Thursday, October 5, 2017

A current AIM International Fund Holding: Jazz Pharmaceuticals (JAZZ) by Brian Holland. "Continue to Hold - All That Jazz"

Jazz Pharmaceuticals Plc (JAZZ, $151.18): “Jazz Pharmaceuticals Makes Noise in Drug Pipeline”
By: Brian Holland, AIM Student at Marquette University

Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.


Jazz Pharmaceuticals Plc (NASDAQ:JAZZ) is an international bio-pharmaceutical company that focuses on identifying, developing, and commercializing pharmaceutical products.  The company’s portfolio includes narcolepsy, oncology, pain, and psychiatry products.

• Jazz entered into a strategic deal that will grant the company exclusive rights to opt into development and commercialization of IMGN779 and IMGN632.

• Defitelio recently launched in the US and JZP-110 has an anticipated new drug application (NDA) filing by year end 2017.

• Jazz is developing two low-sodium versions of Xyrem.

Key points:

Jazz Pharmaceuticals entered into a strategic deal on August 29, 2017 with ImmunoGen, Inc.  Under the agreement, ImmunoGen, Inc. is responsible for the development of three Antibody-Drug Conjugate (ADC) programs prior to any potential opt-in by Jazz.  Following the opt-in, Jazz would be responsible for any further development as well as regulatory submissions and commercialization.  The deal helps add depth to the company’s oncology pipeline.  IMGN779 is currently in Phase 1 trials.  The drug treats Acute Myeloid Leukemia (AML), whose tumors express CD33.  In AML tumors, 85-90% express CD33 which IMGN779 is designed to fight.  IMGN632 is in preclinical development for hematological malignancies.  IMGN632 targets CD123 which appears in 75%-89% of AML tumors.  IMGN632 is planning to begin clinical testing before year end of 2017.

Defitelio is a drug designed to treat hepatic veno-occlusive disease (VOD).  The drug was approved by the Food and Drug Administration (FDA) on March 30, 2016.  The drug has seen penetration into the adult market and is projected to reach 30% volume, or 81 million in annual US revenue by the end of 2018.  JZP-110 is a drug that targets obstructive sleep apnea (OSA) and narcolepsy.  JZP-110 has reported positive top-line Phase 3 data in the OSA and narcolepsy market.  The drug has an anticipated NDA filing in 2017 and could be approved by 2019.

Jazz is also developing two low-sodium versions of the drug Xyrem.  Xyrem is a central nervous system depressant used to treat cataplexy and reduce daytime sleepiness in patients with narcolepsy.  JZP-507 is bioequivalent to Xyrem but has a 50% reduction in sodium.  Jazz plans to file a NDA for JZP-507 early in 2018.  The second drug is JZP-258 and is a 90% reduction in sodium from Xyrem.  Jazz has started a Phase 3 trial for JZP-258 and expects data in 2018.  These drugs would help expand the success that Xyrem has already had in the market, by introducing similar drugs with less sodium.

What has the stock done lately?

Since early December, the stock price has grown by almost 50%.  On December 5, the stock was priced at $102.30.  Since early August, Jazz’s stock price has seen an increase of nearly 6%.  The strategic agreement with ImmunoGen, Inc. may have a substantial part in this increase.

Past Year Performance: Jazz Pharmaceuticals Plc has seen their stock increase over 19% in the last year, from $126.31 to $151.18 to date.  The company has seen sales growth of 12% and net income growth of 20%.  The company EPS increased from $5.78 to $6.82 in the last year.
Source: FactSet
My Takeaway

Jazz Pharmaceuticals Plc has continued to improve their pipeline in order to make their stock more attractive.  Jazz has entered into a strategic deal with ImmunoGen, Inc. which is low in risk and high in reward.  In addition, Jazz has continued to pump drugs through their pipeline and have multiple NDA projections on the horizon.  These drugs will help treat difficult diseases and will have a large impact on the overall value of the company.  For these reasons, I recommend Jazz Pharmaceuticals Plc remain in the AIM International Equity Portfolio.