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Jazz Pharmaceuticals (JAZZ) Q1 Earnings, Sales Top Estimates

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Jazz Pharmaceuticals plc (JAZZ - Free Report) reported adjusted earnings of $2.98 per share for first-quarter 2018, which beat the Zacks Consensus Estimate of $2.76. Earnings rose 29% from the year-ago figure.

Total revenues in the quarter rose 18% year over year to $444.6 million owing to higher sales of Xyrem and continued growth in demand for Vyxeos. Sales also beat the Zacks Consensus Estimate of $445 million.

Shares of the company have outperformed the industry so far this year. The stock has rallied 9.6% against the industry’s 3.1% decrease.

Quarter in Detail

Net product sales in the quarter increased 18% from the year-ago quarter to $440.8 million.

Xyrem (cataplexy and excessive daytime sleepiness (EDS) in narcolepsy patients) sales gained 16% year over year to $316.8 million in the quarter. Sales were driven by a 9% rise in bottle volume growth. The average number of active Xyrem patients increased 7% in the first quarter.

Xyrem, which accounted for 75% of sales in 2017, witnessed lower-than-expected growth in 2017. This was due to the negative impact of unfavorable payer mix, fewer shipping days and operational changes leading to delayed prescription fulfillment. However, volume trends improved in the first quarter supported by the company’s disease awareness education efforts, which led to increased diagnosis rate of new narcolepsy patients. Management sounded confident that it will continue to generate volume growth in 2018 and beyond.

Erwinaze/Erwinase (acute lymphoblastic leukemia [ALL]) revenues were $50.6 million, flat year over year.

Jazz has been facing challenges in building sufficient inventory levels for Erwinaze due to constrained manufacturing capacity. This has resulted in supply disruptions and the company warned of further supply challenges in the year.

Prialt revenues declined 20.6% year over year to $6.1 million. Defitelio sales were flat year over year at $35.1 million in the quarter. Please note that Defitelio product sales vary from quarter to quarter in both the U.S. and EU markets because Defitelio treats an ultra-rare acute condition -hepatic veno-occlusive disease (VOD).

Vyxeos generated sales of $26.2 million in the United States compared with $24.7 million in the previous quarter. The acute myeloid leukemia (AML) drug was launched in the United States in August last year.The drug is under an accelerated assessment in the EU for the same indication with an approval expected in summer.

Other product sales declined 5% to $6.0 million.

Adjusted selling, general and administrative (SG&A) expenses rose 11.4% to $131.9 million due to higher expenses related to business expansion including costs related to continued U.S. launch of Vyxeos and potential launch of Vyxeos in the EU and lead pipeline candidate, JZP-110 in the United States.

Adjusted research and development (R&D) expenses increased almost 16% to $47.3 million, mainly due to escalated expenses related to the company’s pipeline and regulatory activities.

Pipeline Update

JZP-110 has been developed for the treatment of excessive sleepiness (“ES”) in adult patients with narcolepsy or obstructive sleep apnea (“OSA”).

In March, Jazz announced that the FDA accepted the company's regulatory application for JZP-110 for EDS. With the FDA granting a standard review to the filing, a response is awaited on Dec 20, 2018. It expects to launch the candidate in early 2019. In the EU, Jazz expects to file a regulatory application by the end of this year.

Last month, Jazz submitted a supplemental new drug application (sNDA) to the FDA to get Xyrem approved for pediatric patients to treat cataplexy and EDS in narcolepsy patients.

Jazz also entered into an agreement last month to purchase a rare pediatric disease priority review voucher (PRV) from Spark Therapeutics, Inc. (ONCE - Free Report) for $110 million. The PRV will allow Jazz to accelerate the review process by the FDA for one of its future regulatory submissions.

Settles with DoJ

In 2016 and 2017, Jazz received subpoenas from the U.S. Attorney's Office for the District of Massachusetts seeking information regarding its support of some charitable organizations that provide financial assistance to Medicare patients. In April, Jazz reached an agreement in principle with the U.S. Department of Justice for a potential payment of $57 million as part of a civil settlement.

2018 Guidance

Jazz raised the lower end of its earnings and sales guidance for 2018.

Jazz expects earnings in the range of $12.75-$13.25 per share compared with $12.65-$13.25 expected previously. Total revenues are expected in the range of $1.88-$1.93 billion compared with $1.86-$1.93 billion guided previously.

Total product sales are predicted in the range of $1.87-$1.91 billion in 2018 compared with $1.85-$1.91 billion expected previously.

Xyrem sales are estimated in the range of $1.32-$1.34 billion compared with $1.31-$1.34 billion previously.

Erwinaze/Erwinase sales forecast was maintained in the range of $190-$220 million.

While Defitelio net sales prediction for 2018 was maintained in the band of $145-$165 million, Vyxeos net sales are still expected to be within $130-$155 million.

The company reiterated SG&A and R&D expenses guidance in the range of $525-$555 million and $205-$225 million, respectively.

 

Jazz Pharmaceuticals PLC Price, Consensus and EPS Surprise

 

Jazz Pharmaceuticals PLC Price, Consensus and EPS Surprise | Jazz Pharmaceuticals PLC Quote

 

Jazz currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the biotech sector are Ligand Pharmaceuticals (LGND - Free Report) , and Protagonist Therapeutics (PTGX - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ligand’s earnings per share estimates rose 5.5% for 2018 over the last 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with an average beat of 24.88%. The company’s shares have rallied 14.9% year to date.

Protagonist Therapeutics’ loss estimates narrowed by 49% for 2018 and 37% for 2019 over the last 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with an average beat of 24.95%.

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