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Jazz Pharma Posts Higher Y/Y Earnings

Zacks Equity Research

Jazz Pharmaceuticals plc’s (JAZZ) first quarter 2013 adjusted earnings of 97 cents per share were well above the year-ago earnings of 69 cents per share. Excluding one-time items, stock-based compensation expense and amortization, first quarter 2013 earnings per share were $1.37, up 53.9%. The Zacks Consensus Estimate was $1.18 per share.

Quarterly revenues increased 91.4% year over year to $196.2 million. The year-over-year increase in revenues was attributable to the acquisition of EUSA Pharma. Strong sales of Xyrem also contributed to revenue growth. Revenues surpassed the Zacks Consensus Estimate of $188 million.

Quarter in Detail

In the reported quarter, Xyrem sales increased 60% to $117.5 million. Jazz Pharma stated that during the quarter approximately 10,550 patients were on Xyrem compared to 9,500 in the year-ago quarter.

Erwinaze generated revenues of $41.8 million, up 27.1% year over year. Prialt revenues were $5 million compared with $9.9 million a year ago. Under the supply agreement for distribution and sale in Europe, the year-ago quarter included sales of Prialt to Eisai Co. Ltd. (ESALY). Meanwhile, psychiatry products generated sales of $17.7 million compared with $18.1 million a year ago. The decline was due to the launch of a generic version of Luvox CR in Mar 2013.

Jazz Pharma’s selling, general and administrative expenses during the quarter shot up 67.5% to $64.1 million. The increase was due to higher headcount resulting from the EUSA acquisition. Research and development expenses during the quarter increased 70.4% to $6.7 million. The increase was attributable to the company’s efforts to develop its pipeline.

Pipeline Update

An intravenous formulation of Erwinaze is currently being evaluated with results due later this year. Another study for the further use of Erwinaze in adolescents and young adults with acute lymphoblastic leukemia (ALL) who are hypersensitive to E. coli-derived asparaginase is slated to begin in the second half of 2013.

Leukotac, an anti-CD25 monoclonal antibody, is in a phase III study in Europe for the treatment of steroid-refractory acute graft vs. host disease.

2013 Guidance Up

On the back of a strong first quarter, Jazz Pharma raised its 2013 guidance. For 2013, Jazz Pharma expects adjusted earnings in the range of $6.10 to $6.30 per share, up from the earlier guidance of $5.70 to $5.90. Share based compensation expense is now expected in the range of $46–$48 million.

Jazz Pharma raised its revenue guidance to $830–$860 million from the earlier range of $805–$835 million. Xyrem net sales are now expected in the range of $540–$555 million, above the earlier guidance of $530-$540 million. Erwinaze net sales are now expected in the range of $150–$175 million compared to the earlier guidance of $155–$165 million.

In addition to announcing first quarter results, Jazz Pharma announced a share buyback program for up to $200 million. 

Jazz Pharma carries a Zacks Rank #1 (Strong Buy). Other companies like Santarus, Inc. (SNTS) and Catalyst Pharmaceutical Partners Inc. (CPRX) look equally attractive with a Zacks Rank #1 (Strong Buy).

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