Jazz Pharmaceuticals Inc. Reports Operating Results (10-Q)
Jazz Pharmaceuticals Inc. has a market cap of $307.2 million; its shares were traded at around $9.74 with and P/S ratio of 2.3.
Highlight of Business Operations: Research and development costs were 46% lower in the three months ended March 31, 2010 compared to the same period in 2009 as we focused on the prosecution of our NDA for our JZP-6 product candidate, our ongoing safety study for JZP-6 which we expect to complete mid-year 2010, and development work on potential oral tablet forms of sodium oxybate, the active pharmaceutical ingredient in both Xyrem and JZP-6. As a result, our direct development costs decreased $5.9 million in the three months ended March 31, 2010 compared to the same period 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 consist 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 incurred in the research and development organization increased $752,000 in the three months ended March 31, 2010 compared to the same period in 2009. We expect research and development spending in 2010 to be lower than 2009 and to continue to be focused primarily on prosecution of the JZP-6 NDA, completion of the JZP-6 safety study and development work on potential oral tablet forms of sodium oxybate. We do not anticipate significant development spending on our other pipeline programs in the near term unless and until we partner a program or otherwise obtain additional funding.
As of March 31, 2010, we had $19.0 million of cash and cash equivalents, $7.8 million borrowed under our revolving bank line of credit (the maximum amount available at that time) and $116.5 million principal amount of Senior Notes outstanding. In the three months ended March 31, 2010, we reported both net income and cash generated from operations.
Under the terms of the amended agreement governing our Senior Notes we made a principal payment of $3.0 million on March 31, 2010 and are required to make principal payments of $6.0 million, $9.0 million, $10.0 million and $12.0 million on June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2011, respectively, without a prepayment penalty. The remaining principal amount of $79.5 million is due on June 24, 2011 unless it is earlier paid. We are also required to pay a $500,000 fee to the holders of the Senior Notes on the maturity date of the Senior Notes, or upon earlier repayment in full of the Senior Notes. In the event of default or if we prepay the Senior Notes before they are due, we are obligated to pay a prepayment penalty which was 8.3% of the principal amount prepaid as of March 31, 2010 and reduces to zero ratably through June 24, 2011. Upon a change in control, the holders of the Senior Notes could accelerate payment of the Senior Notes and if accelerated, a prepayment penalty would be due. The holders of the Senior Notes have a security interest in all of our assets other than accounts receivable and inventory. The amended agreement also provides for certain restrictions on working capital borrowings, dividends and certain other payments and for certain minimum restricted cash balance requirements if our total net sales in any quarter are less than $25.0 million.
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