Jazz fibromyalgia data music to investors’ ears

Today, Jazz Pharmaceuticals' investors were treated to the sweet sound of the group’s shares rocketing upwards following a second set of positive phase III results for JPZ-06, a treatment for fibromyalgia. The announcement that the drug reduces the pain and other symptoms associated with fibromyalgia caused the shares to climb 75% to $4.63 in early morning trading.

The gains add to those achieved last week when the stock more than doubled following the release of the first phase III trial data at two conferences last week, causing investors to specuate that the chances of approval for the drug were now higher. Prior to this many had been counting on  the group’s other drug JPZ-08, an anti-epileptic, to drive any share price movements in the short-term (Event – Positive data could sound start of confidence in Jazz, April 23, 2009).

Fibromyalgia is a chronic condition characterised by sufferers feeling wide spread pain across their bodies. In addition to pain, symptoms include fatigue, disturbed sleep and morning stiffness. The roots of the disorder are thought to lie in the central nervous system and due to changes in how the brain perceives and responds to pain; it can be triggered by physical trauma, emotional stress or infection.

Despite being a recently recognized disorder the market is not unsubstantial with 5 million people in the US thought to suffer from it.

Partnering discussions

With this set of positive results under its belt, what Jazz will almost certainly look for now is a US partner for the drug, which is already licensed outside of the US to Belgium’s UCB. This second set of phase III data could now strengthen the group’s hand in negotiations.

The money generated from a licensing deal will be most welcome given the group’s rather perilous looking financial situation, which has it sitting on about $124m of debt. Concerns about its longer term future were raised after the group missed a payment on one of its loans earlier this year.

As such, the group will be hoping to land a relatively big upfront fee. Landing a big name company would also help, given that the three approved drugs for the disorder are Pfizer’s anti-epileptic drug Lyrica, Eli Lilly’s SNRI Cymbalta and Forest Laboratories' Savella. 

So anything other than another large pharma company or one with a very extensive sales force to target the numerous types of doctors who diagnose fibromyalgia patients, including primary care physicians, will not be able to help JPZ-06 compete effectively and take market share.

License or buy?

Any news on partnering should send the shares up again, as will the expected filing of JPZ-06 by the end of 2009. Back in October, the group said that it was “pretty far along” in partnering talks for JPZ-06 and two other of its drugs (EP Vantage Interview – Jazz making progress in licensing talks, October 14); if this is the case than last week’s results should help spur someone to sign on the dotted line.

Eventual approval of JZP-06 should be relatively straightforward, given that the active ingredient of the drug, sodium oxybate, is the same as that used in Xyrem, Jazz’s marketed product for excessive daytime sleepiness and cataplexy.

As to how much Jazz will get for licensing JPZ-06 is debatable. According to EvaluatePharma’s NPV Analyzer the drug, which is the most valuable one in the group’s entire portfolio, is currently worth $377m, a figure that dwarfs Jazz’s recently inflated market cap of $126m. However this disconnect in value could mean that rather than buying the drug a company might be tempted to simply take Jazz out.

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