Jazz Pharmaceuticals Stock Lifts On Increased Revenue

After the market closed on Tuesday, Jazz Pharmaceuticals plc (Nasdaq: JAZZ) released its financial results for the third quarter of 2021 and updated financial guidance for 2021. Total revenues for Jazz increased 39% to $838.1 million versus last year’s third quarter. This beat the Yahoo Finance average analyst estimate for revenue of $834 million. The GAAP net loss for the quarter was ($52.8 million), or ($0.86) per diluted share, compared to $148.2 million, or $2.64 per diluted share, for the same time period in 2020.

Non-GAAP adjusted net income for 3Q21 was $261.4 million, or $4.20 per diluted share, compared to $242.1 million, or $4.31 per diluted share, for 3Q20. This also beat the estimate for earnings of $3.37. The stock was moving higher by almost 2% to lately sell at $134. The average price target is $205.

Outlook

Jazz is also raising its full-year earnings guidance, resulting in a reduced GAAP net loss and increased non-GAAP adjusted net income (ANI) on an absolute and per share basis. The revenue guidance given in August was for a range of total revenues between $3,020 to $3,180 and that was changed to a range of $3,020 to $3,100.

The updated non-GAAP ANI range exceeds the upper end of the prior range. The company is also reducing both SG&A and R&D expense guidance on a GAAP and non-GAAP adjusted basis, reflecting progress within its transformation initiatives, improved financial discipline, and strategic capital allocation.  The company is narrowing its net sales guidance range for neuroscience and oncology, with a reduced mid-point for oncology net sales guidance which reflects the ongoing impacts of COVID-19 on our legacy products and the Rylaze competitive landscape at launch in 3Q21, resulting in a reduced mid-point for total revenues guidance.

“Last year, we set the ambitious corporate objective of completing five key commercial launches through 2020 and 2021. With the launch of Xywav for idiopathic hypersomnia earlier this month, we have now accomplished this goal, demonstrating our significant execution capabilities and commitment to bring important new medicines forward for patients,” said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals. “The successful integration of GW underscores our ability to deliver on transformative M&A to grow our business. While there’s more work to be done, I’m confident we have the right strategy, teams, and capabilities in place to realize the blockbuster potential of Epidiolex and to discover, develop and launch additional novel, innovative medicines leveraging cannabinoid science. Our commercial execution, productive R&D engine and culture of commitment to patients and their families provide a strong foundation for significant and sustained growth.”

Epidiolex Update

Jazz reported that Epidiolex/Epidyolex net product sales were $160.4 million in the quarter, an increase of 21% compared to the same period of 2020 on a pro-forma basis, despite short-term COVID-19 pressure. Recent market research indicates approximately 40% of prescribers are moving Epidiolex up in their treatment algorithm. The company has made significant progress on its European rollout with launches in SpainItaly and Switzerland in 3Q21. Epidyolex is now commercially available and fully reimbursed in four of the five key European markets: United KingdomGermanyItaly and Spain, with an anticipated launch in France in 2022.

The company said it expects to initiate a Phase 3 pivotal trial of Epidiolex for Epilepsy with Myoclonic-Atonic Seizures (EMAS), the fourth target indication for Epidiolex, in 1H22. Jazz also said it continues to strengthen the durability of Epidiolex, and expects a composition of matter-like patent, extending through 2039, to be issued later this year.

Renée Galá, executive vice president and chief financial officer, added, “This is an exciting time of transformation for Jazz, underpinned by operational execution, financial discipline and strategic capital allocation across our business. We continue to deliver on our business and financial targets which has enabled us to rapidly reduce our net leverage ratio to 4.4 times in just five months following the close of the GW transaction. We have also delivered on revenue growth and diversification. Recently launched or acquired products now make up over 50% of net product sales, and we remain on track to meet our goal of at least 65% in 2022. In addition, our prior investments in corporate development are translating into near-term catalysts as we advance JZP385, JZP150 and Zepzelca into important new clinical trials. We will continue to prioritize disciplined capital allocation to assets and activities that drive growth and value, while remaining focused on achieving our net leverage ratio target of less than 3.5 times by the end of next year.”

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