Jazz Pharmaceuticals Announces Full Year and Fourth Quarter 2023 Financial Results and Provides 2024 Financial Guidance
– Total revenues of $3.8 billion in 2023 and $1 billion in 4Q23 –
– 27% year-over-year revenue increase from combined key growth drivers: Xywav®, Epidiolex® and Rylaze® –
– Oncology revenue surpassed $1 billion in 2023 –
– Multiple late-stage pipeline catalysts anticipated in 2024 –
– 2024 total revenue guidance reflects continued top-line growth –
DUBLIN, Feb. 28, 2024 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the full year and fourth quarter of 2023 and provided guidance for 2024.
"2023 was a year of continued strong execution that delivered top- and bottom-line growth and over $3.8 billion in total revenue. Sleep1 revenue exceeded $1.9 billion, Oncology revenue surpassed $1 billion and Epidiolex remains on track to deliver on its blockbuster potential, demonstrating our progress towards Vision 2025 targets. We also meaningfully advanced our late-stage pipeline and are pleased to note enrollment of the Phase 3 Zepzelca® trial in first-line small cell lung cancer has been completed," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals. "Looking to 2024, we expect double-digit percentage revenue growth across combined key growth drivers: Xywav, Epidiolex and Rylaze. We look forward to multiple near-term, late-stage pipeline catalysts and anticipate completing the rolling BLA submission for zanidatamab in second-line biliary tract cancer in the first half of 2024. We expect our disciplined capital allocation to enable investment in our key commercial growth drivers for near-term growth, in our pipeline for long-term growth and to provide flexibility for corporate development."
Key Highlights
- Achieved first $1 billion revenue quarter.
- Key growth drivers:
- Xywav net product sales grew 33% year-over-year; annualizing2 at $1.35 billion.
- Epidiolex/Epidyolex® net product sales grew 15% year-over-year; annualizing2 at over $900 million.
- Rylaze net product sales grew 40% year-over-year; annualizing2 at over $400 million.
- Initiated zanidatamab 1L BTC confirmatory trial in 1Q24.
- Multiple near-term, late-stage pipeline catalysts anticipated:
- Completion of rolling BLA submission for accelerated approval in 2L BTC in 1H24.
- Top-line PFS data from zanidatamab in Phase 3 1L GEA targeted for late 2024.
- Suvecaltamide top-line data from Phase 2b trial in ET in late 1H24.
- Top-line data from Epidyolex Phase 3 trial in Japan in 2H24.
- Top-line data from Zepzelca 1L SCLC Phase 3 trial at the end of 2024 or early 2025.
- The Company will host a virtual zanidatamab R&D Day on Tuesday, March 19, 2024.
- 2024 total revenue guidance of $4.0 to $4.2 billion, 7% top-line growth at the mid-point.
- Total revenue guidance is underpinned by expectations of continued growth in net sales of Xywav in IH, Epidiolex/Epidyolex, our Oncology therapeutic area, and royalties on net sales of authorized generics of Xyrem® offset by a continued decline in net sales of Xyrem.
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1 Total Sleep revenue includes: Xywav, branded Xyrem and high-sodium authorized generic royalty revenues. |
2 Based on 4Q23 net product sales. |
Business Updates
Key Commercial Products
Xywav (calcium, magnesium, potassium, and sodium oxybates) oral solution:
- Xywav net product sales increased 33% to $1,273.0 million in 2023 and increased 20% to $337.0 million in 4Q23 compared to the same periods in 2022.
- As the only low-sodium oxybate and the only therapy approved to treat IH, expect Xywav to remain the oxybate of choice.
- There were approximately 12,300 active Xywav patients exiting 4Q23.
- Results from the real-world TENOR study were published in Sleep Medicine. The most common reason cited for switching to Xywav was long-term health benefits due to lower sodium content of Xywav.
- A review of scientific evidence was published in Neurology and Therapy showing oxybate regimens impart substantial and highly similar medical benefit on subjective and objective measures of sleep and daytime function regardless of dosing.
Xywav for Narcolepsy:
- There were approximately 9,525 narcolepsy patients taking Xywav exiting 4Q23.
Xywav for Idiopathic Hypersomnia (IH):
- There were approximately 2,775 IH patients taking Xywav exiting 4Q23.
Xyrem (sodium oxybate) oral solution:
- Xyrem net product sales decreased 44% to $569.7 million in 2023 and decreased 57% to $106.7 million in 4Q23 compared to the same periods in 2022.
High-Sodium Oxybate Authorized Generic (AG) Royalties:
- Royalties from high-sodium oxybate AGs were $75.9 million in 2023 and $39.4 million in 4Q23.
- The Company expects high-sodium oxybate AG royalty revenue to exceed $200 million in 2024, which reflects an increase in the fixed-rate royalty structures of the AG agreements in 2024.
Epidiolex/Epidyolex (cannabidiol):
- Epidiolex/Epidyolex net product sales increased 15% to $845.5 million in 2023 and increased 16% to $240.6 million in 4Q23 compared to the same periods in 2022.
- Outside of the U.S., Epidyolex is approved in more than 35 countries with additional launches and reimbursement anticipated through the end of 2024.
- Long-term and real-world data of treatment-resistant epilepsy were presented at AES 2023:
- Data from long-term Expanded Access Program study demonstrated Epidiolex was associated with a sustained reduction in treatment-resistant, focal-onset seizures through 144 weeks.
- Interim results from the BECOME-TSC survey of caregivers of patients with tuberous sclerosis complex (TSC) demonstrated improved day-to-day function, cognition, language and communication and emotional and social function in patients.
Rylaze/Enrylaze® (asparaginase erwinia chrysanthemi (recombinant)-rywn):
- Rylaze net product sales increased 40% to $394.2 million in 2023 and increased 26% to $101.7 million in 4Q23 compared to the same periods in 2022.
- Initiated European rolling launch of Enrylaze (JZP458; a recombinant Erwinia asparaginase or crisantaspase), marketed as Rylaze in the U.S. and Canada, in 4Q23.
Zepzelca (lurbinectedin):
- Zepzelca net product sales increased 7% to $289.5 million in 2023 and increased 3% to $74.0 million in 4Q23 compared to the same periods in 2022.
- Enrollment in the Phase 3 trial evaluating first-line (1L) use of Zepzelca in combination with Tecentriq® (atezolizumab) in small cell lung cancer, in partnership with Roche, is complete; expect top-line progression-free survival (PFS) data readout at the end of 2024 or early 2025.
Key Pipeline Highlights
Zanidatamab:
- Initiated the zanidatamab rolling biologics license application (BLA) submission in 4Q23 for accelerated approval in second-line (2L) biliary tract cancer (BTC) and expect to complete the rolling submission 1H24.
- Initiated confirmatory trial in 1L metastatic BTC, where there remains unmet patient need, in 1Q24.
- The pivotal HERIZON-GEA-01 trial, evaluating zanidatamab in 1L gastroesophageal adenocarcinoma (GEA), is ongoing and the Company is targeting top-line PFS data in late 2024. The Company increased enrollment in the trial from 714 to 918 to improve statistical power for overall survival analysis, while maintaining PFS top-line readout.
- Data presented at SABCS in heavily pretreated patients with HER2+/HR+ metastatic breast cancer demonstrated 67% PFS at six months with a median PFS of 12 months.
- In addition to achieving clinically meaningful improvements, data presented at the ASCO Gastrointestinal Cancers Symposium in January 2024 demonstrated that patients who responded to zanidatamab also reported improved quality of life with less pain interference in the Phase 2b HERIZON-BTC-01 trial.
Suvecaltamide (JZP385):
- Patient enrollment is ongoing in the Phase 2b essential tremor (ET) trial; top-line data readout is anticipated late 1H24.
- A Phase 2 trial in patients with Parkinson's disease tremor is ongoing.
JZP898:
- Initiated a Phase 1 first-in-human clinical trial in solid tumors in 4Q23.
Corporate Development
KRAS Inhibitor Program Agreement:
- In February 2024, the Company acquired Redx Pharma's KRAS inhibitor program, which includes G12D selective and pan-KRAS molecules, further expanding Jazz's early-stage oncology pipeline.
Ion Channel Targets Agreement:
- In November 2023, the Company and Autifony announced an exclusive global license and collaboration agreement to discover and develop drug candidates for two different ion channel targets associated with neurological disorders.
Continued Repurchases under Previously Announced $1.5 Billion Share Repurchase Program
The Company continued repurchases of its ordinary shares on the open market in the fourth quarter of 2023 as part of its previously authorized and announced share repurchase program. As of December 31, 2023, approximately $161 million remained available and authorized for share repurchases, after the purchase of approximately $100 million of shares during the fourth quarter of 2023. The timing and amount of repurchases under the program will depend on a variety of factors, including the price of the Company's ordinary shares, alternative investment opportunities, restrictions under the Company's credit agreement, corporate and regulatory requirements and market conditions.
Financial Highlights
Three Months Ended December 31, | Year Ended December 31, | ||||||
(In thousands, except per share amounts) | 2023 | 2022 | 2023 | 2022 | |||
Total revenues | $ 1,011,935 | $ 972,123 | $ 3,834,204 | $ 3,659,374 | |||
GAAP net income (loss) | $ 94,154 | $ (240,724) | $ 414,832 | $ (224,060) | |||
Non-GAAP adjusted net income (loss) | $ 345,286 | $ (4,239) | $ 1,295,824 | $ 933,598 | |||
GAAP earnings (loss) per share | $ 1.42 | $ (3.82) | $ 6.10 | $ (3.58) | |||
Non-GAAP adjusted EPS | $ 5.02 | $ (0.07) | $ 18.29 | $ 13.20 |
GAAP net income for 2023 was $414.8 million, or $6.10 per diluted share, compared to a GAAP net loss of $(224.1) million, or $(3.58) per diluted share, for 2022. GAAP net income for 4Q23 was $94.2 million, or $1.42 per diluted share, compared to a GAAP net loss of $(240.7) million, or $(3.82) per diluted share, for 4Q22.
Non-GAAP adjusted net income for 2023 was $1,295.8 million, or $18.29 per diluted share, compared to $933.6 million, or $13.20 per diluted share, for 2022. Non-GAAP adjusted net income for 4Q23 was $345.3 million, or $5.02 per diluted share, compared to a Non-GAAP adjusted net loss of $(4.2) million, or $(0.07) per diluted share, for 4Q22.
Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.
Total Revenues
Three Months Ended December 31, | Year Ended December 31, | ||||||
(In thousands) | 2023 | 2022 | 2023 | 2022 | |||
Xywav | $ 337,019 | $ 281,384 | $ 1,272,977 | $ 958,425 | |||
Xyrem | 106,721 | 247,496 | 569,730 | 1,020,453 | |||
Epidiolex/Epidyolex | 240,622 | 206,998 | 845,468 | 736,398 | |||
Sativex | 5,137 | 4,721 | 19,668 | 16,825 | |||
Sunosi1 | — | — | — | 28,844 | |||
Total Neuroscience | 689,499 | 740,599 | 2,707,843 | 2,760,945 | |||
Rylaze | 101,747 | 80,972 | 394,226 | 281,659 | |||
Zepzelca | 74,010 | 71,969 | 289,533 | 269,912 | |||
Defitelio/defibrotide | 51,083 | 40,653 | 184,000 | 194,290 | |||
Vyxeos | 46,912 | 30,266 | 147,495 | 127,980 | |||
Total Oncology | 273,752 | 223,860 | 1,015,254 | 873,841 | |||
Other | 4,088 | 3,067 | 13,846 | 6,643 | |||
Product sales, net | 967,339 | 967,526 | 3,736,943 | 3,641,429 | |||
High-sodium oxybate AG royalty revenue | 39,387 | — | 75,918 | — | |||
Other royalty and contract revenues | 5,209 | 4,597 | 21,343 | 17,945 | |||
Total revenues | $ 1,011,935 | $ 972,123 | $ 3,834,204 | $ 3,659,374 |
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1. Divestiture of Sunosi U.S. was completed in May 2022. |
Total revenues increased 5% in 2023 and 4% in 4Q23 compared to the same periods in 2022.
- Total neuroscience revenue, including high-sodium oxybate AG royalty revenue, of $2,783.8 million in 2023 and $728.9 million in 4Q23, was broadly in line with the same periods in 2022 and included increased Xywav and Epidiolex/Epidyolex net product sales, offset by decreased Xyrem revenues, reflecting the strong adoption of Xywav by existing Xyrem patients and the impact of high-sodium oxybate competition. High-sodium oxybate AG royalty revenue relates primarily to royalty revenue received from Hikma Pharmaceuticals plc on net sales of a high-sodium oxybate AG product.
- Oncology net product sales increased 16% in 2023 and 22% in 4Q23 compared to the same periods in 2022, primarily driven by the continued growth in Rylaze product sales, which increased 40% to $394.2 million in 2023 and increased 26% to $101.7 million in 4Q23 compared to the same periods in 2022.
Operating Expenses and Effective Tax Rate
Three Months Ended December 31, | Year Ended December 31, | ||||||
(In thousands, except percentages) | 2023 | 2022 | 2023 | 2022 | |||
GAAP: | |||||||
Cost of product sales | $ 107,243 | $ 167,364 | $ 435,577 | $ 540,517 | |||
Gross margin | 88.9 % | 82.7 % | 88.3 % | 85.2 % | |||
Selling, general and administrative | $ 396,034 | $ 383,203 | $ 1,343,105 | $ 1,416,967 | |||
% of total revenues | 39.1 % | 39.4 % | 35.0 % | 38.7 % | |||
Research and development | $ 216,608 | $ 172,555 | $ 849,658 | $ 590,453 | |||
% of total revenues | 21.4 % | 17.8 % | 22.2 % | 16.1 % | |||
Acquired in-process research and development | $ 18,000 | $ 375,000 | $ 19,000 | $ 444,148 | |||
Intangible asset impairment charge | $ — | $ — | $ — | $ 133,648 | |||
Income tax benefit | $ (33,089) | $ (100,042) | $ (119,912) | $ (158,645) | |||
Effective tax rate 1 | (53.8) % | 29.4 % | (40.2) % | 42.6 % |
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1. | The GAAP effective tax rate decreased for the three months and the year ended December 31, 2023 compared to the same periods in 2022, primarily due to the impact of payments made for acquired in-process research and development (IPR&D) in 2022. The year ended December 31, 2022 was also impacted by the recognition of the nabiximols impairment charge, partially offset by the change in income mix across jurisdictions. |
Three Months Ended December 31, | Year Ended December 31, | ||||||
(In thousands, except percentages) | 2023 | 2022 | 2023 | 2022 | |||
Non-GAAP adjusted: | |||||||
Cost of product sales | $ 71,238 | $ 93,386 | $ 269,079 | $ 251,941 | |||
Gross margin | 92.6 % | 90.3 % | 92.8 % | 93.1 % | |||
Selling, general and administrative | $ 300,520 | $ 319,763 | $ 1,110,948 | $ 1,134,703 | |||
% of total revenues | 29.7 % | 32.9 % | 29.0 % | 31.0 % | |||
Research and development | $ 201,107 | $ 160,105 | $ 784,811 | $ 521,085 | |||
% of total revenues | 19.9 % | 16.5 % | 20.5 % | 14.2 % | |||
Acquired in-process research and development | $ 18,000 | $ 375,000 | $ 19,000 | $ 444,148 | |||
Income tax expense (benefit) | $ 20,475 | $ (43,301) | $ 93,260 | $ 94,695 | |||
Effective tax rate1 | 5.6 % | 92.6 % | 6.7 % | 9.1 % |
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1. | The non-GAAP effective tax rate decreased for the three months ended December 31, 2023 compared to the same period in 2022, primarily due to the impact of payments made for acquired IPR&D in 2022. |
Changes in operating expenses in 2023 and 4Q23 over the prior year periods are primarily due to the following:
- Cost of product sales decreased in 2023 and 4Q23 compared to the same periods in 2022, on a GAAP basis, primarily due to lower acquisition accounting inventory fair value step-up expense and the impact of an expense in 2022 for past royalties payable under a settlement agreement with Otsuka Pharmaceutical Co., Ltd, or the Otsuka past royalty expense, partially offset by changes in product mix. Cost of product sales, on a non-GAAP adjusted basis, increased in 2023 compared to the same period in 2022 primarily due to changes in product mix, partially offset by the Otsuka past royalty expense and decreased in 4Q23 compared to the same period in 2022 primarily due to the Otsuka past royalty expense, partially offset by changes in product mix.
- Selling, general and administrative (SG&A) expenses, on a GAAP basis, decreased in 2023 compared to the same period in 2022, primarily due to the loss on disposal of Sunosi, restructuring costs and GW related integration costs incurred in 2022, together with a reduction in costs related to program terminations, partially offset by an impairment of facility assets in 2023. SG&A expenses, on a GAAP and on a non-GAAP adjusted basis, in 2023 included lower compensation-related expenses compared to 2022. SG&A expenses, on a GAAP basis, increased in 4Q23 compared to the same period in 2022, primarily due to an impairment of facility assets in 4Q23, offset by costs related to program terminations incurred in 2022. SG&A expenses, on a GAAP and on a non-GAAP adjusted basis, in 4Q23 included lower compensation-related and litigation expenses compared to 4Q22.
- Research and development (R&D) expenses increased in 2023 and 4Q23 compared to the same periods in 2022, on a GAAP and on a non-GAAP adjusted basis, primarily due to the inclusion of costs related to zanidatamab, as well as our other key pipeline programs.
- Acquired IPR&D expense in 4Q23 and 2023, on a GAAP and on a non-GAAP adjusted basis, primarily related to an upfront payment made in connection with our licensing and collaboration agreement with Autifony Therapeutics Limited. Acquired IPR&D expense in 4Q22, on a GAAP and on a non-GAAP adjusted basis, related to payments of $375.0 million to Zymeworks Inc., in connection with our licensing and collaboration agreement. Acquired IPR&D expense in 2022, on a GAAP and on a non-GAAP adjusted basis, also included upfront payments of $50.0 million to Sumitomo Pharma Co., Ltd in relation to our licensing agreement and $15.0 million to Werewolf Therapeutics, Inc., in connection with our licensing and collaboration agreement.
- The intangible asset impairment charge in 2022, on a GAAP basis, related to the discontinuation of our nabiximols program.
Cash Flow and Balance Sheet
As of December 31, 2023, cash, cash equivalents and investments were
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