Why Is Jazz (JAZZ) Down 5.6% Since Last Earnings Report?

It has been about a month since the last earnings report for Jazz Pharmaceuticals (JAZZ). Shares have lost about 5.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Jazz due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Jazz Pharmaceuticals Beats on Q4 Earnings & Sales

Jazz Pharmaceuticals reported adjusted earnings of $4.00 per share for the fourth quarter of 2020, missing the Zacks Consensus Estimate of $4.10. Earnings declined 9.5% year over year as higher revenues were offset by higher costs.

Total revenues in the reported quarter rose 14% year over year to $665.5 million and beat the Zacks Consensus Estimate of $638.0 million.

Net product sales increased 14.7% from the year-ago quarter to $661.3 million driven mainly by new drug launches. Royalties and contract revenues declined 19.2% to $4.2 million in the quarter.

Neuroscience Products

Sales of neuroscience products increased 6% to $463.2 million driven by the launch of Xywav in November 2020.

Sales of Xyrem, rose 1% year over year to $439.3 million.

Xywav recorded sales of $15.3 million in the quarter.  At the end of 2020, Jazz had approximately 1,900 active Xywav patients.

Another new drug, Sunosi recorded sales of $8.7 million in the quarter, lower than $9.1 million in the previous quarter as the pandemic hurt the drug’s launch uptake. U.S. prescriptions increased 9% in the fourth quarter. Sunosi was launched for excessive sleepiness in narcolepsy & obstructive sleep apnea in the United States in July 2019 and in Europe in May 2020.

Jazz said on the conference call that its neuroscience sales force is focusing exclusively on either Xywav or Sunosi.

Oncology Products

Oncology product sales in the fourth quarter of 2020 increased 46% to $196.5 million driven by strong Zepzelca sales and higher Defitelio sales.

Erwinaze/Erwinase (for acute lymphoblastic leukemia [“ALL”]) revenues were $56.6 million, up 3% year over year due to favorable timing and availability of supply. Generally, sales of the drug were hurt in 2020 due to supply and manufacturing issues at the owner and sole manufacturer of the product.

Defitelio sales increased 16% to $55.5 million in the quarter due to recovery in hematopoietic stem cell transplants that had previously been postponed due to the COVID-19 pandemic. Robust growth in Europe also contributed.

Acute myeloid leukemia drug, Vyxeos generated sales of $30.9 million, down 2% from the year-ago period as sales were hurt by recommendations to increase use of oral oncology products amid the pandemic.

Newly launched Zepzelca (lurbinectedin) recorded sales of $53.4 million in the fourth quarter compared with $36.9 million in the third quarter

Other product sales declined 62.2% to $1.6 million.

Cost Discussion

Adjusted selling, general and administrative (SG&A) expenses rose 14.4% to $225.4 million due to higher expenses for multiple product launches.

Adjusted research and development (R&D) expenses declined 6.8% to $84.0 million, as easy comparisons with the year-ago quarter offset the impact of escalating expenses related to pipeline development. The year-ago quarter’s R&D costs included a milestone payment of $15 million, which was missing in the fourth quarter of 2020.

Full-Year Results

Total revenues increased 9% to $2.36 billion in 2020. Sales beat the Zacks Consensus Estimate of $2.34 billion.

Adjusted earnings per share were $12.46, down almost 19% year over year. Earnings missed the Zacks Consensus Estimate of $12.59 per share.

2021 Guidance

The company issued its financial guidance for 2021 for the standalone company, which does not include the impact of the pending GW Pharmaceuticals acquisition.

The company expects 2021 adjusted earnings in the range of $15.65-$16.85 per share

Total revenues are expected to be in the range of $2.55-$2.70 billion, which indicates 11% increase at the midpoint over 2020 total revenues. Total product sales are anticipated in the range of $2.54-$2.69 billion.

Neuroscience sales are expected in the range of $1.79 billion to $1.89 billion. The Oncology franchise is expected to record sales of $715 million to $835 million.

While adjusted SG&A expenses are anticipated in the range of $905 million to $945 million, adjusted R&D expenses are expected to be in the band of $330 million to $370 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

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