Orexo AB (publ.) – Interim report, January-September 2010

Uppsala, November 10, 2010 - Abstral™ for treatment of breakthrough cancer pain continued to grow strongly

Key events during the period

• Net revenues amounted to MSEK 101.4 (208.2).
• Cash flow from operating activities as a negative MSEK 13.7 (neg:117.7)
• Royalties from Abstral™, Orexo’s leading sublingual fentanyl treatment for breakthrough cancer pain, increased to MSEK 30.3 (6.3)
• The loss after tax was MSEK 91.4 (loss: 40.1).
• The loss per share was SEK 3.90 (loss: 1.78).
• Cash and cash equivalents at the end of the period totaled MSEK 165.6 compared with MSEK 87.4 at the beginning of the period.
• A convertible loan in the amount of SEK 111,150,000 from Novo A/S was implemented.
• In June, Orexo entered into an alliance and license agreement regarding new pharmaceuticals for the treatment of respiratory diseases with Ortho-McNeil-Janssen Pharmaceuticals, Inc. and Janssen Pharmaceutica NV (collectively “OMJ”). The agreement provides Orexo with up to MUSD 21.5 (MSEK 167) in research financing for the first three years, including an upfront payment of MUSD 10 (MSEK 77.8) intended to cover all future development costs for Orexo. In addition, Orexo is to be entitled to full milestone payments of up to MUSD 564 (MSEK 4,390), plus further sales milestones and royalties for each program.
• Orexo signed a license and distribution agreement encompassing the approval, marketing and sales of Abstral™ in the Middle East and Africa with NewBridge Pharmaceuticals. The terms and conditions of the agreement cover an upfront payment and remuneration on achieving regulatory milestones and sales targets, as well as profit sharing.

Third quarter

• Net revenues amounted to MSEK 35.9 (63.7).
• Cash flow from operating activities was a negative MSEK 25.0 (neg: 43.2).
• The loss after tax was MSEK 28.5 (loss: 9.5).
• The loss per share was SEK 1.22 (loss: 0.41).

Operations
“During the third quarter, Abstral™ sales were 480% higher than in the same period last year. Sales of Edluar™, Orexo’s sublingual zolpidem treatment for insomnia, continue to grow more strongly from a low base, with new stock being ordered for the first time since launch and generating royalty income for Orexo.

The decision of the US Food & Drug Administration (“FDA”) was delayed beyond the expected Prescription Drug User Fee Act (“PDUFA”) date in early September. The FDA review is currently in the final stage, and a decision is expected shortly.

During the period, Orexo signed a new license and distribution agreement for Abstral™ in most of the Middle East and African countries. Terms were not disclosed. The agreement with NewBridge enables Abstral™ to be sold in even more geographic markets and marks another step in the company’s efforts to develop a global product. Our alliance with NewBridge will make Abstral™ available to thousands of additional physicians and assist them in the treatment of cancer patients suffering from severe pain.

In August, Orexo launched the next step in its strategy to focus its business model on deploying its well-established and proven reformulation technologies to develop new proprietary products targeted at the Specialty Pharmaceutical market. As part of this strategy, Orexo has initiated the first three proprietary development programs. The company intends to commercialize these products through an Orexo-owned marketing and sales organization, starting in one of the major markets EU or USA.

A Phase I clinical study with OX219, directed towards treatment of opioid addiction, was initiated. OX219 is an improved version of the program originally acquired with the PharmaKodex transaction now using Orexo proprietary technologies. This product will compete in the opioid addiction market, which is today worth an estimated USD 1.4 billion globally, and is currently dominated by Suboxone®. Results from the initial study will be communicated during the fourth quarter.

The clinical trials for the next two proprietary programs, OX51 and OX27 will be performed by Q1, 2011.

Meda AB has informed Orexo that it will further develop the nasal cetirizine NLA product to complement Meda’s allergy product portfolio. The next stage of development of NLA is a clinical phase III program, for which the full cost will be carried by Meda AB.

As previously announced, the total cost base for 2010 is estimated at MSEK 200-220, excluding the new work on the OX-CLI and OX-ESI programs within the framework of the agreement with Ortho McNeil Janssen and Janssen Pharmaceutica for which research funding is received from the partner”, says Torbjörn Bjerke, President and CEO.

For the entire report, see enclosed link to pdf.

For further information, please contact:
Torbjörn Bjerke, President and CEO, Phone: +46 708 66 19 90, e-mail: torbjorn.bjerke@orexo.com
Robin Wright, EVP Head of Finance, Phone: +44 7720 30 00 25, e-mail: robin.wright@orexo.com

Note
Orexo AB publ. discloses the information provided herein pursuant to the Securities Markets Act. The information was provided for public release on November 10, 2010, at 8:00 a.m. CET. This report has been prepared in both Swedish and English. In the event of any discrepancy in the content of the two versions, the Swedish version shall take precedence.

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