Jazz Pharmaceuticals Inc. (JAZZ) is a specialty pharmaceutical company focused on developing and commercializing products to meet unmet medical needs in neurology and psychiatry. The marketed products and late-stage product candidate of the Company include Xyrem (sodium oxybate) oral solution, LUVOX CR (fluvoxamine maleate) extended-release capsules and JZP-6 (sodium oxybate). The other product candidates in clinical development are JZP-8 (intranasal clonazepam), being developed for the treatment of recurrent acute repetitive seizures in epilepsy patients who continue to have seizures while on stable anti-epileptic regimens; JZP-4 (sodium and calcium channel antagonist), being developed for the treatment of epilepsy and bipolar disorder; and JZP-7 (ropinirole gel), being developed for the treatment of restless legs syndrome.

JAZZ was founded in 2003 and is headquartered in Palo Alto, California.

Share Statistics Sept-17-09			2007	2008	%Chg	Q2 2008	Q2 2009	% Chg
Symbol	JAZZ	Revenue, Mn	53.5	64.6	20.7%	14.8	26.5	79%
Current price	$9.76	Gross Marg. Mn	83.3	78.4	6.26%	81.0	90.1	11.2%
52wk Range:	$.051-$11.88	Oper. Margin	N/A	-252.3%	N/A	N/A	21.55%	N/A
Avg Vol (10day):	3,916,192	Net margin, Mn	N/A	-273.04	N/A	N/A	5.82%	N/A
Market Cap.	302.3M
Dil. Shares Outst.	25.04M	EPS, $	-4.36	-6.18	41.7%	-2.17	0.07	N/A

Source: Reuters.com, SEC Filings.

Year-to-date, JAZZ’s stock price has risen almost five-fold, fueled in part by its pain reduction medicine for fibromyalgia patients having cleared some late-stage approval tests. JAZZ will now ask the Food and Drug Administration to approve the drug as a fibromyalgia treatment by the end of 2009.

JAZZ reported total revenues for the second quarter at $37.3 million, compared to $15.5 million for the quarter ended June 30, 2008. Revenues for the second quarter included a $10.0 million milestone payment from UCB Pharma Ltd. that was received in July 2008 and recognized as revenue when the last patient completed the second JZP-6 phase III clinical study in April 2009.

On August 11, 2009, JAZZ reported second-quarter 2009 losses of -0.27 per share. This result exceeded the -0.34 consensus loss of the one analyst covering the Company and under-performed last year’s second-quarter results by -87.56%. The next earnings announcement is expected on November 09, 2009.

Year-on-year JAZZ posted a 32.78% decline in net income from a loss of $138.83 million to a larger loss of $184.34 million despite a 3.39% increase in revenues from $65.30 million to $67.51 million. An increase in the selling, general and administrative costs as a percentage of sales from 120.27% to 165.00% was a component in the falling net income despite rising revenues.

In 2008, cash reserves at JAZZ fell by $78.04 million. Cash Flow from Financing totaled $64.13 million or 94.99% of revenues. In addition the Company used $30.23 million for operations, while cash used for investing totaled $11.94 million.

JAZZ appears to have a weak balance sheet, highlighted by its negative owner’s equity. Additionally, the Company’s debt load is greater than its assets while day-to-day operations are losing money.

	# of Estimates	Mean	High	Low	1 Year Ago
SALES (in millions)
Quarter Ending Sep-09	2	29.10	29.30	28.90	–
Quarter Ending Dec-09	2	31.25	31.60	30.90	–
Year Ending Dec-09	2	119.70	120.30	119.10	127.14
Year Ending Dec-10	2	141.30	146.00	136.60	193.14
Earnings (per share)
Quarter Ending Sep-09	2	-0.12	-0.11	-0.14	–
Quarter Ending Dec-09	2	-0.04	-0.03	-0.04	–
Year Ending Dec-09	2	-0.53	-0.52	-0.54	-4.07
Year Ending Dec-10	2	0.06	0.07	0.06	-2.47

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=JAZZ.O

Consensus Recommendation

Buy

Outperform

Hold

Underperform

Sell

No Opinion

This is the consensus forecast for JAZZ amongst four polled investment analysts:

Analyst Detail	Buy	Outperform	Hold	Underperform	Sell	No Opinion
Latest	0	0	3	0	1	0
4 weeks ago	0	0	3	0	1	0
2 months ago	0	0	3	1	1	0
3 months ago	1	1	2	0	1	0
Last year	1	1	4	0	0	0

Source: http://markets.ft.com/tearsheets/analysis.asp?s=JAZZ

With a low market capitalization, falling EPS, rising costs, and cash flow problems, analysts are quickly adjusting their recommendations to reflect the struggling nature of the Company’s financial picture.

Sales of LUVOX CR, JAZZ’s once-a-day drug to treat social anxiety disorder, rose to $4.1 million from $714,000 in the year-ago quarter; the Company expects net sales for LUVOX CR between $15 million and $18 million. For the full year, the Company expects total revenue between $112 million and $122 million.

JAZZ had second-quarter 2009 revenues of 27.28m. This bettered the $24.50 million estimate of the one analyst covering the Company. This was 23.57% above the prior year’s second-quarter results.

The Company posted a quarterly profit on strong product sales, and forecast full-year revenue above market estimates. For the second quarter, the Company posted a profit of $2.2 million, or 7 cents a share, compared with a net loss of $51.9 million, or $2.17 a share, a year earlier.

Source: Stockcharts.com

Moving Average Price Comparison

JAZZ is trading above its 50-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this small cap stock.

MACD

The MACD for JAZZ currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

Company Name	Ticker	Price per	Mrkt. Cap.	P/E		P/S
Sept-17-2009	symbol	Share, $	$	2009	2010	2009	2010
Amgen Inc.	AMGN	59.69	60.00B	13.80	N/A	N/A	N/A
Biogen Idec Inc.	BIIB	51.55	14.65B	18.52	N/A	N/A	N/A
GlaxoSmithKline plc	GSK	38.93	99.08B	13.21	N/A	2.27	N/A
Cephalon	CEPH	58.44	4.38B	15.97	N/A	2.08	N/A
Median				15.37	N/A	2.17	N/A
JAZZ Pharmaceuticals Inc.	JAZZ	9.76	302.34M	N/A	N/A	2.93	N/A

Source: Thomson Financial, Yahoo! Finance, Analyst estimates.

Net Share Purchase Activity

Insider Purchases – Last 12 Months Shares Trans Purchases 150,000 N/A Sales 3500 N/A Net Shares Purchased (Sold) 146500 N/A Total Insider Shares Held N/A N/A % Net Shares Purchased (Sold) N/A N/A

Net Institutional Purchases – Prior Qtr to Latest Qtr Shares Net Shares Purchased (Sold) 25,174,133 % Change in Institutional Shares Held N/A

Data provided by Thomson Financial

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