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Jazz Pharma (JAZZ) Q4 Earnings Miss, 2021 Sales View Dull

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Jazz Pharmaceuticals (JAZZ - Free Report) delivered adjusted earnings of $4.00 per share for the fourth quarter of 2020, missing the Zacks Consensus Estimate of $4.10. Earnings declined 9.5% year over year as higher revenues were offset by higher costs.

Total revenues in the reported quarter rose 14% year over year to $665.5 million and beat the Zacks Consensus Estimate of $638.0 million.

Net product sales increased 14.7% from the year-ago quarter to $661.3 million driven mainly by new drug launches. Royalties and contract revenues declined 19.2% to $4.2 million in the quarter.

Neuroscience Products

Sales of neuroscience products increased 6% to $463.2 million driven by the launch of Xywav in November 2020.

Sales of Xyrem, approved to treat cataplexy and excessive daytime sleepiness (“EDS”) in narcolepsy patients, rose 1% year over year to $439.3 million.

Xywav is a low sodium formulation and a Xyrem follow-on product to treat EDS or cataplexy in narcolepsy patients. Xywav recorded sales of 15.3 million in the quarter.  At the end of 2020, Jazz had approximately 1,900 active Xywav patients.

Another new drug, Sunosi recorded sales of $8.7 million in the quarter, lower than $9.1 million in the previous quarter as the pandemic hurt the drug’s launch uptake. U.S. prescriptions increased 9% in the fourth quarter. Sunosi was launched for excessive sleepiness in narcolepsy & obstructive sleep apnea in the United States in July 2019 and in Europe in May 2020.

Jazz said on the conference call that its neuroscience sales force is focusing exclusively on either Xywav or Sunosi.

Oncology Products

Oncology product sales in the fourth quarter of 2020 increased 46% to $196.5 million driven by strong Zepzelca sales and higher Defitelio sales.

Erwinaze/Erwinase (for acute lymphoblastic leukemia [“ALL”]) revenues were $56.6 million, up 3% year over year due to favorable timing and availability of supply. Generally, sales of the drug were hurt in 2020 due to supply and manufacturing issues at the owner and sole manufacturer of the product.

Defitelio sales increased 16% to $55.5 million in the quarter due to recovery in hematopoietic stem cell transplants that had previously been postponed due to the COVID-19 pandemic. Robust growth in Europe also contributed.

Acute myeloid leukemia drug, Vyxeos generated sales of $30.9 million, down 2% from the year-ago period as sales were hurt by recommendations to increase use of oral oncology products amid the pandemic.

Newly launched Zepzelca (lurbinectedin) recorded sales of $53.4 million in the fourth quarter compared with $36.9 million in the third 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.

Other product sales declined 62.2% to $1.6 million.

Cost Discussion

Adjusted selling, general and administrative (SG&A) expenses rose 14.4% to $225.4 million due to higher expenses for multiple product launches.

Adjusted research and development (R&D) expenses declined 6.8% to $84.0 million, as easy comparisons with the year-ago quarter offset the impact of escalating expenses related to pipeline development. The year-ago quarter’s R&D costs included a milestone payment of $15 million, which was missing in the fourth quarter of 2020.

2020 Results

Total revenues increased 9% to $2.36 billion in 2020. Sales beat the Zacks Consensus Estimate of $2.34 billion.

Adjusted earnings per share were $12.46, down almost 19% year over year. Earnings missed the Zacks Consensus Estimate of $12.59 per share.

2021 Guidance

The company issued its financial guidance for 2021 for the standalone company, which does not include the impact of the pending GW Pharmaceuticals 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. The deal is expected to close in the second quarter of 2021.

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. The Zacks Consensus Estimate stands at $15.96 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. The Zacks Consensus Estimate stands at $2.75 billion. Total product sales are anticipated in the range of $2.54-$2.69 billion.

The revenue range fell short of investor expectations, which probably led the shares to decline 2.6% in after-hours trading on Feb 23.

This year so far, Jazz’s shares have declined 4.6% against the industry’s increase of 4.9%.

 

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.

Pipeline Update

Xywav has also been developed for Idiopathic hypersomnia or IH. In mid-February, Jazz completed submission of a supplemental new drug application (sNDA) for label expansion of Xywav in IH patients and targets a launch in the fourth quarter.

In December 2020, Jazz initiated submission of a biologics license application to the FDA for approval of JZP-458 for the treatment of acute lymphoblastic leukemia (ALL) and lymphoblastic lymphoma. The company plans to initiate a phase IIb study early 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 #5 (Strong Sell).

Some better-ranked small drugmakers include Cassava Sciences (SAVA - Free Report) and USANA Health Sciences (USNA - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cassava Sciences’ stock price has surged 667.9% this year so far. The consensus estimate for 2021 has improved from earnings of 35 cents per share to $1.15 per share over the past 30 days.

USANA’s earnings estimates have risen from $5.64 per share to $6.40 per share for 2021 over the past 30 days. The stock is up 20.4% this year so far.

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

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