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Jazz Pharma (JAZZ) Q2 Earnings and Sales Beat Estimates

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Jazz Pharmaceuticals plc JAZZ delivered adjusted earnings of $4.05 per share for the second quarter of 2019, which surpassed the Zacks Consensus Estimate of $3.57. Earnings rose 16% from the year-ago figure driven by higher sales and lower operating expense.

Total revenues in the reported quarter rose 6.7% year over year to $534.1 million and also beat the Zacks Consensus Estimate of $508.31 million. This can be attributed to higher product sales of Xyrem, Vyxeos and Defitelio, partially offset by lower sales of Erwinaze.

So far this year, Jazz’s shares have increased 3.8% compared with the industry’s increase of 1.2%.

Quarter in Detail

Net product sales in the reported quarter increased 5.5% from the year-ago quarter to $523.4 million. Royalties and contract revenues rose 144% to $10.7 million in the quarter.

Xyrem (cataplexy and excessive daytime sleepiness [“EDS”] in narcolepsy patients) sales rose 16% year over year to $413.2 million in the quarter. Sales were driven by 5% rise in bottle volume growth. The average number of active Xyrem patients increased 6% in the quarter.

Volume trends for Xyrem have improved in the past few quarters supported by the company’s disease awareness education efforts, driving diagnosis of new narcolepsy patients. Management seems confident of generating volume growth in 2019. Jazz fully launched Xyrem in the pediatric narcolepsy indication in March this year, following approval from the FDA in October 2018.

Erwinaze/Erwinase (acute lymphoblastic leukemia [“ALL”]) revenues were $27.6 million, down 53% year over year. Jazz is facing challenges in building sufficient inventory levels for Erwinaze due to constrained manufacturing capacity. This resulted in supply disruptions and hurt sales of Erwinaze in 2017 as well as in 2018. Though some improvements were seen in the first quarter of 2019, it could not be sustained in the second quarter. The company expects inter-quarter variability in sales of Erwinaze to continue in 2019.

Defitelio sales rose 14% year over year to $46.1 million in the quarter, aided by strong demand and a shipment to Japan following the drug’s approval in the country. Please note that Defitelio product sales vary from quarter to quarter in both in the United States and EU markets because Defitelio treats an ultra-rare acute condition — hepatic veno-occlusive disease (“VOD”).

Vyxeos generated sales of $31.4 million, up 12.2% from the year-ago period primarily due to the rolling launch in EU initiated in September 2018 and strong adoption in first-line setting in the United States. The company has focused its resources to drive adoption of Vyxeos through intensive education and outreach initiatives.

Other product sales declined 60% to $5.2 million.

Adjusted selling, general and administrative (SG&A) expenses rose 12.8% to $155.3 million owing to higher expenses related to business expansion and costs to support the launch of Sunosi in the United States.

Adjusted research and development (R&D) expenses increased 9.8% to $56.5 million, primarily due to escalating expenses related to development of the company’s pipeline and partnered programs.

Pipeline Update

In March 2019, Jazz’s lead pipeline candidate, Sunosi (solriamfetol), received approval in the United States for excessive sleepiness in narcolepsy & obstructive sleep apnea. The company launched the drug in July. Meanwhile, a similar application is also under review in the EU with a decision expected by year end. Meanwhile, in June, Defitelio was approved in Japan for the treatment of VOD.

Jazz is developing JZP-258, a low sodium formulation and a Xyrem follow-on product, in phase III studies for EDS and cataplexy in narcolepsy patients. In March 2019, Jazz announced top-line data from the study, which demonstrated clinically meaningful maintenance of efficacy in patients. The company is looking to file a new drug application seeking approval for JZP-258 by the end of this year. JZP-258 is also being studied for idiopathic hypersomnia or IH in a phase III study.

Apart from JZP-258, the company is also developing JZP-458 for the treatment of ALL and lymphoblastic lymphoma. A pivotal phase II/III study is expected by the year-end.

2019 Guidance

The company raised its previously issued guidance for total revenues including the expected sales range for certain products.

It continues to expect earnings in the range of $14.30-$15.00 per share in 2019. However, the company now expects total revenues to be higher in the range of $2.07-$2.15 billion compared with the previous range of $2.05-$2.13 billion.

Total product sales are predicted in the range of $2.055-$2.125 billion (previously $2.04-$2.11 billion) in 2019. The company raised the guidance for Xyrem sales to the range of $1.55-$1.59 billion from $1.53-$1.57 billion. Erwinaze/Erwinase sales are forecast are maintained in the band of $160-$195 million.

Defitelio’s net sales prediction for 2019 is maintained in the band of $155-$180 million. Vyxeos net sales expectations are in the range of $120-$150 million.

While adjusted SG&A expenses are anticipated in the range of $620 million to $650 million, adjusted R&D expenses are expected to be in the band of $235 million to $265 million.

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). Some better-ranked stocks in the biotech/drugs sector are ImmunoGen IMGN, Neurocrine Biosciences NBIX and Theravance Biopharma TBPH, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ImmunoGen’s loss estimates have narrowed from 98 cents to 96 cents for 2019 and from 83 cents to 56 cents for 2020 over the past 60 days.

Estimates for Neurocrine have improved from a loss of 35 cents to earnings of 80 cents for 2019 and increased from $3.01 to $3.36 for 2020 over the past 60 days.

Theravance’s loss estimates narrowed from $4.74 to $4.28 for 2019 and from $4.27 to $4.01 for 2020 over the past 60 days.

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