Jazz Pharmaceuticals plc (JAZZ)

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Jazz Pharmaceuticals Public Limited (JAZZ)

Q3 2013 Earnings Call

November 05, 2013 4:30 pm ET


Katherine A. Littrell - Vice President of Investor Relations

Bruce C. Cozadd - Co-Founder, Executive Chairman and Chief Executive Officer

Kathryn E. Falberg - Chief Financial Officer and Executive Vice President

Russell J. Cox - Chief Commercial Officer and Executive Vice President


Louise Alesandra Chen - Guggenheim Securities, LLC, Research Division

Mark Goodman

David Amsellem - Piper Jaffray Companies, Research Division

Annabel Samimy - Stifel, Nicolaus & Co., Inc., Research Division

Douglas D. Tsao - Barclays Capital, Research Division

Ken Cacciatore - Cowen and Company, LLC, Research Division

Gary Nachman - Goldman Sachs Group Inc., Research Division

Irina Rivkind - Cantor Fitzgerald & Co., Research Division

Gene Mack - Brean Capital LLC, Research Division

Jonathan Eckard - Citigroup Inc, Research Division

William Tanner - FBR Capital Markets & Co., Research Division

Gregory D. Fraser - BofA Merrill Lynch, Research Division

Patricia L. Bank - DISCERN Investment Analytics, Inc



Welcome to the Jazz Pharmaceuticals Third Quarter 2013 Earnings Conference Call. Following an introduction from the company, we will open the call to questions. I will now turn the call over to Kathy Littrell, Vice President of Investor Relations at Jazz Pharmaceuticals. Please proceed.

Katherine A. Littrell

Thank you, and thank you for joining the Jazz Pharmaceuticals plc investor conference call. Today, we reported our third quarter 2013 financial results and provided an update to 2013 financial guidance in a press release. The release and the earnings slide presentation accompanying this call are available in the News and Events section of the company's website.

With me for today's call are Bruce Cozadd, Chairman and CEO; Kate Falberg, CFO; Russ Cox, Chief Commercial Officer; and Jeff Tobias, Head of R&D and Chief Medical Officer. Following some introductory remarks, we'll open the call for your questions.

Before we begin, I'd like to remind you that some of the statements we will make on this call relate to the future events and our future performance instead of historical facts and are forward-looking statements. These statements include future financial, commercial, development and regulatory plans; expectations and projections, such as our 2013 financial guidance; anticipated growth prospects for our products; planned commercial efforts, including the Versacloz launch timing and the timing of planned and ongoing clinical trials.

These forward-looking statements involve numerous risks and uncertainties that could cause actual events, performance and results to differ materially. These risks and uncertainties are identified and described in our press release, the earnings slide presentation accompanying this call and under Risk Factors in our Form 10-Q for the quarter ended June 30, 2013. We expect to file our 10-Q for the third quarter shortly. We undertake no duty or obligation to update any forward-looking statements we make today.

On this call, we will discuss several non-GAAP financial measures, including adjusted net income, adjusted combined SG&A and R&D expenses, adjusted net income per share and adjusted effective tax rate. We believe that these non-GAAP financial measures are helpful in understanding our past financial performance and potential future results. They are not meant to be considered in isolation or as a substitute for comparable reported GAAP measures. Reconciliations of GAAP to non-GAAP financial measures discussed on this call are included in our press release issued earlier today and the earnings slide presentation accompanying this call that is posted in the News and Events section of our website.

I'll now turn the call over to Bruce.

Bruce C. Cozadd

Thank you, Kathy. Good afternoon, everyone, and thank you for joining us. We are pleased with the significant growth of the top and bottom line year-to-date. In the third quarter, we saw continued strong sales of Xyrem and Erwinaze. Our total revenues increased 32% to $232 million compared to the third quarter of 2012. We realized adjusted net income of $109 million in the third quarter of 2013, reflecting the attractive margins in our business. GAAP net income for the quarter was $75 million.

I'll now update you on the 3 products in our current portfolio that we believe have the highest growth potential, Xyrem, Erwinaze and Prialt, and provide an update on key commercial and clinical development progress during the quarter. Kate will then review our results for the quarter and provide updates to our financial guidance.

Xyrem remains a key driver of our growth. In the third quarter, we were pleased to achieve 13% volume growth compared to the same period of 2012. The average number of active Xyrem patients grew to approximately 11,000 this quarter compared to 10,200 in the same period of 2012. Our efforts last year to expand our prescriber universe have contributed to continued growth during 2013. We are increasing the size of our sales force from 80 to approximately 100 sales representatives to maximize what we believe is an opportunity to increase prescriptions from physicians in the mid to lower deciles. This is a physician group where we have seen significant recent growth.

Further, we believe the expansion of our call universe to recently identified physicians, who are treating narcolepsy patients but who are not currently Xyrem prescribers, provides an important opportunity to broaden the use of Xyrem. We are training our new sales representatives, and they will be ready to engage with physicians at the beginning of 2014.

We are continuing to educate physicians through our Narcolepsy Link programs and website and have developed consumer awareness programs such as checkmysleep.com, which launched in late 2012. Consumer interest in the checkmysleep.com website is quite strong, and over 8,000 visitors to the website exhibited high scores on a standard sleep scale that is used in determining excessive daytime sleepiness.

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