Orexo

OMX: ORX

SEK2385.3m market cap

SEK68.8 last close

Orexo is a Swedish speciality pharma company, with expertise in drug delivery/reformulation technologies (in particular sublingual formulations) and a US commercial infrastructure for opioid dependence therapy Zubsolv (also filed in Europe). Orexo also has two clinical assets and three preclinical programmes.

Investment summary

Orexo generated positive EBITDA and operating cash flow generation in FY16, FY17 and FY18. US commercial and public formulary coverage is dynamic but exclusive contracts among private insurers, and state Medicaid are having a positive impact on US Zubsolv volumes and sales. The IP infringement appeal on the US Zubsolv IP was resolved in Orexo’s favor without recourse. Zubsolv generics are precluded before September 2032 and the other patent cases against Actavis are subject to Orexo’s appeal. Zubsolv was approved in Europe in 2018 and is being partnered in the EU. Orexo’s focus now shifts to business development, M&A and sales force leverage while its CoGS reduction is expected to result in a material improvement in profitability. We are cautious on the effect of multiple generic Suboxone film entries on Zubsolv’s US market share but point to many other sources of upside in 2019.

Y/E Dec
Revenue (SEKm)
EBITDA (SEKm)
PBT (SEKm)
EPS (öre)
P/E (x)
P/CF (x)
2017A 643.7 57.4 29.7 67.00 102.7 15.4
2018A 783.1 95.8 92.2 399.01 17.2 16.2
2019E 879.4 215.5 220.6 611.84 11.2 13.3
2020E 852.3 204.9 187.1 491.13 14.0 22.1
Last updated on 25/07/2019
Industry outlook

Opioid dependence diagnosis/treatment rates are low due to social stigma, limited access to therapy in parts of the US and affordability. Competition includes Suboxone film (Indivior), Bunavail (BDSI) and six generic bup/nal tablets.

Last updated on 25/07/2019
Sector
Healthcare
Share price graph
Balance sheet
Forecast net cash (SEKm) 476.8
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (2.4) 1.6 63.8
Relative* (3.4) 3.0 56.9
52-week high/low SEK85.7/SEK40.5
*% relative to local index
Key management
Martin Nicklasson Chairman
Nikolaj Sorensen CEO
Joseph DeFeo CFO

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