JAZZ PHARMACEUTICALS PLC DUBLIN, May 10, 2016 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the first quarter of 2016 and updated financial guidance for 2016.
"During the first quarter of 2016, we executed on our business model by delivering strong top- and bottom-line growth and commenced promotion of Defitelio in the U.S. immediately following FDA approval. Defitelio is the first and only approved treatment in the U.S. for patients who develop hepatic VOD with renal or pulmonary dysfunction following hematopoietic stem-cell transplantation," said Bruce C. Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals plc. "For 2016, we will continue to invest in the organic growth of our key products, including new indications, and the advancement of our development pipeline. Diversification of our product portfolio through internal and corporate development efforts remains a high priority as we seek to identify and acquire differentiated and long-lived therapeutic options for patients."
Adjusted net income for the first quarter of 2016 was $141.0 million, or $2.26 per diluted share, compared to $125.1 million, or $1.99 per diluted share, for the first quarter of 2015.
GAAP net income for the first quarter of 2016 was $74.1 million, or $1.19 per diluted share, compared to $70.7 million, or $1.12 per diluted share, for the first quarter of 2015. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included in this press release.
Financial Highlights
--------------------
Three Months Ended March 31,
(In
thousands,
except per
share
amounts and
percentages) 2016 2015 Change
---- ---- ------
Total
revenues $336,010 $309,303 8.6%
Adjusted net
income $140,995 $125,068 12.7%
GAAP net
income $74,121 $70,700 4.8%
Adjusted EPS $2.26 $1.99 13.6%
GAAP EPS $1.19 $1.12 6.3%
Total Revenues
Total revenues were as follows:
-------------------------------
Three Months Ended March 31,
(In thousands) 2016 2015
Xyrem(R) (sodium
oxybate) oral solution $249,537 $212,690
Erwinaze(R) /
Erwinase(R)
(asparaginase Erwinia
chrysanthemi) 51,173 50,353
Defitelio(R)
(defibrotide sodium) /
defibrotide 17,897 17,363
Prialt(R) (ziconotide)
intrathecal infusion 6,209 6,764
Psychiatry 7,002 9,093
Other 2,098 10,772
----- ------
Product sales, net 333,916 307,035
Royalties and contract
revenues 2,094 2,268
Total revenues $336,010 $309,303
======== ========
Net product sales increased by 9% in the first quarter of 2016 compared to the same period in 2015 primarily due to higher net product sales of Xyrem.
Erwinaze/Erwinase net product sales increased by 2% in the first quarter of 2016 compared to the same period in 2015. Although Erwinaze net product sales increased, as a consequence of constrained manufacturing capacity, the company has had a limited ability to build sufficient inventory levels that can be used to absorb supply disruptions. In the first quarter of 2016, the company experienced supply challenges that temporarily disrupted its ability to supply certain markets.
Defitelio/defibrotide product sales increased by 3% in the first quarter of 2016 compared to the same period in 2015. The increase in net product sales was partially offset by the impact of foreign exchange on sales made in euro.
Operating Expenses
Operating expenses were as follows:
-----------------------------------
Three Months Ended March 31,
(In thousands,
except
percentages) 2016 2015
---- ----
GAAP:
Cost of product
sales $23,439 $28,298
Gross margin 93.0% 90.8%
Selling, general
and
administrative $128,765 $112,388
% of total
revenues 38.3% 36.3%
Research and
development $31,252 $27,181
% of total
revenues 9.3% 8.8%
Acquired in-
process research
and development $8,750 $ -
Non-GAAP adjusted:
Cost of product
sales $22,640 $27,603
Gross margin 93.2% 91.0%
Selling, general
and
administrative $102,611 $95,041
% of total
revenues 30.5% 30.7%
Research and
development $27,962 $23,696
% of total
revenues 8.3% 7.7%
Operating expenses changed over the prior year period primarily due to the following:
-- Selling, general and administrative (SG&A) expenses increased in the
first quarter of 2016 compared to the same period in 2015, on a GAAP and
non-GAAP adjusted basis, primarily due to higher headcount and other
expenses resulting from the expansion of the company's business.
-- Research and development (R&D) expenses increased in the first quarter
of 2016 compared to the same period in 2015, on a GAAP and non-GAAP
adjusted basis, primarily due to higher costs for clinical studies and
outside services for the development of JZP-110 and line extensions for
the company's existing products.
-- Acquired in-process research and development (IPR&D) expense in the
first quarter of 2016 related to an upfront payment of $8.8 million the
company made in connection with its acquisition of intellectual property
and know-how related to recombinant crisantaspase.
Cash Flow and Balance Sheet
As of March 31, 2016, cash, cash equivalents and investments were $980.5 million, and the outstanding principal balance of the company's long-term debt was $1.3 billion. Cash, cash equivalents and investments decreased during the quarter primarily due to repurchases under the company's share repurchase program, partially offset by cash generated by the business. During the first quarter of 2016, the company repurchased 1.1 million ordinary shares for $134.4 million, at an average cost of $123.77 per ordinary share.
In March 2016, the company recorded a $150.0 million milestone owed to Sigma-Tau Pharmaceuticals, Inc., which was triggered by the U.S. Food and Drug Administration approval of Defitelio on March 30, 2016. The milestone was capitalized as an intangible asset and was paid by the company in April 2016.
2016 Financial Guidance
Jazz Pharmaceuticals is updating its full year 2016 financial guidance, which is as follows (in millions, except per share amounts and percentage):
Revenues $1,490-$1,550
Total net product sales $1,482-$1,542
-Xyrem net sales $1,095-$1,130
-Erwinaze/Erwinase net sales $200-$225
-Defitelio/defibrotide net sales $100-$125
Adjusted gross margin %1,4 93%
Adjusted SG&A expenses2,4 $390-$410
Adjusted R&D expenses3,4 $115-$130
GAAP net income per diluted share $6.76-$7.41
Non-GAAP adjusted net income per diluted
share*,4 $11.10-$11.50
_____________________________
* Updated May 10, 2016 to reflect a
decrease in weighted-average
shares to 62 million.
1. Excludes $6 million of share-based
compensation expense from estimated
GAAP gross margin of 93%.
2. Excludes $87-$95 million of share-
based compensation expense and $6
million of expenses related to
certain legal proceedings and
restructuring from estimated GAAP
SG&A expenses of $483-$511
million.
3. Excludes $17-$19 million of share-
based compensation expense from
estimated GAAP R&D expenses of
$132-$149 million.
4. See "Non-GAAP Financial Measures"
below. Reconciliations of non-GAAP
adjusted guidance measures are
included above and in the tables
accompanying this press release.
Conference Call Details
Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 4:30 p.m. EDT (9:30 p.m. IST) to provide a business and financial update and discuss its 2016 first quarter results. The live webcast may be accessed from the Investors & Media section of the company's website at 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. Investors may participate in the conference call by dialing +1 855 353 7924 in the U.S., or +1 503 343 6056 outside the U.S., and entering passcode 90587993.
A replay of the conference call will be available through May 17, 2016 by dialing +1 855 859 2056 in the U.S., or +1 404 537 3406 outside the U.S., and entering passcode 90587993. An archived version of the webcast will be available for at least one week in the Investors & Media section of the Jazz Pharmaceuticals website at www.jazzpharmaceuticals.com.
About Jazz Pharmaceuticals plc
Jazz Pharmaceuticals plc (Nasdaq: JAZZ) is an international biopharmaceutical company focused on improving patients' lives by identifying, developing and commercializing meaningful products that address unmet medical needs. The company has a diverse portfolio of products and product candidates with a focus in the areas of sleep and hematology/oncology. In these areas, Jazz Pharmaceuticals markets Xyrem® (sodium oxybate) oral solution, Erwinaze® (asparaginase Erwinia chrysanthemi) and Defitelio® (defibrotide sodium) in the U.S. and markets Erwinase® and Defitelio® (defibrotide) in countries outside the U.S. For more information, please visit www.jazzpharmaceuticals.com.
Non-GAAP Financial Measures
To supplement Jazz Pharmaceuticals' financial results and guidance presented in accordance with U.S. generally accepted accounting principles (GAAP), the company uses certain non-GAAP (also referred to as adjusted or non-GAAP adjusted) financial measures in this press release and the accompanying tables. The company believes that each of these non-GAAP financial measures provides useful information to management, investors and analysts by excluding items that may not be indicative of the company's core operating results and business outlook, such as intangible asset amortization and share-based compensation expense, among other items, and by including, in the case of non-GAAP adjusted net income and the related per share measures, adjustments to convert the income tax provision to the estimated amount of taxes that are payable in cash. Jazz Pharmaceuticals' management regularly uses these non-GAAP financial measures internally to understand, manage and evaluate the company's business and to make operating decisions, and compensation of executives is based in part on certain of these non-GAAP financial measures. In addition, Jazz Pharmaceuticals believes that these non-GAAP financial measures are useful to investors because they enhance investors' ability to compare the company's results from period to period; allow for greater transparency with respect to key financial metrics the company uses in making operating decisions; and are regularly used by investors and analysts to model and track the company's financial performance.
These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures; should be read in conjunction with the company's condensed consolidated financial statements prepared in accordance with GAAP; have no standardized meaning prescribed by GAAP; and are not prepared under any comprehensive set of accounting rules or principles. Because of the non-standardized definitions of non-GAAP financial measures, the non-GAAP financial measures as used by Jazz Pharmaceuticals in this press release and the accompanying tables have limits in their usefulness to investors and may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies.
"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 Jazz Pharmaceuticals' future financial and operating results, investment in the growth of the company's key products and advancement of the company's development pipeline, diversification of the company's product portfolio, and other statements that are not historical facts. These forward-looking statements are based on the company's current plans, objectives, estimates, expectations and intentions, and inherently involve significant risks and uncertainties. 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, risks and uncertainties associated with maintaining or increasing sales of and revenue from Xyrem, such as the potential introduction of generic competition or other competitive sodium oxybate products; regulatory restrictions and requirements applicable to Xyrem and ongoing patent litigation and related proceedings; effectively commercializing the company's other products and product candidates; protecting and enhancing the company's intellectual property rights; delays or problems in the supply or manufacture of the company's products and product candidates; complying with applicable U.S. and non-U.S. regulatory requirements; the difficulty and uncertainty of pharmaceutical product development and the uncertainty of clinical success; identifying and acquiring, in-licensing or developing additional products or product candidates and financing and integrating these transactions; and other risks and uncertainties affecting the company, including those described from time to time under the caption "Risk Factors" and elsewhere in Jazz Pharmaceuticals plc's Securities and Exchange Commission filings and reports (Commission File No. 001-33500), including the company's Annual Report on Form 10-K for the year ended December 31, 2015 and future filings and reports by the company, including the company's Form 10-Q for the quarter ended March 31, 2016. Other risks and uncertainties of which the company is not currently aware may also affect the company's forward-looking statements and may cause actual results and timing of events to differ materially from those anticipated. The forward-looking statements herein are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently made available by the company on its website or otherwise. The company undertakes no obligation to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made.
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
2016 2015
---- ----
Revenues:
Product
sales, net $333,916 $307,035
Royalties
and
contract
revenues 2,094 2,268
----- -----
Total
revenues 336,010 309,303
Operating expenses:
Cost of
product
sales
(excluding
amortization
of
intangible
assets) 23,439 28,298
Selling,
general
and
administrative 128,765 112,388
Research
and
development 31,252 27,181
Acquired
in-
process
research
and
development 8,750 -
Intangible
asset
amortization 22,642 24,677
Total
operating
expenses 214,848 192,544
------- -------
Income from
operations 121,162 116,759
Interest
expense,
net (12,192) (16,245)
Foreign
currency
gain
(loss) (819) 2,245
Income
before
income tax
provision 108,151 102,759
Income tax
provision 34,030 32,059
------ ------
Net income $74,121 $70,700
======= =======
Net income per ordinary
share:
Basic $1.21 $1.16
===== =====
Diluted $1.19 $1.12
===== =====
Weighted-
average
ordinary
shares
used in
per share
calculations
- basic 61,142 60,803
====== ======
Weighted-
average
ordinary
shares
used in
per share
calculations
- diluted 62,474 62,964
====== ======
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, December 31,
2016 2015
---- ----
ASSETS
Current assets:
Cash and
cash
equivalents $979,780 $988,785
Investments 764 -
Accounts
receivable,
net of
allowances 223,802 209,685
Inventories 25,369 19,451
Prepaid
expenses 18,472 20,699
Other
current
assets 22,431 19,047
Total
current
assets 1,270,618 1,257,667
Property
and
equipment,
net 86,788 85,572
Intangible
assets,
net 1,348,160 1,185,606
Goodwill 670,991 657,139
Deferred
tax
assets,
net,
non-
current 122,036 122,863
Deferred
financing
costs 6,843 7,209
Other
non-
current
assets 29,543 27,548
------ ------
Total
assets $3,534,979 $3,343,604
========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts
payable $32,622 $21,807
Accrued
liabilities 307,504 164,070
Current
portion
of long-
term
debt 37,592 37,587
Income
taxes
payable 19,735 1,808
Deferred
revenue 1,378 1,370
-----
Total
current
liabilities 398,831 226,642
Deferred
revenue,
non-
current 3,441 3,721
Long-
term
debt,
less
current
portion 1,146,433 1,150,857
Deferred
tax
liability,
net,
non-
current 299,627 294,485
Other
non-
current
liabilities 79,207 69,253
Total
shareholders'
equity 1,607,440 1,598,646
Total
liabilities
and
shareholders'
equity $3,534,979 $3,343,604
========== ==========
JAZZ PHARMACEUTICALS PLC
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
---------
2016 2015
---- ----
GAAP
reported
net
income $74,121 $70,700
Intangible
asset
amortization 22,642 24,677
Share-
based
compensation
expense 24,183 20,819
Upfront
and
milestone
payments 8,750 -
Expenses
related
to
certain
legal
proceedings
and
restructuring 6,060 553
Transaction
and
integration
related
costs - 155
Non-cash
interest
expense 5,362 6,016
Income
tax
adjustments (123) 2,148
Non-GAAP
adjusted
net
income $140,995 $125,068
======== ========
GAAP
reported
net
income
per
diluted
share $1.19 $1.12
===== =====
Non-GAAP
adjusted
net
income
per
diluted
share $2.26 $1.99
===== =====
Weighted-
average
ordinary
shares
used in
diluted
per share
calculations 62,474 62,964
====== ======
JAZZ PHARMACEUTICALS PLC
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS AND OTHER INFORMATION
(In thousands, except per share amounts and percentages)
(Unaudited)
Three Months Ended
------------------
March 31, 2016 March 31, 2015
--------------
GAAP Reported Adjustments Non-GAAP Adjusted GAAP Reported Adjustments Non-GAAP Adjusted
------------- ----------- ----------------- ------------- ----------- -----------------
Total revenues $336,010 $ - $336,010 $309,303 $ - $309,303
Cost of product
sales (excluding
amortization of
intangible assets) 23,439 (799) (a) 22,640 28,298 (695) (a) 27,603
Selling, general
and administrative 128,765 (26,154) (b) 102,611 112,388 (17,347) (b) 95,041
Research and
development 31,252 (3,290) (c) 27,962 27,181 (3,485) (c) 23,696
Acquired in-
process research
and development 8,750 (8,750) - - - -
Intangible asset
amortization 22,642 (22,642) - 24,677 (24,677) -
Interest expense,
net 12,192 (5,362) (d) 6,830 16,245 (6,016) (d) 10,229
Foreign currency
(gain) loss 819 - 819 (2,245) - (2,245)
Income before
income tax
provision 108,151 66,997 (e) 175,148 102,759 52,220 (e) 154,979
Income tax
provision 34,030 123 (f) 34,153 32,059 (2,148) (f) 29,911
Effective tax rate
(g) 31.5% 19.5% 31.2% 19.3%
Net income $74,121 $66,874 (h) $140,995 $70,700 $54,368 (h) $125,068
Net income per
diluted share $1.19 $2.26 $1.12 $1.99
_____________________________
Explanation of Adjustments and Certain Line
Items (in thousands):
(a) Share-based compensation expense
of $689 and $695 and expenses
related to certain legal
proceedings and restructuring of
$110 and $0 for the three months
ended March 31, 2016 and 2015,
respectively.
(b) Share-based compensation expense
of $20,204 and $16,639, expenses
related to certain legal
proceedings and restructuring of
$5,950 and $553 and transaction
and integration costs of $0 and
$155 for the three months ended
March 31, 2016 and 2015,
respectively.
(c) Share-based compensation expense
of $3,290 and $3,485 for the
three months ended March 31, 2016
and 2015, respectively.
(d) Non-cash interest expense
associated with debt discount and
debt issuance costs for the
respective three-month period.
(e) Sum of adjustments (a) through (d)
plus the adjustments for acquired
in-process research and
development expense and
intangible asset amortization, as
applicable, for the respective
three-month period.
(f) Adjustments to convert the income
tax provision to the estimated
amount of taxes that are payable
in cash for the respective three-
month period.
(g) Income tax provision divided by
income before income tax
provision for the respective
three-month period.
(h) Net of adjustments (e) and (f) for
the respective three-month
period.
JAZZ PHARMACEUTICALS PLC
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2016 NET
INCOME GUIDANCE
(In millions, except per share amounts)
(Unaudited)
GAAP net income * $418 - $458
Intangible asset amortization 100 - 110
Share-based compensation expense 110 - 120
Upfront and milestone payments * 9
Expenses related to certain legal
proceedings and restructuring * 6
Non-cash interest expense 20 - 24
Income tax adjustments 7 - 15
Non-GAAP adjusted net income $688 - $712
===========
GAAP net income per diluted share $6.76 - $7.41
=============
Non-GAAP adjusted net income per
diluted share * $11.10 - $11.50
===============
Weighted-average ordinary shares
used in per share calculations * 62
_____________________________
* Updated May 10, 2016.
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SOURCE Jazz Pharmaceuticals plc
