Q4 2023 – Strong recovery in financial results and
FDA initiated the review of OX124

I am pleased to report a Q4 result delivering a positive EBITDA and strong Zubsolv® net sales both compared to Q4 2022 and Q3 2023. Zubsolv net sales year over year grew more than 6 percent in both SEK and USD, and nearly 8 percent quarter over quarter. I am also delighted to share that we are continuing to drive efficiencies across the business and have reduced operating expenses by 23 percent from last year. This recovery in financial performance is not driven by exchange rates, on the contrary, our EBITDA in H2 would have been nearly SEK 8 million higher if we had applied the exchange rates from end of 2022.

I am also pleased to announce that we, despite currency headwinds, reached our financial guidance for 2023, and in particular the positive EBITDA for H2. With relatively stable exchange rates and no other extraordinary events in 2024, we are confident we can reach a positive EBITDA for the FY 2024.

Continued growth in the Zubsolv market, but at a low rate

After the market decline in Q3 we are pleased to have seen positive market growth in Q4, although the growth rates remain in low single digits with the daily US buprenorphine/ naloxone market at 3 percent. The annual market growth for 2023 was 4 percent, in line with the lower part of the guidance of 4-7 percent.

We know that the opioid epidemic is causing severe suffering and that there are many thousands of vulnerable people in need of treatment. While it is reassuring to know that this is being recognised at state and federal levels, the initiatives that have been taken so far have not yet made any notable impact. Unfortunately, increased use of drug combinations and synthetic opioids are reportedly increasing patient relapses and shortening the average period of time people stay in treatment. That said, we expect the market to continue growing in 2024, but at a slightly lower rate of 2-5 percent.

Strong Q4 Zubsolv net sales and stable demand

Zubsolv net sales recovered from Q3 and increased in both local currency and SEK. This improvement is explained by a normalization of inventory levels at the wholesalers in combination with stable demand. During 2024, we expect a continued stable development in net sales. Improving market access and increased market growth in segments where Zubsolv is reimbursed is important for future growth. We are pleased to report that from January 2024, Zubsolv will be reimbursed by New Hampshire Medicaid, further strengthening market access in the Public Segment. The value of improved market access is proven by the strong double-digit growth in demand with the payers where Zubsolv improved reimbursement in 2022 and 2023.

US Pharma continues to be a strong cash generator with an EBIT reaching SEK 75 million in Q4, equal to a margin of 49 percent. However, with the integration of our digital mental health programs into our US Pharma operations we increase our focus on the full US Commercial operations profit contribution and this improved 65 percent from last year to SEK 46 million, mainly due to reduced expenses within digital mental health programs. Most operations in Orexo US are now managed by shared resources and starting Q1 2024, we will report all US commercial operations as one business unit in the P&L.

All digital mental health programs available within Veterans Affairs

The Digital Mental Health Program unit, earlier “Digital Therapeutics”, changed leadership during 2023 and is now run by a small team of tenured and experienced colleagues with a strong focus on the opportunities within Veterans Affairs (VA). In the quarter Orexo signed a distribution agreement with Lovell Government Services who specialize in selling medical supplies to the VA and who are led and operated by veterans. Thanks to this collaboration with Lovell, we have managed to get MODIA® and Vorvida® on the Federal Supply Schedule from January 1, 2024, together with Deprexis®. This means we can start promoting all three products to the hospitals and clinics within the VA during Q1. Additionally, and together with our partner GAIA AG we are updating MODIA to meet the new regulatory pathway. This work will be finalized in Q1 2024 and will enable a re-lauch to a select group of customers under the FDA enforcement discretion.

R&D with all focus on FDA approval for OX124

During the quarter the FDA announced the PDUFA date for our high-dose naloxone rescue medication for opioid overdose, OX124, which is set for July 15, 2024. We know from similar approval processes that the PDUFA date could be delayed due to the complexity that comes with a drugdevice combination. However, we expect approval during Q3 2024 if the review proceeds according to plan. We are encouraged by the fact that the FDA has started the review process. The first questions were received before Christmas and audits of the supply chain are scheduled to start during Q1.

US launch of OX124 approaching in a rapidly growing and dynamic market

OX124 comes with a high dose of naloxone. The high dose, combined with the drug’s rapid absorption and high bioavailability, means that OX124 has the potential to contribute curbing the increased mortality from overdoses caused by the widespread misuse of synthetic opioids. We’re approaching this launch in a rapidly growing market that’s currently undergoing major changes, with the low-dose alternatives moving from prescription medications to over the counter. This move is unprecedented among rescue medications in the US and we are closely monitoring the market dynamics in order to optimize the launch plan for OX124. Once approved, we intend to initiate commercial activities during the second half of 2024, with a focus on obtaining reimbursement ahead of a broader launch into retail pharmacies early in 2025. We are confident we can take advantage of these recent developments to reach many people acutely in need of high-dose naloxone rescue medications

Summary and outlook

Our expectations for Q4 were high and we needed to achieve improvements in sales and reduce expenses compared to Q3 to meet the guidance for the year. With increased Zubsolv® sales and lower costs, we are pleased to report we met our guidance for 2023 despite the significant strengthening of the SEK during December.

Zubsolv sales remain central to our financial performance and with continued stabilization of net sales and improving profit contribution from our US commercial operations we have a solid financial foundation to grow from. We are one year away from the maturity of the corporate bond and to address the upcoming maturity, Orexo has engaged ABG Sundal Collier and Carnegie Investment Bank as financial advisors to evaluate refinancing of the bond during 2024.

Finally, I would like to highlight and compliment my colleagues in Sweden and the US who are skilled, dedicated and highly motivated. Our employees are the key to our success, and I am delighted the annual survey results showed record-high outcomes.

My colleagues and I are looking forward to 2024. It promises to be an exciting and ambitious year for Orexo. Firstly, we are expecting to sign a partner agreement for the AmorphOX® platform. Secondly, we are anticipating FDA approval for our new pharmaceutical, OX124, and based on stable Zubsolv sales we are aiming to continue strengthening our financial performance reaching EBITDA profitability for the full year.

Uppsala, Sweden, February 8, 2024


Nikolaj Sørensen

President and CEO