The stock market is currently in a state of turmoil. Due to fears surrounding the rapid spread of the novel coronavirus around the world -- which has now been declared a pandemic by the World Health Organization (WHO) -- the three major U.S. stock market indexes have plunged.

Furthermore, things could get worse before they get better, and no one knows how much longer the potentially deadly disease will keep spreading. Many investors are choosing to refrain from buying stocks at the moment, but others see the current environment as an excellent opportunity to find quality stocks at a bargain. If you are in the latter group, one cheap biotech stock you should add to your buy list is Jazz Pharmaceuticals (JAZZ -1.65%)

Xyrem doing most of the heavy lifting...for now

Jazz's crown jewel is a sleep disorder drug called Xyrem. This product has been racking up growing sales of late. During the third quarter, sales of Xyrem were $435.4 million, compared to $374.8 million in the year-ago period. For the full year, Xyrem recorded sales of $1.6 billion, up by 16.9% compared to the fiscal year 2018.

Drug pills forming a question mark

Image Source: Getty Images.

However, Jazz currently relies heavily on Xyrem. During its fiscal year 2019, sales of Xyrem accounted for about 76% of the company's total revenue. This is a significant problem because Xyrem will likely see some competition in the future. West-Ward Pharmaceuticals, a subsidiary of Hikma Pharmaceuticals (HKMP.F -7.92%), will start selling a generic version of Xyrem in 2023. This could significantly hinder Xyrem's growth -- unless Jazz can find ways to decrease its top-line exposure to its best-selling drug. Fortunately, the company is looking to do just that. 

Jazz's pipeline is promising

Jazz boasts several exciting products in its pipeline or that are currently being evaluated by health regulators.

First, the company submitted a New Drug Application (NDA) for JZP-258 to the U.S. Food and Drug Administration (FDA) in January. JZP-258 is a potential treatment for cataplexy and excessive daytime sleepiness (EDS) associated with narcolepsy. Narcolepsy, a chronic sleep disorder that affects about one in 2,000 people in the U.S., is severely under-diagnosed: Up to 50% of those with this condition have not been diagnosed. Furthermore, narcolepsy is associated with other conditions, such as hypertension and cardiovascular disease. For those reasons, Jazz has high hopes for JZP-258.

Second, Jazz submitted an NDA to the FDA for Lurbinectedin for the treatment of relapsed small-cell lung cancer (SCLC). Lurbinectedin was granted a priority review by the FDA, which means the review process will be shorter than usual. 

There are about 30,000 cases of SCLC in the U.S. per year. The company said: "There remains a critical unmet need for patients with relapsed SCLC, as the treatment landscape has not changed substantially in more than two decades since the last new chemical entity, topotecan, was approved."  Jazz is expecting an answer from the FDA in mid-August, and if approved, Lurbinectedin could help the company decrease its top-line exposure to Xyrem. 

Should you buy? 

Jazz is currently trading at just 11.37 times past earnings and 7.42 times future earnings. And given that the company will likely find more products to supplement its crown jewel Xyrem, it is worth considering purchasing shares of this biotech stock right now.