Jazz Pharmaceuticals Inc. is a specialty pharmaceutical company focused on identifying developing and commercializing innovative products to meet unmet medical needs in neurology and psychiatry. Company's goal is to build a broad portfolio of products through a combination of internal development and acquisition/in-licensing activities and to utilize our specialty sales force to promote products in our target markets. They apply novel formulations and drug delivery technologies to known drug compounds and compounds with the same mechanism of action or similar chemical structure as marketed products to improve patient care by improving efficacy reducing adverse side effects or increasing patient compliance relative to existing therapies. Based in Palo Alto California the company is committed to working closely with patients patient advocacy groups and healthcare professionals. Jazz Pharmaceuticals Inc. has a market cap of $21.4 million; its shares were traded at around $0.7403 with and P/S ratio of 0.3.
Highlight of Business Operations:Our sales of Luvox CR were $3.1 million for the three months ended December 31, 2008 and $3.6 million for the three months ended March 31, 2009, and we expect to see continued growth in sales of Luvox CR in 2009. In early 2009, we renegotiated the payments that we owe to Solvay under the license agreement, as a result of which $1.0 million was paid in March 2009, $5.0 million is payable to Solvay during the remainder of 2009 and $13.0 million is payable between 2010 and 2012. We also have a commitment, in connection with the FDAs approval of Luvox CR, to conduct two Phase IV clinical trials of the product. We continue to monitor our sales of Luvox CR and our expenses to manufacture, market, sell and support the product, but the product may not become profitable within a commercially reasonable period, or at all. If necessary, we will decrease our efforts in support of the product.
Almost all of our contract revenues consist of upfront or milestone payments received from UCB. In connection with the expansion of our agreement with UCB in 2006, UCB made an upfront payment of $5.0 million in June 2006 and subsequently an additional payment of $10.0 million in September 2006 upon exercise of its rights to develop and commercialize JZP-6 for the treatment of fibromyalgia syndrome. These payments are being recognized as revenue through 2019, the estimated performance period of the contract, which resulted in contract revenues of $280,000 during each of the three months ended March 31, 2009 and 2008.
In February 2009, we amended our product license agreement with Solvay for the rights to market Luvox CR and Luvox in the U.S. such that the existing $14.0 million current payment obligation, a $5.0 million obligation related to a milestone of uninterrupted supply of Luvox CR that was subsequently achieved in April 2009 and future royalty and other obligations were replaced with an obligation to pay a total of $19.0 million. As a result we recorded an increase of $5.0 million in the value of the intangible asset for Luvox CR developed technology during the first quarter of 2009 which will be amortized over 4.7 years, the remaining estimated useful life of the asset.
The increase in product sales, net in the three months ended March 31, 2009, as compared to the same period in 2008, was primarily due to increases of $6.4 million in Xyrem sales and the launch of Luvox CR, offset by a decrease of $2.6 million in Antizol sales as a result of the sale of our product rights in August 2008. The increase in Xyrem sales was primarily due to significant price increases in 2008, and to a lesser extent increase in sales volumes, partially offset by estimated rebates due under the TRICARE rebate program of $635,000 ($462,000 related to 2008 net product sales and $173,000 related to net product sales in the three months ended March 31, 2009).
We have reduced the net cash used in our operations by implementing three reductions in force in 2008 and focusing our efforts on our commercial products and JZP-6, and we are continuing to review our operations in order to identify additional measures to further reduce spending. In addition, we have negotiated changes in the terms of some of our liabilities. In February 2009, we amended our product license agreement with Solvay as a result of which the then existing $14.0 million current payment obligation, a $5.0 million obligation related to a milestone of uninterrupted supply of Luvox CR, which was subsequently met in April 2009, and future royalty and other obligations were replaced with an obligation to pay a total of $19.0 million, of which $1.0 million was paid in March 2009, $5.0 million is payable in the remainder of 2009, $4.0 million is payable in 2010, $4.5 million is payable in 2011 and $5.0 million is payable in 2012. If we pay these amounts when due, the payment due in 2012 will decrease to $4.5 million. In addition, we agreed to pay Solvay $5.0 million in 2015 if net sales of Luvox CR have reached a cumulative amount of $100.0 million on or before December 31, 2014 and no AB-rated generic version of Luvox CR has been or is being sold in the U.S. as of December 31, 2014. In the first quarter of 2009, we entered into arrangements with various government entities to postpone until October 2009 criminal and civil payments (totaling $2.5 million) that otherwise would have been due in January 2009.
We did not make quarterly interest payments of $4.5 million and $5.1 million that were due on December 31, 2008 and March 31, 2009, respectively, to the holders of our $119.5 million principal amount of senior secured notes, or the Senior Notes, which constituted events of default under our agreement with the holders of the Senior Notes. As a result of the defaults, under the terms of the Senior Notes, we could be required to prepay some or all of the Senior Notes, including a prepayment premium, and interest is due at an annual default rate of 17%. We are currently seeking a number of financing and strategic alternatives and are in discussions with the holders of the Senior Notes, including in particular LB I Group Inc., an affiliate of Lehman Brothers Holdings, Inc., which holds approximately 75% of the principal amount of the Senior Notes, with respect to our December 31, 2008 and March 31, 2009 payment defaults and the status of the Senior Notes. There can be no assurance that we can reach such resolution, obtain sufficient financing or enter into other transactions to satisfy our Senior Note obligations in a timely manner, or at all. At any time, the holders of 50% or more of the principal amount of the Senior Notes can accelerate our obligations under the Senior Notes and require payment of the full principal amount of the Senior Notes, plus interest and a prepayment premium. We do not have sufficient cash resources to pay the amou
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