Steps to grow Zubsolv sales
Orexo AB (ST:ORX) is focused on initiatives to drive stepwise sales growth of Zubsolv during 2014. Zubsolv Q114 prescription volumes grew 145% over Q413 and further improvement of managed care coverage and execution in the lifecycle management programme should see continued increases in prescriptions. Previously communicated reimbursement improvements (UnitedHealth Group and OptumRx) and the salesforce reorganisation should start to have a greater impact in H214.
Improved reimbursement with UHG from 1 July
The March agreement with UnitedHealth Group (UHG) and OptumRx signalled further progress in securing competitive reimbursement. This deal gives Zubsolv preferred Tier II status until 1 July, after which it will have exclusivity as the only buprenorphine/naloxone combination product on all of UHG’s closed and highly managed health plan formularies (representing 3-4% of the market).
Clinical data due mid year
New clinical data could potentially expand Zubsolv’s field of use and take market share from market leader Suboxone Film longer term. First results from the fully recruited induction and switch (ISTART) studies are expected mid 2014. Positive data would form the basis for an FDA filing in Q314 to expand the Zubsolv label to include induction therapy (approval should support a higher price). It would also provide evidence of safe and effective transfer to Zubsolv from previous opioids/opioid dependence therapy, reinforcing the marketing message.
Financials: SEK500m bond issue to fund Zubsolv
Orexo has announced the issue of a SEK500m four-year senior unsecured bond loan (maturing on 9 May 2018) to finance the expansion of Zubsolv and associated working capital and decrease existing bank debt. The bond will have a coupon of three-month STIBOR +4% and could be increased to SEK1bn.
Valuation: SEK7.9bn ($1.2bn or $36/share)
Our DCF-based valuation is maintained at SEK7.9bn or SEK239/share, assuming a 25% peak market share and average 35% rebate. Model updates, including a more cautious growth trajectory for Zubsolv in 2014, inclusion of Q114 net debt, other minor revisions to estimates, updated FX rates and rolling forward our model to reflect the passage of time, have a net neutral effect on the valuation. At this early stage in the launch, uncertainty over the profile of Zubsolv’s trajectory remains.
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