Morningstar | Jazz's Diversification Efforts Hindered by Slow Vyxeos Uptake; Maintaining $153 Fair Value Estimate
We are maintaining our fair value estimate for Jazz Pharmaceuticals of $153 per shares after the company posted double-digit growth for Xyrem, offset by slower-than-expected uptake of Vyxeos. The firm remains highly dependent on Xyrem for narcolepsy, which contributed $356 million or 72% of total revenue, and we maintain our position that the no-moat company needs to diversify its portfolio and broaden its pipeline for a long-term competitive advantage.Jazz reported softer-than-expected sales this quarter for Vyxeos for acute myeloid leukemia (AML), with only a 7% increase from last quarter to $28 million. Jazz lowered full-year guidance for Vyxeos, pointing to slower uptake in academic centers compared with community hospitals in addition to the availability of multiple treatment options. Our long-term view of Vyxeos remains unchanged due to its solid efficacy. We model modest label expansion and peak sales of $200 million in 2023. The lower outlook for Vyxeos was offset by increased guidance for Xyrem revenue, which grew 19% year over year. Ultimately, we expect Xyrem to post high single-digit growth until generic competition hits in 2023, reaching peak sales of over $1.8 billion. The firm continues to experience supply issues with Defitelio as expected, and Erwinaze grew in line with our expectations.
Jazz Pharmaceuticals is a biopharmaceutical company focused on identifying, developing and commercializing products that address unmet medical needs. Co.'s products and product candidates focus on sleep and hematology/oncology. Co.'s products are: Xyrem® oral solution, which treats both cataplexy and excessive daytime sleepiness, in patients with narcoleps; Erwinaze®, which treats patients with acute lymphoblastic leukemia, who have developed hypersensitivity to E. coli-derived asparaginase; and Defitelio®, which treats adult and pediatric patients with hepatic veno-occlusive disease, with renal or pulmonary dysfunction following hematopoietic stem cell transplantation.
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