Markets

Jazz Pharmaceuticals Tops Q4 Earnings, Provides Guidance - Analyst Blog

A generic image of stock metrics
Credit: Shutterstock photo

Jazz Pharmaceuticals ' ( JAZZ ) fourth-quarter 2014 adjusted (including stock-based compensation expense and depreciation) earnings of $2.16 per share were above the year-ago adjusted earnings of $1.54 per share. Earnings as per the Zacks Consensus Estimate were at $2.14.

Quarterly revenues increased 32% year over year to $328.1 million, driven by strong sales of Xyrem (narcolepsy), Erwinaze (oncology) and Defitelio (severe hepatic veno-occlusive disease). Revenues were above the Zacks Consensus Estimate of $320 million.

In 2014, Jazz Pharma's adjusted (including stock-based compensation expense and depreciation) earnings came in at $7.43 per share above the year-ago earnings of $5.67 per share. Earnings as per the Zacks Consensus Estimate were at $7.58. The company's annual revenues increased 31.7% to $844.7 million. Revenues were however below the Zacks Consensus Estimate of $1.2 billion.

Quarter in Detail

In the reported quarter, Xyrem sales increased 36% to $222.5 million. Jazz Pharma stated that during the quarter approximately 12,250 patients were on Xyrem, up approximately 2.6% from 11,250 in the year-ago quarter.

Erwinaze generated revenues of $52.8 million, up 21% year over year. Prialt (for pain) revenues were $10 million, an increase of 56.3% from the year-ago period primarily due to the timing of shipments to Eisai Co. ( ESALY ), the European distributor of Prialt. Meanwhile, psychiatry products sales decreased 7.7% to $8.4 million.

The company continued to launch Defitelio (defibrotide) in additional EU countries during the fourth quarter with launches expected to continue over the year. We note that the product was added to Jazz Pharma's portfolio following its acquisition of Gentium. Jazz Pharma has acquired rights to defibrotide in all countries in the Americas including the U.S. from Sigma-Tau. The company recorded Defitelio sales of $19.2 million in the fourth quarter of 2014 compared with $12.7 million in the prior-year quarter.

Jazz Pharma's selling, general and administrative (SG&A) expenses (including stock-based compensation expense and depreciation) during the quarter increased 31% to $98.5 million. Research and development (R&D) expenses (including stock-based compensation expense and depreciation) during the quarter shot up 84.9% to $24.5 million.

Pipeline Update

The company has some interesting candidates including JZP-110. It plans to initiate a phase III study on JZP-110 for the treatment of excessive daytime sleepiness (EDS) in patients suffering from narcolepsy in the second quarter of 2015. Jazz Pharma also plans to start two phase III studies on the candidate for the treatment of EDS and obstructive sleep apnea in the second quarter of this year. The company plans to file for the candidate in the U.S. in 2017 depending on positive outcomes from these studies.

Meanwhile, the company also announced that it voluntarily suspended patient enrolment in a phase II pivotal study on JZP-416 due to the occurrence of hypersensitivity-like reactions following the administration of the candidate. The candidate was being developed for the treatment of patients suffering from acute lymphoblastic leukemia who are hypersensitive to pegylated E.

Meanwhile, Jazz Pharma is also working on expanding the label of its existing products. The FDA approved an intravenous administration of Erwinaze during the end of last year. The company is also evaluating Xyrem in a phase III study for the pediatric narcolepsy indication.

2015 Guidance

For 2015, Jazz Pharma expects adjusted earnings to be in the range of $9.45 to $9.75 per share. The guidance excludes share-based compensation expense and depreciation expense. 2015 earnings, as per the Zacks Consensus Estimate, stand at $9.45 per share. The company also expects an unfavourable currency impact in 2015.

Jazz Pharma is expecting its revenue guidance to be in the range of $1,310-$1,370 million. The Zacks Consensus Estimate of $1,403 million is above the company's guidance range. Total net product sales are expected to be around $1,303-$1,363 million in 2015. Xyrem net sales are expected in the range of $950-$970 million. Erwinaze net sales guidance is in the range of $200-$215 million. Defitelio is expected to generate revenues of approximately $73-$83 million.

Meanwhile, the company's adjusted SG&A and R&D expenses (both excluding share-based compensation expenses) are expected in the range of $355-$365 million and $95-$105 million respectively. An anticipated increase in the company's 2015 R&D expenses is primarily due to clinical expenses related to JZP-110, Xyrem (pediatric narcolepsy) and ZP-386 among others.

Our Take

Jazz Pharma's fourth quarter results were encouraging. Xyrem also performed well during the quarter. However, the company's 2015 guidance was a bit disappointing. Jazz Pharma has also progressed well with its pipeline. The company is expecting several important data readouts and regulatory decisions this year. We expect investor focus to remain on these updates.

Meanwhile, Xyrem's patent litigation remains an overhang on the stock. Sooner-than-expected entry of Xyrem generics would be a huge setback for the company.

Jazz Pharma currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Cytokinetics, Incorporated ( CYTK ) and Affymetrix Inc. ( AFFX ). Both stocks hold a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AFFYMETRIX INC (AFFX): Free Stock Analysis Report

JAZZ PHARMACEUT (JAZZ): Free Stock Analysis Report

EISAI CO LTD (ESALY): Get Free Report

CYTOKINETCS INC (CYTK): Free Stock Analysis Report

To read this article on Zacks.com click here.

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


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

In This Story

CYTK JAZZ

Other Topics

Earnings Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More