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Jazz Pharma (JAZZ) Surpasses Q4 Earnings & Sales Estimates

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Jazz Pharmaceuticals plc JAZZ delivered adjusted earnings of $4.42 per share for the fourth quarter of 2019, which surpassed the Zacks Consensus Estimate of $4.16. Earnings rose 21% from the year-ago figure driven by higher sales, which made up for higher operating expense.

Total revenues in the reported quarter rose 22% year over year to $581.7 million and also beat the Zacks Consensus Estimate of $564.0 million. This can be attributed to higher product sales.

Despite the better-than-expected results, shares were down 1.7% in after-hours trading on Tuesday due to the broader market impact. In the past year, Jazz’s shares have declined 0.4% compared with the industry’s decrease of 7%.



Quarter in Detail

Net product sales increased 23.4% from the year-ago quarter to $576.5 million. Royalties and contract revenues declined 42.8% to $5.21 million in the quarter.

Sales of Xyrem, approved to treat cataplexy and excessive daytime sleepiness [“EDS”] in children and adults with narcolepsy, rose 16% year over year to $435.4 million. Sales were driven by 5% rise in bottle volume growth. The average number of active Xyrem patients increased 4.5%.

Erwinaze/Erwinase (for acute lymphoblastic leukemia [“ALL”]) revenues were $54.9 million, rising 126.3% year over year due to favorable timing of supply availability. In 2019 and 2018, Jazz faced supply constraints for Erwinaze due to supply and manufacturing issues at the sole manufacturer, PDL. The company expects the supply disruptions to continue in 2020.

Defitelio sales rose 27% year over year to $47.8 million in the quarter. Please note that Defitelio product sales vary from quarter to quarter in both the United States and EU markets because Defitelio treats an ultra-rare acute condition — hepatic veno-occlusive disease.

Acute myeloid leukemia drug, Vyxeos generated sales of $31.5 million, up 23% from the year-ago period, primarily due to the ongoing launch in EU.

Jazz’s newest drug Sunosi (solriamfetol) recorded sales of $2.7 million in the quarter compared with $1 million in the third quarter. Sunosi was approved for excessive sleepiness in narcolepsy & obstructive sleep apnea in the United States in March 2019 and launched in July. Meanwhile, Sunosi was approved in Europe in January this year. Jazz expects to begin a rolling launch in Germany in mid-2020 followed by launches in France and the UK in early 2021

Other product sales declined 14% to $4.2 million.

Adjusted selling, general and administrative (SG&A) expenses rose 38.5% to $196.9 million driven by higher expenses for business expansion and costs to support the launch of Sunosi in the United States.

Adjusted research and development (R&D) expenses increased 75.6% to $90.0 million, primarily due to escalating expenses related to development of the company’s pipeline and partnered programs.

2019 Results

Full-year 2019 sales rose 14% to $2.16 billion, slightly beating the Zacks Consensus Estimate of $2.15 billion. However, sales were within the guided range of 2.10-$2.18 billion.

Adjusted earnings of $16.23 per share beat Zacks Consensus Estimate of $15.95 and came ahead of the guided range of $15.50 - $16.15. Earnings rose 18% year over year.

2020 Guidance

The company issued its financial guidance for 2020.

It expects earnings in the range of $12.50 - $13.40 in 2020. Total revenues are expected to be in the range of $2.32-$2.40 billion.

The 2020 sales range indicates growth of 7-11% over 2019 levels. However, the earnings range indicates a significant decline from 2019 levels due to changes in Jazz’s reporting method for upfront and milestone payments The company said that from 2020, it will not adjust upfront and milestone payments for the calculation of adjusted/non-GAAP earnings per share. It made an upfront payment of $200 million in January to PharmaMar, which hurt its after-tax 2020 adjusted EPS guidance by around $3.13 per share.

Total product sales are predicted in the range of $2.31-$2.38 billion. The oxybate franchise (Xyrem and JZP-258) sales are expected to the range of $1.71-$1.76 billion. Erwinaze/Erwinase sales are forecast in the band of $185-$215 million. Defitelio sales are expected in the range $180-$200 million. Vyxeos sales guidance is in the range of $135-$165 million. Jazz’s guidance for Sunosi net sales is $30 million - $50 million.

While adjusted SG&A expenses are anticipated in the range of $770 million to $810 million, adjusted R&D expenses are expected to be in the band of $285 million to $315 million.

Pipeline Update

Jazz has developed JZP-258, a low sodium formulation and a Xyrem follow-on product, to treat EDS and cataplexy in narcolepsy patients. Jazz filed a new drug application for JZP-258 in January 2020 with an approval expected in the third quarter. JZP-258 is also being studied for Idiopathic hypersomnia or IH in a phase III study.

Jazz is also developing JZP-458 for the treatment of acute lymphoblastic leukemia and lymphoblastic lymphoma (LBL). In December, Jazz began enrollment in a pivotal phase II/III study in ALL/LBL. Jazz plans to submit a biologics license application to FDA for JZP-458 in the fourth quarter of 2020.

In December 2019, Jazz announced that it has entered into an agreement with Pharma Mar S.A. to in-license rights to lurbinectedin, a late-stage product candidate for relapsed small cell lung cancer. The transaction closed in January this year and in February, the FDA granted priority review to a new drug application for lurbinectedin. The FDA’s decision is expected on Aug 16.

Jazz is targeting launch of four products in the 2020-2021 period including lurbinectedin, JZP-258 and JZP-458 following approval.

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 #4 (Sell). Some better-ranked stocks in the biotech/drugs sector are USANA Health Sciences USNA, United Therapeutics Corporation UTHR and Capnia SLNO. While USANA Health Sciences (USNA) and United Therapeutics sport a Zacks Rank #1 (Strong Buy), Capnia has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

USANA Health Sciences’ earnings estimates have gone up by 7% for 2020 over the past 30 days.

Earnings estimates for United Therapeutics have increased by 4% for 2020 over the past 30 days.

Capnia’s loss estimates have narrowed from69 cents to 54 cents for 2020 over the past 30 days. The stock has risen 85.3% in the past year.

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