On February 23, 2021 Jazz Pharmaceuticals plc (Nasdaq: JAZZ) reported financial results for the full year and fourth quarter of 2020 and provided financial guidance for 2021 (Press release, Jazz Pharmaceuticals, FEB 23, 2021, View Source [SID1234575466]).
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"In 2020, we made meaningful progress toward our goal to significantly grow and diversify 2022 revenues from products launched since 2019, highlighted by the strong execution of our U.S. launches of both Zepzelca and Xywav. Despite the pandemic, we delivered important new treatment options for patients, ensured the well-being of employees and generated significant value for shareholders. We meaningfully increased revenues, executed three product launches, advanced early- and late-stage clinical trials and added multiple new novel product candidates to our expanding pipeline, all of which exemplifies our highly effective operational execution throughout 2020, while continuing our transformation as an innovative global biopharmaceutical company," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals.
Bruce Cozadd continued, "We expect 2021 to be another catalyst-rich year as we focus on our ambitious set of objectives, including continued growth of our marketed products, especially our recent launches of Xywav and Zepzelca, the next phase of Sunosi growth, two U.S. planned product launches, and the close of the GW Pharmaceuticals (GW) acquisition. We are excited about this transformative opportunity, which will bring together two innovative biopharmaceutical companies, to create a global neuroscience leader. We have long admired what the GW team has done to revolutionize cannabinoid-based medicine and look forward to combining our highly complementary neuroscience expertise across sleep medicine, epilepsies, movement disorders and psychiatry. We expect the GW transaction to provide accelerated, double-digit revenue growth through the addition of a near-term potential blockbuster product, provide a robust pipeline of complementary programs, and deliver substantial value to both shareholders and patients."
Robert Iannone, M.D., M.S.C.E., executive vice president, research and development, added, "2020 was a year of significant advancements as we initiated FDA submissions for JZP-458 in acute lymphoblastic leukemia (ALL) and lymphoblastic lymphoma (LBL) under Real-Time Oncology Review (RTOR) and JZP-258 in idiopathic hypersomnia. We also continued to expand our innovative oncology and neuroscience pipelines through both internal and external collaborations, with a focus on building a highly differentiated portfolio of products to drive long-term sustainable growth. We look forward to an exciting 2021, with the opportunity for additional regulatory approvals, initiation of mid- and late-stage clinical development studies across the neuroscience and oncology therapeutic areas and the addition of a new and innovative neuroscience pipeline with the anticipated closing of the GW acquisition."
The company successfully executed on its prioritized objectives across its business during 2020. Achievements include:
Launched Xywav in the U.S. in November 2020 for the treatment of cataplexy or excessive daytime sleepiness (EDS) in narcolepsy;
Launched Zepzelca in the U.S. for the treatment of metastatic small cell lung cancer (SCLC) on or after platinum based chemotherapy in July 2020, six months after acquiring the U.S. licensing rights;
Initiated the European rolling launch for Sunosi in May 2020 to reduce excessive daytime sleepiness (EDS) in narcolepsy and obstructive sleep apnea (OSA);
Announced positive top-line results in the JZP-258 Phase 3 study in idiopathic hypersomnia (IH) in October 2020, and subsequently, completed the rolling supplemental New Drug Application (sNDA) submission under Fast Track Designation to the Food and Drug Administration (FDA) in February 2021, with potential launch in the fourth quarter of 2021; and
Initiated a Biologics License Application (BLA) submission to FDA for JZP-458 in ALL and LBL in December 2020, with potential launch in mid-2021.
Business Updates
Corporate Development
On February 3, 2021, the company announced that it had entered into a definitive agreement to acquire GW for $220.00 per American Depositary Share, in the form of $200 in cash and $20 in Jazz ordinary shares, for a total value of approximately $7.2 billion, or $6.7 billion net of GW cash. The transaction, which has been unanimously approved by the Boards of Directors of both companies, is expected to close in the second quarter of 2021, subject to satisfaction or waiver of closing conditions including regulatory approvals and the approval of GW shareholders.
Corporate Updates
In December 2020, the company appointed Jennifer Cook and Mark D. Smith, M.D. to the company’s Board of Directors.
Neuroscience
Oxybate (Xyrem and Xywav):
Following the launch of Xywav in the fourth quarter of 2020, the company will provide certain oxybate business performance metrics on a combined basis throughout the Xywav launch. Net product sales will be reported on both a combined and individual product level.
Net product sales for the combined oxybate business increased 7% to $1,757.0 million in 2020 and increased 4% to $454.5 million in the fourth quarter of 2020 compared to the same periods in 2019. Oxybate revenue bottle volume increased 4% in 2020 and 2% in the fourth quarter of 2020 compared to the same periods in 2019. Average active oxybate patients on therapy was approximately 15,300 in the fourth quarter of 2020, an increase of 2% compared to the same period in 2019.
Xyrem (sodium oxybate) oral solution:
Xyrem net product sales increased 6% to $1,741.8 million in 2020 and increased 1% to $439.3 million in the fourth quarter of 2020 compared to the same periods in 2019.
Xywav (calcium, magnesium, potassium, and sodium oxybates) oral solution:
Xywav net product sales were $15.3 million in the fourth quarter of 2020.
There were approximately 1,900 active patients on Xywav at the end of the fourth quarter of 2020, following the U.S. launch in November.
The company has entered into agreements that provide coverage for two of the three largest pharmacy benefit managers, with total commercial coverage now exceeding 60% of lives and remains on track to deliver broad commercial payor coverage within the first six to nine months following launch.
JZP-258
The company completed the rolling submission of an sNDA for JZP-258 for the treatment of IH in February 2021, with an objective of launching in the fourth quarter of 2021.
The company expects the Phase 3 results to be presented at an upcoming medical meeting in the second quarter of 2021.
Sunosi (solriamfetol):
Sunosi net product sales were $28.3 million in 2020 and $8.7 million in the fourth quarter of 2020, compared to $3.7 million and $2.7 million in the same periods of 2019 following the U.S. launch in July 2019.
In the fourth quarter of 2020, U.S. prescriptions increased 9% compared to the third quarter of 2020.
JZP-385:
JZP-385, a highly selective modulator of T-type calcium channels, is in clinical development for the potential treatment of essential tremor.
The company expects to initiate a Phase 2b trial in mid-2021.
JZP-150:
JZP-150, a fatty acid amide hydrolase (FAAH) inhibitor, is in clinical development for the potential treatment of post-traumatic stress disorder (PTSD).
The company expects to initiate a Phase 2 study in late 2021.
Oncology
Zepzelca (lurbinectedin):
Zepzelca net product sales were $90.4 million in 2020 and $53.4 million in the fourth quarter of 2020. Zepzelca launched in the U.S. in July 2020.
The company anticipates the 2021 initiation of a Phase 3 study evaluating immunotherapy plus lurbinectedin maintenance therapy, compared to immunotherapy alone, in patients with extensive-stage SCLC after induction chemotherapy.
The company continues to engage with FDA regarding the confirmatory data package.
In December 2020, the company initiated a New Drug Submission for Zepzelca in SCLC with Health Canada’s Therapeutic Products Directorate.
Erwinaze / Erwinase (asparaginase Erwinia chrysanthemi):
Erwinaze/Erwinase net product sales decreased 17% to $147.1 million in 2020 compared to $177.5 million in 2019 due to ongoing supply and manufacturing issues at the owner and sole manufacturer of the product, Porton Biopharma Limited (PBL). Erwinaze/Erwinase net product sales increased 3% to $56.6 million in the fourth quarter of 2020 compared to $54.9 million for the same period in 2019 due to timing and availability of supply. The company continues to expect inter-quarter variability in Erwinaze net product sales due to timing and availability of supply.
The company’s agreement with PBL terminated on December 31, 2020. The company has the right to sell certain Erwinaze inventory post-termination and expects to distribute this Erwinaze inventory during the first half of 2021. Once sales of available inventory are complete, the company will cease recording net sales of Erwinaze.
JZP-458 (recombinant Erwinia asparaginase):
In December 2020, the company initiated the submission of a BLA to FDA for JZP-458 for use as a component of a multi-agent chemotherapeutic regimen for the treatment of ALL or LBL in adult and pediatric patients who have developed hypersensitivity or silent inactivation to E. coli-derived asparaginase. The BLA will be reviewed under the RTOR pilot program, an initiative of the FDA’s Oncology Center of Excellence designed to expedite the delivery of safe and effective cancer treatments to patients.
The company continues to prioritize development of JZP-458 with the objective of ensuring that ALL/LBL patients have access to a reliable, high-quality recombinant asparaginase.
Enrollment in the pivotal Phase 2/3 trial continues.
The company is targeting a mid-2021 launch in the U.S., subject to anticipated FDA approval.
Defitelio (defibrotide sodium) / defibrotide:
Defitelio/defibrotide net product sales increased 13% to $195.8 million in 2020 and increased 16% to $55.5 million in the fourth quarter of 2020 compared to the same periods in 2019.
Vyxeos (daunorubicin and cytarabine) liposome for injection:
Vyxeos net product sales of $121.1 million in 2020 were in line with 2019. In the fourth quarter of 2020, net sales decreased 2% to $31.0 million compared to the same period in 2019. Vyxeos net product sales in 2020 and the fourth quarter of 2020 were negatively impacted by recommendations to increase use of oral oncology products to avoid hospitalizations and use of intensive care beds during the COVID-19 pandemic.
Commencing in 2020, following consultation with the staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission, the company no longer excludes upfront and milestone payments from the company’s non-GAAP adjusted net income, its line item components and non-GAAP adjusted EPS. For purposes of comparability, non-GAAP adjusted financial measures for the three months and year ended December 31, 2019 have been updated to reflect this change. See "Non-GAAP Financial Measures" below.
GAAP net income for 2020 was $238.6 million, or $4.22 per diluted share, compared to $523.4 million, or $9.09 per diluted share, for 2019. GAAP net income for the fourth quarter of 2020 was $133.4 million, or $2.33 per diluted share, compared to $74.0 million, or $1.29 per diluted share, for the fourth quarter of 2019.
Non-GAAP adjusted net income for 2020 was $704.0 million, or $12.46 per diluted share, compared to $885.2 million, or $15.38 per diluted share, for 2019. Non-GAAP adjusted net income for the fourth quarter of 2020 was $228.7 million, or $4.00 per diluted share, compared to $253.2 million, or $4.42 per diluted share, for the fourth quarter of 2019. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.
Total revenues increased 9% in 2020 and 14% in the fourth quarter of 2020 compared to the same periods in 2019.
Neuroscience net product sales in 2020 increased 8% to $1,785.4 million compared to 2019 led by continued strong growth in Xyrem net product sales, which increased by $99.2 million and a $24.6 million increase in Sunosi net product sales. Neuroscience net product sales in the fourth quarter of 2020 increased 6% to $463.2 million compared to the same period in 2019 led by the launch of Xywav in November 2020 and a $6.0 million increase in Sunosi net product sales.
Oncology net product sales in 2020 increased 18% to $554.5 million compared to 2019 led by strong post-launch Zepzelca net product sales of $90.4 million and a $22.9 million increase in Defitelio net product sales, partially offset by a decrease in Erwinaze net product sales of $30.3 million. Oncology net product sales in the fourth quarter of 2020 increased 46% to $196.5 million compared to the same period in 2019 led by strong Zepzelca net product sales of $53.4 million and a $7.7 million increase in Defitelio net product sales.
Operating expenses changed over the prior year periods primarily due to the following:
Selling, general and administrative (SG&A) expenses increased in 2020 and in the fourth quarter of 2020 compared to the same periods in 2019 on a GAAP and on a non-GAAP adjusted basis primarily due to increased investment in sales, marketing and launch activities related to the launches of Zepzelca and Xywav in the U.S., and the continuation of the launch of Sunosi in the U.S., as well as an increase in other expenses related to the expansion of the company’s business.
Research and development (R&D) expenses increased in 2020 compared to 2019, on a GAAP and on a non-GAAP adjusted basis, primarily due to an increase in expenses related to the progress made on the company’s clinical programs, including JZP-458 and JZP-385, partially offset by a decrease in milestone expense of $25.0 million. R&D expenses decreased in the fourth quarter of 2020 compared to the same period in 2019, on a GAAP and on a non-GAAP adjusted basis, primarily due to milestone expense of $15.0 million in the fourth quarter of 2019, partially offset by an increase in expenses related to the progress made on the company’s clinical programs, including JZP-458 and JZP-385.
Acquired in-process research and development (IPR&D) expense in 2020 on a GAAP and on a non-GAAP adjusted basis primarily related to a $200.0 million upfront payment to PharmaMar for the exclusive U.S. commercialization and development rights to Zepzelca and a $35.0 million upfront payment to SpringWorks Therapeutics, Inc., in the fourth quarter, for a FAAH inhibitor program. Acquired IPR&D expense in 2019 on a GAAP and on a non-GAAP adjusted basis included an upfront payment of $56.0 million to Codiak BioSciences, Inc. under a collaboration agreement. Acquired IPR&D expenses in 2019 on a GAAP basis also included $48.3 million related to the acquisition of Cavion, Inc. (Cavion).
In 2020, the company recorded an impairment charge of $136.1 million on a GAAP basis following the company’s decision to stop enrollment in its Phase 3 clinical study of defibrotide for the prevention of VOD due to an Independent Data Monitoring Committee determination that it is highly unlikely that the study will reach its primary endpoint.
The effective tax rate for 2019 on a GAAP basis included a one-time tax benefit of $112.3 million resulting from an intra-entity intellectual property asset transfer. Excluding this effect, the increase in the effective tax rate for 2020 on both a GAAP and on a non-GAAP adjusted basis compared to 2019 was primarily due to the benefit recognized in 2019 from the application of the Italian patent box incentive regime and the impact in 2020 of the disallowance of certain interest deductions and a provision for a proposed settlement reached with the French tax authorities.
Cash Flow and Balance Sheet
As of December 31, 2020, cash, cash equivalents and investments were $2.1 billion, and the outstanding principal balance of the company’s long-term debt was $2.4 billion.
In 2020, the company generated $899.6 million of cash from operations, made upfront and milestone payments totaling $301.0 million to PharmaMar under a license agreement and used $146.5 million to repurchase ordinary shares under the company’s share repurchase program.
In 2020, the company repurchased approximately 1.2 million ordinary shares under the company’s share repurchase program at an average cost of $121.98 per ordinary share. As of December 31, 2020, the remaining amount authorized for share repurchases under the company’s share repurchase program was $431.2 million.
Conference Call Details
Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 4:30 p.m. EST (9:30 p.m. GMT) to provide a business and financial update and discuss its 2020 full year and fourth quarter results and provide 2021 financial guidance. The live webcast may be accessed from the Investors section of the company’s website at www.jazzpharmaceuticals.com. Please connect to the website prior to the start of the conference call to ensure adequate time for any software downloads that may be necessary. Investors may participate in the conference call by dialing +1 855 353 7924 in the U.S., or +1 503 343 6056 outside the U.S., and entering passcode 3093553.
A replay of the conference call will be available through March 2, 2021 by dialing +1 855 859 2056 in the U.S., or +1 404 537 3406 outside the U.S., and entering passcode 3093553. An archived version of the webcast will be available for at least one week in the Investors section of the company’s website at www.jazzpharmaceuticals.com.