Orexo

Country:
Sector:
Market cap (m):
Sweden
Healthcare
SEK 1,807.69
Bloomberg:
Reuters:
Website:
ORX SS
ORX.ST
Share price (close):
SEK 50.00

Latest Reports

Orexo
5 NOV 2020
Commissioned Research: Favourable market for the ongoing launch
The next major valuation trigger for the Orexo share lies in the company's ability to ramp up sales in its newly launched digital offering, in our view. Even though reimbursement is yet to be established, we expect first sales in Q4 2020. We argue that a successful launch is particularly important because Orexo's main earnings contributor Zubsolv is facing headwinds from increased competition, COVID-19 and legal disputes. We maintain our view that the market conditions for digital therapies are favourable, but we nevertheless lower our DCF-based fair value range to SEK 95-119 (100-126) owing to slightly lower expectations for Zubsolv. Marketing material commissioned by Orexo.

Analysts: Klas Pyk
Orexo
17 JUL 2020
Commissioned Research: Investing for the future
The ongoing pandemic has caused an increase in depression and alcohol and substance abuse. At the same time, social distancing has triggered a need for digital provision of healthcare solutions. This bodes well for Orexo's newly launched digital therapies for depressions and alcohol abuse . While the future sales of the digital offering could be several times Orexo's current revenues, the launch process implies significant short-term investment. We take a more conservative approach to the sales potential of Orexo's digital offering than the company, but nevertheless increase our DCF-based fair value to SEK 100-126 (72-82) per share. Marketing material commissioned by Orexo.

Analysts: Klas Pyk
Orexo
29 APR 2020
Commissioned Research: Favourable market for a digital launch
Orexo yet again proved that Zubsolv is resilient against the recent entry of generic competition. We argue, however, that investors should look at the potential from the upcoming launch of the digital therapeutic offering, planned for Q3 2020 at the latest – particularly since the COVID-19 outbreak has increased demand for digital healthcare solutions. Marketing material commissioned by Orexo.

Analysts: Klas Pyk
Orexo
9 APR 2020
Commissioned Research: Significant earnings potential in digital therapies
Orexo has recently expanded its research and development efforts in digital therapeutics. In addition to five pharma projects, the company's pipeline portfolio now also includes two digital therapy candidates. In this report, we elaborate on the earnings potential for vorvida and OXD01, Orexo's digital treatments for alcohol misuse disorder and opioid addiction. Both could add significantly to future earnings and the former is planned for launch as early as Q3 2020. Marketing material commissioned by Orexo.

Analysts: Klas Pyk
Orexo
18 MAR 2020
Commissioned Research: Impressions from CMD
At its capital markets day yesterday, Orexo elaborated on the company's pipeline (first product launch as early as Q3 2020). Its ambition is to build on the company's well-established US operation in addiction therapy. The company estimates its pipeline revenue potential is in the range of SEK 4.7-6.7bn (USD 480-695m). If this materialised, it would significantly add to future earnings (revenues in 2019 totalled SEK 845m).

Analysts: Klas Pyk
Orexo
31 JAN 2020
Commissioned Research: Modest outlook for 2020
While Q4 2019 marked another quarter of solid growth (Zubsolv US revenues up 7.5% y/y organically), the company foresees flat y/y sales for Zubsolv in the US during 2020. To secure long-term growth, Orexo will continue investing in its pipeline, as confirmed by its outlook for an 8-18% y/y increase in opex – mostly driven by higher R&D spending. Based on this softer-than-anticipated outlook, we lower our sales forecast by 4-9% and adjust our DCF-based valuation range to SEK 70-80 (78-93) per share.

Analysts: Klas Pyk
Orexo
25 OCT 2019
Commissioned Research: Q3 ticked many boxes
Once again Orexo proved its ability to leverage its operations by posting a Q3 report that ticked many boxes. Sales increased by 6.7% y/y, despite a challenging market. At the same time, both gross margins and underlying operating expenditure improved significantly. The strong performance resulted in an adjusted EBITDA margin uplift of 15.3 pp y/y. During the period, Orexo also announced a partnership agreement with the goal of broadening its portfolio with a new digital therapy for Opioid Use Disorder. We update our DCF-based fair value range to SEK 78-93 per share. - Marketing material commissioned by Orexo

Analysts: Klas Pyk
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

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
2016
2017
2018
2019
2020E
2021E
2022E
Total revenues
705.9
643.7
783.1
844.8
658.7
692.0
863.5
Ebitda (adj.)
74.40
78.20
116.60
223.60
-82.31
-56.76
137.50
Ebitda - margin
10.5%
12.1%
14.9%
26.5%
-12.5%
-8.2%
15.9%
EBIT (adj.)
51.7
57.4
95.8
182.6
-113.3
-91.8
102.5
EBIT (adj.) margin
7.3%
8.9%
12.2%
21.6%
-17.2%
-13.3%
11.9%
PTP (adj.)
35.6
29.7
92.3
179.3
-97.4
-89.2
103.5
Net profit from cont oper (adj)
29.10
23.20
138.00
170.50
-134.16
-80.31
88.01
Shareholders´ Equity
310.3
329.1
476.1
706.4
572.2
491.9
579.9
Net interest bearing debt
115.4
-8.8
-269.2
-472.5
-253.0
-103.7
-185.6
Net gearing
37.2%
-2.7%
-56.5%
-66.9%
-44.2%
-21.1%
-32.0%
Net debt/EBITDA
1.6
-0.1
-2.3
-2.1
n.a.
n.a.
-1.3
Free cash flow to equity
71.1
59.6
235.9
264.5
-174.9
-158.3
97.5
Diluted number of shares in issue, year-end (m)
34.6
34.7
35.2
35.4
35.3
35.3
35.3
Nordea Markets estimates published on Nov 5, 2020
Source: Company data, Nordea estimates
Per share data and multiples
Nordea
SEK and %
2016
2017
2018
2019
2020E
2021E
2022E
EPS (adj.)
0.84
0.67
3.92
4.82
-3.80
-2.27
2.49
EPS (adj.) growth
114.7%
-20.5%
485.5%
23.0%
-178.8%
40.1%
209.6%
DPS
0.00
0.00
0.00
0.00
0.00
0.00
0.00
BVPS
9.0
9.5
13.5
20.0
16.2
13.9
16.4
P/E (adj.)
44.7
61.6
15.0
13.0
n.a.
n.a.
20.1
EV/Sales
2.01
2.21
2.30
2.07
2.30
2.40
1.83
EV/EBITDA (adj.)
19.02
18.15
15.45
7.82
n.a.
n.a.
11.50
EV/EBIT (adj.)
27.38
24.73
18.81
9.58
n.a.
n.a.
15.43
P/BV
4.19
4.34
4.35
3.14
3.09
3.59
3.05
Dividend yield
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
FCF Yield bef A&D, lease adj
5.0%
4.3%
11.7%
13.1%
-9.9%
-9.0%
5.5%
RoE
10.0%
7.3%
34.3%
28.8%
-21.0%
-15.1%
16.4%
ROIC
6.4%
8.1%
15.0%
29.1%
-17.0%
-12.5%
12.5%
Nordea Markets estimates published on Nov 5, 2020
Source: Company data, Nordea estimates

Source: Refinitiv