Art of improv: Jazz Pharma boss grows US drugmaker into an Irish innovator
In person: Bruce Cozadd, CEO Jazz Pharmaceuticals
When Bruce Cozadd oversaw the tax inversion deal that brought Jazz Pharmaceuticals to Ireland in 2012, many doubted whether a company focused exclusively on the US market would ever take firm root on Irish soil.
Fast-forward seven years as Cozadd surveys the busy scene in Jazz's three-storey HQ on Waterloo Road, Dublin, where work stations are being assembled for new hires. "We're running out of room here," he says.
Ireland looks likely to play an increasingly important role in the global ambitions of Mr Cozadd, who co-founded Jazz in 2003 and serves as both its chairman and CEO. He sat down with the Irish Independent ahead of the company's AGM today in Dublin.
The company already employs more than 200 people in Ireland, mostly at the Dublin headquarters, but also at a manufacturing and R&D facility in Athlone, and has more than a dozen Irish openings on its website. It is a growth story few foresaw when Jazz shifted its tax residency from the US following its merger with Irish pharma firm Azur in an all-share transaction that gave the Irish side 20pc of the combined operation.
"I remember the interviews I did in January of 2012 when we were closing that deal, and I think we had 20ish Dublin employees," he recalls with a smile.
"People said: 'Are you going to keep the jobs?' And I said: 'I think we're going to expand.' They said: 'How much?' And I said: 'We might double or triple the number of people here.' This would have taken us to 40 or 60 employees.
"The growth has been a bit more rapid than that. The rate of hiring in Ireland has been greater than in the rest of the company. Our growth rate in Ireland has been 15pc-plus for years now."
He says, if anything, the 2018 US decision to lower its corporate tax rate to 21pc and to seek a minimum 10pc tax on American companies' overseas income underscores the wisdom of shifting tax residency to Ireland, with its headline 12.5pc corporation tax rate. But he says the appeal of Ireland increasingly has less to do with tax and more to do with access to new markets, products, partners and scientific expertise.
"What we did with that deal was gain our first ex-US presence, to start to develop a global mindset rather than being only a US company. And we've leveraged that over time to become a truly global company," he says. "If you look at our sales today, we're still overweight US. But most of our newer products we're bringing out will launch around the globe, so that percentage will balance over time."
On the reception wall, Jazz has erected four clocks showing the company's key time zones. Many companies mount such displays to illustrate global scope, but few offer as eclectic a mix of locales as Jazz.
Under its US east coast clock are Jazz's former Philadelphia HQ and Ewing (which sounds like Texas but is in New Jersey). The west coast is represented by Palo Alto - home to Mr Cozadd's alma mater Stanford - and Vancouver, British Columbia. Continental Europe highlights offices in Barcelona, Lyon and Munich, and a factory in Villa Guardia, Italy. Mr Cozadd notes, in passing, they need to add Toronto and Copenhagen to the display. "We're down a couple of clocks," he quips.
Then there's the local clock labelled Dublin, Athlone - and Oxford.
The risk of a no-deal Brexit means some of Jazz's current 150 staff in England might need to find a secure new EU base. While Ireland is no lock to receive UK staff that currently fill EU-specific roles, Mr Cozadd says it is a logical prospect.
"We're keeping our options flexible on Brexit, since we don't know yet how the exact situation will unfold. We know we have Ireland as an option," he says.
Mr Cozadd learned the skill of flexibility from an early age. His US navy father served on nuclear subs, a mission that meant the family was uprooted every 18 months or so, seeing much of the 50 states in the process with stops in Honolulu, San Diego, Seattle and ports all along the east coast.
As a teen, Mr Cozadd developed a love for singing and the piano, taking those talents to Yale where - when he was not studying molecular biophysics, biochemistry and economics - he was performing in the university's famed a cappella troupe, the Whiffenpoofs. He sang bass and baritone the first three academic years but, as he recalls, "I switched to first tenor in my senior year because that's what they needed me to do".
He studied next at Stanford's Graduate School of Business and went straight to work on Wall Street as a mergers and acquisitions specialist focused on life sciences companies. That experience gave him insight into how to co-found a pharma business.
One of the first decisions, made in tandem with his partners, was the name. 'Jazz' epitomised the kind of corporate ensemble he wanted to create.
"I am a musician, and I love the metaphors involved in jazz music," Mr Cozadd says. "Jazz musicians usually are expert on one instrument, a virtuoso on the trumpet or piano. But jazz music is performed as a group. So that combination - a person of individual excellence who works well as part of a team - offers a good metaphor for what I want in my management team."
Just as important, he says, is the art of improvisation. "We would call it 'innovation' in business. And yet jazz musicians who've never played together before can hop up on stage and play in front of an audience. Now, how is that possible if they're all 'making it up'?" he asks.
"There's an underlying structure to the music that they all understand. So that ability to innovate on top of structure is another good metaphor for what we aim to do in Jazz. We innovate in a highly regulated industry."
From its infancy, the company has grown on the profits of its biggest-selling drug, sodium oxybate, known by its brand name Xyrem.
The drug - some of which is made in Athlone for export to the US and 21 EU countries - is a central nervous system depressant, principally used to help people who suffer from narcolepsy, an involuntary sleep disorder.
Xyrem still drives around three quarters of Jazz revenues today and is not expected to face generic competition until 2023.
Through a series of mergers and acquisitions since 2011, Jazz today also markets drugs used to treat relatively rare variants of leukaemia, and has several more prospects in the clinical pipeline.
The Jazz strategy has been to identify areas of unmet need in managing chronic and often lethal diseases, even if the potential customer base is remarkably small, building partnerships with like-minded R&D companies in the process.
"When we partner with another company, sometimes we agree to help them develop the drug and then we share the economics later. In some cases, we step in and buy the company," Mr Cozadd says.
"But the strategy really has two pieces: continue to grow through partnerships and acquisitions, while building an ever-larger R&D portfolio of our own."
He defends the typically high prices charged for medicines designed to help people suffering from rare conditions.
Even flagship product Xyrem has only 14,000 patients prescribed for the drug in North America, and its leukaemia-focused drugs have even smaller bases.
"We have some drugs that treat conditions where the worldwide market might be a couple of thousand patients," he says.
"We start by looking at the disease more than we look at how many patients the drug might benefit. The common denominator in all our R&D work is: Will this treatment change someone's life?"
He says insurance is critical to spread the expense across a customer base, while guarding individuals against "the unlikely event of a high-cost problem".
"For the rarer conditions, it typically is true that the per-patient expense is higher [than for mass-market drugs]. But on a per-population basis in a health plan, from the insurer's perspective, it's only a few patients that are costing them that," he says.
For every R&D winner, he says, are at least nine disappointing dead-ends.
"We take a lot of risk. We put a lot of capital to work. It's very time-consuming and the success rate is highly variable. You have to make bets on problems you think are worth solving. Then you hope your failures happen earlier," he says, noting that final stage-three trials represent "the most expensive part of development".
He adds: "It's particularly painful to fail there. It happens, But part of our business model is we embrace that risk.
"When we succeed, we can make a big difference in people's lives. But it's a portfolio approach, where you don't expect everything to succeed."
Jazz is in the early weeks of marketing its first drug with a potential customer base in the millions: Sunosi, which targets areas of the brain to promote wakefulness.
Sunosi in May received final approval from the US Food and Drug Administration (FDA), and Mr Cozadd anticipates similar approval from the European Medicines Agency "as early as the end of this year". The FDA has approved Sunosi not only as a potential partner drug to Xyrem for treating people with narcolepsy, but also for those who struggle with obstructive sleep apnea.
That condition - in which people wake frequently at night with a partly or wholly obstructed airway - has been diagnosed in 12 million Americans alone.
Around 40pc of them are estimated to experience potentially dangerous levels of daytime sleepiness.
"Obstructive sleep apnea is not just a disease of 'did I continually wake up during the night? Was I snoring? Was I unable to breathe normally?'. It's also a disease that can impact how you function at work, at school, with your family. We see increases in motor vehicle accidents and near-misses," he says.
Jazz in 2014 bought the rights for the drug that became Sunosi from Aerial BioPharma, following phase-two trials that showed promise. "We did a number of very large and expensive phase-three trials, but our confidence that we'd be successful there was very high."
It is too early to identify the potential customer uptake. Right now, Mr Cozadd says, the company is focused on working with doctors on identifying patients with excessive daytime sleepiness. American brand awareness is being driven by a tongue-in-cheek ad campaign featuring a sleep-deprived man failing to notice a flying pig and an alien spaceship outside his office window, alongside the slogan: "Amazing things happen during the day - Sunosi can help you stay awake for them."
Mr Cozadd is spending this weekend enjoying another perk of moving Jazz to Ireland: touring the countryside with his family "to show them some of the beautiful places I've been". He proudly displays his phone bearing a family portrait including his two stepchildren and three children, one of whom this week is exploring options of studying at Trinity.
"For plenty of reasons," he says, "Ireland is one of the best decisions we've made."