Jazz Pharmaceuticals Inc. has a market cap of $476.2 million; its shares were traded at around $12.4 with a P/E ratio of 29.8 and P/S ratio of 3.7. JAZZ is in the portfolios of Bruce Kovner of Caxton Associates.
Highlight of Business Operations: We have licensed to UCB the commercialization rights to JZP-6 in 54 countries outside of the United States in exchange for development funding, commercial milestones and royalties that expire in 2024. In August 2010, UCB announced that it had filed an application with the European Medicines Agency, or EMA, for the approval of JZP-6, which UCB intends to market under the Xyrem trade name if it is approved in Europe. Currently, there are no approved treatments for fibromyalgia in the European Union. Under the terms of our agreement with UCB, we are entitled to a milestone payment of up to $25 million upon EMA approval of JZP-6, royalties on UCBs sales and additional commercial milestone payments of up to $100 million on sales of sodium oxybate. UCB has announced that it expects feedback from the European authorities during the first half of 2011.
Until 2010, we incurred significant net losses in our business. Our net loss was $6.8 million for the year ended December 31, 2009, and $184.3 million for 2008. For the first nine months of 2010, we had net income of $13.2 million, and, although we expect to have significant net income for the full years 2010 and 2011, we may incur net losses in the future. The improvements for 2010 have been due to a significant increase in our product sales and a decrease in our expenses, as discussed below. However, our estimates of product sales and expenses for the full years 2010 and 2011 may prove to be wrong or other factors may adversely affect our business, and our net income could be lower than we expect .
pharmaceutical ingredient in both Xyrem and JZP-6. As a result, our direct development costs decreased $553,000 and $10.6 million in the three and nine months ended September 30, 2010, respectively compared to the same periods in 2009, when we were actively conducting our second JZP-6 Phase III clinical trial and enrolling patients in the long-term safety study. Our direct development costs consisted primarily of out-sourced study costs, including investigator payments and consulting fees, and do not include salaries and benefits or general administrative costs related to maintaining a research and development organization. Salaries and benefits expenses including stock-based compensation and accrued incentive compensation incurred in the research and development organization increased $317,000 and $2.0 million in the three and nine months ended September 30, 2010, respectively, compared to the same periods in 2009. We expect research and development spending in 2010 to be lower than 2009 and to continue to include development work on solid oral dosage forms of sodium oxybate and JZP-8 activities. As a result of the CRL we recently received from the FDA, we cannot predict the amount or timing of any additional spending on JZP-6 development work.
In 2010, we reduced the principal amount of our long-term debt outstanding from $119.5 million to $45.8 million, extended the final maturity date of our debt from June 2011 to June 2013 and reduced the rate at which we pay interest on our debt from a fixed rate of 15% to a variable rate that was 5.75% as of September 30, 2010 by repaying our senior secured notes in full and entering into a bank credit agreement. As a result, interest expense was lower in the three and nine months ended September 30, 2010 compared to the same periods in 2009.
The loss on extinguishment of debt relates to the early repayment of our senior secured notes in May and June 2010 and is comprised of $8.5 million of prepayment premiums and fees, and $3.8 million of non-cash expense related to the write-off of unamortized debt discount and debt issuance costs.
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