Q2 2022 – A leader in providing new innovative treatment solutions for patients suffering from opioid dependence

I am pleased to report ZUBSOLV® demand fully stabilized versus Q1, contributing to an improved development for our main business, US Pharma. Comparing to last year US Pharma net revenues increased by 11 percent driven by a strong USD and a favorable payer mix, offsetting a negative development in ZUBSOLV® demand. With a significant exposure to the US dollar also in our expenses, I am particularly pleased to see a continued improved EBITDA compared to last year, which supports an increase in our cash position of 30 million. The financial development should be seen in the light of our continued investment in future growth drivers, in particular the finalizing of OX124, our opioid overdose rescue medication, for registration in the US later this year. Additionally, we are launching and in parallel running a large clinical trial for MODIA®, our digital therapy for opioid use disorder (OUD), also in the US. These investments are all important elements in a comprehensive solution to improve access to treatment and outcome for patients suffering from OUD.

Improving treatment of opioid use disorder

Orexo is a leading provider of treatment for OUD patients and our core mission during the last ten years has been to strive to improve the treatment outcome and survival of patients suffering from OUD. ZUBSOLV® has been an important contribution to the drug treatment choice for patients, but many patients in the US have limited access to psychological support and therapy. With the development of the digital therapy MODIA®, Orexo is now able to offer two unique treatment options to support OUD patients which are both central elements of medication assisted treatment (MAT). I am pleased to see how MODIA® is positively impacting our access to waivered healthcare providers as they are open to dialogue about new OUD treatment options, and we have more than 50 percent improved access to these healthcare providers when including both MODIA® and ZUBSOLV® in the dialogue compared to solely focusing on medication. Together with a good start in NY Medicaid, where ZUBSOLV® gained reimbursement as of late March, growing 22 percent versus Q1, I expect this to continue to have a growing positive impact on our sales in H2 and the coming years.

Our ambition is to have a dialogue with larger healthcare providers and payers on how we can improve patient access to MAT through a concept of treatment around medication and digital therapy. We aim to utilize our extensive customer network to establish more efficient treatment programs among waivered physicians and providers of OUD counselling to enable them to potentially reach many more patients than possible using traditional OUD methods. We are also talking to states and municipalities who are seeking a solution to expand treatment of OUD using MAT. Orexo’s proprietary OUD product offerings have a unique opportunity to collaborate with multiple entities, e.g., health care professionals, states, municipalities, to offer new and innovative treatment options for their patient populations. These processes are slow, due to their disruptive nature, but Orexo is well placed to play a leading role in developing a new approach to treatment in the US. The most important element in this new business concept is MODIA® and to create an awareness and comfort among physicians and patients about the clinical effect of digital therapeutics on OUD patients.

I am pleased to report about 500 patients have received MODIA® during the quarter as part of our modiaONE test program. The MODIA® randomized clinical trial, which is designed to show a reduction of illicit drug use in OUD patients, is making good progress, but, like many clinical trials during this time, patient enrollment has been negatively impacted by Covid-19 and we now expect the last patient to be recruited in the fourth quarter.

The opioid crisis in the US is worsening due to record high overdose deaths fueled primarily by the prevalence of illicit fentanyl. Our pharmaceutical candidate OX124 is designed to reverse the effect of the most powerful synthetic opioids, such as fentanyl, and will provide us the opportunity to participate in reducing the rising overdose death toll. OX124 will be another important product in the portfolio in our ambitions of providing a comprehensive range of treatment options for OUD. I am pleased to report we are continuing to make good progress towards filing with the FDA in the fourth quarter.

Deprexis® reimbursed by US Veterans Affairs

I am delighted to highlight the great news we shared yesterday about deprexis® being granted reimbursement by the US Veterans Affairs. It is a true milestone as it is the first payer providing nationwide access to one of our digital therapies providing us with a huge potential to reach out to million veterans and their family members suffering from depression. We have been granted a 10-year contract and we expect the first patients to be treated in late 2022.

I am also pleased to report the first patients have been identified to receive vorvida® or deprexis® through Trinity Health in North Dakota (ND). This follows the final implementation of the necessary administrative procedures and when the reimbursement pathway is confirmed, it will be a major step forward to expand the concept to other healthcare provider. This is a major milestone for Orexo since the reimbursement pathway and collaboration set up at Trinity Health ND is the concept we will expand to other healthcare providers. The process with Trinity Health has been a true innovation process where Orexo has developed proprietary solutions to solve the administrative and operational issues identified by Trinity Health during the process. The main objective is to ensure Orexo has an efficient process and system in place to manage the requirements of the health care provider (Trinity Health) to receive reimbursement through a collaborative care model. We are now monitoring the reimbursement claims of the first patients being processed and paid by the insurance companies. With the expected successful outcome Trinity Health is ready to expand these programs across their network in ND and in collaboration with Orexo make pro-active outreach to patients to make them aware of the new innovative treatment offering.

With the progress from Trinity Health, we will now fully focus our commercial resources on larger healthcare providers for these products. The return on investment from working directly to consumers and even employers has not been attractive and any activities towards these customers will be nearly solely through partners, such as Sober Grid, Walgreens and Justmiine. The total Digital Therapeutics expenses are expected to remain at current level in the second half of 2022, but with the majority associated with the MODIA® commercial launch and more than half of the total expenses being shared expenses with US Pharma due to the synergies between ZUBSOLV® and MODIA®.

R&D – OX124 the trigger of serendipity

Many great innovations are results of unexpected findings and our amorphOX® platform is in this category. The technology was designed to improve speed of absorption of naloxone and nalmefene in the development of the opioid overdose rescue medications OX124 and OX125. When reading the ordinary stability data, we got extraordinary results. These results led to broader testing of our technology along with other molecules where significant drug formulation issues existed.

One good example is epinephrine, which is a molecule known to be inherently instable. As the data coming out from the stability studies were excellent we initiated the OX640 project, which is outside our core focus on OUD and mental illness but where the product profile is truly differentiating and has the potential to revolutionize the treatment of allergic reactions, including anaphylaxis. During the quarter we have prepared the first clinical trial of OX640, and I am pleased to report the first test persons received the product in the first week of July. OX640 is in a disease space where Orexo is not commercially present, and the plan is to find a partner who can work with us during the development program and commercialization.

Summary and outlook

The second quarter we continued to solidify our financial position, with positive cash flow and reduced profit loss. 2022, remain an investment year and non-recurring expenses in 2022 fully explain the negative result. We reiterate our guidance for the year, despite we expect to see increased legal expenses in the second half of 2022 as the litigation process against Sun Pharmaceuticals is now scheduled in November, which is earlier than anticipated. However, the outcome of the trial is still expected late in Q1 or early Q2 in 2023.

We are looking forward to an exciting second half of 2022. A period when we expect ZUBSOLV® to grow versus H1, Trinity Health ND to implement vorvida® and deprexis® across their network, new partnerships arising from the combination of ZUBSOLV® and MODIA® and we look forward to the data from the OX640 study.

I wish all of you a good summer.


Uppsala, July 14, 2022

Nikolaj Sørensen

President and CEO