Jazz Pharmaceuticals' CBD Drug Hits $1B: Time to Buy the Stock?

Jazz Pharmaceuticals JAZZ has reached a milestone that most conventional cannabis players are yet to achieve — generating sustained, billion-dollar revenues from a cannabis product.

In its recent earnings announcement, Jazz reported that its cannabidiol (CBD) therapy Epidiolex surpassed $1 billion in annual product sales, officially entering blockbuster territory. The achievement marks a turning point for the company’s cannabis exposure, transforming Epidiolex from a niche orphan-drug asset into a durable growth engine.

With the achievement of this milestone, it is worth assessing Jazz’s strengths and weaknesses to determine whether the stock deserves a place in investors’ portfolios.

Epidiolex — Powering JAZZ’s Cannabis Story

Jazz’s involvement in the cannabis sector centers on Epidiolex, which is approved for treating seizures associated with Lennox-Gastaut syndrome, Dravet syndrome and tuberous sclerosis complex. The drug was originally developed by GW Pharmaceuticals, a pioneer in cannabis-derived therapies, which Jazz acquired in a landmark $7.2 billion deal in 2021.

In 2025, Epidiolex generated $1.1 billion in product sales — accounting for roughly a quarter of Jazz’s total revenues. This figure rose 9% year over year, driven by solid prescription demand and volume growth. The company expects this momentum to continue in the coming quarters.

JAZZ emphasized that Epidiolex’s growth profile is no longer dependent on pediatric-only uptake. The company sees its largest incremental opportunity in adult patients, particularly within long-term care settings, where underdiagnosis remains common. To capitalize on this opportunity, it is actively investing in targeted diagnostic tools, expanded field presence and patient-support programs to improve persistence.

Jazz has also substantially reduced the long-term risk profile of its cannabis-derived revenue stream. During its fourth-quarter conference call, the company disclosed that it has resolved nearly all outstanding ANDA litigations related to Epidiolex, extending patent protection into the late 2030s. This settlement meaningfully improves revenue visibility and limits the near-to-medium-term threat from generic competition.

Jazz’s Diversified Portfolio Supports Cannabis Wave

Although cannabis-derived therapies like Epidiolex attract much of the spotlight, Jazz Pharmaceuticals has built a diversified biopharma portfolio spanning neuroscience and oncology.

On the neuroscience front, Jazz continues to benefit from its oxybate franchise. Xywav, a low-sodium formulation, has become another key growth driver, offering treatment for narcolepsy patients with cataplexy or excessive daytime sleepiness. Unlike Xyrem, it does not carry the warnings and precautions associated with high sodium intake. This makes Xywav the only approved oxybate therapy without such precautions. Xywav is also the only FDA-approved treatment for the full spectrum of idiopathic hypersomnia.

Jazz maintains a growing presence in oncology, where it markets six drugs — Defitelio, Vyxeos, Zepzelca, Rylaze, Ziihera and Modeyso. Initially modest revenue contributors, these products have become increasingly meaningful drivers of growth over time. Today, oncology sales account for more than 26% of the company’s total revenues, driven by new product launches and rising market share across key indications.

JAZZ remains focused on further expanding the commercial potential of its oncology assets. Management is on track to submit a regulatory filing in the first half of 2026 seeking label expansion for Ziihera in first-line HER2+ gastroesophageal adenocarcinoma (GEA) — an area with significant commercial potential. Jazz is also evaluating Modeyso in the phase III ACTION study, which seeks to expand the drug’s use as a front-line treatment for H3 K27M-mutant diffuse glioma.

Pipeline Setbacks Pose a Concern

Despite its commercial progress, Jazz Pharmaceuticals has not been immune to pipeline setbacks. Last year, the company discontinued development of suvecaltamide for both essential tremor and Parkinson’s disease tremor after the drug failed to meet primary and key secondary endpoints in separate mid-stage studies.

In December 2023, Jazz announced similar disappointing results from a mid-stage study on its FAAH inhibitor, JPZ150, in adults with post-traumatic stress disorder (PTSD).

JAZZ’s Stock Price Performance & Estimates

Shares of Jazz have risen 11% year to date compared with the industry’s 8% growth, as shown in the chart below.

Earnings estimate trends, however, paint a mixed picture. Over the past 30 days, EPS estimates for 2026 have moved north, while those for 2027 have trended south.

Still, these metrics compare favorably with pure-play cannabis companies such as Aurora Cannabis ACB and Tilray Brands TLRY, both of which have experienced sharper share price volatility and continued downward pressure on earnings expectations amid industry-wide challenges.

How to Play the Stock?

While pipeline execution remains a watch point, Jazz Pharmaceuticals stands out for its relatively balanced risk profile compared with most cannabis-linked companies. JAZZ’s neuroscience and oncology products provide recurring cash flows, while Epidiolex provides a differentiated exposure to the medical cannabis market — an area projected to surpass the $130 billion mark by 2032.

With a Zacks Rank #3 (Hold), Jazz may appeal to investors seeking stability with selective cannabis-linked upside, rather than a high-risk, policy-driven bet. The investment case does not hinge on broad cannabis reform. Epidiolex is already approved, reimbursed and protected by patents extending into the late 2030s, helping the stock sidestep much of the regulatory uncertainty facing the broader cannabis sector.

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This article originally published on Zacks Investment Research (zacks.com).

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