ZUBSOLV® stable and strong EBIT, despite challenging market due to Covid-19
Q4 2020 highlights
· Total net revenues of
· Net earnings of
· EBITDA of
· US Pharma segment (ZUBSOLV® US) net revenues of
· Cash flow from operating activities of
· Secured a preferred position for ZUBSOLV® as the only branded product on national commercial and Medicare Part D formularies of the largest PBM in the commercial segment in the US, Express Script, from
· Finalized the technical development of modia™, a digital therapy for opioid use disorder, for which
· Entered an exclusive license and supply agreement with
· A new patent for ZUBSOLV®, with protection until 2032, was issued by the
· Financial outlook provided for 2021, see page 14
Important events after the period
· A new patent for OX124, overdose rescue medication, was issued by the USPTO protecting the technology until 2039
SEK m, unless 2020 2019 2020Jan 2019Jan-Dec 2019-2020 Oct-Dec Δ
otherwise stated Oct Oct -Dec
-Dec -Dec
Net revenues 159.2 238.1 663.6 844.8 -33%
Cost of goods sold -11.3 -23.0 -65.6 -105.6 -51%
Operating expenses -158.9 -143.5 -617.9 -508.0 11%
EBIT -11.0 71.5 -19.9 231.2 -115%
EBIT margin, % -6.9 30.0 -3.0 27.4 -36.9 ppt
EBITDA 1.0 85.8 19.0 272.1 -99%
Earnings per share, -1.45 1.12 -2.45 6.33 -230%
before dilution, SEK
Earnings per share, -1.45 1.10 -2.45 6.20 -232%
after dilution, SEK
Cash flow from -11.2 60.2 16.8 287.0 -119%
operating activities
Cash and cash 505.3 816.8 505.3 816.8 -38%
equivalents
Progress while adjusting to new market dynamics
From a management perspective, the most important factor for success is to be an agile company, ready to accelerate development and to capture opportunities when they arise, but also be prepared to shift priorities when the market requires it. The quarter has seen progress on many fronts, with US Pharma showing net revenue growth in local currency comparing to last quarter and improved EBIT margin, Digital Therapeutics (DTx) testing new reimbursement routes and launching new commercialization concepts. Our lead pipeline project, a rescue medication for opioid overdose, OX124, received positive feedback from the FDA on the IND application enabling a request for Fast Track Designation of the product and we also reported an exclusive license and supply agreement for ZUBSOLV® in Europe.
Strong financial base to enable investments in DTx and launch of OX124
Our full year OPEX was
Looking ahead, we expect to increase the investment in DTx as we see a progression in sales and a clearer picture emerges regarding the multiple routes to reimbursement. 2021 will also require significant investments in OX124, as we enter the pivotal trial starting in the summer this year. To ensure we have financial headroom to invest in opportunities when they arise, both internally in our products and our pipeline and through business development, we intend to refinance our existing corporate bond during Q1 2021 with a new corporate bond issue.
Expanding the commercialization model in DTx
The expectations of our DTx portfolio in 2020 were boosted by the
ZUBSOLV® decline diminishing while impact of Covid-19 continues
With bipartisan support for the ongoing opioid crisis in the US, I am pleased to see politicians returning their attention to the opioid crisis. The former US administration recently paved the way for all US physicians to prescribe medical-assisted treatment (MAT) for opioid dependence, and we are confident that in the event of changes under the new administration, addressing the opioid crisis will remain a key priority. With the ongoing Covid-19 pandemic having significantly worsened this crisis, there is a pressing need increase access to treatment. Such a change will likely drive a sustained strong market growth, which will benefit
This quarter we had a small net sales increase compared to Q3 and a strong EBIT margin of 66 percent. Apart from some one-time adjustments, this result is explained by minimal decline from former exclusive contracts and stable development in the open segment. When Covid-19 is behind us, we expect a stabilization of the business and growth. ZUBSOLV® is the only promoted daily treatment in opioid dependence in the US, and Covid-19 restrictions have had a severe impact on our ability to promote the product. In combination with our core market segment, the commercial segment, being stagnant due to the unemployment caused by Covid-19, it is a challenging market place during the pandemic. However, the Covid-19 challenges also provides learning of how to be more efficient in the sales process, which will benefit us long term. We expect ZUBSOLV® will continue to be an important EBIT contributor in the years to come and with the broad launch of modia™, our digital therapy for opioid use disorder, in the second half of 2021 we will see increased commercial synergies between our digital therapies and ZUBSOLV®, both from a cost and revenue perspective.
OX124 development progressing to plan
As the US death tolls associated with overdose of fentanyl continue, we are confident OX124 is urgently needed, with the promise of being the most powerful nasal delivery of naloxone in the market. I am very pleased with the progress we have made during the quarter. With continued progress according to plan, in Q1 2021 we will receive a decision on the Fast Track application, continue to establish a commercial supply chain, improve the IP protection and register the brand name for OX124. In Q2 2021 we will manufacture the batches required for regulatory stability data and we will start the pivotal clinical trial. If the Fast Track application is approved we will be ready to submit an application for approval in Q1 2022. Without Fast Track the process will be delayed as we expect the FDA will require additional stability data to support proposed shelf life of the commercial product.
Summary and Outlook
In the last quarterly report I highlighted the pressing need for
President and CEO
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