On July 31, 2024 Jazz Pharmaceuticals plc (Nasdaq: JAZZ) reported financial results for the second quarter of 2024 and updated guidance for 2024 (Press release, Jazz Pharmaceuticals, JUL 31, 2024, View Source [SID1234645206]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
"Jazz’s record revenues of over $1 billion in the second quarter were driven by strong execution and increased demand for our key growth drivers, Xywav, Epidiolex and Rylaze. Our launch preparations are well underway for zanidatamab, which was recently granted Priority Review in BTC, and we are pleased to have initiated the Phase 3 EmpowHER trial in HER2-positive breast cancer in patients whose disease has progressed after T-DXd treatment," said Bruce Cozadd, chairman and chief executive officer, Jazz Pharmaceuticals. "Based on projections for the remainder of the year, we are narrowing and maintaining the mid-point of our Neuroscience guidance and lowering our Oncology guidance. Importantly, our Oncology guidance still includes double-digit growth at the mid-point and we continue to expect double-digit growth from our combined key growth drivers in 2024."
Key Highlights
•Key growth drivers:
◦Xywav net product sales grew 13% year-over-year.
◦Epidiolex/Epidyolex net product sales grew 22% year-over-year.
◦Rylaze/Enrylaze net product sales grew 6% year-over-year.
•Zanidatamab:
◦Granted Priority Review by U.S. FDA for 2L BTC; MAA validated by EMA.
◦Initiated Phase 3 EmpowHER trial in late-line HER2+ breast cancer.
•Near-term, late-stage pipeline catalysts anticipated:
◦Top-line data from Epidyolex Phase 3 trial in Japan in 2H24.
◦Top-line data from Zepzelca 1L SCLC Phase 3 trial by the end of 2024.
◦Top-line PFS data from zanidatamab in Phase 3 1L GEA estimated to be 2Q25.
•2024 Financial Guidance:
◦Narrowing 2024 total revenue guidance range to $4.0 to $4.1 billion.
◦Narrowing Neuroscience guidance to $2.825 to $2.925 billion.
◦Lowering Oncology guidance to $1.10 to $1.15 billion.
◦Affirming GAAP net income guidance of $385 to $530 million and non-GAAP adjusted net income guidance of $1.275 to $1.350 billion.1
◦Raising GAAP EPS guidance range by approximately $1.00 to $6.00 to $8.00 and non-GAAP EPS guidance to $19.20 to $20.30.
•Vision 2025: The Company is no longer providing the Vision 2025 metrics; however, the priorities highlighted in Vision 2025 remain the same:
◦Achieving commercial excellence to drive a growing and diversified revenue base;
◦Reaching more patients and creating value for shareholders by investing in our business and pipeline, including through corporate development; and
◦Maintaining disciplined capital allocation to generate long-term sustainable growth and value.
Business Updates
Key Commercial Products
Xywav (calcium, magnesium, potassium, and sodium oxybates) oral solution:
•Xywav net product sales were $368.5 million in 2Q24, an increase of 13% compared to the same period in 2023.
•There were approximately 13,225 active Xywav patients exiting 2Q24 comprised of:
◦Approximately 9,925 narcolepsy patients.
◦Approximately 3,300 idiopathic hypersomnia (IH) patients, with 250 net patient adds.
•As the only low-sodium oxybate and the only therapy approved to treat IH, expect Xywav to remain the oxybate of choice.
•Expert recommendations for optimizing flexible and individualized dosing regimens of low-sodium Xywav in narcolepsy and IH were published in Neurology and Therapy. Nearly 90% of HCPs surveyed felt the ability to adjust Xywav dosing to accommodate routine changes was important or very important and had a positive impact on their ability to provide care.
•Data presented at SLEEP 2024 included two late-breaking posters assessing the burden experienced by patients with IH. One poster demonstrated substantial comorbidity and health-related quality-of-life burdens for IH patients. Another poster reported greater economic burden, including work productivity impairment, compared to people living without IH.
Xyrem (sodium oxybate) oral solution and high-sodium oxybate authorized generic (AG) royalties:
•Xyrem net product sales were $62.2 million in 2Q24, a decrease of 61% compared to the same period in 2023.
•Royalties from high-sodium oxybate AGs were $54.2 million in 2Q24, an increase of $48.7 million compared to the same period in 2023.
•The Company expects high-sodium oxybate AG royalty revenue to exceed $200 million in 2024.
Epidiolex/Epidyolex (cannabidiol):
•Epidiolex/Epidyolex net product sales were $247.1 million in 2Q24, an increase of 22% compared to the same period in 2023.
•Outside of the U.S., Epidyolex is approved in more than 35 countries with additional launches and reimbursements anticipated through the end of 2024.
•A plain language summary of the BECOME survey results was published in Future Neurology. In addition to reporting an 85% reduction in the frequency of seizures, caregivers also reported improvements in non-seizure benefits such as cognitive, emotional and social functioning.
•Retrospective review of the validated REST-LGS questionnaire was evaluated in a real-world setting and the majority of patients who had not been previously diagnosed with Lennox-Gastaut syndrome (LGS) were identified, highlighting the potential of the screening tool to identify patients with LGS who may benefit from further diagnostic evaluation.
Rylaze/Enrylaze (asparaginase erwinia chrysanthemi (recombinant)-rywn):
•Rylaze/Enrylaze net product sales were $107.8 million in 2Q24, an increase of 6% compared to the same period in 2023.
Zepzelca (lurbinectedin):
•Zepzelca net product sales were $81.0 million in 2Q24, an increase of 15% compared to the same period in 2023.
•Enrollment in the Phase 3 trial evaluating first-line (1L) use of Zepzelca in combination with Tecentriq (atezolizumab) in small cell lung cancer (SCLC), in partnership with Roche, was completed in 1Q24.
•The Company expects top-line progression-free survival (PFS) data readout by the end of 2024.
Key Pipeline Highlights
Zanidatamab:
•In 2Q24, the U.S. FDA accepted and granted Priority Review of the Biologics License Application for zanidatamab with a target action date of November 29, 2024. If approved, zanidatamab would be the first HER2-targeted treatment specifically approved for biliary tract cancer (BTC) in the U.S. A confirmatory trial in 1L metastatic BTC is ongoing.
•The European Medicines Agency (EMA) validated the marketing authorization application (MAA) for zanidatamab in second-line (2L) BTC.
•Updated zanidatamab data from the HERIZON-BTC-01 trial were presented at the ASCO (Free ASCO Whitepaper) Annual Meeting 2024, demonstrating a confirmed objective response rate was maintained at 41.3%, median duration of response increased by approximately two months to 14.9 months compared to findings reported in 2023, and a median overall survival of 15.5 months in all patients with HER2+ BTC and 18.1 months in patients with immunohistochemistry (IHC) 3+ tumors.
•The pivotal HERIZON-GEA-01 trial, evaluating zanidatamab in 1L gastroesophageal adenocarcinoma (GEA), is ongoing and enrollment remains on track. Based on an updated blinded assessment of progression events, the Company estimates top-line PFS data will be available in 2Q25. The Company continues to track events in the trial relative to the initial protocol assumptions.
•The Company initiated the Phase 3 EmpowHER-BC-303 trial to evaluate zanidatamab plus chemotherapy or trastuzumab plus chemotherapy in patients with HER2-positive breast cancer whose disease has progressed on previous trastuzumab deruxtecan (T-DXd) treatment.
Suvecaltamide (JZP385):
•Announced top-line results from the Phase 2b trial of suvecaltamide in essential tremor did not achieve statistical significance. The improvement in placebo from baseline to week 12 exceeded the Company’s expectations and was higher than what was observed for placebo in the prior T-CALM trial of suvecaltamide.
•A Phase 2 trial in patients with Parkinson’s disease tremor (PDT) is ongoing, with results expected 1Q25. The Company awaits results from the PDT trial to determine next steps, if any, for the program.
JZP441:
•Pending input from FDA, the Company is planning to initiate a Phase 1b trial of JZP441 in type 1 narcolepsy patients in 2H24.
•Expect this trial will further the Company’s understanding of JZP441 and more broadly orexin agonism, providing key learnings that could inform future development efforts.
Share Repurchases of Approximately $161 Million and New $500 Million Authorization
The Company resumed repurchases of its ordinary shares on the open market in the second quarter of 2024 as part of the Company’s previously authorized and announced share repurchase program. Under this share repurchase program, the Company was authorized to repurchase its ordinary shares for up to an aggregate purchase price of $1.5 billion, exclusive of any brokerage commissions. As of June 30, 2024, a nominal amount remained outstanding under this authorization, reflecting the purchase of shares worth approximately $161 million during the second quarter of 2024. The remaining amount will be utilized under the newly authorized repurchase program described below.
On July 25, 2024, the Board of Directors authorized a new share repurchase program with no expiration date pursuant to which the Company may repurchase its ordinary shares for up to an aggregate purchase price of $500 million, exclusive of any brokerage commissions. The timing and amount of repurchases under the program will depend on a variety of factors, including the amount and timing of corporate development transactions, repayment of debt, restrictions under the Company’s credit agreement, corporate and regulatory requirements, market conditions and the price of the Company’s ordinary shares.
Term Loan B Repricing
The Company completed a repricing of the approximately $2.7 billion outstanding balance of its U.S. dollar term loans under its credit facility. The applicable margin above the Term Secured Overnight Financing Rate was reduced by 75 basis points (from 300 basis points to 225 basis points) and the credit spread adjustment of approximately 11 basis points has also been removed, resulting in anticipated interest savings of approximately $23 million on an annualized basis. All other terms are substantially unchanged.
Irrevocable Election of Settlement Method for the 2.000% Exchangeable Senior Notes due 2026
Jazz Investments I Limited (the "Issuer"), a subsidiary of Jazz Pharmaceuticals, announced that it provided written notice to the exchange agent, the trustee and the holders of its 2.000% Exchangeable Senior Notes due 2026 (the "2026 notes") that it has irrevocably elected to fix the settlement method for exchanges of the 2026 notes to combination settlement with a specified cash amount equal to or in excess of $1,000. As a result, an exchanging holder will receive (i) up to $1,000 in cash per $1,000 principal amount of 2026 notes exchanged and (ii) cash, ordinary shares, or any combination thereof, at the Issuer’s election, in respect of the remainder, if any, of its exchange obligation in excess of $1,000 per $1,000 principal amount of 2026 notes exchanged.
Financial Highlights
Three Months Ended
June 30, Six Months Ended
June 30,
(In thousands, except per share amounts) 2024 2023 2024 2023
Total revenues $ 1,023,825 $ 957,317 $ 1,925,808 $ 1,850,129
GAAP net income $ 168,568 $ 104,438 $ 153,950 $ 173,858
Non-GAAP adjusted net income $ 364,727 $ 325,129 $ 546,942 $ 610,390
GAAP earnings per share $ 2.49 $ 1.52 $ 2.35 $ 2.55
Non-GAAP adjusted EPS $ 5.30 $ 4.51 $ 7.98 $ 8.46
GAAP net income for 2Q24 was $168.6 million, or $2.49 per diluted share, compared to $104.4 million, or $1.52 per diluted share, for 2Q23.
Non-GAAP adjusted net income for 2Q24 was $364.7 million, or $5.30 per diluted share, compared to $325.1 million, or $4.51 per diluted share, for 2Q23.
Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.
Total Revenues
Three Months Ended
June 30, Six Months Ended
June 30,
(In thousands) 2024 2023 2024 2023
Xywav $ 368,472 $ 326,564 $ 683,772 $ 604,325
Xyrem 62,180 159,769 126,412 337,899
Epidiolex/Epidyolex 247,102 202,226 445,818 391,135
Sativex 6,383 2,806 9,118 9,904
Total Neuroscience 684,137 691,365 1,265,120 1,343,263
Rylaze/Enrylaze 107,829 101,693 210,579 187,620
Zepzelca 81,047 70,348 156,147 137,529
Defitelio/defibrotide 45,421 46,108 93,097 85,187
Vyxeos 43,012 34,056 75,035 70,756
Total Oncology 277,309 252,205 534,858 481,092
Other 2,698 3,417 6,268 6,851
Product sales, net 964,144 946,987 1,806,246 1,831,206
High-sodium oxybate AG royalty revenue 54,164 5,514 104,111 7,610
Other royalty and contract revenues 5,517 4,816 15,451 11,313
Total revenues $ 1,023,825 $ 957,317 $ 1,925,808 $ 1,850,129
Total revenues increased 7% in 2Q24 compared to the same period in 2023.
Total neuroscience revenue, including high-sodium oxybate AG royalty revenue, was $738.3 million in 2Q24, an increase of 6% compared to $696.9 million in 2Q23, primarily due to increased high-sodium oxybate AG royalty revenue and increased Epidiolex/Epidyolex and Xywav net product sales, partially offset by decreased Xyrem revenues.
Oncology net product sales were $277.3 million in 2Q24, an increase of 10% compared to the same period in 2023, and included higher net product sales from Zepzelca and Rylaze/Enrylaze, which increased 15% and 6% to $81.0 million and $107.8 million, respectively.
Operating Expenses and Effective Tax Rate
Three Months Ended
June 30, Six Months Ended
June 30,
(In thousands, except percentages) 2024 2023 2024 2023
GAAP:
Cost of product sales $ 109,902 $ 97,537 $ 205,389 $ 226,181
Gross margin 88.6% 89.7% 88.6% 87.6%
Selling, general and administrative $ 338,523 $ 340,844 $ 690,235 $ 638,761
% of total revenues 33.1% 35.6% 35.8% 34.5%
Research and development $ 220,734 $ 209,238 $ 443,581 $ 398,648
% of total revenues 21.6% 21.9% 23.0% 21.5%
Acquired in-process research and development $ — $ — $ 10,000 $ 1,000
Income tax benefit1
$ (30,653) $ (24,323) $ (18,984) $ (39,647)
Effective tax rate 1
(22.2)% (29.7)% (13.9)% (29.0)%
_________________________
1.The GAAP income tax benefit decreased in the six months ended June 30, 2024, compared to the same period in 2023, due to the change in income mix across our jurisdictions and the impact of tax shortfalls from share-based compensation.
Three Months Ended
June 30, Six Months Ended
June 30,
(In thousands, except percentages) 2024 2023 2024 2023
Non-GAAP adjusted:
Cost of product sales $ 72,413 $ 65,994 $ 136,561 $ 130,722
Gross margin 92.5% 93.0% 92.4% 92.9%
Selling, general and administrative $ 303,386 $ 276,871 $ 614,885 $ 537,386
% of total revenues 29.6% 28.9% 31.9% 29.0%
Research and development $ 203,463 $ 192,019 $ 407,478 $ 365,937
% of total revenues 19.9% 20.1% 21.2% 19.8%
Acquired in-process research and development $ — $ — $ 10,000 $ 1,000
Income tax expense1
$ 23,520 $ 25,210 $ 89,316 $ 65,407
Effective tax rate1
6.1% 7.2% 14.0% 9.6%
_________________________
1.The non-GAAP income tax expense increased in the six months ended June 30, 2024, compared to the same period in 2023, due to the change in income mix across our jurisdictions and the impact of tax shortfalls from share-based compensation.
Changes in operating expenses in 2Q24 over the prior year period are primarily due to the following:
•Cost of product sales on a GAAP basis increased in 2Q24 compared to the same period in 2023 due to higher acquisition accounting inventory fair value step-up expense and changes in product mix. Cost of product sales on a non-GAAP adjusted basis increased in 2Q24 compared to the same period in 2023, due to changes in product mix.
•Selling, general and administrative (SG&A) expenses on a GAAP basis decreased in 2Q24 compared to the same period in 2023 primarily due to costs related to program terminations incurred in 2Q23. SG&A expenses on a GAAP and on a non-GAAP adjusted basis included increased investment in our priority programs in 2Q24 as compared to the same period in 2023.
•Research and development (R&D) expenses on a GAAP and on a non-GAAP adjusted basis increased in 2Q24 compared to the same period in 2023 primarily due to higher costs related to zanidatamab, as well as our other key pipeline programs.
Cash Flow and Balance Sheet
As of June 30, 2024, cash, cash equivalents and investments were $2.0 billion, and the outstanding principal balance of the Company’s long-term debt was $5.8 billion. In addition, the Company had undrawn borrowing capacity under a revolving credit facility of $500.0 million. For the six months ended June 30, 2024, the Company generated $598.6 million of cash from operations reflecting strong business performance and continued financial discipline.
2024 Financial Guidance
The Company is updating its full year 2024 financial guidance as follows:
(In millions) July 31, 2024 May 1, 2024
Revenues $4,000 – $4,100 $4,000 – $4,200
–Neuroscience (includes royalties from high-sodium oxybate AG)
$2,825 – $2,925 $2,800 – $2,950
–Oncology $1,100 – $1,150 $1,120 – $1,220
GAAP:
(In millions, except per share amounts and percentages) July 31, 2024 May 1, 2024
Gross margin % 89% 89%
SG&A expenses $1,366 – $1,426 $1,346 – $1,426
SG&A expenses as % of total revenues 33% – 36% 32% – 36%
R&D expenses $887 – $935 $877 – $935
R&D expenses as % of total revenues 22% – 23% 21% – 23%
Effective tax rate (22)% – (3)% (22)% – (3)%
Net income $385 – $530 $385 – $530
Net income per diluted share5
$6.00 – $8.00 $5.80 – $7.70
Weighted-average ordinary shares used in per share calculations 67 71
Non-GAAP:
(In millions, except per share amounts and percentages) July 31, 2024 May 1, 2024
Gross margin %
93%1,6
93%
SG&A expenses
$1,190 – $1,2302,6
$1,170 – $1,230
SG&A expenses as % of total revenues 29% – 31% 28% – 31%
R&D expenses
$810 – $8503,6
$800 – $850
R&D expenses as % of total revenues 20% – 21% 19% – 21%
Effective tax rate
10% – 12%4,6
10% – 13%
Net income
$1,275 – $1,3506
$1,275 – $1,350
Net income per diluted share5
$19.20 – $20.306
$18.15 – $19.35
Weighted-average ordinary shares used in per share calculations 67 71
Conference Call Details
Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 4:30 p.m. ET (9:30 p.m. IST) to provide a business and financial update and discuss its 2024 second quarter results.
Audio webcast/conference call:
U.S. Dial-In Number: +1 800 715 9871
Ireland Dial-In Number: +353 1800 943 926
Additional global dial-in numbers are available here.
Passcode: 9124647
Interested parties may access the live audio webcast via the Investors section of the Jazz Pharmaceuticals website at www.jazzpharmaceuticals.com. To ensure a timely connection, it is recommended that participants register at least 15 minutes prior to the scheduled webcast.
A replay of the webcast will be available via the Investors section of the Jazz Pharmaceuticals website at www.jazzpharmaceuticals.com.