(State or Other Jurisdiction of Incorporation) | (Commission File No.) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
(d) | Exhibits |
Exhibit Number | Description |
99.1 | |
104 | 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) |
JAZZ PHARMACEUTICALS PUBLIC LIMITED COMPANY | ||
By: | /s/ Renée Galá | |
Name: | Renée Galá | |
Title: | Executive Vice President and Chief Financial Officer |
Three Months Ended March 31, | |||||||
(In thousands, except per share amounts) | 2020 | 2019 | |||||
Total revenues | $ | 534,726 | $ | 508,186 | |||
GAAP net income (loss) | $ | (157,833 | ) | $ | 85,201 | ||
Adjusted net income1 | $ | 25,833 | $ | 164,173 | |||
GAAP EPS | $ | (2.82 | ) | $ | 1.47 | ||
Adjusted EPS1 | $ | 0.45 | $ | 2.83 |
1. | Commencing in 2020, following consultation with the staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission, the company no longer excludes upfront and milestone payments from the company’s non-GAAP adjusted net income, its line item components and non-GAAP adjusted EPS. For purposes of comparability, non-GAAP adjusted financial measures for the first quarter of 2019 have been updated to reflect this change. See “Non-GAAP Financial Measures” below. |
• | Xyrem: During the quarter, bottle volume growth was 5% and average active patients on therapy grew 3% compared to the first quarter of 2019. The company observed a decline in new patient enrollments in connection with COVID-19 beginning in mid-March. Given the importance of managing narcolepsy, a serious and chronic disease, the company believes that the demand for Xyrem in 2020 will remain strong. |
• | Sunosi: First quarter prescriptions increased 41% from the fourth quarter 2019, and more than 80% of commercially insured U.S. patients have access to coverage for Sunosi. Sales were impacted by physician office closures, and pulmonologists, a key physician audience managing obstructive sleep apnea, refocusing care to patients with acute respiratory distress syndrome, as a result of COVID-19. The European rolling launch will begin in Germany this month. |
• | JZP-258: In March 2020, the U.S. Food and Drug Administration (FDA) accepted for filing with priority review the New Drug Application (NDA) for JZP-258 for the treatment of cataplexy and excessive daytime sleepiness (EDS) in narcolepsy patients 7 years of age and older with a Prescription Drug User Fee Act (PDUFA) action date of July 21, 2020. The company has not been notified of any delays to the PDUFA action date. Additionally, the company completed |
• | Lurbinectedin: In February 2020, FDA accepted for filing with priority review the NDA seeking accelerated approval for lurbinectedin for the treatment of patients with relapsed small cell lung cancer (SCLC) with a PDUFA action date of August 16, 2020. FDA has indicated that an advisory committee meeting is not currently planned. |
• | JZP-458: Enrollment is ongoing in the single-arm, pivotal Phase 2/3 study, additional sites continue to activate and the company expects to submit the Biologics License Application (BLA) as early as fourth quarter this year. |
• | Defitelio (defibrotide sodium)/defibrotide: The company is providing defibrotide to support multiple investigator-sponsored trials to evaluate its use in COVID-19 patients with acute respiratory distress syndrome. Top-line results from the Phase 2 study for prevention of acute graft-versus-host disease are expected in the second half of 2020. |
Three Months Ended March 31, | |||||||
(In thousands) | 2020 | 2019 | |||||
Xyrem® (sodium oxybate) oral solution | $ | 407,875 | $ | 368,317 | |||
Erwinaze® / Erwinase® (asparaginase Erwinia chrysanthemi) | 37,732 | 60,899 | |||||
Defitelio® (defibrotide sodium) / defibrotide | 47,432 | 41,500 | |||||
Vyxeos® (daunorubicin and cytarabine) liposome for injection | 32,720 | 28,943 | |||||
Sunosi® (solriamfetol) | 1,924 | — | |||||
Other | 2,522 | 3,672 | |||||
Product sales, net | 530,205 | 503,331 | |||||
Royalties and contract revenues | 4,521 | 4,855 | |||||
Total revenues | $ | 534,726 | $ | 508,186 |
• | Total net product sales increased 5% in the first quarter of 2020 compared to the same period in 2019 primarily due to the double-digit growth in Xyrem, Defitelio and Vyxeos net sales, partially offset by a decrease in Erwinaze net sales due to ongoing supply and manufacturing issues at the sole manufacturer. |
• | Xyrem net product sales increased 11% in the first quarter of 2020 compared to the same period in 2019. |
• | Erwinaze/Erwinase net product sales decreased 38% in the first quarter of 2020 compared to the same period in 2019. The company continues to expect inter-quarter variability in Erwinaze net sales due to timing and availability of supply. |
• | Defitelio/defibrotide net product sales increased 14% in the first quarter of 2020 compared to the same period in 2019. The company continues to expect inter-quarter variability in Defitelio/defibrotide net sales as VOD is an ultra-rare complication of hematopoietic stem-cell transplantation. |
• | Vyxeos net product sales increased 13% in the first quarter of 2020 compared to the same period in 2019 primarily due to continuing growth in Europe. |
• | Sunosi net product sales were $1.9 million in first quarter of 2020. While Sunosi total prescriptions increased 41% in the first quarter of 2020 compared to the fourth quarter of 2019, net sales in the first quarter of 2020 were negatively impacted by higher gross-to-net deductions due to increased coupon utilization. The company launched Sunosi in the U.S. in July 2019. |
Three Months Ended March 31, | |||||||
(In thousands, except percentages) | 2020 | 2019 | |||||
GAAP: | |||||||
Cost of product sales | $ | 28,657 | $ | 33,506 | |||
Gross margin | 94.6 | % | 93.3 | % | |||
Selling, general and administrative | $ | 208,400 | $ | 167,947 | |||
% of total revenues | 39.0 | % | 33.0 | % | |||
Research and development | $ | 86,107 | $ | 60,105 | |||
% of total revenues | 16.1 | % | 11.8 | % | |||
Acquired in-process research and development | $ | 202,250 | $ | 56,000 | |||
Impairment charge | $ | 136,139 | $ | — | |||
Income tax provision (benefit) | $ | (51,287 | ) | $ | 29,116 | ||
Effective tax rate | 24.5 | % | 25.3 | % |
Three Months Ended March 31, | |||||||
(In thousands, except percentages) | 2020 | 2019 | |||||
Non-GAAP adjusted: | |||||||
Cost of product sales | $ | 26,984 | $ | 31,847 | |||
Gross margin | 94.9 | % | 93.7 | % | |||
Selling, general and administrative | $ | 187,804 | $ | 147,577 | |||
% of total revenues | 35.1 | % | 29.0 | % | |||
Research and development | $ | 79,722 | $ | 54,582 | |||
% of total revenues | 14.9 | % | 10.7 | % | |||
Acquired in-process research and development | $ | 202,250 | $ | 56,000 | |||
Income tax provision | $ | 4,687 | $ | 45,714 | |||
Effective tax rate | 15.4 | % | 21.7 | % |
• | Selling, general and administrative (SG&A) expenses increased in the first quarter of 2020 compared to the same period in 2019 on a GAAP and on a non-GAAP adjusted basis due to higher sales and marketing expenses related to the company's products and pre-launch commercialization activities for product candidates as well as an increase in other expenses related to the expansion of the company's business. |
• | Research and development (R&D) expenses increased in the first quarter of 2020 compared to the same period in 2019 on a GAAP and on a non-GAAP adjusted basis primarily due to expenses related to the company's expanding pre-clinical and clinical development programs, including JZP-458 and JZP-258 in idiopathic hypersomnia. |
• | Acquired in-process research and development expenses on a GAAP and on a non-GAAP adjusted basis included a $200.0 million upfront payment to PharmaMar for the exclusive U.S. commercialization and development rights to lurbinectedin in the first quarter of 2020 and an |
• | In the first quarter of 2020, the company recorded an impairment charge of $136.1 million on a GAAP basis following the company's decision to stop enrollment in its Phase 3 clinical study of defibrotide for the prevention of VOD due to an Independent Data Monitoring Committee determination that it is highly unlikely that the study will reach its primary endpoint. |
Guidance provided as of | ||
February 25, 2020 | May 5, 2020 | |
Revenues | $2,320 - $2,400 | $2,120 - $2,260 |
Total net product sales | $2,305 - $2,375 | $2,105 - $2,240 |
-Sleep/Neuroscience net sales | $1,740 - $1,810 | $1,650 - $1,740 |
-Hematology/Oncology net sales | $500 - $580 | $420 - $5101 |
1. | Lurbinectedin net sales included in Hematology/Oncology net sales for May 5, 2020 guidance; included in Revenues and Total net product sales as of each date. |
• | In the COVID-19 environment, the guidance update reflects management's current expectations and includes the impact of factors such as declines in medical visits, fewer patients accessing treatment, declines in sales representative access to healthcare providers with social distancing, government imposed stay-at-home orders within Europe and the U.S., closure of offices and treatment centers and shifting of healthcare system focus to caring for COVID-19 patients, increased unemployment, and loss of healthcare coverage. |
◦ | Specifically in the sleep and neuroscience therapeutic area: the guidance also includes the impact of declines in diagnostic testing leading to decreased narcolepsy and OSA diagnoses. |
◦ | Specifically in the hematology/oncology therapeutic area: the guidance also includes the impact of postponement of procedures such as hematopoietic stem cell transplantations and recommendations shifting the care of cancer patients to the outpatient setting, reducing the number of treated patients. |
• | Operating Expenses: guidance includes proactive management of operating expenses following prioritization of investments in the company's most important current and future revenue drivers. |
Guidance provided as of | ||
February 25, 2020 | May 5, 2020 | |
Gross margin % | 94% | 94% |
SG&A expenses | $855 - $903 | $785 - $843 |
SG&A expenses as % of total revenues | 36% - 39% | 35% - 40% |
R&D Expenses | $312 - $348 | $277 - $313 |
R&D expenses as % of total revenues | 13% - 15% | 12% - 15% |
Acquired in-process research and development expenses | $200 | $202 |
Impairment charge | — | $136 |
Effective tax rate | 15% - 23% | 22% - 29% |
Net income per diluted share | $5.90 - $7.15 | $2.70 - $4.30 |
Guidance provided as of | ||
February 25, 2020 | May 5, 2020 | |
Gross margin % | 94% | 94%1,6 |
SG&A expenses | $770 - $810 | $700 - $7502,6 |
SG&A expenses as % of total revenues | 32% - 35% | 31% - 35% |
R&D Expenses | $285 - $315 | $250 - $2803,6 |
R&D expenses as % of total revenues | 12% - 14% | 11% - 13% |
Acquired in-process research and development expenses | $200 | $2024 |
Effective tax rate | 18% - 20% | 20% - 23%5,6 |
Net income per diluted share | $12.50 - $13.40 | $11.25 - $12.504,6 |
1. | Excludes $8-$9 million of share-based compensation expense from estimated GAAP gross margin. |
2. | Excludes $85-$93 million of share-based compensation expense from estimated GAAP SG&A expenses. |
3. | Excludes $27-$33 million of share-based compensation expense from estimated GAAP R&D expenses. |
4. | Commencing in 2020, the company no longer excludes upfront and milestone payments from the company’s non-GAAP adjusted net income, its line item components and non-GAAP adjusted EPS. The impact of this change to the company’s 2020 non-GAAP adjusted net income and non-GAAP adjusted EPS guidance is approximately $175 million or $3.13 per diluted share, respectively, related to the post-tax impact of the $200 million upfront payment made to PharmaMar in January 2020. |
5. | Excludes the income tax effect of adjustments between GAAP reported and non-GAAP adjusted net income. |
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 2020 Net Income Guidance" at the end of this press release. |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Revenues: | |||||||
Product sales, net | $ | 530,205 | $ | 503,331 | |||
Royalties and contract revenues | 4,521 | 4,855 | |||||
Total revenues | 534,726 | 508,186 | |||||
Operating expenses: | |||||||
Cost of product sales (excluding amortization of acquired developed technologies) | 28,657 | 33,506 | |||||
Selling, general and administrative | 208,400 | 167,947 | |||||
Research and development | 86,107 | 60,105 | |||||
Intangible asset amortization | 62,847 | 56,885 | |||||
Acquired in-process research and development | 202,250 | 56,000 | |||||
Impairment charge | 136,139 | — | |||||
Total operating expenses | 724,400 | 374,443 | |||||
Income (loss) from operations | (189,674 | ) | 133,743 | ||||
Interest expense, net | (18,496 | ) | (17,922 | ) | |||
Foreign exchange loss | (1,132 | ) | (611 | ) | |||
Income (loss) before income tax provision (benefit) and equity in loss (gain) of investees | (209,302 | ) | 115,210 | ||||
Income tax provision (benefit) | (51,287 | ) | 29,116 | ||||
Equity in loss (gain) of investees | (182 | ) | 893 | ||||
Net income (loss) | $ | (157,833 | ) | $ | 85,201 | ||
Net income (loss) per ordinary share: | |||||||
Basic | $ | (2.82 | ) | $ | 1.49 | ||
Diluted | $ | (2.82 | ) | $ | 1.47 | ||
Weighted-average ordinary shares used in per share calculations - basic | 55,956 | 57,206 | |||||
Weighted-average ordinary shares used in per share calculations - diluted | 55,956 | 58,081 |
March 31, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 701,602 | $ | 637,344 | |||
Investments | 280,000 | 440,000 | |||||
Accounts receivable, net of allowances | 317,301 | 355,987 | |||||
Inventories | 85,610 | 78,608 | |||||
Prepaid expenses | 38,824 | 39,434 | |||||
Other current assets | 94,300 | 78,895 | |||||
Total current assets | 1,517,637 | 1,630,268 | |||||
Property, plant and equipment, net | 129,562 | 131,506 | |||||
Operating lease assets | 135,976 | 139,385 | |||||
Intangible assets, net | 2,238,658 | 2,440,977 | |||||
Goodwill | 909,226 | 920,018 | |||||
Deferred tax assets, net | 230,242 | 221,403 | |||||
Deferred financing costs | 6,887 | 7,426 | |||||
Other non-current assets | 47,107 | 47,914 | |||||
Total assets | $ | 5,215,295 | $ | 5,538,897 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 66,308 | $ | 47,545 | |||
Accrued liabilities | 261,041 | 267,873 | |||||
Current portion of long-term debt | 33,387 | 33,387 | |||||
Income taxes payable | 31,211 | 10,965 | |||||
Deferred revenue | 4,176 | 4,720 | |||||
Total current liabilities | 396,123 | 364,490 | |||||
Deferred revenue, non-current | 4,225 | 4,861 | |||||
Long-term debt, less current portion | 1,576,984 | 1,573,870 | |||||
Operating lease liabilities, less current portion | 147,110 | 151,226 | |||||
Deferred tax liabilities, net | 165,095 | 224,095 | |||||
Other non-current liabilities | 117,258 | 109,374 | |||||
Total shareholders’ equity | 2,808,500 | 3,110,981 | |||||
Total liabilities and shareholders’ equity | $ | 5,215,295 | $ | 5,538,897 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net cash provided by operating activities | $ | 272,969 | $ | 202,253 | |||
Net cash provided by (used in) investing activities | (60,080 | ) | 166,052 | ||||
Net cash used in financing activities | (147,683 | ) | (130,349 | ) | |||
Effect of exchange rates on cash and cash equivalents | (948 | ) | (112 | ) | |||
Net increase in cash and cash equivalents | $ | 64,258 | $ | 237,844 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
GAAP reported net income (loss) | $ | (157,833 | ) | $ | 85,201 | ||
Intangible asset amortization | 62,847 | 56,885 | |||||
Share-based compensation expense | 28,654 | 27,552 | |||||
Impairment charge (a) | 136,139 | — | |||||
Non-cash interest expense (b) | 12,000 | 11,133 | |||||
Income tax effect of above adjustments | (55,974 | ) | (16,598 | ) | |||
Non-GAAP adjusted net income | $ | 25,833 | $ | 164,173 | |||
GAAP reported net income (loss) per diluted share | $ | (2.82 | ) | $ | 1.47 | ||
Non-GAAP adjusted net income per diluted share | $ | 0.45 | $ | 2.83 | |||
Weighted-average ordinary shares used in diluted per share calculations - GAAP | 55,956 | 58,081 | |||||
Weighted-average ordinary shares used in diluted per share calculations - non-GAAP | 56,792 | 58,081 |
(a) | Impairment charge related to the company's decision to stop enrollment in its Phase 3 clinical study of defibrotide for the prevention of VOD due to a determination by an Independent Data Monitoring Committee that it is highly unlikely that the study will reach its primary endpoint. |
(b) | Non-cash interest expense associated with debt discount and debt issuance costs. |
Three months ended March 31, 2020 | |||||||||||||||||||||||||||||||||
Cost of product sales | Gross margin | Selling, general and administrative | Research and development | Intangible asset amortization | Impairment charge | Interest expense, net | Income tax provision (benefit) | Effective tax rate | |||||||||||||||||||||||||
GAAP Reported | $ | 28,657 | 94.6 | % | $ | 208,400 | $ | 86,107 | $ | 62,847 | $ | 136,139 | $ | 18,496 | $ | (51,287 | ) | 24.5 | % | ||||||||||||||
Non-GAAP Adjustments: | |||||||||||||||||||||||||||||||||
Intangible asset amortization | — | — | — | — | (62,847 | ) | — | — | — | — | |||||||||||||||||||||||
Share-based compensation expense | (1,673 | ) | 0.3 | (20,596 | ) | (6,385 | ) | — | — | — | — | — | |||||||||||||||||||||
Impairment charge | — | — | — | — | — | (136,139 | ) | — | — | — | |||||||||||||||||||||||
Non-cash interest expense | — | — | — | — | — | — | (12,000 | ) | — | — | |||||||||||||||||||||||
Income tax effect of above adjustments | — | — | — | — | — | — | — | 55,974 | (9.1 | ) | |||||||||||||||||||||||
Total of Non-GAAP adjustments | (1,673 | ) | 0.3 | (20,596 | ) | (6,385 | ) | (62,847 | ) | (136,139 | ) | (12,000 | ) | 55,974 | (9.1 | ) | |||||||||||||||||
Non-GAAP Adjusted | $ | 26,984 | 94.9 | % | $ | 187,804 | $ | 79,722 | $ | — | $ | — | $ | 6,496 | $ | 4,687 | 15.4 | % |
Three months ended March 31, 2019 | |||||||||||||||||||||||||||||
Cost of product sales | Gross margin | Selling, general and administrative | Research and development | Intangible asset amortization | Interest expense, net | Income tax provision | Effective tax rate | ||||||||||||||||||||||
GAAP Reported | $ | 33,506 | 93.3 | % | $ | 167,947 | $ | 60,105 | $ | 56,885 | $ | 17,922 | $ | 29,116 | 25.3 | % | |||||||||||||
Non-GAAP Adjustments: | |||||||||||||||||||||||||||||
Intangible asset amortization | — | — | — | — | (56,885 | ) | — | — | — | ||||||||||||||||||||
Share-based compensation expense | (1,659 | ) | 0.4 | (20,370 | ) | (5,523 | ) | — | — | — | — | ||||||||||||||||||
Non-cash interest expense | — | — | — | — | — | (11,133 | ) | — | — | ||||||||||||||||||||
Income tax effect of above adjustments | — | — | — | — | — | — | 16,598 | (3.6 | ) | ||||||||||||||||||||
Total of Non-GAAP adjustments | (1,659 | ) | 0.4 | (20,370 | ) | (5,523 | ) | (56,885 | ) | (11,133 | ) | 16,598 | (3.6 | ) | |||||||||||||||
Non-GAAP Adjusted | $ | 31,847 | 93.7 | % | $ | 147,577 | $ | 54,582 | $ | — | $ | 6,789 | $ | 45,714 | 21.7 | % |
GAAP net income | $150 - $240 |
Intangible asset amortization | 250 - 270 |
Share-based compensation expense | 120 -135 |
Impairment charge | 136 |
Non-cash interest expense | 45 - 55 |
Income tax effect of adjustments | (105) - (115) |
Non-GAAP adjusted net income | $630 - $700 |
GAAP net income per diluted share | $2.70 - $4.30 |
Non-GAAP adjusted net income per diluted share | $11.25 - $12.50 |
Weighted-average ordinary shares used in per share calculations | 56 |