Orexo

Country:
Sector:
Market cap (m):
Sweden
Healthcare
SEK 2,559.69
Bloomberg:
Reuters:
Website:
ORX SS
ORX.ST
Share price (close):
SEK 70.80

Latest Reports

Orexo
12 JUL 2019
Commissioned Research: Proving its resilience
There has been turbulence in the market where Orexo's flagship product, Zubsolv, is sold, but this had only a limited impact on Orexo's performance, however, increasing revenues by 6.7% y/y at CER. While Orexo continues to show solid revenue and earnings growth for its existing products (EBITDA up 19.4% y/y), it is also continuously evaluating and taking opportunities to broaden its product portfolio and geographical footprint. We reiterate our DCF-based valuation range of SEK 72-93 per share. Marketing material commissioned by Orexo.

Analysts: Klas Pyk
Orexo
3 MAY 2019
Commissioned Research: H2 COGS reduction target already reached in Q1
Orexo posted a Q1 report with total revenue of SEK 174.3m versus SEK 139.7m in the same period last year, bang in line with our estimates. Zubsolv's US sales increased 9.3% y/y in local currency, to SEK 161.7m, spurred by improved market access. Ahead of schedule, Orexo reached its H2 2019 COGS-reduction target of 35% versus 2017 as early as Q1, which in turn bolstered margins in the quarter and contributes to our full-year positive estimate revisions (2019 EBIT estimates up by 19%). We increase our DCF-based valuation range to SEK 72-93 (64-84).

Analysts: Klas Pyk
Orexo
1 APR 2019
Commissioned Research: Court ruling does not impact earnings potential
On 29 March, Orexo announced that the United States District Court for the District of Delaware has ruled that Actavis' generic versions of Suboxone and Subutex tablets do not infringe Orexo's US Patent 8,454,996. Provided that the ruling stands, this means that Orexo will not receive any compensation from Actavis. We did not include a successful outcome in the litigation trial in our estimates and therefore reiterate our DCF-based fair value range of SEK 64-84 per share. Marketing material commissioned by Orexo.

Analysts: Klas Pyk
Orexo
31 JAN 2019
Commissioned Research: Improved operational leverage in 2019
Orexo posted a Q4 report with total revenue of SEK 227.1m, versus SEK 191m in the same period last year. This sales growth was driven solely by Zubsolv in the US, which reached revenue of SEK 166.7m, up by 21.3% y/y in local currency. We view the continued solid uptake for Zubsolv in the US as positive, but its total revenues missed our expectations by around 5%. We attribute the miss to higher-than-expected rebates and lower demand for Abstral. In the report, last year's opex outlook at around SEK 500m was reiterated for 2019, implying solid operating leverage. Marketing material commissioned by Orexo

Analysts:
Orexo
10 DEC 2018
Commissioned Research: CMD points to bright long-term prospects
Orexo announced new strategic objectives at its well-attended capital markets day. A comprehensive agenda and a mix of internal and external speakers bolster our confidence in our positive outlook for the company for 2019 and beyond. Our DCF-based fair value range is SEK 64-84 per share. – Marketing material commissioned by Orexo

Analysts:
Orexo
30 OCT 2018
Commissioned Research: Strong outlook clouded by legal expenses
Orexo's Q3 report showed continued strong performance for the Zubsolv US business, but slow initial uptake of Zubsolv in Europe and higher legal expenses than we had expected. Therefore, we make slight negative revisions to our near-term Zubsolv sales forecast for the EU and assume somewhat higher costs. However, a solid performance and outlook for Zubsolv in the US, coupled with improved guidance for the manufacturing efficiency programme, reaffirms the long-term prospects. Marketing material commissioned by Orexo.

Analysts:
Orexo
22 OCT 2018
Commissioned Research: Waiting for a major product deal
Recent Zubsolv prescription data shows a development broadly in line with our expectations and, ahead of the Q3 report, we only make a slight downward correction to our H2 estimates. In the coming months, we will closely monitor early European Zubsolv sales, the US market access situation and potential product acquisitions, as the US commercial platform was further developed by internalising the entire sales force in October. – Marketing material commissioned by Orexo

Analysts:
Orexo
12 SEP 2018
Commissioned Research: US appeal case won – shares up 75% in 24 hours
Orexo won its appeal case confirming Zubsolv's US intellectual property protection until 2032, preventing early competition from Actavis's generics in 2019. This decision frees up considerable resources to focus on business development instead. The rapid ~75% share price appreciation also supports Orexo's M&A firepower beyond its cash position of SEK 0.5bn. - Marketing material commissioned by Orexo

Analysts:
Orexo
11 SEP 2018
Commissioned Research: US appeals court rules in Orexo's favour
On 10 September, Orexo finally received notification from the US Federal Court of Appeals in its litigation process against Actavis, a subsidiary of Teva. The court ruled in Orexo's favour, reversing the previous invalidity decision on the '330 patent, which protects Orexo's key product, Zubsolv. This new move reinforces Zubsolv patent protection (expiring in 2032). Orexo will now request that the District Court of Delaware issues a judgment that Actavis’ generic Zubsolv products infringe the ‘330 patent. The decision process has demanded considerable time and resources, so we find it positive that management now can put its full focus on growing the Zubsolv business and continuing the good operational momentum it is currently experiencing. Marketing material commissioned by Orexo

Analysts:
Orexo
16 JUL 2018
Commissioned Research: Orexo’s best Q2 yet
Net sales grew by 25.5% y/y to SEK 200m in Q2. The main growth drivers were Zubsolv US sales, which grew 28% in SEK, ie 30% y/y in local currency, and a milestone payment of SEK 31m by Mundipharma due to the European launch of Zubsolv in June 2018. The US market for buprenorphine-naloxone (BNX) maintained momentum and Orexo’s Zubsolv was the only branded competitor to gain market share compared to Q1. Marketing material commissioned by Orexo

Analysts:

Equity analysts

Analyst

Company info

Orexo is a Swedish speciality pharma company with its core competence on drug delivery enhancing technologies. It has several products on the market, primarily marketed through partners.

Going forward, its most important product is its new Zubsolv, for the treatment of opioid dependency. It was launched on the US market in mid-September 2013. If the product turns out to be as successful as the company believes, upside for the share could be significant. The market for opioid dependency treatment is growing in low double-digit figures and is currently worth about USD 1.5bn each year. The market is concentrated, with around 5,000 physicians representing about 90% of all prescriptions. This means it is possible to address the market with a limited sales force.

Apart from Zubsolv, the company has several development projects in its pipeline even though the stock market will likely focus most on Zubsolv in the coming years.

Key persons

CEO: Nikolaj Sørensen

CFO: Joseph DeFeo

Chairman: Martin Nicklasson

Numbers
Nordea
SEKm
2015
2016
2017
2018
2019E
2020E
2021E
Total revenues
646.2
705.9
643.7
783.1
884.3
873.1
985.9
Ebitda (adj.)
-99.90
72.90
78.20
116.60
264.87
214.24
272.29
Ebitda - margin
-15.5%
10.3%
12.1%
14.9%
30.0%
24.5%
27.6%
EBIT (adj.)
-180.7
51.7
57.4
95.8
236.4
186.6
244.1
EBIT (adj.) margin
-28.0%
7.3%
8.9%
12.2%
26.7%
21.4%
24.8%
PTP (adj.)
-203.7
35.6
29.7
92.3
240.1
192.2
249.7
Net profit from cont oper (adj)
-210.10
29.10
23.20
138.03
243.27
191.03
248.17
Shareholders´ Equity
270.1
310.3
329.1
476.1
719.4
910.4
1,158.6
Net interest bearing debt
296.3
115.4
-8.8
-269.2
-557.2
-763.6
-1,031.6
Net gearing
109.7%
37.2%
-2.7%
-56.5%
-77.5%
-83.9%
-89.0%
Net debt/EBITDA
-3.0
1.6
-0.1
-2.3
-2.1
-3.6
-3.8
Free cash flow to equity
-88.8
71.1
59.6
235.9
288.0
206.3
268.0
Diluted number of shares in issue, year-end (m)
34.5
34.6
34.7
35.2
36.2
36.2
36.2
Nordea Markets estimates published on Jul 12, 2019
Source: Company data, Nordea estimates
Per share data and multiples
Nordea
SEK and %
2015
2016
2017
2018
2019E
2020E
2021E
EPS (adj.)
-6.09
0.84
0.67
3.92
6.73
5.28
6.86
EPS (adj.) growth
-252.1%
113.8%
-20.5%
485.7%
71.7%
-21.5%
29.9%
DPS
0.00
0.00
0.00
0.00
0.00
0.00
0.00
BVPS
7.8
9.0
9.5
13.5
19.9
25.2
32.0
P/E (adj.)
n.a.
44.7
61.6
15.0
10.5
13.4
10.3
EV/Sales
3.81
2.01
2.21
2.30
2.26
2.06
1.55
EV/EBITDA (adj.)
n.a.
19.42
18.15
15.45
7.56
8.38
5.61
EV/EBIT (adj.)
n.a.
27.38
24.73
18.81
8.47
9.62
6.26
P/BV
8.01
4.19
4.34
4.35
3.56
2.81
2.21
Dividend yield
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
FCF yield
-4.1%
5.5%
4.2%
11.4%
11.3%
8.1%
10.5%
RoE
-56.9%
10.0%
7.3%
34.3%
40.7%
23.4%
24.0%
ROIC
-20.7%
6.4%
8.1%
15.0%
39.4%
32.1%
42.0%
Nordea Markets estimates published on Jul 12, 2019
Source: Company data, Nordea estimates

Source: Thomson Reuters