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Jazz Pharmaceuticals (JAZZ) Q3 Earnings Top, 2017 View Cut


Jazz Pharmaceuticals Public Limited Company JAZZ reported third-quarter 2017 adjusted earnings of $3.22 per share, beating the Zacks Consensus Estimate of $2.89. The bottom line also increased 23% from the year-ago figure.

Total revenues in the reported quarter rose 10% year over year to $411.9 million owing to higher sales of the company’s marketed drug, Xyrem, and sales from the launch of Vyxeos in the United States in August. However, the top line fell slightly short of the Zacks Consensus Estimate of $419 million.

Jazz’s shares have decreased almost 3% in after-hours trading due to lowered earnings and revenue guidance. However, the company’s shares have outperformed the industry so far this year. The stock has surged 23.9% while the industry has registered a gain of 1.3%.

Quarter in Detail

Net product sales in the third quarter increased 10% from the year-ago quarter to $408 million.

In the reported quarter, Xyrem (sodium oxybate) sales gain 6% to $303.9 million. The company registered a 1% decline in bottle volume of Xyrem during the period due to fewer shipping days compared with the year-ago quarter.

Xyrem has witnessed lower than expected growth in 2017. This was due to negative impact of payer mix, fewer shipping days and operational changes leading to delayed prescription fulfillment.

Erwinaze/Erwinase generated revenues worth $49.2 million, up 14% compared with the year-ago figure. The upside was driven by the favorable timing of product availability. However, Jazz is facing raw material supply issues for Erwinaze, leading to fluctuations in inventory levels as well as temporary disruptions in the company’s ability to cater to certain markets, including the United States. The company anticipates additional disruptions to occur through the rest of this year and in 2018 as well.

Prialt revenues came in at $7.9 million, down 10.2% from the year-ago period. Other product sales increased 5.2% to $6.1 million.

Defitelio sales increased 11% year over year to $31.2 million in the third quarter. This increase in sales can be attributed to higher net product sales in the United States. Notably, Jazz witnessed eight additional accounts order in Defitelio in the reported quarter. Also, sales of the drug grew 3.3% sequentially.

Vyxeos, launched in the United States for treatment of adults with acute myeloid leukemia (AML), generated sales of $9.7 million. Presently, the drug is under an accelerated assessment in the EU for the same indication.

Adjusted selling, general and administrative (SG&A) expenses during the quarter rose 9.6% to $103.6 million. This uptrend was primarily driven by higher headcount, increase in other expenses related to business expansion and launch costs of Vyxeos in the United States.

Adjusted research and development (R&D) expenses decreased 1.4% to $42.7 million, mainly owing to completion of the phase III studies for the company’s lead pipeline candidate, JZP-110.

The company is enrolling patients for a phase III study on Defitelio for the prevention of veno-occlusive disease (VOD) in high-risk patients following hematopoietic stem cell transplantation. The study is expected to enroll 400 patients from 100 sites globally. Additionally, the company is working on a study protocol for another phase II proof-of-concept trial on Defitelio for prevention of acute graft versus host disease. Jazz expects to initiate this study before the year-end.

In August, Jazz entered into collaboration and option agreement with ImmunoGen IMGN under which, the company has been granted with exclusive, worldwide rights to opt for development and commercialization of two early-stage candidates, IMGN779 and IMGN632, under hematology-related antibody-drug conjugate (ADC) programs.

Pipeline Update

The company is progressing well with its lead pipeline candidate, JZP-110 (completed phase III study), evaluated for the treatment of excessive sleepiness in obstructive sleep apnea (OSA) and narcolepsy. The company is on track for a planned NDA submission to the FDA by the year-end. It expects to launch the candidate in early 2019 in the U.S.

2017 Guidance Updated/Revised

The company lowered its earnings guidance for 2017, mainly due to lower-than-expected sales from Xyrem.

The company now expects earnings in the range of $10.70-$11.20 per share compared with $10.70-$11.30, expected previously. Jazz also lowered its revenue guidance to a range of $1.60-$1.65 billion compared with previous expectation of $1.63-$1.70 billion. Total product sales are now projected in the range of $1.59-$1.63 billion compared with $1.62-$1.69 billion, expected previously.

Xyrem sales are estimated in the range of $1.18-$1.20 billion (old guidance: $1.20-$1.23 billion), while Erwinaze/Erwinase sales are anticipated in the range of $200-$215 million (old guidance: $205-$225 million). However, the company continues to expect Defitelio revenues in the range of $130-$150 million.

The company continues to project adjusted SG&A expenses in the range of $440-$460 million, while R&D costs are expected in the range of $165-$180 million.

Jazz Pharmaceuticals PLC Price, Consensus and EPS Surprise

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

Zacks Rank & Key Picks

Jazz carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Emergent Biosolutions, Inc. EBS and Exelixis, Inc. EXEL. While Emergent sports a Zacks Rank #1 (Strong Buy), Exelixis carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Emergent’s earnings per share estimates have moved up from $2.42 to $2.43 for 2018 over the last 60 days. The company came up with positive earnings surprises in three of the trailing four quarters with an average beat of 15.81%. Share price of the company has rallied 18% year to date.

Exelixis’ earnings per share estimates have moved up from 62 cents to 70 cents for 2018 over the last 60 days. The company came up with positive earnings surprises in each of the trailing four quarters with an average beat of 572.92%. Share price of the company has soared 78.3% year to date.

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