Jazz Pharmaceuticals second-quarter net product sales increase 49% to $39.5 million

Aug 11 2010

Jazz Pharmaceuticals, Inc. (Nasdaq: JAZZ) announced financial results for the second quarter ended June 30, 2010 and updated financial guidance for 2010.  The company's updated financial guidance reflects higher expected sales of XYREM® (sodium oxybate) and the effects of recent financing activities.

Total revenues for the quarter ended June 30, 2010 were $40.5 million, compared to $37.3 million for the quarter ended June 30, 2009.  Total revenues included net product sales, royalties and contract revenues.

For the second quarter of 2010, net product sales increased 49 percent to $39.5 million, compared to $26.5 million in the second quarter of 2009.  Xyrem net sales for the second quarter of 2010 were $33.7 million, compared to $22.4 million for the second quarter of 2009, representing a 51 percent increase.  The increase in Xyrem net sales in the second quarter of 2010 was primarily due to the impact of price increases, as well as an increase in prescription volume.  Net sales of once-daily LUVOX CR® (fluvoxamine maleate) extended-release capsules were $5.8 million for the quarter, compared to $4.1 million for the second quarter of 2009, representing a 41 percent increase.

"Our strong quarterly results demonstrate the continued growing demand for Xyrem and reflect the significant steps we've taken to strengthen our balance sheet," said Bruce Cozadd, chief executive officer of Jazz Pharmaceuticals. "We look forward to the upcoming FDA advisory committee meeting for our JZP-6 product candidate in fibromyalgia, a debilitating and difficult to treat disease for which patients and physicians continue to seek alternative treatment options."

Royalties and contract revenues for the quarter ended June 30, 2010 were $1.0 million, compared to $10.8 million for the second quarter of 2009.  Contract revenues for the second quarter of 2009 included a $10.0 million milestone from UCB Pharma Limited related to completion of the second Phase III clinical study of JZP-6 (sodium oxybate) in patients with fibromyalgia.

Research and development expenses were $8.0 million for the quarter ended June 30, 2010 compared to $11.2 million for the quarter ended June 30, 2009.  Research and development spending in the second quarter of 2010 was primarily focused on activities to support the company's new drug application for JZP-6 in fibromyalgia, as well as development of solid oral dosage forms of sodium oxybate.  Research and development expenses were lower in the second quarter of 2010 compared to the same period of 2009, as the pivotal clinical studies to support JZP-6 were largely completed last year.

Selling, general and administrative expenses for the quarter ended June 30, 2010 were $17.1 million, compared to $13.7 million for the quarter ended June 30, 2009. Selling, general and administrative expenses were higher year over year primarily due to continued planning activities related to the potential launch of JZP-6, as well as higher personnel expenses including stock-based compensation.

During the second quarter, Jazz Pharmaceuticals prepaid the $116.5 million balance on its 15 percent senior notes. In May 2010, the company used the net proceeds from a public offering of its common stock to prepay $53.0 million in principal of the notes.  In June 2010, the company prepaid the remaining $63.5 million principal amount of the notes using a combination of cash on hand and the net proceeds of a new three-year credit agreement that consists of a $50.0 million term loan and a $15 million revolving credit facility, which bear interest at a floating rate that was 5.75 percent as of June 30, 2010.  As of June 30, 2010, $7.4 million was outstanding under the revolving credit facility.  As a result of these transactions, the company's second quarter 2010 financial results include a recorded loss on extinguishment of debt of $12.3 million, comprised of $8.5 million of prepayment premiums and fees, and a non-cash charge of $3.8 million primarily related to unamortized debt discount.

For the second quarter of 2010, the company reported a net loss of $6.4 million, or $0.18 per diluted share, compared to net income of $2.2 million, or $0.07 per diluted share, for the quarter ended June 30, 2009.  The GAAP net loss was due to the recorded loss on extinguishment of debt.

Adjusted net income for the quarter ended June 30, 2010 was $10.5 million, or $0.28 per diluted share, compared to an adjusted net loss of $4.6 million, or $0.16 per diluted share, for the same period of 2009. Adjusted net income (loss) and adjusted net income (loss) per diluted share are non-GAAP financial measures that exclude from GAAP net income (loss) and GAAP net income (loss) per diluted share revenue related to upfront and milestone payments, and certain expenses comprised of loss on extinguishment of debt, amortization of intangible assets, stock-based compensation and non-cash interest expense associated with debt discount and debt issuance costs.  A reconciliation of adjusted net income (loss) and adjusted net income (loss) per diluted share to GAAP net income (loss) and GAAP net income (loss) per diluted share is available in a table included at the end of this press release.

"We are very pleased with the improvements we've made this year on our balance sheet.  Our recently completed common stock offering and new credit facility have allowed us to significantly reduce our long-term debt," said Kate Falberg, senior vice president and chief financial officer of Jazz Pharmaceuticals.  "With this improved capital structure in place and our anticipated cash flow from operations, we believe we have sufficient resources to fund our business moving forward, and to leverage opportunities for future growth, including the launch of JZP-6, if approved by the FDA."

Updated 2010 Guidance

Jazz Pharmaceuticals is revising its full year 2010 guidance to increase the company's adjusted net income per share guidance and provide updated estimates of full year product sales and operating expenses.  The revised financial guidance also reflects the impact of the recent financing activities.  

Recent Developments

• In May and June, respectively, Jazz Pharmaceuticals announced that Rick E Winningham and Paul L. Berns were appointed to the company's Board of Directors.  Mr. Winningham is Chairman and CEO of Theravance, Inc. and Mr. Berns is President and Chief Executive Officer, and a member of the Board of Directors, of Allos Therapeutics.  Both Mr. Winningham and Mr. Berns bring significant pharmaceutical marketing and industry leadership experience to the Board.
• In June, data from the company's Phase III pivotal trials for JZP-6 in fibromyalgia were presented at the Associated Professional Sleep Societies (APSS) and European League Against Rheumatism (EULAR) meetings.
• In June, Jazz Pharmaceuticals announced that the U.S. Food and Drug Administration's (FDA) Arthritis Advisory Committee and Drug Safety and Risk Management Advisory Committee will review JZP-6 (sodium oxybate) for the treatment of fibromyalgia at a joint meeting on August 20.
• In July, Jazz Pharmaceuticals was issued two additional U.S. patents covering the distribution system for Xyrem.  These patents, which are listed in FDA's Orange Book and expire in 2024, broaden the intellectual property protection for Xyrem.  The company anticipates that one or more of its distribution system patents will also cover the final distribution system for its JZP-6 product candidate for the treatment of fibromyalgia, if JZP-6 is approved by the FDA.
• In August, UCB announced that it has filed an application for approval of Xyrem (sodium oxybate) for the treatment of fibromyalgia with the European Medicines Agency (EMA).  Under its collaboration with UCB, Jazz Pharmaceuticals would receive a milestone payment upon approval of JZP-6 in Europe and royalties from product sales.
• Following a portfolio review, Jazz Pharmaceuticals will continue to seek a partner for JZP-4, its potential treatment for epilepsy and bipolar disorder, and will no longer pursue development of JZP-7, its ropinirole gel product candidate for restless legs syndrome.  The company is continuing the development of JZP-8, its candidate for the potential treatment of recurrent acute repetitive seizures in epilepsy patients.  

Source: http://www.jazzpharma.com/