Zubsolv Rx data week 1
COMPANY ANALYSIS 9 January 2015 Summary Orexo (orx.st) Zubsolv Rx data week 1 • • Latest Rx data from Wolters Kluwer, released today, shows a decline in Zubsolv tablets market share compared to last week, down to 5.45% from 5.61%. The rolling four weeks market share were also slightly lower w/w with 0.04 percentage points, reaching 5.73%. List: Market Cap: Industry: CEO: Chairman: First week of 2015 Zubsolv TRx were 8,621 (up 514 w/w). This corresponds to a market share of 5.07%. The rolling four weeks average TRx were 5.23% (down 0.03 percentage points from last week). Mid cap 4,677 MSEK Healthcare Nikolaj Sörensen Martin Nicklasson OMXS 30 Orexo 210 190 170 150 130 • Buprenorphine/naloxone unit sales continues to show steady double digit growth. For the week the y/y rolling four weeks average grew by 11.3%. 110 90 70 09-Jan 09-Apr 08-Jul 06-Oct 04-Jan Redeye Rating (0 – 10 points) Management Growth prospect Ownership 7.0 points 7.5 points Profitability Financial strength 0.0 points 7.5 points 3.0 points Key Financials Revenue. MSEK Growth EBITDA EBITDA margin EBIT EBIT margin Pre-tax earnings Net earnings Net margin 2012 326 2013 430 2014E 582 2015E 843 2016E 1 491 63% 32% 36% 45% 77% -60 -87 -29 97 493 -18% -20% -5% 11% 33% -79 -140 -36 57 463 -24% -33% -6% 7% 31% -88 -86 -153 -155 -65 -67 27 17 446 410 -26% -36% -11% 2% 28% 2012 Dividend/Share EPS adj. P/E adj. EV/S EV/EBITDA 2012 2013 0.00 -2.86 -17.3 4.2 -23.2 2013 2014E 0.00 -4.33 -37.9 12.9 -63.6 2014E 2015E 0.00 -1.79 -75.9 8.4 -169.7 2015E 2016E 136.3 34.3 4 677 201 Free float (%) Daily turnover (’000) 55 % 122 Analysts: Klas Palin 2016E 2.00 0.46 297.6 5.7 50.0 Share information Share price (SEK) Number of shares (m) Market Cap (MSEK) Net debt (MSEK) 3.58 11.05 12.3 3.0 9.1 [email protected] Ulrik Trattner [email protected] Important information: All information regarding limitation of liability and potential conflicts of interest can be found at the end of the report. Redeye. Mäster Samuelsgatan 42. 10tr. Box 7141. 103 87 Stockholm. Tel +46 8-545 013 30. E-post: [email protected] Orexo Redeye Rating: Background and definitions The aim of a Redeye Rating is to help investors identify high-quality companies with attractive valuation. Company Qualities The aim of Company Qualities is to provide a well-structured and clear profile of a company’s qualities (or operating risk) – its chances of surviving and its potential for achieving long-term stable profit growth. We categorize a company’s qualities on a ten-point scale based on five valuation keys; 1 – Management. 2 – Ownership. 3 – Growth Outlook. 4 – Profitability and 5 – Financial Strength. Each valuation key is assessed based a number of quantitative and qualitative key factors that are weighted differently according to how important they are deemed to be. Each key factor is allocated a number of points based on its rating. The assessment of each valuation key is based on the total number of points for these individual factors. The rating scale ranges from 0 to +10 points. The overall rating for each valuation key is indicated by the size of the bar shown in the chart. The relative size of the bars therefore reflects the rating distribution between the different valuation keys. Management Our Management rating represents an assessment of the ability of the board of directors and management to manage the company in the best interests of the shareholders. A good board and management can make a mediocre business concept profitable. while a poor board and management can even lead a strong company into crisis. The factors used to assess a company’s management are: 1 – Execution. 2 – Capital allocation. 3 – Communication. 4 – Experience. 5 – Leadership and 6 – Integrity. Ownership Our Ownership rating represents an assessment of the ownership exercised for longer-term value creation. Owner commitment and expertise are key to a company’s stability and the board’s ability to take action. Companies with a dispersed ownership structure without a clear controlling shareholder have historically performed worse than the market index over time. The factors used to assess Ownership are: 1 – Ownership structure. 2 – Owner commitment. 3 – Institutional ownership. 4 – Abuse of power. 5 – Reputation. and 6 – Financial sustainability. Growth Outlook Our Growth Outlook rating represents an assessment of a company’s potential to achieve long-term stable profit growth. Over the long-term. the share price roughly mirrors the company’s earnings trend. A company that does not grow may be a good short-term investment. but is usually unwise in the long term. The factors used to assess Growth Outlook are: 1 – Strategies and business model. 2 – Sale potential. 3 – Market growth. 4 – Market position. and 5 – Competitiveness. Profitability Our Profitability rating represents an assessment of how effective a company has historically utilised its capital to generate profit. Companies cannot survive if they are not profitable. The assessment of how profitable a company has been is based on a number of key ratios and criteria over a period of up to the past five years: 1 – Return on total assets (ROA). 2 – Return on equity (ROE). 3 – Net profit margin. 4 – Free cash flow. and 5 – Operating profit margin or EBIT. Financial Strength Our Financial Strength rating represents an assessment of a company’s ability to pay in the short and long term. The core of a company’s financial strength is its balance sheet and cash flow. Even the greatest potential is of no benefit unless the balance sheet can cope with funding growth. The assessment of a company’s financial strength is based on a number of key ratios and criteria: 1 – Times-interest-coverage ratio. 2 – Debt-to-equity ratio. 3 – Quick ratio. 4 – Current ratio. 5 – Sales turnover. 6 – Capital needs. 7 – Cyclicality. and 8 – Forthcoming binary events. Company analysis 2 Orexo Weekly Rx data Zubsolv Four-week rolling average, Zubsolv tablet market share and sales 7,00% 350000 6,00% 300000 5,00% 250000 4,00% 200000 3,00% 150000 2,00% 100000 1,00% 50000 0,00% 02-01-14 04-01-14 06-01-14 08-01-14 10-01-14 12-01-14 0 02-01-14 04-01-14 06-01-14 08-01-14 10-01-14 12-01-14 Source: Wolters Kluwer Zubsolv market share Rolling four weeks average - Zubsolv • During the first week of 2015 Zubsolv TRx reached a total of 8,621 scripts, which corresponds to a market share of 5.07% • Zubsolv tablets market share were down to 5.45%, a decline of 0.16 percentage points w/w • Rolling four week average TRx were slightly down to 5.23% • The rolling four week Zubsolv tablets market share were lower w/w, reaching 5.73% Rolling four weeks average TRx market share and tablet sales market share last six months 01-02-15 12-26-14 12-19-14 12-12-14 12-05-14 11-28-14 11-21-14 11-14-14 11-07-14 10-31-14 10-24-14 10-17-14 10-10-14 10-03-14 09-26-14 09-19-14 09-12-14 09-05-14 08-29-14 08-22-14 08-15-14 08-08-14 08-01-14 07-25-14 07-18-14 07-11-14 07-04-14 Suboxone 75.51% 75.52% 75.57% 75.67% 75.80% 75.92% 76.19% 76.45% 76.78% 77.02% 77.12% 77.20% 77.27% 77.38% 77.50% 77.62% 77.70% 77.74% 77.93% 77.97% 78.05% 78.13% 78.09% 78.31% 78.52% 78.79% 79.02% Generics 18.96% 18.93% 18.93% 18.93% 18.91% 18.89% 18.99% 19.10% 19.15% 19.26% 19.19% 19.14% 19.11% 19.05% 18.98% 18.90% 18.83% 18.80% 18.63% 18.62% 18.61% 18.56% 18.65% 18.58% 18.56% 18.52% 18.49% Zubsolv 5.23% 5.26% 5.24% 5.19% 5.13% 5.08% 4.75% 4.42% 4.07% 3.71% 3.69% 3.66% 3.62% 3.57% 3.53% 3.48% 3.46% 3.46% 3.45% 3.40% 3.34% 3.31% 3.25% 3.11% 2.92% 2.69% 2.49% Bunavail 0.30% 0.28% 0.26% 0.21% 0.16% 0.11% 0.06% 0.03% 0.01% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Source: Wolters Kluwer Company analysis 3 Suboxone 73.08% 73.10% 73.12% 73.20% 73.28% 73.37% 73.57% 73.85% 74.21% 74.48% 74.64% 74.69% 74.73% 74.85% 74.98% 75.07% 75.20% 75.21% 75.36% 75.40% 75.40% 75.44% 75.43% 75.72% 76.01% 76.42% 76.75% Generics 20.94% 20.90% 20.93% 20.94% 20.99% 21.00% 21.12% 21.21% 21.24% 21.33% 21.24% 21.22% 21.20% 21.11% 21.01% 20.96% 20.87% 20.90% 20.75% 20.75% 20.81% 20.83% 20.96% 20.92% 20.94% 20.85% 20.81% Zubsolv Bunavail 5.73% 0.24% 5.77% 0.23% 5.74% 0.21% 5.68% 0.18% 5.60% 0.14% 5.53% 0.10% 5.26% 0.06% 4.91% 0.03% 4.54% 0.01% 4.18% 0.00% 4.11% 0.00% 4.08% 0.00% 4.07% 0.00% 4.05% 0.00% 4.01% 0.00% 3.96% 0.00% 3.93% 0.00% 3.89% 0.00% 3.89% 0.00% 3.85% 0.00% 3.79% 0.00% 3.73% 0.00% 3.62% 0.00% 3.36% 0.00% 3.05% 0.00% 2.73% 0.00% 2.45% 0.00% Orexo Tablet sales buprenorphine/naloxone products Suboxone 3486037 3236343 4014318 3842417 4102404 3333525 3829847 3733165 3928420 3652991 3762294 3794982 3872482 3844991 3769049 3749894 3841375 3621365 3854946 3727597 3734568 3762243 3787240 3721519 3759624 3783316 01-02-15 12-26-14 12-19-14 12-12-14 12-05-14 11-28-14 11-21-14 11-14-14 11-07-14 10-31-14 10-24-14 10-17-14 10-10-14 10-03-14 09-26-14 09-19-14 09-12-14 09-05-14 08-29-14 08-22-14 08-15-14 08-08-14 08-01-14 07-25-14 07-18-14 07-11-14 Generics 999345 930274 1159086 1088962 1165506 963661 1104041 1063234 1112807 1067368 1087390 1065289 1100473 1094257 1081949 1046036 1066023 1004171 1090615 1014280 1043144 1004865 1069110 1023877 1052053 1036623 Zubsolv 259263 248014 324621 311174 316007 248194 296045 285442 287780 212518 217219 208577 208853 207214 210847 201961 202040 186494 205257 192350 188710 192393 193814 178568 178093 171110 Bunavail 10725 10083 14928 12899 9243 7515 6797 4303 651 60 178 506 180 30 Total 4755370 4424714 5512953 5255452 5593160 4552895 5236730 5086144 5329658 4932937 5067081 5069354 5181988 5146492 5061845 4997891 5109438 4812030 5150818 4934227 4966422 4959501 5050164 4923964 4989770 4991049 Source: Wolters Kluwer Scripts buprenorphine/naloxone products 01-02-15 12-26-14 12-19-14 12-12-14 12-05-14 11-28-14 11-21-14 11-14-14 11-07-14 10-31-14 10-24-14 10-17-14 10-10-14 10-03-14 09-26-14 09-19-14 09-12-14 09-05-14 08-29-14 08-22-14 08-15-14 08-08-14 08-01-14 07-25-14 07-18-14 07-11-14 Suboxone 128584 119418 142097 137372 144691 123039 138921 136026 141268 136116 138252 139094 139929 140697 139095 138098 140254 133371 141457 137307 137765 137639 139077 137454 138787 139245 Generics 32271 30032 35664 34477 36101 30795 34715 33741 34886 34328 34875 34295 34903 34765 34548 33766 34363 32214 34383 32936 33465 31681 33706 32712 33271 32782 Source: Wolters Kluwer Company analysis 4 Zubsolv 8621 8107 10028 9806 9933 8194 9384 9220 9298 6559 6827 6698 6593 6601 6619 6289 6245 5904 6377 6102 6082 5961 5927 5656 5877 5642 Bunavail 487 447 629 545 389 303 268 173 26 2 5 10 6 1 Total 169963 158004 188418 182200 191114 162331 183288 179160 185478 177005 179959 180097 181431 182064 180262 178153 180862 171489 182217 176345 177312 175281 178710 175822 177935 177669 Orexo Summary Redeye Rating The rating consists of five valuation keys. each constituting an overall assessment of several factors that are rated on a scale of 0 to 2 points. The maximum score for a valuation key is 10 points. Management 7.5p The management and board have solid, relevant experience of the sector. Communication with the market is good and clear. The launch of Zubsolv is lagging slightly behind the original plan. Ownership 7.0p Orexo’s major shareholders are represented and active on the board, which is a big plus. However, we would prefer to see ownership among all of the board, which would bolster the rating. Growth prospect 7.5p Growth over the next few years is governed by the success of the recently launched Zubsolv on the US market. The drug has great commercial potential and sales are expected to grow strongly over the next few years. Risk maintains relatively high as the product is not yet established. Profitability 0.0p The company’s flagship product Zubsolv is in establishment phase and it will take until next year before Orexo achieves profitability. Financial strength 3.0p The financial position has improved due to issues and current financing is deemed adequate until positive cash flow can be achieved. Company analysis 5 Orexo Income statement Net sales Total operating costs EBITDA 2012 326 -386 -60 2013 430 -517 -87 2014E 582 -611 -29 2015E 843 -746 97 2016E 1 491 -998 493 Depreciation Amortization Impairment charges EBIT -7 -13 0 -79 -7 -46 0 -140 -6 -2 0 -36 -3 -37 0 57 -3 -27 0 463 Share in profits Net financial items Exchange rate dif. Pre-tax profit 0 -8 0 -88 0 -14 0 -153 0 -28 0 -65 0 -29 0 27 0 -17 0 446 Tax Net earnings 2 -86 -2 -155 -2 -67 -10 17 -36 410 2012 2013 2014E 2015E 2016E 228 37 28 0 293 106 55 383 0 544 296 116 495 0 908 348 126 489 0 963 670 194 552 0 1 415 35 19 0 26 106 3 0 189 0 33 0 0 26 62 106 0 228 0 31 0 0 26 62 185 0 304 0 33 0 0 28 62 133 0 256 0 36 0 0 30 62 106 0 235 0 482 772 1 212 1 220 1 650 Balance Assets Current assets Cash in banks Receivables Inventories Other current assets Current assets Fixed assets Tangible assets Associated comp. Investments Goodwill Cap. exp. for dev. O intangible rights O non-current assets Total fixed assets Deferred tax assets Total (assets) Liabilities Current liabilities Short-term debt Accounts payable O current liabilities Current liabilities Long-term debt O long-term liabilities Convertibles Total Liabilities Deferred tax liab Provisions Shareholders' equity Minority interest (BS) Minority & equity 11 158 0 169 10 4 103 287 0 4 191 0 191 237 360 0 597 4 0 0 601 10 0 162 0 162 3 262 0 265 494 0 0 759 8 0 445 0 445 3 253 0 256 494 0 0 750 8 0 462 0 462 3 343 0 346 494 0 0 840 7 0 803 0 803 Total liab & SE 482 772 1 212 1 220 1 650 2012 326 -386 2013 430 -517 2014E 582 -611 2015E 843 -746 2016E 1 491 -998 -20 -79 2 -78 20 -58 90 0 -53 -140 -1 -141 53 -88 -201 -111 -7 -36 -1 -37 7 -30 -271 -84 -40 57 -13 44 40 84 -13 8 -30 463 -37 426 30 456 -40 -9 32 -400 -385 79 406 Capital structure Equity ratio Debt/equity ratio Net debt Capital employed Capital turnover rate 2012 40% 65% -103 69 0.7 2013 21% 149% 135 297 0.6 2014E 37% 112% 201 645 0.5 2015E 38% 108% 149 611 0.7 2016E 49% 62% -173 631 0.9 Growth Sales growth EPS growth (adj) 2012 63% -78% 2013 32% 64% 2014E 36% -59% 2015E 45% -126% 2016E 77% 2 313% Free cash flow Net sales Total operating costs Depreciations total EBIT Taxes on EBIT NOPLAT Depreciation Gross cash flow Change in WC Gross CAPEX Free cash flow DCF valuation WACC (%) Cash flow. MSEK 13.4 % Assumptions 2015-2021 (%) Average sales growth 7.1 % EBIT margin 39.9 % Fair value e. per share. SEK Share price. SEK 162.3 136.3 Profitability ROE ROCE ROIC EBITDA margin EBIT margin Net margin 2012 -34% -21% -42% -18% -24% -26% 2013 -88% -39% -204% -20% -33% -36% 2014E -22% -10% -13% -5% -6% -11% 2015E 4% 3% 7% 11% 7% 2% 2016E 65% 39% 70% 33% 31% 28% Data per share EPS EPS adj Dividend Net debt Total shares 2012 -2.86 -2.86 0.00 -3.45 30.00 2013 -4.70 -4.33 0.00 4.11 32.97 2014E -1.94 -1.79 0.00 5.84 34.33 2015E 0.50 0.46 2.00 4.33 34.33 2016E 11.95 11.05 3.58 -5.03 34.33 2012 1 384.6 -17.3 -17.3 4.6 4.2 -23.2 -17.4 7.8 2013 5 542.5 -34.9 -37.9 12.6 12.9 -63.6 -39.7 33.5 2014E 4 877.3 -70.2 -75.9 8.0 8.4 -169.7 -134.6 10.5 2015E 4 825.4 275.1 297.6 5.6 5.7 50.0 85.4 10.1 2016E 4 504.3 11.4 12.3 3.1 3.0 9.1 9.7 5.8 Valuation EV P/E P/E diluted P/Sales EV/Sales EV/EBITDA EV/EBIT P/BV Share performance 1 month 3 month 12 month Since start of the year 9.0 20.8 -19.4 0.6 Shareholder structure % Novo Nordisk Fonden HealthCap ATP SHB fonder Anders Walldow Avanza Pension Försäkring Andra AP-fonden Hans Sköld Thomas Lundqvist Länsförsäkringar fondförvaltning % % % % Growth/year Net sales Operating profit adj EPS. just Equity 12/14e 33.6 % -32.5 % -20.8 % 52.6 % Capital 28.1 % 11.7 % 5.4 % 4.9 % 3.4 % 2.9 % 2.2 % 1.8 % 1.4 % 1.4 % Votes 28.1 % 11.7 % 5.4 % 4.9 % 3.4 % 2.9 % 2.2 % 1.8 % 1.4 % 1.4 % Share information Reuters code List Share price Total shares. million Market Cap. MSEK orx.st Mid cap 136.3 34.3 4676.8 Management & board CEO CFO IR Chairman Nikolaj Sörensen Henrik Juuel Henrik Juuel Martin Nicklasson Financial information FY 2014 Results Q1 report Q2 report Q3 report January April July October Analysts Klas Palin [email protected] Ulrik Trattner [email protected] Company analysis 6 29. 23. 10. 22. 2015 2015 2015 2015 Redeye AB Mäster Samuelsgatan 42. 10tr 111 57 Stockholm Orexo Revenue & Growth (%) EBIT (adjusted) & Margin (%) 1600 600 500 400 300 200 100 0 -100 -200 -300 -400 -500 90,0% 80,0% 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% -10,0% 1400 1200 1000 800 600 400 200 0 2011 2012 2013 2014E Net sales 2015E 2016E 0,0% -50,0% -100,0% 2011 2012 2013 2014E 2015E 2016E -150,0% -200,0% -250,0% Net sales growth EBIT adj Earnings per share EBIT margin Equity & debt-equity ratio (%) 15 15 0,6 10 10 0,5 5 5 0 0 2011 50,0% 2012 2013 2014E 2015E 2016E -5 -5 -10 -10 160,0% 140,0% 120,0% 0,4 100,0% 0,3 80,0% 60,0% 0,2 40,0% 0,1 20,0% 0 -15 -15 EPS, unadjusted EPS, adjusted 0,0% 2011 2012 2013 Equity ratio Conflict of interests Klas Palin owns shares in the company: No Ulrik Trattner owns shares in the company: No Redeye performs/have performed services for the Company and receives/have received compensation from the Company in connection with this. Company analysis 7 2014E 2015E 2016E Debt-equity ratio Orexo DISCLAIMER Important information Redeye AB ("Redeye" or "the Company") is a specialist financial advisory ooutique that focuses on small and mid-cap growth companies in the Nordic region. We focus on the technology and life science sectors. We provide services within Corporate Broking. Corporate Finance. equity research and investor relations. Our strengths are our award-winning research department. experienced advisers. a unique investor network. and the powerful distribution channel redeye.se. Redeye was founded in 1999 and since 2007 has been subject to the supervision of the Swedish Financial Supervisory Authority. 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Redeye Rating (2015-01-09) Rating 7.5p - 10.0p 3.5p - 7.0p 0.0p - 3.0p Company N Management Ownership 23 50 1 74 31 38 5 74 Growth Prospect 11 62 1 74 Profitability 7 30 37 74 Financial Strength 16 31 27 74 Duplication and distribution This document may not be duplicated. reproduced or copied for purposes other than personal use. The document may not be distributed to physical or legal entities that are citizens of or domiciled in any country in which such distribution is prohibited according to applicable laws or other regulations. Copyright Redeye AB. Company analysis 8
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