On May 1, 2024 Jazz Pharmaceuticals plc (Nasdaq: JAZZ) reported financial results for the first quarter of 2024 and affirmed guidance for 2024 (Press release, Jazz Pharmaceuticals, MAY 1, 2024, View Source [SID1234642520]).
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"In the first quarter of 2024, we delivered combined double-digit year-over-year growth from our key growth drivers: Xywav, Epidiolex and Rylaze. We also significantly advanced our zanidatamab program with the completion of the BLA for 2L BTC," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals. "We believe the robust growth in patients benefitting from Xywav underscores the appreciation physicians and patients have for the long-term health benefits of reducing sodium and expect Xywav to remain the oxybate of choice. We see continued demand for Rylaze as the only non-E. coli asparaginase regimen that provides sustained activity throughout the course of treatment, and we expect continued growth of Epidiolex to be driven by geographic expansion, optimized dosing and data demonstrating its beyond-seizure benefits. Growing and durable revenues from Xywav, Epidiolex and Rylaze, coupled with our pipeline progress, drive our confidence in delivering on our guidance and objectives for 2024."
Key Highlights
•Key growth drivers:
◦Xywav net product sales grew 14% year-over-year.
◦Epidiolex/Epidyolex net product sales grew 5% year-over-year.
◦Rylaze/Enrylaze net product sales grew 20% year-over-year.
•Zanidatamab:
◦Completed the zanidatamab BLA submission seeking accelerated approval in 2L BTC.
◦Updated data with longer follow-up, including overall survival (OS) findings, from the HERIZON-BTC-01 trial will be presented at ASCO (Free ASCO Whitepaper) Annual Meeting 2024.
◦Plan to initiate Phase 3 EMPOWHER trial in late-line HER2+ breast cancer in 2H24.
•Multiple near-term, late-stage pipeline catalysts anticipated:
◦Suvecaltamide top-line data from Phase 2b trial in ET in late 1H24.
◦Top-line data from Epidyolex Phase 3 trial in Japan in 2H24.
◦Top-line PFS data from zanidatamab in Phase 3 1L GEA targeted for late 2024.
◦Top-line data from Zepzelca 1L SCLC Phase 3 trial at the end of 2024 or early 2025.
•Affirmed 2024 total revenue guidance of $4.0 to $4.2 billion.
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Business Updates
Key Commercial Products
Xywav (calcium, magnesium, potassium, and sodium oxybates) oral solution:
•Xywav net product sales increased 14% to $315.3 million in 1Q24 compared to the same period in 2023.
•As the only low-sodium oxybate and the only therapy approved to treat idiopathic hypersomnia (IH), expect Xywav to remain the oxybate of choice.
•There were approximately 12,950 active Xywav patients exiting 1Q24, with 275 net patient adds in IH.
•Data presented at 2024 AAN Annual Meeting demonstrated the real-world impacts of Xywav:
◦Results from the RHYTHM study demonstrated patients with IH experienced higher odds of comorbid conditions across multiple clinical categories, including cardiovascular conditions.
◦A review of five clinical studies evaluating the impact of once- and twice-nightly oxybates on sleep quality, sleep architecture and measures of disrupted nighttime sleep in narcolepsy found oxybate was effective in improving these measures regardless of dosing.
Xywav for Narcolepsy:
•There were approximately 9,900 narcolepsy patients taking Xywav exiting 1Q24.
Xywav for Idiopathic Hypersomnia (IH):
•There were approximately 3,050 IH patients taking Xywav exiting 1Q24.
Xyrem (sodium oxybate) oral solution:
•Xyrem net product sales decreased 64% to $64.2 million in 1Q24 compared to the same period in 2023.
High-Sodium Oxybate Authorized Generic (AG) Royalties:
•Royalties from high-sodium oxybate AGs were $49.9 million in 1Q24.
•The Company expects high-sodium oxybate AG royalty revenue to exceed $200 million in 2024.
Epidiolex/Epidyolex (cannabidiol):
•Epidiolex/Epidyolex net product sales increased 5% to $198.7 million in 1Q24 compared to the same period in 2023. Epidiolex/Epidyolex growth was negatively affected by inventory drawdown in 1Q24.
•Outside of the U.S., Epidyolex is approved in more than 35 countries with additional launches and reimbursements anticipated through the end of 2024.
•Long-term and real-world data of treatment-resistant epilepsy were presented at 2024 ANN Annual Meeting:
◦Data from a long-term Expanded Access Program study demonstrated Epidiolex was associated with a sustained reduction in treatment-resistant, focal-onset seizures through 144 weeks, with an acceptable safety profile.
◦Updated interim results of seizure and non-seizure outcomes from the BECOME-TSC survey of caregivers of patients with tuberous sclerosis complex (TSC) reported improvements in seizure frequency and severity and in cognition, language and communication in patients.
Rylaze/Enrylaze (asparaginase erwinia chrysanthemi (recombinant)-rywn):
•Rylaze/Enrylaze net product sales increased 20% to $102.8 million in 1Q24 compared to the same period in 2023.
Zepzelca (lurbinectedin):
•Zepzelca net product sales increased 12% to $75.1 million in 1Q24 compared to the same period in 2023.
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•Enrollment in the Phase 3 trial evaluating first-line (1L) use of Zepzelca in combination with Tecentriq (atezolizumab) in small cell lung cancer, in partnership with Roche, was completed in 1Q24; expect top-line progression-free survival (PFS) data readout at the end of 2024 or early 2025.
Key Pipeline Highlights
Zanidatamab:
•Completed the zanidatamab biologics license application (BLA) seeking accelerated approval from the U.S. FDA for second-line (2L) biliary tract cancer (BTC). If approved, zanidatamab would be the first HER2-targeted treatment specifically approved for BTC in the U.S.
•The Company’s plans to submit a marketing authorization application (MAA) to the European Medicines Agency (EMA) are proceeding.
•Updated data with longer follow-up, including OS findings, from the HERIZON-BTC-01 trial will be presented at the ASCO (Free ASCO Whitepaper) Annual Meeting 2024.
•A confirmatory trial in 1L metastatic BTC is ongoing.
•The pivotal HERIZON-GEA-01 trial, evaluating zanidatamab in 1L gastroesophageal adenocarcinoma (GEA), is ongoing and the Company is targeting top-line PFS data in late 2024.
•The Company plans to initiate a Phase 3 trial, EMPOWHER, in the second half of 2024 to evaluate zanidatamab plus chemotherapy or trastuzumab plus chemotherapy in patients with HER2-positive breast cancer whose disease has progressed on previous T-DXd treatment.
Suvecaltamide (JZP385):
•Enrollment was completed in the Phase 2b essential tremor (ET) trial in 1Q24; top-line data readout is anticipated late 1H24.
•A Phase 2 trial in patients with Parkinson’s disease tremor is ongoing.
Financial Highlights
Three Months Ended
March 31,
(In thousands, except per share amounts) 2024 2023
Total revenues $ 901,983 $ 892,812
GAAP net income (loss) $ (14,618) $ 69,420
Non-GAAP adjusted net income $ 182,215 $ 285,261
GAAP earnings (loss) per share $ (0.23) $ 1.04
Non-GAAP adjusted EPS $ 2.68 $ 3.95
GAAP net loss for 1Q24 was $(14.6) million, or $(0.23) per diluted share, compared to a GAAP net income of $69.4 million, or $1.04 per diluted share, for 1Q23.
Non-GAAP adjusted net income for 1Q24 was $182.2 million, or $2.68 per diluted share, compared to a Non-GAAP adjusted net income of $285.3 million, or $3.95 per diluted share, for 1Q23.
Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.
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Total Revenues
Three Months Ended
March 31,
(In thousands) 2024 2023
Xywav $ 315,300 $ 277,761
Xyrem 64,232 178,130
Epidiolex/Epidyolex 198,716 188,909
Sativex 2,735 7,098
Total Neuroscience 580,983 651,898
Rylaze/Enrylaze 102,750 85,927
Zepzelca 75,100 67,181
Defitelio/defibrotide 47,676 39,079
Vyxeos 32,023 36,700
Total Oncology 257,549 228,887
Other 3,570 3,434
Product sales, net 842,102 884,219
High-sodium oxybate AG royalty revenue 49,947 2,096
Other royalty and contract revenues 9,934 6,497
Total revenues $ 901,983 $ 892,812
Total revenues increased 1% in 1Q24 compared to the same period in 2023, driven by higher Oncology product sales of 13%, primarily due to continued growth in Rylaze/Enrylaze, which increased 20% to $102.8 million in 1Q24 compared to the same period in 2023, partially offset by lower neuroscience revenues. Total neuroscience revenue, including high-sodium oxybate AG royalty revenue, of $630.9 million decreased in 1Q24 compared to the same period in 2023, primarily due to decreased Xyrem revenues, reflecting the adoption of Xywav by existing Xyrem patients, high-sodium oxybate competition and changes to formulary coverage, partially offset by increased royalty revenue received on net sales of high-sodium oxybate AG products and increased Xywav and Epidiolex/Epidyolex net product sales.
Operating Expenses and Effective Tax Rate
Three Months Ended
March 31,
(In thousands, except percentages) 2024 2023
GAAP:
Cost of product sales $ 95,487 $ 128,644
Gross margin 88.7% 85.5%
Selling, general and administrative $ 351,712 $ 297,917
% of total revenues 39.0% 33.4%
Research and development $ 222,847 $ 189,410
% of total revenues 24.7% 21.2%
Acquired in-process research and development $ 10,000 $ 1,000
Income tax expense (benefit)1
$ 11,669 $ (15,324)
Effective tax rate 1
(728.4)% (27.8)%
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1.The GAAP income tax expense for 1Q24 primarily related to tax shortfalls from share-based compensation. The GAAP income tax benefit for 1Q23 related primarily to taxes arising on pre-tax income and losses across tax jurisdictions and deductions on subsidiary equity.
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Three Months Ended
March 31,
(In thousands, except percentages) 2024 2023
Non-GAAP adjusted:
Cost of product sales $ 64,148 $ 64,728
Gross margin 92.4% 92.7%
Selling, general and administrative $ 311,499 $ 260,515
% of total revenues 34.5% 29.2%
Research and development $ 204,015 $ 173,918
% of total revenues 22.6% 19.5%
Acquired in-process research and development $ 10,000 $ 1,000
Income tax expense $ 65,796 $ 40,197
Effective tax rate1
26.4% 12.3%
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1.The non-GAAP effective tax rate increased in 1Q24 compared to the same period in 2023, primarily due to the mix of pre-tax income and losses incurred across tax jurisdictions.
Changes in operating expenses in 1Q24 over the prior year period are primarily due to the following:
•Cost of product sales, on a GAAP basis, decreased in 1Q24 compared to the same period in 2023, primarily due to lower acquisition accounting inventory fair value step-up expense. Cost of product sales, on a non-GAAP adjusted basis, in 1Q24 was in line with the same period in 2023.
•Selling, general and administrative (SG&A) expenses increased in 1Q24 compared to the same period in 2023, on a GAAP and on a non-GAAP adjusted basis, primarily due to increased compensation-related expenses driven by higher headcount in support of our key growth drivers, investment in our priority programs and litigation costs.
•Research and development (R&D) expenses increased in 1Q24 compared to the same period in 2023, on a GAAP and on a non-GAAP adjusted basis, primarily due to higher costs related to zanidatamab, as well as our other key pipeline programs, and an increase in compensation-related expenses driven by higher headcount in support of our development programs.
•Acquired in-process research and development (IPR&D) expense in 1Q24, on a GAAP and on a non-GAAP adjusted basis, related to an upfront payment made in connection with our asset purchase and collaboration agreement with Redx Pharma plc.
Cash Flow and Balance Sheet
As of March 31, 2024, cash, cash equivalents and investments were $1.8 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 three months ended March 31, 2024, the Company generated $267.2 million of cash from operations reflecting strong business performance and continued financial discipline.
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2024 Financial Guidance
The Company is affirming its full year 2024 financial guidance as follows:
(In millions) Guidance
Revenues $4,000 – $4,200
–Neuroscience (includes royalties from high-sodium oxybate AG)
$2,800 – $2,950
–Oncology $1,120 – $1,220
(In millions, except per share amounts and percentages) GAAP Non-GAAP
Gross margin % 89%
93%1,6
SG&A expenses $1,346 – $1,426
$1,170 – $1,2302,6
SG&A expenses as % of total revenues 32% – 36% 28% – 31%
R&D expenses $877 – $935
$800 – $8503,6
R&D expenses as % of total revenues 21% – 23% 19% – 21%
Effective tax rate (22)% – (3)%
10% – 13%4,6
Net income $385 – $530
$1,275 – $1,3506
Net income per diluted share5
$5.80 – $7.70
$18.15 – $19.356
Weighted-average ordinary shares used in per share calculations5
71 71
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1.Excludes $125-$145 million of amortization of acquisition-related inventory fair value step-up and $17-$19 million of share-based compensation expense.
2.Excludes $176-$196 million of share-based compensation expense.
3.Excludes $77-$85 million of share-based compensation expense.
4.Excludes 32%-16% from the GAAP effective tax rate of (22)%-(3)% relating to the income tax effect of adjustments between GAAP net income and non-GAAP adjusted net income, resulting in a non-GAAP adjusted effective tax rate of 10%-13%.
5.Diluted EPS calculations for 2024 include an estimated 6.4 million shares related to the assumed conversion of the 2.00% exchangeable senior notes due 2026, or the 2026 Notes, and the associated interest expense, net of tax, add-back to net income of $20 million and $18 million, on a GAAP and on a non-GAAP adjusted basis, respectively, under the "if converted" method.
6.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 2024 Net Income Guidance" at the end of this press release.
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 first 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: 8991966
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.