Jazz Pharmaceuticals' CEO Discusses Q2 2012 Results - Earnings Call Transcript

Jazz Pharmaceuticals, Inc. (JAZZ)

Q2 2012 Earnings Call

August 7, 2012 4:30 pm ET

Executives

Ami Knoefler – Executive Director, Investor Relations and Corporate Communications

Bruce C. Cozadd – Chairman and Chief Executive Officer

Kathryn E. Falberg – Executive Vice President and Chief Financial Officer

Russell J. Cox – Executive Vice President and Chief Commercial Officer

Jeffrey K. Tobias – Executive Vice President, Research and Development and Chief Medical Officer

Analysts

Douglas D. Tsao – Barclays Capital, Inc.

David Amsellem – Piper Jaffray

Chris Holterhoff – Oppenheimer & Co. Inc.

Michael Faerm – Credit Suisse Securities

William Tanner – Lazard Capital Markets

Michael W. Schmidt – Leerink Swann LLC

Presentation

Operator

Good afternoon, ladies and gentlemen, and welcome to the Jazz Pharmaceuticals Second Quarter 2012 Conference Call. Following an introduction from the company, we will open the call to questions.

I will now to turn the call over to Ms. Ami Knoefler, Head of Investor Relations and Corporate Communications at Jazz Pharmaceuticals. Ma’am you may proceed.

Ami Knoefler

Welcome to the Jazz Pharmaceuticals second quarter 2012 financial results conference call. We reported financial results in a press release issued earlier today. The release is available in the News & Events section on our company website. Among other things, the press release includes a reconciliation of GAAP net income to adjusted net income for Jazz Pharmaceuticals plc, along with the related per share amount.

With me for today's call are Bruce Cozadd, Chairman and CEO; Kate Falberg, CFO; Russ Cox, Chief Commercial Officer; and Jeff Tobias, Head of R&D and Chief Medical Officer. Also joining us is William Craumer, our new Director of Investor Relations. Following some prepared comments, we'll open the call for your questions.

Certain remarks we make on this call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to the future events, future financial results, growth potential, financial guidance, plans, expectations and intentions and pipeline programs.

These forward-looking statements involve numerous risks and uncertainties that could cause our actual results to differ significantly from those projected including risks and uncertainties associated with the business combination transaction and related integration effort as well as related to our business, including our ability to maintain and increase sales of Xyrem and other products, our need to obtain appropriate pricing and reimbursement for our products in an increasingly challenging environment and the difficulty and uncertainty of pharmaceutical product development and the uncertainty of clinical success and regulatory approval.

These and other risks related to our business are detailed in our SEC filings including under the heading Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, as updated by our current report on Form 8-K filed on June 4, 2012 and July 9, 2012 respectively. Our SEC filings and reports are also available on our website. We undertake no duty or obligation to update any forward-looking statements contained on this call as a result of new information, future events or changes in our expectations.

We also use non-GAAP financial measures of adjusted net income and adjusted per diluted share on this call. We believe that the non-GAAP the non-GAAP financial measures are helpful in understanding our past financial performance and potential future results. They are not meant to be considered in isolation or as a substitute for comparable GAAP measures. Our press release issued earlier today provides a full reconciliation of GAAP and non-GAAP financial measures and includes tables that break out the non-GAAP adjustments by line item to arrive at an adjusted income statement.

Please note that we expect to file shortly the Form 10-Q for the second quarter on behalf of Jazz Pharmaceuticals plc. Following some brief introductory remarks, we will open our call to questions.

Now I will hand the call over to Bruce.

Bruce C. Cozadd

Thank you, Ami. Good afternoon, everyone, and thanks for joining us. We are a little over halfway through the year, and I am pleased to report that we’ve made very real progress executing on our strategy and growing our business. Not only have we closed two significant transactions and expanded our operations and management capabilities, we’ve also broadened our portfolio and made important investments in key products, extended our geographical footprint into Europe, and structured our commercial organization for efficiency and scalability all while continuing to drive top and bottom line growth.

Our second quarter financial performance was extremely strong with record revenues of $130 million in the second quarter, more than double last year's second quarter revenues. GAAP net income of $27 million and adjusted net income of $66 million, a 72% increase over the second quarter of last year.

While this growth was partially driven by the expanded portfolio from our recent acquisitions, Xyrem was the major driver, posting 11% year-over-year second quarter volume growth. The average number of active patients during the quarter increased significantly to 9,850 from 8,700 from the prior year’s second quarter. We think this strong performance is the result of our ongoing programs to improve compliance and persistency and the focused efforts of our Xyrem-dedicated sales force, which has now been in place for a full quarter.

We think there is further room to improve on compliance and persistency measures and we’ve recently been obtain that data at a physician level, which will allow our reps to share with physicians how their patients are doing relative to the overall treated population. Looking ahead, we are now projecting the Xyrem volume growth for the year will be in the low double digits, and we are raising our guidance for Xyrem sales.

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