Jazz Pharmaceuticals Announces First Quarter 2011 Financial Results -- Net product sales of $50 million, up 46 percent over first quarter 2010 --

-- Adjusted EPS increased to $0.59; GAAP EPS increased to $0.48 --

-- Company increases 2011 sales and earnings guidance --

PALO ALTO, Calif., May 3, 2011 /PRNewswire/ --Jazz Pharmaceuticals, Inc. (Nasdaq: JAZZ) today announced financial results for the first quarter of 2011.

Total revenues for the quarter ended March 31, 2011 were $50.9 million, compared to $35.2 million for the first quarter of 2010.  Total revenues included net product sales, royalties and contract revenues.

GAAP net income for the first quarter of 2011 was $21.8 million, or $0.48 per diluted share, compared to $1.5 million, or $0.04 per diluted share, for the first quarter of 2010.  Adjusted net income for the first quarter of 2011 was $26.8 million, or $0.59 per diluted share, compared to $6.1 million, or $0.18 per diluted share, for the first quarter of 2010.  A reconciliation of GAAP net income to adjusted net income and the related per diluted share amounts is included with this press release.

Net sales of Xyrem® (sodium oxybate) oral solution increased 49 percent to $42.8 million for the first quarter of 2011, compared to net sales of $28.7 million for the first quarter of 2010.  Net sales of once-daily Luvox CR® (fluvoxamine maleate) were $7.1 million for the first quarter of 2011, compared to $5.5 million for the prior year period, an increase of 29 percent.

"Our first quarter results reflect strong sales momentum for Xyrem," said Bruce Cozadd, chairman and chief executive officer of Jazz Pharmaceuticals.  "We are committed to helping patients suffering from narcolepsy."

Selling, general and administrative expenses for the first quarter of 2011 were $19.9 million, compared to $16.8 million for the first quarter of 2010, primarily due to higher headcount related expenses, including stock based compensation, and legal and information technology expenses.  Research and development expenses for the first quarter of 2011 were $3.7 million, compared to $6.2 million for the first quarter of 2010, reflecting lower product development spending.    

Interest expense for the first quarter of 2011 was $0.8 million, compared to $5.8 million for the prior year period.  As of March 31, 2011, cash and cash equivalents were $65.1 million, an increase of 45 percent from $44.8 million at December 31, 2010.

Pipeline Developments

Jazz Pharmaceuticals is also providing an update on its JZP-6 and JZP-8 development programs:

  • The company has decided that it will not proceed with the additional clinical studies to support the development of JZP-6 (sodium oxybate) in fibromyalgia requested by the Food and Drug Administration (FDA) in its October 2010 complete response letter.  This decision follows an internal analysis of the cost, development time and likelihood of regulatory success associated with further clinical development.
  • Given the estimated costs, development timeline and competitive environment for JZP-8 (intranasal clonazepam), the company is reevaluating whether or how to proceed with additional development.  

2011 Financial Guidance

Jazz Pharmaceuticals is providing updated full year 2011 financial guidance as follows:

- Total product sales

$ 237 - 250 million

- Xyrem

$ 205 – 215 million

- Luvox CR

$ 32 – 35 million

- Gross margin

greater than 90%

- R&D and SG&A combined expenses

$ 105 – 110 million

- GAAP net income per diluted share

$ 2.50 – 2.66

- Adjusted net income per diluted share*

$ 2.95 – 3.10

*  A reconciliation of GAAP net income to adjusted net income and the related per diluted share amounts is included with this press release.



Conference Call Details

Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 1:30 p.m. PT/4:30 p.m. ET to provide a business update and discuss 2011 first quarter results and updated 2011 financial guidance.  The live webcast may be accessed from the Investors section of the company’s website at www.JazzPharmaceuticals.com.  Please connect to the website prior to the start of the conference call to ensure adequate time for any software downloads that may be necessary.  Investors may participate in the conference call by dialing 866-510-0712 in the U.S., or 617-597-5380 outside the U.S., and entering passcode 13279408.

An archived version of the webcast will be available for at least one week on the investors section of the Jazz Pharmaceuticals' website at www.JazzPharmaceuticals.com.

About Jazz Pharmaceuticals, Inc.

Jazz Pharmaceuticals is a specialty pharmaceutical company focused on identifying, developing and commercializing innovative products to meet unmet medical needs in neurology and psychiatry.  For further information see www.JazzPharmaceuticals.com.

Non-GAAP Financial Measures

To supplement our financial results and financial guidance presented on a GAAP basis, we use the non-GAAP measures adjusted net income and adjusted net income per diluted share.  We believe these non-GAAP financial measures are helpful in understanding our past financial performance and our potential future results.  They are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP.  Our management regularly uses these supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions.  Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures.  In addition, we believe that the use of these non-GAAP measures enhances the ability of investors to compare our results from period to period.  Investors should note that adjusted net income and adjusted net income per diluted share, as used by Jazz Pharmaceuticals, may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by our competitors and other companies.  Adjusted net income and adjusted net income per diluted share exclude from the comparable GAAP measures:  revenue related to upfront and milestone payments, amortization of intangible assets, stock-based compensation, and non-cash interest expense associated with a debt discount and debt issuance costs.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements, including, but not limited to, statements related to Jazz Pharmaceuticals’ commercial success, financial performance, growth potential and future financial performance, including 2011 financial guidance, and statements related to future product development.  These forward-looking statements are based on the company’s current expectations and inherently involve significant risks and uncertainties.  Jazz Pharmaceuticals' 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 related to: Jazz Pharmaceuticals’ dependence on sales of Xyrem and its ability to increase sales of its Xyrem and Luvox CR products; competition, including potential generic competition; Jazz Pharmaceuticals’ dependence on single source suppliers and manufacturers; the ability of Jazz Pharmaceuticals to protect its intellectual property and defend its patents; regulatory risks; Jazz Pharmaceuticals’ cash flow and the sufficiency of its cash resources; and those risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in Jazz Pharmaceuticals' Securities and Exchange Commission filings and reports, including in its annual report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission on March 8, 2011.  Jazz Pharmaceuticals undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.

JAZZ PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)




Three Months Ended March 31,


2011


2010

Revenues:


Product sales, net

$   49,903


$          34,283

Royalties, net

693


605

Contract revenues

285


285

Total revenues

50,881


35,173

Operating expenses:




Cost of product sales

2,809


2,882

Selling, general and administrative

19,911


16,790

Research and development

3,695


6,215

Intangible asset amortization

1,862


2,057

Total operating expenses

28,277


27,944

Income from operations

22,604


7,229

Interest income

1


2

Interest expense

(777)


(5,767)

Other expense

(1)


-

Net income  

$   21,827


$            1,464





Net income per share:




Basic

$       0.54


$              0.05

Diluted

$       0.48


$              0.04





Weighted-average common shares used in computing  




net income per share:




Basic

40,362


31,412

Diluted

45,697


34,926







JAZZ PHARMACEUTICALS, INC.

SUMMARY OF PRODUCT SALES, NET

(In thousands)

(Unaudited)



Three Months Ended March 31,


2011


2010

Xyrem

$   42,778


$          28,745

Luvox CR

7,125


5,538

Total

$   49,903


$          34,283











JAZZ PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



March 31,


December 31,


2011


2010

ASSETS




Current assets:




Cash and cash equivalents

$   65,061


$          44,794

Restricted cash

400


400

Accounts receivable, net of allowances

21,383


22,081

Inventories

5,017


5,046

Prepaid expenses

2,577


1,858

Other current assets

402


279

Total current assets

94,840


74,458

Property and equipment, net

652


690

Intangible assets, net

20,171


22,033

Goodwill

38,213


38,213

Other long-term assets

302


335

Total assets

$ 154,178


$        135,729





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Revolving credit facility

$     4,000


$            7,350

Accounts payable

3,648


3,049

Accrued liabilities

23,274


23,572

Current portion of long-term debt

16,131


16,064

Purchased product rights liability

4,625


4,500

Liability under government settlement

8,202


4,128

Deferred revenue

1,561


1,273

Total current liabilities

61,441


59,936

Deferred rent

77


82

Deferred revenue, non-current

8,768


9,053

Purchased product rights liability, non-current

3,250


4,500

Liability under government settlement, non-current

-


6,978

Long-term debt, less current portion

20,569


24,629

Total stockholders' equity

60,073


30,551

Total liabilities and stockholders' equity

$ 154,178


$        135,729



JAZZ PHARMACEUTICALS, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(In thousands, except per share amounts)

(Unaudited)




Three Months Ended March 31,


2011


2010





GAAP net income  

$   21,827


$       1,464

Add:




Intangible asset amortization

1,862


2,057

Stock-based compensation expense

3,148


1,832

Non-cash interest expense

206


1,050

Deduct:




Contract revenues

(285)


(285)

Adjusted net income  

$   26,758


$       6,118





GAAP net income per diluted share

$       0.48


$         0.04

Adjusted net income per diluted share

$       0.59


$         0.18





Shares used in computing GAAP and adjusted net




income per diluted share amounts

45,697


34,926





JAZZ PHARMACEUTICALS, INC.

RECONCILIATION OF GAAP TO NON-GAAP 2011 FINANCIAL GUIDANCE

(In millions, except per share amounts)



GAAP net income

$115-125

Add:


Intangible asset amortization

7

Stock-based compensation expense

14

Non-cash interest expense

1

Deduct:


Contract revenues

(1)

Adjusted net income

$136-146



GAAP net income per diluted share

$2.50-2.66

Adjusted net income per diluted share

$2.95-3.10



Shares used in computing GAAP and adjusted net


income per diluted share amounts

46-47



SOURCE Jazz Pharmaceuticals, Inc.



RELATED LINKS
http://www.jazzpharmaceuticals.com

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