The good times are rolling these days for Jazz Pharmaceuticals (NASDAQ:JAZZ). Jazz stock is up more than 35% so far in 2017, thanks in part to great results from late-stage studies of sleep-disorder drug JZP-110.

But what goes up can always come down. Several risks remain for Jazz Pharmaceuticals. Here are three reasons why the stock could fall in the months ahead.

Man looking at chart going down

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1. Overall market correction

Probably the single biggest risk to Jazz stock is the risk nearly every stock faces. If the overall market experiences a major drop, Jazz will likely be pulled down also.

Will the market pull back significantly in 2017? No one knows, although plenty of prognosticators pretend that they do. There's no hard-and-fast reason why the market (and therefore Jazz stock) will necessarily fall this year or even next year. 

However, based on historical trends, we're overdue for a recession in the U.S. and for a market correction. The current bull market is certainly getting long in the tooth. Although the economy and businesses appear to be doing well in general right now, there's always the possibility of a crisis erupting somewhere in the world that shakes up the market. 

2. Weakness for Xyrem

Jazz Pharmaceuticals continues to depend on one product, Xyrem, for nearly 75% of its total revenue. Any bumps in the road for the sleep-disorder drug could spell trouble for Jazz stock.

There are a couple of ways I could see sales for Xyrem disappointing investors in the coming quarters. One is if payers tighten the screws and require significantly more prior authorizations than in the past. Jazz CEO Bruce Cozadd mentioned in May that the company is seeing a slow increase in prior authorizations already.

Another potential issue is that Medicare Part D patients could hit the infamous "donut hole" and potentially discontinue taking Xyrem. This probably isn't a huge threat to Jazz, though, since most of its Xyrem business comes from commercial payers.

Over the longer term, prospects of generic competition remains the biggest risk for Xyrem. Although Jazz reached a settlement with Hikma Pharmaceuticals in April that keeps Hikma from launching a generic version of Xyrem until 2023, litigation continues with four other companies.     

Man holding FDA blocks

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3. Regulatory setback

The U.S. Food and Drug Administration accepted the regulatory filing for acute myeloid leukemia drug Vyxeos on May 31 with a priority review status. Jazz expects to file for regulatory approval in Europe later this year.

Although there's an old adage that says not to count your chickens before they hatch, Jazz has already incorporated FDA approval of Vyxeos and a 2017 launch of the drug into its financial guidance for the year. If the FDA surprises everyone by not approving Vyxeos, Jaxx stock will likely take a huge hit.

How big of a risk is this? It's probably not too great. Jazz completed five clinical studies, including the pivotal late-stage study on which the FDA filing was based. Vyxeos appeared to pass with flying colors on efficacy and safety. Still, though, you never know what can happen with the regulatory approval process.

Up or down?

All three of these factors could realistically cause Jazz stock to fall. But will it?

In March, I noted several reasons why buying Jazz Pharmaceuticals stock was a smart idea. I thought that Jazz would report more good news from clinical studies of JZP-110 (and it did). I suggested that the stock continued to be dirt cheap. And I speculated that Jazz could be an acquisition target.  

JZP-110 could be a huge potential winner for Jazz. The biotech's stock remains dirt cheap, with shares trading at 11 times expected earnings. I still think that Jazz would be a great buyout target for a bigger player. Even though the company implemented a poison pill recently, Cozadd's comments about it didn't indicate that Jazz was adamantly opposed to an acquisition for the right price.

Jazz Pharmaceuticals stock could very well fall, particularly if there's an overall market correction. My prediction, however, is that the biotech's share price is more likely to go up than down over the next year.