Jazz Pharmaceuticals Has Good News on Narcolepsy Drug, Analyst Says

An analyst at SVB Leerink says that a coming data release should be enough to get the treatment approved by the Food and Drug Administration.

An analyst at SVB Leerink says that a coming data release should be enough to get the treatment approved by the Food and Drug Administration.

This should keep investors from sleeping on Jazz Pharmaceuticals: An analyst at SVB Leerink says that an upcoming data release on the company’s experimental narcolepsy drug should be enough to get the drug approved by the Food and Drug Administration.

In a note out Friday, SVB Leerink’s Ami Fadia wrote that based on published abstracts, the data that Jazz (ticker: JAZZ) will release on its drug JZP-258 next week at the World Sleep Congress will show that the drug is comparably effective to Xyrem, an older Jazz drug that faces generic competition as soon as 2023.

“We believe the highly statistically significant efficacy and similar tolerability profile to Xyrem is sufficient for an FDA approval of JZP-258,” Fadia wrote. “This puts Jazz in a strong position to drive a switch to JZP-258 at the appropriate time and retain a portion of its Xyrem franchise beyond generic entry.”

The back story. Shares of Jazz, a biopharmaceutical firm, are down 21% over the past twelve months, while the S&P 500 is up 2.6%. Xyrem accounted for 75% of the company’s net product sales in 2018, so the coming loss of exclusivity on the drug creates a significant challenge.

What’s new. In her note, Fadia wrote that the new data on JZP-258 looks promising. The new drug is meant to replicate Xyrem’s effect while delivering less sodium than Xyrem, attracting patients who would otherwise use a new Xyrem generic.

“Xyrem is a great product but it incorporates a lot of sodium,” said Jazz’s chairman and CEO, Brue Cozadd, at the Morgan Stanley Health Care Conference this month. “So we’ve taken a new formulation that reduces sodium by 92% through a Phase 3 trial.”

Based on abstracts of data set to be announced next week, Fadia wrote that the efficacy of the new drug showed “high statistical significance,” and its tolerability profile appears to be comparable to Xyrem’s. The data comes from a Phase 3 study. Jazz has previously disclosed positive results from the study, but will be offering detailed data for the first time at the World Sleep Conference in Vancouver.

Looking ahead. “While the stock appears to reflect minimal sales from this franchise post generic entry, we continue to believe that Jazz will be able to retain roughly one-third of the current Xyrem annual sales longer term,” Fadia wrote.

Fadia rates the stock Outperform.

Jazz is holding a webcast for investors on Wednesday to discuss the data being released at the conference, which begins Friday and continues next week. Shares of the stock were flat in premarket trading on Friday.

Write to Josh Nathan-Kazis at

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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