Jazz Pharmaceuticals PLC - Operating Model and DCF Analysis: Assumptions

Jazz Pharmaceuticals plc - Operating Model and DCF Analysis
($ in Millions Except Per Share and Per Unit Data)
Assumptions:
Company Name: 18.0%

Ticker:
Units (for Conversions):
Last Fiscal Year:

Next Fiscal Year:
Most Recent Quarter End Date:
Current Valuation Date
Share Price:
Sensitivity Toggles for Key Revenue and Expense Assumptions:
Xyrem Generics - Entrance Year:

Xyrem Generics - Average Annual Price:
Xyrem - Market Penetration Sensitivity Toggle:
Xyrem - Annual Price Increase Sensitivity Toggle:
Defitelio - Market Penetration Sensitivity Toggle:

Defitelio - Annual Price Increase Sensitivity Toggle:
JZP-110 - Market Penetration Sensitivity Toggle:

JZP-110 - Risk Adjustment Factor (Phase 3 Clinical):
Projected
Revenue Assumptions: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Xyrem Assumptions:
Total Market Size (# Potential Patients) - Xyrem: 157,000 157,000 157,000 157,000 157,000 157,000 157,000 157,000 157,000 157,000
# Patients On Medication at End of Year:
Average # of Patients Throughout the Year: 10,048 12,560 15,072 17,584 20,096 22,608 25,120 27,632 30,144 30,144
Growth Rate in # of Patients: (5.4%) 25.0% 20.0% 16.7% 14.3% 12.5% 11.1% 10.0% 9.1% –
% of Market on Xyrem Medication: 6.4% 8.0% 9.6% 11.2% 12.8% 14.4% 16.0% 17.6% 19.2% 19.2%
Post-Toggle % of Market on Xyrem Medication: 6.4% 8.0% 9.6% 11.2% 12.8% 14.4% 16.0% 17.6% 19.2% 19.2%
Annual Price Per Patient - Xyrem: $ 57,581 $ 61,036 $ 64,698 $ 68,580 $ 72,009 $ 75,609 $ 78,633 $ 10,000 $ 10,000 $ 10,000
Growth Rate in Price per Patient: 7.5% 6.0% 6.0% 6.0% 5.0% 5.0% 4.0% 4.0% 3.0% 3.0%
Post-Toggle Growth Rate in Price per Patient: 7.5% 6.0% 6.0% 6.0% 5.0% 5.0% 4.0% 4.0% 3.0% 3.0%
Xyrem - Revenue: $ 578.6 $ 766.6 $ 975.1 $ 1,205.9 $ 1,447.1 $ 1,709.4 $ 1,975.3 $ 276.3 $ 301.4 $ 301.4
Annual Growth Rate: 1.7% 32.5% 27.2% 23.7% 20.0% 18.1% 15.6% (86.0%) 9.1% –
Erwinaze Assumptions:
Total Market Size (# Potential Patients) - Erwinaze: 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600
Average # of Patients on Erwinaze: 612 684 756 828 900 900 972 972 1,044 1,044
Growth Rate in # of Patients: 13.3% 11.8% 10.5% 9.5% 8.7% – 8.0% – 7.4% –
% of Market on Erwinaze Medication: 17.0% 19.0% 21.0% 23.0% 25.0% 25.0% 27.0% 27.0% 29.0% 29.0%
Annual Price Per Patient - Erwinaze: $ 332,368 $ 342,339 $ 352,609 $ 363,187 $ 374,083 $ 385,305 $ 396,864 $ 408,770 $ 421,033 $ 433,664
Erwinaze - Revenue: $ 203.4 $ 234.2 $ 266.6 $ 300.7 $ 336.7 $ 346.8 $ 385.8 $ 397.3 $ 439.6 $ 452.7
Annual Growth Rate: 16.7% 15.1% 13.8% 12.8% 12.0% 3.0% 11.2% 3.0% 10.6% 3.0%
Defitelio Assumptions:
# Patients Undergoing HSCT - Europe:

# Patients At High Risk for VOD - Europe:
# Patients - Incidence of VOD - Europe:
# Patients Eligible for Treatment - Europe: 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800
# Patients on Defitelio Medication - Worldwide: 1,350 1,620 1,890 2,160 2,430 2,430 2,430 2,430 2,430 2,430
# Patients on Defitelio Medication - Europe: 900 1,080 1,260 1,440 1,620 1,620 1,620 1,620 1,620 1,620
% of EU Market on Defitelio Medication: 50.0% 60.0% 70.0% 80.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0%
Post-Toggle % of EU Market on Defitelio Medication: 50.0% 60.0% 70.0% 80.0% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0%
Annual Price Per Patient - Defitelio: $ 42,832 $ 49,257 $ 56,646 $ 65,143 $ 74,914 $ 86,151 $ 99,074 $ 113,935 $ 131,025 $ 150,679
Defitelio - Revenue: $ 57.8 $ 79.8 $ 107.1 $ 140.7 $ 182.0 $ 209.3 $ 240.7 $ 276.9 $ 318.4 $ 366.1
Pipeline Drugs and Other Product Sales:
Xyrem - Average # of Patients Throughout the Year: 10,048 12,560 15,072 17,584 20,096 22,608 25,120 27,632 30,144 30,144
% of Xyrem Patients on JZP-110 Medication: – – – 2.5% 5.0% 7.5% 7.5% 10.0% 10.0% 12.5%
Post-Toggle % of Market on JZP-110 Medication: – – – 2.5% 5.0% 7.5% 7.5% 10.0% 10.0% 12.5%
Total JZP-110 Patients: – – – 440 1,005 1,696 1,884 2,763 3,014 3,768
Annual Price Per Patient - JZP-110: $ 57,581 $ 61,036 $ 64,698 $ 68,580 $ 72,009 $ 75,609 $ 78,633 $ 81,779 $ 84,232 $ 86,759
JZP-110 - Revenue: $ - $ - $ - $ 30.1 $ 72.4 $ 128.2 $ 148.1 $ 226.0 $ 253.9 $ 326.9

JZP-110 - Risk-Adjusted Revenue: - - - 18.1 43.4 76.9 88.9 135.6 152.3 196.1
Annual Risk-Adjusted Revenue Growth Rate: N/A N/A N/A N/A 140.0% 77.2% 15.6% 52.5% 12.4% 28.8%
JZP-386 - Risk-Adjusted Revenue: - - - - - - - - - -
Other Product Sales: 142.0 156.2 168.7 182.1 193.1 204.7 214.9 225.6 234.7 244.0
Projected
Expense Assumptions: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Projected
Balance Sheet and Cash Flow Statement Drivers: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Projected
Income Statement: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Projected
Balance Sheet: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Projected
Cash Flow Statement: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Discounted Cash Flow (DCF) Analysis - Assumptions and Output:
Discount Rate (WACC): Terminal Value - Perpetuity Growth Method:

Percentage of Year Remaining:
Stub Period Fraction: 12.0 x Baseline Terminal FCF Growth Rate: 0.3%
$ 8,950.5 Baseline Terminal Value: $ 9,042.5
0.2% Implied Terminal EBITDA Multiple: 12.1 x
4,234.0 NPV of Terminal Value: 4,446.7

5,528.0 Sum of NPV of Free Cash Flows: 5,528.0
$ 9,762.0 Implied Enterprise Value: $ 9,974.7
43.4% % of Implied EV from Terminal Value: 44.6%
$ 251.4 Plus: Cash & Cash-Equivalents: $ 251.4

- Plus: Equity Investments: -
- Plus: Other Non-Core Assets, Net: -
71.4 Plus: Net Operating Losses: 71.4
(1,198.6) Less: Total Debt: (1,198.6)
- Less: Preferred Stock: -
(17.6) Less: Noncontrolling Interests: (17.6)
- Less: Unfunded Pension Obligations: -
- Less: Capital Leases: -
- Less: Restructuring & Other Liab.: -
8,868.5 Implied Equity Value: 9,081.2
63.343 Diluted Shares Outstanding: 63.351
$ 140.01 Implied Share Price from DCF: $ 143.35

8.2% Premium / (Discount) to Current: 10.7%
Exercise
Dilution: Type: Number: Price: Dilution:
0.572 Options A: 0.604 $ 7.37 0.573
0.921 Options B: 0.948 4.00 0.922
1.294 Options C: 1.590 26.09 1.301
1.164 RSUs: 1.164 1.164
3.951 Total: 3.959
Projected
Unlevered Free Cash Flow Projections: FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
Revenue: $ 981.8 $ 1,236.7 $ 1,517.4 $ 1,847.6 $ 2,202.3 $ 2,547.1 $ 2,905.6 $ 1,311.7 $ 1,446.4 $ 1,560.5
Annual / Annualized Revenue Growth Rate: 12.5% 26.0% 22.7% 21.8% 19.2% 15.7% 14.1% (54.9%) 10.3% 7.9%
Operating Income (EBIT): 248.4 529.2 663.1 812.5 971.9 1,134.6 1,281.1 518.0 576.4 624.9
Annual / Annualized Operating Margin: 25.3% 42.8% 43.7% 44.0% 44.1% 44.5% 44.1% 39.5% 39.9% 40.0%
Less: Taxes, Excluding Effect of Interest: (44.7) (95.3) (119.4) (146.3) (174.9) (204.2) (230.6) (93.2) (103.8) (112.5)
Net Operating Profit After Tax (NOPAT): 203.7 434.0 543.7 666.3 796.9 930.4 1,050.5 424.8 472.7 512.4
Adjustments for Non-Cash Charges:

Amortization of Intangible Assets: 129.5 126.2 121.8 121.7 118.2 100.7 100.7 100.7 100.7 100.7
Depreciation: 3.9 6.2 9.1 12.9 17.6 22.9 29.1 14.4 17.4 20.3
Acquired In-Process Research & Development: 127.0 - - - - - - - - -
Stock-Based Compensation: 52.4 66.1 81.1 98.7 117.6 136.1 155.2 70.1 77.3 83.4
Change in Fair Value of Contingent Consideration: - - - - - - - - - -
Deferred Income Taxes: - - - - - - - - - -
Goodwill Impairment: - - - - - - - - - -
Other Items and Adjustments: 4.1 4.1 4.1 4.1 4.1 4.1 4.1 4.1 4.1 4.1
Total Adjustments for Non-Cash Charges: 316.9 202.5 216.1 237.5 257.6 263.7 289.0 189.3 199.4 208.4
Changes in Operating Assets & Liabilities:

Accounts Receivable: (15.6) (37.7) (41.9) (49.7) (54.0) (53.2) (56.0) 236.2 (21.6) (18.8)
Inventories: (1.0) (7.7) (8.5) (10.0) (10.7) (10.4) (10.8) 48.1 (4.1) (3.4)
Prepaid Expenses & Other Current Assets: (53.4) 10.0 (24.0) (29.9) (32.3) (29.9) (35.6) 135.9 (12.7) (11.0)
Other Non-Current Assets: - - - - - - - - - -
Accounts Payable: 2.3 6.1 6.7 7.9 8.4 8.2 8.5 (37.9) 3.2 2.7
Accrued Liabilities: 58.4 (14.0) 33.4 41.6 45.0 41.5 49.5 (189.0) 17.7 15.2
Income Taxes Payable: - - - - - - - - - -
Deferred Revenue: 1.0 2.0 2.2 2.6 2.8 2.8 2.9 (12.8) 1.1 0.9
Other Current & Non-Current Liabilities: - - - - - - - - - -
Total Changes in Operating Assets & Liabilities: (8.2) (41.2) (32.1) (37.5) (40.8) (41.0) (41.5) 180.5 (16.5) (14.3)
Less: Capital Expenditures: (11.8) (16.1) (21.2) (27.7) (35.2) (43.3) (52.3) (24.9) (28.9) (32.8)
Annual Unlevered Free Cash Flow: 500.6 579.2 706.5 838.5 978.5 1,109.8 1,245.7 769.6 626.7 673.7
Unlevered Free Cash Flow for Remaining Quarters: 420.4 579.2 706.5 838.5 978.5 1,109.8 1,245.7 769.6 626.7 673.7
Net Present Value of Free Cash Flow: 410.0 529.9 598.1 656.9 709.3 744.4 773.2 442.0 333.0 331.3
Normal Discount Period: 0.647 1.647 2.647 3.647 4.647 5.647 6.647 7.647 8.647 9.647
Mid-Year Discount Period: 0.323 1.147 2.147 3.147 4.147 5.147 6.147 7.147 8.147 9.147
Annual Free Cash Flow Growth Rate: 47.1% 15.7% 22.0% 18.7% 16.7% 13.4% 12.2% (38.2%) (18.6%) 7.5%
Annual EBITDA: 508.8 661.6 794.0 947.2 1,107.7 1,258.2 1,410.8 633.1 694.4 745.9
Annual EBITDA Growth Rate: 19.3% 30.0% 20.0% 19.3% 16.9% 13.6% 12.1% (55.1%) 9.7% 7.4%
Terminal FCF Growth Rate:
(0.5%) - 0.5% 1.0% 1.5% 2.0%
Terminal EBITDA Multiple:

11.0 x 12.0 x 13.0 x 14.0 x 15.0 x 16.0 x
Xyrem Annual Price Increases - Differential to Base Case Estimates:

(5.0%) - 5.0% 10.0% 15.0% 20.0%

(50.0%) (40.0%) (30.0%) (20.0%) (10.0%) -
(5.0%) - 5.0% 10.0% 15.0% 20.0%

(50.0%) (40.0%) (30.0%) (20.0%) (10.0%) -
Defitelio Annual Price Increases - Differential to Base Case Estimates:

(5.0%) - 5.0% 10.0% 15.0% 20.0%
Defitelio Annual Price Increases - Differential to Base Case Estimates:

(50.0%) (40.0%) (30.0%) (20.0%) (10.0%) -
Jazz Pharmaceuticals plc - Q1 Financial Results
Q1 Results - Reported Income Statement and Cash Flow Statement Figures from Q1: FY14 - Q1
Revenue: $ 246.9
Annual Revenue Growth Rate: N/A
Operating Income (EBIT): (66.7)
Annual Operating Margin: N/A
Less: Taxes, Excluding Effect of Interest: (12.0)
Net Operating Profit After Tax (NOPAT): (78.7)
Adjustments for Non-Cash Charges:

Amortization of Intangible Assets: 31.2
Depreciation: 1.3
Acquired In-Process Research & Development: 127.0
Stock-Based Compensation: 13.8
Change in Fair Value of Contingent Consideration: -
Deferred Income Taxes: (4.4)
Goodwill Impairment: -
Other Items and Adjustments: 4.9
Total Adjustments for Non-Cash Charges: 173.9
Changes in Operating Assets & Liabilities:

Accounts Receivable: (16.0)
Inventories: (3.1)
Prepaid Expenses & Other Current Assets: 4.4
Other Non-Current Assets: (1.5)
Accounts Payable: 8.6
Accrued Liabilities: 0.9
Income Taxes Payable: 5.8
Deferred Revenue: (0.3)
Other Current & Non-Current Liabilities: (10.2)
Total Changes in Operating Assets & Liabilities: (11.5)
Less: Capital Expenditures: (3.5)
Q1 Unlevered Free Cash Flow: 80.2

WACC Analysis - Jazz Pharmaceuticals plc
Discount Rate Calculations - Assumptions

Risk-Free Rate: 2.62%
Equity Risk Premium: 7.00%
Pre-Tax Cost of Debt: 3.42%
Cost of Preferred Stock: –
Comparable Companies - Unlevered Beta Calculation

Levered Preferred Equity Unlevered
Name Beta Debt % Debt Stock % Preferred Value % Equity Tax Rate Beta
Alexion Pharmaceuticals, Inc. 0.64 $ 93.5 0.3% $ - – $ 31,142.6 99.7% 17.0% 0.64
Vertex Pharmaceuticals Inc. 0.35 473.4 2.9% - – 15,689.4 97.1% 20.0% 0.34
BioMarin Pharmaceutical Inc. 0.92 828.4 8.3% - – 9,102.5 91.7% 27.0% 0.86
Salix Pharmaceuticals, Ltd. 1.18 1,944.4 20.0% - – 7,774.0 80.0% 35.0% 1.01
Cubist Pharmaceuticals, Inc. 0.65 945.2 13.9% - – 5,865.8 86.1% 27.0% 0.58
United Therapeutics Corporation 1.44 70.3 1.2% - – 5,861.1 98.8% 35.0% 1.43
The Medicines Company 0.79 263.0 13.4% - – 1,699.3 86.6% 36.0% 0.72
Median: 0.79 $ 473.4 8.3% $ - – $ 7,774.0 91.7% 27.0% 0.72
Jazz Pharmaceuticals plc 1.05
Jazz Pharmaceuticals plc - Levered Beta & WACC Calculation

Unlevered Preferred Equity Levered
Beta Debt % Debt Stock % Preferred Value % Equity Tax Rate Beta
Current Capital Structure: 0.72 $ 1,198.6 12.8% $ - – $ 8,196.0 87.2% 18.0% 0.81
"Optimal" Capital Structure: 0.72 783.6 8.3% - – 8,611.0 91.7% 18.0% 0.77
Cost of Equity Based on Comparables, Current Capital Structure: 8.26%

Cost of Equity Based on Comparables, "Optimal" Capital Structure: 8.03%
Cost of Equity Based on Historical Beta: 9.97%
WACC = Cost of Equity * % Equity + Cost of Debt * % Debt * (1 - Tax Rate) + Cost of Preferred Stock * % Preferred Stock
WACC, Current Capital Structure: 7.56%

WACC, Current Capital Structure and Historical Cost of Equity: 9.06%
WACC, "Optimal" Capital Structure: 7.59%
Average WACC Produced by All Methods: 8.07%

Comparable Companies - Specialty Pharmaceutical Companies That Sell Primarily Branded Drugs, with LTM Revenue Between $500 Million and $2 Billion
Operating Statistics Capitalization Projected Projected

Equity Enterprise Revenue EBITDA Reported Net Income Revenue EBITDA EBITDA Margin
Company Name Value Value LTM 12/31/2014 12/31/2015 LTM 12/31/2014 12/31/2015 LTM 12/31/2014 12/31/2015 Growth Growth LTM 12/31/2014 12/31/2015
Alexion Pharmaceuticals, Inc. $ 31,143 $ 29,697 $ 1,779 $ 2,171 $ 2,569 $ 697 $ 1,074 $ 1,306 $ 330 $ 472 $ 1,123 18.3% 21.6% 39.2% 49.5% 50.8%
Vertex Pharmaceuticals Inc. 15,689 14,079 1,002 574 1,211 (331) (478) 164 (369) (538) 119 111.0% (134.3%) (33.0%) (83.3%) 13.5%
BioMarin Pharmaceutical Inc. 9,103 8,769 572 655 905 (96) (80) 65 (175) (142) 47 38.2% (181.3%) (16.7%) (12.2%) 7.2%
Salix Pharmaceuticals, Ltd. 7,774 9,324 1,116 1,649 1,995 281 680 957 77 361 444 21.0% 40.6% 25.2% 41.3% 48.0%
Cubist Pharmaceuticals, Inc. 5,866 6,038 1,086 1,206 1,483 233 259 295 (0) 26 48 22.9% 13.7% 21.5% 21.5% 19.9%
United Therapeutics Corporation 5,861 4,781 1,161 1,255 1,387 463 629 690 250 400 441 10.5% 9.7% 39.9% 50.1% 49.7%
The Medicines Company 1,699 1,533 709 775 823 96 70 166 22 (0) 106 6.1% 136.6% 13.6% 9.1% 20.2%
Maximum $ 31,143 $ 29,697 $ 1,779 $ 2,171 $ 2,569 $ 697 $ 1,074 $ 1,306 $ 330 $ 472 $ 1,123 111.0% 136.6% 39.9% 50.1% 50.8%
75th Percentile 12,396 11,702 1,138 1,452 1,739 372 655 823 163 380 443 30.6% 31.1% 32.2% 45.4% 48.9%
Median $ 7,774 $ 8,769 $ 1,086 $ 1,206 $ 1,387 $ 233 $ 259 $ 295 $ 22 $ 26 $ 119 21.0% 13.7% 21.5% 21.5% 20.2%
25th Percentile 5,863 5,410 856 715 1,058 0 (5) 165 (88) (71) 77 14.4% (62.3%) (1.6%) (1.6%) 16.7%
Minimum 1,699 1,533 572 574 823 (331) (478) 65 (369) (538) 47 6.1% (181.3%) (33.0%) (83.3%) 7.2%
Jazz Pharmaceuticals plc $ 8,196 $ 9,089 $ 923 $ 982 $ 1,237 $ 423 $ 509 $ 662 $ 80 $ 164 $ 403 26.0% 30.0% 45.8% 51.8% 53.5%
Valuation Statistics Capitalization Enterprise Value / Enterprise Value /

Equity Enterprise Revenue EBITDA P / E Multiple
Company Name Value Value LTM 12/31/2014 12/31/2015 LTM 12/31/2014 12/31/2015 LTM 12/31/2014 12/31/2015
Alexion Pharmaceuticals, Inc. $ 31,143 $ 29,697 16.7 x 13.7 x 11.6 x 42.6 x 27.7 x 22.7 x 94.4 x 66.0 x 27.7 x
Vertex Pharmaceuticals Inc. 15,689 14,079 14.1 x 24.5 x 11.6 x NM NM 85.8 x NM NM NM
BioMarin Pharmaceutical Inc. 9,103 8,769 15.3 x 13.4 x 9.7 x NM NM NM NM NM NM
Salix Pharmaceuticals, Ltd. 7,774 9,324 8.4 x 5.7 x 4.7 x 33.2 x 13.7 x 9.7 x NM 21.5 x 17.5 x
Cubist Pharmaceuticals, Inc. 5,866 6,038 5.6 x 5.0 x 4.1 x 25.9 x 23.3 x 20.5 x NM NM NM
United Therapeutics Corporation 5,861 4,781 4.1 x 3.8 x 3.4 x 10.3 x 7.6 x 6.9 x 23.5 x 14.7 x 13.3 x
The Medicines Company 1,699 1,533 2.2 x 2.0 x 1.9 x 15.9 x 21.8 x 9.2 x 76.9 x NM 16.1 x
Maximum $ 31,143 $ 29,697 16.7 x 24.5 x 11.6 x 42.6 x 27.7 x 85.8 x 94.4 x 66.0 x 27.7 x
75th Percentile 12,396 11,702 14.7 x 13.5 x 10.6 x 33.2 x 23.3 x 22.2 x 85.6 x 43.8 x 20.1 x
Median $ 7,774 $ 8,769 8.4 x 5.7 x 4.7 x 25.9 x 21.8 x 15.1 x 76.9 x 21.5 x 16.8 x
25th Percentile 5,863 5,410 4.8 x 4.4 x 3.8 x 15.9 x 13.7 x 9.4 x 50.2 x 18.1 x 15.4 x
Minimum 1,699 1,533 2.2 x 2.0 x 1.9 x 10.3 x 7.6 x 6.9 x 23.5 x 14.7 x 13.3 x
Jazz Pharmaceuticals plc $ 8,196 $ 9,089 9.8 x 9.3 x 7.3 x 21.5 x 17.9 x 13.7 x NM 50.0 x 20.4 x
Precedent Transactions - North American Pharmaceutical Sellers with Between $200 Million and $2 Billion In LTM Revenue,
Announced Between January 1st, 2009 and May 9th, 2014
Jazz Pharmaceuticals plc - Comparable M&A Transactions Operating Metrics Valuation Multiples
Transaction Transaction EV / EV /
Equity Enterprise LTM LTM LTM LTM
Acquirer Name Target Name Date Value Value Revenue EBITDA Revenue EBITDA
Mallinckrodt plc Questcor Pharmaceuticals, Inc. 04/07/2014 $ 5,291 $ 4,802 $ 891 $ 517 5.4 x 9.3 x
Forest Laboratories Inc. Aptalis Holdings Inc. 01/08/2014 2,900 2,900 688 315 4.2 x 9.2 x
Shire Pharmaceutical Holdings Ireland Limited ViroPharma Inc. 11/11/2013 4,200 4,097 430 59 9.5 x 69.0 x
Salix Pharmaceuticals, Inc. Santarus, Inc. 11/07/2013 2,600 1,980 338 82 5.9 x 24.3 x
Endo Health Solutions Inc. Paladin Labs Inc. 11/05/2013 1,600 1,348 264 93 5.1 x 14.5 x
Akorn, Inc. Hi-Tech Pharmacal Co., Inc. 08/27/2013 640 536 231 48 2.3 x 11.3 x
Valeant Pharmaceuticals International, Inc. Medicis Pharmaceutical Corporation 09/03/2012 2,600 2,329 764 191 3.1 x 12.2 x
TPG Capital, L.P. Par Pharmaceutical Companies Inc. 07/16/2012 1,900 1,976 1,035 237 1.9 x 8.3 x
Novartis AG Fougera Pharmaceuticals Inc. 05/02/2012 1,525 1,525 429 173 3.6 x 8.8 x
Takeda Pharmaceuticals U.S.A., Inc. URL Pharma, Inc. 04/11/2012 800 800 600 76 1.3 x 10.5 x
Genomma Lab Internacional SAB de CV Prestige Brands Holdings, Inc. 02/21/2012 834 1,263 403 119 3.1 x 10.6 x
Nestlé Health Science S.A. Prometheus Laboratories Inc. 05/24/2011 745 659 519 139 1.3 x 4.7 x
Pfizer Inc. King Pharmaceuticals LLC 10/12/2010 3,600 3,225 1,565 349 2.1 x 9.2 x
Endo Pharmaceuticals Holdings Inc. Qualitest Pharmaceuticals 09/28/2010 1,200 1,176 309 58 3.8 x 20.2 x
Celgene Corporation Abraxis BioScience, Inc. 06/30/2010 2,923 2,789 397 (23) 7.0 x NM
Astellas US Holding, Inc. OSI Pharmaceuticals Inc. 05/16/2010 4,000 3,414 441 176 7.7 x 19.4 x
Dainippon Sumitomo Pharma America Holdings, Inc. Sepracor, Inc. 09/03/2009 2,600 2,347 1,334 306 1.8 x 7.7 x
GlaxoSmithKline plc Stiefel Laboratories, Inc. 04/20/2009 3,050 3,450 900 288 3.8 x 12.0 x
Maximum $ 4,802 $ 1,565 $ 517 9.5 x 69.0 x

75th Percentile 3,144 859 275 5.3 x 14.5 x
Median $ 2,154 $ 480 $ 156 3.7 x 10.6 x
25th Percentile 1,284 399 78 2.1 x 9.2 x
Minimum 536 231 (23) 1.3 x 4.7 x
Jazz Pharmaceuticals Valuation - Range of Implied Share Prices
Public Company Compara-
bles: LTM EV / Revenue:
12/31/2014E EV / Revenue:
12/31/2015E EV / Revenue:
LTM EV / EBITDA:
12/31/2014E EV / EBITDA:
12/31/2015E EV / EBITDA: Column N
LTM Reported P / E: Column O
25th to Median
12/31/2014E Reported P / E:
Median to 75th
12/31/2015E Reported P / E:
Precedent Transactions:
LTM EV / Revenue:
LTM EV / EBITDA:
Discounted Cash Flow Analysis:
7.0% - 9.0% Discount Rate, (1.0%) - 1.0% Terminal FCF Growth Rate:
$0.00 $50.00 $100.00 $150.00 $200.00 $250.00
Implied Share Price

Valuation Summary - Jazz Pharmaceuticals plc
Valuation Statistics - Jazz Pharmaceuticals plc Jazz Pharmaceuticals plc - Range of Valuation Multiples / Premiums Jazz Pharmaceuticals plc - Implied Per Share Value Range
75th 25th Applicable 25th 75th

Maximum Percentile Median Percentile Minimum Company Minimum Percentile Median Percentile Maximum
Methodology Name Multiple Multiple Multiple Multiple Multiple Figure Multiple Multiple Multiple Multiple Multiple
Public Company Comparables:

LTM EV / Revenue: 16.7 x 14.7 x 8.4 x 4.8 x 2.2 x $ 923 $ 17.86
12/31/2014E EV / Revenue: 24.5 x 13.5 x 5.7 x 4.4 x 2.0 x 982 17.00
12/31/2015E EV / Revenue: 11.6 x 10.6 x 4.7 x 3.8 x 1.9 x 1,237 22.85
LTM EV / EBITDA: 42.6 x 33.2 x 25.9 x 15.9 x 10.3 x 423 55.30
12/31/2014E EV / EBITDA: 27.7 x 23.3 x 21.8 x 13.7 x 7.6 x 509 47.47
12/31/2015E EV / EBITDA: 85.8 x 22.2 x 15.1 x 9.4 x 6.9 x 662 58.73
LTM Reported P / E: 94.4 x 85.6 x 76.9 x 50.2 x 23.5 x 80 30.34
12/31/2014E Reported P / E: 66.0 x 43.8 x 21.5 x 18.1 x 14.7 x 164 38.45
12/31/2015E Reported P / E: 27.7 x 20.1 x 16.8 x 15.4 x 13.3 x 403 84.81
Precedent Transactions:
LTM EV / Revenue: 9.5 x 5.3 x 3.7 x 2.1 x 1.3 x $ 923 $ 4.60
LTM EV / EBITDA: 69.0 x 14.5 x 10.6 x 9.2 x 4.7 x 423 18.07
Discounted Cash Flow Analysis:

7.0% - 9.0% Discount Rate, (1.0%) - 1.0% Terminal FCF Growth Rate: $ 120.02 $ 129.78 $ 141.75 $ 156.86 $ 176.67
VRTX ALXN
Vertex Pharmaceuticals Inc. Alexion Pharmaceuticals, Inc.
Calendarization Calendarization
Old Partial New Partial FY LTM Old Partial New Partial FY LTM
Revenue: $ 328.4 $ 118.5 $ 1,212.0 $ 1,002.1 $ 338.9 $ 566.6 $ 1,551.3 $ 1,779.0
Cost of Sales: 31.0 8.6 89.0 66.6 35.3 32.9 177.6 175.2
Gross Profit: 297.4 109.9 1,123.0 935.5 303.7 533.7 1,373.8 1,603.8
Operating Expenses: 735.7 326.3 2,026.4 1,617.0 186.7 324.2 845.8 983.3
Operating Income (EBIT): (438.3) (216.4) (903.4) (681.5) 117.0 209.5 528.0 620.5
Interest and Other Income / (Expense): (4.7) (15.3) (72.7) (83.3) (0.2) 2.4 (1.7) 0.9
Pre-Tax Income: (442.9) (231.7) (976.1) (764.8) 116.7 211.9 526.3 621.4
Taxes: (130.3) 0.8 (288.6) (157.5) 34.5 52.6 273.4 291.4
Other Items: 4.6 - 242.5 237.9 - - - -
Reported Net Income: (308.0) (232.5) (445.0) (369.5) 82.2 159.4 252.9 330.0
Amortization from the CFS: - - - - - 4.2 3.2 7.4
Acquired In-Process R&D from the CFS: - - - - - - - -
Depreciation from the CFS: 10.7 15.8 48.4 53.5 6.3 9.3 28.7 31.7
Non-Recurring Charges: 412.9 6.2 704.0 297.3 - 3.5 33.5 37.0
Effective Tax Rate: 20.0% 17.0%
EBITDA: $ (14.7) $ (194.4) $ (151.1) $ (330.8) $ 123.2 $ 226.4 $ 593.5 $ 696.6
Balance Sheet Data Balance Sheet Data

Less: Cash & Cash-Equivalents: $ (1,324.3) $ (1,557.5)
Less: Equity Investments: - -
Less: Other Non-Core Assets, Net: - -
Less: Net Operating Losses: (850.9) (5.4)
Plus: Total Debt: 473.4 93.5
Plus: Preferred Stock: - -
Plus: Noncontrolling Interests: - -
Plus: Unfunded Pension Obligations: - (14.8)
Plus: Capital Leases: 67.8 38.4
Plus: Restructuring & Other Liabilities: 23.9 -
Equity Research Projections Equity Research Projections
12/31/2014 12/31/2015 12/31/2016 12/31/2014 12/31/2015 12/31/2016
Bank: JPM UBS
Date: 2014-05-01 2014-05-05
Revenue: $ 574.0 $ 1,211.0 $ 2,569.0 $ 2,170.9 $ 2,568.9 $ 3,160.2
EBITDA: (478.0) 164.0 1,439.0 1,073.6 1,305.6 1,757.9
Reported Net Income: (538.0) 119.0 1,193.0 471.8 1,123.2 1,464.3
Diluted Shares Calculation Diluted Shares Calculation

Share Price as of the Valuation Date: $ 65.05 $ 152.87
Common Shares Outstanding: 236.19 197.80
Options and Warrants:
Total Strike Dilution Total Strike Dilution
0.407 $ 15.42 0.311 5.154 $ 30.26 4.134
0.696 $ 29.30 0.383 0.000
4.199 $ 35.84 1.886 0.000
0.816 $ 46.59 0.232 0.000
0.851 $ 54.41 0.139 0.000
0.018 $ 63.81 0.000 0.000
0.015 $ 77.66 0.000 0.000
0.316 $ 82.38 0.000 0.000
0.000 0.000
Convertible Bonds: $ Amount Par Value Conv. Price Dilution $ Amount Par Value Conv. Price Dilution
0.000 0.000
0.000 0.000
# RSUs Dilution # RSUs Dilution

Restricted Stock Units (RSUs): 2.046 2.046 1.789 1.789
Total Diluted Shares: 241.19 203.72

Valuation Metrics Valuation Metrics
Equity Value: $ 15,689.4 $ 31,142.6

Enterprise Value: $ 14,079.2 $ 29,696.8
Beta: 0.35 0.64
Valuation Multiples Valuation Multiples

LTM 12/31/2014 12/31/2015 12/31/2016 LTM 12/31/2014 12/31/2015 12/31/2016
EV / Revenue: 14.1 x 24.5 x 11.6 x 5.5 x 16.7 x 13.7 x 11.6 x 9.4 x
EV / EBITDA: NM NM 85.8 x 9.8 x 42.6 x 27.7 x 22.7 x 16.9 x
P / E: NM NM NM 13.2 x 94.4 x 66.0 x 27.7 x 21.3 x
Lookup Variables Lookup Variables
12/31/2014 Revenue: $ 574.0 $ 2,170.9

12/31/2014 EBITDA: (478.0) 1,073.6
12/31/2014 Reported Net Income: (538.0) 471.8
12/31/2015 Revenue: $ 1,211.0 $ 2,568.9

12/31/2015 EBITDA: 164.0 1,305.6
12/31/2015 Reported Net Income: 119.0 1,123.2
12/31/2016 Revenue: $ 2,569.0 $ 3,160.2

12/31/2016 EBITDA: 1,439.0 1,757.9
12/31/2016 Reported Net Income: 1,193.0 1,464.3
LTM EV / Revenue: 14.1 x 16.7 x

LTM EV / EBITDA: NM 42.6 x
LTM P / E: NM 94.4 x
12/31/2014 EV / Revenue: 24.5 x 13.7 x

12/31/2014 EV / EBITDA: NM 27.7 x
12/31/2014 P / E: NM 66.0 x
12/31/2015 EV / Revenue: 11.6 x 11.6 x

12/31/2015 EV / EBITDA: 85.8 x 22.7 x
12/31/2015 P / E: NM 27.7 x
SLXP UTHR
Salix Pharmaceuticals, Ltd. United Therapeutics Corporation
$ 202.6 $ 384.4 $ 933.8 $ 1,115.6 $ 245.1 $ 289.4 $ 1,117.0 $ 1,161.3
33.1 115.6 179.4 261.9 29.3 30.6 131.1 132.4
169.5 268.8 754.4 853.7 215.8 258.8 985.9 1,028.8
120.3 306.9 482.7 669.4 121.8 42.7 693.4 614.2
49.3 (38.1) 271.7 184.4 94.0 216.1 292.5 414.6
(15.3) (42.2) (59.6) (86.5) (3.2) (2.9) (13.6) (13.3)
34.0 (80.2) 212.1 97.9 90.8 213.2 278.9 401.3
11.5 (36.4) 69.0 21.1 28.5 75.7 104.3 151.5
- - - - - - - -
22.4 (43.9) 143.0 76.7 62.3 137.5 174.6 249.8
- - - - 4.1 4.9 17.1 17.9
- - - - - - - -
12.9 57.1 52.1 96.3 8.2 7.6 31.3 30.7
- - - - - - - -
35.0% 35.0%
$ 62.2 $ 19.0 $ 323.8 $ 280.6 $ 106.3 $ 228.6 $ 340.9 $ 463.1

$ (385.1) $ (1,150.0)
- -
- -
(9.1) -
1,944.4 70.3
- -
- -
- -
0.0 -
- -
12/31/2014 12/31/2015 12/31/2016 12/31/2014 12/31/2015 12/31/2016
JEFF JPM
2014-05-09 2014-04-29
$ 1,648.6 $ 1,994.7 $ 2,114.1 $ 1,255.0 $ 1,387.0 $ 1,496.0
680.3 956.7 1,025.4 629.0 690.0 747.0
360.9 444.0 477.5 400.0 441.0 480.0

$ 103.56 $ 106.50
63.41 48.18

0.023 $ 0.07 0.023 4.486 $ 57.56 2.061
0.204 $ 7.22 0.190 5.200 $ 67.56 1.901
0.258 $ 9.78 0.234 0.000
0.013 $ 0.59 0.013 0.000
10.484 $ 85.31 1.848 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
$ Amount Par Value Conv. Price Dilution $ Amount Par Value Conv. Price Dilution
$ 345.0 $ 1,000 $ 46.38 4.107 $ 250.0 $ 1,000 $ 47.69 2.895
$ 690.0 $ 1,000 $ 65.81 3.822 0.000

1.423 1.423 0.000
75.07 55.03
$ 7,774.0 $ 5,861.1
$ 9,324.2 $ 4,781.4
1.18 1.44

LTM 12/31/2014 12/31/2015 12/31/2016 LTM 12/31/2014 12/31/2015 12/31/2016
8.4 x 5.7 x 4.7 x 4.4 x 4.1 x 3.8 x 3.4 x 3.2 x
33.2 x 13.7 x 9.7 x 9.1 x 10.3 x 7.6 x 6.9 x 6.4 x
NM 21.5 x 17.5 x 16.3 x 23.5 x 14.7 x 13.3 x 12.2 x
$ 1,648.6 $ 1,255.0
680.3 629.0
360.9 400.0
$ 1,994.7 $ 1,387.0
956.7 690.0
444.0 441.0
$ 2,114.1 $ 1,496.0
1,025.4 747.0
477.5 480.0
8.4 x 4.1 x
33.2 x 10.3 x
NM 23.5 x
5.7 x 3.8 x
13.7 x 7.6 x
21.5 x 14.7 x
4.7 x 3.4 x
9.7 x 6.9 x
17.5 x 13.3 x
CBST BMRN
Cubist Pharmaceuticals, Inc. BioMarin Pharmaceutical Inc.
$ 229.9 $ 261.2 $ 1,054.4 $ 1,085.7 $ 127.9 $ 151.6 $ 548.5 $ 572.1
55.7 73.5 260.3 278.2 20.5 22.8 95.7 98.1
174.3 187.7 794.1 807.6 107.4 128.7 452.7 474.1
164.5 159.4 767.7 762.6 140.3 155.2 608.8 623.6
9.8 28.3 26.4 44.9 (32.9) (26.5) (156.0) (149.5)
(6.2) (14.1) (70.1) (77.9) (11.6) (8.2) (20.5) (17.1)
3.6 14.2 (43.6) (33.0) (44.5) (34.6) (176.5) (166.6)
(2.5) (10.0) (25.1) (32.6) (4.7) 3.5 (0.2) 8.1
- - - - - - - -
6.1 24.2 (18.6) (0.4) (39.8) (38.1) (176.4) (174.7)
7.2 11.9 34.1 38.8 1.0 7.5 9.1 15.6
- - - - - - - -
8.5 20.4 43.2 55.1 8.7 9.6 36.5 37.4
- 2.4 92.2 94.7 - - 0.9 0.9
27.0% 27.0%
$ 25.5 $ 63.0 $ 195.9 $ 233.4 $ (23.2) $ (9.4) $ (109.5) $ (95.6)

$ (566.0) $ (1,138.9)
- (0.5)
- -
(215.2) (22.9)
945.2 828.4
- -
- -
- -
- -
8.3 -
12/31/2014 12/31/2015 12/31/2016 12/31/2014 12/31/2015 12/31/2016
MS DB
2014-04-27 2014-05-09
$ 1,206.3 $ 1,483.0 $ 1,834.0 $ 655.0 $ 905.0 $ 1,225.0
259.3 294.8 714.6 (80.0) 65.0 380.0
26.0 48.0 296.0 (142.0) 47.0 277.0

$ 67.47 $ 58.54
75.31 145.93

4.380 $ 27.09 2.621 8.395 $ 26.33 4.619
9.705 $ 96.43 0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
$ 800.0 $ 1,000 $ 82.43 0.000 $ 750.0 $ 1,000 $ 94.15 0.000
$ 228.8 $ 1,000 $ 29.18 7.842 $ 62.0 $ 1,000 $ 20.36 3.047

1.171 1.171 1.900 1.900
86.94 155.49
$ 5,865.8 $ 9,102.5
$ 6,038.1 $ 8,768.6
0.65 0.92

LTM 12/31/2014 12/31/2015 12/31/2016 LTM 12/31/2014 12/31/2015 12/31/2016
5.6 x 5.0 x 4.1 x 3.3 x 15.3 x 13.4 x 9.7 x 7.2 x
25.9 x 23.3 x 20.5 x 8.4 x NM NM NM 23.1 x
NM NM NM 19.8 x NM NM NM 32.9 x
$ 1,206.3 $ 655.0
259.3 (80.0)
26.0 (142.0)
$ 1,483.0 $ 905.0
294.8 65.0
48.0 47.0
$ 1,834.0 $ 1,225.0
714.6 380.0
296.0 277.0
5.6 x 15.3 x
25.9 x NM
NM NM
5.0 x 13.4 x
23.3 x NM
NM NM
4.1 x 9.7 x
20.5 x NM
NM NM
MDCO JAZZ
The Medicines Company Jazz Pharmaceuticals plc
$ 155.8 $ 177.2 $ 687.9 $ 709.3 $ 196.2 $ 246.9 $ 872.4 $ 923.1
56.7 66.9 262.8 272.9 27.2 30.9 102.1 105.9
99.0 110.4 425.1 436.4 169.0 216.0 770.3 817.3
121.7 95.6 411.9 385.8 100.8 282.7 430.0 611.8
(22.6) 14.8 13.2 50.6 68.2 (66.7) 340.3 205.5
0.3 2.3 3.4 5.5 (7.1) (10.0) (32.4) (35.2)
(22.4) 17.1 16.6 56.1 61.1 (76.6) 308.0 170.3
(10.8) 22.1 1.4 34.2 17.6 17.0 91.6 91.0
0.0 0.0 0.3 0.2 - 1.0 - 1.0
(11.6) (5.0) 15.5 22.1 43.4 (92.7) 216.3 80.2
2.9 2.9 11.4 11.4 19.6 31.2 79.0 90.7
- - - - 4.0 127.0 - 123.0
5.7 7.9 32.2 34.4 0.6 1.3 3.0 3.8
- - - - - - - -
36.0% 18.0%
$ (14.1) $ 25.6 $ 56.8 $ 96.5 $ 92.3 $ 92.8 $ 422.4 $ 422.9

$ (379.9) $ (251.4)
- -
- -
(49.5) (71.4)
263.0 1,198.6
- -
(0.3) 17.6
- -
- -
- -
Equity Research Projections Projections
12/31/2014 12/31/2015 12/31/2016 12/31/2014 12/31/2015 12/31/2016
CS N/A
2014-04-24 N/A
$ 775.1 $ 822.5 $ 833.8 $ 981.8 $ 1,236.7 $ 1,517.4
70.2 166.1 226.0 508.8 661.6 794.0
(0.4) 105.6 139.0 163.8 402.7 512.5
Diluted Shares Calculation

$ 25.49 $ 129.45
65.02 59.39
# Shares Strike Price Dilution # Shares Strike Price Dilution

4.280 $ 19.26 1.046 0.604 $ 7.37 0.570
9.800 $ 34.20 0.000 0.948 $ 4.00 0.919
0.000 1.590 $ 26.09 1.270
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
0.000 0.000
$ 275.0 $ 1,000 $ 27.93 0.000 0.000
0.000 0.000

0.603 0.603 1.164 1.164
66.67 63.31
$ 1,699.3 $ 8,196.0
$ 1,532.7 $ 9,089.5
0.79 1.05

LTM 12/31/2014 12/31/2015 12/31/2016 LTM 12/31/2014 12/31/2015 12/31/2016
2.2 x 2.0 x 1.9 x 1.8 x 9.8 x 9.3 x 7.3 x 6.0 x
15.9 x 21.8 x 9.2 x 6.8 x 21.5 x 17.9 x 13.7 x 11.4 x
76.9 x NM 16.1 x 12.2 x NM 50.0 x 20.4 x 16.0 x
$ 775.1 $ 981.8
70.2 508.8
(0.4) 163.8
$ 822.5 $ 1,236.7
166.1 661.6
105.6 402.7
$ 833.8 $ 1,517.4
226.0 794.0
139.0 512.5
2.2 x 9.8 x
15.9 x 21.5 x
76.9 x NM
2.0 x 9.3 x
21.8 x 17.9 x
NM 50.0 x
1.9 x 7.3 x
9.2 x 13.7 x
16.1 x 20.4 x
Cell Inputs and Lookup Cells for Use in Public Comps:
Labels for Comparables:
Last Twelve Months LTM

Forward Year 1 2014.12.31
Lookup Cells for Public Company Comparables:
Company Name 2
Share Price 44
Equity Value 69
Enterprise Value 70
LTM Revenue 5
Forward Year 1 Revenue 81
Forward Year 2 Revenue 85
LTM EBITDA 21
Forward Year 1 EBITDA 82
Forward Year 2 EBITDA 86
LTM Net Income 14
Forward Year 1 Net Income 83
Forward Year 2 Net Income 87
LTM Revenue Multiple 93
Forward Year 1 Revenue Multiple 97
Forward Year 2 Revenue Multiple 101
LTM EBITDA Multiple 94
Forward Year 1 EBITDA Multiple 98
Forward Year 2 EBITDA Multiple 102
LTM P/E Multiple 95
Forward Year 1 P/E Multiple 99
Forward Year 2 P/E Multiple 103
Levered Beta 71
Debt 28
Preferred Stock 29
Tax Rate 19

Jazz Pharmaceuticals PLC - Operating Model and DCF Analysis: Assumptions

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Jazz Pharmaceuticals plc - Operating Model and DCF Analysis

($ in Millions Except Per Share and Per Unit Data)

Company Name: 18.0%

Last Fiscal Year:

Sensitivity Toggles for Key Revenue and Expense Assumptions:

Xyrem Generics - Entrance Year:

Defitelio - Market Penetration Sensitivity Toggle:

JZP-110 - Market Penetration Sensitivity Toggle:

# Patients Undergoing HSCT - Europe:

Pipeline Drugs and Other Product Sales:

JZP-110 - Revenue: $ - $ - $ - $ 30.1 $ 72.4 $ 128.2 $ 148.1 $ 226.0 $ 253.9 $ 326.9

JZP-386 - Risk-Adjusted Revenue: - - - - - - - - - -

Discount Rate (WACC): Terminal Value - Perpetuity Growth Method:

4,234.0 NPV of Terminal Value: 4,446.7

43.4% % of Implied EV from Terminal Value: 44.6%

$ 251.4 Plus: Cash & Cash-Equivalents: $ 251.4

63.343 Diluted Shares Outstanding: 63.351

$ 140.01 Implied Share Price from DCF: $ 143.35

Adjustments for Non-Cash Charges:

Changes in Operating Assets & Liabilities:

Terminal EBITDA Multiple:

Xyrem Annual Price Increases - Differential to Base Case Estimates:

Xyrem Annual Price Increases - Differential to Base Case Estimates:

Xyrem Annual Price Increases - Differential to Base Case Estimates:

Defitelio Annual Price Increases - Differential to Base Case Estimates:

Defitelio Annual Price Increases - Differential to Base Case Estimates:

Less: Taxes, Excluding Effect of Interest: (12.0)

Net Operating Profit After Tax (NOPAT): (78.7)

Adjustments for Non-Cash Charges:

Changes in Operating Assets & Liabilities:

Less: Capital Expenditures: (3.5)

Q1 Unlevered Free Cash Flow: 80.2

Discount Rate Calculations - Assumptions

Comparable Companies - Unlevered Beta Calculation

Median: 0.79 $ 473.4 8.3% $ - – $ 7,774.0 91.7% 27.0% 0.72

Jazz Pharmaceuticals plc 1.05

Jazz Pharmaceuticals plc - Levered Beta & WACC Calculation

Cost of Equity Based on Comparables, Current Capital Structure: 8.26%

WACC, Current Capital Structure: 7.56%

Average WACC Produced by All Methods: 8.07%

Operating Statistics Capitalization Projected Projected

Valuation Statistics Capitalization Enterprise Value / Enterprise Value /

Maximum $ 4,802 $ 1,565 $ 517 9.5 x 69.0 x

Implied Share Price

75th 25th Applicable 25th 75th

Public Company Comparables:

Discounted Cash Flow Analysis:

EBITDA: $ (14.7) $ (194.4) $ (151.1) $ (330.8) $ 123.2 $ 226.4 $ 593.5 $ 696.6

Balance Sheet Data Balance Sheet Data

Diluted Shares Calculation Diluted Shares Calculation

# RSUs Dilution # RSUs Dilution

Total Diluted Shares: 241.19 203.72

Equity Value: $ 15,689.4 $ 31,142.6

Valuation Multiples Valuation Multiples

Lookup Variables Lookup Variables

12/31/2014 Revenue: $ 574.0 $ 2,170.9

12/31/2015 Revenue: $ 1,211.0 $ 2,568.9