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Jazz Pharmaceuticals: Growth Trajectory Can Continue In Future

September 03, 2014 | About:
mitu77

mitu77

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Investors of pharmaceutical company stocks should try to eye Jazz Pharmaceuticals (JAZZ), as this company has been keeping its investors smiling. Ever since the release of its second-quarter earning the stock prices have gained by almost 10%. The revised market estimates and the growth-oriented guidance for the fiscal 2014 can predict this growth to further continue and can provide good returns to its investors.

Overview of the quarter

Last month, the company released its second quarter results and as expected was above expectation of consensus estimates. It reported consolidated revenue (net product sales, royalties and contract revenues) of $291 million, up 40%, as compared to the same quarter last year which recorded $208.3 million. The reported revenue for the quarter also beat the consensus estimates of $275 million. This increase was driven primarily by net product sales of Xyrem®, Erwinaze®/Erwinase® and defibrotide, marketed under the name Defitelio® (defibrotide) in Europe.

Product wise revenue Contribution ($ in million) with comparative year ago

Products

Q2-2014

Q2-2013

% (Change)

% Contribution

Xyrem

$191.4

$133.7

43% (up)

66%

Erwinaze/Erwinase

$47.9

$44.9

7% (up)

17%

Defitelio/defibrotide

$20.2

$10.1

100% (up)

7%

Prialt® (ziconotide)

$5.8

$4.7

24% (up)

2%

Psychiatry products

$11.7

$11.8

 

4%

Other

$12.1

$11.5

 

4%

Xyrem is the prime product of the company which contributed 77% of the totals revenue. This drug is an oral solution for treating patients of cataplexy, patients suffering from narcolepsy, a severe neurological disorder. The company claims a patient count of 11,750 that are on Xyrem, this count has increased by 10% as compared to same quarter last year.

Acquisitions to further boost revenue

Defibrotide/Defitelio contributes around 17% of the consolidated revenue for the company. The revenue from this drug is expected to rise in the future. The rise is expected since the company has completed the acquisition of rights to defobrotide in America from Sigma-Tai Pharmaceuticals. The company now owns the worldwide rights to defibrotide; this will certainly leverage revenue growth for the company. Furthermore, the company also gained 98% shares of Gentium. This is used for patients suffering from chronic hepatic VOD (veno-occlusive disease). This drug is already approved in the EU (October 2013) for undergoing hematopoietic stem cell transplantation and it is to be launced in European countries in the current year

Earlier this year the company completed its acquisition of global right for HZP-10 from Aerial BioPharma. With this acquisition, Jazz pharma strengthened its product portfolio for treatment of patients suffering from EDS (excessive daytime sleepiness) or narcolepsy.

Outlook

The company anticipates the consolidated revenue for the fiscal 2014 to be in between $1,100 to $1,160 million much higher than that consensus estimate of $1,079

Approximately 90% of the revenue is contributed from products like Xyrem, Erwinaze/Erwinase and Defitelio/Defibrotide. With various acquisitions in the fiscal 2014, the company anticpates higher revenue from this products as compared to fiscal 2013

Product wise guidance for fiscal 2014

Products

Fiscal 2014 (Range)

Remark

Xyrem

$755–$775

up 33% to 36% from 2013

Erwinaze/Erwinase

$185–$200

$174.3 in 2013

Defitelio/defibrotide

$42–$52

 

Conclusion

The real treasure with Jazz is its high-growth product portfolios comprising of innovative and acquired therapies in the psychiatric and oncologic fields. The company seems to be recording constant growth mainly due to success of its narcolepsy drug Xylem. Consolidated revenue for the current fiscal is projected to cross the $1.0 billion mark to record $1.10 billion and can reach $1.39 billion next year. The growth rate for the company seems to be immense with a PEG ratio of 0.92. Analyst consensus anticipate its EPS to be around $8.19 for the current fiscal 2014 and can reach $10.09 in by end of fiscal 2015. I feel this stock can keep an investor smiling with high return in long run.


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