COMPANY ANALYSIS

COMPANY ANALYSIS 14 November 2014
Summary
Orexo
(orx.st)
Zubsolv Rx data week 45
•
Latest Rx data released today from Wolters Kluwer
shows a significant jump in market share for Zubsolv
tablets, reaching 5.4% for the week. The rolling four
weeks average increased to 4.54% and were up 0.36
percentage points from last week.
•
The number of Zubsolv scripts were 9,298 (up 2,739
since last numbers), corresponding to a market share
of 5.01%. The rolling for week average increased 0.36
percentage points to a market share of 4.07%.
List:
Market Cap:
Industry:
CEO:
Chairman:
Small cap
4,479 MSEK
Healthcare
Nikolaj Sörensen
Martin Nicklasson
OMXS 30
Orexo
200
150
100
•
Buprenorphine/naloxone scripts volumes for the week
were up 8,473 from the previous week to 185,500. Y/y
scripts rose by 9.7%. The large increase in market
share for Zubsolv in the first week of November could
in part be explained by the fact that the Wellcare
exclusivity now kicks in.
50
0
14-Nov
12-Feb
13-May
11-Aug
09-Nov
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
523
2015E
843
2016E
1 490
63%
32%
22%
61%
77%
-60
-87
-88
93
492
-18%
-20%
-17%
11%
33%
-79
-140
-96
57
462
-24%
-33%
-18%
7%
31%
-88
-86
-153
-155
-124
-127
30
19
447
412
-26%
-36%
-24%
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
-3.43
-38.0
9.0
-53.1
2015E
2016E
2.00
0.51
256.6
5.6
50.5
2016E
3.60
11.09
11.8
2.9
8.9
Share information
Share price (SEK)
Number of shares (m)
Market Cap (MSEK)
Net debt (MSEK)
130,5
34,3
4,479
207
Free float (%)
Daily turnover (’000)
55 %
122
Analysts:
Klas Palin
[email protected]
Björn Olander
[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
Increase in Zubsolv market share
Weekly Rx data Zubsolv
Four-week rolling average, Zubsolv market share and tablet sales 2014
5,00%
250000
4,50%
4,00%
200000
3,50%
3,00%
150000
2,50%
2,00%
100000
1,50%
1,00%
50000
0,50%
0,00%
01-03-14
03-03-14
05-03-14
07-03-14
09-03-14
11-03-14
0
01-03-14
03-03-14
05-03-14
07-03-14
09-03-14
11-03-14
Source: Wolters Kluwer
Market share Zubsolv
Rolling four week average Zubsolv
•
Zubsolv tablet market share week 45 were up 1.09
percentage points from previous week to 5.40%
•
Rolling four weeks tablet sales continues to show a
positive trend - market share rose to 4.54%
•
TRx market share rose 1.30 percentage points from
previous week to 5.01%
•
Rolling four weeks scripts reached 4.07%
•
Week 45 is the first week with exclusivity for
Zubsolv at Wellcare
Rolling four weeks average TRx market share and tablet sales
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
Generics Zubsolv
Film
76.78%
19.15%
4.07%
77.02%
19.26%
3.71%
77.12%
19.19%
3.69%
77.20%
19.14%
3.66%
77.27%
19.11%
3.62%
77.38%
19.05%
3.57%
77.50%
18.98%
3.53%
77.62%
18.90%
3.48%
77.70%
18.83%
3.46%
77.74%
18.80%
3.46%
77.93%
18.63%
3.45%
77.97%
18.62%
3.40%
78.05%
18.61%
3.34%
78.13%
18.56%
3.31%
78.09%
18.65%
3.25%
78.31%
18.58%
3.11%
78.52%
18.56%
2.92%
78.79%
18.52%
2.69%
Bunavail
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%
Source: Wolters Kluwer
Company analysis
3
Suboxone
Film
74.32%
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%
Generics
21.43%
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%
Zubsolv
4.25%
4.18%
4.11%
4.08%
4.07%
4.05%
4.01%
3.96%
3.93%
3.89%
3.89%
3.85%
3.79%
3.73%
3.62%
3.36%
3.05%
2.73%
Bunavail
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%
Orexo
Tablet sales H2 2014 buprenorphine/naloxone products
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
Film
3928420
3652991
3762294
3794982
3872482
3844991
3769049
3749894
3841375
3621365
3854946
3727597
3734568
3762243
3787240
3721519
3759624
3783316
3834739
Generics
1112807
1067368
1087390
1065289
1100473
1094257
1081949
1046036
1066023
1004171
1090615
1014280
1043144
1004865
1069110
1023877
1052053
1036623
1058026
Zubsolv
287780
212518
217219
208577
208853
207214
210847
201961
202040
186494
205257
192350
188710
192393
193814
178568
178093
171110
142218
Bunavail
651
60
178
506
180
30
Total
5329658
4932937
5067081
5069354
5181988
5146492
5061845
4997891
5109438
4812030
5150818
4934227
4966422
4959501
5050164
4923964
4989770
4991049
5034983
Source: Wolters Kluwer
Scripts H2 2014 buprenorphine/naloxone products
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
Film
141268
136116
138252
139094
139929
140697
139095
138098
140254
133371
141457
137307
137765
137639
139077
137454
138787
139245
136415
Generics
34886
34328
34875
34295
34903
34765
34548
33766
34363
32214
34383
32936
33465
31681
33706
32712
33271
32782
32210
Source: Wolters Kluwer
Company analysis
4
Zubsolv
9298
6559
6827
6698
6593
6601
6619
6289
6245
5904
6377
6102
6082
5961
5927
5656
5877
5642
4752
Bunavail
26
2
5
10
6
1
Total
185478
177005
179959
180097
181431
182064
180262
178153
180862
171489
182217
176345
177312
175281
178710
175822
177935
177669
173377
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 remains 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
523
-611
-88
2015E
843
-750
93
2016E
1 490
-998
492
Depreciation
Amortization
Impairment charges
EBIT
-7
-13
0
-79
-7
-46
0
-140
-6
-2
0
-96
-3
-33
0
57
-3
-27
0
462
Share in profits
Net financial items
Exchange rate dif.
Pre-tax profit
0
-8
0
-88
0
-14
0
-153
0
-28
0
-124
0
-26
0
30
0
-15
0
447
Tax
Net earnings
2
-86
-2
-155
-4
-127
-12
19
-36
412
2012
2013
2014E
2015E
2016E
228
37
28
0
293
106
55
383
0
544
290
105
445
0
839
289
126
489
0
905
612
194
551
0
1 357
35
19
0
26
106
3
0
189
0
33
0
0
26
62
106
0
228
0
31
0
0
26
62
166
0
286
0
33
0
0
28
62
133
0
256
0
36
0
0
30
62
106
0
235
0
482
772
1 125
1 161
1 593
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
235
0
238
494
0
0
732
8
0
384
0
384
3
253
0
256
494
0
0
750
8
0
403
0
403
3
343
0
346
494
0
0
840
7
0
746
0
746
Total liab & SE
482
772
1 125
1 161
1 593
Free cash flow
Net sales
Total operating
costs
Depreciations total
EBIT
Taxes on EBIT
NOPLAT
Depreciation
Gross cash flow
Change in WC
Gross CAPEX
2012
326
-386
2013
430
-517
2014E
523
-611
2015E
843
-750
2016E
1 490
-998
-20
-79
2
-78
20
-58
90
0
-53
-140
-1
-141
53
-88
-201
-111
-7
-96
-3
-99
7
-91
-235
-65
-36
57
-13
44
36
80
-49
-7
-30
462
-37
425
30
455
-40
-9
32
-400
-391
24
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
34%
129%
207
591
0.5
2015E
35%
123%
208
611
0.7
2016E
47%
67%
-115
631
0.9
Growth
Sales growth
EPS growth (adj)
2012
63%
-78%
2013
32%
64%
2014E
22%
-21%
2015E
61%
-115%
2016E
77%
2 080%
Free cash flow
DCF valuation
WACC (%)
13.4 %
Assumptions 2015-2021 (%)
Average sales growth
7.1 %
EBIT margin
39.9 %
Cash flow, MSEK
NPV FCF (2013-2015)
NPV FCF (2016-2022)
NPV FCF (2023-)
Non-operating assets
Interest-bearing debt
Fair value estimate MSEK
-59
2784
2627
445
-241
5556
Fair value e. per share, SEK
Share price, SEK
161.9
130.5
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
-47%
-19%
-33%
-17%
-18%
-24%
2015E
5%
3%
7%
11%
7%
2%
2016E
72%
42%
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
-3.71
-3.43
0.00
6.02
34.33
2015E
0.55
0.51
2.00
6.05
34.33
2016E
11.99
11.09
3.60
-3.36
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
4 686.2
-35.2
-38.0
8.6
9.0
-53.1
-49.0
11.7
2015E
4 686.9
237.2
256.6
5.3
5.6
50.5
82.8
11.1
2016E
4 364.2
10.9
11.8
3.0
2.9
8.9
9.4
6.0
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
22.5
-5.1
-11.8
-20.4
Shareholder structure %
Novo Nordisk Fonden
HealthCap
ATP
SHB fonder
Anders Walldow
Avanza Pension Försäkring
Andra AP-fonden
Hans Sköld
Thomas Lundqvist
Länsförsäkringar fondförvaltning
Share information
Reuters code
List
Share price
Total shares, million
Market Cap, MSEK
%
%
%
%
Growth/year
Net sales
Operating profit adj
EPS. just
Equity
12/14e
26.6 %
9.8 %
9.5 %
41.7 %
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 %
orx.st
Small cap
130.5
34.3
4479.4
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]
Björn Olander
[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
Björn Olander 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.
Redeye is licensed to; receive and transmit orders in financial instruments, provide investment advice to clients regarding financial instruments, prepare
and disseminate financial analyses/recommendations for trading in financial instruments, execute orders in financial instruments on behalf of clients,
place financial instruments without position taking, provide for the safekeeping of financial instruments, accept funds with accounting responsibility,
provide corporate advice and services within mergers and acquisition, provide services in conjunction with the provision of guarantees regarding financial
instruments and to operate as a Certified Advisory business (ancillary authorization).
Limitation of liability
This document was prepared for information purposes for general distribution and is not intended to be advisory. The information contained in this
analysis is based on sources deemed reliable by Redeye. However, Redeye cannot guarantee the accuracy of the information. The forward-looking
information in the analysis is based on subjective assessments about the future, which constitutes a factor of uncertainty. Redeye cannot guarantee that
forecasts and forward-looking statements will materialize. Investors shall conduct all investment decisions independently. This analysis is intended to be
one of a number of tools that can be used in making an investment decision. All investors are therefore encouraged to supplement this information with
additional relevant data and to consult a financial advisor prior to an investment decision. Accordingly, Redeye accepts no liability for any loss or damage
resulting from the use of this analysis.
Potential conflict of interest
Redeye’s research department is regulated by operational and administrative rules established to avoid conflicts of interest and to ensure the objectivity
and independence of its analysts. The following applies:
•
For companies that are the subject of Redeye’s research analysis, the applicable rules include those established by the Swedish Financial
Supervisory Authority pertaining to investment recommendations and the handling of conflicts of interest. Furthermore, Redeye employees are
not allowed to trade in financial instruments of the company in question, effective from 30 days before its covered company comes with financial
reports, such as quarterly reports, year-end reports, or the like, to the date Redeye publishes its analysis plus two trading days after this date.
•
An analyst may not engage in corporate finance transactions without the express approval of management, and may not receive any
remuneration directly linked to such transactions.
•
Redeye may carry out an analysis upon commission or in exchange for payment from the company that is the subject of the analysis, or from an
underwriting institution in conjunction with a merger and acquisition (M&A) deal, new share issue or a public listing. Readers of these reports
should assume that Redeye may have received or will receive remuneration from the company/companies cited in the report for the performance
of financial advisory services. Such remuneration is of a predetermined amount and is not dependent on the content of the analysis.
Redeye’s research coverage
Redeye’s research analyses consist of case-based analyses, which imply that the frequency of the analytical reports may vary over time. Unless otherwise
expressly stated in the report, the analysis is updated when considered necessary by the research department, for example in the event of significant
changes in market conditions or events related to the issuer/the financial instrument.
Recommendation structure
Redeye does not issue any investment recommendations for fundamental analysis. However, Redeye has developed a proprietary analysis and rating
model, Redeye Rating, in which each company is analyzed and evaluated. This analysis aims to provide an independent assessment of the company in
question, its opportunities, risks, etc. The purpose is to provide an objective and professional set of data for owners and investors to use in their decisionmaking.
Redeye Rating (2014-11-14)
Rating
7,5p - 10,0p
3,5p - 7,0p
0,0p - 3,0p
Company N
Management
Ownership
23
48
1
72
28
39
5
72
Growth
Prospect
11
60
1
72
Profitability
7
30
35
72
Financial
Strength
16
31
25
72
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