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Jazz Pharma (JAZZ) Q3 Earnings Beat, New Drugs Drive Sales
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Jazz Pharmaceuticals (JAZZ - Free Report) delivered adjusted earnings of $4.20 per share for the third quarter of 2021, beating the Zacks Consensus Estimate of $3.27. Earnings declined 2.5% year over year.
Total revenues in the reported quarter rose 39% year over year to $838.1 million, beating the Zacks Consensus Estimate of $830 million. The increase was driven by sales of new drugs and drugs added from the acquisition of GW Pharmaceuticals.
Net product sales increased 40.0% from the year-ago quarter to $834.3 million. In the quarter, 52% of Jazz’s net product sales came from newly launched and acquired products.
Royalties and contract revenues declined 18% to $3.9 million in the quarter.
This year so far, Jazz’s shares have declined 20% compared with the industry’s decrease of 12.4%.
Image Source: Zacks Investment Research
Neuroscience Products
Sales of neuroscience products increased 41% to $646.1 million, driven by the launch of Xywav in November 2020. The company added two drugs — Epidiolex and Sativex (nabiximols) — to the portfolio with the GW Pharmaceuticals acquisition. Epidiolex is approved for the treatment of seizures associated with two rare and severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome. Sativex is a cannabis-based mouth spray for multiple sclerosis (MS)-related spasticity but is yet to receive approval in the United States.
Net product sales for the combined oxybate business (Xyrem + Xywav) increased 3% to $460.4 million in the quarter. Sales of Xyrem, approved to treat cataplexy and excessive daytime sleepiness (“EDS”) in narcolepsy patients, declined 31% year over year to $307.3 million due to patient switching to Xywav.
Xywav is a low sodium formulation and a Xyrem follow-on product to treat EDS or cataplexy in narcolepsy patients. Xywav recorded sales of $153.1 million in the quarter compared with $124.2 million in the previous quarter. At the end of the third quarter, Jazz had approximately 6,000 active Xywav patients, up from 5,100 at the end of second-quarter 2021. The FDA approved a label expansion of the drug in idiopathic hypersomnia in August and launched Xywav for IH in November. The IH indication should drive growth of Xyrem in the future quarters.
Another new drug, Sunosi recorded sales of $19.3 million in the quarter, up 111%. The growth was driven by strong demand for the drug. Sunosi was launched for excessive sleepiness in narcolepsy & obstructive sleep apnea in the United States in July 2019 and in Europe in May 2020.
Sales of Epidiolex rose 21% to $160.4 million despite the pandemic hurting new patient starts especially among pediatric patients. Moreover, limited promotional visits to institutional centers in the United States also hurt sales of Epidiolex in the quarter. Sativex (nabiximols) sales were $6.1 million.
Oncology Products
Oncology product sales increased 34% to $184.8 million, primarily driven by strong Zepzelca sales. Zepzelca was launched for second-line small cell lung cancer in the U.S. market in July 2020.
Zepzelca (lurbinectedin) recorded sales of $71.7 million in the third quarter compared with $55.9 million in the previous quarter.
Acute myeloid leukemia drug, Vyxeos generated sales of $34.7 million, up 13% from the year-ago period.
New drug Rylaze (JZP458) recorded sales of $20.7 million in the quarter. Rylaze was launched in July in the United States for treating acute lymphoblastic leukemia (ALL) patients who have developed hypersensitivity to E.coli-derived asparaginase. Regulatory applications in Europe are expected to be filed in mid-2022.
Defitelio sales increased 15% to $57.7 million in the quarter.
Cost Discussion
Adjusted selling, general and administrative (SG&A) expenses surged 49.5% to $278.6 million to support higher headcount costs and recent launches. Adjusted research and development (R&D) expenses increased 74.9% to $124.4 million mainly due to support ongoing clinical activities of pipeline candidates of GW Pharmaceuticals.
2021 Guidance
The company raised its earnings guidance for 2021 while tightening the revenue outlook due to lowered revenue expectations for the oncology franchise.
The company expects 2021 adjusted earnings in the range of $15.10-$15.80, up from the previous expectation of $13.40-$14.70 per share.
Total revenues are expected to be in the range of $3.02-$3.10 billion versus the previous expectation of $3.02-$3.18 billion.
Neuroscience sales are expected in the range of $2.28 billion-$2.35 billion versus the prior expectation of $2.26 billion to $2.36 billion. The Oncology franchise is expected to record sales in the range of $715 million-$735 million compared with $715 million-$835 million expected previously. The oncology guidance was lowered due to the ongoing impacts of COVID on legacy products and the Rylaze competitive landscape in the third quarter
While adjusted SG&A expenses are anticipated between $1.06 billion and $1.1 billion (previously $1.12 billion to $1.18 billion), adjusted R&D expenses are expected to be in the band of $465 million to $485 million (previously $500 million to $540 million).
Pipeline Update
Jazz plans to initiate a late-stage pivotal study to evaluate Epidiolex for treating epilepsy with myoclonic-atonic seizures (EMAS) in the first half of 2022. EMAS will be the fourth target indication for Epidiolex. The company initiated a third late-stage study on nabiximols as a potential treatment for multiple sclerosis-related spasticity in the third quarter. While data from the first study is expected in the first half of 2022, data from the other two studies are expected in late 2022 and early 2023.
Jazz has initiated a phase II study to evaluate its pipeline candidate, JZP385, for the treatment of essential tremors. A phase II study is scheduled to start later in 2021 to evaluate JZP150 as a potential treatment for post-traumatic stress disorder.
Jazz’s partner, PharmaMar, will initiate a confirmatory study to support continued approval for Zepzelca in second-line SCLC patients later in 2021. A phase III study, in collaboration with Roche (RHHBY - Free Report) , has been initiated to evaluate Zepzelca in combination with Tecentriq for first-line extensive-stage SCLC. The first patient in the study is expected to be enrolled later this year. A phase II basket study, expected to start early next year, will evaluate Zepzelca as monotherapy in patients with select advanced or metastatic solid tumors.
Zacks Rank & Stocks to Consider
Jazz currently carries a Zacks Rank #4 (Sell).
Jazz Pharmaceuticals PLC Price, Consensus and EPS Surprise
A couple of better-ranked stocks from the same sector include Endo International and Catalyst Pharmaceuticals (CPRX - Free Report) . While Endo has a Zacks Rank of 1 (Strong Buy), Catalyst Pharma carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Catalyst Pharma’s estimates for earnings per share have increased from 55 cents to 56 cents for 2022 over the past 60 days. The stock has risen 85% so far this year
Endo’s earnings per share estimates have moved north from $2.29 to $2.32 for 2021 and from $2.24 to $2.38 for 2022 in the past 60 days.
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Jazz Pharma (JAZZ) Q3 Earnings Beat, New Drugs Drive Sales
Jazz Pharmaceuticals (JAZZ - Free Report) delivered adjusted earnings of $4.20 per share for the third quarter of 2021, beating the Zacks Consensus Estimate of $3.27. Earnings declined 2.5% year over year.
Total revenues in the reported quarter rose 39% year over year to $838.1 million, beating the Zacks Consensus Estimate of $830 million. The increase was driven by sales of new drugs and drugs added from the acquisition of GW Pharmaceuticals.
Net product sales increased 40.0% from the year-ago quarter to $834.3 million. In the quarter, 52% of Jazz’s net product sales came from newly launched and acquired products.
Royalties and contract revenues declined 18% to $3.9 million in the quarter.
This year so far, Jazz’s shares have declined 20% compared with the industry’s decrease of 12.4%.
Neuroscience Products
Sales of neuroscience products increased 41% to $646.1 million, driven by the launch of Xywav in November 2020. The company added two drugs — Epidiolex and Sativex (nabiximols) — to the portfolio with the GW Pharmaceuticals acquisition. Epidiolex is approved for the treatment of seizures associated with two rare and severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome. Sativex is a cannabis-based mouth spray for multiple sclerosis (MS)-related spasticity but is yet to receive approval in the United States.
Net product sales for the combined oxybate business (Xyrem + Xywav) increased 3% to $460.4 million in the quarter. Sales of Xyrem, approved to treat cataplexy and excessive daytime sleepiness (“EDS”) in narcolepsy patients, declined 31% year over year to $307.3 million due to patient switching to Xywav.
Xywav is a low sodium formulation and a Xyrem follow-on product to treat EDS or cataplexy in narcolepsy patients. Xywav recorded sales of $153.1 million in the quarter compared with $124.2 million in the previous quarter. At the end of the third quarter, Jazz had approximately 6,000 active Xywav patients, up from 5,100 at the end of second-quarter 2021. The FDA approved a label expansion of the drug in idiopathic hypersomnia in August and launched Xywav for IH in November. The IH indication should drive growth of Xyrem in the future quarters.
Another new drug, Sunosi recorded sales of $19.3 million in the quarter, up 111%. The growth was driven by strong demand for the drug. Sunosi was launched for excessive sleepiness in narcolepsy & obstructive sleep apnea in the United States in July 2019 and in Europe in May 2020.
Sales of Epidiolex rose 21% to $160.4 million despite the pandemic hurting new patient starts especially among pediatric patients. Moreover, limited promotional visits to institutional centers in the United States also hurt sales of Epidiolex in the quarter. Sativex (nabiximols) sales were $6.1 million.
Oncology Products
Oncology product sales increased 34% to $184.8 million, primarily driven by strong Zepzelca sales. Zepzelca was launched for second-line small cell lung cancer in the U.S. market in July 2020.
Zepzelca (lurbinectedin) recorded sales of $71.7 million in the third quarter compared with $55.9 million in the previous quarter.
Acute myeloid leukemia drug, Vyxeos generated sales of $34.7 million, up 13% from the year-ago period.
New drug Rylaze (JZP458) recorded sales of $20.7 million in the quarter. Rylaze was launched in July in the United States for treating acute lymphoblastic leukemia (ALL) patients who have developed hypersensitivity to E.coli-derived asparaginase. Regulatory applications in Europe are expected to be filed in mid-2022.
Defitelio sales increased 15% to $57.7 million in the quarter.
Cost Discussion
Adjusted selling, general and administrative (SG&A) expenses surged 49.5% to $278.6 million to support higher headcount costs and recent launches. Adjusted research and development (R&D) expenses increased 74.9% to $124.4 million mainly due to support ongoing clinical activities of pipeline candidates of GW Pharmaceuticals.
2021 Guidance
The company raised its earnings guidance for 2021 while tightening the revenue outlook due to lowered revenue expectations for the oncology franchise.
The company expects 2021 adjusted earnings in the range of $15.10-$15.80, up from the previous expectation of $13.40-$14.70 per share.
Total revenues are expected to be in the range of $3.02-$3.10 billion versus the previous expectation of $3.02-$3.18 billion.
Neuroscience sales are expected in the range of $2.28 billion-$2.35 billion versus the prior expectation of $2.26 billion to $2.36 billion. The Oncology franchise is expected to record sales in the range of $715 million-$735 million compared with $715 million-$835 million expected previously. The oncology guidance was lowered due to the ongoing impacts of COVID on legacy products and the Rylaze competitive landscape in the third quarter
While adjusted SG&A expenses are anticipated between $1.06 billion and $1.1 billion (previously $1.12 billion to $1.18 billion), adjusted R&D expenses are expected to be in the band of $465 million to $485 million (previously $500 million to $540 million).
Pipeline Update
Jazz plans to initiate a late-stage pivotal study to evaluate Epidiolex for treating epilepsy with myoclonic-atonic seizures (EMAS) in the first half of 2022. EMAS will be the fourth target indication for Epidiolex. The company initiated a third late-stage study on nabiximols as a potential treatment for multiple sclerosis-related spasticity in the third quarter. While data from the first study is expected in the first half of 2022, data from the other two studies are expected in late 2022 and early 2023.
Jazz has initiated a phase II study to evaluate its pipeline candidate, JZP385, for the treatment of essential tremors. A phase II study is scheduled to start later in 2021 to evaluate JZP150 as a potential treatment for post-traumatic stress disorder.
Jazz’s partner, PharmaMar, will initiate a confirmatory study to support continued approval for Zepzelca in second-line SCLC patients later in 2021. A phase III study, in collaboration with Roche (RHHBY - Free Report) , has been initiated to evaluate Zepzelca in combination with Tecentriq for first-line extensive-stage SCLC. The first patient in the study is expected to be enrolled later this year. A phase II basket study, expected to start early next year, will evaluate Zepzelca as monotherapy in patients with select advanced or metastatic solid tumors.
Zacks Rank & Stocks to Consider
Jazz currently carries a Zacks Rank #4 (Sell).
Jazz Pharmaceuticals PLC Price, Consensus and EPS Surprise
Jazz Pharmaceuticals PLC price-consensus-eps-surprise-chart | Jazz Pharmaceuticals PLC Quote
A couple of better-ranked stocks from the same sector include Endo International and Catalyst Pharmaceuticals (CPRX - Free Report) . While Endo has a Zacks Rank of 1 (Strong Buy), Catalyst Pharma carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Catalyst Pharma’s estimates for earnings per share have increased from 55 cents to 56 cents for 2022 over the past 60 days. The stock has risen 85% so far this year
Endo’s earnings per share estimates have moved north from $2.29 to $2.32 for 2021 and from $2.24 to $2.38 for 2022 in the past 60 days.