Earnings call transcript: Orexo AB Q3 2025 reports revenue miss, stock falls

Orexo AB’s third-quarter 2025 earnings call revealed a revenue miss, with actual figures falling short of forecasts. The company’s stock reacted negatively, dropping 14.8% in pre-market trading. According to InvestingPro data, this decline comes despite the company’s impressive 87.23% gross profit margins. Despite positive developments in product innovation and strategic partnerships, the market focused on declining revenue and negative EBITDA of -$1.27 million.

Key Takeaways

• Orexo reported Q3 revenue of 119 million SEK, below the forecast of 128.1 million SEK.
• The stock price fell by 14.8%, reflecting investor concerns over financial performance.
• OX390 received a substantial BARDA grant, supporting development until 2027.
• The company maintained its 2025 EBITDA guidance despite current challenges.
• Promising advancements in nasal delivery technology for semaglutide and other products.

Company Performance

Orexo’s overall performance in Q3 2025 was marked by a 4.8% decline in revenue year-over-year, consistent with InvestingPro analysis showing an 8.76% revenue decline over the last twelve months. The company, currently valued at $115.65 million, continued to focus on its nasal powder delivery technology, which it claims is leading in the market. Despite the financial setbacks, Orexo remains committed to innovation and strategic partnerships, maintaining a healthy current ratio of 1.48.

Financial Highlights

• Revenue: 119 million SEK, down 4.8% year-over-year
• Zubsolv revenue: 114 million SEK, comprising 96% of total revenue
• EBITDA: Negative 9.8 million SEK, would be positive 3 million SEK excluding incentive costs
• Cash and cash equivalents: Approximately 106 million SEK

Earnings vs. Forecast

Orexo’s Q3 revenue missed the forecast of 128.1 million SEK, reporting only 119 million SEK. This shortfall contributed to the negative market reaction and stock price decline. Without specific EPS data, a full comparison to forecasts cannot be made.

Market Reaction

Following the earnings announcement, Orexo’s stock fell by 14.8% to 31.9 SEK. This decline places the stock closer to its 52-week low of 9.2 SEK, indicating significant investor concern. Based on InvestingPro’s Fair Value analysis, the stock appears to be overvalued at current levels. The market’s response highlights the impact of the revenue miss and negative EBITDA. Subscribers to InvestingPro can access 8 additional ProTips and comprehensive financial analysis for Orexo, along with over 1,400 detailed Pro Research Reports for other companies.

Outlook & Guidance

Orexo maintained its 2025 EBITDA guidance, signaling confidence in future performance. The company is exploring partnerships for its GLP-1 and nasal delivery technologies and anticipates potential FDA voucher opportunities for OX390.

Executive Commentary

CEO Nikolaj Sørensen emphasized the strength of Orexo’s nasal powder delivery technology, stating, "We believe today we have the world’s leading nasal powder delivery." He also noted the financial stability provided by the BARDA grant for OX390.

Risks and Challenges

• Revenue decline and financial performance shortfalls.
• Dependence on Zubsolv for the majority of revenue.
• Potential regulatory hurdles for new product approvals.
• Market competition in the nasal delivery sector.
• Economic pressures affecting healthcare spending.

Q&A

Analysts questioned the development timeline for OX390 and the potential for semaglutide nasal delivery. Orexo’s management highlighted ongoing partnership discussions and interest from international investors, reflecting strategic growth opportunities.

Full transcript - Orexo AB (ORX) Q3 2025:

Conference Operator: Welcome to the conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing 5 on their telephone keypad. Now, I will hand the conference over to the speakers. Please go ahead.

Nikolaj Sørensen, CEO, Orexo: Thank you very much. Welcome to this third quarter call for Orexo. It has indeed been a transformative quarter in many ways for the company, in particular in our R&D departments, where we have made very good progress in two projects. I will come back to that a little later. Today, I’m Nikolaj Sørensen, and I will be joined by Fredrik Järrsten, our CFO. This time, also Ed Kim, our Chief Medical Officer, who I believe will be new to many of you. Ed Kim will talk a little more about our OX390 project and why we think this is an important project both for Orexo but also for the U.S. We will go through the business update. I will take that. As I said, Ed will come in on the product under development, focusing on OX390.

Fredrik will take us through the financials before I will close out with the legal update and some approach for expansion for where we think we have some future value drivers. Starting with a brief overview of the quarter, as I said in the introduction here, we have made some great progress in our pipeline, in particular with our GLP-1 agonist project that we have, OX472, where we showed some very promising in vivo data. We also received a BARDA fund, which initially is worth $8 million, but could be all the way up to $51 million, where BARDA will finance the majority of our OX390 project. During the quarter, our work with iCIPRI, formerly known as OX124, has proceeded well. We are now starting the reliability and stability testing that was required by FDA more or less on time.

With regard to OX640, during the quarter, we have manufactured the first batches of the amorphous powder with epinephrine at commercial scale. We have continued partner discussions. We have also, as I wrote in the CEO comment, seen some increased uncertainty around the market in the U.S. We believe that is something that will be solved. I will come back to that a little later. Looking at the revenues, clearly in the Swedish krona, the dollar Swedish exchange rate has had a strong headwind during the quarter for the company. It impacted with nearly SEK 11 million, which is kind of close to 10%. We have also seen during the quarter that the wholesale inventory has declined in the U.S., which explains a lot of the development compared to last year.

On EBITDA, we have a negative EBITDA, which was not entirely according to our plans, but that is very much associated with the increased value of the share price during the quarter, where we are reserving for provisions for the taxes, and particularly around the social securities in Sweden, which is impacting negatively in the quarter, but not from a cash flow perspective, but from a P&L perspective. Fredrik Järrsten will come back to that a little later. Looking at the outlook, we reaffirmed the 2025 outlook. What’s worth noting is that we still believe that it’s possible for us to reach our positive EBITDA number for the full year. Moving into our U.S. commercial update, we are seeing the buprenorphine and naloxone market is picking up a little pace, getting closer to 5%, but 4% growth year over year.

Over the last quarter, we saw a slight increase of 1%. This is particular now, which is the interesting behind the scenes, as the market has really been driven by the commercial segment, which is now basically on the edge of surpassing Medicaid as the largest segment in the U.S. That is important for us because of two reasons. First of all, the commercial segment has a lower rebate, so it’s more valuable. Each patient within the commercial segment is worth much more for us than a patient with Medicaid. We have, and we maintain into next year, unrestricted access to nearly the entire market, with 99% of the volume today sitting with payers, where we have no limitations in access for subsidy. We have no changes expected for next year. In the public segment, we have seen Medicaid decline.

This quarter actually increased a little, but at a much slower pace than the commercial segment. We have seen in both Medicaid and Medicare that our access is nearly unchanged. There’s a small, small plan where we got some restrictions for 2026, but it’s not really material for the company. One thing that is interesting in this space is particularly where we see our largest account is with Humana Medicare. Humana Medicare has, from a subsidy perspective, had a significant impact for two reasons. The one is that we have seen Humana Medicare declining because they had new restrictions for a certain part of their patients’ populations, but also that the rebate increased for that particular account.

We kind of both had lower prices, but also we saw negative volumes, which have had an impact on the company year over year, which is actually the main explanation behind the year-over-year negative development. From a quarter-over-quarter perspective, actually from a pure demand perspective, we have no major changes. We are quite stable in both Medicaid and OPEN. They actually grow a little in some of the segments. We do still have some negative impact from Humana and to a less extent from UnitedHealth Group. For those of you who are new to the companies, these were the formerly exclusive contracts where Orexo had nearly the entire volumes within these accounts. After the introduction of generics in 2019, we have seen a steady decline in the two accounts. One thing that I have shown before is a little around the inventory.

This is because we have strong expectations of a build-up here in Q4. To validate that a little, I just want to show some more interesting data here. One is looking at the sales to pharmacies. That means that the wholesalers’ sales to the pharmacies is down about 1% compared to last year. Some of that is, of course, pricing when you compare to our net sales. In these numbers, we also have a 4% price increase in the start of the year. That’s also something we anticipate will happen next year. From a gross sales perspective, we are also stable despite the volatility you can see here on the dark line. We’re down about 1% year to date. That is despite the destocking we have seen. Just looking a little closer on the inventory levels at wholesalers, this is a new picture for all of you, I believe.

You can see these two peaks that are in the picture. They’re both in the end of the year 2023 and also 2024. If you look at the level of inventory when we entered 2025, it was 60% above the inventory that we have today in the end of Q3. Even just looking into the inventory in the end of Q2, it was actually 30% higher than where we are now in the end of Q3. There has been an inventory decline. It follows the same pattern that we’ve seen in previous years. We are now expecting to see in Q4 that there will be some inventory build, which helps us when we reiterate our guidance for the year that we actually believe we can hit the sales numbers that are in here and also overall for the company hit the positive EBITDA number.

Coming in under products under development, the first area I will go a little into depth with is we did show some promising data in semaglutide where we have done a nasal administration. For most of you, you should be aware, and I’m sure you’re following the pharmaceutical industry, that these anti-obesity medications, which is kind of a collective name for these GLP-1s, is growing substantially. One is within obesity and diabetes. Also looking forward, there are a lot of expectations in more neurodegenerative diseases such as Alzheimer’s and Parkinson’s. We also see that there are areas within addiction where these have shown promising data. It is really, you can say in one way, a drug with a very wide range of applications and where we see some of these patient segments would have benefit from a new administration form.

On top of that, we also see with our dry powder formulation, we can add a lot of stability to the products. What are some of the reasons why we believe? It’s, of course, compared—it’s a small needle today that you need to take subcutaneous for most of the GLP-1s. Most of them only have an injectable or lotion pipeline. There are a couple who also have an oral formulation but with very poor performance in terms of bioavailability. Taking it into the nose, it’s quite easy to self-administer. It’s, of course, needle-free, so it’s a non-invasive route of administration. It will bypass the first pass metabolism where you would normally, and that’s why we see this low bioavailability of GLP-1 medications when they’re taken orally in the GI tract. We don’t see any need for refrigeration. We have data for six months of semaglutide in our formulation.

During those six months in 40 degrees heat, we have basically not seen any degradation of the active substance. We think there are a lot of advantages coming in with the powder formulation, both from a patient perspective and from a stability perspective. We think that can help also with improved adherence for the patients. With the data that we presented, this is a preclinical in vivo study. I will say this is a very early stage. We think semaglutide is the perfect model substance. This could probably be applied to other peptides used for GLP-1s. Semaglutide is a very difficult peptide in the sense it’s a very large peptide. We are still showing this quite impressive uptake when we compare to the oral formulation of semaglutide, with basically up to about seven times higher bioavailability using the nasal route of administration in the studies.

As I said before, we have continued to do stability studies, and we see minimal degradations after six months. What we are doing now is that based on the learnings from this study, we will continue working on the formulation because the study was in 7 milligrams. We know that 7 milligrams of Rybelsus, we know some of the obesity data that we’ve seen from Novo Nordisk is about 25 milligrams for obesitas. We probably have to work a little on the formulation to increase the dosing also. The aim is, of course, to take this into a human trial. We will have to look at the timeline. It is a little early for us to commit to a timeline.

This is, of course, the ambition that we’re working towards, to show that we can replicate the data we’ve seen in dogs, also in humans, with improved bioavailability over the oral formulation. I will invite Ed into the conference, and Ed will talk a little about our OX390 project and why we think this is so important for the U.S. Ed, the word is yours.

Ed Kim, Chief Medical Officer, Orexo: OK. Thank you very much, Nikolaj. Good morning, good afternoon to everybody. For those of you who may not recall, it was in April of 2023 that the White House declared fentanyl/xylazine mixtures as an emerging public health threat. That was about 2.5 years ago. In the latest DEA National Drug Threat Assessment, which goes back over the past three years, the prevalence of xylazine in illicit opioid samples that are confiscated by the DEA has increased over four times. It is no longer a problem just in the Northeast, but it is spreading. Certainly, if you look at this heat map, it has already reached significant numbers on the West Coast. It has been identified in all 50 states. It is not just how common it is now, but what we see here is that the deaths due to xylazine-fentanyl overdoses continue to rise.

This is a paper that analyzed CDC data, which currently only goes to 2023. If you recall, 2023 was the first year where the total number of overdose deaths started decreasing. What you see here, though, is that in 2023, the number of xylazine-fentanyl overdose deaths continued to increase. We are hearing this from market research, as well as informal discussions that we have with colleagues and customers in the substance use disorder space, that this really is a problem. In the last two to three years, there has been emerging animal data suggesting that while xylazine is an FDA-approved veterinary product that is safe and effective when used appropriately in animals, when xylazine and fentanyl are given to these animals, in this case, usually mice or rats, it actually increases and sometimes multiplies the lethality and the opioid-induced respiratory depression.

There is a paper published in 2023. It is the title on the left, which identified it did not measure respiration, but identified that a moderate dose of xylazine increased the lethality of fentanyl by over 100 times. It took 0.01 the dose to kill 50% of the animals. We believe that this is truly a public health threat. It is growing over time. The BARDA partnership that we recently announced is a true partnership with this agency that is part of the Department of Health and Human Services. They’re not only contributing a substantial amount of financial support, but BARDA has technical experts in all phases of drug development and public health who are at our disposal to continue to consult with us, advise us, and advocate for the continued development of OX390. You heard Nikolaj mention that the total value is $51 million.

The current base period is going to be dedicated to the IND-enabling toxicity studies, formulation development, and in-house manufacturing capabilities. That totals $8.5 million. Based on achieving certain regulatory, manufacturing, clinical milestones, there are four option periods to continue the development. These are negotiated with BARDA at each stage so that this is a staged approach to manage the risk of this program because, as you know, drug development always carries some degree of technical risk. The goal is to develop an intranasal rescue medication for use by laypersons or first responders in the community where these overdoses are happening. It’ll be developed on Orexo’s own amorphous platform that you know so much about. It will continue to leverage the existing manufacturing supply chain that we’ve already developed for OX124 and OX640. Back to you.

Nikolaj Sørensen, CEO, Orexo: Thank you very much, Ed. Maybe worth noting also is we received the grant was signed in the last few days of September. That’s also the last few days of Q2. We have not included any effect of this grant into the Q3 numbers. You will start to see some effect in the Q4 numbers and, of course, continuing into next year. What it is, is it’s a cost covering. We would basically invoice for the expenses running the project, and then BARDA will cover the majority of the expenses for the project upon invoice. The cost coverage will be recognized as other income by the company. Going on to iCIPRI. iCIPRI is, of course, as you said, intimately connected to the same issue Ed was just talking about. Here, we have basically proceeded according to plan with our upscaling of the manufacturing.

We have had some good dialogue with FDA also around the nasal device, where we can now use the new nasal device without any further studies. Looking at the entire market for naloxone, it’s very highly competitive. That’s something we’re taking into account when we’re looking at the launch strategy. We are reviewing how we can put this to the market with the least amount of financial risk to the company based on a more competitive market in the U.S. and also the need for financing some of these other projects we just talked about. We do see that the product as such and getting it approved is something that’s highly valuable for the entire value chain. Every partner we’re talking to is talking about the commercialization. For those of you in Sweden, have probably seen some of our colleagues in the industry just recently have had issues with manufacturing.

Manufacturing is central and, I would say, the number one cause of delays of many approval processes. That we can have a product that has been approved on a supply chain, I think, is immensely valuable for other discussions and other projects. Actually, even also some of the exceptions that we, unique exceptions we’re using for amorphous, is something with an approved product that is also supportive evidence for some of the other products that we have in the pipeline. In many ways, I think iCIPRI is paving the way for a lot of other products moving forward. One of them is, of course, OX640. With OX640, we have continued to do the upscaling. We have manufactured the first batches of powder, which are now being analyzed. We have had some partnering discussions.

I will say that the data we received from the first launch of a nasal product in the U.S. and even in Europe, that launch has gone somewhat slower than some of our partners had anticipated. That has had a negative impact on these discussions, where there’s a little more, let’s see how the market evolves over the next quarter or two. From an Orexo perspective, when we look at this market, we see the first product has come out with a strong growth. We actually see from a financial perspective, some investors are seeing it’s performing above expectations. Some of the industry players, maybe based on some early expectations from the company launching the product in the U.S., ARS Pharmaceuticals, find that this is somewhat slower than what they have seen.

When we are looking into this space, we’re seeing it’s around physicians’ hesitance to prescribe before they see real-world data supporting that a nasal delivery is as effective as an injectable. We know that patients in the U.S. who have allergies have quite infrequent interactions with health care. A lot of them don’t see an issue in the daily day. It’s the annual meeting with the allergist, which is the time when you can get a new product. Also, from a more market perspective, some pushback is around the first ANDA that was filed in August by Lupin Pharmaceuticals on this product. That has created some uncertainty. If you look at the expectations by the investors, we see that the valuations are still significant. Our competitor, ARS Pharmaceuticals, actually, according to the Wall Street Journal Markets, have a buy rating by all analysts.

Some of the largest investors in ARS Pharmaceuticals have just continued financing with up to $250 million in the launch of Nefi in the U.S. For those who are close to the company, there’s clearly an expectation that this market will go through. From an Orexo perspective, we still believe that OX640 has significant opportunity. Looking at the naloxone market, which we know very well, we saw that it didn’t really take off before after 18 months. We saw exactly the same concerns by physicians and patients. Today, I don’t think anyone in the U.S. questions the benefits of a nasal administration, which is probably a lead for some of the decline we’ve seen in the number of people dying from overdose in the U.S. We also believe that coming in with OX640, we’re actually looking competitively. We have done some market research.

We know some of our potential partners have done some market research, and all of that confirms that we have a very competitive product in the U.S. We still have IP until 2044. To continue understanding the market and to get more evidence, we have started a market research using some external experts running the study in the U.S. that will be concluded during Q4 to ensure that we actually focus on the right market differentiating parameters of OX640 when we proceed and to confirm the attractiveness of the market. OX640, we continue with the development. We have seen some, you can say, delay in the partnering discussions.

There is a concern from Orexo about the attractiveness with the uncertainty of some of these partnering opportunities, where if you go a little further, get more certainty around the market, we see that could be a significant value inflection for a potential partnership. Moving into the financial section, I will invite Fredrik Järrsten to talk a little about our financial results.

Fredrik Järrsten, CFO, Orexo: Thanks, Nikolaj. On page 22, looking at revenues, if we start looking on the top part of this page, you can see that our total Q3 revenue for the group was SEK 119 million. The vast majority of that, SEK 114 million or 96%, came from Zubsolv in our U.S. commercial business. That’s down about SEK 17 million year over year, mainly driven by a negative SEK 11 million FX impact. We also had lower demand in net revenue terms, primarily from the previously exclusive contracts within UnitedHealth Group and Humana. That was about a 3% demand reduction year over year. Partly offsetting this, we had a lower destocking effect versus last year that contributed a positive SEK 2 million. In local currencies, Zubsolv revenue declined 4.8% year over year.

Looking at other revenues within HQ and pipeline, AmorphOX royalties were higher, but that is largely because Q3 last year included a negative adjustment to historic reported royalties. Edgeware royalties were stable, but Zubsolv ex-U.S. revenues were lower, mainly because there were no tablet sales to our partner, Accord Healthcare, this quarter. That follows the one-time inventory build earlier this year ahead of Accord starting manufacturing in Europe. If we switch to the quarter-over-quarter view for Zubsolv revenue, the waterfall chart on the bottom part of the page shows that, opposite to the year-over-year trend, reported net revenues in local currency increased slightly in Q3 by approximately 2% versus reported Q2 numbers. Those include the non-recurring rebate payment we had in Q2, SEK 9 million.

In SEK terms, with a negative FX impact of SEK 1.5 million, quarter-over-quarter net revenue shows only very marginal growth, reflecting a broadly stable demand picture in the quarter, as shown in the first three bars of the chart. Working against the growth was also a sizable negative inventory destocking effect of SEK 6 million during the quarter, as Nikolaj previously talked about. Moving on to the next page, the P&L, we already touched on our net revenues, total of SEK 990 million. FX effect was a negative SEK 12 million year over year. The weakening of the U.S. dollar year over year has, of course, also had a positive effect on our USD denominated costs, which account for approximately 65% of total expenses. The declining COGS, as you can see this quarter, is driven largely by this favorable FX effect within U.S. commercial. That was about SEK 6 million.

Also, improved production costs for Zubsolv. As a result, gross margin increased from 85% in Q3 last year to 94%. On operating expenses in Q3, which landed at SEK 133 million, we’re pleased to see that’s down 4% compared to last year, although about SEK 12 million is coming from the weaker U.S. dollar. We also saw lower costs from a performance perspective with lower selling expenses in our U.S. operations in relation to staffing, as well as lower marketing-related costs for iCIPRI. We also had lower admin costs, mainly from reduced legal fees. R&D costs, on the other hand, were higher, mostly related to high costs for OX640 upscaling or manufacturing. We had these costs of SEK 13 million for the long-term incentive programs, mainly related to provision for Social Security fees following the sharp increase in our share price during the quarter.

EBITDA was negative for the quarter by SEK -9.8 million. That includes this SEK 13 million negative LT impact. If you would exclude those costs, EBITDA would be positive SEK 3 million instead. If you look at the U.S. business specifically, EBIT was an impressive SEK 38 million for the quarter, up from SEK 25 million a year ago. That’s an EBIT margin of 34% and an improvement from 19% last year. Let’s move to the next page, cash flow. We reported a negative cash flow of SEK 15 million for the period. After adjusting for a negative FX effect of SEK 0.8 million, that resulted in a decrease in cash equivalents of SEK 16 million in the quarter. Operating cash flow was negative, mainly due to negative operating earnings and interest paid on the bond.

Adjustment to non-cash items had a positive effect, especially from the provisions related to timing of rebate payments and also from adding back these non-cash LT-related costs we had this quarter. By the end of Q3, cash and cash equivalents were approximately SEK 106 million. Just a reminder, at the end of Q3, we still held SEK 20 million in our own bond, which could serve as an additional funding going forward. Looking at the next page, our financial outlook for 2025, these metrics are reaffirmed. Specifically, EBITDA guidance remains unchanged, driven by expectations of a positive inventory impact for Zubsolv in Q4, as well as stable demand. Continued strong cost control is also expected to have a positive effect. We should probably also see positive impact with the BARDA award and the covering of incurred costs in Q4.

However, the EBITDA outlook is related to some increased risk due to impact from non-budgeted one-time items, such as the non-recurring rebate payment we had in Q2, $9 million. Also, provisions we talked about associated with the long-term incentive program and also significant exchange rates, fluctuations. With that, back to you.

Nikolaj Sørensen, CEO, Orexo: Thank you. Maybe a word also on the BARDA contract and OX390 is that it’s covering also our internal expenses. Particularly in the first phases of the project, it’s really our existing staff that is working on the project. We will have covering of salaries that we would otherwise have to finance ourselves. Among others, Ed Kim’s part of Ed Kim’s salary that you listened to him earlier today is also covered partly by this award by BARDA. A short legal update. The one process we still have ongoing, never ending, is the Department of Justice, where we have not really any material movement during the quarter. What is worth saying is the U.S. system with U.S. prosecutors, which are the ones leading these processes, that’s political appointees. The U.S. prosecutors are political appointees. That process has been going on during the quarter.

There actually even was a change of the appointed U.S. prosecutor in the district that we worked with. They really need to be confirmed before we think we can make any movement here. This is, of course, a process that is taking unnecessary time and also money. It’s something we would like to resolve. We would need to have a U.S. prosecutor in place to have that discussion. Looking at the future, we can say we have three buckets that we really focus on. One is our commercial assets, where, of course, we have some of the revenue or royalty-generating assets like Amstrad, Edgeware, which are still there, even though on a low level. The most important is Zubsolv, where we continue to work on how can we optimize the value contribution for Zubsolv long term.

On top of that, we, of course, have iCIPRI, which we’re now putting into the semi-commercial space here as we are making good progress towards an approval, where we would then look at what is the right go-to-market strategy, both looking at the market potential and the amount of expenses needed. Really, value optimizing, those are important to enable the next areas, which is running our own projects, which today consist of three projects. One is OX390, that you heard. One is OX472 and GLP-1s. The last one is OX640. On top of that, we have the amorphous technology and how we can apply that to other partnerships and to other companies’ APIs, really with the goal to become the partner of choice in nasal powder delivery technology. We believe today we have the world’s leading nasal powder delivery.

We think the powder has a lot of advantages over a liquid nasal delivery. This is something we are working to apply together on partners, in particular in large molecules, where we think this can move from injectables to nasal delivery, among others, to vaccines, which is in our partnership with Abera Bioscience. We also have other non-disclosed partnerships where we’re testing on larger molecules using our technology. With that, I will open up for Q&As.

Conference Operator: If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Samir Devaney from RX Securities. Please go ahead.

Hi, everyone. Thanks for taking my questions. Probably easier if I just give them to you one at a time. I guess kicking off on a couple of the positive developments that we’ve seen over the quarter. On OX390, the $8 million initial period, how long will that cover? Can you make any further comment on how 390 will be differentiated from existing rescue medications? I don’t think you’ve disclosed yet the active. Maybe when we might hear about that. Thanks.

Nikolaj Sørensen, CEO, Orexo: I will take the first. Ed can answer your second question around the differentiation and difference. The $8 million is lasting until the first gateway, and that is right now planned to be in the first half of 2027. This will cover the expenses until the first half of 2027. With regard to the differentiation, Ed, could you give a little comment on how this is different than other naloxone and nalmefene rescue medications?

Ed Kim, Chief Medical Officer, Orexo: Sure. Thanks, Nikolaj. Thanks for the question. What the preclinical evidence shows is that naloxone does not have a beneficial effect on the respiratory depression associated with xylazine. There is nothing else available. This will be specifically targeted to reverse the toxic negative effects of xylazine and drugs like it. It’ll be a first in class.

When do you think you’ll be in a position to tell us what that active is?

I’ll leave that to Nikolaj. I think he’s going, we’re not prepared, certainly today, to disclose specifics around the API.

Nikolaj Sørensen, CEO, Orexo: Samir, I think we will do that relatively soon. I would say in the start of next year, it’s a little around the supply chain. It’s around the IP and others that we want to get control of before we will disclose the details.

OK. That’s totally fair enough. Maybe moving on to semaglutide. Obviously, this is a non-core area for you. I’m just, again, thinking about obviously, we’ve got OX640 on the sort of partnering table. When do you think you’ll have enough or what further investment do you need to make before you think you could be in a position to partner this?

I think that OX472 or semaglutide is an interesting one because we see this as a two, you can say, two-legged opportunity. One is, of course, semaglutide as a product, where that one will, before you can get to market, is subject to semaglutide API patents, which I believe for some of the large markets is in the early 2030s before they go. There is an opportunity in semaglutide. Before you get to a partnering around that, I think there could be opportunities short term. Really, to get through human data, I think, will be an important milestone to have the first human data showing that it actually works, not only in vivo in animal testing but also in humans. I think that will be a great value inflection point. I also think the expenses to take us to that level is not that high.

On the other leg, which is the more other GLP-1s, where today Novo Nordisk and Eli Lilly did, they have an oral formulation. There are some of the others, but not a lot, who have oral formulations. There are basically a large number of companies who have peptides for GLP-1s which don’t have access to an oral or nasal formulation. That could give an opportunity, which is coming much faster, to test whether we could have the product tested on that GLP-1, which, of course, then in that end, you will have to decide whether you can run both legs or you will have to decide which one you’re going on. We really think from a partnering pharmaceutical company with semaglutide, the real value inflection point is likely to come with the first human study. The other ones could come earlier than that.

OK. That’s great. Just on my final question, on iCIPRI, I just wanted to double-check that nothing has changed since we last spoke in terms of the likely timeline for the FDA filing, which you’ve said is mid-2026. I just wanted to confirm that’s your current expectation.

That is still our current expectation.

That’s great. Thanks very much.

Conference Operator: The next question comes from Klaas Peelen from DNB Carnegie. Please go ahead.

Yes. Hello, and thanks for taking my questions. The first one relates to OX390. I wonder if you are perhaps willing to share some further details about the clinical program needed to get an approval for this, what you have had for kind of discussions with the FDA, and the scope of such trials, perhaps.

Nikolaj Sørensen, CEO, Orexo: I will refer that to Ed, keeping the communication line as we have discussed, that we can’t go into too much detail. At a high level, Ed, you can maybe answer this.

Ed Kim, Chief Medical Officer, Orexo: Sure. Thanks, Nikolaj. Good questions. Because OX390 is a new chemical entity, we are going through the IND-enabling studies currently. Our initial conversations with the FDA are going to be around getting to first in human. The clinical program and the pathway to developing this important rescue medication, those conversations need to be had once we’re getting closer to our first in human studies.

OK. Thank you. Yes, to confirm, the device that you intend to use there, is this very similar to the one for iCIPRI?

Nikolaj Sørensen, CEO, Orexo: Yes, that’s the plan.

OK. Perfect. Let’s jump to OX640. You are sort of downplaying the expectations of a near-term partnership, at least what I’m hearing. I just wonder, are the negotiations on pause awaiting this market research analysis? What’s going on?

There is a limit to how much I can go into individual discussions. We still have ongoing discussions with interested parties. I think some of the opportunities, there is a question mark from us whether the attractiveness of entering a partnership with that market uncertainty is attractive or if we would have more value to take this a step further while monitoring the market development. There is a little on the value that you can get from the product partnering today. There are still companies interested in the game with different setups. There are still opportunities for partnership in relatively short term.

I think the company needs to decide on what level of risk we’re willing to take because we think there could be more value taking this a step further if we believe the market development is in line with some of the valuation indications for ARS Pharmaceuticals and what some of their larger investors believe, how this will evolve.

OK. Great. Then my last question is about OX472. You talked about perhaps conducting a human trial before partnering. Is it possible to provide some sort of a time frame when you perhaps could enter clinical trials with this compound?

I think here we, this has gone very fast for us. Of course, we’ve been working on the formulation, and it has been even in the patent since quite some years back. The real work started this year. What we are discussing internally and we are looking into the market opportunities is what is the target profile that we’re looking for. For example, is the dosing that you need for obesity likely to be higher than what you need for some of the other indications? That also increases the risk in the study. If you have to go very high in dose, then that could lead to more frequent dosing through the nose, and that comes with some other potential issues that we don’t know. There’s a discussion where we’re leading, and that comes from two sides.

One is to understand the market and the clinical profile that we think is desirable. The other one is purely formulation to say how can we work on excipients and how much can we get into one dose of the nasal spray. There is some formulation work that we would like to conduct, probably followed up with some in vivo study before we move into humans with what you can say a targeted formulation. We will have to wait a little to see where that is going. To run this first exploratory clinical study in humans is not a large study, and it’s not something that is going to be quite very time-consuming. We could make a decision, and we could run it relatively fast.

As you might know, we have manufacturing capacity for clinical trial material internally, so we don’t have to wait for slot times at a contract manufacturer.

OK. Thank you so much. That was all for me.

Thank you. I believe we received some questions on the telephone conference here. I will go through those here. Have you applied or intend to apply for these FDA vouchers, giving the company much shorter timeline, so one to two months of approval for drugs of importance for the U.S., for example, OX390 and OX124? For OX124, we have tested to see if we could get accelerated approval. We think we came in a little late because there are other alternatives on the market. We did not have that pathway available. For 390, that could be a possibility. That, of course, is something we’re exploring. What’s worth noting here is Ed said BARDA is not only a financing. They are an active part in the development. BARDA is part of the HHS in the U.S., which is under the same department as the FDA.

I think even here, there are opportunities for us to work with BARDA to find the most optimal pathway to approval in the U.S. That is something we expect. There is a question whether OX390 will be a single-agent product or we could combine it with naloxone together with an alpha-2 receptor antagonist. Alpha-2 is the target for xylazine, for those of you who don’t know that. The use of a combination product in the U.S. is, from FDA perspective, a hard sell. It requires quite a lot of data to combine the two products. Often, it will be easier to have some kind of combination package, or you will have to work with pharmacies to make a combination of the two agents.

We will have to see what is kind of the emergency steps you would take when you see someone who is potentially overdosed with xylazine or a similar agent and then decide what is the best distribution way. To combine it in one nasal spray, we believe will be a very complicated process from an FDA perspective. We have a question here, which is around whether we think inhaled semaglutide would be a better solution than the oral products in clinical trials, given oral production in clinical trials, given higher toxicology at discontinuation seen in trials such as those led by Viking, which is another company, just for those of you who don’t know, who works with a GLP-1. Do you see interest from new investors, including international investors, given potentially huge market opportunity coming from that product?

We think there’s a lot of advantages of using a nasal delivery of a GLP-1. Working with inhaled could be. In my, and here, I’m not a physician. Ed is, of course. Ed, maybe I will take it to you later. I would just say, in general, I have seen that inhaled products come with more tox stories at least historically than what we have seen with others because you get it into the lung. The long-term toxicology effect of that is difficult to predict. I at least have been part of withdrawing a product from the market because of late coming toxic indications from real-world data.

The nasal distribution, or nasal, at least with our powder formulation, with the seven times higher uptake through the nose without the issues that you have with using an oral tablet, what we’ve seen with Rybelsus is very low bioavailability and also high variability among the individuals who receive Rybelsus. Taking it through the nose, at least in our in vivo study, we saw much more consistent data from the nasal delivery than the oral delivery. We think there could be a great advantage, say, from a nasal delivery over the oral. On the inhaled, I’m not that sure. I don’t know, Ed, if you have any thinking around inhaled semaglutide.

Ed Kim, Chief Medical Officer, Orexo: Yeah, Nikolaj. I think you’ve stated it all, that the inhaled route of administration carries some risks. What we want to focus on is de-risking as much as we can the development of novel formulations. We believe that the intranasal de-risks it the most.

Nikolaj Sørensen, CEO, Orexo: There was a second part of the questions, which is around whether we have seen interest from new investors, including international investors, given the potentially huge market opportunity. What I can see is that our share price has increased, even though today it probably came with some disappointment. I can understand from the commentaries. A lot of that is related to OX640, where we, of course, also had hoped and had some qualified expectations that we could have come to an agreement this autumn. I will say that the quarterly data and also the patent litigation that ARS ended up with came as a surprise to both us and at least the lead potential partner that we had during the summer. Looking at what has happened after the GLP-1 announcement and also OX390, which one of them is driving, it’s a little hard.

I actually think they might be very complementary with the GLP-1s having a huge market potential. OX390 actually gives us some financial stability in the company by supporting a development program with a lot of the staff that we’re working with. We’re a small company, of course, the same people who have to work on both the GLP-1s and also on the OX390. What we have seen is significantly increased volumes. We have seen more block trades in the stock than we’ve seen recently. Some of the block trades are managed by international banks or banks which are at least a part of the banks, not present in Sweden. That indicates, in my view, that it’s either some very affluent private individuals or, more likely, it’s an institutional investor that is buying the share. We have not seen that in our statistics.

I think that is due to many international investors don’t disclose their holdings. We just see that we have an international custodian bank that holds an additional amount of shares. We normally would see that some of these investors will call us and ask for individual presentations. I will say that we have had more inbound interest in the company after the GLP-1s from international investors than we have seen for quite a while. That’s maybe different indications that the hypothesis presented here in the question that we have new investors and that there has been an increasing interest is correct. We have another question, which I think came before the conference, which is around whether Orexo is involved in Abera Bioscience’s long-term study for its influenza vaccine. What data was presented quite recently, which was quite promising? The short answer is no.

We were not a part of this long-term study. I also think looking at how you design these studies, it would be natural for Abera Bioscience to actually focus on the delivery method with the least noise. That is probably working with an injectable or the way of delivering the product that they have done for most of their studies. That said, we still have an intimate dialogue with Abera Bioscience. We have discussions about future studies that we could conduct together. This is just supportive of Abera Bioscience’s vaccine that they have some great data that they could show. For us, that is very good news because it, of course, helps us in the discussion with Abera Bioscience for where the powder could add value to Abera Bioscience’s vaccine candidate. We have not been involved in the study. With that, I believe we have no further questions.

I would thank all of you that you listened in. I hope this is a new partner we work with for the conference call. From our side, it seems to have been working very well. I hope it’s the same for you. Thank you so much for your time. You’re welcome to reach out to Orexo AB if you have any further questions. Thank you.

Conference Operator: There are no more questions at this time. I hand the conference back to the speakers for any closing comments.

Nikolaj Sørensen, CEO, Orexo: Thank you so much.

Ed Kim, Chief Medical Officer, Orexo: Your participation in the participation.

Conference Operator: Welcome to the conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing star 5 on their telephone keypad. Now, I will hand the conference over to the speakers. Please go ahead.

Nikolaj Sørensen, CEO, Orexo: Thank you very much. Welcome to this third quarter call for Orexo. It has indeed been a transformative quarter in many ways for the company, in particular in our R&D departments, where we have made very good progress in two projects. I will come back to that a little later. Today, I’m Nikolaj Sørensen. I will be joined by Fredrik Järrsten, our CFO, and this time also Ed Kim, our Chief Medical Officer, who I believe will be new to many of you. Ed Kim will talk a little more about our OX390 project and why we think this is an important project both for Orexo and also for the U.S. We will go through the business update. I will take that, and as I said, Ed will come in on the products under development, focusing on OX390.

Fredrik will take us through the financials before I will close out with the legal update and some approach for expansion for where we think we have some future value drivers. Starting with a brief overview of the quarter, as I said in the introduction here, we have made some great progress in our pipeline, in particular with our GLP-1 agonist project that we have, OX472, where we showed some very promising in vivo data. We also received a BARDA fund, which initially is worth $8 million, but could be all the way up to $51 million, where BARDA will finance the majority of our OX390 project. During the quarter, our work with iCIPRI, formerly known as OX124, has proceeded well. We are now starting the reliability and stability testing that was required by FDA more or less on time.

With regard to OX640, during the quarter, we have manufactured the first batches of the amorphous epinephrine powder at commercial scale. We have continued partner discussions. We have also, as I wrote in the CEO comments, seen some increased uncertainty around the market in the U.S. We believe that is something that will be solved. I will come back to that a little later. Looking at the revenues, clearly in the Swedish krona, the dollar-Swedish exchange rate has had a strong headwind during the quarter for the company. It impacted with nearly SEK 11 million, which is kind of close to 10%. We have also seen during the quarter that the wholesaler inventory has declined in the U.S., which explained a lot of the development compared to last year. On EBITDA, we have a negative EBITDA, which was not entirely according to our plans.

That is very much associated with the increased value of the share price during the quarter, where we are reserving for provisions for taxes and particularly around the social securities in Sweden, which is impacting negatively in the quarter, not from a cash flow perspective, but from a P&L perspective. Fredrik Järrsten will come back to that a little later. Looking at the outlook, we reaffirmed the 2025 outlook. What’s worth noting is that we still believe that it’s possible for us to reach our past two EBITDA numbers for the full year. Moving into our U.S. commercial update, we are seeing the BUPNOVEN naloxone market is picking up a little pace, getting closer to 5%, but 4% growth year over year. Over the last quarter, we saw a slight increase of 1%.

This is particular now, which is the interesting behind the scene, the market has really been driven by the commercial segment, which is now basically on the edge of surpassing Medicaid as the largest segment in the U.S. That is important for us because of two reasons. First of all, the commercial segment has a lower rebate, so it’s more valuable. Each patient within the commercial segment is worth much more for us than a patient within Medicaid. We have, and we maintain into next year, unrestricted access to nearly the entire market, with 99% of the volume today sitting with payers, where we have no limitations in access for Zubsolv. We have no changes expected for next year. In the public segment, we have seen Medicaid decline. This quarter has actually increased a little, but at a much slower pace than the commercial segment.

We have seen in both Medicaid and Medicare that our access is nearly unchanged. There’s a small, small plan where we got some restrictions for 2026, but it’s not really material for the company. One thing that is interesting in this space is particularly where we see our largest account is with Humana Medicare. Humana Medicare has, for a Zubsolv perspective, had a significant impact for two reasons. One is that we have seen Humana Medicare declining because they had new restrictions for a certain part of their patients’ populations, but also that the rebate increased for that particular account. We kind of had both.

Conference Operator: But also we saw negative volumes, which have had an impact on the company year over year, which is actually the main explanation behind the year-over-year negative development. From a quarter-over-quarter perspective, we’re actually, from a pure demand perspective, we have no major changes. We are quite stable in both Medicaid and Open, and they actually grow a little in some of the segments. We do still have some negative impact from Humana and to a lesser extent from UnitedHealth Group. For those of you who are new to the company, these were the formerly exclusive contracts where Orexo had nearly the entire volumes within these accounts. After the introduction of generics in 2019, we have seen a steady decline in the two accounts.

One thing that I have shown before is a little around the inventory, and this is because we have strong expectations of a build-up here in Q4. To validate that a little, I just want to show some more interesting data here. One is looking at the sales to pharmacies. That means that the wholesalers’ sales to the pharmacies is down about 1% compared to last year. Some of that is, of course, pricing. When you compare to our net sales, in these numbers, we also have a 4% price increase in the start of the year. That’s also something we anticipate will happen next year. From a gross sales perspective, we are also stable despite the volatility you can see here on the dark line. We’re down about 1% year to date, and that is despite the destocking we have seen.

Just looking a little closer on the inventory levels at wholesalers, this is a new picture for all of you, I believe. You can see these two peaks that are in the picture. They’re both in the end of the year 2023 and also 2024. If you look at the level of inventory when we entered 2025, it was 60% above the inventory that we have today in the end of Q3. Even just looking into the inventory in the end of Q2, it was actually 30% higher than where we are now in the end of Q3. There has been an inventory decline, and it follows the same pattern that we’ve seen in previous years.

We are now expecting to see in Q4 that there will be some inventory build, which helps us when we reiterate our guidance for the year, that we actually believe we can hit the sales numbers that are in here and also overall for the company hit the positive EBIT down number. Coming in under products under development, the first area I will go a little into depth with is we did show some promising data in semaglutide where we have done a nasal administration. For most of you, you should be aware, and I’m sure you’re following the pharmaceutical industry, that this anti-obesity medications, which is kind of a collective name for these GLP-1s, is growing substantially. One is within obesity and diabetes, but also looking forward, there are a lot of expectations in more neurodegenerative diseases such as Alzheimer’s and Parkinson’s.

We also see that there are areas within addiction where these have shown promising data. It’s really, you can say in one way, a drug with a very wide range of applications and where we see some of these patient segments would have benefit from a new administration form. On top of that, we also see with our dry powder formulation, we can add a lot of stability to the products. What are some of the reasons why we believe? It’s, of course, compared—it’s a small needle today that you need to take subcutaneous for most of the GLP-1s. Most of them only have an injectable or losing pipeline. There are a couple who also have an oral formulation but with very poor performance in terms of bioavailability. Taking it into the nose, it’s quite easy to self-administer. It’s, of course, needle-free. It’s a non-invasive route of administration.

It will bypass the first pass metabolism where you would normally, and that’s why we see this low bioavailability of GLP-1 medications when they’re taken orally in the GI tract. We don’t see any need for refrigeration. We have data for six months of semaglutide in our formulation, and during those six months in 40 degrees heat, we’ve basically not seen any degradation of the active substance. We think there are a lot of advantages coming in with the powder formulation, both from a patient perspective, from a stability perspective, and we think that can help also with improved adherence for the patients. With the data that we presented, this is a preclinical in vivo study, so I will say this is a very early stage. We think semaglutide is the perfect model substance, but this could probably be applied to other peptides used for GLP-1s.

Semaglutide is a very difficult peptide in the sense it’s a very large peptide, but we’re still showing this quite impressive uptake when we compare to the oral formulation of semaglutide, which is basically up to about seven times higher bioavailability using the nasal route of administration in the studies. As I said before, we have continued to do stability studies, and we see minimal degradations after six months. What we’re doing now is that based on the learnings from this study, we will continue working on the formulation because the study was in seven milligrams. We know that seven milligrams of Rybelsus, we know some of the obesity data that we’ve seen from Novo Nordisk is about 25 milligrams for obesity. We probably have to work a little on the formulation to increase the dosing also.

The aim is, of course, to take this into a human trial, but we will have to look at the timeline. It’s a little early for us to commit to a timeline, but this is, of course, the ambition that we’re working towards, to show that we can replicate the data we’ve seen in dogs, also in humans, with improved bioavailability over the oral formulation. I will invite Ed into the conference, and Ed will talk a little about our OX390 project and why we think this is so important for the U.S. Ed, the word is yours.

Nikolaj Sørensen, CEO, Orexo: Okay. Thank you very much, Nikolaj, and good morning, good afternoon to everybody. For those of you who may not recall, it was in April of 2023 that the White House declared fentanyl/xylazine mixtures as an emerging public health threat. That was about two and a half years ago. In the latest DEA national drug threat assessment, which goes back over the past three years, the prevalence of xylazine in illicit opioid samples that are confiscated by the DEA has increased over four times. It’s no longer a problem just in the Northeast, but it’s spreading, and certainly, if you look at this heat map, it has already reached significant numbers on the West Coast. It’s been identified in all 50 states. It’s not just how common it is now, but what we see here is that the deaths due to xylazine-fentanyl overdoses continue to rise.

This is a paper that analyzed CDC data, which currently only goes to 2023. If you recall, 2023 was the first year where the total number of overdose deaths started decreasing. What you see here, though, is that in 2023, the number of xylazine-fentanyl overdose deaths continued to increase. We’re hearing this from market research as well as informal discussions that we have with colleagues and customers in the substance use disorder space that this really is a problem. In the last two to three years, there’s been emerging animal data suggesting that while xylazine is an FDA-approved veterinary product that is safe and effective when used appropriately in animals, when xylazine and fentanyl are given to these animals, in this case, usually mice or rats, it actually increases and sometimes multiplies the lethality and the opioid-induced respiratory depression. There is a paper published in 2023.

It’s the title on the left, which identified it didn’t measure respiration, but identified that a moderate dose of xylazine increased the lethality of fentanyl by over 100 times. It took one one-hundredth of the dose to kill 50% of the animals. We believe that this is truly a public health threat, and it is growing over time. The BARDA partnership that we recently announced is a true partnership with this agency that is part of the Department of Health and Human Services. They’re not only contributing a substantial amount of financial support, but BARDA has technical experts in all phases of drug development and public health who are at our disposal to continue to consult with us, advise us, and advocate for the continued development of OX390. You heard Nikolaj mention that the total value is $51 million.

The current base period is going to be dedicated to the IND-enabling toxicity studies, formulation development, and in-house manufacturing capabilities. That totals $8.5 million. Based on achieving certain regulatory, manufacturing, clinical milestones, there are four option periods to continue the development. These are negotiated with BARDA at each stage so that this is a staged approach to manage the risk of this program because, as you know, drug development always carries some degree of technical risk. The goal is to develop an intranasal rescue medication for use by laypersons or first responders in the community where these overdoses are happening. It’ll be developed on Orexo’s own AmorphOX platform that you know so much about. It will continue to leverage the existing manufacturing supply chain that we’ve already developed for OX124 and OX640. Back to you.

Conference Operator: Thank you very much, Ed. Maybe worth noting also is we received the grant was signed in the last few days of September, and that’s also the last few days of Q2. We have not included any effect of this grant into the Q3 numbers. You will start to see some effect in the Q4 numbers and, of course, continuing into next year. What it is, is it’s a cost covering. We would basically invoice for the expenses running the project, and then BARDA will cover the majority of the expenses for the project upon invoice. The cost coverage will be recognized as other income by the company. Going on to iCIPRI. iCIPRI is, of course, intimately connected to the same issue Ed was just talking about. Here, we have basically proceeded according to plan with our upscaling of the manufacturing.

We have had some good dialogue with FDA also around the nasal device where we can now use the new nasal device without any further studies. Looking at the entire market for naloxone, it’s very highly competitive, and that’s something we’re taking into account when we’re looking at the launch strategy. We are reviewing how we can put this to the market with the least amount of financial risk to the company based on a more competitive market in the U.S. and also the need for financing some of these other projects we just talked about. We do see that the product as such and getting it approved is something that’s highly valuable for the entire value chain. Every partner we’re talking to is talking about the commercialization.

For those of you in Sweden, have probably seen some of our colleagues in the industry just recently have had issues with manufacturing. Manufacturing is central, and I would say the number one cause of delays of many approval processes. That we can have a product that has been approved on a supply chain, I think is immensely valuable for other discussions and other projects. Actually, even also some of the exceptions that we’re unique exceptions we’re using for AmorphOX is something with an approved product that is also supportive evidence for some of the other products that we have in pipeline. In many ways, I think iCIPRI is paving the way for a lot of other products moving forward. One of them is, of course, OX640. With OX640, we have continued to do the upscaling. We have manufactured the first batches of powder, which are now being analyzed.

We have had some partnering discussions, but I will say that the data we received from the first launch of a nasal product in the U.S. and even in Europe, that launch has gone somewhat slower than some of our partners had anticipated. That has had a negative impact on these discussions where there’s a little more, let’s see how the market evolves over the next quarter or two. From an Orexo perspective, when we look at this market, we see the first product has come out with a strong growth. We actually see from a financial perspective, some investors are seeing it’s performing above expectations. Some of the industry players, maybe based on some early expectations from the company launching the product in the U.S., AOS Pharmaceuticals, find that this is somewhat slower than what they have seen.

When we are looking into this space, we’re seeing it’s around physicians’ hesitance to prescribe before they see real-world data supporting that a nasal delivery is as effective as an injectable. We know that patients in the U.S. who have allergies have quite infrequent interactions with healthcare. A lot of them don’t see an issue in the daily day. It’s the annual meeting with the allergist, which is the time when you can get a new product. From a more market perspective, some pushback is around the first ANDA that was filed in August by Lupin Pharmaceuticals on this product. That has created some uncertainty. If you look at the expectations by the investors, we see that the valuations are still significant. Our competitor, AOS Pharmaceuticals, actually, according to the Wall Street Journal Markets, has a buy rating by all analysts.

Some of the largest investors in AOS Pharmaceuticals have just continued financing with up to $250 million in the launch of Nefi in the U.S. For those who are close to the company, there’s clearly an expectation that this market will go through. From an Orexo perspective, we still believe that OX640 has significant opportunity. Looking at the naloxone market, which we know very well, we saw that it didn’t really take off before after 18 months. We saw exactly the same concerns by physicians and patients. Today, I don’t think anyone in the U.S. questions the benefits of a nasal administration, which is probably a lead for some of the decline we’ve seen in the number of people dying from overdose in the U.S. We also believe that coming in with OX640, we’re actually looking competitively. We have done some market research.

We know some of our potential partners have done some market research, and all of that confirms that we have a very competitive product in the U.S. We still have IP until 2044. To continue understanding the market and to get more evidence, we have started a market research using some external experts running the study in the U.S. that will be concluded during Q4 to ensure that we actually focus on the right market differentiating parameters of OX640 when we proceed and to confirm the attractiveness of the market. OX640, we continue with the development. We have seen some, you can say, delay in the partnering discussions.

There is also a concern from Orexo about the attractiveness with the uncertainty of some of these partnering opportunities where if you go a little further, get more certainty around the market, we see that could be a significant value inflection for a potential partnership. Moving into the financial section, I will invite Fredrik to talk a little about our financial results.

Ed Kim, Chief Medical Officer, Orexo: Thanks, Nikolaj. On page 22, looking at revenues, if we start looking on the top part of this page, you can see that our total Q3 revenue for the group was SEK 119 million. The vast majority of that, SEK 114 million or 96%, came from Zubsolv in our U.S. commercial business. That’s down about SEK 17 million year over year, mainly driven by a negative SEK 11 million FX impact. We also had lower demand in net revenue terms, primarily from the previously exclusive contracts within UnitedHealth Group and Humana. That was about a 3% demand reduction year over year. Partly offsetting this, we had a lower destocking effect versus last year that contributed a positive SEK 2 million. In local currencies, Zubsolv revenue declined 4.8% year over year.

Looking at other revenues within HQ and pipeline, AmorphOX royalties were higher, but that is largely because Q3 last year included a negative adjustment to historic reported royalties. Edelrod royalties were stable, but Zubsolv ex-U.S. revenues were lower, mainly because there were no tablet sales to our partner, Accord Healthcare, this quarter. That’s following the one-time inventory build earlier this year ahead of Accord starting manufacturing in Europe. If we switch to the quarter-over-quarter view for Zubsolv revenue, the waterfall chart on the bottom part of the page shows that opposite to the year-over-year trend, reported net revenues in local currency increased slightly in Q3 by approximately 2% versus reported Q2 numbers. That, though, includes the non-recurring rebate payment we had in Q2, SEK 9 million.

In SEK terms, with a negative FX impact of SEK 1.5 million, quarter-over-quarter net revenue shows only very marginal growth, reflecting a broadly stable demand picture in the quarter as shown in the first three bars of the chart. Working against the growth was also a sizable negative inventory destocking effect of SEK 6 million during the quarter, as Nikolaj previously talked about. Moving on to the next page, the P&L, we already touched on our net revenues total of SEK 990 million. FX effect was a negative SEK 12 million year over year. The weakening of the U.S. dollar year over year has, of course, also had a positive effect on our USD denominated costs, which account for approximately 65% of total expenses. The declining COGS, as you can see this quarter, is driven largely by this favorable FX effect within U.S. commercial. That was about SEK 6 million.

Also improved production costs for Zubsolv. As a result, gross margin increased from 85% in Q3 last year to 94%. On operating expenses in Q3, which landed at SEK 133 million, we’re pleased to see that’s down 4% compared to last year, although about SEK 12 million is coming from the weaker U.S. dollar. We also saw lower costs from a performance perspective with lower selling expenses in our U.S. operations in relation to staffing, as well as lower marketing-related costs for iCIPRI. We also had lower admin costs, mainly from reduced legal fees. R&D costs, on the other hand, were higher, mostly related to high costs for OX640 upscaling on manufacturing. We had these costs of SEK 13 million for the long-term incentive programs, mainly related to provision for Social Security fees following the sharp increase in our share price during the quarter.

EBITDA was negative for the quarter by minus SEK 9.8 million. That includes this SEK 13 million negative LTIP impact. If you would exclude those costs, EBITDA would be positive SEK 3 million instead. If you look at the U.S. business specifically, EBIT was an impressive SEK 38 million for the quarter, and that’s up from SEK 25 million a year ago. That’s an EBIT margin of 34% and an improvement from 19% last year. Let’s move to the next page, cash flow. We reported negative cash flow of SEK 15 million for the period. After adjusting for a negative FX effect of SEK 0.8 million, that resulted in a decrease in cash and cash equivalents of SEK 16 million in the quarter. Operating cash flow was negative, mainly due to negative operating earnings and interest paid on the bond.

Adjustment to non-cash items had a positive effect, especially from the provisions related to timing of rebate payments and also from adding back these non-cash LTIP-related costs we had this quarter. By the end of Q3, cash and cash equivalents were approximately SEK 106 million. Just a reminder, at the end of Q3, we still held SEK 20 million in our own bond, which could serve as an additional funding going forward. We’re looking at the next page, our financial outlook for 2025. These metrics are reaffirmed, and specifically, EBITDA guidance remains unchanged, driven by expectations of a positive inventory impact for Zubsolv in Q4, as well as stable demand. Continued strong cost control is also expected to have a positive effect. We should probably also see positive impact with the BARDA award and the covering of incurred costs in Q4.

However, the EBITDA outlook is related to some increased risk due to impact from non-budgeted one-time items such as the non-recurring rebate payment we had in Q2, $9 million. Also, provisions we talked about associated with the long-term incentive programs and also significant exchange rate fluctuations. With that, back to you.

Conference Operator: Thank you. Maybe a word also on the BARDA contract and OX390 is that it’s covering also our internal expenses, and particularly in the first phases of the project, it’s really our existing staff that is working on the project. We will have covering of salaries that we would otherwise have to finance ourselves. Among others, Ed Kim’s part of Ed Kim’s salary that you’ve listened to him earlier today is also covered partly by this award by BARDA. A short legal update. The one process we still have ongoing, never ending, is the Department of Justice where we have not really any material movement during the quarter. What is worth saying is the U.S. system with U.S. prosecutors, which are the ones leading these processes, that’s politically appointed. The U.S. prosecutors are politically appointed and that process has been going on during the quarter.

There actually even was a change of the appointed U.S. prosecutor in the district that we worked with. They really need to be confirmed before we think we can make any movement here. This is, of course, a process that is taking unnecessary time and also money, and it’s something we would like to resolve, but we would need to have a U.S. prosecutor in place to have that discussion. Looking at the future, we can say we have three buckets that we really focus on. One is our commercial assets where, of course, we have some of the revenue of royalty-generating assets like Amstrad, Etlwa, which is still there, even though on a low level. The most important is Zubsolv where we continue to work on how can we optimize the value contribution for Zubsolv long term.

On top of that, we, of course, have iCIPRI, which we’re now putting into the semi-commercial space here as we are making good progress towards an approval. We would then look at what is the right go-to-market strategy, both looking at the market potential and the amount of expenses needed. Really, value optimizing, those are important to enable the next areas, which is running our own projects, which today consist of three projects. One is OX390 that you heard. One is OX472 and GLP-1s. The last one is OX640. On top of that, we have the AmorphOX technology and how we can apply that to other partnerships and to other companies’ APIs, with the goal to become the partner of choice in nasal powder delivery technology. We believe today we have the world’s leading nasal powder delivery.

We think the powder has a lot of advantages over a liquid nasal delivery. This is something we are working to apply together on partners, in particular in large molecules where we think this can move from injectables to nasal delivery, among others, to vaccines, which is in our partnership with Abera Bioscience. We also have other non-disclosed partnerships where we’re testing on larger molecules using our technology. With that, I will open up for Q&As.

Fredrik Järrsten, CFO, Orexo: If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Samir Devaney from RX Securities. Please go ahead.

Hi, everyone. Thanks for taking my questions. Probably easier if I just give them to you one at a time. I guess kicking off on a couple of the positive developments that we’ve seen over the quarter. On OX390, the $8 million initial period, how long will that cover? Can you make any further comment on how 390 will be differentiated from existing rescue medications? I don’t think you’ve disclosed yet the active and maybe when we might hear about that. Thanks.

Conference Operator: I will take the first, and then Ed can answer your second question around the differentiation and difference. The $8 million is lasting until the first gateway, and that is right now planned to be in the first half of 2027. This will cover the expenses until the first half of 2027. With regard to the differentiation, Ed, could you give a little comment on how this is different than other naloxone and nalmefene rescue medications?

Nikolaj Sørensen, CEO, Orexo: Sure. Thanks, Nikolaj. Thanks for the question. What the preclinical evidence shows is that naloxone does not have a beneficial effect on the respiratory depression associated with xylazine. There is nothing else available. This will be specifically targeted to reverse the toxic negative effects of xylazine and drugs like it. It’ll be a first in class.

When do you think you’ll be in a position to tell us what that active is?

I’ll leave that to Nikolaj. I think we’re not prepared, certainly today, to disclose specifics around the API.

Conference Operator: I think we will do that relatively soon, but I would say in the start of next year. It’s a little around the supply chain. It’s around the IP and others that we want to get control of before we will disclose the details.

Okay. That’s totally fair enough. Maybe moving on to semaglutide. Obviously, this is a non-core area for you. I’m just, again, thinking about obviously, we’ve got OX640 on the sort of partnering table. When do you think you’ll have enough or what further investment do you need to make before you think you could be in a position to partner this?

I think OX472 or semaglutide is an interesting one because we see it as a two, you can say, two-legged opportunity. One is, of course, semaglutide as a product, where that one will, before you can get to market, is subject to semaglutide API patents, which I believe for some of the large markets is in the early 2030s before they go. There is an opportunity in semaglutide. Before you get to a partnering around that, I think there could be opportunities short term. Really, to get through human data, I think, will be an important milestone to have the first human data showing that it actually works, not only in vivo in animal testing, but also in humans. I think that would be a great value inflection point. I also think the expenses to take us to that level is not that high.

On the other leg, which is the more other GLP-1s, where today Novo Nordisk and Eli Lilly, they have an oil formulation. There are some of the others, but not a lot, who have oil formulations. There are basically a large number of companies who have peptides for GLP-1s, which don’t have access to an oil or nasal formulation. That could give an opportunity, which is coming much faster, to test whether we could have the product tested on that GLP-1, which, of course, then in that end, you will have to decide whether you can run both legs or you will have to decide which one you’re going on. We really think from a partnering when a pharmaceutical company with semaglutide, the real value inflection point is likely to come with the first human study. The other ones could come earlier than that.

Okay. That’s great. Just on my final question, on iCIPRI, I just wanted to double-check that nothing has changed since we last spoke in terms of the likely timeline for the FDA filing, which you’ve said is mid-2026. I just wanted to confirm that’s your current expectation.

That is still our current expectation.

That’s great. Thanks very much.

Fredrik Järrsten, CFO, Orexo: The next question comes from Klaas Peelen from DNB Carnegie. Please go ahead.

Yes. Hello, and thanks for taking my questions. The first one relates to OX390. I wonder if you are perhaps willing to share some further details about the clinical program needed to get an approval for this, what you have had for kind of discussions with the FDA and the scope of such trials, perhaps.

Conference Operator: I will refer that to Ed, keeping the communication line as we have discussed that we can’t go into too much detail, but on a high level, Ed, you can maybe answer this.

Nikolaj Sørensen, CEO, Orexo: Sure. Thanks, Nikolaj. Good questions. Because OX390 is a new chemical entity, we are going through the IND-enabling studies currently. Our initial conversations with the FDA are going to be around getting to first in human. The clinical program and the pathway to developing this important rescue medication, those conversations need to be had once we’re getting closer to our first in human studies.

Okay. Thank you. Yes, to confirm, the device that you intend to use there, is this very similar to the one for iCIPRI?

Conference Operator: Yes, that’s the plan.

Okay. Perfect. Let’s jump to OX640. You are sort of downplaying the expectations of a near-term partnership, at least what I’m hearing. I just wonder, is the negotiations on pause awaiting this market research analysis or what’s going on?

There is a limit to how much I can go into individual discussions, but we still have ongoing discussions with interested parties. I think some of the opportunities, there’s a question mark from us whether the attractiveness of entering a partnership with that market uncertainty is attractive or we would have more value to take this a step further while monitoring the market development. There is a little on the value that you can get from the product partnering today. There are still companies interested in the game with different setups. There are still opportunities for partnership in relatively short term.

I think the company needs to decide on what level of risk we’re willing to take because we think there could be more value taking this a step further if we believe the market development is in line with some of the valuation indications for AOS Pharmaceuticals and what some of their larger investors believe how this will evolve.

Okay. Great. Then my last question is about OX472. You talked about perhaps conducting a human trial before partnering. Is it possible to provide some sort of a timeframe when you perhaps could enter clinical trials with this compound?

I think here we, this has gone very, very fast for us. Of course, we’ve been working on the formulation, and it has been even in the patent since quite some years back. The real work started this year. What we are discussing internally and we are looking into the market opportunities is what is the target profile that we’re looking for? For example, is the dosing that you need for obesity likely to be higher than what you need for some of the other indications? That also increases the risk in the study. If you have to go very high in dose, that could lead to more frequent dosing through the nose, and that comes with some other potential issues that we don’t know. There’s a discussion where we’re leading, and that comes from two sides.

One is to understand the market and the clinical profile that we think is desirable. The other one is purely formulation to say how can we work on excipients and how much can we get into one dose of the nasal spray? There is some formulation work that we would like to conduct, probably followed up with some in vivo study before we move into humans with what you can say a targeted formulation. We will have to wait a little to see where that is going. To run this first exploratory clinical study in humans is not a large study, and it’s not something that is going to be very time-consuming. We could make a decision, and we could run it relatively fast. As you might know, we have manufacturing capacity for clinical trial material internally, so we don’t have to wait for slot times at a contract manufacturer.

Okay, thank you so much. That was all for me.

Thank you. I believe we received some questions on the telephone conference here. I will go through those here. Have you applied or intend to apply for these FDA vouchers giving the company much shorter timeline, so one to two months of approval for drugs of importance for the U.S., for example, OX390 and OX124? For OX124, we have tested to see if we could get accelerated approval. We think we came in a little late because there are other alternatives on the market, so we didn’t have that pathway available. For OX390, that could be a possibility, and that, of course, is something we’re exploring. What’s worth noting here is Ed said BARDA is not only a financing. They are an active part in the development. BARDA is part of the HHS in the U.S., which is under the same department as the FDA.

I think even here, there are opportunities for us to work with BARDA to find the most optimal pathway to approval in the U.S. That is something we expect. There’s a question whether OX390 will be a single-agent product or we could combine it with naloxone together with an alpha-2 receptor antagonist. Alpha-2 is the target for psilocybin, for those of you who don’t know that. The use of a combination product in the U.S. is, from FDA perspective, it’s a hard sell. It requires quite a lot of data to combine the two products. Often, it will be easier to have some kind of combination package, or you will have to work with pharmacies to make a combination of the two agents.

We will have to see what is kind of the emergency steps you would take when you see someone who is potentially overdosed with psilocybin or a similar agent and then decide what is the best distribution way. To combine it in one nasal spray, we believe will be a very complicated process from an FDA perspective. We have a question here, which is around whether we think inhaled semaglutide would be a better solution than the oral products in clinical trials given oral production in clinical trials given higher toxicology at discontinuation seen in trials such as those led by Viking, which is another company, just for those of you who don’t know, who works with a GLP-1. Do you see interest from new investors, including international investors, given potentially huge market opportunity coming from that product?

We think there’s a lot of advantages of using a nasal delivery of a GLP-1. Working with inhaled could be, but in my, and here I’m not a physician. Ed is, of course, so Ed, maybe I will take it to you later. I would just say, in general, I have seen that inhaled products come with more tox stories at least historically than what we have seen with others because you get it into the lung, and the long-term toxicology effect of that is difficult to predict. I at least have been part of withdrawing a product from the market because of late coming toxic indications from real-world data.

The nasal distribution, or nasal, at least with our powder formulation, with the seven times higher uptake through the nose without the issues that you have with using an oral tablet, what we’ve seen with Rybelsus is very low bioavailability and also high variability among the individuals who receive Rybelsus. Taking it through the nose, at least in our in vivo study, we saw much more consistent data from the nasal delivery than the oral delivery. We think there could be a great advantage, say, from a nasal delivery over the oral. On the inhaled, I’m not that sure. I don’t know, Ed, if you have any thinking around inhaled semaglutide.

Nikolaj Sørensen, CEO, Orexo: Yeah, yeah, Nikolaj. I think you’ve stated it all that the inhaled route of administration carries some risks. What we want to focus on is de-risking as much as we can the development of novel formulations. We believe that the intranasal de-risks it the most.

Conference Operator: There was a second part of the questions, which is around whether we have seen interest from new investors, including international investors, given the potentially huge market opportunity. What I can see is that our share price has increased, even though today it probably came with some disappointment. I can understand from the commentaries a lot of that is related to OX640, where we, of course, also had hoped and had some qualified expectations that we could have come to an agreement this autumn. I will say that the quarterly data and also the patent litigation that AOS ended up with came as a surprise to both us and at least the lead potential partner that we had during the summer.

Looking at what has happened after the GLP-1 announcement and also OX390, which one of them is driving, it’s a little hard, but I actually think they might be very complementary with the GLP-1s having a huge market potential. OX390 actually gives us some financial stability in the company by supporting a development program with a lot of the staff that we’re working with. We’re a small company, of course, the same people have to work on both the GLP-1s and also on the OX390. What we have seen is significantly increased volumes. We have seen more block trades in the stock than we’ve seen recently. Some of the block trades are managed by international banks or banks which are at least a part of the banks, not present in Sweden.

That indicates, in my view, that it’s either some very affluent private individuals or more likely it’s an institutional investor that is buying the share. We have not seen that in our statistics. I think that is due to many international investors not disclosing their holdings. We just see that we have an international custodian bank that holds an additional amount of shares. We normally would see that some of these investors will call us and ask for individual presentations. I will say that we have had more inbound interest in the company after the GLP-1s from international investors than we have seen for quite a while. That’s maybe different indications that the hypothesis presented here in the question that we have new investors and that there has been an increasing interest is correct.

We have another question, which I think came before the conference, which is around whether Orexo is involved in Abera Bioscience’s long-term study for its influenza vaccine. What data was presented quite recently, which was quite promising? The short answer is no. We were not a part of this long-term study. I also think looking at how you design these studies, it would be natural for Abera Bioscience to actually focus on the delivery method with the least noise. That is probably working with an injectable or the way of delivering the product that they have done for most of their studies. That said, we still have an intimate dialogue with Abera Bioscience. We have discussions about future studies that we could conduct together. This is just supportive of Abera Bioscience’s vaccine that they have some great data that they could show.

For us, that is very good news because it, of course, helps us in the discussion with Abera Bioscience for where the powder could add value to Abera Bioscience’s vaccine candidate. We have not been involved in the study. With that, I believe we have no further questions. I would thank all of you that you listened in. I hope this is a new partner we work with for the conference call from our side. It seems to have been working very well. I hope it’s the same for you. Thank you so much for your time. You’re welcome to reach out to Orexo AB if you have any further questions. Thank you.

Fredrik Järrsten, CFO, Orexo: There are no more questions at this time. I hand the conference back to the speakers for any closing comments.

Conference Operator: Thank you so much.

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