selling and marketing accruals	Selling and marketing accruals	7,304		6,742		Selling and marketing accruals	14,666		21,566
Accrued collaboration expenses		4,918		444
Derivative instrument liabilities						Derivative instrument liabilities	8,418		18,419
Accrued construction-in-progress	Accrued construction-in-progress	835		1,119		Accrued construction-in-progress	3,978		2,894

Accrued milestones						Accrued milestones	—		25,000
Other	Other	33,999		31,313		Other	52,971		59,311
Total accrued liabilities	Total accrued liabilities	$	374,035	$	352,732	Total accrued liabilities	$	604,710	$	666,304

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9.8. Debt

The following table summarizes the carrying amount of our indebtedness (in thousands):


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
2021 Notes		$	218,812	$	218,812
Unamortized discount and debt issuance costs on 2021 Notes		(3,592)		(5,883)
2021 Notes, net		215,220		212,929

2024 Notes	2024 Notes	575,000		575,000		2024 Notes	$	575,000	$	575,000
Unamortized discount and debt issuance costs on 2024 Notes		(89,519)		(95,275)
Unamortized - debt issuance costs						Unamortized - debt issuance costs	(4,023)		(4,401)
Unamortized discount - equity component						Unamortized discount - equity component	—		(66,836)
2024 Notes, net	2024 Notes, net	485,481		479,725		2024 Notes, net	570,977		503,763

2026 Notes	2026 Notes	1,000,000		1,000,000		2026 Notes	1,000,000		1,000,000
Unamortized discount and debt issuance costs on 2026 Notes		(172,678)		(179,518)
Unamortized - debt issuance costs						Unamortized - debt issuance costs	(10,879)		(11,407)
Unamortized discount - equity component						Unamortized discount - equity component	—		(139,323)
2026 Notes, net	2026 Notes, net	827,322		820,482		2026 Notes, net	989,121		849,270

Term loan		573,623		581,702
Secured Notes						Secured Notes	1,474,346		1,473,810

Term Loan (1)						Term Loan (1)	2,989,424		3,223,100

Total debt	Total debt	2,101,646		2,094,838		Total debt	6,023,868		6,049,943
Less current portion	Less current portion	248,613		246,322		Less current portion	31,000		31,000
Total long-term debt	Total long-term debt	$	1,853,033	$	1,848,516	Total long-term debt	$	5,992,868	$	6,018,943

________________________

(1) In May 2021, we entered into a credit agreement that provided for (i) the Dollar Term Loan, (ii) a seven-year $625.0 million term loan B facility, or the Euro Term Loan, together with the Dollar Term Loan, collectively known as the Term Loan and (iii) a five-year $500.0 million revolving credit facility. In 2021 we made voluntary prepayments on the Euro Term Loan totaling €416.7 million, or $502.0 million, and in March 2022 we repaid the remaining outstanding principal of €208.3 million, or $251.0 million.

Exchangeable Senior Notes Due 2026

In 2020 we completed a private placement of $1.0 billion principal amount of the 2026 Notes. Interest on the 2026 Notes is payable semi-annually in cash in arrears on June 15 and December 15 of each year, beginning on December 15, 2020, at a rate of 2.00% per year. In certain circumstances, we may be required to pay additional amounts as a result of any applicable tax

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withholding or deductions required in respect of payments on the 2026 Notes. The 2026 Notes mature on June 15, 2026, unless earlier exchanged, repurchased or redeemed.

The holders of the 2026 Notes have the ability to require us to repurchase all or a portion of their 2026 Notes for cash in the event we undergo certain fundamental changes, such as specified change of control transactions, our liquidation or dissolution or the delisting of our ordinary shares from any of The New York Stock Exchange, The Nasdaq Global Market, The Nasdaq Global Select Market or The Nasdaq Capital Market (or any of their respective successors). Additionally, the terms and covenants in the indenture related to the 2026 Notes include certain events of default after which the 2026 Notes may be due and payable immediately. Prior to June 15, 2026, we may redeem the 2026 Notes, in whole but not in part, subject to compliance with certain conditions, if we have, or on the next interest payment date would, become obligated to pay to the holder of any 2026 Notes additional amounts as a result of certain tax-related events. We also may redeem the 2026 Notes on or after June 20, 2023 and prior to March 15, 2026, in whole or in part, if the last reported sale price per ordinary share has been at least 130% of the exchange price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide the notice of redemption.

The 2026 Notes are exchangeable at an initial exchange rate of 6.4182 ordinary shares per $1,000 principal amount of 2026 Notes, which is equivalent to an initial exchange price of approximately $155.81 per ordinary share. Upon exchange, the 2026 Notes may be settled in cash, ordinary shares or a combination of cash and ordinary shares, at our election. Our intent and policy is to settle the principal amount of the 2026 Notes in cash upon exchange. The exchange rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain make-whole fundamental changes occurring prior to the maturity date of the 2026 Notes or upon our issuance of a notice of redemption, we will in certain circumstances increase the exchange rate for holders of the 2026 Notes who elect to exchange their 2026 Notes in connection with that make-whole fundamental change or during the related redemption period. Prior to March 15, 2026, the 2026 Notes will be exchangeable only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

Following the adoption of ASU 2020-06, the 2026 Notes are accounted for as a single liability measured at its amortized cost. The total liability is reflected net of issuance costs of $15.3 million which will be amortized over the term of the 2026 Notes. The effective interest rate of the 2026 Notes is 2.26%. During the three months ended March 31, 2022, we recognized interest expense of $5.5 million, of which $5.0 million related to the contractual coupon rate and $0.5 million related to the amortization of debt issuance costs. Please see Note 1 for further information on the adoption of ASU 2020-06.

Exchangeable Senior Notes Due 2024

In 2017, we completed a private placement of $575.0 million principal amount of 2024 Notes. Interest on the 2024 Notes is payable semi-annually in cash in arrears on February 15 and August 15 of each year, beginning on February 15, 2018, at a rate of 1.50% per year. In certain circumstances, we may be required to pay additional amounts as a result of any applicable tax withholding or deductions required in respect of payments on the 2024 Notes. The 2024 Notes mature on August 15, 2024, unless earlier exchanged, repurchased or redeemed.

The holders of the 2024 Notes have the ability to require us to repurchase all or a portion of their 2024 Notes for cash in the event we undergo certain fundamental changes, such as specified change of control transactions, our liquidation or dissolution or the delisting of our ordinary shares from The Nasdaq Global Select Market. Prior to August 15, 2024, we may redeem the 2024 Notes, in whole but not in part, subject to compliance with certain conditions, if we have, or on the next interest payment date would, become obligated to pay to the holder of any 2024 Notes additional amounts as a result of certain tax-related events. We also may redeem the 2024 Notes on or after August 20, 2021, in whole or in part, if the last reported sale price per ordinary share has been at least 130% of the exchange price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide the notice of redemption.

The 2024 Notes are exchangeable at an initial exchange rate of 4.5659 ordinary shares per $1,000 principal amount of 2024 Notes, which is equivalent to an initial exchange price of approximately $219.02 per ordinary share. Upon exchange, the 2024 Notes may be settled in cash, ordinary shares or a combination of cash and ordinary shares, at our election. Our intent and policy is to settle the principal amount of the 2024 Notes in cash upon exchange. The exchange rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain make-whole fundamental changes occurring prior to the maturity date of the 2024 Notes or upon our issuance of a notice of redemption, we will in certain circumstances increase the exchange rate for holders of the 2024 Notes who elect to exchange their 2024 Notes in connection with that make-whole fundamental change or during the related redemption period. Prior to May 15, 2024, the 2024 Notes will be exchangeable only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

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Following adoption of ASU 2020-06, the 2024 Notes are accounted for as a single liability measured at its amortized cost. The total liability is reflected net of issuance costs of $11.4 million which will be amortized over the term of the 2024 Notes. The effective interest rate of the 2024 Notes is 1.79%. During the three months ended March 31, 2022, we recognized interest expense of $2.5 million, of which $2.1 million related to the contractual coupon rate and $0.4 million related to the amortization of debt issuance costs. Please see Note 1 for further information on the adoption of ASU 2020-06.

The Exchangeable Senior Notes were issued by Jazz Investments I Limited, or the Issuer, a 100%-owned finance subsidiary of Jazz Pharmaceuticals plc. The Exchangeable Senior Notes are senior unsecured obligations of the Issuer and are fully and unconditionally guaranteed on a senior unsecured basis by Jazz Pharmaceuticals plc. No subsidiary of Jazz Pharmaceuticals plc guaranteed the Exchangeable Senior Notes. Subject to certain local law restrictions on payment of dividends, among other things, and potential negative tax consequences, we are not aware of any significant restrictions on the ability of Jazz Pharmaceuticals plc to obtain funds from the Issuer or Jazz Pharmaceuticals plc’s other subsidiaries by dividend or loan, or any legal or economic restrictions on the ability of the Issuer or Jazz Pharmaceuticals plc’s other subsidiaries to transfer funds to Jazz Pharmaceuticals plc in the form of cash dividends, loans or advances. There is no assurance that in the future such restrictions will not be adopted.

As of March 31, 2021, the carrying values of the equity component of the 2021 Notes, 2024 Notes and the 2026 Notes, net of equity issuance costs, were $114.4 million, $149.8 million and $176.3 million, respectively.

Maturities

Scheduled maturities with respect to our long-term debt principal balances outstanding as of March 31, ~~2021~~2022 were as follows (in thousands):

Year Ending December 31, Scheduled Long-Term Debt Maturities
2021 (remainder) $ 243,852
2022 33,387
2023 517,494
2024 575,000
2025 0
Thereafter 1,000,000
Total $ 2,369,733

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~~10. Leases~~

~~The components of the lease expense for the three months ended March 31, 2021 and 2020 were as follows (in thousands):~~

Three Months Ended
March 31,
Lease Cost 2021 2020
Operating lease cost $ 5,546 $ 5,290
Short-term lease cost 1,375 870
Variable lease cost 1 1
Sublease income 0 (157)
Net lease cost $ 6,922 $ 6,004

~~Supplemental balance sheet information related to operating leases was as follows (in thousands):~~

Leases Classification March 31,
2021 December 31,
2020
Assets
Operating lease assets Operating lease assets $ 125,738 $ 129,169
Liabilities
Current
Operating lease liabilities Accrued liabilities 14,048 14,457
Non-current
Operating lease liabilities Operating lease liabilities, less current portion 136,020 140,035
Total operating lease liabilities $ 150,068 $ 154,492

Lease Term and Discount Rate March 31,
2021 December 31,
2020
Weighted-average remaining lease term - operating leases (years) 8.6 8.7
Weighted-average discount rate - operating leases 5.3 % 5.3 %

~~Supplemental cash flow information related to operating leases was as follows (in thousands):~~

Three Months Ended
March 31,
2021 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases $ 6,293 $ 6,215
Non-cash operating activities:
Operating lease assets obtained in exchange for new operating lease liabilities $ 375 $ 201

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~~Maturities of operating lease liabilities were as follows (in thousands):~~


Year Ending December 31,	Year Ending December 31,	Operating Leases		Year Ending December 31,	Scheduled Long-Term Debt Maturities
2021 (remainder)		$	16,009
2022		22,265
2022 (remainder)				2022 (remainder)	$	23,250
2023	2023	22,352		2023	31,000
2024	2024	24,192		2024	606,000
2025	2025	18,405		2025	31,000

2026				2026	1,031,000
Thereafter	Thereafter	86,495		Thereafter	4,429,500
Total lease payments		189,718
Less imputed interest		(39,650)
Present value of lease liabilities		$	150,068
Total				Total	$	6,151,750

~~11.~~9. Commitments and Contingencies

Indemnification

In the normal course of business, we enter into agreements that contain a variety of representations and warranties and provide for general indemnification, including indemnification associated with product liability or infringement of intellectual property rights. Our exposure under these agreements is unknown because it involves future claims that may be made but have not yet been made against us. To date, we have not paid any claims or been required to defend any action related to these indemnification obligations.

We have agreed to indemnify our executive officers, directors and certain other employees for losses and costs incurred in connection with certain events or occurrences, including advancing money to cover certain costs, subject to certain limitations. The maximum potential amount of future payments we could be required to make under the indemnification obligations is unlimited; however, we maintain insurance policies that may limit our exposure and may enable us to recover a portion of any future amounts paid. Assuming the applicability of coverage, the willingness of the insurer to assume coverage, and subject to certain retention, loss limits and other policy provisions, we believe the fair value of these indemnification obligations is not significant. Accordingly, we did not recognize any liabilities relating to these obligations as of March 31, ~~2021~~2022 and December 31, ~~2020.~~2021. No assurances can be given that the covering insurers will not attempt to dispute the validity, applicability, or amount of coverage without expensive litigation against these insurers, in which case we may incur substantial liabilities as a result of these indemnification obligations.

Other Commitments

As of March 31, ~~2021,~~2022, we had ~~$88.8~~$74.4 million of noncancelable purchase commitments due within one year, primarily related to agreements with third party ~~manufacturers and marketing campaigns.~~manufacturers.

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Legal Proceedings

We are involved in legal proceedings, including the following matters:

Xyrem Class Action

From June 2020 to ~~March 2021,~~February 2022, a number of ~~class action~~ lawsuits were filed on behalf of purported direct and indirect Xyrem purchasers, alleging that the patent litigation settlement agreements we entered with ~~Hikma and other~~generic drug manufacturers who had filed Abbreviated New Drug Applications, or ANDA, ~~filers~~ violate state and federal antitrust and consumer protection laws, as follows:

On June 17, 2020, a class action lawsuit was filed in the United States District Court for the Northern District of Illinois by Blue Cross and Blue Shield Association, or BCBS, against Jazz Pharmaceuticals plc, Jazz Pharmaceuticals, Inc., and Jazz Pharmaceuticals Ireland Limited, or, collectively, the Company Defendants (hereinafter referred to as the BCBS Lawsuit). The BCBS Lawsuit also names Roxane Laboratories, Inc., Hikma Pharmaceuticals USA Inc., Eurohealth (USA), Inc., Hikma Pharmaceuticals plc, Amneal Pharmaceuticals LLC, Par Pharmaceuticals, Inc., Lupin Ltd., Lupin Pharmaceuticals Inc., and Lupin Inc., or, collectively, the BCBS Defendants.

On June 18 and June 23, 2020, respectively, 2 additional class action lawsuits were filed against the Company Defendants and the BCBS Defendants: one by the New York State Teamsters Council Health and Hospital Fund in the United States District Court for the Northern District of California, and another by the Government Employees Health Association Inc. in the United States District Court for the Northern District of Illinois (hereinafter referred to as the GEHA Lawsuit).

On June 18, 2020, a class action lawsuit was filed in the United States District Court for the Northern District of California by the City of Providence, Rhode Island, on behalf of itself and all others similarly situated, against Jazz

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Pharmaceuticals plc, and Roxane Laboratories, Inc., West-Ward Pharmaceuticals Corp., Hikma Labs Inc., Hikma Pharmaceuticals USA Inc., and Hikma Pharmaceuticals plc, or, collectively, the City of Providence Defendants.

On June 30, 2020, a class action lawsuit was filed in the United States District Court for the Northern District of Illinois by UFCW Local 1500 Welfare Fund on behalf of itself and all others similarly situated, against Jazz Pharmaceuticals Ireland Ltd., Jazz Pharmaceuticals, Inc., Roxane Laboratories, Inc., Hikma Pharmaceuticals plc, Eurohealth (USA), Inc. and West-Ward Pharmaceuticals Corp., or collectively the UFCW Defendants (hereinafter referred to as the UFCW Lawsuit).

On July 13, 2020, the plaintiffs in the BCBS Lawsuit and the GEHA Lawsuit dismissed their complaints in the United States District Court for the Northern District of Illinois and refiled their respective lawsuits in the United States District Court for the Northern District of California. On July 14, 2020, the plaintiffs in the UFCW Lawsuit dismissed their complaint in the United States District Court for the Northern District of Illinois and on July 15, 2020, refiled their lawsuit in the United States District Court for the Northern District of California.

On July 31, 2020, a class action lawsuit was filed in the United States District Court for the Southern District of New York by the A.F. of ~~L.-A.G.C~~L.-A.G.C. Building Trades Welfare Plan on behalf of itself and all others similarly situated, against Jazz Pharmaceuticals plc (hereinafter referred to as the AFL Plan Lawsuit). The AFL Plan Lawsuit also names Roxane Laboratories Inc., West-Ward Pharmaceuticals Corp., Hikma Labs Inc., Hikma Pharmaceuticals plc, Amneal Pharmaceuticals LLC, Par Pharmaceuticals Inc., Lupin Ltd., Lupin Pharmaceuticals, Inc., and Lupin Inc.

On August 14, 2020, an additional class action lawsuit was filed in the United States District Court for the Southern District of New York by the Self-Insured Schools of California on behalf of itself and all others similarly situated, against the Company Defendants, as well as Hikma Pharmaceuticals plc, Eurohealth (USA) Inc., Hikma Pharmaceuticals USA, Inc., West-Ward Pharmaceuticals Corp., Roxane Laboratories, Inc., Amneal Pharmaceuticals LLC, Endo International, plc, Endo Pharmaceuticals LLC, Par Pharmaceutical, Inc., Lupin Ltd., Lupin Pharmaceuticals Inc., Lupin Inc., Sun Pharmaceutical Industries Ltd., Sun Pharmaceutical Holdings USA, Inc., Sun Pharmaceutical Industries, Inc., Ranbaxy Laboratories Ltd., Teva Pharmaceutical Industries Ltd., Watson Laboratories, Inc., Wockhardt Ltd., Morton Grove Pharmaceuticals, Inc., Wockhardt USA LLC, Mallinckrodt plc, and Mallinckrodt LLC (hereinafter referred to as the Self-Insured Schools Lawsuit).

On September 16, 2020, an additional class action lawsuit was filed in the United States District Court for the Northern District of California, by Ruth Hollman on behalf of herself and all others similarly situated, against the same defendants named in the Self-Insured Schools Lawsuit.

In December 2020, the above cases were centralized and transferred to the United States District Court for the Northern District of California, where the multidistrict litigation will proceed for the purpose of discovery and pre-trial proceedings. In January 2021, the United States District Court for the Northern District of California issued a Case Management Order that schedules this case for trial in February 2023.

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Pharmaceuticals, Inc., raising similar allegations, or the UHS Lawsuit. On March 24, 2021, the U.S. Judicial Panel on Multidistrict Litigation conditionally transferred the UHS Lawsuit to the United States District Court for the Northern District of California, where it was consolidated for discovery and pre-trial proceedings with the other cases.

On August 13, 2021, the United States District Court for the Northern District of California granted in part and denied in part the Company Defendants motion to dismiss the complaints in the cases referenced above.

On October 8, 2021, Humana Inc. filed a lawsuit in the United States District Court for the Northern District of California against the Company Defendants, Hikma Pharmaceuticals plc, Hikma Pharmaceuticals USA Inc., Hikma Labs, Inc., Eurohealth (USA), Inc., Amneal Pharmaceuticals LLC, Par Pharmaceutical, Inc., Lupin Ltd., Lupin Pharmaceuticals, Inc., and Lupin Inc, raising similar allegations.

On October 8, 2021, Molina Healthcare Inc. filed a lawsuit in the United States District Court for the Northern District of California against the Company Defendants, Hikma Pharmaceuticals plc, Hikma Pharmaceuticals USA Inc., Hikma Labs, Inc., Eurohealth (USA), Inc., Amneal Pharmaceuticals LLC, Par Pharmaceutical, Inc., Lupin Ltd., Lupin Pharmaceuticals, Inc., and Lupin Inc, raising similar allegations.

On February 17, 2022, Health Care Service Corporation filed a lawsuit in the United States District Court for the Northern District of California against the Company Defendants, Hikma Pharmaceuticals plc, Hikma Pharmaceuticals USA Inc., Hikma Labs, Inc., Eurohealth (USA), Inc., Amneal Pharmaceuticals LLC, Par Pharmaceutical, Inc., Lupin Ltd., Lupin Pharmaceuticals, Inc., and Lupin Inc, raising similar allegations.

A hearing on class certification is scheduled for November 2022. A trial date will be set following a ruling on class certification.

The plaintiffs in certain of these lawsuits are seeking to represent a class of direct purchasers of Xyrem, and the plaintiffs in the remaining lawsuits are seeking to represent a class of indirect purchasers of Xyrem. Each of the lawsuits generally alleges violations of U.S. federal and state antitrust, consumer protection, and unfair competition laws in connection with the Company Defendants’ conduct related to Xyrem, including actions leading up to, and entering into, patent litigation settlement agreements with each of the other named defendants. Each of the lawsuits seeks monetary damages, exemplary damages, equitable relief against the alleged unlawful conduct, including disgorgement of profits and restitution, and injunctive relief. It is possible that additional lawsuits will be filed against the Company Defendants making similar or related allegations. If the plaintiffs were to be successful in their claims, they may be entitled to injunctive relief or we may be required to pay significant monetary damages, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

In December 2020, these cases were centralized and transferred to the United States District Court for the Northern District of California, where the multidistrict litigation will proceed for the purpose of discovery and pre-trial proceedings. In January 2021, the Court issued a Case Management Order that schedules this case for trial in February 2023.

On March 18, 2021, United Healthcare Services, Inc. filed a lawsuit in the United States District Court for the District of Minnesota against the Company Defendants, Hikma Pharmaceuticals plc, Roxane Laboratories, Inc., Hikma Pharmaceuticals USA Inc., Eurohealth (USA) Inc., Amneal Pharmaceuticals LLC, Par Pharmaceutical Inc., Lupin Ltd., and Lupin Pharmaceuticals, Inc., raising similar allegations, or the UHS Lawsuit. On March 24, 2021, the U.S. Judicial Panel on MultidistrictGW Acquisition Litigation conditionally transferred the UHS Lawsuit to the United States District Court for the Northern District of California, where it was consolidated for discovery and pre-trial proceedings with the other cases.

On March 15, 2021, GW filed a definitive proxy statement, or Proxy Statement, with the Securities and Exchange Commission in connection with the GW Acquisition.

Since the filing of the Proxy Statement, Jazz Pharmaceuticals plc has been named in 2 lawsuits filed in state and federal courts in New York on March 17, 2021 by purported GW shareholders in connection with the GW ~~Acquisition, the~~Acquisition. The first was filed in the United States District Court for the Southern District of New York by James Farrell (hereinafter referred to as the Farrell ~~Lawsuit,~~Lawsuit) and an additional suit was filed in New York state court by Brian Levy or(hereinafter referred to as the Levy ~~Lawsuit.~~Lawsuit). In addition to Jazz Pharmaceuticals plc, Jazz Pharmaceuticals UKU.K. Holdings Ltd., GW Pharmaceuticals plc, and the GW Board of Directors are named as defendants in the Farrell Lawsuit. In the Levy Lawsuit, GW Pharmaceuticals plc, the GW Board of Directors,

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Centerview Partners LLC, and Goldman Sachs & Co. LLC are named as defendants. In addition to the Farrell Lawsuit and the Levy Lawsuit, 10 additional suits have been filed in New York, California, and Pennsylvania federal courts by purported GW shareholders against GW Pharmaceuticals plc and its Board of Directors, but which do not name any Jazz Pharmaceuticals parties (hereinafter referred to as the GW Litigation, and collectively with the Farrell Lawsuit and the Levy Lawsuit, as the Transaction ~~Litigation.~~Litigation). In the Transaction Litigation, the plaintiffs allege that the Proxy Statement omitted material information and contained misrepresentations, and that the individual members of the GW Board of Directors breached their fiduciary duties, in violation of state and federal laws, including the Securities Exchange Act of 1934. The plaintiffs in the Transaction Litigation sought various remedies, including injunctive relief to prevent the consummation of the GW Acquisition unless certain allegedly material information was disclosed, or in the alternative, rescission or damages.

On April 14, 2021, GW filed a Form8-K containing supplemental disclosures related to the GW Acquisition. Pursuant to a memorandum of understanding between the parties, the Levy Lawsuit was dismissed on April 14, 2021.

~~Jazz~~On May 27, 2021, a class action lawsuit was filed in the United States District Court for the Southern District of California by plaintiff Kurt Ziegler against GW and its former Directors asserting claims under Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, referred to as the Ziegler Lawsuit. The allegations in the Ziegler Lawsuit are similar to those in the previously dismissed Transaction Litigation.

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Patent Infringement Litigation

Avadel Patent Litigation

On May 13, 2021, we filed a patent infringement suit against Avadel Pharmaceuticals plc, or Avadel, and several of its corporate affiliates in the United States District Court for the District of Delaware. The suit alleges that Avadel’s product candidate FT-218 will infringe 5 of our patents related to controlled release formulations of oxybate and the safe and effective distribution of oxybate. The suit seeks an injunction to prevent Avadel from launching a product that would infringe these patents, and an award of monetary damages if Avadel does ~~not believe any of GW’s supplemental disclosures were material or required by law,~~launch an infringing product. Avadel filed an answer to the complaint and ~~further believes~~counterclaims asserting that the ~~claims~~patents are invalid or not enforceable, and that its product, if approved, will not infringe our patents.

On August 4, 2021, we filed an additional patent infringement suit against Avadel in the ~~Transaction Litigation~~United States District Court for the District of Delaware. The second suit alleges that Avadel’s product candidate FT-218 will infringe a newly-issued patent related to sustained-release formulations of oxybate. The suit seeks an injunction to prevent Avadel from launching a product that would infringe this patent, and an award of monetary damages if Avadel does launch an infringing product. Avadel filed an answer to the complaint and counterclaims asserting that the patents are ~~meritless. Jazz~~invalid or not enforceable, and that its product, if approved, will ~~continue to defend itself~~not infringe our patents.

On November 10, 2021, we filed an additional patent infringement suit against Avadel in the ~~remaining Transaction Litigation.~~United States District Court for the District of Delaware. The third suit alleges that Avadel’s product candidate FT-218 will infringe a newly-issued patent related to sustained-release formulations of oxybate. The suit seeks an injunction to prevent Avadel from launching a product that would infringe this patent, and an award of monetary damages if Avadel does launch an infringing product. Avadel filed an answer to the complaint and counterclaims asserting that the patents are invalid or not enforceable, and that its product, if approved, will not infringe our patents.

On April 14, 2022, Avadel sued us in the United States District Court for the District of Delaware. Avadel’s new suit alleges that we misappropriated trade secrets related to Avadel’s once-nightly sodium oxybate development program and breached certain contracts between the parties. Avadel seeks monetary damages, an injunction preventing us from using Avadel’s confidential information, and an order directing the United States Patent and Trademark Office to modify the inventorship of one of our oxybate patents.

Canopy Patent Litigation

In December 2020, Canopy Growth Corporation filed a complaint against our subsidiary, GW, in the United States District Court for the Western District of Texas, alleging infringement of its patent, U.S. Patent No. 10,870,632. Canopy claims that our extraction process used to produce material used to produce Epidiolex infringes its patent. Canopy seeks a judgment that we have infringed their patent and an award of monetary damages. In July 2021, we filed an answer to the amended complaint, and counterclaims seeking judgment that the ‘632 patent is invalid and that we have not infringed the patent. In October 2021, the United States District Court for the Western District of Texas held a claim construction hearing regarding the disputed term of the ‘632 patent. In November 2021, the Court issued a claim construction order. On February 23, 2022, the parties filed a Joint Motion and Stipulation to Enter Final Judgment in favor of GW. On February 25, 2022, the Court granted the parties’ motion and entered final judgment in favor of GW. Pursuant to the stipulation, Canopy filed a notice of appeal of the Court’s ruling on the disputed term in March 2022.

Lupin Patent Litigation

In June 2021, we received notice from Lupin Inc., or Lupin, that it has filed with FDA an ANDA, for a generic version of Xywav. The notice from Lupin included a “paragraph IV certification” with respect to ten of our patents listed in FDA’s Orange Book for Xywav on the date of our receipt of the notice. The asserted patents relate generally to the composition and method of use of Xywav, and methods of treatment when Xywav is administered concomitantly with certain other medications. A paragraph IV certification is a certification by a generic applicant that alleges that patents covering the branded product are invalid, unenforceable, and/or will not be infringed by the manufacture, use or sale of the generic product.

In July 2021, we filed a patent infringement suit against Lupin in the United States District Court for the District of New Jersey. The complaint alleges that by filing its ANDA, Lupin has infringed 10 of our Orange Book listed patents. We are seeking a permanent injunction to prevent Lupin from introducing a generic version of Xywav that would infringe our patents. As a result of this lawsuit, we expect that a stay of approval of up to 30 months will be imposed by FDA on Lupin's ANDA. In June 2021, FDA recognized seven years of Orphan Drug Exclusivity for Xywav through July 21, 2027. On October4,2021, Lupinfiled an answer to the complaint and counterclaims asserting that the patents are invalid or not enforceable, and that its product, if approved, will not infringe our patents.

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Otsuka Patent Litigation

In October 2021, Otsuka Pharmaceutical Co., Ltd., or Otsuka, filed claims against GW Pharma Limited and GW Pharmaceuticals Limited, or collectively, the GW Parties, in the English High Court, Patents Court. Otsuka alleges that under a now-expired Research Collaboration and License Agreement between Otsuka and the GW Parties, Otsuka and the GW Parties jointly own certain patents and other intellectual property, that Epidiolex is covered by that intellectual property, and that Otsuka is therefore due a royalty on net sales of Epidiolex.

In January 2022, we filed a lawsuit against Otsuka in the Supreme Court of the State of New York, County of New York, seeking a declaration that Otsuka is not entitled to any royalties on sales of Epidiolex under the Research Collaboration and License Agreement.

The Company vigorously enforces its intellectual property rights, but cannot predict the outcome of these matters.

From time to time we are involved in legal proceedings arising in the ordinary course of business. We believe there is no other litigation pending that could have, individually or in the aggregate, a material adverse effect on our results of operations or financial condition.

~~12.~~10. Shareholders’ Equity

~~Share Repurchase Program~~

In November 2016, our board of directors authorized a share repurchase program and as of March 31, 2021 had authorized the repurchase of ordinary shares having an aggregate purchase price of up to $1.5 billion, exclusive of any brokerage commissions. Under this program, which has no expiration date, we may repurchase ordinary shares from time to time on the open market. The timing and amount of repurchases will depend on a variety of factors, including the price of our ordinary shares, alternative investment opportunities, restrictions under the amended credit agreement, corporate and regulatory requirements and market conditions. The share repurchase program may be modified, suspended or discontinued at any time without prior notice. During the three months ended March 31, 2021, we did 0t repurchase any of our ordinary shares. As of March 31, 2021, the remaining amount authorized under the share repurchase program was $431.2 million.

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows (in thousands):

Net Unrealized
Loss From
Hedging Activities Foreign
Currency
Translation
Adjustments Total
Accumulated
Other
Comprehensive
Loss
Balance at December 31, 2020 $ (2,467) $ (131,885) $ (134,352)
Other comprehensive loss before reclassifications (16) (46,220) (46,236)
Amounts reclassified from accumulated other comprehensive loss 1,160 0 1,160
Other comprehensive income (loss), net 1,144 (46,220) (45,076)
Balance at March 31, 2021 $ (1,323) $ (178,105) $ (179,428)


	Net Unrealized Loss From Hedging Activities		Foreign Currency Translation Adjustments		Total Accumulated Other Comprehensive Loss
Balance at December 31, 2021	$	(128)	$	(400,232)	$	(400,360)


Other comprehensive loss before reclassifications	—		(190,488)		(190,488)
Amounts reclassified from accumulated other comprehensive income (loss)	128		—		128
Other comprehensive income (loss), net	128		(190,488)		(190,360)
Balance at March 31, 2022	$	—	$	(590,720)	$	(590,720)

During the three months ended March 31, ~~2021,~~2022, other comprehensive loss primarily reflects foreign currency translation adjustments, primarily due to the weakening of the sterling and the euro against the U.S. dollar.

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~~13.~~11. Net Income ~~(Loss)~~ per Ordinary Share

Basic net income ~~(loss)~~ per ordinary share is based on the weighted-average number of ordinary shares outstanding. Diluted net income ~~(loss)~~ per ordinary share is based on the weighted-average number of ordinary shares outstanding and potentially dilutive ordinary shares outstanding.

Basic and diluted net income ~~(loss)~~ per ordinary share were computed as follows (in thousands, except per share amounts):


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Numerator:	Numerator:						Numerator:

Net income (loss)		$	121,832	$	(157,833)
Net income							Net income	$	1,647	$	121,832

Denominator:	Denominator:						Denominator:
Weighted-average ordinary shares used in per share calculations - basic	Weighted-average ordinary shares used in per share calculations - basic	56,468		55,956			Weighted-average ordinary shares used in per share calculations - basic	61,865		56,468
Dilutive effect of employee equity incentive and purchase plans	Dilutive effect of employee equity incentive and purchase plans	1,584		0			Dilutive effect of employee equity incentive and purchase plans	1,042		1,584
Dilutive effect of Exchangeable Senior Notes	Dilutive effect of Exchangeable Senior Notes	341		0			Dilutive effect of Exchangeable Senior Notes	—		341
Weighted-average ordinary shares used in per share calculations - diluted	Weighted-average ordinary shares used in per share calculations - diluted	58,393		55,956			Weighted-average ordinary shares used in per share calculations - diluted	62,907		58,393

Net income (loss) per ordinary share:
Net income per ordinary share:							Net income per ordinary share:

Basic	Basic	$	2.16	$	(2.82)		Basic	$	0.03	$	2.16

Diluted	Diluted	$	2.09	$	(2.82)		Diluted	$	0.03	$	2.09

Potentially dilutive ordinary shares from our employee equity incentive and purchase plans ~~and the Exchangeable Senior Notes~~ are determined by applying the treasury stock method to the assumed exercise of share options, the assumed vesting of outstanding Restricted Stock Units, or RSUs, and Performance-based restricted stock units, or ~~RSUs,~~PRSUs, and the assumed issuance of ordinary shares under our employee stock purchase plan, or ~~ESPP, and~~ESPP. Potentially dilutive ordinary shares from the Exchangeable Senior Notes are determined by applying the if-converted method to the assumed issuance of ordinary shares upon exchange of the Exchangeable Senior Notes. The potential issue of ordinary shares ~~issuable~~ upon exchange of the Exchangeable Senior Notes was anti-dilutive and had no ~~effect~~impact on diluted net income ~~(loss)~~ per ordinary share for the three months ended March 31, ~~2020 because the average price of our ordinary shares for the three months ended March 31, 2020 did not exceed the effective exchange prices per ordinary share of the Exchangeable Senior Notes.~~2022.

The following table represents the weighted-average ordinary shares that were excluded from the calculation of diluted net income ~~(loss)~~ per ordinary share for the periods presented because including them would have an anti-dilutive effect (in thousands):


		Three Months Ended March 31,		Three Months Ended March 31,
		2021	2020			2022	2021
Exchangeable Senior Notes	Exchangeable Senior Notes	9,798	5,504		Exchangeable Senior Notes	9,044	9,798
Options, RSUs and ESPP		1,671	5,611
Employee equity incentive and purchase plans					Employee equity incentive and purchase plans	2,509	1,671

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~~14.~~12. Revenues

The following table presents a summary of total revenues (in thousands):


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Xyrem	Xyrem	$	335,550	$	407,875		Xyrem	$	247,497	$	335,550
Xywav	Xywav	75,416		0			Xywav	186,080		75,416
Total Oxybate	Total Oxybate	410,966		407,875			Total Oxybate	433,577		410,966
Epidiolex/Epidyolex							Epidiolex/Epidyolex	157,893		—
Sunosi	Sunosi	11,606		1,924			Sunosi	15,878		11,606
Sativex							Sativex	4,742		—
Total Neuroscience	Total Neuroscience	422,572		409,799			Total Neuroscience	612,090		422,572
Zepzelca	Zepzelca	54,334		0			Zepzelca	59,338		54,334
Rylaze							Rylaze	54,220		—
Vyxeos	Vyxeos	33,155		32,720			Vyxeos	33,757		33,155
Defitelio/defibrotide	Defitelio/defibrotide	49,619		47,432			Defitelio/defibrotide	49,489		49,619
Erwinaze/Erwinase	Erwinaze/Erwinase	41,068		37,732			Erwinaze/Erwinase	—		41,068
Total Oncology	Total Oncology	178,176		117,884			Total Oncology	196,804		178,176
Other	Other	2,783		2,522			Other	943		2,783
Product sales, net	Product sales, net	603,531		530,205			Product sales, net	809,837		603,531
Royalties and contract revenues	Royalties and contract revenues	4,050		4,521			Royalties and contract revenues	3,884		4,050
Total revenues	Total revenues	$	607,581	$	534,726		Total revenues	$	813,721	$	607,581

The following table presents a summary of total revenues attributed to geographic sources (in thousands):


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
United States	United States	$	548,292	$	477,789		United States	$	740,583	$	548,292
Europe	Europe	47,233		41,556			Europe	61,028		47,233
All other	All other	12,056		15,381			All other	12,110		12,056
Total revenues	Total revenues	$	607,581	$	534,726		Total revenues	$	813,721	$	607,581

The following table presents a summary of the percentage of total revenues from customers that represented more than 10% of our total revenues:


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
ESSDS	ESSDS	67	%	76	%		ESSDS	55	%	67	%
McKesson	McKesson	14	%	13	%		McKesson	12	%	14	%

Financing and payment

Our payment terms vary by the type and location of our customer but payment is generally required in a term ranging from 30 to 45 days.

Contract Liabilities - Deferred Revenue

The deferred revenue balance as of March 31, ~~2021~~2022 primarily related to deferred upfront fees received from Nippon Shinyaku Co., Ltd., or Nippon Shinyaku, in connection with 2 license, development and commercialization agreements granting Nippon Shinyaku exclusive rights to develop and commercialize each of Defitelio and Vyxeos in Japan. We recognized contract revenues of ~~$0.6~~$0.5 million during the three months ended March 31, ~~2021,~~2022, relating to these upfront payments.

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The deferred revenue balances are being recognized over an average of four years representing the period over which we expect to perform our research and developments obligations under each agreement.

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The following table presents a reconciliation of our beginning and ending balances in contract liabilities from contracts with customers for the three months ended March 31, ~~2021~~2022 (in thousands):


	Contract Liabilities
Balance as of December 31, ~~2020~~2021	$	~~4,861~~2,556

Amount recognized within royalties and contract revenues	~~(636)~~(523)
Balance as of March 31, ~~2021~~2022	$	~~4,225~~2,033

~~15.~~13. Share-Based Compensation

Share-based compensation expense related to share options, RSUs, PRSUs and grants under our ESPP was as follows (in thousands):


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Selling, general and administrative	Selling, general and administrative	$	23,846	$	20,596		Selling, general and administrative	$	34,785	$	23,846
Research and development	Research and development	8,643		6,385			Research and development	12,436		8,643
Cost of product sales	Cost of product sales	1,996		1,673			Cost of product sales	2,849		1,996
Total share-based compensation expense, pre-tax	Total share-based compensation expense, pre-tax	34,485		28,654			Total share-based compensation expense, pre-tax	50,070		34,485
Income tax benefit from share-based compensation expense	Income tax benefit from share-based compensation expense	(6,587)		(3,121)			Income tax benefit from share-based compensation expense	(8,823)		(6,753)
Total share-based compensation expense, net of tax	Total share-based compensation expense, net of tax	$	27,898	$	25,533		Total share-based compensation expense, net of tax	$	41,247	$	27,732

Share Options

There were no share options granted in the three months ended March 31, 2022. The table below shows the number of shares underlying options granted to purchase our ordinary shares, the weighted-average assumptions used in the Black-Scholes option pricing model and the resulting weighted-average grant date fair value of share options ~~granted:~~granted for the three months ended March 31, 2021:

Three Months Ended
March 31,
2021 2020
Shares underlying options granted (in thousands) 95 565
Grant date fair value $ 51.33 $ 33.65
Black-Scholes option pricing model assumption information:
Volatility 37 % 32 %
Expected term (years) 4.5 4.6
Range of risk-free rates 0.4-0.8% 0.8-1.6%
Expected dividend yield 0 % 0 %



	Three Months Ended March 31, 2021
Shares underlying options granted (in thousands)	95
Grant date fair value	$	51.33
Black-Scholes option pricing model assumption information:
Volatility	37		%
Expected term (years)	4.5
Range of risk-free rates	0.4%-0.8%
Expected dividend yield	—		%

Restricted Stock Units

The table below shows the number of RSUs granted covering an equal number of our ordinary shares and the weighted-average grant date fair value of RSUs granted:


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
RSUs granted (in thousands)	RSUs granted (in thousands)	1,201		959			RSUs granted (in thousands)	1,888		1,201
Grant date fair value	Grant date fair value	$	169.87	$	114.19		Grant date fair value	$	152.38	$	169.87

The fair value of RSUs is determined on the date of grant based on the market price of our ordinary shares on that date. The fair value of RSUs is expensed ratably over the vesting period, generally over four years.

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Performance-Based Restricted Stock Units

In March 2022, the Compensation & Management Development Committee of our board of directors approved awards of PRSUs to certain employees of the Company, subject to vesting on the achievement of certain commercial and pipeline performance criteria to be assessed over a performance period from the date of the grant to December 31, 2024. Following the determination of the Company’s achievement with respect to the performance criteria, the amount of shares awarded will be subject to adjustment based on the application of a relative total shareholder return, or TSR modifier. The number of shares that may be earned ranges between 0% and 200% of the target number of PRSUs granted based on the degree of achievement of the applicable performance metric and the application of the relative TSR modifier.

The table below shows the number of PRSUs granted covering an equal number of our ordinary shares and the weighted-average grant date fair value of PRSUs granted:


	Three Months Ended March 31, 2022

PRSUs granted (in thousands)		281
Grant date fair value		$	179.19

As the PRSUs granted in March 2022 are subject to a market condition, the grant date fair value for such PRSUs was based on a Monte Carlo simulation model. The Company evaluated the performance targets in the context of its current long-range financial plan and its product candidate development pipeline and recognized expense based on the probable number of awards that will ultimately vest. There were no PRSUs granted in the three months ended March 31, 2021.

As of March 31, ~~2021,~~2022, compensation cost not yet recognized related to unvested share options, RSUs and ~~RSUs~~PRSUs was ~~$52.0~~$29.7 million, $418.8 million and ~~$275.1~~$56.6 million, respectively, which is expected to be recognized over a weighted-average period of ~~2.2~~1.6 years, 3.2 years and ~~3.2~~2.3 years, respectively.

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~~16.~~14. Income Taxes

Our income tax ~~provision~~expense was ~~$18.0~~$0.5 million in the three months ended March 31, 2021, compared to an income tax benefit of $51.3 million for the same period in 2020. The effective tax rate was 13.3% in the three months ended March 31, 2021 compared to 24.5% for the same period in 2020. The decrease in the effective tax rate for the three months ended March 31, ~~2021~~2022, compared to $18.0 million for the same period in ~~2020 was~~2021. The decrease in the income tax expense resulted primarily ~~due to~~from the ~~impact~~mix of ~~the defibrotide acquired in-process research~~pre-tax income and development, or IPR&D, asset impairment charge and the acquired IPR&D expense relating to the $200.0 million upfront payment to Pharma Mar, S.A., or PharmaMar, for the exclusive U.S. commercialization and development rights to Zepzelca in 2020, and changes in income mix among the various jurisdictions in which we operate. The effectivelosses incurred across tax rate for the three months ended March 31, 2021 was higher than the Irish statutory rate of 12.5% primarily due to the impact of various expenses not deductible for tax purposes, income taxable at a rate higher than the Irish statutory rate and uncertain tax positions, partially offset by deductions available in respect of subsidiary equity and originating tax credits.jurisdictions. We do not provide for Irish income taxes on undistributed earnings of our foreign operations that are intended to be indefinitely reinvested in our foreign subsidiaries.

Our net deferred tax ~~asset~~liability is ~~comprised~~ primarily related to acquired intangible assets, and is net of deferred tax assets related to U.S. federal and state tax credits, U.S. federal and state and foreign net operating loss carryforwards and other temporary ~~differences, and is net of deferred tax liabilities related to acquired intangible assets.~~differences. We maintain a valuation allowance against certain ~~foreign and U.S.~~ deferred tax assets. Each reporting period, we evaluate the need for a valuation allowance on our deferred tax assets by jurisdiction and adjust our estimates as more information becomes available.

We are required to recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. As a result, we have recorded an unrecognized tax benefit for certain tax benefits which we judge may not be sustained upon examination. Our most significant tax jurisdictions are Ireland, ~~and~~ the U.S. (both at the federal level and in various state jurisdictions)~~. For~~ and the U.K. In Ireland we are no longer subject to income tax audits by taxing authorities for the years prior to ~~2016.~~2017. The U.S. jurisdictions generally have statute of limitations three to four years from the later of the return due date or the date when the return was filed. However, in the U.S. (at the federal level and in most states), carryforwards that were generated in ~~2016~~2017 and earlier may still be adjusted upon examination by the tax authorities. ~~During~~In the ~~three months ended March 31, 2021, certain of our subsidiaries were under examination~~U.K. we are no longer subject to income tax audits by ~~the French tax~~taxing authorities for the years ~~ended December31,2012, 2013 and 2015 through 2019. Due~~prior to the subjective nature of the transfer pricing issues involved, the Company reached an agreement with the French tax authorities to settle the audits for all open years. The settlement agreement in respect of 2012 and 2013 has been finalized and the Company paid incremental taxes, interest and penalties of $18.6 million during the three months ended March 31, 2021 to close the audit of those periods. Settlements in respect of 2015 through 2019 are also expected to be finalized and paid in 2021, and $1.1 million has been accrued in this respect.2018. Certain of our Italian subsidiaries are currently under examination by the Italian ~~tax~~taxing authorities for the year ended December31,2017. Certain of our Luxembourg subsidiaries are currently under examination by the Luxembourg ~~tax~~taxing authorities for the years ended December31,2017 and 2018. ~~Our~~Certain of our German ~~subsidiary is~~subsidiaries are currently under examination by the German ~~tax~~taxing authorities for the years ended December 31, 2017, 2018 and 2019.

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~~17. Subsequent Event~~15. Assets Held for Sale

~~Pending GW Acquisition~~On March 25, 2022, we entered into a definitive agreement to divest Sunosi to Axsome. Under the terms of the agreement, Axsome will acquire the rights to Sunosi in all of the existing territories available to us. We will receive a upfront payment of $53 million, a high single-digit royalty on Axsome’s U.S. net sales of Sunosi in current indications and a mid-single-digit royalty on Axsome’s U.S. net sales of Sunosi in future indications.

The respective obligations of GWJazz and usAxsome to consummate the ~~GW Acquisition~~transactions contemplated by the definitive agreement are subject to the satisfaction or waiver of a number of customary ~~conditions, including obtaining certain regulatory approvals~~conditions.

The transaction is structured to be completed in sequential closings for the U.S. and obtaining sanction of the Scheme of Arrangement by the High Court of Justice of England and Wales. Certain conditions have been satisfied, including expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the approval by GW’s shareholders of the Scheme of Arrangement. The GW Acquisition is not subject to approval by our shareholders, nor is the GW Acquisition subject to a financing contingency. The GW Acquisition is expected to close in the first half of May 2021, subjectex-U.S. territories. Subject to the satisfaction or waiver of the closing conditions, ~~set forth~~the companies expect the U.S. transaction to close in the ~~GW Transaction Agreement.~~

~~On February 3, 2021, in connection with~~second quarter of 2022 and the ~~execution~~ex-U.S. transaction close to occur within 60 days following the close of the ~~GW Transaction Agreement,~~U.S. transaction.

The assets to be divested met the assets held for sale criteria and were reclassified to assets held for sale as of March 31, 2022. We determined this is the disposal of a business and have allocated goodwill to these assets using the relative fair value method.

We have determined that the expected disposition of these assets does not qualify for reporting as a discontinued operation since the expected sale does not represent a strategic shift that has or will have a major effect on our operations and financial results.

The following assets were segregated and classified as assets held for sale in the condensed consolidated balance sheet (in thousands):


	March 31, 2022

Intangible assets, net	$	56,680
Inventories	21,163
Goodwill	12,927
Other	118
Total assets held for sale	$	90,888

We will account for the contingent consideration in the form of the future royalty as earned. As a result, we expect to record a loss on disposal of approximately $40.0 million when the transaction closes as the determination of the initial gain or loss will include the upfront consideration only and not include an amount for the contingent consideration.

16. Subsequent Events

In the second quarter of 2022, we acquired development and commercialization rights to 2 preclinical compounds, consistent with our objective to expand our pipeline.

In April 2022, we announced that we had entered into a ~~commitment letter~~licensing agreement with ~~BofA Securities,~~Werewolf Therapeutics, Inc., ~~Bank~~or Werewolf, to acquire exclusive global development and commercialization rights to Werewolf's investigational WTX-613, now referred to as JZP898. JZP898 is a differentiated, conditionally-activated interferon alpha (IFNα) INDUKINE™ molecule. Under the terms of ~~America, N.A.~~the agreement, we made an upfront payment of $15.0 million to Werewolf, and ~~JPMorgan Chase Bank, N.A. pursuant~~Werewolf is eligible to ~~which these commitment parties have committed to provide us with a senior secured revolving credit facility in an aggregate principal amount~~receive development, regulatory and commercial milestone payments of up to ~~$500.0~~$1.26 billion. Pending approval, Werewolf is eligible to receive a tiered, mid-single-digit percentage royalty on net sales of JZP898. The upfront payment totaling $15.0 million will be expensed to Acquired in-process research and development, or IPR&D, in the second quarter of 2022.

In May 2022, we announced that we had entered into a ~~senior secured term loan B facility~~licensing agreement with Sumitomo Pharma Co., Ltd, or Sumitomo, to acquire exclusive development and commercialization rights in the United States, Europe and other territories for DSP-0187, which we have designated JZP441. JZP441 is a potent, highly selective oral orexin-2 receptor agonist with potential application for the treatment of narcolepsy, IH and other sleep disorders. Under the terms of the agreement, we will make an ~~aggregate principal amount~~upfront payment of $50.0 million to Sumitomo, and Sumitomo is eligible to receive development, regulatory and commercial milestone payments of up to ~~$3.15 billion and~~$1.09 billion. Pending approval, Sumitomo is eligible to receive a ~~senior secured bridge loan facility in an aggregate principal amount~~tiered, low double-digit royalty on Jazz's net sales of ~~up to $2.2 billion to, among other things, finance our obligations in respect of the GW Acquisition.~~JZP441. The ~~effectiveness of such credit facilities is subject to the occurrence of customary closing conditions, including the consummation of the GW Acquisition.~~

On April 20, 2021, we and certain of our wholly-owned subsidiaries, entered into Amendment No. 3 to our Credit Agreement, dated as of June 18, 2015, or the Existing Credit Agreement, with the lenders party thereto and Bank of America, N.A., as administrative agent, collateral agent, letter of credit issuer and swing line lender. The Amendment No. 3 amended the Existing Credit Agreement to permit the issuance of senior secured notes and made certain related changes as set forth therein.

~~On April 29, 2021, our wholly-owned subsidiary, Jazz Securities Designated Activity Company, issued $1.5 billion in aggregate principal amount of 4.375% senior secured notes due 2029.~~

~~Concurrently with the closing of the GW Acquisition, we expect to enter into new senior secured credit facilities, which is expected to consist of a $500.0~~upfront payment totaling $50.0 million revolving credit facility and a term loan B facility in an aggregate amount of approximately $3.85 billion. We expect to use term loan B borrowings under new senior secured credit facilities and the net proceeds from the senior secured notes, together with cash on hand to fund the cash consideration payable in connection with the GW Acquisition. The senior secured notes have a mandatory redemption clause that will be ~~triggered under certain circumstances, including failure~~expensed to ~~complete the GW Acquisition within the time period outlined~~Acquired IPR&D in the ~~GW Transaction Agreement or the termination~~second quarter of ~~the GW Acquisition.~~2022.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the notes to condensed consolidated financial statements included elsewhere in this Quarterly Report on Form ~~10-Q.~~10‑Q. This discussion contains forward-looking statements that involve risks and uncertainties. When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that could impact our business. In particular, we encourage you to review the risks and uncertainties ~~summarized under “Cautionary Note Regarding Forward-Looking Statements” that appears at the end of this discussion and as discussed~~described in ~~more detail under~~ “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. These risks and uncertainties could cause actual results to differ materially from those projected in forward-looking statements contained in this report or implied by past results and trends. Forward-looking statements are statements that attempt to forecast or anticipate future developments in our business, financial condition or results of operations. See the “Cautionary Note Regarding Forward-Looking Statements” that appears at the end of this discussion. These statements, like all statements in this report, speak only as of the date of this Quarterly Report on Form ~~10-Q~~10‑Q (unless another date is indicated), and we undertake no obligation to update or revise these statements in light of future developments.

Overview

Jazz Pharmaceuticals plc is ~~an innovative~~a global biopharmaceutical company ~~dedicated~~whose purpose is to ~~developing and commercializing life-changing medicines that~~innovate to transform the lives of patients and their families. We are dedicated to developing life-changing medicines for people with serious diseases –- often with limited or no therapeutic options. We have a diverse portfolio of marketed medicines and novel product candidates, infrom early- to late-stage development, ~~across key therapeutic areas. Our focus is~~ in neuroscience ~~including sleep~~ and ~~movement disorders, and in oncology, including hematologic malignancies and solid tumors. We actively explore~~oncology. Within these therapeutic areas, we strive to identify new options for patients ~~including novel compounds,~~by actively exploring small molecules and biologics, and through innovative delivery ~~technologies.~~technologies and cannabinoid science.

Our ~~continued~~strategy for growth is rooted in executing commercial ~~launches;~~launches and ongoing commercialization initiatives; advancing robust research and development, or R&D, programs and delivering ~~positive~~impactful clinical results; effectively deploying capital to strengthen the prospects of achieving our short- and long-term goals through strategic ~~and capital-efficient~~ corporate development; and delivering strong financial performance.

~~In our core therapeutic areas, we follow a similar approach to bring new medicines to patients and to create sustainable shareholder value. Most critically, we~~ We focus on patient populations with high unmet needs. We identify and develop differentiated therapies for these patients that we expect will be long-lived assets and that we can support with an efficient ~~sales force and that we expect will be long-lived, durable assets.~~commercialization model. In addition, we leverage our efficient, scalable operating model and integrated capabilities ~~and~~across our global infrastructure to effectively reach patients around the world.

~~Table~~At the 40th Annual J.P. Morgan Healthcare Conference in January 2022, we announced our Vision 2025, which aims to deliver sustainable growth and enhanced value, driving our continued transformation to an innovative, high-growth global pharmaceutical leader. The three core components of ~~Contents~~

our Vision 2025 focus on commercial execution, pipeline productivity and operational excellence.

Commercial Achievements

Our marketed products are approved in countries around the world to improve patient care.


Product	Indications	Initial ~~U.S.~~ Approval Date	Markets
NEUROSCIENCE
~~Xywav™~~Xywav® (calcium, magnesium, potassium, and sodium oxybates)	Treatment of cataplexy or excessive daytime sleepiness, or EDS, in patients seven years of age and older with narcolepsy. Treatment of idiopathic hypersomnia, or IH, in adults.	July 2020 August 2021	U.S. U.S.
Xyrem® (sodium oxybate)	Treatment of cataplexy or EDS in patients seven years of age and older with narcolepsy. For the treatment of cataplexy in patients with narcolepsy. Treatment of narcolepsy with cataplexy in adult patients, adolescents and children from age of 7 years.	July 2002 August 2005 October 2005	~~July 2002~~ U.S. Canada EU, Great Britain, other markets (through licensing agreement)

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Epidiolex® (cannabidiol) Epidyolex® (cannabidiol)	Treatment of seizures associated with Lennox-Gastaut syndrome, or LGS, Dravet syndrome, or DS, or tuberous sclerosis complex, or TSC, in patients 1 year of age and older. For adjunctive therapy of seizures associated with LGS or DS, in conjunction with clobazam, for patients 2 years of age and older.* For adjunctive therapy of seizures associated with TSC for patients 2 years of age and older.**	June 2018 September 2019 April 2021	U.S.~~, Other Markets~~ EU, Great Britain, other markets EU, Great Britain, other markets
Sunosi® (solriamfetol)***	Improve wakefulness in adult patients with EDS associated with narcolepsy or obstructive sleep apnea, or OSA. Improve wakefulness and reduce EDS in adult patients with narcolepsy (with or without cataplexy) or adult patients with OSA whose EDS has not been satisfactorily treated by primary OSA therapy, such as continuous positive airway pressure, or CPAP. Treatment of EDS in adult patients with narcolepsy or OSA.	March 2019 January 2020 May 2021	U.S.~~, Europe, United Kingdom (UK)~~ EU, Great Britain, other markets Canada
Sativex® (nabiximols)	Treatment for adult patients with moderate to severe spasticity due to multiple sclerosis, or MS, who have not responded adequately to other anti-spasticity medication and who demonstrate clinically significant improvement in spasticity related symptoms during an initial trial of therapy.	June 2010	U.K. (other markets through licensing agreements with partners)
ONCOLOGY
~~Zepzelca™~~Zepzelca® (lurbinectedin)	Treatment of adult patients with metastatic small cell lung cancer, or SCLC, with disease progression on or after platinum-based chemotherapy. Treatment of adults with Stage III or metastatic SCLC who have progressed on or after platinum-containing therapy.	June 2020 September 2021	U.S. (licensed from ~~Pharma Mar, S.A.,~~PharmaMar) Canada (licensed from PharmaMar)
Rylaze® (asparaginase erwinia chrysanthemi (recombinant)- rywn)	A component of a multi-agent chemotherapeutic regimen for the treatment of acute lymphoblastic leukemia, or ~~PharmaMar)~~ALL, and lymphoblastic lymphoma, or LBL, in adult and pediatric patients 1 month or older who have developed hypersensitivity to E. coli-derived asparaginase.	June 2021	U.S.

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Vyxeos® (daunorubicin and cytarabine) liposome for injection ~~(U.S.)~~ Vyxeos® liposomal 44 mg/100 mg powder for concentrate for solution for infusion ~~(Europe)~~ Vyxeos® Daunorubicin and cytarabine liposome for injection Powder, 44 mg daunorubicin and 100 mg cytarabine per vial, intravenous infusion	~~Newly-diagnosed~~ Treatment of newly-diagnosed therapy-related therapy-related acute myeloid leukemia, ~~(t-AML)~~or t-AML or AML with myelodysplasia-related changes (AML-MRC) in adults and pediatric patients one year and older. ~~Adults~~ Treatment of adults with newly-diagnosed ~~therapy-related acute myeloid leukemia (t-AML)~~t-AML or ~~AML with myelodysplasia-related changes (AML-MRC).~~	~~August 2017~~	~~U.S.~~ ~~Europe, UK~~
~~Defitelio~~® ~~(defibrotide sodium) (U.S.)~~AML-MRC. Treatment of adults with newly diagnosed therapy-related t-AML or AML with AML-MRC.	August 2017 August 2018 April 2021	U.S. EU, Great Britain, other markets Canada
Defitelio® (defibrotide sodium) Defitelio® (defibrotide) ~~Defitelio~~® ~~(defibrotide) (Europe)~~	Treatment of adult and pediatric patients with hepatic veno-occlusive disease, or VOD, also known as ~~sinusoidal obstruction syndrome, or~~ SOS, with renal or pulmonary dysfunction following hematopoietic ~~stem-cell~~stem cell transplantation, or HSCT. Treatment of severe hepatic VOD, also known as SOS, infollowing HSCT therapy.	March 2016 October 2013	U.S.~~, Europe, UK, Japan, and~~ EU, Great Britain, other markets
~~Erwinaze~~® ~~(asparaginase Erwinia chrysanthemi)~~	~~Treatment of patients with acute lymphoblastic leukemia (ALL) who have developed hypersensitivity to E. coli-derived asparaginase.~~	~~November 2011~~	~~U.S., Europe, Other Markets~~

*Clobazam restriction limited to EU and Great Britain

**TSC approval pending in certain markets

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***In March 2022, we announced that we had entered into a definitive agreement to divest Sunosi to Axsome Therapeutics, or Axsome

Neuroscience

We are the global leader in the development and commercialization of oxybate therapy for patients with sleep disorders. ~~We introduced~~ Xyrem was approved by the U.S. Food and Drug Administration, or FDA, in 2002, ~~which~~and has become a standard of care for treating EDS and cataplexy in narcolepsy. In 2020, we received ~~U.S. Food and Drug Administration, or~~ FDA approval for Xywav for the treatment of cataplexy or EDS, in patients seven years of age and older with narcolepsy. In August 2021, Xywav became the first and only therapy approved by FDA for the treatment of IH in adults. Xywav is an oxybate therapy that contains 92% less sodium than Xyrem.

Since there is no cure for narcolepsy and long-term disease management is needed, we believe that Xywav represents an important new therapeutic option for ~~patients.~~patients with this sleep disorder. Our commercial efforts are focused on educating patients and physicians about the lifelong impact of high sodium intake, and how the use of Xywav enables them to address what is a modifiable risk factor.

In June 2021, FDA recognized seven years of Orphan Drug Exclusivity (ODE) for Xywav in narcolepsy. ODE extends through July 2027. In connection with granting ODE, FDA stated that "Xywav is clinically superior to Xyrem by means of greater safety because Xywav provides a greatly reduced chronic sodium burden compared to Xyrem." FDA's summary also stated that "the differences in the sodium content of the two products at the recommended doses will be clinically meaningful in reducing cardiovascular morbidity in a substantial proportion of patients for whom the drug is indicated."

We ~~have seen strong~~view the adoption of Xywav ~~since its launch~~ in November 2020. In the first quarter of 2021, there were 15,700 average active oxybate patients; exiting the quarter, there were 3,900 active Xywav patients. This increased from 1,900 active Xywav patients exiting the fourth quarter of 2020. We view thisnarcolepsy as a positive indication that physicians and patients appreciate the benefits of a ~~lower-sodium~~lower sodium oxybate option. We ~~are seeing strong~~continue to see Xywav adoption among both existing and new-to-oxybate narcolepsy patients.

~~Coupled with strong adoption, we have met our goal to obtain broad payer coverage for Xywav within six months of launch.~~ We now have agreements in place for Xywav with all three major pharmacy benefit managers, ~~(PBMs)~~or PBMs, in the U.S. ~~Commercial payer~~To date, we have entered into agreements with various entities and have achieved benefit coverage ~~overall~~for Xywav for approximately 90% of commercial lives.

On August 12, 2021, FDA approved Xywav for the treatment of IH in adults. Xywav is ~~currently at~~the first and only FDA-approved therapy to treat IH. We initiated the U.S. commercial launch of Xywav for the treatment of IH in adults on November 1, 2021. IH is a debilitating neurologic sleep disorder characterized by chronic EDS, the inability to stay awake and alert during the day resulting in the irrepressible need to sleep or unplanned lapses into sleep or drowsiness. An estimated 37,000 people in the U.S. have been diagnosed with IH and are actively seeking healthcare.

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We have seen strong adoption of Xywav in narcolepsy since its launch in November 2020. Exiting the first quarter of 2022, there were approximately ~~80%~~7,800 patients taking Xywav, including approximately 7,050 patients with narcolepsy and approximately 750 patients with IH. With respect to Xywav and Xyrem in the aggregate, the average number of ~~covered lives, and our team is working with payers to further expand coverage.~~active oxybate patients on therapy was approximately 16,650 in the first quarter of 2022.

Sunosi was launched in the ~~United States~~U.S. in 2019 as a therapy to improve wakefulness in adult patients with EDS associated with narcolepsy or OSA, and we remain focused on driving the next phase of its growth. We have established broad commercial payer coverage and have invested in an expanded and dedicated sales force and direct-to-consumer initiatives to raise awareness of EDS due to narcolepsy or OSA. Sunosi was approved in Europe ~~and the United Kingdom~~ in 2020, and the rolling launch is ongoing. Sunosi was approved in Canada in 2021. In March 2022, we announced that we had entered into a definitive agreement to divest Sunosi to Axsome. Under the terms of the agreement, Axsome will receive the rights to Sunosi in all of the existing territories available to us and we will receive an upfront payment of $53 million, a high single-digit royalty on Axsome’s U.S. net sales of Sunosi in current indications and a mid-single-digit royalty on Axsome’s U.S. net sales of Sunosi in future indications. The divestiture of Sunosi to Axsome is intended to enable us to sharpen our focus on our highest strategic priorities designed to deliver sustainable growth and enhanced shareholder value. In assessing the positioning of Sunosi in the overall treatment landscape, we believe that Axsome is well positioned to deliver access to this important medicine and to maximize the value of Sunosi to us through future growth. The respective obligations of the companies to consummate the transactions contemplated by the definitive agreement are ~~pleased~~subject to the satisfaction or waiver of a number of customary conditions. The transaction is structured to be completed in sequential closings for the U.S. and ex-U.S. territories. Subject to the satisfaction or waiver of the closing conditions, the companies expect the U.S. transaction to close in the second quarter of 2022 and the ex-U.S. transaction close to occur within 60 days following the close of the U.S. transaction.

We acquired Epidiolex (Epidyolex outside the U.S.) in May 2021 as part of the acquisition of GW Pharmaceuticals plc, or GW, which we refer to as the GW Acquisition, which expands our growing neuroscience business with a global, high-growth childhood-onset epilepsy franchise. Epidiolex was approved in the ~~progression~~U.S. in June 2018 for the treatment of ~~our~~seizures associated with two rare and severe forms of epilepsy, LGS and DS, in patients two years of age and older, and subsequently approved in July 2020 for the treatment of seizures associated with TSC in patients one year of age and older. FDA also approved the expansion of all existing indications, LGS and DS, to patients one year of age and older. The rolling ~~launch.~~European launch of Epidyolex is also underway following European Commission approval in September 2019 for use as adjunctive therapy of seizures associated with LGS or DS, in conjunction with clobazam, for patients two years of age and older. The clobazam restriction is limited to EU and Great Britain. Outside the U.S. and Europe, Epidiolex/Epidyolex is approved in Israel and Australia.

Sativex (nabiximols) is approved in more than 25 countries outside the U.S. for the treatment of adult patients with moderate to severe spasticity due to MS who have not responded adequately to other anti-spasticity medication. We market Sativex directly in the U.K. and through licensing agreements with partners across other countries. We are working toward potential approval of nabiximols in the U.S. with multiple Phase 3 clinical trials in progress.

Oncology

We acquired U.S. development and commercialization rights to Zepzelca in early 2020, and launched six months thereafter with an indication for treatment of patients with SCLC with disease progression on or after platinum-based chemotherapy. Our education and promotional efforts are focused on SCLC-treating physicians. We are ~~seeing increased~~continuing to raise awareness of Zepzelca across academic and community cancer centers and see continued opportunities for growth in ~~the~~ second-line ~~setting in both platinum-sensitive~~share and ~~platinum-resistant patients,~~overall demand, reflecting the significant unmet need and favorable Zepzelca product profile. In collaboration with F. Hoffmann-La Roche Ltd (Roche), we have initiated a Phase 3 pivotal clinical trial in first-line extensive stage SCLC of Zepzelca in combination with Tecentriq® (atezolizumab). We are also developing Zepzelca in additional indications.

Rylaze was approved by FDA in June 2021 under the Real-Time Oncology Review (RTOR) program, and was launched in the U.S. in July 2021 for use as a component of a multi-agent chemotherapeutic regimen for the treatment of patients with ALL or LBL in pediatric and adult patients one month and older who have developed hypersensitivity to E. coli-derived asparaginase. Rylaze is the only recombinant erwinia asparaginase manufactured product that maintains a clinically meaningful level of asparaginase activity throughout the entire duration of treatment. We developed Rylaze to address the needs of patients and health care providers for an innovative, high-quality erwinia asparaginase with reliable supply. The current indication is for an intramuscular (IM) dosing regimen of 25 mg/m2 every 48 hours. We submitted a supplemental Biologics License Application (sBLA) with additional data in support of a Monday/Wednesday/Friday (M/W/F) IM dosing schedule in January 2022 and submitted a separate sBLA for intravenous administration in April 2022, both which have been granted review under the RTOR program. We anticipate that data from the current development program will support regulatory filings in Europe in mid-2022, with potential for approval in 2023. The Company is also working with a partner for potential submission, approval and launch in Japan, as well as planning additional submissions in other markets.

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Vyxeos is a treatment for adults with newly-diagnosed ~~therapy-related AML,~~t-AML, or ~~AML with myelodysplasia-related changes.~~AML-MRC. In March 2021, FDA approved a revised label to include a new indication to treat newly-diagnosed therapy-related acute myeloid leukemia (t-AML) or AML with myelodysplasia-related changes in pediatric patients aged one year and older. We have a number of ongoing development activities and continue to expand into new markets internationally. Despite an ongoing trend in the U.S.towards lower-intensity treatments and away from Vyxeos that accelerated due to COVID-19 pandemic, we continue to see recovery in demand for Vyxeos and expect future demand for appropriate secondary AML patients to remain steady. In Europe, we continue to expect a negative impact on demand for and utilization of Vyxeos compared to historical periods due to COVID-19.

Defitelio ~~provides an important~~is the first and only approved treatment ~~option~~ for patients with VOD following HSCT. There was a significant decline in the number of patients receiving HSCT due to the effects of the COVID-19 pandemic. We anticipate the use of Defitelio will increase asto the extent that hospital systems globally are able to ~~move~~continue moving forward with ~~more~~ HSCT procedures.

Erwinaze, which is approved to treat a limited population of patients with ALL who have developed hypersensitivity to E. coli-derived asparaginase, is licensed from and manufactured by a single source, Porton Biopharma Limited, or PBL. Our license and supply agreement with PBL expired on December 31, 2020. We expect to distribute Erwinaze through the first half of 2021. In the past, a significant challenge to maintaining sales of Erwinaze and a barrier to increasing sales was PBL’s inability to consistently supply product that meets specifications in quantities that are adequate to meet market demand. Given the urgent need for a reliable and high-quality recombinant asparaginase, we are focused on bringing JZP458 to market as quickly as possible. Our commercial team is currently preparing for its anticipated U.S. launch, targeted for mid-year 2021, subject to FDA approval.

Research and Development Progress

Our development activities encompass all stages of development and currently include clinical testing of new product candidates and activities related to clinical improvements of, or additional indications or new clinical data for, our existing marketed products. We also have ~~also expanded into~~active preclinical ~~exploration of~~programs for novel therapies, including precision medicines in hematology and ~~oncology.~~oncology and the GW cannabinoid platform. We are increasingly leveraging our growing internal research and development function, and we have also entered into collaborations with third parties for the research and development of innovative early-stage product candidates and have supported additional investigator-sponsored trials, or ISTs, that ~~will~~are anticipated to generate additional data related to our products. We also seek out investment opportunities in support of development of early- and mid-stage technologies in our

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therapeutic areas and adjacencies. We have a number of licensing and collaboration agreements with third parties, including biotechnology companies, academic institutions and research-based companies and institutions, related to preclinical and clinical research and development activities in hematology and in precision oncology, as well as in neuroscience.

~~We remain on track~~With the approvals and launches of Rylaze for the treatment ALL or LBL in pediatric and adult patients one month and older who have developed hypersensitivity to E. coli-derived asparaginase and Xywav for IH in 2021, we accomplished our goal to deliver ~~two important therapies to patients in 2021: Xywav in idiopathic hypersomnia, or IH,~~five product launches through 2020 and ~~JZP458 in ALL.~~2021. We have taken both ~~products~~Rylaze and Xywav from concept to ~~commercial readiness, underscoring~~commercialization.

Our neuroscience R&D efforts include the ~~strength~~planned initiation of ~~our portfolio and development capabilities.~~

~~At the American Academy of Neurology (AAN) Annual Meeting in April 2021, we presented positive results from the~~a pivotal Phase 3 clinical trial ~~evaluating Xywav~~of Epidiolex for the treatment of Epilepsy with Myoclonic-Atonic Seizures, or EMAS, also known as Doose syndrome, in ~~adult~~the first half of 2022. This trial is expected to evaluate Epidiolex in a fourth childhood-onset epileptic encephalopathy with high unmet need. EMAS is characterized by generalized myoclonic-atonic seizures, and this trial is designed to provide the first randomized, controlled clinical data with Epidiolex in this syndrome type. Seizure types including atonic, tonic, clonic, tonic-clonic and partial onset seizures are seen in LGS, DS, and TSC.

For nabiximols, we have three ongoing Phase 3 clinical trials in MS-related spasticity. Spasticity occurs in up to 84% of MS patients, and approximately one-third of those who experience spasticity live with ~~IH. IH~~uncontrolled symptoms. The first trial is a ~~chronic neurological disorder that~~smaller, shorter trial relative to the other two. If results from this first trial are supportive, there is ~~primarily characterized by EDS and that currently has no approved therapies~~the potential for a New Drug Application, or NDA, submission in the U.S. ~~FDA granted Fast Track designation for Xywav~~by the end of 2022.

Additionally, in IH in September 2020, and we completed the rolling submission of a supplemental new drug application, or sNDA, in February 2021. Subsequently, FDA granted Priority Review and a PDUFA action date of August 12, 2021. We are planning for a potential commercial launch in the fourth quarter of 2021.

~~For JZP458,~~December 2021 we initiated a rolling biologics licensing application, or BLA, submission to FDA under Real-Time Oncology Review. We are working closely with FDA to complete the BLA submission and remain focused on bringing JZP458 to patients as quickly as possible. We are targeting a mid-2021 launch in the U.S., subject to FDA approval.

~~Additionally, we remain on track to begin planned~~ Phase 2 clinical trials for ~~JZP385 and JZP150 this year~~suvecaltamide (JZP385) for essential tremor, or ET, and for JZP150 for post-traumatic stress disorder, ~~respectively.~~or PTSD. These are both patient populations ~~who~~that suffer significant impacts to their quality of life and for whom there are limited current treatment options. We are also pursuing early-stage activities related to the development of JZP324, an extended-release low sodium, oxybate formulation that we believe could provide a clinically meaningful option for narcolepsy patients.

Within our oncology R&D program, there is a robust development plan being executed for Zepzelca.We are collaborating with Roche on a pivotal Phase 3 clinical trial evaluating Zepzelca in combination with Tecentriq in first-line extensive stage SCLC. In December 2021, our licensor PharmaMar initiated a confirmatory trial in second-line SCLC. This is a three-arm trial comparing Zepzelca as either monotherapy or in combination with irinotecan to investigator's choice of irinotecan or topotecan. Data from this trial could confirm the benefit of Zepzelca in the treatment of SCLC when patients progress following first-line treatment with a platinum-based regimen.

In 2022 we initiated a Phase 2 basket trial to explore Zepzelca monotherapy in patients with select advanced or metastatic solid tumors. Cohorts will include advanced urothelial cancer, large cell neuroendocrine tumor of the lung, and homologous recombination deficient (HRD) cancers. In addition, we have initiated a Phase 4 observational study to collect real world safety and outcome data in adult Zepzelca monotherapy patients with SCLC who progress on or after prior platinum-containing chemotherapy.

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For Rylaze, in January 2022 we submitted an sBLA with data in support of a M/W/F IM dosing schedule and submitted a separate sBLA for intravenous administration in April 2022, both of which have been granted review under the RTOR program. We are planning regulatory submissions in Europe in mid-2022.

In the second quarter of 2022, we acquired development and commercialization rights to two preclinical compounds, consistent with our objective to expand our pipeline. In April 2022, we announced that we had entered into a licensing agreement with Werewolf Therapeutics, Inc., or Werewolf, to acquire exclusive global development and commercialization rights to Werewolf's investigational WTX-613, now referred to as JZP898. JZP898 is a differentiated, conditionally-activated interferon alpha (IFNα) INDUKINE™ molecule. Under the terms of the agreement, we made an upfront payment of $15 million to Werewolf, and Werewolf is eligible to receive development, regulatory and commercial milestone payments of up to $1.26 billion. Pending approval, Werewolf is eligible to receive a tiered, mid-single-digit percentage royalty on net sales of JZP898. This transaction underscores our commitment to enhancing our pipeline to deliver novel oncology therapies to patients, and also provides us with an opportunity to expand into immuno-oncology.

In May 2022, we announced that we had entered into a licensing agreement with Sumitomo Pharma Co., Ltd, or Sumitomo, to acquire exclusive development and commercialization rights in the United States, Europe and other territories for DSP-0187, which we have designated JZP441, a potent, highly selective oral orexin-2 receptor agonist with potential application for the treatment of narcolepsy, IH and other sleep disorders. Under the terms of the agreement, we will make an upfront payment of $50 million to Sumitomo, and Sumitomo is eligible to receive development, regulatory and commercial milestone payments of up to $1.09 billion. Pending approval, Sumitomo is eligible to receive a tiered, low double-digit royalty on Jazz's net sales of JZP441.

Below is a summary of our key ongoing and planned development projects related to our products and pipeline and their corresponding current stages of development:


Product Candidates			Description
NEUROSCIENCE
~~Regulatory Review~~
~~Xywav~~			IH
Phase 3
~~Zepzelca~~Epidiolex			~~Small cell lung cancer~~EMAS, also known as Doose syndrome (planned study)
Nabiximols			MS Spasticity (multiple studies ongoing) Spinal cord injury spasticity (planned study)
Phase 2b
~~JZP385~~Suvecaltamide (JZP385)			~~Essential tremor (planned~~ET (ongoing study)
Phase 2
JZP150			~~Post-traumatic stress disorder (planned~~PTSD (ongoing study)
Additional cannabinoids			Autism spectrum disorders (ongoing study)
Phase 1
JZP324			Oxybate extended-release formulation (planned study)
Additional cannabinoids			Neonatal hypoxic-ischemic encephalopathy (ongoing study) Neuropsychiatry targets (ongoing study)
Preclinical
JZP441 (DSP-0187)			Potent, highly selective oral orexin-2 receptor agonist
Undisclosed targets			Neuroscience Cannabinoids
ONCOLOGY
Regulatory Review
~~JZP458~~Rylaze			ALL/~~lymphoblastic lymphoma, or~~ LBL FDA approval in June 2021; submitted sBLA in January 2022 seeking approval for Monday/Wednesday/Friday intramuscular dosing schedule; submitted separate sBLA seeking approval for intravenous administration; regulatory submission planned for Europe in mid-2022
Phase 3
Zepzelca			First-line extensive stage SCLC in combination with Tecentriq (collaboration with Roche) (ongoing study) Confirmatory Study (PharmaMar study) (ongoing study)
Vyxeos			AML or high-risk Myelodysplastic Syndrome, or MDS ~~(AML18 and AML19)~~(AML18) (cooperative group studies) (ongoing study) Newly diagnosed adults with standard- and high-risk AML (AML Study Group cooperative group study) (ongoing study) Newly diagnosed pediatric patients with AML (Children’s Oncology Group cooperative group study) (ongoing study)

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Product Candidates			Description
Phase 2
Zepzelca			Basket trial including urothelial cancer, large cell neuroendocrine tumor of the lung, and HRD (homologous recombination deficient) cancers (ongoing study)
Vyxeos			High-risk MDS (European Myelodysplastic Syndromes ~~Cooperative Group cooperative~~(cooperative group study) (ongoing study) Newly diagnosed older adults with high-risk AML (cooperative group study) (planned ~~cooperative group~~ study)
Vyxeos + venetoclax			De novo or relapsed/refractory, or R/R, AML (MD Anderson collaboration study) (ongoing study)
Phase 1

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~~Product Candidates~~			~~Description~~
Vyxeos			Low intensity dosing for higher risk MDS (MD Anderson collaboration study) (ongoing study)
Vyxeos + other approved therapies			R/R AML or hypomethylating agent failure MDS (MD Anderson collaboration study) (ongoing study) First-line, fit AML (Phase 1b study) (ongoing study) Low intensity therapy for first-line, unfit AML (Phase 1b study) (ongoing study)
Preclinical
CombiPlex®			Hematology/oncology exploratory activities
JZP341 (long-acting Erwinia asparaginase)			ALL and other hematological malignancies (collaboration with ~~Ligand Pharmaceuticals Incorporated, or~~ Ligand)
JZP815/Pan-Raf inhibitor program			Raf and Ras mutant tumors (acquired from Redx, ~~Pharma, or Redx,~~ which is continuing development)
JZP898			Conditionally-activated interferon alpha (IFNα) INDUKINE™ molecule
Undisclosed targets			Ras/Raf/MAP kinase pathway (collaboration with Redx) Oncology
Exosome targets ~~(NRAS and 3 others)~~(up to 4)			Hematological malignancies/solid tumors (collaboration with Codiak BioSciences, Inc., or Codiak)
~~Defibrotide~~Undisclosed targets			~~Exploratory activities~~Oncology

~~Acquisition of GW Pharmaceuticals Plc Creates Innovative High-Growth, Global Biopharma Leader~~

In February 2021, we entered into an agreement to acquire GW Pharmaceuticals plc, or GW, with the objectives of broadening our neuroscience portfolio, further diversifying our revenue and driving sustainable, long-term value creation opportunities. Under the agreement, the total consideration to be paid by us for the entire issued share capital of GW is approximately $7.2 billion. The acquisition, which we refer to as the GW Acquisition, is expected to close in early May 2021.

GW specializes in discovering, developing, manufacturing and commercializing therapeutics from its proprietary cannabinoid product platform to address a broad range of diseases. GW's lead product, Epidiolex® (cannabidiol) oral solution, is approved in patients one-year and older for the treatment of seizures associated with Lennox-Gastaut Syndrome, Dravet Syndrome and Tuberous Sclerosis Complex, all of which are rare diseases characterized by severe early-onset epilepsy. Epidiolex was the first plant-derived cannabinoid medicine ever approved by FDA, and has also been approved in Europe under the trade name Epidyolex. In addition to the approved indications for Epidiolex, we believe there are considerable opportunities to pursue other indications within the epilepsy field, including other treatment-resistant epilepsies where significant unmet needs of patients exist.

GW is leveraging its scientific platform and specialized manufacturing expertise to develop additional cannabinoid-based therapies. This pipeline includes nabiximols, for which GW is in Phase 3 clinical trials for the treatment of spasticity associated with multiple sclerosis and spinal cord injury, as well as earlier-stage cannabinoid product candidates.

We view the transaction as consistent with our overall business and capital allocation strategy to expand our neuroscience portfolio and drive substantial value for our shareholders. We expect that product sales, operating expenses and interest expense will be significantly higher in 2021 than in 2020 due to the impact of the inclusion of the results of operations from GW commencing on closing the GW Acquisition, the higher debt balance in connection with the GW Acquisition and the continued growth of the organization.

Operational Excellence

We remain focused on continuing to build excellence in areas that we believe will give us a competitive advantage, including building an increasingly agile and adaptable commercialization engine and strengthening our customer-focused market expertise across patients, providers and ~~payers.~~payors. We are refining our approach to engaging our customers by strengthening alignment and integration across functions and across regions. This includes a more integrated approach to brand planning, a heightened focus on launch and operational excellence and multichannel customer engagement. We have fully adapted to virtual scientific congresses designed to ensure we can continue to provide promotional and non-promotional interactions and have supported our field-based teams with virtual customer interaction tools, training and content. These initiatives mark a significant operational evolution that is directly linked to our corporate strategy and are designed to better enable our teams to work collaboratively on an aligned and shared agenda through both virtual and in-person interactions.

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in-person interactions as medical congresses and healthcare practices begin to resume in-person activities, taking into account applicable public health authority and local government guidelines which are designed to ensure community and employee safety.

COVID-19 Business Update

We have implemented a comprehensive response strategy designed to ~~effectively~~ manage the impact of the COVID-19 pandemic on our employees, patients and our business. ~~We have experienced limited financial and other impacts~~The prolonged nature of the pandemic is negatively impacting our business in a varied manner due to the ~~pandemic.~~emergence of the Delta and Omicron variants and other variants with increased transmissibility, even in some cases in vaccinated people, including limited access to health care provider offices and institutions and the willingness of patients or parents of patients to seek treatment or change existing treatments. We expect that our business, financial condition, results of operations and growth prospects may continue to be negatively impacted by the pandemic on a limited basis bythat may vary depending on the ~~pandemic, albeit~~context. However we have begun to observe, and expect to continue to observe, a ~~lesser extent~~gradual normalization in patient and health care provider practices, as providers and patients have adapted their behaviors and procedures to the evolving circumstances and as COVID-19 vaccines continue to be administered.

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Workplace and ~~treatments reduce the global impact of COVID-19 and enable a resumption to more normal business practices and initiatives.~~Employees

We support broad public health strategies designed to prevent the spread of COVID-19 and are focused on the health and welfare of our employees. Our global organization has mobilized to enable our employees to accomplish our most critical goals through a combination of remote work and in-person initiatives. In addition to rolling out new technologies and collaboration tools, we have implemented processes and resources to support our employees in the event an employee receives a positive COVID-19 diagnosis. We have ~~developed plans regarding the opening~~begun reopening some of our sites to enable our employees to return to ~~work in~~ our global offices, ~~the field and our manufacturing facilities,~~ which take into account applicable public health authority and local government guidelines and which are designed to ensure community and employee safety. We ~~plan to permanently move~~are moving to a more flexible mix of virtual and in-person working to advance our culture, drive innovation and agility and enable greater balance and well-being for our workforce. This will also enable us to reconfigure our physical workspaces to optimize the footprint of our company-owned or leased office spaces.

Commercialization

~~While there~~There continues to be some negative impact on demand, new patient starts and treatments for our products arising from the pandemic, ~~we have seen improvements as~~primarily due to the inherent limitations of telemedicine and a reprioritization of healthcare resources toward COVID-19. As healthcare systems have adapted to cope with the ongoing ~~situation.~~situation, we have seen improvements. We are utilizing technology to continue to engage healthcare professionals and other customers virtually to support patient care. As more clinics and institutions begin to allow in-person interactions pursuant to local health authority and government guidelines, our field teams continue to resume in-person interactions with healthcare professionals and clinics combined with virtual engagement. The level of renewed in-person engagement varies by account, region and ~~country.~~country and may be adversely impacted in the future as a result of the continuing impact of the COVID-19 pandemic. The lack of access to ~~healthcare~~health care providers has caused, and may continue to cause, delays in appropriate diagnosis, treatment and ongoing care for some patients, which has negatively impacted, and could ~~subsequently~~continue to impact, prescribing and use of our products.

Supply Chain

Our manufacturing facilities in Athlone, Ireland, which produces ~~Xyrem~~Xywav and ~~Xywav, and~~Xyrem, Villa Guardia, Italy, which produces defibrotide, and Kent Science Park, U.K., which produces Epidiolex/Epidyolex and Sativex, are operational with essential staff onsite and office-based staff working ~~remotely.~~onsite and remotely as business needs require. We currently expect to have adequate global supply of ~~Xyrem, Xywav, Sunosi, Zepzelca, Vyxeos, and Defitelio in 2021.~~all of our products for 2022.

Research and Development

With respect to our clinical trial activities, we have taken measures to implement remote and virtual approaches, including remote data monitoring where possible, to maintain patient safety and trial continuity and to preserve study integrity. We have seen limited COVID-19-related impact to our mid- and late-stage clinical trial activity, despite delays in initiating trial sites. We rely on contract research organizations or other third parties to assist us with clinical trials, and we cannot guarantee that they will continue to perform their contractual duties in a timely and satisfactory manner as a result of the evolving effects of the COVID-19 pandemic. Similarly, our ability to recruit and retain patients and principal investigators and site staff who, as ~~healthcare~~health care providers, may have heightened exposure to COVID-19, may adversely impact our clinical trial operations.

~~Corporate Development and Other Financial Impacts~~

~~With our strong cash balance and positive cash flow, we anticipate having sufficient liquidity~~ Supply chain disruptions related to continue to make planned investments in our business in support of our long-term growth strategy. However, the COVID-19 pandemic continues to rapidly evolve and has resulted in significant volatility in the global financial markets. If the disruption persists and deepens, we could experience an inability to access additional capital, which could in the future negatively affect our capacity for certain corporate development transactions or our ability to make other important, opportunistic investments. The effects of the pandemic ~~could~~may also impact our ability to ~~do in-person due diligence, negotiations, and other interactions to identify new opportunities.~~initiate clinical trials in a timely manner.

Corporate Response

The COVID-19 pandemic has caused a significant burden on health systems globally and has highlighted the need for companies to evaluate existing therapies to assess if they can be utilized beyond their current indications to treat COVID-19 as well as consider developing new therapies. To this end, we have granted requests for several ISTs to evaluate the use of defibrotide in COVID-19 patients experiencing respiratory distress.

In addition, we are supporting our local communities and patient-focused organizations in COVID-19 relief efforts including through corporate donations to charitable organizations providing food and medical relief to ~~our~~ communities in

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which we operate, ~~in Italy, Philadelphia and the San Francisco Bay Area,~~ and other localities where the needs related to the impact of COVID-19 are greatest. We are engaging with patient advocacy organizations to better understand the impact of COVID-19 and working to ~~ensure that~~enable patients living with sleep disorders, ~~and hematology~~epilepsies and oncology conditions ~~continue to have~~with access to treatments and that their other needs are addressed given the impact of COVID-19 on the healthcare system. We are committed to enabling our employees to give back, including allowing licensed healthcare practitioners employed by us to support local response efforts.

Other Challenges, Risks and Trends Related to Our Business

Our business has been substantially dependent on Xyrem. Our future plans assume that ~~our newly launched oxybate product~~ Xywav, with 92% lower sodium compared to Xyrem, depending on the dose, absence of a sodium warning and dosing titration option, will become the treatment of choice for patients who can benefit from oxybate treatment, including current Xyrem patients and patients who previously were not prescribed Xyrem ~~including those patients~~ for whom sodium content is a concern. In June 2021, FDA recognized seven years of

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ODE for Xywav in narcolepsy through July 21, 2027 stating that Xywav is clinically superior to Xyrem by means of greater safety due to reduced chronic sodium burden. While we expect that our business will continue to be substantially dependent on oxybate product sales from both ~~Xyrem~~Xywav and ~~Xywav,~~Xyrem, there is no guarantee that we can maintain oxybate sales at or near historical levels, or that oxybate sales will continue to grow.

Our ability to successfully commercialize Xywav will depend on, among other things, our ability to ~~obtain and~~ maintain adequate coverage and reimbursement for Xywav and acceptance of Xywav by ~~payers,~~payors, physicians and ~~patients.~~patients, including of Xywav for the treatment of idiopathic hypersomnia in adults. In an effort to support strong adoption of Xywav, we are focused on providing robust patient ~~access~~copay and savings programs and facilitating ~~payer~~payor coverage for Xywav. Moreover, we have increasingly experienced pressure from third party ~~payers~~payors to agree to discounts, rebates or restrictive pricing terms, ~~for our products,~~ and we cannot guarantee we will be able to agree to commercially reasonable terms with ~~pharmacy benefit managers, or~~ PBMs and other third party ~~payers,~~payors, or that we will be able to ensure patient access ~~to our existing and future products~~ and acceptance ~~of our products~~ on institutional formularies. Entering into agreements with PBMs and ~~payers~~payors to ensure patient access has and will likely continue to result in higher gross to net ~~deductions for these products.~~deductions. In addition to the COVID-19 related impacts described above, in the future, we expect our oxybate products to face competition from generic and authorized generic versions of sodium oxybate pursuant to the settlement agreements we have entered into with multiple abbreviated new drug application, or ANDA, filers. Generic competition can decrease the prices at which ~~Xyrem~~Xywav and ~~Xywav~~Xyrem are sold and the number of prescriptions written for ~~Xyrem~~Xywav and ~~Xywav.~~Xyrem. Xywav and Xyrem ~~and Xywav~~ may also face increased competition from new branded products for treatment of cataplexy and/or EDS in narcolepsy in the U.S. market.

As for other products in our neuroscience therapeutic area, if we are unable to successfully commercialize Sunosi in the U.S. and Europe, or if sales of Sunosi do not reach the levels we expect, our anticipated revenue from Sunosi will be negatively affected, which would have a material adverse effect on our business,Our financial condition, results of operations and growth ~~prospects.~~prospects are also dependent on our ability to maintain or increase sales of Epidiolex/Epidyolex in the U.S. and Europe, which is subject to many risks and there is no guarantee that we will be able to continue to successfully commercialize Epidiolex for its approved indications. The commercial success of Epidiolex depends on the extent to which patients and physicians accept and adopt Epidiolex as a treatment for seizures associated with LGS, DS and TSC, and we do not know whether our or others’ estimates in this regard will be accurate. Physicians may not prescribe Epidiolex and patients may be unwilling to use Epidiolex if coverage is not provided or reimbursement is inadequate to cover a significant portion of the cost. Additionally, any negative development for Epidiolex in the market after launch, in clinical development for additional indications, or in regulatory processes in other jurisdictions, may adversely impact the commercial results and potential of Epidiolex. Thus, significant uncertainty remains regarding the commercial potential of Epidiolex.

In addition to our neuroscience products and product candidates, we are commercializing a portfolio of oncology products, including Defitelio, ~~Erwinaze,~~ Vyxeos, Rylaze and Zepzelca. An inability to effectively commercialize Defitelio, Vyxeos, Rylaze and Zepzelca and to maximize their potential where possible through successful research and development activities could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

Our license and supply agreement with PBL, a limited liability company wholly owned by the UK Secretary of State for Health which includes an exclusive right to market, sell or distribute Erwinaze, an exclusive license to Erwinaze trademarks, and a non-exclusive license to PBL’s manufacturing know-how, expired on December 31, 2020. Under our agreement with PBL, we have the right to sell certain Erwinaze inventory for a post-termination sales period of 12 months and retain ownership of certain data, know-how and other property interests, including the BLA for Erwinaze in the U.S. and marketing authorizations for Erwinase in several other countries. We expect to distribute available Erwinaze supply during the first half of 2021. In addition, if we are unable to replace the future product sales we will lose from Erwinaze with our existing or future products, our business, financial condition, results of operations and growth prospects would be materially adversely affected.

A key aspect of our growth strategy is our continued investment in our evolving and expanding research and development activities. If we are not successful in the clinical development of these or other product candidates, if we are unable to obtain regulatory approval for our product candidates in a timely manner, or at all, or if sales of an approved product do not reach the levels we expect, our anticipated revenue from our product candidates would be negatively affected, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

In addition to continued investment in our ~~research and development~~R&D pipeline, we intend to continue to grow our business by acquiring or in-licensing, and developing, including with collaboration partners, additional products and product candidates that we believe are highly differentiated and have significant commercial potential. Failure to identify and acquire, in-license or develop additional products or product candidates, successfully manage the risks associated with integrating any products or product candidates into our portfolio or the risks arising from anticipated and unanticipated problems in connection with an acquisition or in-licensing, such as the ~~pending~~ GW Acquisition, could have a material adverse effect on our business, results of

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operations and financial condition. ~~In particular, the~~

The success of the GW Acquisition will depend, in part, on our ability to realize the anticipated benefits from successfully combining our and GW’s businesses and we plan to continue to devote substantial management attention and resources to integrating our business practices and operations with GW’s ~~so that we can~~in an effort to fully realize the anticipated benefits of the ~~pending acquisition.~~GW Acquisition. Nonetheless, Epidiolex and the other products and technologies acquired may not be successful or continue to grow at the same rate as ~~when~~if our companies operated independently or they may require significantly greater resources and investments than originally anticipated. ~~The acquisition could also result~~Conversely, the liabilities assumed in the ~~assumption of unknown or contingent liabilities.~~GW Acquisition may be greater than originally anticipated. In addition, difficulties may arise during the process of combining the operations of our companies that could result in the failure to achieve the synergies or free cash flow that we anticipate, the failure to integrate operations and internal systems, programs and controls, the loss of key employees that may be difficult to replace in the very competitive pharmaceutical field, the failure to harmonize both companies’ corporate cultures, and the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with customers, suppliers, distributors, collaboration partners, clinical trial investigators or managers of our clinical trials. As a result, the anticipated benefits of the ~~pending acquisition~~GW Acquisition may not be realized fully within the expected

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timeframe or at all or may take longer to realize or cost more than expected, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.

Our industry has been, and is expected to continue to be, subject to healthcare cost containment and drug pricing scrutiny by regulatory agencies in the U.S. and internationally. If healthcare policies or reforms intended to curb healthcare costs are adopted or if we experience negative publicity with respect to pricing of our products or the pricing of pharmaceutical drugs generally, the prices that we charge for our products may be affected, our commercial opportunity may be limited and/or our revenues from sales of our products may be negatively impacted. We are also subject to increasing pricing pressure and restrictions on reimbursement imposed by ~~payers.~~payors. If we fail to obtain and maintain adequate formulary positions and institutional access for ~~newly-launched~~our products ~~such as Sunosi, Xywav, Zepzelca~~ and future approved products, we will not be able to achieve a return on our investment and our business, financial condition, results of operations and growth prospects would be materially adversely affected.

While certain preparations of cannabis remain Schedule I controlled substances, if such products are approved by FDA for medical use in the U.S. they are rescheduled to Schedules II-V, since approval by FDA satisfies the “accepted medical use” requirement; or may be removed from control under the Controlled Substances Act entirely. If any of our product candidates receive FDA approval, the U.S. Drug Enforcement Administration, or DEA, will make a scheduling determination. If any foreign regulatory authority determines that Epidyolex may have potential for abuse, or if DEA makes a similar determination for nabiximols, it may require us to generate more clinical or other data than we currently anticipate to establish whether or to what extent the substance has an abuse potential, which could increase the cost, delay the approval and/or delay the launch of that product. In addition, there are non-FDA approved cannabidiol preparations being made available from companies through the state-enabled medical marijuana industry, which might attempt to compete with Epidiolex and, if approved by FDA, nabiximols. If we are unable to compete successfully, our commercial opportunities will be reduced and our business, results of operations and financial conditions may be materially harmed.

Finally, business practices by pharmaceutical companies, including product formulation improvements, patent litigation settlements, and risk evaluation and mitigation strategy, or REMS, programs, have increasingly drawn public scrutiny from legislators and regulatory agencies, with allegations that such programs are used as a means of improperly blocking or delaying competition. If we become the subject of any future government investigation with respect to our business practices, including as they relate to the Xywav and Xyrem REMS, the launch of Xywav, our Xyrem patent litigation settlement agreements or otherwise, we could incur significant expense and could be distracted from operation of our business and execution of our strategy. From June 2020 to ~~September 2020,~~February 2022, a number of ~~class action~~ lawsuits were filed on behalf of purported direct and indirect Xyrem purchasers, alleging that the patent litigation settlement agreements we entered with certain generic companies violate state and federal antitrust and consumer protection laws. For additional information on these ~~class action complaints,~~lawsuits, see Note ~~11,~~9, Commitments and Contingencies-Legal Proceedings of the Notes to Condensed Consolidated Financial Statements, included in Part I ~~Item 1~~ of this Quarterly Report on Form~~10-Q.~~ 10‑Q. It is possible that additional lawsuits will be filed against us making similar or related allegations. We cannot predict the outcome of these or potential additional lawsuits or government action; however, if the plaintiffs were to be successful in their claims, they may be entitled to injunctive relief or we may be required to pay significant monetary damages. Any of the foregoing risks and uncertainties could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In addition, to the extent the COVID-19 pandemic continues to adversely affect our business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties described above. All of these risks and uncertainties are discussed in greater detail, along with other risks and uncertainties, in “Risk Factors” in in Part I, Item 1A of the annual report on Form 10-K for the year ended December 31, ~~2020~~2021.~~, filed with the Securities and Exchange Commission on February 23, 2021, or the 2020 Form 10-K.~~

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Results of Operations

The following table presents our revenues and expenses (in thousands, except percentages):


		Three Months Ended March 31,				Increase/		Three Months Ended March 31,				Increase/
		2021		2020		(Decrease)				2022		2021(1)		(Decrease)
Product sales, net	Product sales, net	$	603,531	$	530,205	14	%		Product sales, net	$	809,837	$	603,531	34	%
Royalties and contract revenues	Royalties and contract revenues	4,050		4,521		(10)	%		Royalties and contract revenues	3,884		4,050		(4)	%
Cost of product sales (excluding amortization of acquired developed technologies)	Cost of product sales (excluding amortization of acquired developed technologies)	40,189		28,657		40	%		Cost of product sales (excluding amortization of acquired developed technologies)	115,284		40,189		N/A(2)
Selling, general and administrative	Selling, general and administrative	260,508		208,400		25	%		Selling, general and administrative	308,813		260,508		19	%
Research and development	Research and development	76,573		86,107		(11)	%		Research and development	129,981		76,573		70	%
Intangible asset amortization	Intangible asset amortization	68,192		62,847		9	%		Intangible asset amortization	172,094		68,192		N/A(2)
Impairment charge		—		136,139		N/A(1)
Acquired in-process research and development		—		202,250		N/A(1)

Interest expense, net	Interest expense, net	27,376		18,496		48	%		Interest expense, net	70,684		27,376		N/A(2)
Foreign exchange (gain) loss		(943)		1,132		(183)	%
Foreign exchange loss (gain)									Foreign exchange loss (gain)	10,540		(943)		N/A(2)

Income tax provision (benefit)		18,019		(51,287)		(135)	%
Equity in gain of investees		(4,165)		(182)		2,188	%
Income tax expense									Income tax expense	536		18,019		N/A(2)
Equity in loss (gain) of investees									Equity in loss (gain) of investees	4,142		(4,165)		N/A(2)

~~_____________________________~~____________________________

(1)The results of operations of the GW business have been included from the closing of the acquisition of GW on May 5, 2021.

(2)Comparison to prior period not meaningful.

Revenues

The following table presents our net product sales, royalties and contract revenues, and total revenues (in thousands, except percentages):


		Three Months Ended March 31,				Increase/		Three Months Ended March 31,				Increase/
		2021		2020		(Decrease)				2022		2021(1)		(Decrease)
Xyrem	Xyrem	$	335,550	$	407,875	(18)	%		Xyrem	$	247,497	$	335,550	(26)	%
Xywav	Xywav	75,416		—		N/A(1)			Xywav	186,080		75,416		147	%
Total Oxybate	Total Oxybate	410,966		407,875		1	%		Total Oxybate	433,577		410,966		6	%
Epidiolex/Epidyolex									Epidiolex/Epidyolex	157,893		—		N/A(2)
Sunosi	Sunosi	11,606		1,924		503	%		Sunosi	15,878		11,606		37	%
Sativex									Sativex	4,742		—		N/A(2)
Total Neuroscience	Total Neuroscience	422,572		409,799		3	%		Total Neuroscience	612,090		422,572		45	%
Zepzelca	Zepzelca	54,334		—		N/A(1)			Zepzelca	59,338		54,334		9	%
Rylaze									Rylaze	54,220		—		N/A(2)
Vyxeos	Vyxeos	33,155		32,720		1	%		Vyxeos	33,757		33,155		2	%
Defitelio/defibrotide	Defitelio/defibrotide	49,619		47,432		5	%		Defitelio/defibrotide	49,489		49,619		—	%
Erwinaze/Erwinase	Erwinaze/Erwinase	41,068		37,732		9	%		Erwinaze/Erwinase	—		41,068		N/A(2)
Total Oncology	Total Oncology	178,176		117,884		51	%		Total Oncology	196,804		178,176		10	%
Other	Other	2,783		2,522		10	%		Other	943		2,783		(66)	%
Product sales, net	Product sales, net	603,531		530,205		14	%		Product sales, net	809,837		603,531		34	%
Royalties and contract revenues	Royalties and contract revenues	4,050		4,521		(10)	%		Royalties and contract revenues	3,884		4,050		(4)	%
Total revenues	Total revenues	$	607,581	$	534,726	14	%		Total revenues	$	813,721	$	607,581	34	%

_____________________________

(1)The results of operations of the GW business have been included from the closing of the acquisition of GW on May 5, 2021.

(2)Comparison to prior period not meaningful.

Product Sales, Net

Total oxybate product sales increased by $22.6 million in the three months ended March 31, ~~2021~~2022 compared to the same period in ~~2020 primarily due to a higher average selling price, partially offset by a decrease in commercial sales volumes~~2021. . Total oxybate revenue bottle volume ~~decreased~~increased by 3% in the three months ended March 31, ~~2021~~2022 compared to

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the same period in ~~2020~~2021 reflecting our continued investment in patient access programs during the launch of Xywav. Average active oxybate patients on therapy were approximately ~~15,700~~16,650 in the first quarter of ~~2021,~~2022, an increase of ~~approximately 4%~~approximately 6% compared to the same period in ~~2020.~~2021. Xyrem product sales decreased in the three months ended March 31, ~~2021~~2022 compared to the same period in ~~2020~~2021 primarily due

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to a decrease in sales volume, reflecting the continued adoption of Xywav by existing Xyrem patients, and ~~to a lesser extent~~ higher gross to net deductions, partially offset by a higher average net selling price. Price increases were instituted in January ~~2020~~2021 and January ~~2021. Xyrem product sales volume decreased in the three months ended March 31, 2021, compared to the same period in 2020~~ ~~driven by the strong adoption of~~2022. Xywav ~~by existing Xyrem patients.~~ ~~Xywav product sales in the three months ended March 31, 2021 were $75.4 million, following its U.S. launch in November 2020.~~ ~~Sunosi~~ product sales increased in the three months ended March 31, ~~2021,~~2022 compared to the same period in ~~2020~~2021 primarily due to ~~an increase in~~higher sales ~~volume.Sunosi launched in the U.S. in July 2019 and the European rolling launch commenced in May 2020.~~

~~Zepzelca~~volumes, with bottle volume increasing by 148%. Epidiolex/Epidyolex product sales ~~were $54.3 million~~ in the three months ended March 31, ~~2021 following its U.S. launch in July 2020. Vyxeos~~2022 were $157.9 million. On a pro forma basis, Epidiolex/Epidyolex product sales ~~for~~increased by 6% in the three months ended March 31, ~~2021 were in line with~~2022 compared to the same period in ~~2020. Defitelio/defibrotide~~2021, primarily due to an increase in commercial sales volumes and higher average net selling price. Price increases were instituted in January 2021 and January 2022. Sunosi product sales increased in the three months ended March 31, ~~2021~~2022, compared to the same period in ~~2020~~2021 primarily due to ~~the positive impact of foreign exchange rates. Erwinaze/Erwinase~~an increase in sales volume.

Zepzelca product sales increased in the three months ended March 31, ~~2021~~2022 compared to the same period in ~~2020~~2021 primarily due to a higher average net selling price. Price increases were instituted in July 2021 and January 2022. Rylaze product sales were $54.2 million in the ~~timing of availability of supply of inventory from the manufacturer.~~

~~Royalties~~three months ended March 31, 2022, following its U.S. launch in July2021. Vyxeos and ~~Contract Revenues~~

~~Royalties and contract revenues decreased in~~Defitelio/defibrotide product sales for the three months ended March 31, ~~2021 compared to~~2022 were in line with the same period in ~~2020~~2021. We distributed our final Erwinaze inventory in June 2021 following expiration of our license and supply agreement.

We expect total product sales, net will increase in 2022 over 2021, primarily due to ~~lower revenues from out-licensing agreements.~~an increase in sales of Xywav partially offset by a decrease in Xyrem as patients continue to transition to Xywav, expected growth in, and the inclusion of a full year sales of, Epidiolex and Rylaze and expected growth in Zepzelca, partially offset by an expected reduction in Sunosi upon completion of the sale to Axsome.

Cost of Product Sales

Cost of product sales increased in the three months ended March 31, ~~2021~~2022 compared to the same period in ~~2020~~2021 primarily due to ~~changes~~the cost of product sales acquired in ~~product mix.~~the acquisition of GW, including the acquisition accounting inventory fair value step-up expense, or fair value step-up expense of $63.9 million. Gross margin as a percentage of net product sales was ~~93.3%~~85.8% for the three months ended March 31, ~~2021~~2022 compared to ~~94.6%~~93.3% for the same period in ~~2020.~~2021. The decrease in our gross margin percentage was primarily due to the impact of the fair value step-up expense. We expect our cost of product sales to increase in 2022 compared to 2021 primarily driven by the inclusion of a full year of fair value step-up expense.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased in the three months ended March 31, ~~2021~~2022 compared to the same period in ~~2020~~2021, primarily due to ~~increased investment~~an increase in ~~sales, marketing~~compensation-related expenses driven by higher headcount due to the acquisition of GW. We expect selling, general and ~~launch activities~~administrative expenses in 2022 to decrease compared to 2021, primarily due to a reduction in transaction and integration-related expenses and a reduction in costs associated with Sunosi upon completion of the sale to Axsome, together with synergies expected to be realized in connection with the ~~commencement~~acquisition of GW, partially offset by the ~~Sunosi direct-to-consumer marketing campaign in the U.S. and the continuation~~inclusion of ~~the launches~~a full year of ~~Zepzelca and Xywav in the U.S., transaction expenses~~expense related to the ~~proposed~~acquired GW ~~Acquisition as well as an increase in other expenses related to the expansion of our~~ business.

Research and Development Expenses

Research and development expenses consist primarily of costs related to clinical studies and outside services, personnel expenses, and other research and development costs. Clinical study and outside services costs relate primarily to services performed by clinical research organizations, materials and supplies, and other third party fees. Personnel expenses relate primarily to salaries, benefits and share-based compensation. Other research and development expenses primarily include overhead allocations consisting of various support and facilities-related costs. We do not track fully-burdened research and development expenses on a project-by-project basis. We manage our research and development expenses by identifying the research and development activities that we anticipate will be performed during a given period and then prioritizing efforts based on our assessment of which development activities are important to our business and have a reasonable probability of success, and by dynamically allocating resources accordingly. We also continually review our development pipeline projects and the status of their development and, as necessary, reallocate resources among our development pipeline projects that we believe will best support the future growth of our business.

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The following table provides a breakout of our research and development expenses by major categories of expense (in thousands):


		Three Months Ended March 31,				Three Months Ended March 31,
		2021		2020				2022		2021
Clinical studies and outside services	Clinical studies and outside services	$	31,046	$	47,749		Clinical studies and outside services	$	56,429	$	31,046
Personnel expenses	Personnel expenses	36,226		25,902			Personnel expenses	55,301		36,226

Other	Other	9,301		12,456			Other	18,251		9,301
Total	Total	$	76,573	$	86,107		Total	$	129,981	$	76,573

Research and development expenses ~~decreased~~increased by ~~$9.5~~$53.4 million in the three months ended March 31, ~~2021,~~2022, compared to the same period in ~~2020.~~2021. Clinical studies and outside services costs ~~decreased by $16.7 million~~increased in the three months ended

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March 31, ~~2021,~~2022 compared to the same period in ~~2020~~2021 primarily due to ~~a decrease in expenses~~the addition of costs related to ~~our~~ clinical programs ~~including JZP458.~~for Epidiolex, nabiximols, cannabinoids and an increase in costs related to JZP150 and suvecaltamide (JZP385). Personnel expenses increased by ~~$10.3~~$19.1 million in the three months ended March 31, ~~2021,~~2022, compared to the same period in ~~2020 primarily~~2021 due to increased headcount ~~in support~~primarily driven by the acquisition of GW.

For 2022, we expect that our research and development ~~programs.~~expenses will continue to increase from previous levels due to the inclusion of a full year of expense with respect to the acquired GW business and as we prepare for anticipated data read-outs from clinical trials, initiate and undertake additional clinical trials and related development work and potentially acquire rights to additional product candidates.

Intangible Asset Amortization

Intangible asset amortization increased by ~~$5.3~~$103.9 million in the three months ended March 31, ~~2021~~2022, compared to the same period in ~~2020~~2021 primarily due to the ~~impact~~inclusion of ~~changes in foreign exchange rates on euro-denominated intangible assets and~~ the ~~commencement of~~ amortization of the ~~Zepzelca~~ intangible ~~asset upon FDA approval in June 2020.~~

~~Impairment Charge~~

Inassets arising from the ~~three months ended March 31, 2020, we recorded an acquired in-process research and development, or IPR&D, asset impairment charge~~acquisition of $136.1 million following the decision to stop enrollment in our Phase 3 clinical study of defibrotide for the prevention of VOD due to a determination that the study is highly unlikely to reach one of its primary endpoints.

~~Acquired In-Process Research and Development~~

~~Acquired IPR&D expense in the three months ended March 31, 2020~~GW, primarily related to ~~an upfront payment~~Epidiolex. Intangible asset amortization is expected to increase in 2022 compared to 2021 primarily as a result of ~~$200.0 million to PharmaMar~~the inclusion of a full years amortization on the intangible assets acquired in ~~connection with our license agreement.~~the acquisition of GW.

Interest Expense, Net

Interest expense, net increased by ~~$8.9~~$43.3 million in the three months ended March 31, ~~2021~~2022, compared to the same period in ~~2020,~~2021, primarily due to higher ~~non-cash~~ interest expense ~~following~~from (i) a seven-year $3.1 billion term loan B facility, or the ~~issuance of our 2.00% exchangeable~~Dollar Term Loan and (ii) a seven-year $625.0 million term loan B facility, or the Euro Term Loan, together with the Dollar Term Loan, collectively known as the Term Loan and 4.375% senior secured notes, due ~~2026,~~2029, or the ~~2026 Notes,~~Secured Notes. We expect interest expense, net for 2022 to be broadly in ~~June 2020 and lower interest income.~~line with 2021.

Foreign Exchange Loss (Gain) ~~Loss~~

The foreign exchange loss (gain) ~~loss~~ is primarily related to the translation of sterling and euro-denominated net monetary liabilities, primarily intercompany balances, held by subsidiaries with a U.S. dollar functional currency and related foreign exchange forward contracts not designated as hedging instruments.

Income Tax ~~Provision (Benefit)~~Expense

Our income tax ~~provision~~expense was ~~$18.0~~$0.5 million in the three months ended March 31, 2021, compared to an income tax benefit of $51.3 million for the same period in 2020. The effective tax rate was 13.3% in the three months ended March 31, 2021 compared to 24.5% for the same period in 2020. The decrease in the effective tax rate for the three months ended March 31, ~~2021~~2022, compared to $18.0 million for the same period in ~~2020 was~~2021. The decrease in the income tax expense resulted primarily ~~due to~~from the ~~impact~~mix of ~~the defibrotide acquired IPR&D asset impairment charge~~pre-tax income and the acquired IPR&D expense relating to the $200.0 million upfront payment to PharmaMar for the exclusive U.S. commercialization and development rights to Zepzelca in 2020, and changes in income mix among the various jurisdictions in which we operate. The effectivelosses incurred across tax rate for the three months ended March 31, 2021 was higher than the Irish statutory rate of 12.5% primarily due to the impact of various expenses not deductible for tax purposes, income taxable at a rate higher than the Irish statutory rate and uncertain tax positions, partially offset by deductions available in respect of subsidiary equity and originating tax credits.jurisdictions. We do not provide for Irish income taxes on undistributed earnings of our foreign operations that are intended to be indefinitely reinvested in our foreign subsidiaries.

~~Equity in Earnings of Investees~~

~~Equity in earnings of investees relates to our share in the net gain of companies in which we have made investments accounted for under the equity method of accounting.~~

Liquidity and Capital Resources

As of March 31, ~~2021,~~2022, we had cash and cash equivalents ~~and investments~~ of ~~$2.4 billion,~~$490.8 million, borrowing availability under our revolving credit facility of ~~$1.6 billion~~$500.0 million and long-term debt principal balance of ~~$2.4~~$6.2 billion. Our long-term debt included ~~$575.9 million~~$3.1 billion in aggregate principal amount ~~term loan, $218.8 million~~of the Dollar Term Loan, $1.5 billion in aggregate principal amount of ~~our 1.875%~~the Secured Notes, $1.0 billion principal amount of the 2.00% exchangeable senior notes due ~~2021,~~2026, or the ~~2021~~2026 Notes and $575.0 million principal amount of ~~our~~the 1.50% exchangeable senior notes due 2024, or the 2024 ~~Notes, and $1.0 billion principal amount of our 2026~~ Notes. We generated cash flows from operations of ~~$285.0~~$209.0 million during the three months ended March 31, ~~2021,~~2022, and we expect to continue to generate positive cash flows from operations ~~during 2021.~~which will enable us to operate our business and de-lever our balance sheet over time.

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~~On April 20, 2021,~~In the first quarter of 2022, we ~~and certain of our wholly-owned subsidiaries, entered into Amendment No. 3 to our Credit Agreement, dated as of June 18, 2015,~~repaid €208.3 million, or $251.0 million which represents the Existing Credit Agreement, with the lenders party thereto and Bank of America, N.A., as administrative agent, collateral agent, letter of credit issuer and swing line lender. The Amendment No. 3 amended the Existing Credit Agreement to permit the issuance of senior secured notes and made certain related changes as set forth therein.

~~On April 29, 2021, our wholly-owned subsidiary, Jazz Securities Designated Activity Company, issued $1.5 billion in aggregate~~remaining principal amount of ~~4.375% senior secured notes due 2029.~~

~~Concurrently with~~the Euro Term Loan. We have made voluntary repayments of €625.0 million, or $753.0 million, relating to Euro Term Loan and mandatory repayments of $23.3 million relating to the Dollar Term Loan since the closing of the acquisition of GW ~~Acquisition, we expect to enter into new senior secured credit facilities, which is expected to consist of~~in May 2021.

We have a ~~$500.0 million revolving credit facility and a term loan B facility in an aggregate~~significant amount of ~~approximately $3.85 billion. We expect~~debt outstanding on a consolidated basis. For a more detailed description of our debt arrangements, including information relating to ~~use term loan B borrowings under new senior secured credit facilities and the net proceeds from the senior secured notes, together~~our scheduled maturities with ~~cash on hand~~respect to fund the cash consideration payable in connection with the GW Acquisition. The senior secured notes have a mandatory redemption clause that will be triggered under certain circumstances, including failure to complete the acquisition within the time period outlined in the GW Transaction Agreement or the terminationour long-term debt, see Note 8, Debt, of the ~~GW Acquisition.~~notes to the condensed consolidated financial statements, included in Part I, Item 1 of this Quarterly Report on Form 10‑Q. This substantial level of debt could have important consequences to our business, including, but not limited to the factors set forth in “Risk Factors” in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2021 under the heading "We have incurred substantial debt, which could impair our flexibility and access to capital and adversely affect our financial position, and our business would be adversely affected if we are unable to service our debt obligations.”

We believe that our existing cash and cash equivalents, ~~and investments balances,~~ cash we expect to generate from operations and funds available under our ~~revolving credit facility~~Revolving Credit Facility will be sufficient to fund our operations and to meet our existing obligations for the foreseeable future. The adequacy of our cash resources depends on many assumptions, including primarily our assumptions with respect to product sales and expenses, as well as the other factors set forth in “Risk Factors” in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 under the headings “Risks Related to our Lead Products and Product Candidates” and “To continue to grow our business, we will need to commit substantial resources, which could result in future losses or otherwise limit our opportunities or affect our ability to operate and grow our business.” Our assumptions may prove to be wrong or other factors may adversely affect our business, and as a result we could exhaust or significantly decrease our available cash resources, and we may not be able to generate sufficient cash to service our debt obligations which could, among other things, force us to raise additional funds and/or force us to reduce our expenses, either of which could have a material adverse effect on our business.

To continue to grow our business over the longer term, we plan to commit substantial resources to product acquisition and in-licensing, product development, clinical trials of product candidates and expansion of our commercial, development, manufacturing and other operations. In this regard, we have evaluated and expect to continue to evaluate a wide array of strategic transactions as part of our strategy to acquire or in-license and develop additional products and product candidates. Acquisition opportunities that we pursue could materially affect our liquidity and capital resources and may require us to incur additional indebtedness, seek equity capital or both. We regularly evaluate the performance of our products and product candidates to ensure fit within our portfolio and support efficient allocation of capital. In addition, we may pursue new operations or continue the expansion of our existing operations. Accordingly, we expect to continue to opportunistically seek access to additional capital to license or acquire additional products, product candidates or companies to expand our operations or for general corporate purposes. Raising ~~additional~~additional capital could be accomplished through one or more public or private debt or equity financings, collaborations or partnering arrangements. However, as a result of the COVID-19 pandemic ~~continues to rapidly evolve and has resulted in significant volatility in~~ the global financial ~~markets.~~ markets have experienced significant volatility. If ~~the disruption~~this volatility persists and deepens, we could experience an inability to access additional capital or ~~an impact on~~our liquidity could otherwise be impacted, which could in the future negatively affect our capacity for certain corporate development transactions or our ability to make other important, opportunistic investments. In addition, as a matter of Irish law, when an Irish public limited company issues ordinary shares to new shareholders for cash, the company must first offer those shares on the same or more favorable terms to existing shareholders on a pro rata basis, unless this statutory pre-emption obligation is dis-applied, or opted-out of, by approval of its shareholders. At our extraordinary general meeting of shareholders in September 2021, our shareholders voted to approve our proposal to dis-apply the statutory pre-emption obligation on terms that are substantially more limited than our general preemption opt-out authority that had been in effect prior to August 4, 2021, which could adversely affect our ability to effectively use our unissued share capital to fund in-licensing or acquisition opportunities, or to otherwise raise additional capital for our business. In any event, an inability to borrow or raise additional capital in a timely manner and on attractive terms could prevent us from expanding our business or taking advantage of acquisition opportunities, and could otherwise have a material adverse effect on our business and growth prospects. In addition, if we use a substantial amount of our funds to acquire or in-license products or product candidates, we may not have sufficient additional funds to conduct all of our operations in the manner we would otherwise choose. Furthermore, any equity financing would be dilutive to our shareholders, and could require the consent of the lenders under the ~~amended credit agreement could be required~~Credit Agreement and the indenture for the Secured Notes for certain financings.

In November 2016, our board of directors authorized a share repurchase program and as of March 31, 2021 had authorized the repurchase of ordinary shares having an aggregate purchase price of up to $1.5 billion, exclusive of any brokerage commissions. Under this program, which has no expiration date, we may repurchase ordinary shares from time to time on the open market. The timing and amount of repurchases will depend on a variety of factors, including the price of our ordinary shares, alternative investment opportunities, restrictions under the amended credit agreement, corporate and regulatory requirements and market conditions. The share repurchase program may be modified, suspended or discontinued at any time without prior notice. During the three months ended March 31, 2021, we did not repurchase any of our ordinary shares. As of March 31, 2021, the remaining amount authorized under the share repurchase program was $431.2 million.

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The following table presents a summary of our cash flows for the periods indicated (in thousands):

Three Months Ended
March 31,
2021 2020
Net cash provided by operating activities $ 284,997 $ 272,969
Net cash provided by (used in) investing activities 737,132 (60,080)
Net cash provided by (used in) financing activities 18,276 (147,683)
Effect of exchange rates on cash and cash equivalents (641) (948)
Net increase in cash and cash equivalents $ 1,039,764 $ 64,258


	Three Months Ended March 31,
	2022		2021
Net cash provided by operating activities	$	208,979	$	284,997
Net cash (used in) provided by investing activities	(37,292)		737,132
Net cash (used in) provided by financing activities	(270,811)		18,276
Effect of exchange rates on cash and cash equivalents	(1,489)		(641)
Net (decrease) increase in cash and cash equivalents	$	(100,613)	$	1,039,764

Operating activities

Net cash provided by operating activities ~~increased~~decreased by ~~$12.0~~$76.0 million in the three months ended March 31, ~~2021~~2022 compared to the same period in ~~2020,~~2021, primarily due ~~to:~~

•~~An increase~~to a decrease in net cash inflow related to changes in operating assets and ~~liabilities primarily driven by the timing of payments to suppliers, partially offset by the timing of receipts from customers.~~liabilities.

Investing activities

Net cash (used in) provided by ~~(used in)~~ investing activities ~~increased~~decreased by ~~$797.2~~$774.4 million in the three months ended March 31, ~~2021~~2022 compared to the same period in ~~2020,~~2021, primarily due to the following:

•$~~579.3~~739.3 million ~~increase~~ in net proceeds from maturity of investments, primarily time ~~deposits;~~

•~~$202.3 million decrease in upfront payments for acquired IPR&D primarily driven by the $200.0 million payment under our license agreement with PharmaMar~~deposits, in the three months ended March 31, ~~2020.~~2021; and

•$25.0 million milestone payment to PharmaMar in relation to our first sales-based milestone for Zepzelca in the three months ended March 31, 2022.

Financing activities

Net cash (used in) provided by ~~(used in)~~ financing activities ~~increased~~decreased by ~~$166.0~~$289.1 million in the three months ended March 31, ~~2021~~2022 compared to the same period in ~~2020,~~2021, primarily due to:

•~~The impact~~Repayment of ~~share repurchases~~long-term debt of ~~$139.1~~$258.8 million in the three months ended March 31, ~~2020;~~2022, compared to $8.3 million in the three months ended March 31, 2021;

•~~An increase~~A decrease of ~~$37.1~~$28.7 million in proceeds from employee equity incentive and purchase plans; ~~partially offset by~~and

•An increase of ~~$10.2~~$10.0 million in payment of employee withholding taxes related to share-based awards.

Debt

The summary of our outstanding indebtedness under our financing arrangements is included in Note 9,8, Debt, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. During the three months ended March 31, ~~2021,~~2022, there were no ~~material~~ changes to the ~~amended~~ credit agreement, as set forth in Note ~~11,~~12, Debt, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

~~On April 29, 2021, our wholly-owned subsidiary, Jazz Securities Designated Activity Company, issued $1.5 billion in aggregate principal amount of 4.375% senior secured notes due 2029.~~2021.

Contractual Obligations

During the three months ended March 31, ~~2021,~~2022, there were no material changes to our contractual obligations as set forth in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Critical Accounting Estimates

To understand our financial statements, it is important to understand our critical accounting estimates. The preparation of our financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the

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date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in determining the amounts to be deducted from gross revenues ~~in particular estimates~~and also with respect to the acquisition and valuation of government rebates, which include Medicaid and TRICARE rebates, commercial contracting and estimated product returns. Significant estimates and assumptions are also required to determine whether to capitalize intangible assets, the amortization periods for identifiable intangible assets, the potential impairment of goodwill and other intangible assetsintangibles and income taxes. Some of these judgments can be subjective and complex, and,

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consequently, actual results may differ from these estimates. For any given individual estimate or assumption we make, there may also be other estimates or assumptions that are reasonable. Although we believe our estimates and assumptions are reasonable, they are based upon information available at the time the estimates and assumptions were made.

Our critical accounting policies and significant estimates are detailed in our Annual Report on Form ~~10-K~~10‑K for the year ended December 31, ~~2020.~~2021. Our critical accounting policies and significant estimates have not changed substantially from those previously disclosed in our Annual Report on Form ~~10-K~~10‑K for the year ended December 31, ~~2020.~~

~~Off-Balance Sheet Arrangements~~

~~We do not have any off-balance sheet arrangements.~~2021.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form ~~10-Q~~10‑Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. Forward-looking statements are based on our management’s current plans, objectives, estimates, expectations and intentions and on information currently available to our management. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “propose,” “intend,” “continue,” “potential,” “possible,” “foreseeable,” “likely,” “unforeseen” and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. ~~These known and unknown~~We discuss many of these risks, uncertainties and other risk factors ~~include, without limitation:~~

•~~We may not realize the anticipated benefits and synergies from our pending GW Acquisition.~~

•~~The GW Acquisition may not be completed on the currently contemplated timeline or terms, or at all.~~

•~~Failure to complete the GW Acquisition could have a material and adverse effect on us.~~

•~~The indebtedness of the combined company following the consummation of the GW Acquisition will be substantially~~in greater than our indebtedness on a standalone basis and greater than the combined indebtedness of Jazz and GW prior to the announcement of the acquisition. This increased level of indebtedness could adversely affect the combined company’s business flexibility and increase its borrowing costs.

•Our inability to maintain or increase sales from our neuroscience therapeutic area would have a material adverse effect on our business, financial condition, results of operations and growth prospects.

•The introduction of new products in the U.S. market that compete with, or otherwise disrupt the market for, our oxybate products and product candidates would adversely affect sales of our oxybate products and product candidates.

•The distribution and sale of our oxybate products are subject to significant regulatory restrictions, including the requirements of a REMS and these regulatory requirements subject us to risks and uncertainties, any of which could negatively impact sales of Xyrem and Xywav.

•While we expect our oxybate products, Xyrem and Xywav, to remain the largest part of our business, our success also depends on our ability to effectively commercialize products in our oncology therapeutic area. An inability to effectively commercialize Defitelio, Vyxeos and Zepzelca and to maximize their potential where possible through successful research and development activities and an inability to replace the future product sales we will lose from Erwinaze, would have a material adverse effect on our business, financial condition, results of operations and growth prospects.

•We face substantial competition from other companies, including companies with larger sales organizations and more experience working with large and diverse product portfolios, and the commercial potential of our current products and any future products may be reduced or eliminated if our competitors develop or acquire and commercialize

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~~generic or branded products that are safer or more effective, are more convenient or are less expensive than our products.~~

•Adequate coverage and reimbursement from third party payers may not be available for our products and we may be unable to successfully contract for coverage from pharmacy benefit managers and group purchasing organizations, which could diminish our sales or affect our ability to sell our products profitably; conversely, to secure coverage from these organizations, we may be required to pay rebates or other discounts or other restrictions to reimbursement that could diminish our sales.

•The pricing of pharmaceutical products has come under increasing scrutiny as part of a global trend toward healthcare cost containment and resulting changes in healthcare law and policy may impact our business in ways that we cannot currently predict, which could have a material adverse effect on our business and financial condition.

•~~In addition to access, coverage and reimbursement, the commercial success of our products depends upon their market acceptance by physicians, patients, third party payers and the medical community.~~

•Delays or problems in the supply of our products for sale or for use in clinical trials, loss of our single source suppliers or failure to comply with manufacturing regulations could materially and adversely affect our business, financial condition, results of operations and growth prospects.

•Our future success depends on our ability to successfully develop and obtain and maintain regulatory approvals for our late-stage product candidates and, if approved, to successfully launch and commercialize those product candidates.

•We may not be able to successfully identify and acquire or in-license additional products or product candidates to grow our business, and, even if we are able to do so, we may otherwise fail to realize the anticipated benefits of these transactions.

•Conducting clinical trials is costly and time-consuming, and the outcomes are uncertain. A failure to prove that our product candidates are safe and effective in clinical trials, or to generate data in clinical trials to support expansion of the therapeutic uses for our existing products, could materially and adversely affect our business, financial condition, results of operations and growth prospects.

•We have incurred and may in the future incur substantial costs as a result of litigation or other proceedings relating to patents, other intellectual property rights and related matters, and we may be unable to protect our rights to, or commercialize, our products.

•Our business is currently adversely affected and could be materially and adversely affected in the future by the evolving effects of the COVID‑19 pandemic and related global economic slowdown as a result of the current and potential future impacts on our commercialization efforts, clinical trial activity, research and development activities, supply chain and corporate development activities and other business operations, in addition to the impact of a global economic slowdown.

•~~Significant disruptions of information technology systems or data security breaches could adversely affect our business.~~

•~~We are subject to significant ongoing regulatory obligations and oversight, which may result in significant additional expense and limit our ability to commercialize our products.~~

•If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate program or other governmental pricing programs, we could be subject to additional reimbursement requirements, penalties, sanctions and fines, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

•We have incurred substantial debt, and expect to incur additional debt in connection with the GW Acquisition, which could impair our flexibility and access to capital and adversely affect our financial position, and our business would be adversely affected if we are unable to service our debt obligations.

•To continue to grow our business, we will need to commit substantial resources, which could result in future losses or otherwise limit our opportunities or affect our ability to operate and grow our business.

~~Additional discussion of the risks, uncertainties and other factors described above, as well as other risks material to our business, can be found under “Risk Factors”~~detail in Part I, Item 1A of ~~the 2020~~our Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2021. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our plans, objectives, estimates, expectations and intentions only as of the date of this filing. You should read this Quarterly Report on Form ~~10-Q~~10‑Q completely and with the understanding that our actual future results and the

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timing of events may be materially different from what we expect. We hereby qualify our forward-looking statements by our cautionary statements. Except as required by law, we undertake no obligation to update or supplement any forward-looking statements publicly, or to update or supplement the reasons that actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

During the three months ended March 31, ~~2021,~~2022, there were no material changes to our market risk disclosures as set forth in Part II, Item ~~7A “Quantitative~~7A“Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures. We have carried out an evaluation under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form ~~10-Q.~~10‑Q. Based on their evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, ~~2021.~~2022.

Limitations on the Effectiveness of ~~Controls.~~Controls. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within an organization have been detected. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met and, as set forth above, our principal executive officer and principal financial officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures were effective to provide reasonable assurance that the objectives of our disclosure control system were met.

Changes in Internal Control over Financial ~~Reporting.~~Reporting. During the quarter ended March 31, ~~2021,~~2022, other than continuing changes to our internal control process resulting from the acquisition of GW, there have been no changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.Legal Proceedings

The information required to be set forth under this Item 1 is incorporated by reference to Note ~~11,~~9, Commitments and Contingencies—Legal Proceedings of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form ~~10-Q.~~10‑Q.

Item 1A.Risk Factors

There have been no material changes to the risk factors as previously disclosed in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

In November 2016, our board of directors authorized a share repurchase program and as of March 31, ~~2021~~2022 had authorized the repurchase of ordinary shares having an aggregate purchase price of up to $1.5 billion, exclusive of any brokerage commissions. Under this program, which has no expiration date, we may repurchase ordinary shares from time to time on the open market. During the three months ended March 31, ~~2021,~~2022, we did not repurchase any of our ordinary shares. As of March 31, ~~2021,~~2022, the remaining amount authorized under the share repurchase program was $431.2 million.

Under our share repurchase program, we are authorized to repurchase shares from time to time through open market repurchases. Such repurchases may be pursuant to Rule 10b-18 or Rule 10b5-1 agreements as determined by our management and in accordance with the requirements of the Securities and Exchange Commission.

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Item 6.Exhibits


Exhibit Number			Description of Document
2.1			Agreement and Plan of Merger and Reorganization, dated as of September 19, 2011, by and among Azur Pharma Limited (now Jazz Pharmaceuticals plc), Jaguar Merger Sub Inc., Jazz Pharmaceuticals, Inc. and Seamus Mulligan, solely in his capacity as the Indemnitors’ Representative (incorporated herein by reference to Exhibit 2.1 in Jazz Pharmaceuticals, Inc.’s Current Report on Form 8-K (File No. 001-33500) filed with the SEC on September 19, 2011).
2.2			Letter Agreement, dated as of January 17, 2012, by and among Jazz Pharmaceuticals plc, Jaguar Merger Sub Inc., Jazz Pharmaceuticals, Inc. and Seamus Mulligan, solely in his capacity as the Indemnitors’ Representative (incorporated by reference to Exhibit 2.2 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-33500), as filed with the SEC on January 18, 2012).
2.3			Agreement and Plan of Merger, dated as of April 26, 2012, by and among Jazz Pharmaceuticals plc, Jewel Merger Sub Inc., EUSA Pharma Inc., and Essex Woodlands Health Ventures, Inc., Mayflower L.P., and Bryan Morton, in their capacity as the representatives of the equity holders of EUSA Pharma Inc. (incorporated herein by reference to Exhibit 2.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-33500), as filed with the SEC on April 27, 2012).
2.4			Assignment, dated as of June 11, 2012, by and among Jazz Pharmaceuticals plc and Jazz Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 2.1B in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-33500), as filed with the SEC on June 12, 2012).
2.5			Tender Offer Agreement, dated December 19, 2013, by and among Jazz Pharmaceuticals Public Limited Company, Jazz Pharmaceuticals Italy S.r.l. and Gentium S.p.A. (incorporated herein by reference to Exhibit 2.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K/A (File No. 001-33500), as filed with the SEC on December 20, 2013).
2.6†			Asset Purchase Agreement, dated January 13, 2014, by and among Jazz Pharmaceuticals International III Limited, Aerial BioPharma, LLC and Jazz Pharmaceuticals plc (incorporated herein by reference to Exhibit 2.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-33500), as filed with the SEC on January 13, 2014).
2.7†			Assignment Agreement, dated July 1, 2014, by and among Jazz Pharmaceuticals International II Limited, Sigma-Tau Pharmaceuticals, Inc., Jazz Pharmaceuticals plc and Gentium S.p.A. (incorporated herein by reference to Exhibit 2.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-33500), as filed with the SEC on August 5, 2014).
2.8			Amended and Restated Agreement for the Acquisition of the Topaz Portfolio Business of Jazz Pharmaceuticals plc, dated March 20, 2015, between Jazz Pharmaceuticals plc and Essex Bidco Limited (incorporated herein by reference to Exhibit 2.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-33500), as filed with the SEC on March 23, 2015).
2.9			Agreement and Plan of Merger, dated as of May 27, 2016, by and among Jazz Pharmaceuticals plc, Plex Merger Sub, Inc., and Celator Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 2.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-33500), as filed with the SEC on May 31, 2016).
2.10‡			Transaction Agreement, dated as of February 3, 2021, by and among Jazz Pharmaceuticals UK Holdings Limited, Jazz Pharmaceuticals Public Limited Company and GW Pharmaceuticals PLC (incorporated herein by reference to Exhibit 2.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-33500), as filed with the SEC on February 4, 2021).
3.1			Amended and Restated Memorandum and Articles of Association of Jazz Pharmaceuticals plc, as amended on August 4, 2016 (incorporated herein by reference to Exhibit 3.1 in Jazz Pharmaceuticals plc’s Quarterly Report on Form 10-Q (File No. 001-33500) for the period ended June 30, 2016, as filed with the SEC on August 9, 2016).
4.1			Reference is made to Exhibit 3.1.
4.2A			Indenture, dated as of August 13, 2014, by and among Jazz Pharmaceuticals plc, Jazz Investments I Limited and U.S. Bank National Association (incorporated herein by reference to Exhibit 4.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-33500), as filed with the SEC on August 13, 2014).
~~4.2B~~			Form of 1.875% Exchangeable Senior Note due 2021 (incorporated herein by reference to Exhibit 4.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-33500), as filed with the SEC on August 13, 2014).
~~4.3A~~			Indenture, dated as of August 23, 2017, among Jazz Pharmaceuticals Public Limited Company, Jazz Investments I Limited and U.S. Bank National Association (incorporated herein by reference to Exhibit 4.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-033500), as filed with the SEC on August 23, 2017).
~~4.3B~~			Form of 1.50% Exchangeable Senior Note due 2024 (incorporated herein by reference to Exhibit 4.2 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-033500), as filed with the SEC on August 23, 2017).

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~~4.4A~~			Indenture, dated as of June 11, 2020 among Jazz Pharmaceuticals Public Limited Company, Jazz Investments I Limited and U.S. Bank National Association (incorporated herein by reference to Exhibit 4.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-033500), as filed with the SEC on June 11, 2020).
~~4.4B~~			Form of 2.000% Exchangeable Senior Note due 2026 (incorporated herein by reference to Exhibit 4.2 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-033500), as filed with the SEC on June 11, 2020).
~~4.5A~~			~~Indenture, dated as of~~ April 29, 2021, among Jazz Securities Designated Activity Company, the guarantors party thereto, U.S. Bank National Association, as trustee and acknowledged by U.S. Bank National Association, as collateral trustee. (incorporated herein by reference to Exhibit 4.1 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-033500), as filed with the SEC on April 29, 2021).
~~4.5B~~4.2B			Form of 4.375% Senior Notes due 2029 (incorporated herein by reference to Exhibit 4.2 in Jazz Pharmaceuticals plc’s Current Report on Form 8-K (File No. 001-033500), as filed with the SEC on April 29, 2021).
4.2C			First Supplemental Indenture, dated as of July 21, 2021, among GW Pharmaceuticals Limited, GW Global Services (International) Limited, GW Pharma Limited, GW Research Limited, GW UK Services Limited and Greenwich Biosciences, Inc., Jazz Securities Designated Activity Company , and U.S. Bank National Association, as trustee under the Indenture, dated as of April 29, 2021.
10.1#			Amendment No. 4, dated as of April 18, 2022 to Pharmacy Master Services Agreement, dated as of July 1, 2020, by and between Jazz Pharmaceuticals, Inc. and Express Scripts Specialty Distribution Services, Inc.

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31.1			Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2			Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32.1*			Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

__________________

~~+ Indicates management contract or compensatory plan.~~

† Confidential treatment has been granted for portions of this ~~exhibit.~~exhibit (indicated by “[*]”). Omitted portions have been filed separately with the SEC.

# Portions of this document (indicated by “[***]”) have been omitted because they are not material and are the type that the Company treats as private and confidential.

‡ Certain portions of this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

* The certification attached as Exhibit 32.1 accompanies this Quarterly Report on Form ~~10-Q~~10‑Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 4, ~~2021~~2022


JAZZ PHARMACEUTICALS PUBLIC LIMITED COMPANY (Registrant)

/s/ Bruce C. Cozadd
Bruce C. Cozadd
Chairman and Chief Executive Officer and Director (Principal Executive Officer)

/s/ Renée Galá
Renée Galá
Executive Vice President and Chief Financial Officer (Principal Financial Officer)

/s/ Patricia Carr
Patricia Carr
Senior Vice President, ~~Finance~~Chief Accounting Officer (Principal Accounting Officer)

4748


	Three Months Ended March 31,
Lease Cost	2021		2020
Operating lease cost	$	5,546	$	5,290
Short-term lease cost	1,375		870
Variable lease cost	1		1
Sublease income	0		(157)
Net lease cost	$	6,922	$	6,004


Leases	Classification	March 31, 2021		December 31, 2020
Assets
Operating lease assets	Operating lease assets	$	125,738	$	129,169

Liabilities
Current
Operating lease liabilities	Accrued liabilities	14,048		14,457
Non-current
Operating lease liabilities	Operating lease liabilities, less current portion	136,020		140,035
Total operating lease liabilities		$	150,068	$	154,492


Lease Term and Discount Rate	March 31, 2021		December 31, 2020
Weighted-average remaining lease term - operating leases (years)	8.6		8.7
Weighted-average discount rate - operating leases	5.3	%	5.3	%