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DUBLIN, Nov. 9, 2022 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the third quarter of 2022, and raised the mid-point of 2022 total revenue guidance.
"Our execution across our business continues to chart a clear path to delivering on Vision 2025. We have further strengthened our operations, and our business is performing well as we've diversified our revenue streams and rapidly deleveraged, while delivering meaningful top- and bottom-line growth. We have also achieved another important milestone — exiting October 2022, there are now more narcolepsy patients taking Xywav® than Xyrem®," said Bruce Cozadd, chairman and CEO of Jazz Pharmaceuticals. "We're pleased with the performance across our key products: compelling Xywav adoption across both narcolepsy and idiopathic hypersomnia (IH) continues to drive oxybate durability, Epidiolex® delivered significant year-over-year growth driven by underlying demand, strong demand for Rylaze® underscores the substantial unmet need and Zepzelca® remains the treatment of choice in second-line small cell lung cancer (SCLC). Based on this performance, we are raising the mid-point for our 2022 full year revenue guidance and continue to focus on long-term sustainable growth."
"We have prioritized and invested in key programs leading to significant progress across our pipeline. I'm pleased to announce we have enrolled the first patients in both our Phase 1 clinical trial of JZP815, a pan-RAF inhibitor, and our Phase 3 trial of Epidyolex® in Japan," said Rob Iannone, M.D., M.S.C.E., executive vice president, global head of research and development of Jazz Pharmaceuticals. "Upon close of the transaction, we are excited to further expand our pipeline with zanidatamab, a novel HER2-targeted bispecific antibody in late-stage trials with the potential to transform the current standard of care in multiple HER2-expressing cancers, and also through the initiation of a Phase 2 clinical trial evaluating suvecaltamide (JZP385) in Parkinson's disease tremor. We also continue to advance the JZP441 orexin-2 receptor agonist program. Together, this pipeline progress underscores an exciting time for R&D at Jazz as we look to deliver innovative therapies for patients in critical need."
Key Highlights
Business and Execution
Financial
_______________________
1.
Pending transaction close.
2.
On a pro forma non-GAAP adjusted basis. Non-GAAP net leverage ratio is a non-GAAP financial measure. For further information, see "Non-GAAP Financial Measures."
Business Updates
Key Commercial Products
Oxybate (Xywav and Xyrem):
Xywav (calcium, magnesium, potassium, and sodium oxybates) oral solution:
Xywav for Narcolepsy:
Xywav for Idiopathic Hypersomnia (IH):
Xyrem (sodium oxybate) oral solution:
Epidiolex/Epidyolex (cannabidiol):
Zepzelca (lurbinectedin):
Rylaze (asparaginase erwinia chrysanthemi (recombinant)-rywn):
Corporate Development
Zanidatamab Agreement1:
_______________________
1.
Subject to closing conditions, Jazz to obtain exclusive development and commercialization rights to zanidatamab across all indications in the United States, Europe, Japan and all other territories except for those Asia/Pacific territories previously licensed by Zymeworks.
Key Pipeline Highlights
Nabiximols:
Suvecaltamide (JZP385):
JZP150:
JZP815:
JZP441:
Financial Highlights
Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands, except per share amounts)
2022
2021
2022
2021
Total revenues
$ 940,652
$ 838,115
$ 2,687,251
$ 2,197,507
GAAP net income (loss)
$ (19,648)
$ (52,833)
$ 16,664
$ (294,317)
Adjusted net income
$ 370,438
$ 261,418
$ 937,837
$ 730,812
GAAP EPS
$ (0.31)
$ (0.86)
$ 0.26
$ (4.98)
Adjusted EPS1,2
$ 5.17
$ 4.20
$ 13.21
$ 12.02
_______________________
1.
Adjusted EPS for the three and nine months ended September 30, 2022 was impacted by $0.63 per share and $1.59 per share, respectively, following the adoption of ASU 2020-06.
2.
The Company adopted ASU No. 2020-06, "Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity", (ASU 2020-06) on January 1, 2022. Following adoption, diluted EPS must be calculated using the if-converted method which assumes full conversion of our Exchangeable Senior Notes.
GAAP net loss in 3Q22 was $(19.6) million, or $(0.31) per diluted share, compared to $(52.8) million, or $(0.86) per diluted share, for 3Q21. Non-GAAP adjusted net income in 3Q22 was $370.4 million, or $5.17 per diluted share, compared to $261.4 million, or $4.20 per diluted share, for 3Q21. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included at the end of this press release.
Total Revenues
Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands)
2022
2021
2022
2021
Xyrem
$ 256,039
$ 307,333
$ 772,957
$ 977,065
Xywav
255,936
153,063
677,041
352,643
Total Oxybate
511,975
460,396
1,449,998
1,329,708
Epidiolex/Epidyolex1
196,218
160,378
529,400
269,859
Sativex1
3,220
6,097
12,104
8,058
Sunosi2
—
19,251
28,844
42,981
Total Neuroscience
711,413
646,122
2,020,346
1,650,606
Zepzelca
70,320
71,714
197,943
181,972
Rylaze
73,513
20,674
200,687
20,674
Vyxeos
30,067
34,688
97,714
99,296
Defitelio/defibrotide
49,452
57,705
153,637
155,420
Erwinaze/Erwinase
—
—
—
69,382
Total Oncology
223,352
184,781
649,981
526,744
Other
1,001
3,344
3,576
8,768
Product sales, net
935,766
834,247
2,673,903
2,186,118
Royalties and contract revenues
4,886
3,868
13,348
11,389
Total revenues
$ 940,652
$ 838,115
$ 2,687,251
$ 2,197,507
__________________________
1.
Net product sales for Epidiolex/Epidyolex and Sativex are included from the acquisition of GW on May 5, 2021.
2.
Net product sales for Sunosi U.S. are included until the date of divestment to Axsome of May 9, 2022.
Total revenues increased 12% in 3Q22 compared to the same period in 2021.
Operating Expenses and Effective Tax Rate
Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands, except percentages)
2022
2021
2022
2021
GAAP:
Cost of product sales
$ 133,661
$ 145,224
$ 373,153
$ 304,607
Gross margin
85.7 %
82.6 %
86.0 %
86.1 %
Selling, general and administrative
$ 358,478
$ 363,682
$ 1,033,764
$ 1,053,221
% of total revenues
38.1 %
43.4 %
38.5 %
47.9 %
Research and development
$ 148,870
$ 141,036
$ 417,898
$ 350,305
% of total revenues
15.8 %
16.8 %
15.6 %
15.9 %
Acquired in-process research and development
$ —
$ —
$ 69,148
$ —
Impairment charge
$ 133,648
$ —
$ 133,648
$ —
Income tax expense (benefit)
$ (43,027)
$ (18,057)
$ (58,603)
$ 228,583
Effective tax rate (1)
71.6 %
26.7 %
178.7 %
(336.1) %
_____________________________
1.
The fluctuations in the GAAP effective tax rates for the three and nine months ended September 30, 2022 and 2021 are primarily due to the impacts of the impairment of our acquired in-process research and development (IPR&D) asset and costs related to restructuring in 2022 and the impact of the change in the statutory tax rate in the U.K in 2021.
Three Months Ended
September 30,
Nine Months Ended
September 30,
(In thousands, except percentages)
2022
2021
2022
2021
Non-GAAP adjusted:
Cost of product sales
$ 57,103
$ 58,872
$ 158,554
$ 147,291
Gross margin
93.9 %
92.9 %
94.1 %
93.3 %
Selling, general and administrative
$ 274,747
$ 278,552
$ 814,941
$ 776,392
% of total revenues
29.2 %
33.2 %
30.3 %
35.3 %
Research and development
$ 120,802
$ 124,470
$ 360,980
$ 310,925
% of total revenues
12.8 %
14.9 %
13.4 %
14.1 %
Acquired in-process research and development
$ —
$ —
$ 69,148
$ —
Income tax expense
$ 44,386
$ 43,589
$ 137,996
$ 111,510
Effective tax rate
10.6 %
14.1 %
12.7 %
13.3 %
Changes in operating expenses in 3Q22 over the prior year period are primarily due to the following:
Cash Flow and Balance Sheet
As of September 30, 2022, cash, cash equivalents and investments were $899.4 million, and the outstanding principal balance of the Company's long-term debt was $5.8 billion compared to $6.4 billion as of December 31, 2021. In addition, the Company had undrawn borrowing capacity under a revolving credit facility of $500 million. For the nine months ended September 30, 2022, the Company generated $930.0 million of cash from operations. In 3Q22 the Company made a voluntary payment of $300.0 million on the Dollar Term Loan and in 1Q22 the Company repaid in full the $251.0 million remaining aggregate principal amount of the Euro Term Loan B.
2022 Financial Guidance
The Company has raised the mid-point of 2022 total revenue guidance to $3.65 billion driven by increases in the guidance mid-point for both our Neuroscience and Oncology therapeutic areas.
(In millions)
November 9, 2022
August 3, 2022
Revenues
$3,600 - $3,700
$3,500 - $3,700
–Neuroscience (includes potential Xyrem authorized generic royalties)
$2,700 - $2,800
$2,600 - $2,800
–Oncology
$860 - $920
$840 - $920
GAAP:
(In millions, except per share amounts and percentages)
November 9, 2022
August 3, 2022
Gross margin %
85 %
85 %
SG&A expenses
$1,328 - $1,391
$1,299 - $1,389
SG&A expenses as % of total revenues
36% - 39%
35% - 40%
R&D expenses
$560 - $596
$621 - $669
R&D expenses as % of total revenues
15% - 17%
17% - 19%
Impairment charge
$134
-
Acquired in-process research and development expenses
$1191
$69
Effective tax rate
(88)% - 179%
(22)% - 1,104%
Net income
$50 - $175
$90 - $255
Net income per diluted share
$0.75 - $2.75
$1.45 - $3.95
Weighted-average ordinary shares used in per share calculations
64
63 - 72
Non-GAAP:
(In millions, except per share amounts and percentages)
November 9, 2022
August 3, 2022
Gross margin %
93%2,7
93 %
SG&A expenses
$1,090 - $1,1203,7
$1,080 - $1,130
SG&A expenses as % of total revenues
29% - 31%
29% - 32%
R&D expenses
$490 - $5204,7
$560 - $600
R&D expenses as % of total revenues
13% - 14%
15% - 17%
Acquired in-process research and development expenses
$1191
$69
Effective tax rate
10% - 12%5,7
10% - 12%
Net income
$1,225 - $1,2757
$1,180 - $1,250
Net income per diluted share6
$17.20 - $17.857
$16.70 - $17.70
Weighted-average ordinary shares used in per share calculations
73
72
____________________________
1.
Includes anticipated $50 million payment to Zymeworks in connection with an exclusive licensing agreement for zanidatamab, subject to HSR Clearance. Should Jazz decide to continue the collaboration following readout of the top-line clinical data from HERIZON-BTC-01, Zymeworks is eligible to receive a second payment of $325 million, and therefore Jazz's acquired IPR&D expenses would increase accordingly.
2.
Excludes $260-$280 million of amortization of acquisition-related inventory fair value step-up, $11-$12 million of share-based compensation expense, $2 million of restructuring costs and $1 million of transaction and integration related expenses relating to the acquisition of GW from estimated GAAP gross margin.
3.
Excludes $133-$146 million of share-based compensation expense, $43 million of restructuring and other costs, $22-$32 million of transaction and integration related expenses relating to the acquisition of GW and $40-$50 million of costs related to the disposal of Sunosi from estimated GAAP SG&A expenses.
4.
Excludes $56-$62 million of share-based compensation expense, $12 million of restructuring costs and $2 million of transaction and integration related expenses relating to the acquisition of GW from estimated GAAP R&D expenses.
5.
Excludes the income tax effect of adjustments between GAAP net income and non-GAAP adjusted net income.
6.
Non-GAAP adjusted EPS guidance for 2022 reflects dilution of $2.05, at the midpoint, post adoption of ASU 2020-06. Diluted EPS calculations for 2022 include 9 million shares related to the assumed conversion of the Exchangeable Senior Notes and the associated interest expense add-back to net income of $25 million, on a non-GAAP basis, under the "if converted" method.
7.
See "Non-GAAP Financial Measures" below. Reconciliations of non-GAAP adjusted guidance measures are included above and in the table titled "Reconciliation of GAAP to non-GAAP Adjusted 2022 Net Income Guidance" at the end of this press release.
Conference Call Details
Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 4:30 p.m. ET (9:30 p.m. GMT) to provide a business and financial update and discuss its 2022 third quarter results.
Interested parties may register for the call in advance here or via the Investors section of the Jazz Pharmaceuticals website at www.jazzpharmaceuticals.com. To ensure a timely connection, it is recommended that participants register at least 15 minutes prior to the scheduled webcast.
A replay of the webcast will be available via the Investors section of the Jazz Pharmaceuticals website at www.jazzpharmaceuticals.com.
About Jazz Pharmaceuticals
Jazz Pharmaceuticals plc (NASDAQ: JAZZ) is a global biopharmaceutical company whose purpose is to innovate to transform the lives of patients and their families. We are dedicated to developing life-changing medicines for people with serious diseases - often with limited or no therapeutic options. We have a diverse portfolio of marketed medicines and novel product candidates, from early- to late-stage development, in neuroscience and oncology. Within these therapeutic areas, we are identifying new options for patients by actively exploring small molecules and biologics, and through innovative delivery technologies and cannabinoid science. Jazz is headquartered in Dublin, Ireland and has employees around the globe, serving patients in nearly 75 countries. Please visit www.jazzpharmaceuticals.com for more information.
Non-GAAP Financial Measures
To supplement Jazz Pharmaceuticals' financial results and guidance presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses certain non-GAAP (also referred to as adjusted or non-GAAP adjusted) financial measures in this press release and the accompanying tables. In particular, the Company presents non-GAAP adjusted net income (and the related per share measure) and its line item components, as well as certain non-GAAP adjusted financial measures derived therefrom, including non-GAAP adjusted gross margin percentage and non-GAAP adjusted effective tax rate. Non-GAAP adjusted net income (and the related per share measure) and its line item components exclude from GAAP reported net income (loss) (and the related per share measure) and its line item components certain items, as detailed in the reconciliation tables that follow, and in the case of non-GAAP adjusted net income (and the related per share measure), adjust for the income tax effect of the non-GAAP adjustments and the impact of the change in the statutory tax rate in the U.K. In this regard, the components of non-GAAP adjusted net income, including non-GAAP adjusted cost of product sales, SG&A expenses and R&D expenses, are income statement line items prepared on the same basis as, and therefore components of, the overall non-GAAP adjusted net income measure. The Company also uses a pro forma non-GAAP net leverage ratio calculated as net debt (defined as total GAAP debt, net of cash, cash equivalents and investments) divided by Adjusted EBITDA for the most recent period of four consecutive completed fiscal quarters. EBITDA is defined as net income (loss) before income taxes, interest expense, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain other charges and adjustments as detailed in the pro forma non-GAAP net leverage ratio reconciliation table that follows, and is calculated in accordance with the definition of Adjusted Consolidated EBITDA as set out in the Company's credit agreement entered into in May 2021 (the Credit Agreement).
The Company believes that each of these non-GAAP financial measures provides useful supplementary information to, and facilitates additional analysis by, investors and analysts and that each of these non-GAAP financial measures, when considered together with the Company's financial information prepared in accordance with GAAP, can enhance investors' and analysts' ability to meaningfully compare the Company's results from period to period and to its forward-looking guidance, to identify operating trends in the Company's business and to understand the Company's ability to delever. In addition, these non-GAAP financial measures are regularly used by investors and analysts to model and track the Company's financial performance. Jazz Pharmaceuticals' management also regularly uses these non-GAAP financial measures internally to understand, manage and evaluate the Company's business and to make operating decisions, and compensation of executives is based in part on certain of these non-GAAP financial measures. Because these non-GAAP financial measures are important internal measurements for Jazz Pharmaceuticals' management, the Company also believes that these non-GAAP financial measures are useful to investors and analysts since these measures allow for greater transparency with respect to key financial metrics the Company uses in assessing its own operating performance and making operating decisions. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures; should be read in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP; have no standardized meaning prescribed by GAAP; and are not prepared under any comprehensive set of accounting rules or principles in the reconciliation tables that follow. In addition, from time to time in the future there may be other items that the Company may exclude for purposes of its non-GAAP financial measures; and the Company has ceased, and may in the future cease, to exclude items that it has historically excluded for purposes of its non-GAAP financial measures. Likewise, the Company may determine to modify the nature of its adjustments to arrive at its non-GAAP financial measures. Because of the non-standardized definitions of non-GAAP financial measures, the non-GAAP financial measures as used by Jazz Pharmaceuticals in this press release and the accompanying tables have limits in their usefulness to investors and may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies.
Caution Concerning Forward-Looking Statements
This press release contains forward-looking statements, including, but not limited to, statements related to: the Company's growth prospects and future financial and operating results, including the Company's 2022 financial guidance and the Company's expectations related thereto; Vision 2025 and the Company's progress related thereto; the Company's advancement of pipeline programs and the timing of planned regulatory activities and submissions related thereto; the potential of zanidatamab to transform the current standard of care in multiple HER2-expressing cancers and deliver significant long-term value and meaningfully contribute to Vision 2025, and expectations to leverage the Company's existing integrated capabilities and global infrastructure to commercialize zanidatamab efficiently, subject to approval; expectations with respect to the Company's license agreement with Zymeworks Inc., including HSR Clearance and payments thereunder; the Company's capital allocation and corporate development strategy; the expected divestiture of ex-U.S. Sunosi to Axsome and the anticipated benefits of the Sunosi divestiture; the potential successful future development, manufacturing, regulatory and commercialization activities; the Company's expectation of long-term sustainable growth and enhanced value as part of its Vision 2025; growing and diversifying the Company's revenue, investing in its pipeline of novel therapies, and delivering innovative therapies for patients and the potential benefits of such therapies; the Company's ability to realize the commercial potential of its products; the Company's views and expectations relating to its patent portfolio, including with respect to expected patent protection; planned or anticipated clinical trial events, including with respect to initiations, enrollment and data read-outs, and the anticipated timing thereof; the Company's clinical trials confirming clinical benefit or enabling regulatory submissions; planned or anticipated regulatory submissions and filings, including for Rylaze, and the anticipated timing thereof; potential regulatory approvals, including for Rylaze; the anticipated launch of Epidyolex in France in 2022; the anticipated launch of Epidyolex in new markets and indications; and other statements that are not historical facts. These forward-looking statements are based on the Company's current plans, objectives, estimates, expectations and intentions and inherently involve significant risks and uncertainties.
Actual results and the timing of events could differ materially from those anticipated in such forward- looking statements as a result of these risks and uncertainties, which include, without limitation, risks and uncertainties associated with: the closing of the Zymeworks transaction, the successful completion of development and regulatory activities with respect to zanidatamab and Jazz's ability and potential decision to exercise its option related thereto; Jazz's and Axsome's ability to complete the proposed divestiture of ex-U.S. Sunosi on the proposed terms or on the anticipated timeline, or at all; maintaining or increasing sales of and revenue from the Company's oxybate products, Zepzelca and other key marketed products; effectively launching and commercializing the Company's other products and product candidates; obtaining and maintaining adequate coverage and reimbursement for the Company's products; the time-consuming and uncertain regulatory approval process, including the risk that the Company's current and/or planned regulatory submissions may not be submitted, accepted or approved by applicable regulatory authorities in a timely manner or at all, including the risk that the Company's sBLA seeking approval for a revised dosing label for Rylaze may not be approved by FDA in a timely manner or at all; the costly and time-consuming pharmaceutical product development and the uncertainty of clinical success, including risks related to failure or delays in successfully initiating or completing clinical trials and assessing patients such as those being experienced, and expected to continue to be experienced, by the Company as a result of the effects of the COVID-19 pandemic; the Company's failure to realize the expected benefits of its acquisition of GW Pharmaceuticals, including the failure to realize the blockbuster potential of Epidiolex and the risk that the legacy GW Pharmaceuticals business will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; the ultimate duration and severity of the COVID-19 pandemic and resulting global economic, financial, and healthcare system disruptions and the current and potential future negative impacts to the Company's business operations and financial results; geopolitical events, including the conflict between Russia and Ukraine and related sanctions; macroeconomic conditions, including global financial markets and inflation; regulatory initiatives and changes in tax laws; market volatility; protecting and enhancing the Company's intellectual property rights and the Company's commercial success being dependent upon the Company obtaining, maintaining and defending intellectual property protection for its products and product candidates; delays or problems in the supply or manufacture of the Company's products and product candidates; complying with applicable U.S. and non-U.S. regulatory requirements, including those governing the research, development, manufacturing and distribution of controlled substances; government investigations, legal proceedings and other actions; identifying and acquiring, in-licensing or developing additional products or product candidates, financing these transactions and successfully integrating acquired product candidates, products and businesses; the Company's ability to realize the anticipated benefits of its collaborations and license agreements with third parties; the sufficiency of the Company's cash flows and capital resources to fund its debt service obligations, de-lever and meet its stated leverage targets; the Company's ability to achieve expected future financial performance and results and the uncertainty of future tax, accounting and other provisions and estimates; the possibility that, if the Company does not achieve the perceived benefits of the acquisition of GW Pharmaceuticals as rapidly or to the extent anticipated by financial analysts or investors, the market price of the Company's ordinary shares could decline; the Company's ability to achieve expected future financial performance and results and the uncertainty of future tax and other provisions and estimates; the Company's ability to meet its projected long-term goals and objectives, including as part of Vision 2025, in the time periods that the Company anticipates, or at all, and the inherent uncertainty and significant judgments and assumptions underlying the Company's long-term goals and objectives; and other risks and uncertainties affecting the Company, including those described from time to time under the caption "Risk Factors" and elsewhere in Jazz Pharmaceuticals' Securities and Exchange Commission filings and reports, including the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, and future filings and reports by the Company including the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022. Other risks and uncertainties of which the Company is not currently aware may also affect the Company's forward-looking statements and may cause actual results and the timing of events to differ materially from those anticipated.
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Revenues:
Product sales, net
$ 935,766
$ 834,247
$ 2,673,903
$ 2,186,118
Royalties and contract revenues
4,886
3,868
13,348
11,389
Total revenues
940,652
838,115
2,687,251
2,197,507
Operating expenses:
Cost of product sales (excluding amortization of
acquired developed technologies)
133,661
145,224
373,153
304,607
Selling, general and administrative
358,478
363,682
1,033,764
1,053,221
Research and development
148,870
141,036
417,898
350,305
Intangible asset amortization
141,232
159,804
461,782
368,476
Acquired in-process research and development
—
—
69,148
—
Impairment charge
133,648
—
133,648
—
Total operating expenses
915,889
809,746
2,489,393
2,076,609
Income from operations
24,763
28,369
197,858
120,898
Interest expense, net
(80,244)
(93,372)
(214,117)
(190,168)
Foreign exchange gain (loss)
(4,649)
(2,631)
(16,532)
1,262
Loss before income tax expense (benefit) and
equity in loss (gain) of investees
(60,130)
(67,634)
(32,791)
(68,008)
Income tax expense (benefit)
(43,027)
(18,057)
(58,603)
228,583
Equity in loss (gain) of investees
2,545
3,256
9,148
(2,274)
Net income (loss)
$ (19,648)
$ (52,833)
$ 16,664
$ (294,317)
Net income (loss) per ordinary share:
Basic
$ (0.31)
$ (0.86)
$ 0.27
$ (4.98)
Diluted
$ (0.31)
$ (0.86)
$ 0.26
$ (4.98)
Weighted-average ordinary shares used in per
share calculations - basic
62,785
61,284
62,365
59,084
Weighted-average ordinary shares used in per
share calculations - diluted
62,785
61,284
63,388
59,084
JAZZ PHARMACEUTICALS PLC
PRO FORMA NET PRODUCT SALES
(In thousands)
(Unaudited)
The following unaudited pro forma information represents the net product sales for the nine months ended September 30, 2022, compared to the same period in 2021, as if the acquisition of GW had been completed on January 1, 2021:
Nine Months Ended
September 30,
2022
2021
Xyrem
$ 772,957
$ 977,065
Xywav
677,041
352,643
Total Oxybate
1,449,998
1,329,708
Epidiolex/Epidyolex
529,400
464,508
Sativex
12,104
13,825
Sunosi1
28,844
42,981
Total Neuroscience
2,020,346
1,851,022
Zepzelca
197,943
181,972
Rylaze
200,687
20,674
Vyxeos
97,714
99,296
Defitelio/defibrotide
153,637
155,420
Erwinaze/Erwinase
—
69,382
Total Oncology
649,981
526,744
Other
3,576
8,768
Product sales, net
$ 2,673,903
$ 2,386,534
____________________________
1.
Net product sales for Sunosi U.S. are included until the date of divestment to Axsome of May 9, 2022.
JAZZ PHARMACEUTICALS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents
$ 839,358
$ 591,448
Investments
60,000
—
Accounts receivable, net of allowances
601,179
563,360
Inventories
728,074
1,072,721
Prepaid expenses
92,877
131,413
Other current assets
250,016
252,392
Total current assets
2,571,504
2,611,334
Property, plant and equipment, net
216,339
256,837
Operating lease assets
73,728
86,586
Intangible assets, net
5,570,394
7,152,328
Goodwill
1,592,635
1,827,609
Deferred tax assets, net
314,965
311,103
Deferred financing costs
9,949
12,029
Other non-current assets
35,153
40,813
Total assets
$ 10,384,667
$ 12,298,639
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 102,249
$ 100,298
Accrued liabilities
668,390
666,304
Current portion of long-term debt
31,000
31,000
Income taxes payable
10,444
9,608
Deferred revenue
871
2,093
Total current liabilities
812,954
809,303
Deferred revenue, non-current
116
463
Long-term debt, less current portion
5,695,814
6,018,943
Operating lease liabilities, less current portion
72,984
87,200
Deferred tax liabilities, net
933,670
1,300,541
Other non-current liabilities
123,935
116,998
Total shareholders' equity
2,745,194
3,965,191
Total liabilities and shareholders' equity
$ 10,384,667
$ 12,298,639
JAZZ PHARMACEUTICALS PLC
SUMMARY OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2022
2021
Net cash provided by operating activities
$ 930,006
$ 600,752
Net cash used in investing activities
(121,852)
(5,202,051)
Net cash (used in) provided by financing activities
(549,087)
4,217,131
Effect of exchange rates on cash and cash equivalents
(11,157)
(1,821)
Net increase (decrease) in cash and cash equivalents
$ 247,910
$ (385,989)
JAZZ PHARMACEUTICALS PLC
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
GAAP reported net income (loss)
$ (19,648)
$ (52,833)
$ 16,664
$ (294,317)
Intangible asset amortization
141,232
159,804
461,782
368,476
Impairment charge1
133,648
—
133,648
—
Share-based compensation expense
54,948
45,535
156,427
123,431
Transaction and integration related expenses2
5,491
59,867
23,560
201,457
Non-cash interest expense3
14,262
28,045
32,002
66,055
Acquisition accounting inventory fair value step-up
70,964
82,646
203,189
148,637
(Income) costs related to disposal of a business4
(671)
—
49,539
—
Restructuring and other costs5
57,625
—
57,625
—
Income tax effect of above adjustments
(87,413)
(61,646)
(196,599)
(134,307)
Impact of U.K. tax rate change
—
—
—
251,380
Non-GAAP adjusted net income
$ 370,438
$ 261,418
$ 937,837
$ 730,812
GAAP reported net income (loss) per diluted share6
$ (0.31)
$ (0.86)
$ 0.26
$ (4.98)
Non-GAAP adjusted net income per diluted share6
$ 5.17
$ 4.20
$ 13.21
$ 12.02
Weighted-average ordinary shares used in diluted per
share calculations - GAAP
62,785
61,284
63,388
59,084
Weighted-average ordinary shares used in diluted per
share calculations - non-GAAP
72,860
62,285
72,432
60,805
________________________________________________
Explanation of Adjustments and Certain Line Items:
1.
Impairment charge related to the IPR&D asset impairment following the discontinuation of our nabiximols program.
2.
Transaction and integration expenses related to the acquisition of GW.
3.
Non-cash interest expense associated with debt discount and debt issuance costs.
4.
Loss on disposal of Sunosi U.S. to Axsome and associated costs.
5.
Includes restructuring costs and costs related to program terminations.
6.
Diluted EPS for the 2022 periods was calculated using the "if-converted" method in relation to the Exchangeable Senior Notes. As such, Non-GAAP adjusted net income per diluted share for the three and nine months ended September 30, 2022 includes 9.0 million shares related to the assumed conversion of the Exchangeable Senior Notes and the associated interest expense add-back to adjusted net income of $6.3 million and $18.9 million, respectively. There was no impact on GAAP reported net income (loss) per diluted share for the three and nine months ended September 30, 2022 as the Exchangeable Senior Notes were anti-dilutive.
JAZZ PHARMACEUTICALS PLC
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS - FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 and 2021
(In thousands, except percentages)
(Unaudited)
Three months ended September 30, 2022
Cost of
product
sales
Gross
margin
Selling, general
and administrative
Research and
development
Intangible asset
amortization
Impairment
charge
Interest
expense, net
Income tax
expense (benefit)
Effective
tax rate (1)
GAAP Reported
$ 133,661
85.7 %
$ 358,478
$ 148,870
$ 141,232
$ 133,648
$ 80,244
$ (43,027)
71.6 %
Non-GAAP Adjustments:
Intangible asset
amortization
—
—
—
—
(141,232)
—
—
—
—
Share-based
compensation expense
(3,160)
0.3
(35,890)
(15,898)
—
—
—
—
—
Impairment charge
—
—
—
—
—
(133,648)
—
—
—
Income related to the
disposal of a business
—
—
671
—
—
—
—
—
—
Restructuring and
other costs
(2,359)
0.3
(43,375)
(11,891)
—
—
—
—
—
Transaction and integration
related expenses
(75)
—
(5,137)
(279)
—
—
—
—
—
Non-cash interest
expense
—
—
—
—
—
—
(14,262)
—
—
Acquisition accounting
inventory fair
value step-up
(70,964)
7.6
—
—
—
—
—
—
Income tax effect
of above adjustments
—
—
—
—
—
—
—
87,413
(61.0)
Total of non-GAAP
adjustments
(76,558)
8.2
(83,731)
(28,068)
(141,232)
(133,648)
(14,262)
87,413
(61.0)
Non-GAAP Adjusted
$ 57,103
93.9 %
$ 274,747
$ 120,802
$ —
$ —
$ 65,982
$ 44,386
10.6 %
Three months ended September 30, 2021
Cost of
product
sales
Gross
margin
Selling, general
and administrative
Research and
development
Intangible asset
amortization
Interest
expense, net
Income tax
expense (benefit)
Effective
tax rate (1)
GAAP Reported
$ 145,224
82.6 %
$ 363,682
$ 141,036
$ 159,804
$ 93,372
$ (18,057)
26.7 %
Non-GAAP Adjustments:
Intangible asset
amortization
—
—
—
—
(159,804)
—
—
—
Share-based
compensation expense
(2,763)
0.3
(31,752)
(11,020)
—
—
—
—
Transaction and integration
related costs
(943)
0.1
(53,378)
(5,546)
—
—
—
—
Non-cash interest expense
—
—
—
—
—
(28,045)
—
—
Acquisition accounting
inventory fair value step-up
(82,646)
9.9
—
—
—
—
—
—
Income tax effect of
above adjustments
—
—
—
—
—
—
61,646
(12.6)
Total of non-GAAP
adjustments
(86,352)
10.3
(85,130)
(16,566)
(159,804)
(28,045)
61,646
(12.6)
Non-GAAP Adjusted
$ 58,872
92.9 %
$ 278,552
$ 124,470
$ —
$ 65,327
$ 43,589
14.1 %
__________________________
(1)
The fluctuations in the GAAP effective tax rates for the three months ended September 30, 2022 and 2021 are primarily due to the impacts of the impairment of our acquired IPR&D asset and costs related to restructuring in 2022.
JAZZ PHARMACEUTICALS PLC
RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION
CERTAIN LINE ITEMS - FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 and 2021
(In thousands, except percentages)
(Unaudited)
Nine months ended September 30, 2022
Cost of
product
sales
Gross
margin
Selling, general
and administrative
Research and
development
Intangible asset
amortization
Impairment
charge
Acquired
IPR&D
Interest
expense, net
Income tax
expense (benefit)
Effective
tax rate (1)
GAAP Reported
$ 373,153
86.0 %
$ 1,033,764
$ 417,898
$ 461,782
$ 133,648
$ 69,148
$ 214,117
$ (58,603)
178.7 %
Non-GAAP Adjustments:
Intangible asset
amortization
—
—
—
—
(461,782)
—
—
—
—
—
Share-based
compensation expense
(8,581)
0.3
(104,851)
(42,995)
—
—
—
—
—
—
Impairment charge
—
—
—
—
—
(133,648)
—
—
—
—
Costs related to the
disposal of a business
—
—
(49,539)
—
—
—
—
—
—
—
Restructuring and
other costs
(2,359)
0.1
(43,375)
(11,891)
—
—
—
—
—
Transaction and integration
related expenses
(470)
—
(21,058)
(2,032)
—
—
—
—
—
—
Non-cash interest expense
—
—
—
—
—
—
—
(32,002)
—
—
Acquisition accounting
inventory fair value step-up
(203,189)
7.7
—
—
—
—
—
—
—
—
Income tax effect of
above adjustments
—
—
—
—
—
—
—
—
196,599
(166.0)
Total of non-GAAP
adjustments
(214,599)
8.1
(218,823)
(56,918)
(461,782)
(133,648)
—
(32,002)
196,599
(166.0)
Non-GAAP Adjusted
$ 158,554
94.1 %
$ 814,941
$ 360,980
$ —
$ —
$ 69,148
$ 182,115
$ 137,996
12.7 %
Nine months ended September 30, 2021
Cost of
product
sales
Gross
margin
Selling, general
and administrative
Research and
development
Intangible asset
amortization
Interest
expense, net
Income tax
expense (benefit)
Effective
tax rate (1)
GAAP Reported
$ 304,607
86.1 %
$ 1,053,221
$ 350,305
$ 368,476
$ 190,168
$ 228,583
(336.1) %
Non-GAAP Adjustments:
Intangible asset
amortization
—
—
—
—
(368,476)
—
—
—
Share-based
compensation expense
(7,331)
0.3
(85,644)
(30,456)
—
—
—
—
Transaction and integration
related costs
(1,348)
0.1
(191,185)
(8,924)
—
—
—
—
Non-cash interest expense
—
—
—
—
—
(66,055)
—
—
Acquisition accounting inventory
fair value step-up
(148,637)
6.8
—
—
—
—
—
—
Income tax effect of
above adjustments
—
—
—
—
—
—
134,307
(20.2)
Impact of U.K. tax rate change
—
—
—
—
—
—
(251,380)
369.6
Total of non-GAAP
adjustments
(157,316)
7.2
(276,829)
(39,380)
(368,476)
(66,055)
(117,073)
349.4
Non-GAAP Adjusted
$ 147,291
93.3 %
$ 776,392
$ 310,925
$ —
$ 124,113
$ 111,510
13.3 %
__________________________
(1)
The fluctuations in the GAAP effective tax rates for the nine months ended September 30, 2022 and 2021 are primarily due to the impacts of the impairment of our acquired IPR&D asset and costs related to restructuring in 2022 and the impact of the change in the statutory tax rate in the U.K in 2021.
JAZZ PHARMACEUTICALS PLC
RECONCILIATION OF PRO FORMA GAAP NET INCOME TO PRO FORMA NON-GAAP ADJUSTED EBITDA
AND CALCULATION OF PRO FORMA NON-GAAP NET LEVERAGE RATIO
(In thousands, except ratio)
(Unaudited)
The following table provides a reconciliation of the Company's pro forma GAAP net income to pro forma non-GAAP Adjusted EBITDA (calculated in accordance with the Credit Agreement) for the last twelve months, or LTM, ended September 30, 2022 and the calculation of the Company's pro forma non-GAAP net leverage ratio:
LTM Ended
September 30, 2022
Pro forma GAAP net income2
$ 46,278
Interest expense, net
302,714
Income tax benefit
(71,070)
Depreciation and amortization3
632,668
Pro forma non-GAAP EBITDA
910,590
Transaction and integration related expenses
65,813
Share-based compensation expense3
195,790
Acquisition accounting inventory fair value step-up
277,638
Restructuring and other costs
57,625
Impairment charge
133,648
Upfront and milestone payments
85,400
Costs related to the disposal of a business
49,539
Other
(61,829)
Expected cost synergies4
10,000
Pro forma non-GAAP Adjusted EBITDA1
$ 1,724,214
At September 30,
2022
Calculation of Net Debt:
Total GAAP debt
$ 5,836,250
Cash, cash equivalents and investments
(899,358)
Net Debt
$ 4,936,892
Calculation of Pro Forma Non-GAAP Net Leverage Ratio:
Pro forma non-GAAP Net Leverage Ratio
2.9
____________________________________
1.
Pro forma non-GAAP Adjusted EBITDA is calculated in accordance with the definition of Consolidated Adjusted EBITDA as set out in the Credit Agreement.
2.
Pro forma GAAP net income is derived from the GAAP financial statements of the Company for the LTM ended September 30, 2022 and, in accordance with the Credit Agreement reflects the divestment of Sunosi U.S. to Axsome on a pro forma basis as if the divestment had occurred at the beginning of the LTM ended September 30, 2022.
3.
Excludes the portion of these adjustments related to the Sunosi U.S. business.
4.
Expected cost synergies of $45 million from initiatives implemented following the acquisition of GW are assumed to be realized pro-rata through 2022.
JAZZ PHARMACEUTICALS PLC
RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED 2022 NET INCOME GUIDANCE
(In millions, except per share amounts)
(Unaudited)
GAAP net income
$50 - $175
Intangible asset amortization
590 - 610
Acquisition accounting inventory fair value step-up
260 - 280
Share-based compensation expense
200 - 220
Impairment charge
134
Restructuring and other costs
58
Transaction and integration related expenses
25 - 35
Costs related to disposal of a business
40 - 50
Non-cash interest expense
35 - 45
Income tax effect of above adjustments
(240) - (255)
Non-GAAP adjusted net income
$1,225 - $1,275
GAAP net income per diluted share
$0.75 - $2.75
Non-GAAP adjusted net income per diluted share1
$17.20 - $17.85
Weighted-average ordinary shares used in per share calculations - GAAP
64
Weighted-average ordinary shares used in per share calculations - non-GAAP
73
____________________________________
1.
Non-GAAP adjusted EPS guidance for 2022 reflects dilution of $2.05, at the midpoint, post adoption of ASU 2020-06.
Contacts:
Investors:
Andrea N. Flynn, Ph.D.
Vice President, Head, Investor Relations
Jazz Pharmaceuticals plc
InvestorInfo@jazzpharma.com
Ireland +353 1 634 3211
U.S. +1 650 496 2717
Media:
Kristin Bhavnani
Head of Global Corporate Communications
Jazz Pharmaceuticals plc
CorporateAffairsMediaInfo@jazzpharma.com
Ireland +353 1 637 2141
U.S. +1 215 867 4948
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SOURCE Jazz Pharmaceuticals plc