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Jazz Pharma (JAZZ) Q2 Earnings Beat, Sales Ride on GW Buyout

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Jazz Pharmaceuticals JAZZ delivered adjusted earnings of $3.90 per share for the second quarter of 2021, beating the Zacks Consensus Estimate of $3.55. The company had reported earnings of $3.71 in the year-ago quarter.

Total revenues in the reported quarter rose 33.7% year over year to $751.8 million, beating the Zacks Consensus Estimate of $743.2 million. The increase was driven by sales of new drugs and drugs added after the recently completed acquisition of GW Pharmaceuticals. This growth was partially offset by decline in sales of its key drug, Xyrem.

Net product sales increased 34.1% from the year-ago quarter to $748.3 million. Product sales included sales of drugs added with GW Pharmaceuticals acquisition since May 5. Please note that 41% of Jazz’s net product sales in the quarter came from newly launched and acquired products.

Royalties and contract revenues declined 18% to $3.5 million in the quarter.

This year so far, Jazz’s shares have declined 3% compared with the industry’s decrease of 8.5%.

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Zacks Investment Research

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Neuroscience Products

Sales of neuroscience products increased 27.8% to $581.9 million driven by the launch of Xywav in November 2020. The company added two drugs — Epidiolex and Sativex (nabiximols) — to the portfolio with GW Pharmaceuticals acquisition. Epidiolex is approved for the treatment of seizures associated with two rare and severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome. Sativex is a cannabis-based mouth spray for multiple sclerosis(MS)-related spasticity but is yet to receive approval in the United States.

Net product sales for the combined oxybate business (Xyrem + Xywav) increased 2.6% to $458.3 million in the second quarter of 2021. Strong growth in Xywav was partially offset by decline in sales of Xyrem.

Sales of Xyrem, approved to treat cataplexy and excessive daytime sleepiness (“EDS”) in narcolepsy patients, declined 25.2% year over year to $334.2 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 $124.2 million in the quarter compared with $75.4 million in the previous quarter. At the end of the second quarter, Jazz had approximately 5,100 active Xywav patients, up from approximately 3,900 at the end of first quarter 2021. A regulatory application seeking label expansion of the drug in idiopathic hypersomnia is under review with the FDA and a decision is expected later this month.

Another new drug, Sunosi recorded sales of $12.1 million in the quarter, higher than $11.6 million in the previous quarter and the year-ago sales of $8.6 million. The growth was driven by strong demand for the drug. Sunosi was launched for excessive sleepiness in narcolepsy & obstructive sleep apnea in the United States in July 2019 and in Europe in May 2020.

Sales of Epidiolex and Sativex recorded by Jazz during the quarter were $109.5 million and $2 million, respectively. Full-quarter sales of Epidiolex and Sativex were $155.9 million and $3.5 million reflecting growth of 32.4% and 1.7%, respectively.

Oncology Products

Oncology product sales increased 60.6% to $163.8 million driven by strong Zepzelca sales and higher Defitelio and Vyxeos sales.

Acute myeloid leukemia drug, Vyxeos generated sales of $31.5 million, up 18.4% from the year-ago period driven by ongoing commercial activities and expansion into new international markets.

Newly launched Zepzelca (lurbinectedin) recorded sales of $55.9 million in the second quarter compared with $54.3 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.

Erwinaze/Erwinase (for acute lymphoblastic leukemia [“ALL”]) revenues were $28.3 million, down 13.4% year over year. During the quarter, Jazz completed the sale of eligible Erwinaze inventory following termination of agreement with Porton Biopharma Limited in December last year. The company will not record any revenues from the sale of Erwinaze going forward. However, the company launched Rylaze (JZP458), a drug similar to Erwinaze, in July for treating ALL or lymphoblastic lymphoma. Rylaze sales will likely offset loss of sales from Erwinaze in the upcoming quarters. However, uptake of Rylaze remains to be seen.

Defitelio sales increased 12.6% to $48.1 million in the quarter.

Other product sales were $2.6 million compared with $0.9 million in the year-ago quarter.

Cost Discussion

Adjusted selling, general and administrative (SG&A) expenses surged 58.1% to $269.4 million due to higher expenses for multiple product launches and inclusion of GW Pharmaceuticals’ business.

Adjusted research and development (R&D) expenses increased 66.3% to $118.5 million mainly due to support ongoing clinical activities of pipeline candidates of GW Pharmaceuticals.

2021 Guidance

The company maintained its financial guidance for 2021 provided in June to include the impact of GW Pharmaceuticals acquisition.

The company expects 2021 adjusted earnings in the range of $13.40-$14.70 per share.

Total revenues are expected to be in the range of $3.02-$3.18 billion, which indicates 31.1% increase at the midpoint over 2020 total revenues. Total product sales are anticipated in the range of $3.01-$3.17 billion.

Neuroscience sales are expected in the range of $2.26 billion to $2.36 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 $1.12 billion to $1.18 billion, adjusted R&D expenses are expected to be in the band of $500 million to $540 million.

Pipeline Update

Jazz plans to initiate a late-stage label expansion study to evaluate recently-added Epidiolex for treating epilepsy with myoclonic-atonic seizures in the first half of 2022. The company is conducting two ongoing late-stage studies on nabiximols as potential treatment for MS-related spasticity and plans to initiate a third late-stage for the same indication later this year.

Two mid-stage studies are scheduled to start later in 2021 to evaluate JZP385 and JZP150 as a potential treatment of essential tremor and post-traumatic stress disorder, respectively.

Jazz’s partner, PharmaMar, will initiate a confirmatory study to support continued approval for Zepzelca in second-line SCLC patients later in 2021. A phase III study, in collaboration with Roche RHHBY, has been planned to start later this year to evaluate Zepzelca in combination with an immunotherapy for treating first-line extensive stage SCLC. A phase II basket study, expected to start next year, will evaluate Zepzelca as monotherapy in patients with select advanced or metastatic solid tumors.

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

Zacks Rank & Stocks to Consider

Jazz currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks from the same sector include Larimar Therapeutics, Inc. LRMR and Ironwood Pharmaceuticals, Inc. IRWD, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Larimar’s loss per share estimates have narrowed from $3.08 to $2.70 for 2021 and from $3.09 to $2.96 for 2022 in the past 30 days.

Ironwood’s earnings per share estimates have moved north from $1.04 to $1.08 for 2021 and from $1.18 to $1.20 for 2022 in the past 30 days. The stock has risen 14.2% so far this year.

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