Orexo AB (publ) – Interim report, January - June 2009
Key events during the period • Net revenues amounted to MSEK 144.6 (80.2). • The loss after tax was MSEK 30.5 (loss: 90.5). • The loss per share was SEK 1.38 (loss: 4.19). • Cash and cash equivalents at the end of the quarter amounted to MSEK 137.2 (247.1). • The US Food and Drug Administration (FDA) approved Orexo’s EdluarTM product for the short-term treatment of insomnia. The approval meant that Orexo received a milestone payment from Meda of MUSD 5. • Orexo signed an exclusive development agreement with a large healthcare company. The agreement covers the development of Orexo’s OX17 program for the treatment of gastroesophageal reflux disease (GERD). • Orexo acquired the UK drug delivery company PharmaKodex Ltd. The acquisition strengthens Orexo’s strategy of developing unique drugs based on well-established, effective substances. Second quarter • Net revenues amounted to MSEK 29.6 (56.2). • Loss after tax was MSEK 56.9 (loss: 28.3). • The loss per share was SEK 2.53 (loss: 1.31). • Orexo announced Abstral is ready for launch in France. • Orexo’s Annual General Meeting was held April 23. Key events after the end of the period • Meda has initiated the launch of Orexo’s product EdluarTM in the US market. • ProStrakan has submitted a registration application for Abstral to the US Food and Drug Administration (FDA). Orexo receives an unpublished milestone payment. • Orexo announced positive Phase III results for KW-2246 (AbstralTM) in Japan and receives MUSD 2. • As part of the established strategy to become a profitable pharmaceutical company and as a natural effect of the development of the product portfolio, costs will decrease. In addition, the management has decided to enhance the efficiency of research and development and relocate the operations conducted in Solna to Uppsala. • The second installment for the acquisition of PharmaKodex was paid in the form of new issued Orexo shares. The installment was decided on August 21, 2009 and PharmaKodex’s former shareholders received a total of 933,781 newly issued Orexo shares. CEO’s COMMENTS: This half year has been a period of significant progress for Orexo. We see good growth in our revenue stream and a significant reduction in loss on our way to profitability. Importantly, we received our second major market approval within 12 months, from the FDA in the US for Edluar with our partner Meda. Following its approval in the EU last year, we have seen the royalties from Abstral increase as our partner ProStrakan launched the product in additional countries such as the UK, Germany and France. We also obtained new distribution agreements for Abstral in China and Israel. We gained new technologies and programs through the acquisition of PharmaKodex, which we are already using to create new products for ourselves and also for potential new big pharma partners. We continue to have a great focus on business development in order to close additional revenue-generating partnerships with excellent pharma partners. In this context, we have signed new formulation development and partnership option agreements that could enable us to add new revenue streams within the next few years. As a consequence of all this, I am confident that Orexo is on track to become a profitable company. Earlier this week our partner Meda launched Edluar in the US which was earlier than anticipated. I am certain that Meda is well placed to sell Edluar in the US market. At Orexo, we are delighted that American patients suffering from insomnia can benefit from a valuable product developed by our R&D team. The response to Abstral’s launch from patients and doctors is highly favorable throughout Europe. Abstral is now on sale in the UK, Germany and Sweden, and during July, it was also launched in France – one of Europe’s largest markets for pain-relieving drugs based on fentanyl. During August, ProStrakan submitted the registration application for Abstral in the US, as a result of which we received a milestone payment. If the FDA approves the file for review, Abstral may be approved for the US market in 2010. Importantly, we reported positive results for KW-2246 (Abstral) in Japan with our partner Kyowa Hakko Kirin. Kyowa will now prepare for the submission of a registration application in Japan, which marks another important step in the international development of Abstral. Another line of revenue for us is our subsidiary Kibion, which markets diagnostic products for Helicobacter Pylori and saw a robust trend during the first six months, with sales of MSEK 21.5, up 48 percent compared with the same period in the preceding year. We expect continuing good growth in Kibion, along with increasing earnings. The trend for our product portfolio implies that the risks and costs will now become lower. This, together with other streamlining throughout the business, will result in staff reductions by approximately 25 people, mainly on the new chemical entity research side. Our research activities at the Karolinska Institute will be fully integrated into our headquarters site in Uppsala enabling a more effective and lean R&D organization. The above, combined with increased royalty revenues, mean that we are coming increasingly closer to our goal of being a sustainably profitable pharmaceutical company. I look forward to an exciting autumn for Orexo. Torbjörn Bjerke President and CEO For the entire report, see enclosed link to pdf. For further information, please contact: Torbjörn Bjerke, President and CEO, tel: +46 708 66 19 90, e-mail: firstname.lastname@example.org Claes Wenthzel, Executive Vice-President & CFO, tel: +46 708-62 01 22, e-mail: email@example.com Johan Andersson, Investor Relations Manager, tel: +46 702 10 04 51, e-mail: firstname.lastname@example.org Note Orexo AB publ. discloses the information provided herein pursuant to the Securities Markets Act. The information was provided for public release on August 21, 2009 at 08:45 CET. This report has been prepared in both Swedish and English. In case of variation in the content of the two versions, the Swedish version shall take precedence.