Steady as she goes
Zubsolv continues to grow, and although on the face of it this growth has slowed compared to recent quarters, some of this can be attributed to Q1 specific effects. Encouragingly, there is now evidence that the strategy of pursuing exclusive contracts to gain a foothold in the market is paying off, which should bode well for the future. Although we now expect lower Zubsolv growth in the near-term, our long-term forecasts are unchanged following Q115. Our valuation remains SEK8.2bn (SEK240/share).
Zubsolv growth masked by Q1 headwinds
Zubsolv tablet growth in Q115 was 21%, leading to a 0.4% market share gain taking Zubsolv to a >6% market share. This increase is slower than in prior quarters, although these benefitted from exclusive contract wins, which boosted growth. In addition, Q1 was subject to a number of headwinds, some of which we believe will be one-offs, including: (1) Wellcare patients switching to alternative insurance providers, leading to a 0.3% market share loss; (2) increased co-pay voucher usage; (3) higher rebating; and (4) wholesaler destocking. Excluding the Wellcare impact, Orexo estimates that underlying tablet growth was around 30%.
Focus remains continued growth
The priority remains to grow Zubsolv and increase share, particularly in the non-exclusive segment and the sales force will be expanded in 2015. Evidence of pull-through to other segments from exclusive contracts already in place was seen in Kentucky where market shares increased post the Wellcare contract. Six-month clinical data were recently released reaffirming Zubsolv’s safety and efficacy and demonstrating improvements in patients’ job status (including employment and productivity).
Aiming to sign at least one partner agreement in 2015
Orexo AB (ST:ORX) has initiated partner discussions for both Zubsolv ex-US, focusing on Europe, and for pain product OX51. Various options are being considered for both opportunities, and a larger partner with marketing muscle in Europe would be preferred for Zubsolv. Orexo is aiming to sign at least one agreement during 2015.
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