214 215 216E 217E 218E COMPANY ANALYSIS 1 July 216 Summary (orx.st) Zubsolv Rx Data week 25 According to latest Symphony Health Solutions Rx data Zubsolv tablets market share (4-week rolling average) were down by.3 percentage points from last week, reaching 5.42%. TRx market share (4-week rolling average) were down by.2 percentage points from last week to 5.44%. List: Market Cap: Industry: CEO: Chairman: Mid cap 1,59 MSEK Healthcare Nikolaj Sörensen Martin Nicklasson The overall market (buprenorphine/naloxone products) continues to grow and recorded a y/y growth rate of 5.1% (4-week rolling average unit sales). TRx showed a y/y growth rate by 5.9% (4-week rolling average). We have revised up our estimates ahead of the 2Q report, which will be released the 12 of July (see page 5). We now forecast 2Q revenues of SEK 172,4 (126.5) million and a positive EBITDA of SEK 25.2 (-74.2) million. Our base case fair value is raised to SEK 85 (84) OMXS 3 8 75 7 65 6 55 5 45 4 1-Jul 29-Sep 28-Dec 27-Mar 25-Jun Redeye Rating ( 1 points) Management Ownership Profit outlook Profitability Financial strength 8. points 7. points 7.5 points. points 3.5 points Key Financials 214 215 216E 217E 218E Revenue, MSEK 57 643 656 833 1, Growth 33% 13% 2% 27% 2% EBITDA -12-88 17 89 195 EBITDA margin -2% -14% 3% 11% 19% EBIT -25-169 -1 62 166 EBIT margin -4% -26% -2% 7% 17% Pre-tax earnings -53-191 -35 36 157 Net earnings -57-198 -44 26 142 Net margin -1% -31% -7% 3% 14% Dividend/Share..... EPS adj. -1.6-5.57-1.22.72 3.98 P/E adj. -84.5-11.3-37.3 63.5 11.5 EV/S 8.5 3.8 2.8 2.1 1.6 EV/EBITDA -391. -27.9 19. 19.5 8.2 Share information Share price (SEK) 45.6 Number of shares (m) 34.9 Market Cap (MSEK) 1,59 Net debt (MSEK) 227 Free float (%) 49 % Daily turnover ( ) 85 Analysts: Klas Palin klas.palin@redeye.se Ulrik Trattner ulrik.trattner@redeye.se Important information: All information regarding limitation of liability and potential conflicts of interest can be found at the end of the report. Redeye, Mäster Samuelsgatan 42, 1tr, Box 7141, 13 87 Stockholm. Tel +46 8-545 13 3. E-post: info@redeye.se
Redeye Rating: Background and definitions The aim of a Redeye Rating is to help investors identify high-quality companies with attractive valuation. Company Qualities The aim of Company Qualities is to provide a well-structured and clear profile of a company s qualities (or operating risk) its chances of surviving and its potential for achieving long-term stable profit growth. We categorize a company s qualities on a ten-point scale based on five valuation keys; 1 Management, 2 Ownership, 3 Profit Outlook, 4 Profitability and 5 Financial Strength. Each valuation key is assessed based a number of quantitative and qualitative key factors that are weighted differently according to how important they are deemed to be. Each key factor is allocated a number of points based on its rating. The assessment of each valuation key is based on the total number of points for these individual factors. The rating scale ranges from to +1 points. The overall rating for each valuation key is indicated by the size of the bar shown in the chart. The relative size of the bars therefore reflects the rating distribution between the different valuation keys. Management Our Management rating represents an assessment of the ability of the board of directors and management to manage the company in the best interests of the shareholders. A good board and management can make a mediocre business concept profitable, while a poor board and management can even lead a strong company into crisis. The factors used to assess a company s management are: 1 Execution, 2 Capital allocation, 3 Communication, 4 Experience, 5 Leadership and 6 Integrity. Ownership Our Ownership rating represents an assessment of the ownership exercised for longer-term value creation. Owner commitment and expertise are key to a company s stability and the board s ability to take action. Companies with a dispersed ownership structure without a clear controlling shareholder have historically performed worse than the market index over time. The factors used to assess Ownership are: 1 Ownership structure, 2 Owner commitment, 3 Institutional ownership, 4 Abuse of power, 5 Reputation, and 6 Financial sustainability. Profit Outlook Our Profit Outlook rating represents an assessment of a company s potential to achieve long-term stable profit growth. Over the long-term, the share price roughly mirrors the company s earnings trend. A company that does not grow may be a good short-term investment, but is usually unwise in the long term. The factors used to assess Profit Outlook are: 1 Business model, 2 Sale potential, 3 Market growth, 4 Market position, and 5 Competitiveness. Profitability Our Profitability rating represents an assessment of how effective a company has historically utilised its capital to generate profit. Companies cannot survive if they are not profitable. The assessment of how profitable a company has been is based on a number of key ratios and criteria over a period of up to the past five years: 1 Return on total assets (ROA), 2 Return on equity (ROE), 3 Net profit margin, 4 Free cash flow, and 5 Operating profit margin or EBIT. Financial Strength Our Financial Strength rating represents an assessment of a company s ability to pay in the short and long term. The core of a company s financial strength is its balance sheet and cash flow. Even the greatest potential is of no benefit unless the balance sheet can cope with funding growth. The assessment of a company s financial strength is based on a number of key ratios and criteria: 1 Times-interest-coverage ratio, 2 Debt-to-equity ratio, 3 Quick ratio, 4 Current ratio, 5 Sales turnover, 6 Capital needs, 7 Cyclicality, and 8 Forthcoming binary events. 2
Zubsolv market share development Rolling 4-week Wolter Kluwers Rx data - Zubsolv 7,% 6,% 5,% 4,% 3,% 2,% 1,%,% 4 35 3 25 2 15 1 5 4-week rolling average, Zubsolv market share and tablet sales TRx market share for the week reached 5.5%, unchanged from last week Zubsolv tablets recorded a market share of 5.45% during week 25, down.12 percentage points from last week The four week rolling average TRx market share were unchanged from last week at 5.44% The four week rolling average tablets market share were lower by.3 percentage points reaching 5.42% Wolter Kluwers Rx data Rolling four week average TRx market share and tablets sales Suboxone Film Generics Zubsolv Bunavail Suboxone Film Generics Zubsolv Bunavail 6-24-16 75.72% 17.73% 5.44% 1.11% 74.84% 18.93% 5.42%.82% 6-17-16 75.72% 17.7% 5.46% 1.13% 74.82% 18.9% 5.45%.83% 6-1-16 75.67% 17.71% 5.48% 1.14% 74.78% 18.91% 5.46%.84% 6-3-16 75.61% 17.73% 5.52% 1.14% 74.66% 19.% 5.51%.83% 5-27-16 75.56% 17.72% 5.57% 1.15% 74.64% 19.1% 5.51%.84% 5-2-16 75.56% 17.73% 5.56% 1.15% 74.58% 19.7% 5.51%.84% 5-13-16 75.55% 17.75% 5.55% 1.15% 74.5% 19.17% 5.49%.84% 5-6-16 75.49% 17.75% 5.6% 1.16% 74.45% 19.16% 5.54%.85% 4-29-16 75.47% 17.76% 5.63% 1.15% 74.41% 19.18% 5.56%.85% 4-22-16 75.47% 17.74% 5.65% 1.14% 74.43% 19.15% 5.57%.85% 4-15-16 75.43% 17.74% 5.71% 1.13% 74.4% 19.13% 5.63%.85% 4-8-16 75.4% 17.74% 5.75% 1.11% 74.43% 19.11% 5.63%.84% 4-1-16 75.35% 17.76% 5.78% 1.11% 74.33% 19.19% 5.65%.83% 3-25-16 75.19% 17.89% 5.8% 1.12% 74.15% 19.42% 5.59%.83% 3-18-16 75.13% 17.94% 5.8% 1.13% 74.9% 19.54% 5.54%.83% 3-11-16 75.5% 18.2% 5.78% 1.16% 74.% 19.64% 5.5%.85% 3-4-16 75.2% 18.9% 5.72% 1.16% 73.97% 19.76% 5.43%.85% 2-26-16 75.5% 18.8% 5.69% 1.18% 74.3% 19.68% 5.43%.86% 2-19-16 75.5% 18.9% 5.67% 1.18% 73.94% 19.73% 5.46%.87% 2-12-16 75.8% 18.1% 5.64% 1.18% 73.93% 19.72% 5.48%.87% 2-5-16 75.11% 18.6% 5.64% 1.19% 73.93% 19.68% 5.52%.87% 1-29-16 75.16% 18.3% 5.63% 1.18% 73.91% 19.71% 5.5%.87% 1-22-16 75.26% 17.9% 5.65% 1.19% 73.82% 19.66% 5.64%.87% 1-15-16 75.29% 17.82% 5.71% 1.18% 73.56% 19.71% 5.86%.87% 1-8-16 75.23% 17.73% 5.86% 1.19% 73.23% 19.69% 6.2%.87% 1-1-16 75.1% 17.71% 6.% 1.19% 72.85% 19.77% 6.5%.88% Source: Symphony Health Solutions 3
Scripts buprenorphine/naloxone products Suboxone Film Generics Zubsolv Bunavail Total 6-24-16 145214 3444 155 293 19191 6-17-16 142117 33227 1334 272 18775 6-1-16 145984 348 1322 218 192566 6-3-16 14185 33335 185 285 18731 5-27-16 147288 34258 1885 2258 194689 5-2-16 141821 33352 15 2162 187835 5-13-16 144428 33942 158 2172 1915 5-6-16 14835 3488 1977 2296 19653 4-29-16 143796 33584 1589 2151 1912 4-22-16 141141 3334 1364 2168 186977 4-15-16 1421 33498 1754 2193 188455 4-8-16 14738 34735 1113 227 195353 4-1-16 141968 337 1594 212 187671 3-25-16 13927 32952 1715 223 18496 3-18-16 138442 32697 1796 232 183967 3-11-16 143136 3411 1172 2147 19366 3-4-16 145199 3518 1172 2261 19355 2-26-16 137116 3298 1565 272 182661 2-19-16 136647 3312 1554 2187 1824 2-12-16 143938 34825 1745 229 191717 2-5-16 145262 34895 178 239 193327 1-29-16 135327 3256 1314 265 18266 1-22-16 138686 33472 1478 2221 184857 1-15-16 145117 3484 1773 224 192934 1-8-16 14777 34986 1839 2369 195271 1-1-16 132345 3691 1185 251 175272 Source: Symphony Health Solutions Tablets sales buprenorphine/naloxone products Suboxone Film Generics Zubsolv Bunavail Total 6-24-16 4954 128615 297596 42214 5458929 6-17-16 3969724 99684 295244 43161 534213 6-1-16 4127487 14574 29279 47863 55173 6-3-16 47438 12619 2922 43422 536781 5-27-16 4162755 142473 39414 468 5561442 5-2-16 394413 993637 296746 44396 5275192 5-13-16 42637 145263 29544 4468 5411681 5-6-16 4298961 112436 311645 49559 576261 4-29-16 426143 123818 388 4554 539639 4-22-16 391939 1122 2954 44142 5257155 4-15-16 3947429 127626 3836 45779 532167 4-8-16 4267246 11612 314615 4944 5731913 4-1-16 3987378 14937 3437 4527 5337779 3-25-16 3874674 999544 299887 42598 521673 3-18-16 3879369 14648 295942 42827 5222786 3-11-16 412448 186915 39752 47324 556839 3-4-16 4199145 111984 37429 48213 5673871 2-26-16 3779593 1435 281714 41747 517359 2-19-16 37899 18192 2838 45163 5125444 2-12-16 487645 113567 29712 4632 5527956 2-5-16 41825 17529 3753 49867 5534115 1-29-16 3591141 969 275416 41673 487723 1-22-16 37438 995812 28386 45729 568355 1-15-16 44834 183263 295638 4649 5472984 1-8-16 4118681 18542 298917 4966 5552678 1-1-16 3492478 93795 29927 4152 4769652 Source: Symphony Health Solutions 4
New 2Q 16 estimates Ahead of the 2Q report, which will be released 12 th of July, we are raising our forecast and expect that shows a profit during the second quarter. We are raising our milestone payment forecast in accordance to the Mundipharma license deal terms. We also lowers expected R&D expenses in the quarter, as we expect Mundipharma to pay the bioequivalence study Estimates 2Q 216 (SEK million) New Previous Diff Q1'15 Net revenues 172.4 144.6 19% 126.5 Abstral 6.6 6.6 % 5.3 Edluar 3.8 3.8 % 3.3 Zubsolv 96.2 96.6 % 91.1 Milestone 65.8 37.6 75% 22.5 COGS -31.6-31.7 % 36.4 Operating costs -122.3-133.4 9% -137.4 Selling expenses -59.3-58.4-2% -81.7 Admin expenses -36. -36. % -33.1 R&D -27. -39. 44% -38.1 Other.. Nm 15.5 EBITDA 25.2-13.8 155% -74.2 EBIT 18.5-2.5 211% -77.3 Net profit 1.5-28. 367% -84.6 Gross margin 81.7% 78.1% 5% 128.8% Adjusted gross margin 67.2% 67.2% % 61.8% EBIT margin 1.7% Neg Neg 5
Income statement 214 215 216E 217E 218E Net sales 57 643 656 833 1, Total operating costs -583-732 -639-744 -85 EBITDA -12-88 17 89 195 Depreciation -8-12 -5-5 -6 Amortization -5-69 -22-22 -23 Impairment charges EBIT -25-169 -1 62 166 Share in profits Net financial items -28-22 -24-26 -9 Exchange rate dif. Pre-tax profit -53-191 -35 36 157 Tax -4-7 -9-1 -14 Net earnings -57-198 -44 26 142 Balance 214 215 216E 217E 218E Assets Current assets Cash in banks 285 198 267 351 183 Receivables 174 233 236 233 27 Inventories 478 399 335 317 34 Other current assets Current assets 936 83 837 91 793 Fixed assets Tangible assets 29 25 22 22 21 Associated comp. Investments 1 2 1 1 1 Goodwill 27 Cap. exp. for dev. 62 O intangible rights 17 159 137 115 95 O non-current assets Total fixed assets 29 186 161 139 118 Deferred tax assets Total (assets) 1,226 1,16 999 1,4 911 Liabilities Current liabilities Short-term debt 3 Accounts payable 266 252 282 292 32 O current liabilities Current liabilities 268 252 282 292 32 Long-term debt 494 494 494 5 2 O long-term liabilities Convertibles Total Liabilities 762 746 776 792 52 Deferred tax liab 9 4 Provisions Shareholders' equity 455 266 223 248 391 Minority interest (BS) Minority & equity 455 266 223 248 391 Total liab & SE 1,226 1,16 999 1,4 911 Free cash flow 214 215 216E 217E 218E Net sales 57 643 656 833 1, Total operating costs -583-732 -639-744 -85 Depreciations total -13-81 -27-27 -29 EBIT -25-169 -1 62 166 Taxes on EBIT -2-6 -3-17 -15 NOPLAT -27-175 -13 44 151 Depreciation 13 81 27 27 29 Gross cash flow -14-94 14 72 18 Change in WC -452 17 92 3-32 Gross CAPEX -74 23-2 -5-8 Free cash flow -54-54 14 97 14 Capital structure 214 215 216E 217E 218E Equity ratio 37% 26% 22% 24% 43% Debt/equity ratio 19% 186% 222% 21% 51% Net debt 212 296 227 149 17 Capital employed 667 563 45 397 48 Capital turnover rate.5.6.7.8 1.1 Growth 214 215 216E 217E 218E Sales growth 33% 13% 2% 27% 2% EPS growth (adj) -65% 247% -78% -159% 454% DCF valuation WACC (%) 12.9 % Assumptions 216-222 (%) Average sales growth 16.3 % Fair value e. per share, SEK 84.8 EBIT margin 21.2 % Share price, SEK 45.6 Profitability 214 215 216E 217E 218E ROE -18% -55% -18% 11% 45% ROCE -8% -22% -5% 5% 23% ROIC -9% -26% -2% 1% 38% EBITDA margin -2% -14% 3% 11% 19% EBIT margin -4% -26% -2% 7% 17% Net margin -1% -31% -7% 3% 14% Data per share 214 215 216E 217E 218E EPS -1.65-5.73-1.26.74 4.9 EPS adj -1.6-5.57-1.22.72 3.98 Dividend..... Net debt 6.17 8.57 6.52 4.27.48 Total shares 34.35 34.58 34.87 34.87 34.87 Valuation 214 215 216E 217E 218E EV 4,865.5 2,466.2 1,817.5 1,739. 1,67. P/E -82.2-11. -36.3 61.8 11.2 P/E diluted -84.5-11.3-37.3 63.5 11.5 P/Sales 8.2 3.4 2.4 1.9 1.6 EV/Sales 8.5 3.8 2.8 2.1 1.6 EV/EBITDA -391. -27.9 19. 19.5 8.2 EV/EBIT -194.7-14.6-176. 28.2 9.7 P/BV 1.2 8.1 7.1 6.4 4.1 Share performance Growth/year 14/16e 1 month -4.4 % Net sales 7.2 % 3 month -26.5 % Operating profit adj -35.7 % 12 month -35.6 % EPS, just -12.7 % Since start of the year -27.3 % Equity -3.1 % Shareholder structure % Capital Votes Novo Nordisk Fonden 28. % 27.9 % HealthCap 11.5 % 11.5 % ATP 5.9 % 5.9 % Danske Invest Fonder 4.7 % 4.7 % Avanza Pension 3.6 % 3.6 % Anders Walldow 3.5 % 3.5 % Nordnet Pensionsförsäkring 1.6 % 1.6 % Svolder 1.5 % 1.5 % Lancelot Fonder 1.5 % 1.5 % Thomas Lundqvist 1.3 % 1.3 % Share information Reuters code orx.st List Mid cap Share price 45.6 Total shares, million 34.9 Market Cap, MSEK 1,59.2 Management & board CEO CFO IR Chairman Nikolaj Sörensen Henrik Juuel Lena Wange Martin Nicklasson Financial information Q2 report July 12, 216 Q3 report October 2, 216 FY 216 Results January 26, 217 Analysts Klas Palin klas.palin@redeye.se Ulrik Trattner ulrik.trattner@redeye.se Redeye AB Mäster Samuelsgatan 42, 1tr 111 57 Stockholm 6
Revenue & Growth (%) EBIT (adjusted) & Margin (%) 12 1 8 6 4 2 213 214 215 216E 217E 218E 4,% 35,% 3,% 25,% 2,% 15,% 1,% 5,%,% 2 15 1 5-5 -1-15 -2 213 214 215 216E 217E 218E 2,% 1,%,% -1,% -2,% -3,% -4,% Net sales Net sales growth EBIT adj EBIT margin Earnings per share Equity & debt-equity ratio (%) 6 4 2-2 -4-6 -8 213 214 215 216E 217E 218E 6 4 2-2 -4-6 -8,5,45,4,35,3,25,2,15,1,5 213 214 215 216E 217E 218E 25,% 2,% 15,% 1,% 5,%,% EPS, unadjusted EPS, adjusted Equity ratio Debt-equity ratio Conflict of interests Klas Palin owns shares in the company : Yes Ulrik Trattner owns shares in the company : No Redeye performs/have performed services for the Company and receives/have received compensation from the Company in connection with this. 7
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