Upbeat Earnings Boost Jazz Pharmaceuticals (JAZZ) 6% Higher

Jazz Pharmaceuticals Inc (NASDAQ:JAZZ) is trading sharply higher this afternoon, currently up $9.01, or 6.7 percent, at the time of writing. Before the market open this morning, the Irish biotech announced encouraging results from two Phase 3 clinical trials evaluating its obstructive sleep apnea (OSA) treatment – JZP-110.

“There is an important unmet need for OSA patients who experience excessive sleepiness, and the robust magnitude of effect, when taken together with the preliminary safety findings, suggest that JZP-110 could be an important treatment option for this population,” said Karen Smith, M.D., Ph.D. – the company’s Chief Medical Officer and global head of research and development.

The first study, called TONES 3, was a five-arm trial assessing four different dose levels of JZP-110. Just under 500 patients were enrolled in TONES 3, and the trial’s participants were observed by researchers for a 12-week period. According to Jazz, the product showed a highly statistically significant improvement in the primary endpoints – which were measured using the Maintenance of Wakefulness test (MWT) and the Epworth Sleepiness scale (ESS).

JZP-110 managed to considerably boost the patients’ power to stay awake and greatly slashed the participants’ subjective levels of sleepiness compared to the placebo cohort. Also, an important secondary endpoint was met: Patient Global Impression of Change (PGIc) scale showed a greatly statistically significant enhancement in JZP-110 against the placebo.

In the second study, referred to as the TONES 4 trial, 126 patients who had experienced “much” or “very much” improvement on the PGIc scale and achieved improvement on both the MWT and ESS were randomized to be treated with more of the drug or a placebo. In these patients, those who continued treatment with JZP-110 saw their results continue while the placebo group unfortunately lost efficacy.

The company is also doing a Phase 3 study assessing JZP-110 in patients diagnosed with excessive sleepiness associated with narcolepsy. Top-line data is slated to be released in the second quarter. The company told investors today that it is aiming for submission of its New Drug Application (NDA) late this year.

Following this morning’s announcement, BMO Capital Markets’ Gary Nachman restated an Outperform rating on the company’s stock – keeping his price target at $192. The upside, according to the analyst, is about 34 percent.

“There had been some concerns into these data (first OSA studies for JZP-110), and we think this outcome significantly de-risks the program,” Nachman told investors today.

Similarly, Cowen & Company’s Ken Cacciatore reiterated an Outperform rating and maintained a $190 price target today – saying that positive JZP-110 results should lead to a “complete re-rating” and that Jazz is close to a very intriguing inflection point. According to Cowen, JZP-110 has potential upwards of $750 million.

Earlier this month, the company announced its fourth-quarter financial results – posting earnings of $2.71 per share. The results were six cents higher than the consensus estimate, which was calling for earnings of $2.65 per share. Revenue, which was $396.62 million, was about $1.7 million below Wall Street’s projections.

After the earnings came out, Mizuho Securities analyst Irina Koffler restated a Buy rating on Jazz’s stock – keeping her price target at $152.00.

The author of this article holds no position in any of the stocks mentioned above.

Tim is a contributing analyst for EconomicCalendar.com and specializes in equities trading and public offerings. He is a graduate of UCLA and began his career doing capital markets research for a top investment banking software provider.