Quarterly Report • Nov 9, 2011
Quarterly Report
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References made in this interim report pertain to the Group unless otherwise stated. Figures in parentheses relate to the corresponding year-earlier period.
A Chief Scientific Officer was appointed.
| Key figures | |||||
|---|---|---|---|---|---|
| MSEK | 3 months 2011 |
3 months 2010 |
9 months 2011 |
9 months 2010 |
12 months 2010 |
| Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec | |
| Net revenues | 46.2 | 35.9 | 142.9 | 101.4 | 210.5 |
| Operating loss | -61.3 | -25.8 | -121.5 | -84.5 | -81.7 |
| Net loss for the period | -55.9 | -28.5 | -121.0 | -91.4 | -89.2 |
| Earnings/loss per share, SEK | -1.87 | -1.22 | -4.61 | -3.90 | -3.81 |
| Cash flow from operating activities | -39.1 | -25.0 | -70.3 | -13.7 | -43.0 |
| Cash and cash equivalents | 294.3 | 165.6 | 294.3 | 165.6 | 135.8 |
CEO Anders Lundström and CFO Carl-Johan Blomberg will present the report at a teleconference today at 10:00 a.m. CET. Presentation slides are available by link and on the website. Internet: http://livecast.se/stockontv/111109/orexo/ Telephone: +44 (0) 20 3003 2666 - Standard International Access; 08-50520424 – Stockholm Toll Free; 0808 109 0700 - UK Toll Free; 1 866 966 5335 - USA Toll Free
"It is interesting to follow the strong sales growth of Abstral®. During the first nine months of the year, our royalty revenues from the pain product rose 69 percent to MSEK 51.3. The product continues to capture market shares in Europe and sales have increased by more than 60 percent year to date. In September, Abstral was launched in the Netherlands and it has also been approved for marketing in Russia, where our partner is preparing a launch in the coming year.
In the US, all fast-acting fentanyl products will be sold under REMS program from the end of the first quarter, 2012. Only then will Abstral compete on equal terms with other products, as it has so successfully done in Europe.
The development of our proprietary products is advancing at rapid pace. During the third quarter, we obtained positive results from a study of OX219 which is developed for the treatment of opioid dependence. The results have confirmed our commercial formulation and dose. Since our registration application may be based on data from an already approved drug, our clinical studies will not be as extensive. This is but one of the many advantages to our strategy of developing new patentable products based on existing successful therapies in clinical use.
Our two other proprietary programs are proceeding according to plan and during the fourth quarter, we are expecting data from our next study of OX27, which is being developed for breakthrough pain in cancer patients.
Orexo's new orientation towards becoming a specialty pharmaceutical company places new demands on our organization. The strengthening of the executive management is the next step in our strategy to create profitability focusing on our three proprietary programs. Consequently, during the third quarter, we recruited Peter Edman as Chief Scientific Officer and Nikolaj Sørensen as Chief Commercial Officer (CCO), both new key positions.
Peter Edman, with his solid scientific background and long experience from all the phases of drug development, is well-suited to shoulder the overall responsibility of Orexo's R&D. The position of CCO is also central, since Orexo's commercial operations will be expanded significantly.
Nikolaj Sørensen joins us from Pfizer, where he was responsible for the marketing and sales of a leading pain product in Europe and Canada. In addition, he has also been Managing Director for Pfizer in Sweden. To make the management team complete we also have a new highly-qualified CFO in place, Carl-Johan Blomberg, who is also responsible for Investor Relations and IT.
During the final quarter, we will continue the development of our proprietary development programs, both by clinical and commercial planning. Preparing a commercial launch is a substantial undertaking that spans several years and is established gradually, bringing Orexo closer to becoming a leading specialty pharmaceutical company, step-by-step."
Anders Lundström President and CEO
During the period, positive results were received from a Phase I study of OX219 for the treatment of opioid dependence. The study was designed to decide the commercial formulation and dose for the project. The selected formulation was based on Orexo's proprietary sublingual technology.
In June, positive results were reported from the first pharmacokinetic study for the OX27 project, which is aimed at developing the treatment of breakthrough pain among cancer patients.
In July, the insomnia-treatment Sublinox (Edluar) was approved for sale in Canada. Meda and its partner Valeant plan to launch the product during the fourth quarter of 2011. Orexo, which has developed the product, will have rights to sales royalties.
In July, the subsidiary Kibion AB acquired Wagner Analysen Technik GmbH (WAT), a leading manufacturer of IRIS instruments and substrates for diagnostic breath testing. The acquisition reinforces Kibion's operations and creates considerable opportunity for future growth, and consequently a unit with increased independence. The purchase consideration amounted to MEUR 1.2 and was financed entirely through a bank loan. A supplementary purchase consideration will be paid if a well-defined sales target is achieved. The acquisition is expected to contribute positively to Orexo's earnings within 12 months.
In July, Orexo announced a significant change of shareholders and a new number of shares as a result of the successfully completed new share issue of some MSEK 245. The newcomer investors were Denmark's largest pension fund, Arbejdsmarkedets Tillaegspension (ATP), and the specialized life-science investor, Abingworth. In addition, existing owner Novo A/S became the largest shareholder.
In September, Nikolaj Sørensen was appointed Chief Commercial Officer. Sørensen has extensive experience in the pharmaceutical industry and will be responsible for Orexo's commercial operations and the development of the company's commercial strategies.
In September, Carl-Johan Blomberg was appointed the new CFO with responsibilities for the company's financial functions, IR and IT. Blomberg has a broad experience of many years in economic and financial functions related to a range of industries such as engineering, electronics and pharmaceuticals.
Orexo appointed Peter Edman as Chief Scientific Officer. Edman brings with him many years of experience in all the phases of pharmaceutical development and a solid background in research. He was most recently at Sobi (Swedish Orphan Biovitrum) and will assume the position of CSO at Orexo on January 1, 2012.
Revenues from product sales rose 39 percent during the period January-September 2011 to MSEK 92.8 (67.0). Royalty revenues from Abstral® increased during the same period by 69 percent to MSEK 51.3 (30.3), compared with the year-earlier period. The sales growth for Abstral in Europe remained considerably strong and sales have increased by more than 60 percent during the January-September period. During the third quarter, sales in Europe increased 46 percent and consequently showed a similar pattern as the year-earlier period. The growth was strongest in Spain and France - the largest markets for fast-acting fentanyl products. In September, Abstral was launched in the Netherlands, Europe's seventh largest market for pharmaceuticals. During the period, Abstral, in partnership with Gedeon Richter, was approved in Russia and in partnership with NewBridge, was approved in Kuwait.
In April, Abstral was introduced in the US by Orexo's partner ProStrakan, which sells the product through pharmacies approved in accordance with the REMS (risk evaluation and mitigation strategy) system. Actiq and Fentora - the two market-leading products in the US—are not yet included in the REMS system, which means a significant competitive disadvantage for Abstral. Cephalon, which provides these products, has initiated the implementation of its own REMS system in October, which will be adopted during the first quarter of 2012. When a REMS system is adopted by all players in the market, they will compete on equal terms and; consequently, Abstral will be well-positioned.
The bars refer to invoiced sales from our partner ProStrakan Group plc to wholesalers.
Royalty revenues from Edluar™ amounted to MSEK 1.8 for the period.
During the third quarter, Kibion AB acquired Wagner Analysen Technik GmbH (WAT). Kibion's total third quarter sales of MSEK 8.2 (8.0) comprised those of WAT, which amounted to MSEK 1.7. During the quarter, Heliprobe® System was registered in Columbia, which is expected to lead to sales in 2012.
ProStrakan AB's sales rose by 41.9 percent during the period January-September 2011. Orexo's shares amounted to MSEK 12.2 (8.6). Sales of Abstral through ProStrakan AB rose 88.9 percent to MSEK 5.1 (2.7) during the same period.
Revenues from new and existing licensing agreements amounted to MSEK 26.2 (16.2) during the period January-September 2011. These comprise a recognized portion of the nonrecurring payment made by Ortho-McNeil-Janssen Pharmaceuticals, Inc. and Janssen Pharmaceutica NV (OMJ).
Refer to page 9 for information on partner-financed R&D costs in respect of collaborative projects.
During the third quarter, positive results were received from a Phase I study of OX219 which is being developed for the treatment of opioid dependence. The study was designed to decide the commercial formulation and dose for OX219. Orexo complies with the 505 (b)(2) registration procedure, whereby the FDA's approval may be based on data from already approved drugs—in this case, the market-leading Suboxone®. This enables Orexo to obtain approval without costly clinical studies on effects and safety, and consequently creates a significantly faster route to market.
The selected formulation is based on Orexo's proprietary sublingual technology. The objective with OX219 is to create a new, patented drug for the treatment of opioid dependence. Orexo performs the clinical development of the product in the US, which is also the primary market for Suboxone, the current market-leading pharmaceutical preparation for the treatment of opioid dependence. The current global market for treatments of opiate dependence amounts to USD 1.4 billion and is estimated to reach USD 2.2 billion by 2019 (Datamonitor, 2010).
Positive clinical data was reported in March for OX51. This is a new sublingual formulation of an existing treatment for acute intensive pain episodes in conjunction with care-related, diagnostic or therapeutic procedures for patients who currently do not receive sufficient pain relief. The planning of the first patient study in the program will be completed during the second half of the year.
The project has the potential to address a market with an estimated 130 million pain episodes annually in the US and EU. A significant portion of such pain episodes is currently treated through the anesthetization of patients, which requires considerable healthcare resources. By managing these pain episodes more efficiently with OX51 and thereby reducing the need for anesthetization, a major potential market is created for the product.
The program involves a fast-acting sublingual formulation for an existing drug and is designed for optimal treatment of breakthrough pain episodes than can affect cancer patients. In June, positive results were reported from the initial pharmacokinetic study for the OX27 project. It indicated the ability of the active pharmaceutical ingredient to both be absorbed and eliminated quickly, which makes the product well-suited to such pain treatments. The subsequent clinical study was initiated in June and the results are expected during the fourth quarter of 2011.
| MSEK | 3 months 2011 |
3 months 2010 |
9 months 2011 |
9 months 2010 |
12 months 2010 |
|---|---|---|---|---|---|
| Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec | |
| Net revenues | 46.2 | 35.9 | 142.9 | 101.4 | 210.5 |
| Cost of goods sold | -5.5 | -5.6 | -18.8 | -18.9 | -26.3 |
| Gross profit | 40.8 | 30.3 | 124.1 | 82.5 | 184.2 |
| Selling expenses | -10.7 | -6.6 | -34.3 | -22.8 | -35.2 |
| Administrative expenses | -11.5 | -17.4 | -37.4 | -36.7 | -46.8 |
| Research and development | |||||
| costs | -42.2 | -31.3 | -137.5 | -109.4 | -161.1 |
| Other operating income | |||||
| and expenses* | -37.8 | -0.8 | -36.4 | 1.9 | -22.8 |
| Operating loss | -61.3 | -25.8 | -121.5 | -84.5 | -81.7 |
| Net financial items | -1.5 | -2.7 | -6.5 | -6.9 | -7.5 |
| Loss after financial items | -62.8 | -28.5 | -128.0 | -91.4 | -89.2 |
| Tax | 7.0 | 0.0 | 7.0 | 0.0 | 0.0 |
| Net loss for the period | -55.9 | -28.5 | -121.0 | -91.4 | -89.2 |
* Includes a MSEK 38.7 (MSEK 1.7) impairment loss on previously acquired technology.
Net revenues for January-September 2011 totaled MSEK 142.9 (101.4). The increase was primarily attributable to higher royalty revenues from Abstral® and higher licensing revenues from joint ventures.
During the period July-September 2011, net revenues totaled MSEK 46.2 (35.9).
| MSEK | Jul–Sep 2011 |
Jul–Sep 2010 |
Jan–Sep 2011 |
Jan–Sep 2010 |
Jan–Dec 2010 |
|---|---|---|---|---|---|
| Abstral royalties | 17.7 | 10.8 | 51.3 | 30.3 | 42.2 |
| Edluar royalties | 0.5 | 0.4 | 1.8 | 0.4 | 1.3 |
| ProStrakan AB J/V 50 % | 4.6 | 2.7 | 12.2 | 8.6 | 12.3 |
| Kibion | 8.2 | 8.0 | 27.5 | 27.7 | 39.9 |
| Total revenues from products | |||||
| launched | 31.0 | 21.9 | 92.8 | 67.0 | 95.7 |
| Partner-financed R&D costs | 7.7 | 6.0 | 24.3 | 17.9 | 33.8 |
| License revenues for development | |||||
| projects | 7.9 | 7.8 | 26.2 | 16.2 | 81.1 |
| Other | -0.4 | 0.0 | -0.4 | 0.1 | -0.1 |
| Total | 46.2 | 35.9 | 142.9 | 101.4 | 210.5 |
Selling expenses during January-September 2011 totaled MSEK 34.3 (22.8) and amounted to MSEK 10.7 (6.6) for the period July–September 2011. The increase was due mainly to higher costs for ongoing Phase IV studies for Abstral, market-support activities for Orexo's project portfolio and higher selling expenses in the subsidiary Kibion AB and in the joint venture, ProStrakan AB, as well as the costs in Kibion in conjunction with the acquisition of Wagner Analysen Technik GmbH.
Administrative expenses for January-September 2011 totaled MSEK 37.4 (36.7). These expenses were attributable to such costs as the recruitment of new senior executives, implementation of long-term incentive programs for the period 2011/2021 and legal costs relating to the company's patent portfolio. A Paragraph IV process is ongoing in the US, with the patent for Edluar being challenged. For the period of July–September, administrative expenses totaled MSEK 11.5 (17.4).
Research and development costs for January-September 2011 totaled MSEK 137.5 (109.4), of which MSEK 24.3 (17.9) was covered by the business partners, Ortho-McNeil-Janssen Pharmaceuticals, Inc. and Janssen Pharmaceutica NV (OMJ). The increase pertained primarily to activities relating to Phase I studies for proprietary programs. For the period of July–September2011, research-and-development costs amounted to MSEK 42.2 (31.3).
The Group's expenses for its employee stock options program for the period January-September 2011 totaled MSEK 2.2, excluding implementation costs, compared with MSEK 2.5 for the corresponding year-earlier period.
Other revenues and expenses amounted to an expense of MSEK 36.4 (revenue: 1.9) MSEK for the period January-September 2011. Other revenues and expenses comprise a MSEK 38.7 impairment loss on previously acquired technology based on the choice of formulation for the proprietary development project, OX219. The project is entirely attributable to PKX219, which was included in the acquisition of PharmaKodex. Other revenues and expenses consist primarily of exchange rate gains/losses.
For the period July-September 2011, other revenues and expenses amounted to an expense of MSEK 37.8 (expense: 0.8).
Depreciation/amortization amounted to MSEK 5.9 (5.9) for the period January-September 2011 and to MSEK 2.0 (1.9) for July–September 2011.
Net financial items for the period January-September 2011 amounted to an expense of MSEK 6.5 (expense: 6.9). Net financial items primarily comprise interest expenses of MSEK 8.8 in respect of the convertible loan.
The income tax amounted to MSEK 7.0 (0.0) for the period January-September 2011 and is entirely attributable to the recovery of deferred tax related to the impairment of acquired technology.
The operating loss for the period January-September 2011 totaled MSEK 121.5 (loss: 84.5).
As of September 30, 2011, cash and cash equivalents totaled MSEK 294.3 (165.6).
Cash flow from operating activities for the period January-September 2011 was a negative MSEK 70.3 (13.7). Cash flow for the period was positively affected by a nonrecurring payment of MSEK 56.3 from Boehringer Ingelheim, where revenue was recognized in 2010 but paid in 2011.
The new share issue completed during the third quarter has provided a total of MSEK 231.2 after issue costs.
Shareholders' equity as of September 30, 2011 amounted to MSEK 581.7 (466.2). The equity ratio was 72 (66) percent.
Gross investments in tangible fixed assets amounted to MSEK 4.7 (2.3) for the period January-September 2011 and MSEK 1.1 (0.2) for the period July-September 2011.
Orexo's operations are not affected by seasonal variations. However, sales of pharmaceuticals in new markets can be affected by inventory build-up, particularly in the launch phase.
Most of the Group's business is carried out in the Parent Company, Orexo AB. Net revenue for the period January-September 2011 totaled MSEK 86.1 (61.5), and the loss after financial items was MSEK 162.0 (loss: 97.8). Investments totaled MSEK 4.7 (2.3). As of September 30, 2011, cash and cash equivalents in the Parent Company amounted to MSEK 273.6 (130.5).
During the period, shares of the subsidiary were reduced by MSEK 118.7. The reduction is partly attributable to the write-down of acquired technology and partly to the reduction of Biolipox AB's statutory reserve, which was repaid to the Parent Company.
Significant risks and uncertainties are disclosed in the 2010 Annual Report. Apart from the following, no significant changes in terms of business risks and uncertainties have occurred since the publication of Annual Report.
The successful completion of the rights issue during the period has reduced Orexo's financial risks.
Orexo's share traded at SEK 28.60 on September 30, 2011. The company's market capitalization, based on the number of shares outstanding on September 30, 2011, was MSEK 854.
| ABG Sundal Collier | Erik Hultgård |
|---|---|
| Carnegie | Camilla Oxhamre |
| Nordea | Olle Sjölin |
| Pharmium Securities | Frédéric Gomez |
| Redeye | Klas Palin and Peter Östling |
| Rodman & Renshaw | Michael Higgins |
| SEB Enskilda | Lars Hevreng |
| Year-end report for fiscal year 2011 | January 31, 2012 |
|---|---|
| Annual General Meeting 2012 | April 11, 2012, at 4:00 p.m. |
| Interim report January–March 2012 | April 27, 2012 |
| Interim report January–June 2012 | July 12, 2012 |
| Interim report January–September 2012 | October 25, 2012 |
| Year-end report for fiscal year 2012 | January 31, 2013 |
Interim reports will be covered in a conference call on the date of the publication. Details on the calls will be provided in each report.
Uppsala, November 9, 2011 Orexo AB (publ)
Anders Lundström President and Chief Executive Officer
For further information, please contact:
Anders Lundström, CEO, tel: +46 (0)706 67 22 66, e-mail: [email protected] Carl-Johan Blomberg, CFO, tel: +46 (0)706 33 67 11, e-mail: [email protected]
Orexo has four products on the market, several significant partnerships and three proprietary development projects. Orexo's launched pharmaceuticals are Abstral™, for the treatment of breakthrough pain in cancer patients which is sold by Kyowa Hakko Kirin/ProStrakan Group plc. in Europe and the US, insomnia tablet Edluar™ which is sold by Meda in the US, and two products, Diabact® UBT/Heliprobe® System, for diagnosing the gastric ulcer bacterium, Helicobacter pylori, through its subsidiary Kibion.
Orexo's objective is to build a portfolio of proprietary products, which are to be marketed and sold through the company's own organization in Europe or in the US. The objective is that Orexo will become a profitable and fully integrated specialist pharmaceutical company.
In its proprietary development projects and throughout all clinical phases, Orexo focuses not only on pain relief and anti-inflammatory pharmaceuticals, but also on the treatment of opioid dependence. The company combines well-known substances with innovative drug-delivery technologies to create new patented pharmaceuticals that provide improved or new treatments. These pharmaceuticals can often be developed at lower risk and in shorter time spans than new drug molecules. Orexo also has partnerships in this area.
Existing partnerships are key strategic assets, from both a financial and competence perspective. Three of the out-licensed projects are based on Orexo's knowledge in the arachidonic acid cascade. The aim is to develop completely new drugs for the treatment of major diseases, including inflammatory pain and respiratory diseases such as asthma and COPD. Orexo's partners in this area are Boehringer Ingelheim, Ortho-McNeil-Janssen Pharmaceuticals, Inc. and Janssen Pharmaceutica NV (OMJ).
| Product/project | Indication |
|---|---|
| Abstral® | Breakthrough pain in cancer patients |
| Edluar™ | Sleeping disorders |
| Diabact® UBT | Exhalation test, Helicobacter pylori |
| Heliprobe® System | Test, Helicobacter pylori |
| OX17 | GERD (gastroesophageal reflux) |
| OX27 | Breakthrough pain in cancer patients |
| OX51 | Acute intense pain episodes |
| OX219 | Opioid dependence |
| OX-NLA | Rhinitis |
| OX-MPI | Inflammatory pain |
| OX-CLI | Asthma/COPD |
We have reviewed the appended report for the period January 1 to September 30, 2011 for Orexo AB (publ). The Board of Directors is responsible for the preparation and fair presentation of this interim report in accordance with the Annual Accounts Act and IAS 34. Our responsibility is to express an opinion on this interim report based on our review.
We conducted our review in accordance with the Standard on Review Engagements SÖG 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different direction and is substantially more restricted in scope than an audit conducted in accordance with Standards on Auditing in Sweden RS and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.
Based on our review, nothing has come to our attention that causes us to believe that the appended interim report has not in all significant respects been compiled in accordance with the Annual Accounts Act and IAS 34 and for the Parent Company in accordance with the Annual Accounts Act.
Uppsala, November 9, 2011
PricewaterhouseCoopers AB
Leonard Daun Authorized Public Accountant
| KSEK | Notes | 3 months 2011 Jul-Sep |
3 months 2010 Jul-Sep |
9 months 2011 Jan-Sep |
9 months 2010 Jan-Sep |
12 months 2010 Jan-Dec |
|---|---|---|---|---|---|---|
| Net revenues | 46,225 | 35,854 | 142,888 | 101,362 | 210,499 | |
| Costs of goods sold | 2 | -5,475 | -5,577 | -18,810 | -18,858 | -26,321 |
| Gross profit | 40,750 | 30,277 | 124,078 | 82,504 | 184,178 | |
| Selling expenses | 2 | -10,698 | -6,607 | -34,294 | -22,824 | -35,223 |
| Administrative expenses | 2 | -11,434 | -17,394 | -37,369 | -36,667 | -46,819 |
| Research and development costs | - | |||||
| 2 | -42,151 | -31,268 | -137,533 | 109,438 | -161,120 | |
| Other operating income | 2,213 | 2,521 | 5,606 | 6,445 | 7,746 | |
| Other operating expenses | 2 | -40,020 | -3,339 | -42,016 | -4,535 | -30,535 |
| Operating loss | -61,340 | -25,810 | -121,528 | -84,515 | -81,773 | |
| Financial income | 1,805 | 200 | 2,755 | 264 | 1,456 | |
| Financial expense | -3,274 | -2,902 | -9,216 | -7,139 | -8,942 | |
| Financial items, net | -1,469 | -2,702 | -6,461 | -6,875 | -7,486 | |
| Pre-tax loss | -62,809 | -28,512 | -127,989 | -91,390 | -89,259 | |
| Income tax | 6,935 | 9 | 6,967 | 14 | 13 | |
| Net loss for the period | -55,874 | -28,503 | -121,022 | -91,376 | -89,246 | |
| Loss for the period attributable to: | ||||||
| Parent Company shareholders | -55,874 | -28,503 | -121,022 | -91,376 | -89,246 | |
| Non-controlling interests | - | - | - | - | - | |
| Loss per share, attributable to Parent Company shareholders during the period (SEK per share): |
||||||
| Loss per share, before dilution, SEK | -1.87 | -1.22 | -4.61 | -3.90 | -3.81 | |
| Loss per share, after dilution, SEK | -1.87 | -1.22 | -4.61 | -3.90 | -3.81 |
| 3 months 2011 Jul-Sep |
3 months 2010 Jul-Sep |
9 months 2011 Jan-Sep |
9 months 2010 Jan-Sep |
12 months 2010 Jan-Dec |
|---|---|---|---|---|
| -55,874 | -28,503 | -121,022 | -91,376 | -89,246 |
| 1,760 | -2,465 | -34 | -2,972 | -3,524 |
| 1,760 | -2,465 | -34 | -2,972 | -3,524 |
| -54,114 | -30,968 | -121,056 | -94,348 | -92,770 |
| -54,114 | -30,968 | -121,056 | -94,348 | -92,770 |
Attributable to Parent Company shareholders 1)
| KSEK | Share capital |
Other contributed capital |
Accumulated loss |
Translation differences |
Total | Total share holders' equity |
|---|---|---|---|---|---|---|
| Opening balance, January 1, 2010 |
9,360 | 1,094,453 | -549,907 | -5,245 | 548,661 | 548,661 |
| Total comprehensive income/loss for the period |
- | - | -91,376 | -2,972 | -94,348 | -94,348 |
| Employee stock options, vested amount |
- | 1,823 | - | - | 1,823 | 1,823 |
| Debenture loan – equity portion |
- | 10,005 | - | - | 10,005 | 10,005 |
| New share issues | 1 | 43 | - | - | 44 | 44 |
| Closing balance, September 30, 2010 |
9,361 | 1,106,324 | -641,283 | -8,217 | 466,185 | 466,185 |
| Opening balance, January 1, 2011 |
9,361 | 1,106,798 | -639,153 | -8,769 | 468,237 | 468,237 |
| Total comprehensive income for the period |
- | - | -121,022 | -34 | -121,056 | -121,056 |
| Employee stock options, vested amount |
- | 3,124 | - | - | 3,124 | 3,124 |
| New share issues | 2,579 | 228,820 | - | - | 231,399 | 231,399 |
| Closing balance, September 30, 2011 |
11,940 | 1,338,742 | -760,175 | -8,803 | 581,704 | 581,704 |
1) There are no non-controlling interests.
| KSEK | Notes | 2011 Sep 30 |
2010 Sep 30 |
2010 Dec 31 |
|---|---|---|---|---|
| ASSETS | ||||
| Fixed assets | ||||
| Tangible fixed assets | 40,592 | 42,602 | 41,666 | |
| Goodwill | 7 | 33,806 | 17,800 | 17,679 |
| Acquired research and development | 349,111 | 423,332 | 388,487 | |
| Other intangible fixed assets | 895 | 1,420 | 1,251 | |
| Total fixed assets | 424,404 | 484,154 | 449,083 | |
| Current assets | ||||
| Inventories | 18,319 | 9,577 | 7,965 | |
| Accounts receivable and other receivables | 76,297 | 48,870 | 119,845 | |
| Cash and cash equivalents | 294,340 | 165,645 | 135,798 | |
| Total current assets | 388,956 | 224,092 | 236,608 | |
| Total assets | 813,360 | 708,246 | 712,691 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | 3 | |||
| Share capital | 11,940 | 9,361 | 9,361 | |
| Other capital contributions | 1,338,742 | 1,106,324 | 1,106,798 | |
| Accumulated losses | -760,175 | -641,283 | -639,153 | |
| Translation differences | -8,803 | -8,217 | -8,769 | |
| Total shareholders' equity | 581,704 | 466,185 | 468,237 | |
| Long-term liabilities | ||||
| Provisions | 4,974 | 10,798 | 1,112 | |
| Long-term liabilities, interest-bearing | 107,510 | 91,510 | 94,421 | |
| Deferred tax liability | 1,806 | 9,036 | 8,911 | |
| Total long-term liabilities | 114,290 | 111,344 | 104,444 | |
| Current liabilities | ||||
| Current liabilities, non-interest-bearing* | 106,052 | 121,238 | 130,531 | |
| Current liabilities, interest-bearing | 11,314 | 9,479 | 9,479 | |
| Total liabilities | 231,656 | 242,061 | 244,454 | |
| Total shareholders' equity and liabilities | 813,360 | 708,246 | 712,691 |
* Including advance payment of MSEK 43.2 from the OX-CLI cooperation.
| KSEK | Note | |||||
|---|---|---|---|---|---|---|
| 2011 Jul-Sep |
2010 Jul-Sep |
2011 Jan-Sep |
2010 Jan-Sep |
2010 Jan-Dec |
||
| Operating activities | ||||||
| Operating loss before interest expense | ||||||
| and interest income | ||||||
| -61,340 | -25,810 | -121,528 | -84,515 | -81,773 | ||
| Interest income | 1,805 | 200 | 2,755 | 264 | 550 | |
| Interest expense | -2,305 | -2,902 | -6,928 | -6,030 | -8,942 | |
| Other financial expenses Adjustment for non-cash items |
-138 | - | -138 | -1,109 | 906 | |
| 4 | 40,722 | 7,156 | 44,664 | 9,890 | 39,825 | |
| Cash flow from operating activities before changes in working capital |
||||||
| -21,256 | -21,356 | -81,175 | -81,500 | -49,434 | ||
| Changes in working capital | ||||||
| Accounts receivable | -5,847 | 6,461 | 50,752 | 2,760 | -67,453 | |
| Other current receivables | 4,393 | 19,446 | 831 | 9,037 | 8,275 | |
| Inventories | -5,877 | -2,050 | -9,777 | -1,137 | 475 | |
| Current liabilities | -14,708 | -25,284 | -33,816 | 58,191 | 65,751 | |
| Provisions | 4 | -1,288 | -503 | -316 | 299 | |
| Long-term provisions | 4,216 | -881 | 3,400 | -755 | -880 | |
| Cash flow from operating activities | ||||||
| -39,075 | -24,952 | -70,288 | -13,720 | -42,967 | ||
| Investing activities Acquisition of machinery and equipment |
||||||
| Acquisition of subsidiaries | -1,050 | -170 | -4,680 | -2,286 | -3,438 | |
| Cash flow after investments | -10,298 -50,423 |
- -25,122 |
-10,298 -85,266 |
- -16,006 |
- -46,405 |
|
| Change in financing | ||||||
| New issue | 102,041 | 44 | 244,808 | 44 | 44 | |
| Issue expenses | -11,334 | - | -12,798 | - | - | |
| Proceeds from the issue of convertible | ||||||
| debentures | - | - | - | 111,150 | 111,150 | |
| Amortization of loans | - | - | - | -16,000 | -16,000 | |
| Loans raised | 11,743 | - | 11,743 | - | - | |
| Cash flow after financing | 52,027 | -25,078 | 158,487 | 79,188 | 48,789 | |
| Cash flow for the year Cash and cash equivalents at the |
||||||
| beginning of the period | 242,497 | 190,853 | 135,798 | 87,414 | 87,414 | |
| Exchange-rate differences in cash and | ||||||
| cash equivalents | -184 | -130 | 55 | -957 | -405 | |
| Changes in cash and cash equivalents | 52,027 | -25,078 | 158,487 | 79,188 | 48,789 | |
| Cash and cash equivalents at the end of | ||||||
| the period | 294,340 | 165,645 | 294,340 | 165,645 | 135,798 |
| 3 months 2011 |
3 months 2010 |
9 months 2011 |
9 months 2010 |
12 months 2010 |
|
|---|---|---|---|---|---|
| Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec | |
| Operating margin, % | -133 | -72 | -85 | -83 | -39 |
| Profit margin, % | -136 | -80 | -90 | -90 | -42 |
| Return on total capital, % | -7 | -4 | -16 | -12 | -12 |
| Return on equity, % | -9 | -6 | -24 | -18 | -18 |
| Return on capital employed, % | -8 | -5 | -19 | -15 | -14 |
| Debt/equity ratio, % | 20 | 22 | 20 | 22 | 22 |
| Equity/assets ratio, % | 72 | 66 | 72 | 66 | 66 |
| Current ratio, % | 331 | 171 | 331 | 171 | 188 |
| Acid ratio, % | 316 | 164 | 316 | 164 | 183 |
| Average number of shares, before dilution | 29,850,940 | 23,403,752 | 26,269,419 | 23,402,085 | 23,402,502 |
| Average number of shares, after dilution | 32,380,626 | 25,942,413 | 28,818,593 | 25,353,390 | 25,500,884 |
| Number of shares, after full dilution | 33,647,834 | 26,610,080 | 33,647,834 | 26,610,080 | 26,609,081 |
| Number of shares, before dilution | 29,850,940 | 23,403,752 | 29,850,940 | 23,403,752 | 23,403,752 |
| Number of shares, after dilution | 32,373,345 | 25,945,232 | 32,373,345 | 25,945,232 | 25,943,070 |
| Loss per share, before dilution, SEK | -1.87 | -1.22 | -4.61 | -3.90 | -3.81 |
| Loss per share, after dilution, SEK | -1.87 | -1.22 | -4.61 | -3.90 | -3.81 |
| Shareholders' equity per share, before | |||||
| dilution, SEK | 19.49 | 19.92 | 19.49 | 19.92 | 20.01 |
| Shareholders' equity per share, after | |||||
| dilution, SEK | 17.97 | 17.97 | 17.97 | 17.97 | 18.05 |
| Number of employees at the end of the | |||||
| period | 108 | 106 | 108 | 106 | 105 |
| Average number of employees | 108 | 105 | 106 | 105 | 105 |
| Shareholders' equity, KSEK | 581,704 | 466,185 | 581,704 | 466,185 | 468,237 |
| Capital employed, KSEK | 699,591 | 567,174 | 699,591 | 567,174 | 572,137 |
Definitions of key figures are presented on the final page of this report.
Share-related key figures have been calculated retroactively based on the so-called bond issue element in the implemented preferential issue in June 2011.
| KSEK | Notes | 3 months 2011 Jul-Sep |
3 months 2010 Jul-Sep |
9 months 2011 Jan-Sep |
9 months 2010 Jan-Sep |
12 months 2010 Jan-Dec |
|---|---|---|---|---|---|---|
| Net revenues Cost of goods sold |
28,310 - |
21,637 - |
86,125 - |
61,508 - |
112,951 - |
|
| Gross profit | 28,310 | 21,637 | 86,125 | 61,508 | 112,951 | |
| Selling expenses | -4,564 | -1,480 | -16,161 | -11,387 | -16,533 | |
| Administrative expenses | -18,060 | -24,003 | -57,095 | -44,904 | -61,605 | |
| Research and development costs | -39,277 | -30,527 | -128,733 | -97,400 | -145,395 | |
| Other operating income | 618 | 888 | 2,304 | 3,214 | 4,136 | |
| Other operating expenses | -39,300 | -2,021 | -39,817 | -2,571 | -2,998 | |
| Operating loss | -72,273 | -35,506 | -153,377 | -91,540 | -109,444 | |
| Earnings from financial investments |
||||||
| Interest income | 1,675 | 192 | 2,142 | 224 | 506 | |
| Interest expense | -3,659 | -2,983 | -10,764 | -6,163 | -9,399 | |
| Other financial costs | - | - | - | -295 | -295 | |
| Loss after financial items | -74,257 | -38,297 | -161,999 | -97,774 | -118,632 | |
| Tax | - | - | - | - | - | |
| Loss for the period | -74,257 | -38,297 | -161,999 | -97,774 | -118,632 |
| KSEK | Notes | 2011 Sep 30 |
2010 Sep 30 |
2010 Dec 31 |
|---|---|---|---|---|
| ASSETS | ||||
| Fixed assets | ||||
| Tangible fixed assets | 40,367 | 42,465 | 41,566 | |
| Intangible fixed assets | 108 | 254 | 218 | |
| Shares in subsidiaries/joint ventures | 486,033 | 604,763 | 604,763 | |
| Total fixed assets | 526,508 | 647,482 | 646,547 | |
| Current assets | ||||
| Inventories | 6,912 | 2,734 | 2,529 | |
| Accounts receivable and other receivables | 101,316 | 113,162 | 133,986 | |
| Cash and bank balances | 273,590 | 130,525 | 101,400 | |
| Total current assets | 381,818 | 246,421 | 237,915 | |
| Total assets | 908,326 | 893,903 | 884,462 | |
| SHAREHOLDERS' EQUITY, PROVISIONS AND | ||||
| LIABILITIES | 5 | |||
| Restricted equity | 302,691 | 300,112 | 300,112 | |
| Non-restricted equity | 310,359 | 260,878 | 240,414 | |
| Total shareholders' equity | 613,050 | 560,990 | 540,526 | |
| Long-term liabilities | ||||
| Provisions | 609 | 929 | 1,135 | |
| Loans | 96,884 | 91,510 | 94,421 | |
| Total long-term liabilities | 97,493 | 92,439 | 95,556 | |
| Current liabilities, non-interest-bearing | 188,891 | 230,995 | 238,901 | |
| Current liabilities, interest-bearing | 8,892 | 9,479 | 9,479 | |
| Total current liabilities | 197,783 | 240,474 | 248,380 | |
| Total liabilities | 295,276 | 332,913 | 343,936 | |
| Total shareholders' equity and liabilities | ||||
| 908,326 | 893,903 | 884,462 | ||
| Pledged assets | 44,000 | 16,000 | 44,000 | |
| Contingent liabilities | 13,111 | 6,050 | 6,050 |
No new or amended International Financial Reporting Standards have come into effect that are expected to have any significant impact on the Group.
| 2011 Jul-Sep |
2010 Jul-Sep |
2011 Jan-Sep |
2010 Jan-Sep |
2010 Jan-Dec |
|
|---|---|---|---|---|---|
| Raw materials and supplies | 7,779 | 8,570 | 27,031 | 25,744 | 35,306 |
| Other external costs | 34,644 | 21,531 | 115,367 | 71,644 | 114,821 |
| Personnel costs | 26,662 | 30,534 | 83,004 | 87,429 | 116,126 |
| Depreciation/amortization and | 40,693 | 3,548 | 44,621 | 7,504 | 33,764 |
| impairment | |||||
| TOTAL | 109,778 | 64,183 | 270,023 | 192,321 | 300,017 |
Research and development costs encompass costs for personnel, premises, external costs for clinical trials, pharmaceutical registration and laboratory services, the depreciation/amortization of equipment, and the acquisition of patents and other intangible assets. All development costs recognized in the balance sheet pertain to assets that were acquired through business combinations.
The number of shares outstanding as of September 30, 2011 was 29,850,940, all of which were common shares. All shares carry entitlement to one vote each.
| Number of shares outstanding at January 1, 2011 | 23,403,752 |
|---|---|
| Subscription of shares through exercise of employee stock | 9,000 |
| options | |
| New issue | 6,438,188 |
| Number of shares outstanding at September 30, 2011 | 29,850,940 |
As of September 30, 2011, a total of 2,399,234 options were outstanding that carry rights to new subscription of 2,255,052 shares in Orexo and the exchanged of 144,182 options for shares in Orexo. Each option issued by Biolipox AB provides entitlement to the exchange of one share in Orexo AB, and a corresponding number of shares are held by the independent company Pyrinox AB.
| Employee-related options | Opening Jan 1, 2011 |
Change | Closing Sep 30, 2011 |
|---|---|---|---|
| Of which: | |||
| Decided and allocated employee stock options | 837,148 | 837,148 | |
| Expired | -163,145 | -163,145 | |
| Exercised | -29,003 | -29,003 | |
| Allotted | 745,000 | 745,000 | |
| Total | 1,390,000 | ||
| Decided and allotted Board options | 60,920 | 14,641 | 75,561 |
| Total | 75,561 | ||
| Decided and allotted warrants | 10,000 | 10,000 | |
| Total | 10,000 | ||
| Decided but not allotted employee stock options | |||
| Opening balance, as approved by the 2009 AGM | 470,000 | -470,000 | - |
| Resolved at the Extraordinary General Meeting in | |||
| 2011 | 795,000 | 795,000 | |
| Total | 795,000 | ||
| Warrants held by subsidiaries as cash-flow hedging for social security fees |
139,873 | -11,200 | 128,673 |
| Total | 128,673 | ||
| Total options to employees | 1,517,941 | 881,293 | 2,399,234 |
During the January-September 2011 period, a total of 29,003 employee stock options from Orexo's options program were exercised, of which 15,361 were exercised during the period July-September.
During 2011, Orexo introduced a performance-based, long-term incentive program that prior to exercise comprises performance shares that provide entitlement to subscription of a total of 1,540,000 Orexo shares. A condition for entitlement to acquire new shares through the exercise of performance shares is that each employee fulfills certain vesting conditions. Of the total number of performance shares allotted, 50 percent are vested on the basis of time and internal operational goals ("time-based performance shares") and 50 percent is based on the share-price trend and the relative share performance ("share-price based performance shares"). Of these performance shares, 500,000 were allotted free of charge to the President on March 7, 2011 and 245,000 performance shares were allotted free of charge to senior executives on April 26. Of these
performance shares, 372,500 are time-based and 372,500 are share-price based performance shares. The exercise price for the performance shares that were allotted on March 7 has been set at SEK 44.40 and the exercise price for the performance shares that were allotted on April 26 has been set at SEK 47.80. The final date for exercising the options is December 31, 2021.
For the time-based portion of the shares, the market capitalization is calculated according to the Black & Scholes method and for the share-price based portion, the Monte Carlo method is used. The market capitalization of the options allotted on March 7 is SEK 20.25 for the time-based portion and SEK 13.37 for the share-price based portion. For the options allotted on April 26, the market capitalization is SEK 19.19 for the time-based portion and SEK 12.41 for the share-price based portion.
In May 2011, 14,641 Board options were allotted, which carry the entitlement to subscription of a total of 14,641 shares in Orexo. These Board shares were allotted free of charge to Board members elected at the 2011 AGM. The Board shares will be allotted in a proportion of 25 percent the day after Orexo publishes its interim report for the first quarter and 25 percent after the publishing the interims for quarters two and four during the mandate period for the 2011 fiscal year. Board members' entitlement to redemption will come into effect two years after the 2011 AGM. The final date for exercising Board shares is December 31, 2018 and the share price is SEK 0.40 per share. The market capitalization, which is calculated according to the Black & Scholes method, was SEK 43.70 on the allotment date.
| KSEK | 2011 Jul-Sep |
2010 Jul-Sep |
2011 Jan-Sep |
2010 Jan-Sep |
2010 Jan Dec |
|
|---|---|---|---|---|---|---|
| Depreciation/amortization and | ||||||
| impairment | 40,693 | 3,548 | 44,621 | 7,504 | 33,764 | |
| Estimated costs for employee stock | ||||||
| options program | 760 | 698 | 2,193 | 2,544 | 3,309 | |
| Financial expenses, convertible bond | -731 | 2,910 | -2,150 | -158 | 2,752 | |
| Total | 40,722 | 7,156 | 44,664 | 9,890 | 39,825 | |
| 5. Shareholders' equity | ||||||
| Change in the Parent Company's shareholders' equity |
||||||
| KSEK | 2011 | 2010 | 2011 | 2010 | 2010 | |
| Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec | ||
| Opening shareholders' equity, balance | ||||||
| sheet | 686,319 | 598,732 | 540,526 | 647,140 | 647,140 | |
| Net loss for the period | -74,257 | -38,297 | -161,999 | -97,774 | -118,632 | |
| Subscription of shares through the | ||||||
| exercise of warrants | - | 44 | 157 | 44 | 44 | |
| Employee stock options, vested value for employees Convertible bond – |
1,343 | 511 | 3,124 | 1,575 | 1,969 |
equity share - - - 10,005 10,005 New issue -355 - 231,242 - -
Closing amount 613,050 560,990 613,050 560,990 540,526
During 2010, the Inflazyme project was discontinued, which entailed recognition of the entire supplementary purchase consideration of MSEK 44.6 as a contingent liability.
As cash-flow hedging for social security fees pertaining to the employee stock options issued by Biolipox, warrants were issued to Pyrinox AB. Orexo has pledged to handle any deficits exceeding the cover provided by the warrants during their lifetime through December 31, 2016.
Orexo acquired the UK drug company PharmaKodex in February 2009. This acquisition includes conditional payments based on license revenues from the current PharmaKodex program and technologies, as well as on payments for certain milestones that are not recognized as a liability.
Kibion acquired the German company Wagner Analysen Technik GmbH on August 1, 2011. The acquisition comprises a supplementary purchase consideration based on sales revenues.
Orexo has an overdraft facility of MSEK 35 from Nordea entailing chattel mortgages of MSEK 44 and pledging of all the shares of the subsidiary Kibion AB.
On August 1, Orexo AB achieved controlling influence and thereby the control of the acquired German company Wagner Analysen Technik GmbH (WAT). The company was acquired by Orexo's subsidiary Kibion AB and consolidated in the Orexo Group on the same day. The acquisition of WAT provides increased opportunities for Kibion to increase sales of existing products, and a broader platform for the development and commercialization of new breath tests.
The acquired company contributed net revenues of MSEK 1.7 and net losses of MSEK 0.2 for the period of August 1 to September 30, 2011. If the acquisition had taken place on January 1, 2011, the Group's net revenue would have been raised by MSEK 2.6 and the period's net income lowered by MSEK 3.5.
The acquisition was financed by means of a bank loan.
The acquisition also comprises an additional conditional payment, which is based on sales revenues. Kibion has made provision for a liability corresponding to the estimated amount of the payment. However, there is a ceiling on the amount of the supplementary purchase consideration.
The Acquisition value amounted to MSEK 15.8.
Acquired net assets and goodwill (MSEK):
| Purchase consideration | 10.4 |
|---|---|
| Supplementary purchase consideration | 4.3 |
| Total purchase consideration | 14.7 |
| Fair value of acquired net assets | -1.1 |
| Goodwill | 15.8 |
The assets and liabilities included are as follows (MSEK):
| Fair value | Acquired carrying | |
|---|---|---|
| amount | ||
| Tangible assets | 0.1 | 0.1 |
| Inventories | 0.6 | 0.6 |
| Current receivables | 8.0 | 8.0 |
| Cash and cash equivalents | 0.2 | 0.2 |
| Current liabilities | -10.0 | -10.0 |
| Acquired net assets | -1.1 | -1.1 |
A substance, which, through transformation to prostaglandins and leukotrienes, regulates a number of biological processes in the body.
The process through which a pharmaceutical receives the composition and form that enables the active compound to function in an optimal way.
Studies mainly of the safety of a drug performed on healthy human volunteers.
Studies of the safety and efficacy of a drug and appropriate dosages performed on a limited number of patients.
Studies of the safety and efficacy of a drug in a real clinical situation performed on a large number of patients.
An opioid with similar effects on living organisms as morphine but with less hypnotic activity, used mainly within anesthesia and analgesia.
Short-lived and intense pain that occurs in addition to the otherwise well-controlled, long-term pain that is treated with opioid analgesics.
A bacterium that infects the mucous membrane of the stomach.
Studies of a drug's effect and safety in humans.
Chronic Obstructive Pulmonary Disease, also known as a "smoker's disease."
Pain-alleviating opioid.
Studies of a drug's effect and safety before being evaluated in humans; may be performed on animals or in various cell systems.
Under the tongue.
Administered above the mucous membrane.
Number of shares after full dilution Total number of shares plus the maximum number of shares that can be subscribed through options outstanding. Number of shares after dilution Calculation of dilution from options issued by the company up to and including 2005, carried out in accordance with IAS 33. Return on total capital Operating profit/loss plus financial revenues as a percentage of average total assets. Return on shareholders' equity Profit/loss for the period divided by average shareholders' equity. Return on capital employed Operating profit/loss plus financial revenues as a percentage of average capital employed. Current ratio Current assets as a percentage of current liabilities. Gross margin Gross profit divided by net revenues. Shareholders' equity per share, before dilution Shareholders' equity divided by the number of shares outstanding before dilution at the end of the period. Shareholders' equity per share, after dilution Shareholders' equity divided by the number of shares outstanding after dilution at the end of the period. Average number of employees Average number of full-year employees for the period. Acid test ratio Current assets excluding inventories as a percentage of current liabilities. Capital turnover rate Net revenues divided by average operating capital. Net debt Current and long-term interest-bearing liabilities including pension liabilities, less cash and cash equivalents. Operating capital Total assets less interest-free liabilities and provisions less cash and cash equivalents. Earnings per share, before dilution Profit/loss for the period after tax divided by the average number of shares outstanding before dilution during the period. Earnings per share, after dilution Profit/loss for the period after tax divided by the average number of shares outstanding after dilution during the period. Annual return on shareholders' equity Profit/loss for the year divided by the average shareholders' equity. Interest-coverage ratio Profit/loss after net financial items plus interest expenses and similar items, divided by expenses and similar items. Working capital, net Interest-free current assets less interest-free current liabilities. Working capital, net/net re+ venues Average working capital, net, divided by net revenues. Operating margin Operating profit/loss as a percentage of net revenues. Debt/equity ratio Interest-bearing liabilities divided by shareholders' equity. Equity/assets ratio Shareholders' equity as a percentage of total assets. Capital employed Interest-bearing liabilities and shareholders' equity. Profit margin Profit/loss after net financial items.
Orexo AB publ discloses the information provided herein pursuant to the Securities Markets Act. The information was provided for public release on November 9, 2011, at 8:00 a.m. This report has been prepared in both Swedish and English. In the event of any discrepancy in the content of the two versions, the Swedish version shall prevail.
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