2025 outlook remains amid currency headwinds and non-recurring effect 

Our main product Zubsolv, for opioid dependence, is manufactured in the US and we operate in a disease space with significant political interest from the new administration. We do not anticipate any major impact on the Zubsolv business from potential tariffs or changes at the FDA. On the contrary, having domestic manufacturing in the US is a
strategic advantage. The largest segment for treatment of opioid use disorder in the US is Medicaid and the expected changes to Medicaid can have a negative impact on the overall volumes in the market. However, the Medicaid segment is heavily rebated and if some of the patients move to a commercial health insurance the impact on net sales (after rebates) will be limited. At the time of the report no changes have been announced on tariffs on pharmaceuticals, and we know this is a key focus area for the EU and Canada to maintain at a minimal level if any. Based on that we remain confident that this situation will have minimal impact on our development projects and Zubsolv EU.

The overall market growth for buprenorphine/naloxone products in the US continue with a single digit growth rate of 4 percent. This is a slight increase from recent quarters and is mainly explained by growth in both Medicaid and the Commercial segment. Zubsolv demand is stable from the first quarter, with Medicaid volumes growing and Commercial at the same level. In USD Zubsolv sales grew slightly from the first quarter, when excluding the nonrecurring rebate payment. From last year Zubsolv declined by 6 percent, with the vast majority explained by continued decline in our previously exclusive contracts.

The non-recurring rebate paid in the quarter is associated with non-paid rebates dating back to the time of the pandemic and was discovered during a claim review by the payer and a new external vendor managing our rebate payments in the US. The claim reviews are made regularly and are often minor adjustments, like in the second quarter last year (SEK 1 million positive adjustment), but the payment this time is exceptional and together with our new vendor we are taking measures to improve the quality in our rebate accruals and payment.

The profit contribution from Zubsolv is an important financial foundation for the company and we work continuously to optimize our expenses while minimizing impact on sales. I am pleased to report that the EBIT contribution margin continues to exceed last year reaching 31 percent and EBIT contribution from our US operations is similar to last year, including the non-recurring rebate payment. 

For OX124 we have received the critical components of the nasal device, and we are ready to initiate the necessary commercial testing of the final product. The timeline for resubmission to the FDA is now under our control and will be optimized to balance time to market, requirements for competitive shelf life, and regulatory risks.

During the quarter, the FDA approved Izipry as the brand name for OX124, marking an important step in preparations for the US launch following regulatory approval.

Following the positive results from the second clinical trial in healthy volunteers with OX640 conducted in Q4 last year the product is now entering the final development stage. Based on the results from the second clinical study, we have finalized the formulation and are initiating the upscaling of manufacturing to commercial scale. Experience with OX124 has demonstrated the critical role of commercial scale manufacturing and an established supply chain in generating the data required for regulatory approval. We can now fully leverage investments in the supply chain and learnings from OX124 to manufacture OX640 on a commercial scale for FDA and EMA documentation and for the pivotal clinical trials.

Our ambition is to find a partner for the final development and commercialization, and we are in discussions with both global and regional companies active in the field of allergies. The feedback we receive from these discussions is encouraging. They share our belief that OX640 is well positioned to become the gold standard for nasal treatment of anaphylaxis. Looking at how nasal treatment of opioid overdose transformed this market, replacing the old injectables, growing the market and saving thousands of patients’ lives, there are strong reasons to believe the market potential for anaphylaxis treatment is significant and a successful launch of OX640 can be transformative for Orexo. 

In the beginning of the quarter, we announced the first important scientific milestone from our collaboration with Abera Bioscience to develop nasal powder vaccines based on the AmorphOX technology. During the quarter Abera Bioscience reported strong stability data from the formulation with AmorphOX. This is encouraging, as powder-based vaccines have the potential to reach many more patients due to their stability at room temperature, eliminating the need for refrigeration. Together we Abera we are planning for the next steps in the development of a vaccine.

With our most recent project OX390, to develop a rescue medication to treat patients overdosing with a certain combination of illicit drugs, we have submitted a concrete proposal for discussion with US authorities. The outcome of these discussions will guide the further development of OX390. 

Our financial results for the quarter are heavily impacted by the dramatic exchange rate fluctuations and the nonrecurring rebate payment.  However, we remain confident we will reach our objective of a positive EBITDA in 2025. In local currency, our revenues for Zubsolv increased  compared to the previous quarter, but were affected by the non-recurring rebate payment related to previous year’s sales. Keeping a stable financial contribution from Zubsolv is important and I am pleased to see the operating expenses declined with 28 percent in our US subsidiary partly due to positive FX impact, explaining most of the reduction of 14 percent at a Group level. 

In our assessment of our businesses, it is clear the main future value driver is our AmorphOX platform and our R&D projects based on the technology. In the quarter, we outlined a strategy for AmorphOX to focus on larger molecules and pursue partnerships to broaden our presence in this area. Increasing the data from AmorphOX is critical for many large pharma companies to reduce risk in the formulation, and the data from the collaboration with Abera Bioscience is an important contribution to the credibility of AmorphOX in large molecules and vaccines. We have made some concrete progress in the quarter, both for Izipry and OX640.
Since OX640 is not within our commercial focus, our goal is to out-license it as the first AmorphOX-based product that could make an important contribution to Orexo’s financial results from 2025 and onward.