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Jazz Pharma (JAZZ) Q1 Earnings Beat, Sales Miss, Stock Down

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Jazz Pharmaceuticals JAZZ delivered adjusted earnings of $3.92 per share for the first quarter of 2021, beating the Zacks Consensus Estimate of $3.69. The company had reported earnings of 45 cents in the year-ago quarter.

Total revenues in the reported quarter rose 13.6% year over year to $607.6 million. However, sales missed the Zacks Consensus Estimate of $613.0 million.

Net product sales increased 13.8% from the year-ago quarter to $603.5 million driven mainly by recently launched products, Xywav and Zepzelca. Please note that 23% of Jazz’s net product sales in the quarter came from newly launched products.

Royalties and contract revenues declined 10.4% to $4.1 million in the quarter.

Shares of Jazz were down 3% in after-hours trading on Tuesday. This year so far, Jazz’s shares have declined 3% compared with the industry’s decrease of 8.5%.

Neuroscience Products

Sales of neuroscience products increased 3% to $422.6million driven by the launch of Xywav in November 2020.

Net product sales for the combined oxybate business (Xyrem + Xywav) increased 1% to $411.0 million in the first quarter of 2021.

Sales of Xyrem, approved to treat cataplexy and excessive daytime sleepiness (“EDS”) in narcolepsy patients, declined 18% year over year to $335.6 million due to patient switching to Xywav.

Xywav is a low sodium formulation and a Xyrem follow-on product to treat EDS or cataplexy in narcolepsy patients. Xywav recorded sales of $75.4 million in the quarter compared with $15.3 million in the previous quarter. At the end of the first quarter, Jazz had approximately 3,900 active Xywav patients. This is up from approximately 1,900 at the end of the year.

Another new drug, Sunosi recorded sales of $11.6 million in the quarter, higher than $8.7 million in the previous quarter driven by recent demand and growth trends. Sunosi was launched for excessive sleepiness in narcolepsy & obstructive sleep apnea in the United States in July 2019 and in Europe in May 2020.

Oncology Products

Oncology product sales increased 51% to $178.2 million driven by strong Zepzelca sales and higher Defitelio and Vyxeos sales.

Acute myeloid leukemia drug, Vyxeos generated sales of $33.2 million, up 1% from the year-ago period driven by ongoing commercial activities and expansion into new international markets. In March 2021, the FDA approved Vyxeos label expansion to include pediatric AML patients.

Newly launched Zepzelca (lurbinectedin) recorded sales of $54.3 million in the first quarter compared with $53.4 million in the previous quarter. Zepzelca was launched for the treatment of adult patients with metastatic small cell lung cancer (SCLC) with disease progression on or after platinum-based chemotherapy in the U.S. market in July 2020.

The drug witnessed significant patient growth and uptake across both community and academic settings and in both platinum sensitive and platinum resistant SCLC patients

Erwinaze/Erwinase (for acute lymphoblastic leukemia [“ALL”]) revenues were $41.1 million, up 9% year over year.

Defitelio sales increased 5% to $49.6 million in the quarter.

Other product sales rose 10.3% to $2.8 million.

Cost Discussion

Adjusted selling, general and administrative (SG&A) expenses rose 21.6% to $228.4 million due to higher expenses for multiple product launches and expansion of the commercial operations.

Adjusted research and development (R&D) expenses declined 14.8% to $67.9 million due to lower expenses related to pipeline development.

2021 Guidance

The company maintained its financial guidance for 2021 for the standalone company, which does not include the impact of the pending GW Pharmaceuticals GWPH acquisition. In early February, Jazz announced an agreement to acquire British cannabinoid drug company, GW Pharmaceuticals. Per the terms of the deal, Jazz will pay $220 per American depositary share of GW Pharmaceuticals. The deal is valued at $6.7 billion net of cash. In April, GW’s shareholders voted to approve the acquisition and the same is expected to close soon.

The acquisition will add GW Pharmaceuticals’ lead oral solution, Epidiolex, approved for the treatment of seizures associated with two rare and severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome. The acquisition thus adds a third high-growth commercial franchise to Jazz’s business.

The company expects 2021 adjusted earnings in the range of $15.65-$16.85 per share.

Total revenues are expected to be in the range of $2.55-$2.70 billion, which indicates 11% increase at the midpoint over 2020 total revenues. Total product sales are anticipated in the range of $2.54-$2.69 billion.

Neuroscience sales are expected in the range of $1.79 billion to $1.89 billion. The Oncology franchise is expected to record sales of $715 million to $835 million.

While adjusted SG&A expenses are anticipated in the range of $905 million to $945 million, adjusted R&D expenses are expected to be in the band of $330 million to $370 million.

The company plans to provide 2021 financial guidance for the combined Jazz GW organization following the close of the transaction.

Pipeline Update

Xywav has also been developed as an oral solution for idiopathic hypersomnia or IH. In April the FDA accepted Jazz’s supplemental new drug application (sNDA) seeking label expansion of Xywav in IH patients. The FDA granted priority review to the sNDA with a decision expected on Aug 12. Jazz expects to launch Xywav for IH in the fourth quarter.

In December 2020, Jazz initiated submission of a biologics license application (BLA) to the FDA for approval of JZP-458 for the treatment of acute lymphoblastic leukemia (ALL) and lymphoblastic lymphoma. The company is working with the FDA to complete the BLA submission The company plans to initiate a phase IIb study in mid-2021 on another pipeline candidate, JZP-385, as a potential treatment for essential tremor.

Jazz expects to launch JZP-458 in ALL and JZP-258 in IH in 2021 in the United States.

Zacks Rank & Stocks to Consider

Jazz currently carries a Zacks Rank #3 (Hold).

Jazz Pharmaceuticals PLC Price, Consensus and EPS Surprise

Jazz Pharmaceuticals PLC Price, Consensus and EPS Surprise
Jazz Pharmaceuticals PLC Price, Consensus and EPS Surprise

Jazz Pharmaceuticals PLC price-consensus-eps-surprise-chart | Jazz Pharmaceuticals PLC Quote

Some better-ranked small drugmakers include Corcept Therapeutics Incorporated CORT and Aerie Pharmaceuticals, AERI both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Aerie Pharmaceuticals’ stock price has surged 25.4% this year so far.

Corcept Therapeutics’ earnings estimates have risen from by 7.6% for 2021 over the past 90 days.

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