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Jazz Pharmaceuticals Up on U.S. Approval of Xyrem REMS - Analyst Blog

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Jazz Pharmaceuticals ' JAZZ shares gained 3.7% after announcing that the FDA has sent a notice to the company last week stating that it has approved the risk evaluation and mitigation strategy (REMS) for Xyrem oral solution. The company also said that the FDA's denial of the company's dispute resolution is overshadowed by the approval of Xyrem REMS.

Last November, the company submitted a form to the FDA regarding Xyrem REMS which included provisions requiring distribution through a single pharmacy. The FDA stated in its notice that Xyrem REMS has met the applicable statutory standards.

The FDA notice further stated that the approval should not be taken as an agreement with the company that distribution through a single pharmacy is the only way of ensuring that the benefits of Xyrem overshadow its risks. Also, it should not mean that the FDA is concerned about the fact that limiting the distribution of Xyrem to one pharmacy will impose a burden on patient access and on the overall healthcare delivery system.

Moreover, the FDA plans to evaluate the Xyrem REMS on an ongoing basis and may modify it if required.

Our Take

The news comes as a positive for the company. Xyrem is a controlled substance with a highly restricted distribution channel which was subject to REMS.

We note that Xyrem is the largest contributor to Jazz Pharma's net product sales. The drug contributed $778.6 million in 2014 to the company's top line, up 36.8%. Xyrem net sales are expected in the range of $950 million to $970 million for 2015.

The product being the only FDA approved drug for both the indications - cataplexy and excessive daytime sleepiness - has a huge commercial potential. Also, the company is evaluating Xyrem in a phase III study for the pediatric narcolepsy indication. Further label expansion of the drug will boost sales.

Jazz Pharma currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the health care sector include Cytokinetics, Incorporated CYTK , Horizon Pharma plc HZNP and Affymetrix Inc. AFFX . All three stocks hold a Zacks Rank #1 (Strong Buy).

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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.

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