10. Jazz Pharmaceuticals
2018 median employee pay: $216,797
2018 number of employees: 1,360
CEO: Bruce Cozadd
2018 CEO pay: $11.44 million
CEO-to-employee pay ratio: 52.8:1
Jazz Pharmaceuticals has been expanding as more drugs reach the market, boosting its headcount to 1,360 as of February from 1,210 a year prior. And that number has likely grown even larger since, given all the activity there.
Jazz scored a new FDA nod—and anticipates a European go-ahead this year—for sleepiness drug Sunosi. It’s working to fold in Cavion, the small biotech it snapped up in August. And it’s preparing to submit an application for JZP-258, a follow-up to its blockbuster narcolepsy drug Xyrem.
As the only treatment approved in the U.S. for two symptoms of narcolepsy—sudden muscle weakness (cataplexy) and excessive daytime sleepiness (EDS)—Xyrem remains Jazz’s bread and butter, accounting for about 75% of the company’s total revenues of $1.04 billion in the first half of 2019. Xyrem’s $781.5 million haul for the period marked a 16% increase, partly fueled by last October’s FDA approval in pediatric patients ages 7 and older.
But Xyrem is set to face generic competition in 2023. And last year, Jazz’s stock first dipped in November on the lackluster launch of leukemia drug Vyxeos, then plunged again in December after the FDA pushed back its Sunosi decision date, and has not returned to the November level since.
Still, thanks in part to Xyrem’s continuous strong growth, CEO Bruce Cozadd’s compensation grew across every line item in 2018: base salary, cash incentive pay, stock and option awards and all other compensation. His 2018 total, $11.44 million, represents an 11% year-over-year jump.
The median total compensation for Jazz employees also climbed—by 8%, reaching $216,797 in 2018.
With employee pay, the company aims to make sure “all employees have the opportunity to earn equal pay for equal work,” it says on its website. Operating out of 13 offices in North America and Europe, it’s seeking to achieve pay equality in every country.
The company says it's operating in “a style all its own,” or “a unique fusion of expertise, innovation and collaboration.” Like many other drugmakers, Jazz says it always puts patients first, while at the same time it “strive[s] to create the best working experience in the pharmaceutical industry,” it says.
That patients-first motto has been challenged in the past; Jazz made headlines for its pricing after reports showed it had jacked up Xyrem's price by 841% from 2007 to 2014.
But Xyrem and its new sister Sunosi will soon face a challenger. Harmony Biosciences, which started up shop in October 2017, won FDA approval last month for Wakix, or pitolisant, to treat EDS in narcolepsy patients. The drug has been sold in Europe by France’s Bioprojet for several years now.
Neither Jazz nor analysts seem to consider the Harmony drug a serious threat. Wakix does have one advantage: It’s not regulated as a controlled substance and therefore isn’t subject to the attendant FDA safeguards or DEA regulation. But it’s only approved for EDS, not cataplexy—even though 75% to 80% of Wakix trial patients had a history of cataplexy, Wells Fargo analyst David Maris noted in a recent report to clients.
“Jazz has stated to us that it believes that some milder patients with EDS/narcolepsy may now have to cycle through Wakix before getting access to Xyrem, but this is not new since Xyrem is already heavily step-edited/regulated,” Maris said.
And even if the two drugs compete for some patients, there’s still enough room for both to grow. Only about half of narcolepsy patients, or 60,000 in the U.S., are diagnosed, and among those, just 14,700 are taking Xyrem in the second quarter, Cozadd said on an investor call in August.
As for Sunosi, Maris has estimated that the drug could reach $371 million by 2023, while RBC Capital analyst Randall Stanicky has projected $314 million by 2024.
The focus among Jazz’s investors, however, is on JZP-258, which contains 92% less sodium than Xyrem. Because excessive sodium itself is linked to increased risk of cardiovascular disease and other conditions, Jazz hopes JZP-258 could be a safer option—and a way to keep sales in the family after Xyrem generics hit.
Market watchers are waiting for details of some recently announced phase 3 data, though, and that trial delivered some mixed results. JZP-258 was significantly more effective than placebo in terms of cataplexy attacks and changes in a sleepiness scale, the company announced. But the problem is, two patients suffered serious adverse events that were considered treatment-related. The company expects to hold a pre-New Drug Application meeting with the FDA in the fourth quarter.
As Stanicky sees it, improved management disclosure around the strategy to replace Xyrem could help drive confidence back in the stock.
Jazz’s management team has undergone some makeover lately. Daniel Swisher, formerly CEO of Sunesis Pharmaceuticals, became president and chief operating officer in January 2018. Robert Iannone, M.D., who previously served a short stint as head of R&D and CMO of Immunomedics, was appointed EVP of R&D in June 2019. Neena Patil recently stepped in as Jazz’s general counsel, taking over from Suzanne Sawochka Hooper.