Jazz Pharmaceuticals (JAZZ) Misses Q1 Earnings & Sales

Jazz Pharmaceuticals Public Limited Company (NASDAQ:JAZZ) reported first-quarter 2017 earnings of $1.41 per share, which narrowly missed the Zacks Consensus Estimate of $1.42.

However, adjusted earnings of $1.90 per share – including stock based compensation expenses – increased 8% from the year-ago figure.

Jazz’s shares have decreased more than 3% in after-hours trading. However, the company’s shares significantly outperformed Zacks classified Medical-Drugs industry so far this year. The company’s shares gained 45.2%, while the industry registered an increase of 3.3%.



Total revenue in the reported quarter climbed 12% year over year to $376.1 million, mainly due to higher sales of Xyrem and Defitelio. Revenues, however, fell short of the Zacks Consensus Estimate of $378 million.

Quarter in Detail

Net product sales in the first quarter increased 11.9% from the year-ago quarter to 373.7 million.

In the reported quarter, Xyrem (sodium oxybate) sales rose 9% to $272.3 million. The company reported 1% bottle volume growth of Xyrem in the quarter.

Xyrem is currently facing patent challenges from several companies. In Apr 2017, the company resolved its patent litigation with Hikma Pharmaceuticals PLC, granting Hikma's subsidiary West-Ward Pharmaceuticals the right to sell an authorized generic version of Xyrem in the U.S. Moreover, Jazz’s patent litigation continues against four other companies that have filed abbreviated new drug application (ANDAs) for Xyrem. A decision on the Roxane Laboratories case will be announced in the second quarter.

Erwinaze/Erwinase generated revenues of $51.4 million, almost in line with the year-ago figure. However, the performance was negatively impacted in the quarter by raw material supply challenges. This led to fluctuations in inventory levels and temporary disruptions in the company's ability to supply certain markets, including the U.S. The company expects these supply interruptions to continue in 2017.

Prialt revenues came in at $7.7 million, up 24.2% from the year-ago period. Other product sales plunged 30.8% to $6.3 million.

The company’s Defitelio sales were up 101% to $35.9 million in the first quarter compared with the year-ago figure of $17.9 million. Defitelio was launched in the U.S.from the Apr last year and so no U.S. sales were recorded in the first quarter of 2016. In the first quarter if 2017, the drug garnered sales of $11.6 million. Adjusted selling, general and administrative (SG&A) expenses (excluding stock-based compensation expenses) during the quarter rose 15.6% to $118.5 million, primarily due to higher headcount and an increase in other expenses related to business expansion.

Adjusted research and development (R&D) expenses increased 45.7% to $40.8 million due to costs related to the development of its pipeline candidate JZP-258, increased expenses oxybate-related R&D programs, costs related to Vyxeos rolling NDA submission and an increase in head count required supporting these activities.

Pipeline Update

Notably, lead pipeline candidate JZP-110 is in phase III safety and efficacy studies (TONES 3 and TONES 4) for the treatment of excessive daytime sleepiness in patients suffering from narcolepsy or obstructive sleep apnea (OSA). In March and April of this year, the company, respectively,announced positive efficacy and top-line safety results from the studies.

In Mar 2017, the company completed the rolling NDA submission to the FDA for Vyxeos for the treatment of acute myeloid leukemia (AML). Vyxeos has Fast Track designation in the U.S. and plans to request for priority review as well.

Moreover, the company has started clinical sites for a phase III study on Defitelio for the prevention of veno-occlusive disease (VOD) in high-risk patients following hematopoietic stem cell transplantation. The study is expected to enroll 400 patients from 100 sites globally. In Jan 2017, the company enrolled the first patient in the phase III study.

In Apr 2017, the company announced positive top-line efficacy results from phase II/III study evaluating Xyrem for the treatment of cataplexy in pediatric patients with narcolepsy.

2017 Guidance

The company continues to expect earnings in the range of $10.70–$11.30 per share (excluding stock based compensation expenses) in 2017. Jazz also maintains its revenue guidance in the band of $1.62–$1.70 billion during the same period. Total product sales are still expected in the range of $1.62–$1.69 billion.

Xyrem sales are now expected in the range of $1.20–$1.23 billion (old guidance: $1.22–$1.25 billion). Erwinaze/Erwinase sales are anticipated in the range of $205–$225 million. Defitelio revenues are projected in the range of $130–$150 million.

The company projects adjusted SG&A expenses in the range of $440–$460 million, while R&D costs are expected in the range of $165–$180 million.

Zacks Rank & Key Picks

Jazz currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the health care sector are Galena Biopharma, Inc. (NASDAQ:GALE) , VIVUS, Inc. (NASDAQ:VVUS) and Aeglea Biotherapeutics, Inc. (NASDAQ:AGLE) . While Galena and VIVUS sport a Zacks Rank #1 (Strong Buy), Aeglea carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Galena’s loss per share estimates narrowed from $2.03 to 58 cents for 2017, over the last 60 days. The company posted positive earnings surprises in two of the four trailing quarters with an average beat of 53.83%.

VIVUS’s loss per share estimates narrowed from 50 cents to 39 cents for 2017, over the last 30 days. The company posted positive earnings surprises in all of the four trailing quarters with an average beat of 233.69%.

Aeglea’s loss per share estimates narrowed from $3.64 to $2.48 for 2017, over the last 30 days. The company’s shares gained 42.5% so far this year.

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