Jazz Pharmaceuticals plc (JAZZ)

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Jazz Pharmaceuticals (JAZZ)

Q3 2012 Earnings Call

November 08, 2012 4:30 pm ET


Ami Knoefler - Executive Director of Investor Relations & Corporate Communications

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

Jeffrey K. Tobias - Chief Medical Officer and Executive Vice President of Research & Development


Louise Alesandra Chen - Guggenheim Securities, LLC, Research Division

Rebecca M. Forest - Piper Jaffray Companies, Research Division

Gene Mack - Brean Murray, Carret & Co., LLC, Research Division

Ken Cacciatore - Cowen and Company, LLC, Research Division

William Tanner - Lazard Capital Markets LLC, Research Division

Michael W. Schmidt - Leerink Swann LLC, Research Division

Michael Faerm - Crédit Suisse AG, Research Division

Douglas D. Tsao - Barclays Capital, Research Division

Oren G. Livnat - Jefferies & Company, Inc., Research Division

Christopher Holterhoff - Oppenheimer & Co. Inc., Research Division



Good day, ladies and gentlemen, and welcome to the Q3 2012 Jazz Pharmaceuticals Earnings Conference Call. My name is Kirsten, I'll be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I'd now like to turn the call over to Ms. Ami Knoefler, Executive Director of Investor Relations. Please proceed.

Ami Knoefler

Thank you for joining the Jazz Pharmaceuticals PLC Third Quarter 2012 Conference Call. Earlier today, we reported our financial results and updated guidance in a press release. The release is available in the News and Event section of the company's website. Our press release included quarterly and year-to-date net sales data for our key products on a pro-forma basis for products acquired this year, as well as some detail on our discontinued women's health business. 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 prepared comments, we'll open the call for your questions.

Please note that certain remarks we make on this call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to future events, future financial results, growth potential, financial guidance, pipeline opportunities, future regulatory and intellectual property matters and other statements relating to our plans, expectations and intentions. These forward-looking statements involve numerous risks and uncertainties that could cause our actual results to differ significantly from those projected, including risks and uncertainties associated with our ability to maintain and increase sales of and revenue from Xyrem, such as the potential introduction of generic competition and changed or increased regulatory restrictions on Xyrem, our ability to effectively commercialize our other products, including Erwinaze and Prialt, our need to obtain appropriate pricing and reimbursement for our products in an increasingly challenging environment, our ability to successfully integrate and grow our combined business operations following the Azur Pharma and EUSA Pharma transaction, our ability to protect intellectual property rights with respect to our products, and the difficulty and uncertainty of pharmaceutical product development, clinical success and regulatory approval. These and other risks related to our business are detailed in the SEC filings, including under the heading Risk Factors in our quarterly report on Form 10-Q for the quarter ended June 30, 2012. Our SEC filings and reports are available on our website. We undertake no duty or obligation to update any forward-looking statements contained on this call as a result of new information, future events or changes in our expectations.

On this call, we discuss certain non-GAAP financial measures, including adjusted gross margins, combined SG&A and R&D expenses, and earnings per share. 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 GAAP measures. A reconciliation of GAAP to adjusted financial measures is included in our press release issued earlier today, which is available on our website. We expect to file the Form 10-Q for the third quarter shortly.

I'll now turn the call over to Bruce.

Bruce C. Cozadd

Thank you, Amy. Good afternoon, everyone and thank you for joining us. The third quarter was another great quarter of growth and execution at Jazz. We posted record revenues of $176 million from continuing operations, which reflects our first full quarter of revenues after our acquisition of the EUSA Pharma.

As noted in our press release, results from continuing operations exclude our women's health business, which we divested in mid-October, raising nearly $100 million and enabling us to focus on our core business. During the quarter, we made important progress towards integrating the EUSA operations and strengthening our business for the long term. I'll center my comments today on the 3 products in our current portfolio that we think have the highest growth potential, Xyrem, Erwinaze and Prialt.

Xyrem's third quarter revenues were bolstered by 9% year-over-year volume growth. During the quarter, we averaged approximately 10,200 patients on active treatment, up from just over 9,000 in the prior year's third quarter. The growth in the average active patient pool supports our view that the underlying organic volume growth for the Xyrem business for the full year will be in the low double-digits.

While our historical volume growth has been aided by improvements in persistency and compliance, we are now seeing an uptick in new patient growth, driven by new and previously infrequent prescribers. We attribute some of the increase in new prescribers to our efforts over the past year and a half to identify and add approximately 1,000 physicians to our call universe. We can trace the number of the new Xyrem patients directly to this group. We are continuing to work on appropriate physician-targeting and refining the call universe with a particular focus on board-certified sleep specialists. This broadening of the prescriber base bodes well for continued patient growth and underscores the success of our single-product-focused sales force and the positive outcomes we are seeing from our physician education efforts.

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