Interim Report Q3 2018

The win in the patent litigation strengthen Orexo’s long term business opportunities

Q3 2018 highlights

  • Orexo wins appeal against Actavis on Zubsolv patent in the US, expiring in 2032
  • Total net revenues of SEK 216.6 million (166.2), up 30.3 percent from Q3 previous year
  • Zubsolv® US net revenue of SEK 165.4 million (121.1), up 36.6 percent in SEK and 24.3 percent in local currency compared to the same period last year
  • EBITDA of SEK 39.8 million (46.1), EBITDA excluding IP litigation costs, of SEK 71.0 million (50.8)
  • US EBIT of SEK 55.6 million (31.8)
  • Cash flow from operating activities of SEK 24.5 million (92.3), building a cash balance of SEK 516.6 million (370.7)
  • Earnings per share, before dilution SEK 1.80 (0.82), earnings per share after dilution SEK 1.77 (0.81)

Important events after the period

  • The contracted US field force is internalized to further strengthen the commercial organization
  • Joseph DeFeo is appointed as new CFO from November 1, 2018
  • A Capital Markets Day will be hosted in Stockholm, Sweden, on December 6, 2018
SEK million, unless otherwise stated  2018
12 mth    
Oct 2017 - 
Sep 2018 
12 mth
Oct 2016 -
Sep 2017
Net revenues  216.6  166.2  556.0  452.6  747.0  637.3 
whereof Zubsolv® US net revenue  165.4  121.1  454.9  359.3  581.4  487.5 
Cost of goods sold  -42.4  -32.1  -128.4  -114.1  -178.7  -159.0 
Operating expenses  -139.6  -93.2  -369.4  -311.3  -480.0  -428.6 
EBIT  34.6  40.9  58.2  27.2  88.2  49.8 
EBIT margin, %  16.0  24.6  10.5  6.0  11.8  7.8 
US EBIT  55.6  31.8  136.5  54.0  156.2  51.6 
US EBIT margin, %  33.6  26.3  30.0  15.0  26.9  10.6 
EBITDA  39.8  46.1  73.7  42.8  109.0  67.1 
Earnings per share, before dilution, SEK  1.80  0.82  2.50  -0.10  3.27  0.55 
Earnings per share, after dilution, SEK  1.77  0.81  2.46  -0.10  3.26  0.55 
Cash flow from operating activities  24.5  92.3  170.4  169.6  147.4  241.0 
Cash and cash equivalents  516.6  370.7  516.6  370.7  516.6  370.7 

CEO Comments - Our focus is now on expansion of the business

The third quarter has been another important milestone in Orexo’s history as we have significantly strengthened the long-term business prospects of our company.

After 52 months of waiting we received the decision from the US Federal Court, reversing the decision by the District Court and validating our ‘330 patent. The ‘330 patent is one of three patents covering Zubsolv® until 2032 and with this confirmation of its validity in a precedential decision from the Federal Court in the US, we have significantly strengthened the patent protection around Zubsolv for another 13 years.

During the patent litigation Orexo has continued to evolve and reached several important milestones: we have delivered stable profitability since 2016, the company is net cash positive, and we have initiated three new innovative development projects.

The natural question now is what is next for Orexo. In our journey towards becoming a leading addiction company we will intensify the efforts to reach our objectives in three priority areas.

Firstly, we have an objective to maintain and improve profitability to enable increased investments in late stage R&D and business development. The main focus is on the Zubsolv business we control in the US and I am pleased to see that the twelve-month rolling EBIT margin of our Zubsolv US business has improved from 11 percent to 27 percent in one year and contributed with USD 18 million to Group EBIT during the last year. All other things equal and applying our guidance on cost of goods improvement to the current Zubsolv US business, we would reach an EBIT of USD 25 million for our Zubsolv business with current volumes and OPEX. Even when excluding all royalties and milestones from out-licensed products, Orexo is profitable with the contribution from Zubsolv in the US when excluding our current IP litigation costs. With continued strong development of Zubsolv in the US regarding both revenue and profitability we will be able to invest in the required clinical development of our own pipeline until approval and have the financial strength to compete for business development opportunities when they occur.

Secondly, with the strong foundation from our commercial operations in the US, we have intensified our R&D efforts. We currently have three on-going projects with a well-defined target profile that all address key unmet needs in areas that are complementary to our commercial infrastructure. We are currently testing which formulations will meet the desired profile. Formulations in all three projects will be tested in-vivo during the next six months with OX124 becoming the most advanced and entering a human clinical phase I trial in Q4, 2018. To further accelerate future development, we are upgrading our Uppsala site in Sweden to enable manufacturing of clinical trial material for phase I/II in-house.

Thirdly, the patent outcome enables us to intensify our business development and M&A efforts to broadening our late-stage and commercial product portfolio. With the continuously improving net-cash position, we are ready to invest when an opportunity emerges that complements Zubsolv and offers attractive synergies. With the improved confidence in Zubsolv’s long-term prospects, we have internalized our complete field force. Based on previous feedback from potential partners, this will further enhance Orexo’s attractiveness as a partner.

The financial results of the quarter continue on the positive trajectory from Q2. In particular the contribution from our US business has further improved, primarily explained by revenue growth of 24.3 percent in local currency. The most significant investment during the quarter is our legal case against Actavis for infringement of our ‘996 patent with their generic versions of Suboxone® and Subutex® tablets. The case will be associated with significant costs in the next quarters. We are confident we have a strong case and should be awarded damages for the infringement of our ‘996 patent.

As recently communicated we will host a Capital Markets Day on December 6 in Stockholm. Together with my management team I am looking forward to sharing more insights into our plans moving forward, the market we operate in and more details about our exciting R&D portfolio.

Uppsala, Sweden, October 25, 2018

Nikolaj Sørensen
President and CEO

For further information, please contact
Nikolaj Sørensen, CEO and President, Henrik Juuel, EVP and CFO or Joseph DeFeo, EVP and CFO from November 1, 2018. Tel: +46 18 780 88 00, +1 855 982 7658 Email:

At 2.00 pm CET, the same day as the announcement of the report, Orexo invites analysts, investors and media to attend an audiocast with a web presentation where Nikolaj Sørensen, CEO, and Henrik Juuel, CFO, will present the report. After the presentation a Q&A will be held. Questions can also be sent in advance to, no later than 11.00 am CET. Please view the instructions below on how to participate.
Telephone: SE: +46 856 642 696 UK:+44 2030 089 808 US: +1 855 8315 946
The presentation material will be available on Orexo´s website one hour prior to the audiocast.

This information is information that Orexo AB (publ.) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 8.00 am CET on October 25, 2018.