News Release

Media Contact

Kristin Bhavnani
Head of Global Corporate Communications
Jazz Pharmaceuticals plc

Send Email
Ireland: +353 1 637 2141
US: 215-867-4948

Jazz Pharmaceuticals, Inc. Announces Third Quarter 2007 Financial Results

November 06, 2007
       Milestones Achieved in Four Clinical Programs During the Quarter

PALO ALTO, Calif., Nov. 6 /PRNewswire-FirstCall/ -- Jazz Pharmaceuticals, Inc. (Nasdaq: JAZZ) today announced financial results for the quarter ended September 30, 2007.

Jazz Pharmaceuticals' net loss for the third quarter of 2007 was $19.4 million, compared to net income of $7.7 million for the third quarter of 2006. Net income in the quarter ended September 30, 2006 included $31.6 million of gain on extinguishment of a development financing obligation in connection with a terminated development program.

Total revenues for the quarter ended September 30, 2007 were $21.5 million, compared to $11.5 million for the quarter ended September 30, 2006. The increase in total revenue resulted primarily from $7.5 million of contract revenue related to achievement of a clinical enrollment milestone in the Phase III development program of JZP-6 for fibromyalgia syndrome. Xyrem(R) net sales were $9.6 million in the quarter ended September 30, 2007, compared with $7.6 million for the same quarter of 2006. For the nine months ended September 30, 2007, total revenues increased to $49.8 million, compared to $32.4 million for the nine months ended September 30, 2006.

Research and development expenses for the quarter ended September 30, 2007 were $17.0 million, compared to $14.7 million for the quarter ended September 30, 2006.

Selling, general and administrative expenses for the quarter ended September 30, 2007 were $18.1 million, compared to $12.9 million for the quarter ended September 30, 2006. The increase was primarily due to spending in preparation for the anticipated launch of Luvox(R) CR (fluvoxamine maleate extended release capsules), increased headcount and higher expenses to support the sales force, offset in part by lower legal fees.

Jazz Pharmaceuticals' unrestricted cash, cash equivalents and marketable securities balance as of September 30, 2007 was $130.9 million. During the quarter ended September 30, 2007, net cash used in operating activities was $15.4 million.

"As our commercial organization ramps up for the anticipated commercial launch of Luvox CR in early 2008, we have also made progress in all four of our most advanced clinical development programs during the past few months," said Samuel R. Saks, M.D., Chief Executive Officer. "We continue to make important progress on our development programs for the treatment of fibromyalgia, recurrent acute repetitive seizures, restless legs syndrome and partial epilepsy."

Recent Highlights

  • Expansion of Jazz Pharmaceuticals' specialty sales force in preparation for the commercial launch of Luvox CR began in August 2007, with more than 100 new field sales management and specialty sales consultants hired as of October 31, 2007. The PDUFA action date for Luvox CR is December 22, 2007. The company expects to commence promotion of Luvox CR in the United States during the first quarter of 2008, subject to approval by the U.S. Food and Drug Administration (FDA).
  • In August 2007, a clinical enrollment milestone was achieved in the Phase III development program for fibromyalgia syndrome, JZP-6, triggering a $7.5 million payment to Jazz Pharmaceuticals under the company's development agreement with UCB Pharma Limited. The payment was recognized as contract revenue in the third quarter of 2007.
  • In September 2007, Jazz Pharmaceuticals submitted an Investigational New Drug application to the FDA for JZP-8, a product candidate for the treatment of recurrent acute repetitive seizures. The FDA has indicated that a future New Drug Application filing for this product candidate could be eligible to receive priority review. The company plans to initiate a Phase II clinical trial in the fourth quarter of 2007.
  • Interim data have been obtained from two single dose studies, one in healthy volunteers and one in epilepsy patients, of JZP-4, a product candidate for the treatment of partial epilepsy and bipolar disorder. The data from both of these studies indicate biological activity in human epilepsy models. A single dose study of a controlled-release formulation of JZP-4 is underway, and is expected to complete in the fourth quarter of 2007. Jazz Pharmaceuticals plans to initiate Phase II clinical trial activities for JZP-4 by the end of 2007.
  • A second pharmacokinetic study of JZP-7, a product candidate for the treatment of restless legs syndrome, was initiated in the third quarter of 2007, and Jazz Pharmaceuticals expects top line results from that study in the second quarter of 2008.
  • In August 2007, the U.S. Patent and Trademark Office (USPTO) awarded Jazz Pharmaceuticals a new U.S. patent (No. 7,262,219) titled "Microbiologically Sound and Stable Solutions of Gamma-Hydroxybutyrate Salt for the Treatment of Narcolepsy." This Xyrem patent is now listed in the FDA's Orange Book.

Jazz Pharmaceuticals will host an investor conference call and live audio webcast to discuss its quarterly results on November 6, 2007 at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time. The live webcast and press release may be accessed on Jazz Pharmaceuticals' website at http://www.JazzPharmaceuticals.com. Please connect to the website prior to the start of the conference call to ensure adequate time for any software downloads that may be necessary. An archived version of the webcast will be available through November 20, 2007. Investors may participate in the conference call by dialing 1-866-770-7120 in the U.S., or 1-617-213-8065 outside the U.S., and entering passcode 57344568. A replay of this call will be available until November 20, 2007 at 1-888-286-8010 (U.S.), or 1-617-801-6888 (international), using the passcode 41294935.

About Jazz Pharmaceuticals, Inc.

Jazz Pharmaceuticals is a specialty pharmaceutical company focused on identifying, developing and commercializing innovative products to meet unmet medical needs in neurology and psychiatry. For further information see http://www.JazzPharmaceuticals.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements, including, but not limited to, statements related to the potential regulatory approval and anticipated commercial launch of Luvox CR, the initiation of additional clinical trials of Jazz Pharmaceuticals' product candidates, the continued development of Jazz Pharmaceuticals' product candidates and potential regulatory developments, and the timing of study results. These forward-looking statements inherently involve significant risks and uncertainties. Jazz Pharmaceuticals' actual results and the timing of events could differ materially from those anticipated in such forward looking statements as a result of these risks and uncertainties, which include, without limitation, the risks that the FDA may not approve Luvox CR for marketing in the United States, and, if approved, when that approval will occur; risks related to the development of Jazz Pharmaceuticals' product candidates, including the risk that Jazz Pharmaceuticals may not initiate clinical trials on the timing currently anticipated or at all, or that study or clinical trial results may require Jazz Pharmaceuticals to discontinue the development of its product candidates; and risks related to the uncertain and time-consuming regulatory approval process. These and other risk factors are discussed under "Risk Factors," in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 filed by Jazz Pharmaceuticals with the Securities and Exchange Commission on August 10, 2007. Jazz Pharmaceuticals undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.



                          JAZZ PHARMACEUTICALS, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except per share amounts)
                                 (Unaudited)

                                     Three Months Ended     Nine Months Ended
                                         September 30,         September 30,
                                         2007     2006      2007        2006

     Revenues:
       Product sales, net              $13,436  $11,184   $38,676     $31,409
       Royalties, net                      253      150       824         336
       Contract revenue                  7,785      162    10,326         662
         Total revenues                 21,474   11,496    49,826      32,407

     Operating expenses:
       Cost of product sales             1,938    2,044     5,620       5,367
       Research and development         16,978   14,746    49,252      41,920
       Selling, general and
        administrative                  18,069   12,906    50,583      38,841
       Amortization of intangible
        assets                           2,287    2,400     6,936       7,200
       Provision for government
        settlement                         -        -      17,469         -
         Total operating expenses       39,272   32,096   129,860      93,328

     Loss from operations              (17,798) (20,600)  (80,034)    (60,921)

       Interest income                   1,969      516     4,360       1,688
       Interest expense                 (3,511)  (3,272)  (10,093)    (10,818)
       Other income, net                   (19)    (579)    1,816        (397)
       Gain on extinguishment of
        development financing
        obligation                         -     31,592       -        31,592
       Gain on sale of product rights      -        -       5,145         -
     Net income (loss)                 (19,359)   7,657   (78,806)    (38,856)
       Beneficial conversion feature       -        -         -        (3,501)
     Income (loss) attributable to
      common stockholders             $(19,359)  $7,657  $(78,806)   $(42,357)

     Income (loss) per share
      attributable to common
      stockholders, basic               $(0.82) $638.08    $(7.50) $(3,850.64)
     Weighted-average common shares
      used in computing income
      (loss) per share attributable to
      common stockholders, basic        23,671       12    10,505          11

     Income (loss) per share
      attributable to common
      stockholders, diluted             $(0.82)   $0.57    $(7.50) $(3,850.64)
     Shares used in computing income
      (loss) per share attributable
      to common stockholders,
      diluted                           23,671   13,470    10,505          11



                          JAZZ PHARMACEUTICALS, INC.
           RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
                   (In thousands, except per share amounts)
                                 (Unaudited)

                                     Three Months Ended    Nine Months Ended
                                         September 30,        September 30,
                                         2007     2006      2007        2006
     Non-GAAP net income (loss) per
      share information (1):
       Net income (loss)              $(19,359)  $7,657  $(78,806)   $(38,856)
       Weighted-average shares used
        in computing non-GAAP net
        income (loss) per share         23,671   13,417    20,483      13,212
       Non-GAAP net income (loss) per
        share                           $(0.82)   $0.57    $(3.85)     $(2.94)

     Reconciliation of GAAP income
      (loss) per share attributable
      to common stockholders and
      non-GAAP net income (loss)
      per share:
       GAAP income (loss) per share
        attributable to common
        stockholders, basic             $(0.82) $638.08    $(7.50) $(3,850.64)
       Decrease due to change in
        weighted-average shares
        outstanding                        -    (637.51)     3.65    3,847.96
       Decrease due to exclusion of
        beneficial conversion feature      -        -         -         (0.26)
       Non-GAAP net income (loss) per
        share                           $(0.82)   $0.57    $(3.85)     $(2.94)

       GAAP weighted-average common
        shares outstanding              23,671       12    10,505          11
       Increase in the weighted-average
        number of shares outstanding
        from treating preferred shares
        as if they converted into
        common shares at their date
        of issuance                        -     13,405     9,978      13,201
       Weighted-average shares used in
        computing non-GAAP net income
        (loss) per share                23,671   13,417    20,483      13,212

     (1)  Non-GAAP net income (loss) per share attributable to common
          stockholders and weighted-average shares used in computing non-GAAP
          income (loss) per share attributable to common stockholders treats
          outstanding preferred shares as if they were converted into common
          shares at their date of issuance. Accordingly, the beneficial
          conversion feature attributable to preferred stockholders is not
          included in non-GAAP net income (loss) per share.  Management
          believes that including non-GAAP net income (loss) per share for
          periods prior to and including the Company's June 2007 initial
          public offering provides a useful and relevant measure for
          comparative year-over-year operating performance. Management does
          not believe the use of non-GAAP net income (loss) per share lessens
          the importance of comparable GAAP measures.  As of September 30,
          2007, 24,550,554 shares of common stock were issued and outstanding.



                          JAZZ PHARMACEUTICALS, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In thousands)
                                 (Unaudited)

                                               September 30,      December 31,
                                                    2007               2006
    ASSETS
    Current assets:
      Cash and cash equivalents                   $119,972            $78,948
      Restricted cash                                  304                275
      Marketable securities                         10,939                -
      Accounts receivable, net                       6,566              5,380
      Inventories                                    3,231              3,026
      Prepaid expenses                               2,392              3,447
      Other current assets                           1,574                487
        Total current assets                       144,978             91,563
    Property and equipment, net                      3,286              2,107
    Intangible assets                               58,664             69,140
    Goodwill                                        38,213             38,213
    Long-term restricted cash and
     investments                                    12,085             12,000
    Other long-term assets                           1,541              1,548
        Total assets                              $258,767           $214,571

    LIABILITIES, CONVERTIBLE PREFERRED
     STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
    Current liabilities:
      Line of credit                                $2,597             $2,191
      Accounts payable                               2,872              5,443
      Accrued liabilities                           23,892             12,943
      Deferred revenue                               1,999              1,422
      Preferred stock warrant liability                -                8,521
        Total current liabilities                   31,360             30,520
    Deferred rent and other non-current
     liabilities                                       -                  534
    Deferred revenue, non-current                   12,752             13,495
    Liability under government
     settlement, non-current                        14,881                -
    Senior secured notes                            74,862             74,283

    Convertible preferred stock                          -            263,852
    Common stock subject to repurchase              13,222              8,183
    Stockholders' equity (deficit):
      Common stock                                       2                -
      Additional paid-in capital                   368,136              1,335
      Accumulated other comprehensive
       income                                            1                 12
      Accumulated deficit                         (256,449)          (177,643)
    Total stockholders' equity (deficit)           111,690           (176,296)
    Total liabilities, convertible
     preferred stock and stockholders'
     equity (deficit)                             $258,767           $214,571



                          JAZZ PHARMACEUTICALS, INC.
                        SUMMARY OF PRODUCT SALES, NET
                                (In thousands)
                                 (Unaudited)

                                        Three Months Ended   Nine Months Ended
                                          September 30,        September 30,
                                          2007     2006        2007     2006

    Xyrem                                 $9,646   $7,612     $27,898  $20,967
    Antizol                                3,790    3,203      10,413    9,341
    Cystadane (1)                            -        369         365    1,101
    Total                                $13,436  $11,184     $38,676  $31,409


     (1) Jazz Pharmaceuticals, Inc. sold its rights to Cystadane to an
         unrelated third party in March 2007.

SOURCE Jazz Pharmaceuticals, Inc.

CONTACT: Karen L. Bergman, +1-650-575-1509, or Michelle Corral, +1-415-794-8662, both of BCC Partners, for Jazz Pharmaceuticals, Inc.; or Jim Karrels, Executive Director, Finance of Jazz Pharmaceuticals, Inc., +1-650-496-2800, investorinfo@jazzpharmaceuticals.com
Web site: http://www.jazzpharmaceuticals.com