Jazz Pharmaceuticals Announces Third Quarter 2014 Financial Results And Updated Guidance Jazz Pharmaceuticals plc (Nasdaq: JAZZ) today announced financial results for the third quarter ended September 30, 2014 and updated financial...

DUBLIN , Nov. 4, 2014 /PRNewswire/ -- Jazz Pharmaceuticals plc (Nasdaq: JAZZ ) today announced financial results for the third quarter ended September 30, 2014 and updated financial guidance for full year 2014.

"We successfully executed on key goals across the business, from strong sales growth of Xyrem, Erwinaze and Defitelio, to advances in our clinical development programs, and to furtherance of our regulatory efforts in preparation for the planned submission of a new drug application for defibrotide in the U.S. in the first half of 2015," said Bruce C. Cozadd , chairman and chief executive officer of Jazz Pharmaceuticals plc. "We're pleased with the substantial progress we've made towards meeting our 2014 goals and creating long-term shareholder value."

Adjusted net income attributable to Jazz Pharmaceuticals plc for the third quarter of 2014 was $145.8 million , or $2.33 per diluted share, compared to $109.4 million , or $1.78 per diluted share, for the third quarter of 2013.

GAAP net income attributable to Jazz Pharmaceuticals plc for the third quarter of 2014 was $25.8 million , or $0.41 per diluted share, compared to $75.4 million , or $1.23 per diluted share, for the third quarter of 2013. GAAP net income attributable to Jazz Pharmaceuticals plc for the third quarter of 2014 included an upfront payment of $75.0 million for the rights to defibrotide in the Americas. Reconciliations of applicable GAAP reported to non-GAAP adjusted information are included in this press release.

Third Quarter 2014 Revenues and Product Sales

Total revenues for the third quarter of 2014 were $306.6 million , an increase of 32% over total revenues of $232.2 million for the third quarter of 2013. This increase was driven primarily by net product sales of Xyrem® (sodium oxybate) oral solution, Erwinaze®/Erwinase® (asparaginase Erwinia chrysanthemi ) and Defitelio® (defibrotide). Total revenues include net product sales, royalties and contract revenues.

Net product sales for the third quarter of 2014 were as follows:

Tables showing actual and pro forma net product sales for the three and nine months ended September 30, 2014 compared to actual and pro forma net product sales for the same periods in 2013 are included in this press release.

Operating Expenses and Other

Operating expenses for the third quarter of 2014 were $248.5 million on a GAAP basis compared to $131.6 million for the third quarter of 2013. Operating expenses increased over the prior year period primarily due to the following:

Net interest expense for the third quarter of 2014 was $14.5 million compared to $6.2 million for the third quarter of 2013. The increase was due to the company's increased debt levels following the acquisition of Gentium in January 2014 and the sale, in August 2014 , of $575.0 million principal amount of 1.875% exchangeable senior notes due 2021, resulting in net proceeds to the company of $558.9 million . A portion of the net proceeds from the sale of exchangeable senior notes was used to repay total outstanding borrowings of $300 million under the company's revolving credit facility.

Foreign currency gain during the third quarter of 2014 was $6.5 million primarily due to the strengthening of the U.S. dollar against the Euro.

As of September 30, 2014 , cash and cash equivalents were $575.0 million and the principal balance of the company's long-term debt was $1.5 billion . Cash and cash equivalents decreased from December 31, 2013 primarily due to funds used to acquire Gentium, JZP-110 and the rights to defibrotide in the Americas, make a contingent consideration payment to the former equity holders of EUSA Pharma, repurchase ordinary shares under the company's share repurchase program and fund capital expenditures, offset in part by the net proceeds from the company's term loans, exchangeable senior notes and cash generated by the business.

In the nine months ended September 30, 2014 , the company repurchased 0.2 million ordinary shares under its share repurchase program for $30.0 million at an average cost of $131.88 per ordinary share. As of September 30, 2014 , the remaining amount under the current share repurchase program was $33.6 million .

Recent Developments

2014 Financial Guidance

Jazz Pharmaceuticals' updated full year 2014 financial guidance is as follows:

Conference Call Details

Jazz Pharmaceuticals will host an investor conference call and live audio webcast today at 4:30 p.m. EST ( 9:30 p.m. GMT ) to provide a business and financial update, discuss its 2014 third quarter results and update 2014 financial guidance. The live webcast may be accessed from the Investors & Media 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 +1 866 318 8615 in the U.S., or +1 617 399 5134 outside the U.S., and entering passcode 57934182.

A replay of the conference call will be available through November 11, 2014 by dialing +1 888 286 8010 in the U.S., or +1 617 801 6888 outside the U.S., and entering passcode 24997214. An archived version of the webcast will be available for at least one week in the Investors & Media section of the Jazz Pharmaceuticals website at www.jazzpharmaceuticals.com .

About Jazz Pharmaceuticals plc

Jazz Pharmaceuticals plc (Nasdaq: JAZZ ) is a specialty biopharmaceutical company focused on improving patients' lives by identifying, developing and commercializing differentiated products that address unmet medical needs. The company has a diverse portfolio of products and/or product candidates in the areas of sleep, hematology/oncology, pain and psychiatry. The company's U.S. marketed products in these areas include: Xyrem® (sodium oxybate) oral solution, Erwinaze® (asparaginase Erwinia chrysanthemi ), Prialt® (ziconotide) intrathecal infusion, Versacloz® (clozapine) oral suspension, FazaClo® (clozapine, USP) HD and FazaClo LD. Jazz Pharmaceuticals also has a number of products marketed outside the United States , including Erwinase® and Defitelio® (defibrotide). For more information, please visit www.jazzpharmaceuticals.com .

Non-GAAP Financial Measures

Investors should note that these non-GAAP financial measures are not prepared under any comprehensive set of accounting rules or principles and do not reflect all of the amounts associated with the company's results of operations as determined in accordance with GAAP. Investors should also note that these non-GAAP financial measures have no standardized meaning prescribed by GAAP and, therefore, have limits in their usefulness to investors. In addition, from time-to-time in the future there may be other items that the company may exclude for purposes of its non-GAAP financial measures; likewise, the company may in the future cease to exclude items that it has historically excluded for purposes of its non-GAAP financial measures. Because of the non-standardized definitions, the non-GAAP financial measures as used by Jazz Pharmaceuticals in this press release and the accompanying tables may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by the company's competitors and other companies.

As used in this press release, (i) the historical adjusted net income measures attributable to Jazz Pharmaceuticals plc (and the related per share measures) exclude from GAAP net income (loss) attributable to Jazz Pharmaceuticals plc, as applicable, intangible asset amortization, share-based compensation expense, intangible asset impairment, upfront and milestone payments, transaction and integration costs, acquisition accounting inventory fair value step-up adjustments, restructuring charges, change in fair value of contingent consideration, depreciation expense, loss on extinguishment and modification of debt and non-cash interest expense; adjust the income tax provision to the estimated amount of taxes that are payable in cash; and adjust for the amount attributable to noncontrolling interests; (ii) the historical adjusted SG&A expense measures exclude from GAAP SG&A expenses, as applicable, share-based compensation expense, transaction and integration costs, restructuring charges, change in fair value of contingent consideration and depreciation expense; (iii) the historical adjusted R&D expense measures exclude from GAAP R&D expenses, as applicable, share-based compensation expense, transaction and integration costs and depreciation expense; (iv) the adjusted net income attributable to Jazz Pharmaceuticals plc (and the related per share) guidance measures exclude from estimated GAAP net income attributable to Jazz Pharmaceuticals plc intangible asset amortization and depreciation expense, share-based compensation expense, intangible asset impairment, upfront and milestone payments, transaction and integration costs, acquisition accounting inventory fair value step-up adjustments and non-cash interest expense; adjust the income tax provision to the estimated amount of taxes that are payable in cash; and adjust for the amount attributable to noncontrolling interests; (v) the adjusted gross margin percentage guidance excludes from estimated GAAP gross margin percentage share-based compensation expense, acquisition accounting inventory fair value step-up adjustments and depreciation expense; (vi) the adjusted SG&A expenses guidance excludes from estimated GAAP SG&A expenses share-based compensation expense, transaction and integration costs and depreciation expense; and (vii) the adjusted R&D expenses guidance excludes from estimated GAAP R&D expenses share-based compensation expense and depreciation expense.

"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' future financial results, including 2014 financial guidance, the company's plans to submit a new drug application for defibrotide in the United States and the timing thereof, the potential for creating long-term shareholder value, and other statements that are not historical facts. These forward-looking statements are based on Jazz Pharmaceuticals' current expectations and inherently involve significant risks and uncertainties. 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 and uncertainties associated with maintaining and increasing sales of and revenue from Xyrem, such as the potential introduction of generic competition or other sodium oxybate products that compete with Xyrem and changed or increased regulatory restrictions on or requirements with respect to Xyrem, as well as similar risks related to effectively commercializing the company's other marketed products, including Erwinaze and Defitelio; protecting and enhancing the company's intellectual property rights; delays or problems in the supply or manufacture of the company's products, particularly with respect to certain products as to which the company maintains limited inventories, and dependence on single source suppliers, including the risk that the company may not be able to obtain and supply sufficient product to meet commercial demand or to meet requirements for clinical trial supplies; obtaining appropriate pricing and reimbursement for the company's products in an increasingly challenging environment, including the need to obtain appropriate pricing and reimbursement approvals for Defitelio in European countries representing a significant market opportunity for Defitelio and the need to obtain and maintain reimbursement for Xyrem in the United States in an environment in which the company is subject to increasingly restrictive conditions for reimbursement required by third party payors; ongoing regulation and oversight by U.S. and non-U.S. regulatory agencies; the challenges of obtaining sustained acceptance of the company's products by patients, physicians and payors; the difficulty and uncertainty of pharmaceutical product development, including the timing thereof, and the uncertainty of clinical success, such as the risk that results from preclinical studies and/or early clinical trials may not be predictive of results obtained in later and larger clinical trials planned or anticipated to be conducted for the company's product candidates; the inherent uncertainty associated with the regulatory approval process, including the risks that the company may be required to conduct additional time-consuming and costly clinical trials as a condition of regulatory approval of defibrotide in the United States and that the company may otherwise be unable to obtain or maintain any regulatory approval for defibrotide in the United States ; risks associated with business combination or product or product candidate acquisition transactions, such as the risks that the acquired businesses, including the acquired Gentium business, will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected, and that the company may otherwise fail to realize the anticipated benefits (commercial or otherwise) from such acquisition transactions, including the acquisition of Gentium and acquisition of the rights to defibrotide in the Americas; the company's ability to identify and acquire, in-license or develop additional products or product candidates to grow its business; and possible restrictions on the company's ability and flexibility to pursue certain future opportunities as a result of its substantial outstanding debt obligations; as well as risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results; and those other risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in Jazz Pharmaceuticals plc's Securities and Exchange Commission filings and reports (Commission File No. 001-33500), including the Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and future filings and reports by the company, including the Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 . Jazz Pharmaceuticals undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information, future events or changes in its expectations.

The following unaudited pro forma information represents the net product sales for the three and nine months ended September 30, 2014 and 2013, respectively, as if the acquisition of Gentium had been completed on January 1, 2013 :

JAZZ PHARMACEUTICALS PLC RECONCILIATIONS OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION CERTAIN LINE ITEMS AND OTHER INFORMATION (In thousands) (Unaudited)

Explanation of Adjustments and Certain Line Items:

SOURCE Jazz Pharmaceuticals plc