Jazz: Key FDA Decision Imminent

| About: Jazz Pharmaceuticals, (JAZZ)

Summary

PDUFA date of March 31 means that an FDA decision is imminent.

Defibrotide should obtain FDA approval in an orphan indication for which there is a substantial unmet need.

Clinical trial results and previous European approval should make investors confident of Defibrotide's chances of obtaining FDA approval.

Jazz Pharmaceuticals (NASDAQ:JAZZ) has been a very good investment over the last few years for investors. The company was largely propelled by its main drug Xyrem. However, after recent acquisitions and an attempt to diversify its pipeline, Jazz now finds itself trying to build a broader product portfolio. It is due to these efforts that Jazz has a very promising drug that is coming up for PDUFA review. Defibrotide has orphan designation and priority review from the FDA, and has the potential to provide substantial sales for Jazz moving forward upon FDA approval.

Defibrotide

Defibrotide is being developed for use in patients with hepatic veno-occulisive disease with evidence of multi-organ dysfunction following stem cell treatment. The drug was initially developed by Gentrium, and was acquired by Jazz after it bought out the company. This condition has been associated with an 84% mortality rate and has no approved treatments. There is clearly a need for any drug that could help to improve patient outcomes in this area.

The importance of this drug is that it has the potential to provide much better clinical outcomes than currently available treatment options and has an orphan drug designation. Defibrotide has been shown to be effective throughout its clinical trials and it is likely that the company will be able to push through Defibrotide approval. Defibrotide is already approved for use in the EU, where it has been proven to be safe and effective.

Defibrotide FDA Approval Likely

I am bullish on the prospects of Defibrotide approval by the FDA on March 31. Not only are we talking about an orphan drug for an indication where patients have very few options (which suggests the need for other opportunities and medicines to come into play), but Defibrotide has been impressive throughout its clinical trials.

In its phase three clinical trial, Defibrotide showed a statistically significant increase in 100 day survival, it also showed a statistically significant increase in complete response rate. The trial was unusual in the fact that Jazz only had to show this increase in survival rates versus the historical 100 day survival rate, as giving a placebo to patients with this condition is very likely to cause death. Defibrotide performed very well versus the historical data, and this trial should help to give the FDA confidence in approving Defibrotide. Helping to even further increase the chances for FDA approval is that Defibrotide has been on the market in Europe for this indication since 2013. While the FDA is not bound by the decisions of its European counterparts, they generally rule the same way on drugs. The real question that the FDA is likely to look at is efficacy and since Defibrotide met its primary endpoint for the trial, I would expect for the FDA to hand down an approval. I do not believe that the FDA will be hung up on safety. The drug appeared to be safe and effective throughout its clinical trials, and I think that European approval only further reinforces the fact that the drug is safe in its targeted indication. Also, with patients that are having this poor of clinical outcomes without the drug, I would expect that the safety profile for Defibrotide would have to be very bad before the FDA becomes concerned with the potential safety impacts of Debibrotide. It is unlikely that the FDA will want to delay this drug coming onto the market.

Importance of Defibrotide

The FDA has recognized the importance of finding any treatment that can help patients with this rare condition, and granted Defibrotide breakthrough therapy status as well as orphan drug designation. Both of these statuses should help the company to be able to get Defibrotide to the market in a quicker manner. The benefit of breakthrough therapy is that it helps to lessen the timeline for FDA review, and with the FDA already having announced the importance of finding a drug for VOD with MOF, it is likely that Defibrotide will be approved in this indication as well. Orphan drug indication recognizes that there are not a large amount of patients that have this affliction and grants Jazz Pharmaceuticals years of marketing exclusivity after FDA approval. This should be important for the company moving forward. Orphan drug exclusivity means that the company will be able to charge a premium for Defibrotide in these situations, and it should help to substantially expand the amount of revenue that they are able to make off of Defibrotide.

Defibrotide is already generating revenue for Jazz in other countries. Defibrotide net sales for 2015 were $70.7 million. This suggests that there could be a large market in the United States for Defibrotide as well. Jazz has been launching an informational campaign to help draw attention to VOD with MOF. This informational campaign should help to make the sales process easier for Defibrotide after Jazz is able to gain FDA approval. Also, the relatively low amount of doctors who deal with this issue should help to make the drug a positive revenue driver almost immediately, as it is unlikely to take a large addition to Jazz's sales force in order to effectively market Defibrotide.

Conclusion

Investors should be watching Defibrotide approval very closely. There are very few patients with positive clinical outcomes from VOD with MOF, and I would expect that the FDA will be taking this into account when it ultimately makes its approval decision. I fully expect that the FDA will approve Defibrotide, and that investors could be in for a windfall from this orphan indication. There are many patients in desperate need of Defibrotide and I believe that the FDA will allow for Defibrotide to be approved.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.