Morningstar | Jazz Pharmaceuticals Starts Off 2019 Strong With Growth in All Major Products
We are maintaining our $153 fair value estimate for no-moat Jazz following the company's first-quarter results, which were mostly in line with our expectations. Total revenue of $508 million met our expectations and represents 14% growth from last year and 7% sequentially. Research and development spend was slightly below our expectations, but we don't plan to change our full-year outlook, as clinical trial costs may ramp up in the back half of the year.Lead therapy Xyrem for narcolepsy contributed $368 million, representing strong growth of 16% relative to last year. Erwinaze (cancer) returned to growth after declines last year due to supply shortages, posting $61 million, up 20% from last year's soft first quarter. We model flat growth due to the ongoing supply irregularities. Defitelio (liver disease in patients with bone marrow transplants) contributed $42 million, up 18% but relative to a soft first quarter last year. Lastly, Vyxeos (leukemia) contributed $29 million, up 10% from last year. We don't plan to alter any of our full-year projections for these products and believe the company is on track to meet its reaffirmed full-year guidance.
At the end of the first quarter, the FDA approved Sunosi (or solriamfetol) for excessive daytime sleepiness in narcolepsy or obstructive sleep apnea. The company expects to launch in the U.S. later this year following the Drug Enforcement Administration's scheduling decision for Sunosi, which will likely be in the second quarter.
Additionally, the company recently announced positive top line results in narcolepsy for JZP-258, which is essentially a lower-sodium version of Xyrem for patients vulnerable to cardiovascular issues. While it may contribute some incremental revenue, we do not believe the candidate will stave off patient share erosion from Xyrem generics as early as 2023. The company's significant dependence on Xyrem precludes awarding the company an economic moat, in our opinion.
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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