TRANSITION TO A COMMERCIAL AND PROFITABLE PHARMACEUTICAL COMPANY CONTINUES Presenting at Småbolagsdagen June 10, 2013
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OREXO COMPANY OVERVIEW PROVEN DEVELOPMENT TRACK RECORD BASED ON FORMULATION STRATEGY US Product. Proprietary US commercial product in 2013 FORMULATION TECHNOLOGY (Sublingual Delivery) Zubsolv for opioid dependence Platform & Pipeline. Sublingual formulation technologies driving products and pipeline PROPRIETARY PRODUCTS PIPELINE Zubsolv: Opioid dependence OX51: Procedure-induced pain OX27: BTCP Revenues. Portfolio of revenue generating US/EU partnered products Manufacturing. In-house GMP facility approved for controlled substances PARTNERED PRODUCTS PIPELINE Abstral: BTCP (Kyowa ex US, Galena BioPharma US) Edluar : Insomnia (Meda) OX-CLI: Astra Zeneca 1 OX-MPI: Boehringer Ingelheim 1 1) Not based on drug delivery technology Page 3
2013 - THE START OF A NEW COMMERCIAL CHAPTER IN THE OREXO EVOLUTION 2013 has started in a fast pace to continue focusing the business New CEO appointed in February Agreement with Astra Zeneca on OX-CLI Agreement with Galena Biopharma on Abstral, worth $15M (SEK 97,5M) in one time payments and additional royalty expected Successful Zubsolv launch, the primary objective of 2013 Target date for approval of Zubsolv set for early July, 2013 Significant clinical programs initiated to gain differentiation Establish commercial infrastructure in the US Launch anticipated in September 2013 Other projects and products to continue strengthen the Orexo base Abstral approval in Japan OX51 results from a dose-finding phase II study expected Edluar launch in Europe Page 4
ZUBSOLV OREXO LEAD VALUE DRIVER
SIGNIFICANT MARKET FOR OPIOID DEPENDENCE 44% 11% ~40% Established ~35-45% Pharma Focus Chronic Pain 1 N=109 MM Rx Opioids for Chronic Pain 2 N=~48 MM Develop Dependence 3 N=5 MM Diagnosed Dependent 4,5 N=2 MM Treated 6 N=700-900 K Increased ambition to control opioid use but lack of good alternatives Opioids are highly addictive with 11% developing dependence Majority of opioid users are unaware of own dependence and/or believe they can wean off by themselves Lack of prescribing physicians and even if referred few dependents receive treatment ~50% Suboxone 7 ~3M patients have been treated with Suboxone N=400 K Zubsolv market-entry focus Source: Trinity Market Reserach, October 2012 1) Committee on Advancing Pain, Research and Education (N and %) 2) Clark, J.D., J Pain Symptom Manage (2002) (%) 3) NSDUH (N) 4) Peer, K, Drug and Alcohol Dependence (2012) (%) 5) Healthcare for Communities Survey (%) 6) NSDUH; Trinity experienced based on Rx data (N); Decision Resources (%) 7) Presentation at SAMHSA buprenorphine meeting (N) Page 6
CHANGES IN US LEGISLATION WILL DRIVE DEMAND FOR ZUBSOLV IN THE US The Obama administration issued a final rule on Wednesday defining essential health benefits that must be offered by most health insurance plans next year... The federal rule requires insurers to cover treatment of mental illnesses, behavioral disorders, drug addiction. [New York Times, Feb 20 th, 2013] Under healthcare reform, millions of people will become eligible for insurance coverage starting in January. The number of people seeking addiction treatment could double [Associated Press, April 16 th, 2013] "There is no illness currently being treated that will be more affected by the Affordable Care Act than addiction," Tom McLellan, CEO of the nonprofit Treatment Research Institute, [Associated Press, April 16 th, 2013] Page 7
SUBOXONE IS A US BLOCKBUSTER THAT CONTINUES TO DEMONSTRATE DOUBLE-DIGIT GROWTH Suboxone Tablet Launched 2003 US SALES (IN MILLIONS OF USD) Film approved in August 2010 +19% +38% Marketed by Reckitt Benckiser Sales of $1.5 billion in 2012 Sales growth of 21% in Q1-Q3 2012 15,4% TRx growth 2011-2012 Growth drivers: Growing number of sufferers Increasing proportion seeking therapy Price increases Sources: IMS, RB Annual report, Credit Suisse Reports on RB Page 8
ZUBSOLV IS WELL POSITIONED TO REPEAT SUCCESSFUL INTRODUCTION OF SUBOXONE FILM BUP/NLX market evolution 2002 2010 2013 Suboxone Tablet Suboxone Film Zubsolv First in class buprenorphinenaloxone combination product Replacing stigmatized abuse clinics enabled broader population to be treated for opioid dependency Improved formulation, dissolved faster and improved taste masking Further improvement of dissolve time, taste masking and mouth feel over Tablet Preferred by 9 out of 10 participants in an acceptability study compared to the Suboxone Film Page 9
STUDY COMPARING WITH SUBOXONE FILM SHOWS 89% WOULD CHOOSE ZUBSOLV DRIVEN BY TASTE, ADMINISTRATION AND AFTERTASTE OVERALL PREFERENCE (WHICH TREATMENT WOULD YOU CHOOSE?) Suboxone Film 89% Zubsolv TM Taste (WHICH TASTE DO YOU PREFER?) Suboxone Film Ease of administration (WHICH TREATMENT IS MOST EASY TO ADMINISTER?) Suboxone Film Unpleasant aftertaste (SHARE OF PARTICIPANTS WITH NO UNPLEASANT AFTER TASTE?) 96% 89% Zubsolv TM Zubsolv TM 57% 7% p < 0.001 p < 0.001 Zubsolv (OX219) Suboxone Page 10
FOCUS OF ZUBSOLV IS TO BECOME THE PREFERRED CHOICE FOR ALL PATIENTS Payer At least equal payer coverage for Zubsolv Price competitive Prescriber Aware of Zubsolv superior product features and make is available for patients FDA Comparable label and REMS with Suboxone Zubsolv the patients choice Patients Improved support program and equal financial support to Suboxone Page 11
ABSTRAL TREATMENT OF BREAKTHROUGH CANCER PAIN
ABSTRAL FOR BREAKTHROUGH CANCER PAIN (BTCP) FAST-ACTING SUBLINGUAL TABLET FORMULATION OF FENTANYL CITRATE FAST-ACTING Sublingual TABLET formulation of fentanyl citrate Launched in EU in 2008 Launched in US in 2011 Orexo acquired back rights to the US in June 2012 Approval and launch anticipated in Japan during 2013 Abstral - the only fast dissolving (in less than a min) sublingual tablets in the category Patients require o o o Fast onset Easy administration Good taste experience Breakthrough pain episode Basal Opioid Page 13
RECONFIGURATION OF ABSTRAL RIGHTS GENERATE MORE THAN MSEK 700 IN FIXED PAYMENTS European rights sold to Kyowa Kirin for MSEK 610 US rights sold to Galena Biopharma Inc for MSEK 98 Double digit royalty remain in all geographies except Japan EU for sales exceeding MEUR 42.5 Double digit royalty in ROW and Europe over MEUR 42.5 Fixed payments and milestone Single digit royalty in Japan and approval milestone MUSD 10 upfront and MUSD 5 within first 12 months Double digit royalty 1) Will be reported as revenue in equal monthly amounts over the 12-month period subsequent to when received. 2) Exchange rate of 1.60 USD per GBP. Page 14
FINANCIALS
NET REVENUES JANUARY-MARCH 2013 MSEK Q1 2013 Q1 2012 FY 2012 Abstral -royalties 59.8 19.4 175.2 Abstral - milestone payment 64.3-29.3 Edluar -royalties 1.8 1.2 6.3 ProStrakan AB joint venture 50 % - 4.7 8.0 Kibion 10.5 10.5 48.3 Total revenues from launched products 136.4 35.8 267.1 Partner-financed R&D-costs 1.8 11.6 23.8 Licensing revenue for development projects 1.6 36.7 36.7 Other - -0.5-1.3 Total 139.8 83.6 326.3 Page 16
P&L IN SUMMARY Q1 Q1 FY MSEK 2013 2012 2012 Net revenues 139.8 83.6 326.3 Cost of goods sold -6.9-6.9-27.9 Gross Profit 132.9 76.7 298.4 Selling expenses -18.9-13.0-62.0 Administrative expenses -34.6-13.6-82.6 Research & development expenses -46.6-56.2-216.2 Other operating income & expenses -2.5-8.0-17.1 Operating Costs -102,6-90.8-377.8 EBIT 30.2-14.1-79.4 Net financial items -2.7-2.1-8.2 EBT 27.5-16.2-87.6 Tax - - 1.7 Net profit/loss 27.5-16.2-85.9 EBITDA 31.5-12.1-62.1 Page 17
FINANCIAL POSITION Cash flow Q1 Q1 FY MSEK 2013 2012 2012 Cash flow from operating activities -5.0-32.9 28.7 Investment activities -5,0-1.2 6.9 Financing activities 1.5 - -54.5 Cash flow -8.5-34.1-18.9 Liquid funds 218.9 212.4 228.1 Financing activities 2012 FY include shares bought back amounting to MSEK 53 Abstral royalty (EU) paid in one yearly payment (June) Limited CAPEX in Zubsolv production equipment Page 18
SUMMARY: OREXO IS AT A TURNING POINT Preparing the most important launch in the history of Orexo Zubsolv. Entering a commercial space with outstanding macro development Continuous market growth of $1,5 billion market High unmet need >5 million patients Political changes driving growth, addiction treatment an essential health benefit Best-in-class product close to approval with launch expected in September 9 out of 10 would choose Zubsolv compared to market leader Orexo is well positioned to make this happen Commercial team in Sweden and US with strong track-record Financial strength Strategic flexibility to find solution generating most share holder value Page 19
Q & A Page 20
TRANSITION TO A COMMERCIAL AND PROFITABLE PHARMACEUTICAL COMPANY CONTINUES