On June 18, 2021 Jazz Pharmaceuticals plc (Nasdaq: JAZZ) reported its full year 2021 financial guidance to incorporate the GW Pharmaceuticals (GW) business, which the Company acquired on May 5, 2021 (Press release, Jazz Pharmaceuticals, JUN 18, 2021, View Source [SID1234584148]).
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"We expect 2021 to be another exciting, productive and transformational year for Jazz and are pleased to update our guidance to include the addition of GW. Our guidance reflects strong execution across our commercial portfolio, continued investment in both our ongoing and planned launches and strategic investments in R&D to advance therapies to patients in critical need of new treatment options. These investments will support the recent successful launches of both Xywav and Zepzelca, the ongoing growth of Epidiolex, the anticipated launches of JZP458 for ALL or LBL and Xywav in idiopathic hypersomnia, and the rolling launch of Epidyolex in Europe. As part of our continued R&D efforts we also look forward to advancing our PTSD and essential tremor programs, the nabiximols clinical trial program to support a U.S. regulatory approval, and our new cannabinoid research platform," said Renée Galá, chief financial officer of Jazz Pharmaceuticals. "We believe Epidiolex has near-term blockbuster potential and expect the addition of Epidiolex and the GW pipeline to deliver double-digit revenue growth, accelerated revenue diversification and substantial shareholder value. With the addition of GW, we are excited to transform the lives of even more patients and their families."
As a result of the acquisition, the Company expects:
Accelerated revenue diversification with double digit revenue growth; expect to generate 65% of 2022 revenues from products that have been launched or acquired since 20191
Earnings accretion, with the GW acquisition expected to be non-GAAP adjusted EPS accretive in the first full calendar year of combined operations and substantially accretive thereafter
Strong cash flows, which will enable rapid deleveraging, targeting less than 3.5x net leverage by the end of 2022
Continued investment in its broad and productive pipeline to drive long-term shareholder value
Additional value to be delivered through continued corporate development activity, while achieving deleveraging targets
2021 Financial Guidance2
The Company is updating its full year 2021 financial guidance for the combined organization, which includes the anticipated results of GW from May 5, 2021 to December 31, 2021.
Products acquired or launched since 2019 include Xywav, Epidiolex, Zepzelca and Sunosi, as well as the anticipated U.S. launches of JZP458 in acute lymphoblastic leukemia (ALL) / lymphoblastic lymphoma (LBL) and Xywav in idiopathic hypersomnia (in each case subject to FDA approval).
The Company’s 2021 financial guidance includes the anticipated results of the acquired GW business from the date of acquisition (May 5, 2021) and preliminary estimates of acquisition accounting adjustments related to the acquisition of GW, which estimates are subject to change; any such change could be material.
The Company expects the transaction to be dilutive to both GAAP and non-GAAP adjusted net income per diluted share in 2021. On a GAAP basis, this is expected to be primarily due to an increase in the amortization of acquisition-related intangible asset and transaction and integration expenses, the amortization of inventory fair value step-up, increased interest expense and the increase in number of outstanding shares relating to the GW acquisition. On a non-GAAP adjusted basis, this is expected to be due to increased cash interest expense and an increase in the number of outstanding shares.
Excludes $200-$225 million of amortization of acquisition-related inventory fair value step-up, $8-$10 million of share-based compensation expense and $2-$4 million of transaction and integration expenses relating to the GW acquisition from estimated GAAP gross margin.
Excludes $221-$245 million of transaction and integration expenses relating to the GW acquisition and $127-$135 million of share-based compensation expense from estimated GAAP SG&A expenses.
Excludes $35-$45 million of share-based compensation expense and $7-$11 million of transaction and integration expenses relating to the GW acquisition from estimated GAAP R&D expenses.
Excludes the income tax effect of adjustments between GAAP net income and non-GAAP adjusted net income.
See "Non-GAAP Financial Measures" below. Reconciliations of non-GAAP adjusted guidance measures are included above and in the table titled "Reconciliation of GAAP to Non-GAAP Adjusted 2021 Net Income Guidance" at the end of this press release.