Jazz Pharma Rises As Competitive Position Grows Stronger
Specialty drugmaker Jazz Pharmaceuticals ( JAZZ ) was trading up Wednesday morning as its lead drug staved off competition until the end of 2025, even though the company missed Q1 estimates late Tuesday. Jazz has been embroiled in litigation over its narcolepsy treatment Xyrem, as seven different generic-drug makers have been challenging its aging patents. On Tuesday’s earnings conference call with analysts, CEO Bruce Cozadd said that Jazz had reached a confidential settlement with two of them, Ranbaxy and Wockhardt Bio, which would allow them to start selling generic Xyrem, but not until Dec. 31, 2025. The news led Mizuho Securities analyst Irina Koffler to upgrade Jazz Pharma stock to buy from neutral, and raise the price target to 193 from 137. “Jazz’s announcement of its late 2025 Xyrem settlements was the upgrade signal we were looking for,” Koffler wrote in a research note. Bargaining From Strength Leerink analyst Jason Gerberry raised his price target to 198 from 137 while maintaining an outperform rating. He wrote that the patent launch was a year later than he’d been modeling, and came after last month’s favorable decision from the patent office declining to institute 18 claims Ranbaxy made against Jazz’s Xyrem patent, meaning that Ranbaxy would have to take Jazz to open court instead of banking on an inter partes review (IPR) ruling set for July. “Given favorable first-half developments in the IPR dispute … we believe Jazz is well positioned to entice the other challengers to accept similar settlement terms, eliminating an important stock overhang,” Gerberry wrote in his research note. The news lifted Jazz Pharma stock as much as 5.5% in early trading on the stock market today , though by midday shares were up just 1.5%, near 150, as Jazz reported a weak first quarter. Jazz’s earnings rose 14% over the year-earlier quarter to $2.26 a share, 5 cents short of analysts’ consensus, according to Thomson Reuters. Revenue climbed 9% to $336 million, missing consensus by almost $3 million. Jazz nonetheless added 20 cents to its 2016 EPS range, now $11.10 to $11.50, while affirmed revenue guidance of $1.49 billion to $1.55 billion. The earnings hike came entirely through share repurchases. Last year, the company made $9.52 a share on $1.325 billion in sales.