Merely a minute into his prepared remarks during Jazz Pharmaceuticals’ fourth-quarter earnings call, CEO Bruce Cozadd brought investors’ attention to the company’s appetite in dealmaking.
“We plan to further diversify our commercial and pipeline portfolios through strategic corporate development, which remains a key focus for Jazz,” Cozadd said on the call Tuesday.
“As part of our ongoing search, we’re evaluating neuroscience and oncology assets while also contemplating other rare and orphan diseases,” he continued. “In addition, durability of revenue, efficiency of commercial call points and alignment with our expanded R&D capabilities are part of our considerations.”
Cozadd’s call to attention to business development came alongside another important revelation for Jazz, as it's breathing easier concerning the long-term revenue stream of its key cannabinoid product Epidiolex.
The company recently settled with all 10 existing generic Epidiolex filers, pushing their copycat launch dates into “very late 2030s” or earlier under certain circumstances, Jazz’s president and chief operating officer, Renée Galá, told investors on the call.
Citing confidentiality provisions in the agreements, Cozadd declined to provide a more specific timeline. Still, Leerink Partners analysts pointed out in a Wednesday note that the late-2030s loss of exclusivity date is better than expected for Jazz and “should be good enough to keep investors very content.”
The settlements guarantee Jazz a strong revenue source for years to come and could embolden the company to pursue M&A. Epidiolex, currently the only FDA-approved CBD product to treat certain types of seizures, is expected to reach blockbuster status this year after its sales grew by 15% to $972 million in 2024.
Jazz got its hands on Epidiolex through dealmaking—the drug was the centerpiece of its $7.2 billion buyout of GW Pharmaceuticals in 2021. As one analyst noted on the call, Jazz has made no major M&A moves since that deal.
“I certainly would not take the lack of announcing a large deal as lack of activity or interest in doing things,” Jazz’s chief financial officer Philip Johnson said on the call. “We’re active and looking.”
For 2025, the company expects total revenues to reach a range between $4.15 billion and $4.4 billion, representing 5% year-over-year growth at the midpoint. Leerink analysts called the guidance “as expected.” Jazz has significantly lowered its debt since closing the GW deal, as well, Johnson pointed out.
A de-levered balance sheet and continued strong cash flow mean that Jazz has “significant financial resources […] to engage in M&A and licensing activities for the various sizes,” Johnson said.
“From an operational perspective, we feel ready to take on additional programs and more products,” Cozadd said.
Besides Epidiolex, the HER2 bispecific Ziihera also came to Jazz via a potential $1.76 billion deal with Zymeworks. Jazz believes the drug, which was recently approved by the FDA in previously treated HER2-positive biliary tract cancer, could reach more than $2 billion in peak sales across various tumor types.
In Tuesday’s earnings report, Jazz pushed back a potential phase 3 readout for Ziihera in first-line gastroesophageal adenocarcinoma (GEA) into the second half of 2025 from a previous target of this year's second quarter. The trial was accruing tumor progression events slower than expected, according to Jazz.
By Jazz’s estimate, the drug will only book modest sales until it can branch into the bigger GEA market or, more importantly, HER2-positive breast cancer.
Meanwhile, Cozadd and Jazz’s board are currently searching for his successor as the long-time CEO prepares to pass the baton by the end of 2025, at which time he will remain on as the company’s chairman.
The Jazz co-founder didn’t characterize what he’s looking for in a replacement.
“We’re going to take our time and get it right,” he said. “We’re not in a hurry.”