Orexo AB (publ) ($ORX)

Welcome to the conference call. [Operator Instructions] Now, I will hand the conference over to the speakers. Please go ahead.

Good afternoon, everyone on the call. So I'm pleased here to report our first quarter of 2026. Together with me today, I have Fredrik Jarrsten, who will go through the financial results of the report. As you know, this is the first report that we have without Zubsolv. That, of course, has a significant impact on the way that we are presenting the data and also the length of the presentation, as we don't have the commercial asset with us anymore. So a short summary of where we are right now. We sold, and this has been a quarter which has been one of the most intensive from a work perspective from most of us, together with the end of last quarter due to the transition of Zubsolv. As you know, we sold that on the last day of 2025. But of course, most of the transition activity has been [Audio Gap]. We have in the end, during the quarter, we have, of course, a lot of these activities have led to a reduction of cash position because we're paying a lot [Audio Gap] we redeemed our [Audio Gap] in the end, we have [Audio Gap] excluding SEK 52 million we on the balance sheet right now, which is actually attributable to Dexcel because we're running their accounts receivable. All-in-all, I think the transition with Zubsolv has been very successful. It has been very smooth. There has been no interruptions in the sale of Zubsolv in the market in the US. The collaboration with Dexcel have been running smoothly, and we're quite pleased to see how the sales of Zubsolv has continued after they took over, which is good for Dexcel and the earn-out that we are anticipating next year and the year after. When looking at our development programs, we have seen a steady progress according to the plan. Both Izipry is on track for filing later this year. OX640 is on track for starting a clinical or initiating a clinical trial, nasal allergen challenge study in the end of the year. And also OX390 is making good progress, and we have an ongoing in vivo study that where we expect the results to come here in the second quarter. In addition, we've been working on expanding the use of AmorphOX, in particular into the GLP-1 space, where we have one nasal program ongoing. But we also, based on some feedback and interest, we're also testing whether this could support an oral formulation. We'll come back to that in more details. Just to remind those of you who have been following Orexo, the way that we're looking at the business right now is basically in three arms. One is that we're working in what we call exploratory. That's early-stage programs where we haven't set a full development program and timeline, where we're using the AmorphOX technology into new areas, such as peptides, so the GLP-1 agonist or vaccines. We have the other leg is our development program. That's when we have a set timeline. We are planning for clinical trials and all the way up to submission to the regulatory authorities across the world. Here we have 3 programs today. We have our last leg, and that is when we're partnering our technology and basically making AmorphOX, the AmorphOX technology available for other companies' programs and where they can use that to accelerate or to improve the properties of their programs. On the first area, the explore, the big focus during the quarter has been on the GLP-1s and in particular, in semaglutide. We have expanded now into an oral formulation where we're looking to see if we, by combining the, by using the unique properties of the AmorphOX particle, we can basically combine the peptide, semaglutide peptide or other peptides together with excipients that can improve the bioavailability of the peptide when it comes into humans. We are planning for the first in vivo studies on this during the summer. On vaccines, we have been looking a lot to start up collaborations, in particular with other parties than just Abera. We are in good progress to expand into new opinion leaders and in particular within academia, to see where we can basically test a broader span of vaccines together with our technology. Finally, we have our proprietary development programs. I said before, Izipry, everything is on track for the submission that we're planning for in Q3. As you know, we have to redo some of the stability studies in the final manufacturing process, you can say. Right now everything looks like we can submit according to plan. For OX640, a lot of the focus during the quarter has been on setting up manufacturing processes in Canada together with our contract manufacturer. That is required to have this commercial, final commercial product to be used in the pivotal trial that we're planning for to initiate in the fourth quarter or end of this year. We've also been working on human factors studies. When you're working with human factors, that's how humans are going to use the actual device. The way to do that is formative human factors studies and instructions for use. And we've been doing that during the COVID good success. That means that we are then ready to start the real human factors studies that are going to be used for the regulatory submission when we want to. And then finally, on OX390, we are now working with our first in vivo study, waiting the results in this quarter. We're also planning for a Type C meeting with the FDA that we've been planning together with BARDA. That is with a big focus on our non-clinical plans. So that Type C meeting is with the FDA. All in all, of these programs are doing steady progress and basically follow the plan for this quarter. When it comes to the partnering, that's one way our technology is to be used by other partners. And as you know, we've talked about that several times. We have been working with quite a few, both smaller and larger companies to test the feasibility of AmorphOX. We now need to move some of these programs into more concrete partnerships, and we are in dialog with some companies about programs in different phases where we will get coverage of our expenses and also programs that are intended to lead into a longer term partnership of program development. As we said multiple times, it's very hard to forecast when these agreements will be in place. It takes two companies to get to a conclusion. But we are working hard to expand this pipeline of programs. I'll leave to -- Fredrik will lead us into the financials.

Yes. Thank you, Nikolaj. Starting with the P&L for continued operations, which following the divestment of Zubsolv U.S., as of this quarter, we do not longer follow up on a segment basis. The divested Zubsolv U.S. business is presented in the report as discontinued operations in Note 10. On net revenues, SEK 5 million for the quarter, we have lower Abstral royalties following the trend we've seen for a while now as individual countries' royalty agreements expire. We had higher Edluar royalties though from higher partner sales in Canada. We had lower Zubsolv ex-U.S. revenues explained by absence of sales. [Audio Gap] for minimal this quarter and lower than last year, that's mainly due to lower marketing related costs for Izipry and lower DMHP activities. [Audio Gap] legal fees seeking a settlement in the DOJ investigation. R&D costs also higher following high cost for development of [Audio Gap] which on the other hand also meant high reimbursement of [Audio Gap]. That's the main reason we're doing net items from higher bond loan costs, and that's following the early redemption of the corporate bond that we did in March, partly offset though by higher interest. Net [Audio Gap], and for discontinued operations, SEK 9 million. And that's mainly explained by the restructuring costs post section [Audio Gap] continued operations of SEK 528 million. That the absolute majority is a consequence of the early redemption of the bond. During the quarter, we exercised our right to carry out the redemption [Audio Gap]. The contribution for part was payment of provisions for outstanding rebates related to Zubsolv sales in 2025, and also following obligations in the Zubsolv agreement related to rebates. Furthermore, we had positive changes in working capital from collected Zubsolv sales related receivables from 2025. In addition, under the transition services agreement following the divestment, Orexo continues to collect Zubsolv revenue on [Audio Gap] positive FX effect of SEK 9 million, decrease in cash and cash equivalents of SEK 526 million to SEK 386 million [Audio Gap].

Sorry for the delay. This is the Operator. We will continue soon, trying to fix the sound problem.

We try again here. We were just disconnected. Sorry again for that. So our expectations here is for OX640 that we'll have a clinical trial start or the pivotal trial starting in the end of this year with the result early next year, but also the manufacturing of the clinical trial material is incredibly important in pharma development, and that's something that we'll do now during the second quarter. OX390, we are waiting for the in vivo study results, and that of course, is very important for us to get into the next stage together with Abera. The collaboration with Abera is going very well at the moment. And I think we have a very constructive discussion with BARDA about how to optimize the development, and how to run the timelines moving forward. And we are of course, also looking forward to the Type C meeting with the FDA. We think this project is incredibly important for the U.S. government, and for the strategy of combating opioid addiction and death in the U.S. Finally, we have our GLP-1 agonist and our vaccines. We're expecting to have some additional in vivo studies in the oral formulation, and we also continue to work with the nasal formulation, which if positive, could lead into the first human studies next year. In parallel with all of this, we are working with all kind of partnerships, both on a technology basis, on a knowledge basis with academia, but of course also with pharma companies where we can have co-development programs in one shape or form. Either them basically using our technology or getting access to our own programs. We are looking for a partner for Izipry, and we think it's a good trigger to have the filing ready in the U.S., so we are starting this process right now. OX640, we will also be looking for a partner, and I think here the manufacturing and meeting the timeline of the clinical trial in the fourth quarter is an important milestones. With that, I will close the presentation and open up for Q&A.

[Operator Instructions] The next question comes from Klas Palin from DNB Carnegie. Please go ahead.

Hello, and thank you for taking my questions, even though I want to mention that I didn't hear that much of the presentation, so excuse me if my questions has already been addressed. I just wonder, Q1 2026, how typical quarter is this for the new Orexo if we exclude what you're doing with DOJ for the moment?

[Audio Gap]

Sorry, I can't hear you.

If you can hear us, we'll dial up using another number.

Great. I can hear you.

Maybe different perspectives on that question, Klas. If I address it from a cost perspective, so obviously we are in the transition period, and costs within discontinued operations obviously related to transition, but also in the continued operations we are affected by additional costs in relation to the transition. If we look at a sort of normalized OpEx annual, and deducting those extra costs, so to say, then we would estimate an annual OpEx, assuming also that the projects that we are running now. So an annual OpEx, excluding also depreciation of SEK 250 million. It is an estimate, Klas. That's the angle. You said also in relation to the DOJ investigation.

Yes, if you could provide some granularity about that would be great, of course. I don't know what you can say.

I would say we can't say that much more right now. It's a difficult process, not at least due to personnel change at the DOJ or uncertainty about who is leading from their side. But we have an ongoing dialog and it is our clear ambition to try to close this. We are navigating our way through the Department of Justice to find a way to get to a settlement.

Just my last question then, just wonder if you could provide some timeline when you think that the phase out will be completed of the divested business.

I mean, we expect the transition period to last some time after the first half of the year. I guess September, October will be a fair estimate. You know, in that period, we will phase out in continued operations the people that are busy with the transition, but they're no longer needed. With that end of the transition period, discontinued operations for this year, there will be no costs or income in that. That's a fair estimate, I would say.

The next question comes from Samir Devani from Rx Securities. Please go ahead.

Hi, guys. I guess I've got a couple of questions really just again, coming back to the transition and the SEK 52 million that's owed to Dexcel. I'm assuming that's for returns and rebates only. I just wanted a, I guess, bit more granularity. How much were the returns and rebates in Q? Is that all for Q1, the SEK 52 million? Or should we be assuming and that will be paid in Q2? Is that correct?

Yes. There's different aspects to that as well, Samir. The SEK 52 million, that refers to Orexo collecting sales revenues from Zubsolv. Obviously, that's just a pass-through. The SEK 52 million is not belonging to us. So that's the easy part. In relation to rebates and returns, we started the quarter with SEK 155 million in provisions for rebates. Now, a big part of that is following, you know, separating an asset and we are to pay rebates for those assets that were there in 2025. And we have paid also following the agreement, the purchase agreement, where we had the commitments and provisions in relation to the agreement. That has been dealt with during Q1 to a large extent. We paid out of the SEK 155 million, we paid SEK 109 million in rebates. That means that we have still left some SEK 40 million in rebates to pay in going forward.

The SEK 52 million in Q2, will there still be pass-through payments coming or would Dexcel have taken it all over by then?

No, that would be taken over as we speak, but there will be probably new since this last for 9 months. There will be new passthrough money to clear to Dexcel.

Then I guess my only other question is just on the BARDA collaboration, and you mentioned obviously we're going to see some in vivo data in Q2. Is that a no-go, go point in the collaboration then? If so, what do you need to show for the collaboration to progress?

I think in all of the development, there is a continuous go, no-go. If things are turning out in a very unfortunate way, then it would be. You have to consider, is this worth redoing? Should we redo the formulations? We're testing several different formulations in the in vivo study. Should it of some reason all of them show no indication for nasal uptake, then there will need to be a new discussion with BARDA about how this is moving along. I think that comes continuously in all development program. This one is a little unique because we're running other programs or have been running other programs in these early stages without sharing the information. Because we have an income, we're of course giving an update continuously on the BARDA partnership. I will say the, what we're testing in the in vivo study is the nasal uptake, and there have been some evidence that the atipamezole, the active ingredients, is available and for uptake through to the nose. So we think that we have a good shot on goal here. But of course, should it turn out that there's no uptake, then it will need to be a new discussion with BARDA. Is it worthwhile adjusting the formulation? Is there other delivery methods that we should test, or should the program not continue? But I think the atipamezole, as we went out at the R&D Day as well, is well-researched and have been tested and is used daily in veterinary use across the world. It's a well-documented API, but just not for humans. We have a problem here that I'm really sorry about the sound. We recognized then when we got disconnected, we have a few comments about that, and my apologies. We need to go back and look at what we can do to address that next time to avoid the same thing happening. Then we get a question about what are the value triggers in near time. I think delivering on our development program is of course what we have most control of and basically meeting the development milestones that we have outlined now with in vivo data from OX390 that Samir Devani was just asking about, our submission of Izipry, the continued development towards starting the OX640 program in the autumn. I think all important data points. Also in vivo data on GLP-1, should that turn out positive, that would be an important trigger. And then on top of that, we of course have partnering discussions, which from experience, I would say it's very hard to put a timeline on some of these processes, but it's not because they're not ongoing. So there are partnering discussions ongoing on different types of development programs. Should they come in, I would expect that that has a positive impact. As I said, we are running negotiations and discussions as we speak. We of course optimistic that we will have some partnership that we can share, but time will tell. There's no deal until we have a signed agreement. But I do think it's quite important if you look at the overall market, there's also external drivers that can have impact. Taking the OX640, I would look at the transition or transformation of an injectable epinephrine market and how it's moving to get into nasal. As you know, there are nasal alternatives available in Europe, some countries in Europe, in the U.S. Just got approval just a few weeks ago in Canada. This transformation going from injectable and auto-injectors into nasal, I think is an important value trigger since OX640 is relatively close by in development terms and is a late-stage, quite low-risk asset. I think that to recognize value in that will be an important value trigger. With that, we have no further questions. Once again, my sincere apologies about the sound. Fredrik and I, we could hear each other quite loud and clear on our side, but unfortunately, that sounds like it has not really gone through to all of you. We did have a lot of sound checks before we went into the conference, so something must have happened during the meeting. My apologies for that. I will then invite you to listen in to our future presentations and when they are, that's available on the homepage. Thanks a lot and goodbye.