Orexo: Share price under pressure

Research Update

2016-02-09

16:27

The fourth quarter report were in line with our expectations and consensus on both sales and profitability. Although we thought there was nothing dramatic in the quarterly report, the share price still fell. It was positive that the company has decided to raise the price of Zubsolv by 5 percent. This increase is within the scope of existing agreements and therefore has the potential to be fully reflected in profitability. There are also positive signals about an agreement possibly being reached on Zubsolv rights outside the US. However, the report did not provide as strong a guidance as the previous report that a partner agreement on OX51 is also imminent. We are taking a somewhat more cautious view and have revised our expectations down slightly and are also cutting our fair value estimate to SEK 86 (100). A key factor for building confidence in the company’s growth potential is the decision to raise patient limits for accredited physicians who are permitted to prescribe buprenorphine in the US. This process has dragged on longer than we expected, but appears to still be active and we believe a decision will be taken in H1 2016, which will be an important price trigger for the shares this year. Note, this is a translation of the original report, written in Swedish, which was released the 2 of February.

KP

Klas Palin

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