It's been a great year for Jazz Pharmaceuticals (NASDAQ:JAZZ) shareholders so far. The biotech stock is up more than 35% year to date. However, most of those gains were made in the first quarter, thanks to positive clinical results. Over the last five months, Jazz stock has retreated every time it seems to pick up momentum.
Jazz Pharmaceuticals CEO Bruce Cozzad sat down at the Wells Fargo Healthcare Conference on Wednesday to field questions. Perhaps the most important question posed to Cozzad related to what investors should watch for in the rest of 2017 and into 2018. Here are the five key things Jazz's CEO listed in his response.
1. Vyxeos performance
Jazz won FDA approval on Aug. 3 for Vyxeos in treating two types of acute myeloid leukemia (AML). The company launched the drug in the U.S. roughly one week later. Jazz's third-quarter results should show some sales activity for Vyxeos, but the fourth-quarter results will be a better sign of how the launch is going.
Vyxeos is expected to generate peak annual sales north of $200 million. It will be interesting to see how the drug fares in the early days of the launch, considering that Vyxeos combines two chemotherapies, daunorubicin and cytarabine, that are already on the market. However, in a phase 3 study, patients taking Vyxeos survived a median 9.6 months after treatment, compared with 5.9 months for patients taking the two chemotherapies separately.
2. Regulatory submissions
Cozzad mentioned several upcoming regulatory submissions planned by Jazz. Three should happen by the end of this year: European filing for Vyxeos in treating AML, and U.S. filings for JZP-110 in treating excessive sleepiness in obstructive sleep apnea (OSA) and narcolepsy, and for an additional indication for Xyrem in treating pediatric narcolepsy. Another key regulatory submission should take place in the first quarter of 2018 for JZP-507, which is a low-sodium version of Xyrem.
The submissions themselves won't move the needle for Jazz Pharmaceuticals stock, of course. However, Cozzad stressed that these are important for investors to monitor because they're prerequisites for winning approval and launching the drugs.
3. Deal activity
Jazz picked up Vyxeos with its acquisition last year of Celator. The company recently bought option rights to ImmunoGen's (NASDAQ:IMGN) two early-stage, hematology-related antibody-drug conjugate (ADC) programs, as well as an additional program to be determined later. Cozzad said investors should watch for more deals, although he wouldn't predict when they might happen.
The size of Jazz's deals could be bigger in the future than they've been in the past. Cozzad stated that Jazz is now a bigger company and should be able to invest more capital in larger deals "that make sense." He doesn't think the company necessarily needs to be in a hurry, though.
4. Resumption of growth for Xyrem
Sales growth for Xyrem in the first half of 2017 was sluggish. Cozzad predicted a return to stronger growth for the drug in 2018.
Jazz launched an educational campaign earlier this year to help narcolepsy patients better understand the disease. Cozzad thinks this campaign could potentially lead to an uptick in sales for Xyrem. He noted that there are around 13,000 patients taking the drug currently, but there are roughly 60,000 patients diagnosed with narcolepsy in the U.S. and many more on top of that who haven't yet been diagnosed.
5. More settlements with potential generic rivals
Jazz removed a key obstacle earlier this year by settling with Hikma Pharmaceuticals in a deal that allows Hikma to launch an authorized generic version of Xyrem in 2023. The company also settled with three other generic drugmakers in agreements that allow them to market generic versions of Xyrem after 2025.
Cozzad said to watch for more settlements in the future. There are four other companies that have filed abbreviated new drug applications (ANDAs) for generic versions of Xyrem. Litigation between Jazz and these four companies has been combined into one case for which the trial date has not yet been set. Cozzad expects the trial to begin no earlier than the first half of 2018. He said that settlements could be more likely as the trial date approaches.
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