Jazz Pharmaceuticals Announces Third Quarter 2024 Financial Results

– 14% year-over-year revenue increase from combined key growth drivers:

Xywav^®, Epidiolex^® and Rylaze^® –

– 2024 total revenue guidance affirmed at $4.0 to $4.1 billion –

– Zanidatamab 2L BTC PDUFA date of November 29, 2024 –

– Plan to submit sNDA for Zepzelca^® in 1L ES-SCLC in 1H25 –

DUBLIN, Nov. 6, 2024  /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the third quarter of 2024 and updated guidance for 2024.

"Jazz once again delivered record revenues of more than $1.05 billion and a 14% year-over-year increase in revenue from our key growth drivers combined. We continue to see robust patient demand for Xywav with approximately 400 net patient additions in the third quarter, supported by physician and patient appreciation of a low-sodium treatment option. Strong sleep¹ performance coupled with continued Epidiolex performance gives us confidence in maintaining our total revenue guidance of $4.0 to $4.1 billion for 2024," said Bruce Cozadd, chairman and chief executive officer, Jazz Pharmaceuticals. "We're preparing for the anticipated launch of zanidatamab in the fourth quarter in 2L BTC, where there remains a high unmet medical need. We expect to provide the first chemotherapy-free dual HER2-targeted bispecific antibody indicated for BTC as well as an opportunity for HCPs to gain important experience ahead of future indications. In addition, results from the Phase 3 IMforte trial were highly encouraging, and we plan to submit an sNDA for Zepzelca in the first half of 2025 to support expansion into the 1L maintenance setting in ES-SCLC."

Key Highlights

• Key growth drivers grew 14% combined year-over-year.
• Combination of Zepzelca and atezolizumab demonstrated statistically significant and clinically meaningful improvement in OS and PFS primary endpoints, demonstrating the potential of the regimen to delay disease progression in ES-SCLC and extend survival for patients.
• Zanidatamab:
  • PDUFA date of November 29; expect 2L BTC commercial launch in 4Q24, following approval.
  • Top-line PFS data from zanidatamab in Phase 3 1L GEA estimated to be 2Q25.
  • Initiated a Phase 2 pan-tumor trial to evaluate HER2-positive solid tumors.
• 2024 Financial Guidance:
  • Affirming 2024 total revenue guidance of $4.0 to $4.1 billion.
  • Affirming neuroscience revenue guidance of $2.825 to $2.925 billion.
  • Lowering oncology revenue guidance to $1.08 to $1.13 billion.
  • Lowering GAAP R&D expense guidance to $862 to $908 million and non-GAAP R&D expense guidance to $790 to $830 million,² primarily driven by strategic pipeline prioritization.
  • Raising GAAP EPS guidance range to $6.70 to $8.50 and non-GAAP EPS guidance range to $19.50 to $20.60.²

Business Updates

Commercial Updates

Xywav (calcium, magnesium, potassium, and sodium oxybates) oral solution:

• Xywav net product sales were $388.5 million in 3Q24, an increase of 17% compared to the same period in 2023.
• There were approximately 400 net patient adds for a total of approximately 13,625 active Xywav patients exiting 3Q24 comprised of:
  • Approximately 10,075 narcolepsy patients.
  • Approximately 3,550 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.
• Presented top-line results from the Phase 4 DUET (Develop hypersomnia Understanding by Evaluating low-sodium oxybate Treatment) trial at the Psych Congress 2024, which demonstrated efficacy and safety consistent with narcolepsy and IH Phase 3 data. The prospective trial assesses the effect of Xywav treatment on excessive daytime sleepiness, polysomnography parameters and functional outcomes in adults with narcolepsy or IH.

Xyrem^® (sodium oxybate) oral solution and high-sodium oxybate authorized generic (AG) royalties:

• Xyrem net product sales were $58.1 million in 3Q24, a decrease of 54% compared to the same period in 2023.
• Royalties from high-sodium oxybate AGs were $58.2 million in 3Q24, an increase of $29.2 million compared to the same period in 2023.

Epidiolex/Epidyolex (cannabidiol):

• Epidiolex/Epidyolex net product sales were $251.6 million in 3Q24, an increase of 18% compared to the same period in 2023.
• Outside of the U.S., Epidyolex is approved in more than 35 countries.
• Presented data at the European Epilepsy Congress 2024 demonstrating clinically meaningful reductions in drop seizures in patients with Lennox-Gastaut syndrome and subgroup analyses from the BECOME Caregiver Survey showing most caregivers reported patient improvements in seizure and non-seizure outcomes.
• Ongoing data generation of the seizure and non-seizure benefits of Epidiolex, including from the EpiCom study in tuberous sclerosis complex, to be presented at American Epilepsy Society 2024.

Rylaze/Enrylaze (asparaginase erwinia chrysanthemi (recombinant)-rywn):

• Rylaze/Enrylaze net product sales were $98.8 million in 3Q24, a decrease of 6% compared to the same period in 2023.
• There is a temporary impact to Rylaze revenue due to a recent update to pediatric acute lymphoblastic leukemia (ALL) protocols regarding timing of asparaginase administration. The Company does not expect this impact will affect ongoing demand and expects revenue will normalize by early 2025.

Zepzelca (lurbinectedin): 

• Zepzelca net product sales were $85.8 million in 3Q24, an increase of 10% compared to the same period in 2023.
• The Company announced statistically significant and clinically meaningful overall survival (OS) and progression-free survival (PFS) results from the Phase 3 clinical trial, conducted in partnership with Roche, evaluating Zepzelca in combination with Tecentriq^® (atezolizumab) in first-line (1L) extensive-stage (ES) small cell lung cancer (SCLC). Based on positive results from the trial, the Company plans to submit a supplemental New Drug Application (sNDA) for Zepzelca in 1L ES-SCLC in the first half of 2025.

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 pivotal HERIZON-GEA-01 trial, evaluating zanidatamab in 1L gastroesophageal adenocarcinoma (GEA), is expected to read out in 2Q25.
• Data presented at ESMO 2024 demonstrated sustained clinical antitumor activity in HER2-positive metastatic GEA. Updated results from the Phase 2 trial included a confirmed objective response rate of 84%, duration of response of 18.7 months, median PFS of 15.2 months and a Kaplan-Meier–estimated OS of 59% at 30 months.
•  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 is enrolling patients.
• The Company initiated a Phase 2 DiscovHER-Pan-206 pan-tumor trial in HER2-positive solid tumors.

Senior Notes Offering and Concurrent Share Repurchases

In the third quarter of 2024, the Company completed a private placement of $1.0 billion aggregate principal amount of 3.125% exchangeable senior notes due 2030, or 2030 Notes. The Company intends to use a portion of the proceeds from the private placement to make a payment on the Term Loan B following the mid-January 2025 expiration of the 1% prepayment premium period in place after the recent repricing. Concurrently with this transaction, the Company repurchased approximately $150.0 million of its ordinary shares. The Company paid for such repurchases with existing cash on hand, and such share repurchases were effected as part of the Company's share repurchase program announced in July 2024.

Financial Highlights

GAAP net income for 3Q24 was $215.1 million, or $3.42 per diluted share, compared to $146.8 million, or $2.14 per diluted share, for 3Q23. 

Non-GAAP adjusted net income for 3Q24 was $416.9 million, or $6.61 per diluted share, compared to $340.1 million, or $4.84 per diluted share, for 3Q23. 

Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.

Total Revenues

Total revenues increased 9% in 3Q24 compared to the same period in 2023.

Total neuroscience revenue, including high-sodium oxybate AG royalty revenue, was $760.9 million in 3Q24, an increase of 8% compared to $704.0 million in 3Q23, primarily due to increased Xywav and Epidiolex/Epidyolex net product sales and increased high-sodium oxybate AG royalty revenue partially offset by decreased Xyrem revenues.

Oncology net product sales were $284.8 million in 3Q24, an increase of 9% compared to the same period in 2023, and included higher net product sales from Defitelio/defibrotide which increased 38% to $65.8 million primarily due to timing of orders and Zepzelca which increased 10% to $85.8 million. In 3Q24, Rylaze net product sales were negatively affected by a recent update to pediatric ALL protocols regarding timing of asparaginase administration.

Operating Expenses and Effective Tax Rate

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Changes in operating expenses in 3Q24 over the prior year period are primarily due to the following:

• Cost of product sales, on a GAAP basis, increased in 3Q24 compared to the same period in 2023, primarily due to higher product sales, net and higher acquisition accounting inventory fair value step-up expense. Cost of product sales, on a non-GAAP adjusted basis, increased in 3Q24 compared to the same period in 2023, primarily due to higher product sales, net.
• Selling, general and administrative (SG&A) expenses, on a GAAP and on a non-GAAP adjusted basis, increased in 3Q24 compared to the same period in 2023, primarily due to increased compensation-related expenses driven by higher headcount in support of our key growth drivers.
• Research and development (R&D) expenses, on a GAAP and on a non-GAAP adjusted basis, decreased in 3Q24 compared to the same period in 2023, primarily due to lower clinical program costs as a result of JZP150 costs incurred in 3Q23 and lower zanidatamab costs.

Cash Flow and Balance Sheet

As of September 30, 2024, cash, cash equivalents and investments were $2.6 billion, and the outstanding principal balance of the Company's long-term debt was $6.2 billion. In addition, the Company had undrawn borrowing capacity under a revolving credit facility of $500.0 million. In 3Q24, we repaid the $575.0 million aggregate principal amount of the 1.50% exchangeable senior notes due 2024, or 2024 Notes, and completed the private placement of the 2030 Notes. For the nine months ended September 30, 2024, the Company generated $997.3 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:

GAAP:

(In millions, except per share amounts and percentages)	November 6, 2024		July 31, 2024
Gross margin %	89 %		89 %
SG&A expenses	$1,339 - $1,392		$1,366 - $1,426
SG&A expenses as % of total revenues	33% - 35%		33% - 36%
R&D expenses	$862 - $908		$887 - $935
R&D expenses as % of total revenues	21% - 23%		22% - 23%
Effective tax rate	(17)% - (2)%		(22)% - (3)%
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