Orexo
Written by
Orexo |
Good things come in threes |
Regulatory news |
Pharma & biotech |
7 October 2016 |
Share price performance
Business description
Next events
Analysts
Orexo is a research client of Edison Investment Research Limited |
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Orexo has delivered on three key newsflow items, which should contribute to driving increased Zubsolv use in the treatment of opioid addiction. Submission of Zubsolv’s MAA with the EMA means that first launch ex-US could come from 2018 onwards. FDA approval of a new low dose provides greater dosing flexibility. Positive data from the RESOLV real world study will be leveraged in educating new and existing prescribers to improve their treatment programmes. Ahead of Q316 results we maintain our SEK5.13bn (SEK149/share) valuation highlighting that uncertainty due to the ongoing Actavis litigation continues to weigh on the share price; resolution is expected in H216.
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/14 |
570 |
(53) |
(1.6) |
0.0 |
N/A |
N/A |
12/15 |
643 |
(191) |
(5.7) |
0.0 |
N/A |
N/A |
12/16e |
753 |
25 |
0.5 |
0.0 |
N/A |
N/A |
12/17e |
989 |
137 |
2.2 |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Mundipharma files Zubsolv in Europe
Orexo’s global ex-US partner Mundipharm has filed the Zubsolv MAA with the EMA suggesting that first EU launches are possible in 2018. Precise timelines would be contingent on reimbursement decisions, which differ between EU member states. The MAA covers six dose strengths (including the newly approved US low dose) but does not trigger any milestone; the next milestone is expected on approval.
FDA approves unique low dose
A new 0.7mg buprenorphine /0.18 mg naloxone Zubsolv tablet will be available in early 2017. Approval of this dose gives Zubsolv the broadest available dose range (six doses) increasing physician dosing flexibility and enabling tapering of patients to the lowest effective maintenance dose, without compromising tablet or packaging integrity through ‘dose splitting’ (tablet breakage).
RESOLV: Completed study = valuable database
The 1,080-pt REZOLV study provides a substantial real-world clinical database for Orexo to leverage in its dialogue with key stakeholders (physicians, politicians and payers) to optimise and improve access to opioid dependence therapy. Of 978 evaluable patients, 77.6% were classed as treatment successes. Numerous factors correlated with positive treatment outcomes: older age, partner support, employment, heroin rather than injectable opioid addiction. Prior failed treatment had a negative impact on success, but physician experience had no bearing.
Valuation: SEK5.1bn or SEK149/share on a DCF basis
We maintain our SEK5.13bn or SEK149/share valuation ahead of Q316 results. This already includes potential European Zubsolv sales revenues (assuming launch in late 2018, conservative €100m peak sales and a 10% net royalty) but not potential Mundipharma milestones as their magnitude and timing are undisclosed.
Exhibit 1: Financial summary
SEK m |
2014 |
2015 |
2016e |
2017e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
570.3 |
643.2 |
752.9 |
989.4 |
Cost of Sales |
(107.4) |
(136.1) |
(143.9) |
(182.2) |
||
Gross Profit |
462.9 |
507.1 |
608.9 |
807.2 |
||
EBITDA |
|
|
(12.5) |
(88.4) |
60.7 |
156.2 |
Operating Profit (before GW and except.) |
|
(25.0) |
(169.1) |
45.1 |
150.1 |
|
Intangible Amortisation |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
16.5 |
(64.6) |
1.8 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
||
Operating Profit |
(25.0) |
(169.1) |
45.1 |
150.1 |
||
Net Interest |
(27.6) |
(22.1) |
(20.2) |
(12.8) |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
(52.6) |
(191.2) |
24.8 |
137.3 |
Profit Before Tax (IFRS) |
|
|
(52.6) |
(191.2) |
24.8 |
137.3 |
Tax |
(4.0) |
(6.9) |
(6.0) |
(60.7) |
||
Deferred tax |
0.0 |
0.0 |
0.0 |
0.0 |
||
Profit After Tax (norm) |
(56.6) |
(198.1) |
18.8 |
76.6 |
||
Profit After Tax (IFRS) |
(56.6) |
(198.1) |
18.8 |
76.6 |
||
Average Number of Shares Outstanding (m) |
34.3 |
34.6 |
34.6 |
34.6 |
||
EPS - normalised (ore) |
|
|
(165) |
(573) |
54 |
221 |
EPS - IFRS (SEK) |
|
|
(1.6) |
(5.7) |
0.5 |
2.2 |
Dividend per share (SEK) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
81.2 |
78.8 |
80.9 |
81.6 |
||
EBITDA Margin (%) |
(2.2) |
(13.7) |
8.1 |
15.8 |
||
Operating Margin (before GW and except.) (%) |
(4.4) |
(26.3) |
6.0 |
15.2 |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
289.5 |
185.9 |
168.5 |
163.3 |
Intangible Assets |
259.2 |
159.1 |
147.8 |
147.8 |
||
Tangible Assets |
29.1 |
24.7 |
19.5 |
14.3 |
||
Other |
1.2 |
2.1 |
1.2 |
1.2 |
||
Current Assets |
|
|
936.4 |
830.4 |
967.6 |
1,088.4 |
Stocks |
478.1 |
398.9 |
295.7 |
199.6 |
||
Debtors |
173.8 |
233.4 |
185.6 |
244.0 |
||
Cash |
284.5 |
198.1 |
486.3 |
644.8 |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
||
Current Liabilities |
|
|
(268.1) |
(251.6) |
(349.3) |
(385.8) |
Creditors |
(265.6) |
(251.6) |
(349.3) |
(385.8) |
||
Short term borrowings |
(2.5) |
0.0 |
0.0 |
0.0 |
||
Long Term Liabilities |
|
|
(502.8) |
(498.3) |
(497.8) |
(497.8) |
Long term borrowings |
(493.8) |
(494.4) |
(495.5) |
(495.5) |
||
Other long term liabilities |
(9.0) |
(3.9) |
(2.3) |
(2.3) |
||
Net Assets |
|
|
455.0 |
266.4 |
289.0 |
368.1 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(455.7) |
(73.2) |
300.6 |
196.4 |
Net Interest |
(31.6) |
(29.0) |
(23.7) |
(12.8) |
||
Tax |
0.0 |
0.0 |
(0.4) |
(24.2) |
||
Capex |
(71.7) |
(4.1) |
(0.8) |
(0.9) |
||
Acquisitions/disposals |
0.0 |
21.8 |
11.0 |
0.0 |
||
Financing |
341.7 |
3.8 |
0.0 |
0.0 |
||
Dividends |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
||
Net Cash Flow |
(217.3) |
(80.7) |
286.6 |
158.5 |
||
Opening net debt/(cash) |
|
|
135.4 |
211.8 |
296.3 |
9.2 |
HP finance leases initiated |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exchange rate movements |
1.5 |
4.5 |
(1.6) |
0.0 |
||
Other |
139.4 |
(8.3) |
2.1 |
0.0 |
||
Closing net debt/(cash) |
|
|
211.8 |
296.3 |
9.2 |
(149.3) |
Source: Orexo, Edison Investment Research
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