Q1 2022 – Making progress

The primary value drivers for Orexo are our ability tomaintain our solid financial position, based on strong profit contributions from ZUBSOLV®, establishing a new profitable business segment in digital therapeutics and develop new pharmaceuticals. I am pleased to report we have made good progress in all of these areas in the first quarter. To maintain a strong financial base is essential for Orexo and we have had a strong focus on cost efficiency in the quarter. This prudent financial management has led to a positive EBITDA of SEK 2.8 million for the quarter and good financial results compared to last year.

ZUBSOLV® - Continued strong profit contribution

The revenues in SEK for ZUBSOLV® increased during the quarter, and can be explained by the strengthening of the USD in combination with favourable price development. As expected we have seen a decline in demand of ZUBSOLV® in the first quarter in line with the seasonal effect seen nearly every year for ZUBSOLV® but also from a slight negative market growth. The highlight of the first quarter is the announcement of ZUBSOLV® receiving “preferred status” and reimbursement by all Medicaid payers in New York from March 22. ZUBSOLV® has performed well in the Commercial segment in NY, but has never been reimbursed by all Medicaid payers in NY. The success to gain preferred status is one of the greatest market access developments for ZUBSOLV® in years and is destined to be a strong growth contributor in the coming quarters and years for ZUBSOLV®.

The general market development for the treatment of Opioid Use Disorder continues to be slower than expected with a flat development versus the last quarter. The feedback we get from our field force is several clinics continue to be affected by Covid-19 and have slowed down operations and moved more activities to tele medicine. However, we continue to see improvements and expect this will improve access to treatment and support an accelerated market growth in line with our expectation of 5-8 percent on a full year basis.

Looking beyond the US borders, we have made our first shipment of ZUBSOLV® to our partner Accord Healthcare and registered the first revenue of SEK 4.6 million in the quarter. The majority of this revenue is associated with sale of ZUBSOLV®, but also includes a smaller milestone payment triggered by the first supply of the product. We expect continued shipment during the next quarters as they build their inventory in preparation for launch and when Accord Healthcare start to record sales we will also receive a double digit royalty.

Digital Therapeutics – Full focus on reimbursement

Finally I start to see some light in the tunnel by concrete progress establishing reimbursement pathways for digital health solutions. During the quarter we have seen new legislation approved and additional legislative actions taken on a federal level to establish viable reimbursement pathways for digital health solutions. During the last year we have seen a hesitancy among payers to make individual solutions for suppliers and national initiatives are needed for the market to reach its full potential.

For Orexo the partnership with Trinity Health in North Dakota is finally reaching implementation stage and in Q2 2022 we expect the first patients will get access to DEPREXIS® or VORVIDA®. We are certain we have managed to overcome the administrative hurdles to establish a reimbursement pathway together with Trinity Health. The next step is now to see actual reimbursement requests being processed and paid by the insurance companies as anticipated for the initial group of patients. With our presence and persistence in the digital health market in the US, I am also pleased to see health care providers now reaching out to Orexo to discuss our digital therapies. With our experience from Trinity Health and the interest from health care providers we are confident we can shorten the timeline from interest to implementation dramatically going forward.

As previously announced we have moved away from direct to consumer promotion and will rely on partnerships to reach the end customers. Our partnership with SoberGrid has resulted in our digital therapies are now accessible together with SoberGrids peer coaches on Walgreens Find Care® platform. Walgreens Find Care® serves as a digital marketplace that helps connect customers to a network of local and national health providers and healthcare services. This is a major accomplishment for the partnership and add both credibility to the products from the association and approval by a well known and leading player in US healthcare as well as access to the millions of users of Walgreens Find Care® services.

The reliance on partnerships has dramatically reduced our direct spending on digital therapies and the majority of expenses are now from shared expenses with our US Pharma business, e.g. field force and market access. The shared expenses are from the ZUBSOLV® sales team for the launch of our MODIA™ early access program for opioid dependence, modiaONE, among ZUBSOLV® prescribers. Meanwhile we allow engaged health care professionals to try the product on a limited number of patients for free and we also work with selected clinics to test various reimbursement pathways. Since the start in late February we have reached more than 250 users of MODIA™ and for our full DTx portfolio we now have over 1,800 users across early access commercial programs and clinical trials.

R&D – Expanding amorphOX™

Our leading pipeline products are all based on our new innovative drug delivery platform amorphOX™ and the progress in each of the projects are valuable for all current and future projects based on this technology. Our most advanced project, OX124, is continuing to progress towards filing with the FDA late this year and basically all current activities are relevant for future nasal pipeline projects using amorphOX™ as well, from formulation, packaging and usability of the device.

The most important feature of amorphOX™ is the ability to deliver the drug efficiently. This has been proven in clinical trials for both OX124 and OX125, which makes us optimistic regarding the results for OX640, where the first clinical trial is planned for the third quarter. With positive clinical results for OX640, this will be great progress to enable a shift from the current expensive autoinjectors of epinephrine to a nasal formulation. In addition to superior stability of the product we are confident we have a product with significant benefits for the millions of patients at risk of severe allergic reactions.

In addition to our existing internal pipeline projects we are testing several new drugs in amorphOX™ and we have initiated collaboration with other pharmaceutical companies to test amorphOX™ on their pipeline projects. With positive results of the ongoing tests, amorphOX™ has the potential to expand our pipeline considerably with both internal and externally funded pipeline projects.

Summary and outlook

The first quarter of 2022 has shown our ability to control our costs, without slowing down our development programs or establishing a new business segment in digital therapeutics. With the launch of MODIA™ we are now able to fully exploit the cost and sales synergies of our pharmaceutical business and the digital therapeutics. With the Covid-19 impact diminishing and improved market access for both ZUBSOLV® and our digital therapies, in combination with good progress in our R&D pipeline we are well positioned to reinvigorate the growth of the company and create value for our shareholders.

Uppsala, Sweden, April 28, 2022

Nikolaj Sørensen

President and CEO