DUBLIN, Aug. 5, 2015 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the second quarter of 2015 and reaffirmed financial guidance for 2015.
“Our second quarter results reflect strong top- and bottom-line growth, strong margins, and continued investment in our commercial and R&D portfolios to support our long-term growth strategy,” said Bruce C. Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals plc. “We made significant progress toward this year’s research and development goals with the completion of the rolling NDA submission for defibrotide and the initiation of enrollment in our Phase 3 program to evaluate the role of JZP-110 in the treatment of excessive daytime sleepiness in patients with narcolepsy or obstructive sleep apnea.”
Adjusted net income attributable to Jazz Pharmaceuticals plc for the second quarter of 2015 was $152.2 million, or $2.41 per diluted share, compared to $125.9 million, or $2.02 per diluted share, for the second quarter of 2014.
GAAP net income attributable to Jazz Pharmaceuticals plc for the second quarter of 2015 was $88.1 million, or $1.40 per diluted share, compared to $43.7 million, or $0.70 per diluted share, for the second quarter of 2014. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included in this press release.
Second Quarter 2015 Revenues and Product Sales
Total revenues for the second quarter of 2015 were $333.7 million, an increase of 15% over total revenues of $291.2 million for the second quarter of 2014. The increase in total revenues was driven by higher net product sales of Xyrem® (sodium oxybate) oral solution. Total revenues include net product sales, royalties and contract revenues.
Net product sales for the second quarter of 2015 were as follows:
- Xyrem: Xyrem net sales increased by 30% to $247.8 million in the second quarter of 2015 compared to $191.4 million in the second quarter of 2014. During the second quarter of 2015, the average number of active Xyrem patients in the U.S. increased to approximately 12,475.
- Erwinaze®/Erwinase® (asparaginase Erwinia chrysanthemi): Erwinaze/Erwinase net sales were $46.2 million in the second quarter of 2015 compared to $47.9 million in the second quarter of 2014. Net sales decreased primarily due to increased chargebacks and rebates. Product demand increased slightly compared to the second quarter of 2014.
- Defitelio® (defibrotide): Defitelio/defibrotide net sales were $15.3 million in the second quarter of 2015 compared to $20.2 million in the second quarter of 2014. Net sales decreased by 25% primarily due to the impact of foreign exchange rates on sales made in euro and the discontinuation of the cost recovery program in the U.S. in July 2014.
- Prialt® (ziconotide) intrathecal infusion: Prialt net sales were $7.1 million in the second quarter of 2015 compared to $5.8 million in the second quarter of 2014.
- Psychiatry products: Net sales of the company’s psychiatry products were $9.4 million in the second quarter of 2015 compared to $11.7 million in the second quarter of 2014.
- Other: Net sales of other products in the second quarter of 2015 were $6.3 million compared to $12.1 million in the second quarter of 2014. In March 2015, the company completed the sale of certain products and the related business that the company acquired as part of the acquisition of EUSA Pharma Inc. (EUSA Pharma) in 2012.
Tables showing actual net product sales for the three and six months ended June 30, 2015 and pro forma net product sales for the six months ended June 30, 2014 are included in this press release.
Operating Expenses and Other
Operating expenses for the second quarter of 2015 were $180.4 million compared to $216.9 million for the second quarter of 2014. Operating expenses decreased primarily due to an intangible asset impairment charge of $32.8 million recorded in the second quarter of 2014. The impairment charge was related to certain products acquired as part of the acquisition of EUSA Pharma that were subsequently sold in March 2015.
Other changes in operating expenses for the second quarter of 2015 as compared to the second quarter of 2014 were as follows:
- Cost of product sales for the second quarter of 2015 was $21.8 million compared to $30.7 million for the same period in 2014. The decrease was primarily due to a change in product mix and, to a lesser extent, acquisition accounting inventory fair value step-up adjustments of $2.5 million in the second quarter of 2014, which were partially offset by an increase in net product sales. Gross margin for the second quarter of 2015 was 93.4% compared to 89.4% for the same period in 2014. The increase was primarily due to a change in product mix.
- Selling, general and administrative (SG&A) expenses for the second quarter of 2015 were $107.1 million on a GAAP basis compared to $100.6 million for the same period in 2014. Adjusted SG&A expenses for the second quarter of 2015 were $88.5 million, or 27% of total revenues, compared to $81.7 million, or 28% of total revenues, for the same period in 2014. The increase in both GAAP and adjusted SG&A expenses was primarily due to higher headcount and other expenses resulting from the expansion of the company’s business. The increase in SG&A expenses on a GAAP basis was partially offset by a decrease in transaction and integration costs.
- Research and development (R&D) expenses for the second quarter of 2015 were $27.8 million on a GAAP basis compared to $20.1 million for the same period in 2014. Adjusted R&D expenses for the second quarter of 2015 were $24.0 million, or 7% of total revenues, compared to $16.8 million, or 6% of total revenues, for the same period in 2014. The increase in both GAAP and adjusted R&D expenses was primarily driven by increased costs for the development of the company’s product candidates and life cycle management activities related to the company’s existing products, including expenses related to the completed rolling new drug application (NDA) submission in the U.S. for defibrotide for the treatment of hepatic veno-occlusive disease (VOD) with evidence of multi-organ dysfunction following hematopoietic stem cell transplantation (HSCT).
Net interest expense for the second quarter of 2015 was $15.8 million compared to $11.4 million for the second quarter of 2014. The increase was due to the company’s higher debt levels, primarily due to the sale in August 2014 of $575.0 million principal amount of 1.875% exchangeable senior notes due 2021.
As of June 30, 2015, cash and cash equivalents were $921.6 million and the outstanding principal balance of the company’s long-term debt was $1.5 billion. Cash and cash equivalents increased from December 31, 2014 primarily due to cash generated by the business. In June 2015, the company refinanced its existing term loans and revolving credit facility and recorded a loss on extinguishment and modification of debt of $16.8 million. The company reduced its term loan facility from $893.1 million to $750.0 million and increased its borrowing capacity under its revolving credit facility from $425.0 million to $750.0 million. The company also moved to a more favorable interest rate while extending the maturities of the term loan and revolving credit facility from June 2018 and June 2017, respectively, to June 2020 for both the term loan and credit facility. As of June 30, 2015, the company had drawn down $160.0 million under the revolving credit facility.
During the six months ended June 30, 2015, the company repurchased 0.1 million ordinary shares under its share repurchase program for $11.7 million at an average cost of $165.05 per ordinary share. As of June 30, 2015, the amount remaining under the current share repurchase program was $9.7 million.
Recent Developments
The company completed the rolling submission of the NDA for defibrotide to the U.S. Food and Drug Administration (FDA) on July 31, 2015 and has requested a priority review under the Fast Track designation for defibrotide. Defibrotide has been evaluated for the treatment of patients with VOD with evidence of multi-organ dysfunction following HSCT.
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