Orion Group Half-12 months Monetary Report January–June 2024

ORION CORPORATION
HALF-YEAR FINANCIAL REPORT 1–6/2024
8 AUGUST 2024 at 12:00 EEST

Orion Group Half-12 months Monetary Report January–June 2024

• Web gross sales totalled EUR 636.7 (January–June 2023: 567.5) million

• Working revenue was EUR 121.8 (102.0) million

• Fundamental earnings per share had been EUR 0.68 (0.57)

• Money circulation from working actions per share was EUR 0.98 (0.27)

• The outlook for 2024 was upgraded after the reporting interval on 1 July 2024: Web gross sales are estimated to be EUR 1,440 million to EUR 1,480 million. Working revenue is estimated to be EUR 350 million to EUR 380 million. Beforehand web gross sales had been estimated to be EUR 1,340 to EUR 1,410 and working revenue was estimated to be EUR 280 million to EUR 310 million.

Key figures

President and CEO Liisa Hurme:
First half of 2024 was robust for Orion

“In January–June 2024, our web gross sales elevated by 12.2 p.c to EUR 636.7 (567.5) million and working revenue elevated by 19.5 p.c to EUR 121.8 (102.0) million.

Nubeqa® continued to carry out properly and was a transparent progress driver for Orion and the Modern Medicines enterprise division. Nubeqa® gross sales recorded by Orion, i.e. pill deliveries to Bayer and royalties, grew sooner than we anticipated, reflecting the robust efficiency of the product and our associate Bayer out there.

Demand for Easyhaler® merchandise remained robust, which explains the expansion of the product portfolio and, to a big extent, of the Branded Merchandise enterprise division. The online gross sales of the Generics and Shopper Well being enterprise division had been nearly at par in comparison with the comparative interval.

The primary half of 2024 was robust for our Animal Well being enterprise division. The event is defined by the weak comparative interval when comfortable market and optimisation of companions’ stock ranges had been inflicting headwinds.

Fermion’s necessary strategic function is to fabricate lively pharmaceutical elements for Orion’s revolutionary medicines in addition to for different necessary medicines. Fermion additionally elevated its exterior gross sales within the early a part of the 12 months, though extra capability has lately been reserved for the manufacture of Orion’s personal merchandise.

Orion’s working revenue grew sooner than web gross sales, despite the fact that working bills elevated in a deliberate and anticipated method. The nice growth of all enterprise divisions contributed to the rise in working revenue, however the strongest impression was on Nubeqa® royalties.

After the assessment interval in July, we reported that Orion and MSD have exercised the choice to transform the businesses’ ongoing co-development and co-commercialization settlement for opevesostat and different candidates concentrating on CYP11A1 into an unique international license for MSD. The conversion of this collaboration right into a license settlement permits Orion to focus our sources to progress our different promising growth candidates whereas each remaining properly positioned to learn from the event and potential commercialisation of opevesostat and assembly our monetary targets. We imagine MSD gives the only option to maximise the potential of opevesostat, a compound found by Orion’s scientists. As a consequence of the train of the choice, we’ll launch a EUR 60 million merchandise from our steadiness sheet, which may have a optimistic impression on the third quarter 2024 web gross sales and working revenue, and because of this, we upgraded the outlook for the present 12 months.

In mid-July, along with our associate Bayer, we reported that the ARANOTE trial had met its major endpoint, exhibiting that darolutamide together with androgen deprivation remedy (ADT) considerably will increase radiological progression-free survival in comparison with placebo plus ADT. Security evaluation exhibits darolutamide plus ADT to be akin to placebo plus ADT, reconfirming the established tolerability profile of darolutamide as noticed within the ARAMIS and ARASENS trials. The outcomes of the ARANOTE trial reconfirm that darolutamide, a compound found by Orion scientists, is a viable therapy choice for sufferers with metastatic hormone-sensitive prostate most cancers.

In any other case, our medical growth pipeline stays the identical. We’re getting ready to start out the medical section II program with the ODM-111 molecule for the therapy of acute and continual ache throughout 2024 or early 2025.

I’m proud and glad of all of the achievements we have now already achieved collectively at Orion this 12 months. We’re wanting to proceed on our progress path!”

Outlook for 2024 (up to date on 1 July 2024)

Web gross sales are estimated to be EUR 1,440 million to EUR 1,480 million.

Working revenue is estimated to be EUR 350 million to EUR 380 million.

Earlier outlook for 2024 (supplied on 13 February and specified on 25 April 2024)

Web gross sales are estimated to be EUR 1,340 million to EUR 1,410 million.

Working revenue is estimated to be EUR 280 million to EUR 310 million.

Foundation for outlook in additional element

Collaboration agreements with different pharmaceutical corporations are an integral a part of Orion’s enterprise mannequin. Agreements usually embrace funds recorded in web gross sales and working revenue that adjust tremendously from 12 months to 12 months. Forecasting the timing and quantity of those funds is troublesome. In some circumstances, they’re conditional on phrases similar to R&D outcomes which aren’t identified till research have been accomplished, the progress of R&D initiatives or the attainment of specified gross sales ranges. Relating to potential new contracts beneath negotiation, neither the result nor the schedule of contract negotiations is mostly identified earlier than the ultimate signing of the settlement.

Orion is eligible to obtain milestone funds from Bayer based mostly on gross sales of the Nubeqa® product upon assembly sure international annual gross sales thresholds for the primary time. In 2023 Orion acquired one such milestone cost of EUR 30 million. The outlook for 2024 contains one Nubeqa® sales-related milestone cost of EUR 70 million which is included in each the online gross sales outlook and the working revenue outlook.

As well as, each the online gross sales outlook and the working revenue outlook embrace a EUR 60 million merchandise which Orion will launch from the steadiness sheet in Q3 2024 after Orion and MSD exercised an choice in July 2024 to transform the businesses’ co-development and co-commercialisation settlement for opevesostat (MK-5684/ODM-208), an investigational CYP11A1 inhibitor, and different candidates concentrating on CYP11A1 into an unique international license for MSD.

The outlook doesn’t embrace another materials milestone funds or one-offs.

The outlook assumes that Orion’s personal manufacturing and different operations will have the ability to function usually all year long, and the provision chains of uncooked supplies or ready-made merchandise will not be going through vital disruptions. These and different dangers are mentioned in additional element beneath ‘Close to-term dangers and uncertainties’.

The outlook doesn’t embrace revenue, bills or different impacts associated to any future materials product or firm acquisition or divestment.

Milestone funds acquired by Orion in 2019–2023

Web gross sales

The outlook assumes that the online gross sales of Nubeqa® booked by Orion, and thus the online gross sales of the Modern Medicines enterprise division, will clearly improve in 2024. Orion’s assumption is predicated on forecasts acquired from its associate Bayer. Nevertheless, it’s troublesome to foretell the precise degree of product gross sales and royalties fof a strongly rising product for the entire 12 months. As well as, the EUR 70 million Nubeqa®-related milestone is predicted to extend the online gross sales of the Modern Medicines enterprise division. The online gross sales of the enterprise division will increase additionally because of the EUR 60 million merchandise to be launched from the steadiness sheet in Q3 2024.

The Branded Merchandise and Animal Well being enterprise divisions are additionally estimated to enhance their web gross sales in 2024. Branded Merchandise progress is anticipated to be pushed by the Easyhaler® product portfolio. The gross sales of entacapone merchandise are assumed to recuperate considerably after difficult 12 months 2023. On the identical time, nevertheless, the market situations for the entacapone merchandise proceed to be robust with growing competitors and declining costs in lots of markets, and because of this, the gross sales of the entacapone merchandise are anticipated to be flat in 2024. Animal Well being progress is anticipated to be pushed by the sedatives portfolio, merchandise in launch section and enhancing market situations.

The Generics and Shopper Well being enterprise division continues to endure from the decline of Simdax® and dexmedetomidine merchandise because of generic competitors and falling costs, however lower than lately. The general quantity of generic merchandise is predicted to develop. As a result of aforementioned causes, the online gross sales of the Generic and Shopper Well being enterprise division in 2024 is assumed to be at an identical degree as in 2023.

Fermion has been working at very close to full capability over the previous few years. The share of producing of the lively pharmaceutical elements of Orion’s personal proprietary medicine is estimated to extend, which can prohibit capability allotted to exterior enterprise.

Working revenue

Gross revenue is predicted to extend clearly pushed by rising Nubeqa® royalties, the EUR 60 million merchandise to be launched from the steadiness sheet in Q3 2024, and the anticipated EUR 70 million Nubeqa®-related gross sales milestone.

The vary within the working revenue estimate is especially because of Nubeqa’s gross sales booked by Orion and the event of R&D prices. It’s troublesome to foretell the precise degree of royalties of a strongly rising product for the entire 12 months. Any variance from the anticipated degree can have a notable impression on Orion’s working revenue. Additionally, the mechanism by which every quarter’s product deliveries are at all times totally deducted from the subsequent quarter’s royalty funds is inflicting variance to working revenue. Despite the fact that this impression on working revenue is just short-term, the timing of product deliveries could have notable impression on Orion’s working revenue in a single calendar 12 months.

Over the previous few years, Orion has been decided to extend its funding in early-stage analysis in keeping with its progress technique. This work is now beginning to bear fruit and a number of other initiatives are approaching the medical growth section. Progressing these initiatives can even require considerably increased R&D expenditure than previously. On the identical time, initiatives within the medical growth section have superior and can advance throughout 2024, which can improve challenge prices. Nevertheless, there are uncertainties associated to the progress and timing of initiatives, which can imply that not all the prices projected for 2024 will materialise.

Gross sales and advertising bills are anticipated to extend primarily because of rising investments to the Easyhaler® gross sales and growing Nubeqa® royalty payable as per an settlement with Endo Prescription drugs.

Capital expenditure

The Group’s whole capital expenditure in 2024 is predicted to be at an identical degree as in 2023, when capital expenditure was EUR 93 million. The estimate of capital expenditure doesn’t embrace any investments associated to any future materials product or firm acquisition.

Close to-term dangers and uncertainties

The outlook assumes that Orion’s personal manufacturing and different operations will have the ability to function usually. The realisation of gross sales of Orion-manufactured merchandise requires that manufacturing and the associated provide chains and different operations are capable of function on the deliberate degree. There are a selection of dangers that would even materially disrupt Orion’s manufacturing or different operations. Such dangers embrace, for instance, accidents, strikes, worker sickness, poor availability of provides, gear, spare elements, merchandise, vitality, beginning supplies or semi-finished merchandise, and the failure of logistics chains or severe disruptions to data or communication programs. Present dangers to produce and logistics chains embrace geopolitical conflicts and unrest around the globe. Along with conflicts and unrest, another unexpected adjustments within the working setting may trigger disruptions to Orion’s manufacturing, provide chains or different operations. Such dangers could embrace accidents, strikes, pure disasters, epidemics and pandemics, wars, terrorism, cyber-attacks or hybrid influencing.

Gross sales of particular person merchandise and likewise Orion’s gross sales in particular person markets could range, for instance relying on the extent to which the ever-tougher value and different competitors prevailing in pharmaceutical markets lately will particularly concentrate on Orion’s merchandise. Adjustments in pharmaceutical regulation in particular person markets or extra broadly, for instance at EU degree, could have an effect on the gross sales and profitability of Orion’s merchandise. Adjustments in general market demand might also have unfavourable impression on gross sales.

Product deliveries to key companions are based mostly on timetables which can be collectively agreed upfront. However, they will change, for instance as a consequence of choices regarding changes of inventory ranges. As well as, adjustments in market costs and trade charges have an effect on the worth of deliveries.

Presently no single forex is posing a fabric trade price threat for Orion. Key currencies that carry an trade price threat are the US greenback and European currencies apart from EUR. Nevertheless, the general impact of the danger arising from currencies of European international locations can be abated by the truth that Orion has organisations of its personal in most European international locations, which signifies that along with gross sales revenue there are additionally prices in these currencies. The trade price efficiency of the Japanese yen is critical because of gross sales of Parkinson’s medicine in Japan.

The present geopolitical conflicts and unrest, and different challenges within the international provide and logistics chains of prescribed drugs have elevated the already elevated threat of provide disruptions. Furthermore, the disruptions, manufacturing quantity adjustments and logistical challenges skilled in different industries might also have sudden and sudden ramifications that may manifest as shortages of vital uncooked supplies, provides and gear within the chemical and pharmaceutical industries and as will increase in costs. The potential rise of uncooked materials costs and different provide chain prices deteriorates the profitability of Orion’s merchandise, since within the pharmaceutical business it is vitally troublesome to move on value will increase to the costs of personal merchandise, particularly prescription medicines, significantly in Europe. If excessive value inflation happens, it can pose a threat to Orion’s profitability.

Authorities and key clients in several international locations perform common and detailed inspections of drug growth and manufacturing at Orion’s manufacturing websites. Any remedial actions which may be required could at the very least briefly have results that lower supply reliability and improve prices. Orion’s product vary additionally comprises merchandise manufactured by different pharmaceutical corporations and merchandise that Orion manufactures by itself however for which different corporations provide lively pharmaceutical or different elements and elements or elements (amongst these the Easyhaler® merchandise). Potential issues associated to the supply reliability or high quality of the merchandise of these producers could trigger a threat to Orion’s supply reliability. The one-channel system used for prescribed drugs distribution in Finland, through which Orion’s merchandise have been delivered to clients by way of just one wholesaler, might also trigger dangers to supply reliability.

Analysis initiatives at all times entail uncertainty elements that will both improve or lower estimated prices. The initiatives could progress extra slowly or sooner than assumed, or they could be discontinued. Nonetheless, adjustments that will happen in ongoing medical research are mirrored in prices comparatively slowly and will not be anticipated to have a fabric impression on earnings within the present 12 months. Owing to the character of the analysis course of, the scale and prices of recent research which can be being began are identified comparatively properly upfront. Nevertheless, there are uncertainties within the timing and development of any particular person examine. Any adjustments within the timing of recent analysis or growth phases which can be being launched could have a fabric impression on the projected value construction inside a single 12 months. Orion usually undertakes the final, in different phrases Part III, medical trials in collaboration with different pharmaceutical corporations. Graduation of those collaboration relationships and their construction additionally materially have an effect on the schedule and price degree of analysis initiatives.

Collaboration preparations are an necessary part of Orion’s enterprise mannequin. Potential collaboration and licensing agreements associated to those preparations additionally usually embrace funds to be recorded in web gross sales that will materially have an effect on Orion’s monetary outcomes. The funds could also be topic to situations regarding the progress of analysis initiatives or gross sales or to new contracts to be signed, and whether or not these situations or contracts materialise and what their timing is, will at all times entail uncertainties. The upfront and milestone funds paid by Orion to its collaborators, that are recorded as investments in intangible belongings in steadiness sheet, embrace write-down threat which may be realised if, for instance, a collaborative analysis challenge fails or in any other case must be discontinued.

Webcast and Convention Name

A webcast and a convention name for analysts, traders and media representatives can be held on Thursday, 8 August 2024 at 13.30 EEST.

A hyperlink to the dwell webcast is offered on Orion’s web site at www.orion.fi/en/investors. A recording of the occasion can be accessible on the web site later the identical day.

Convention name will be joined by registering by way of the next hyperlink:
https://palvelu.flik.fi/teleconference/?id=5007087

Cellphone numbers and the convention ID to entry the convention can be supplied after the registration. In case you wish to ask a query throughout the convention, please dial *5 in your phone keypad to enter the query queue.

Questions can be offered in writing by way of the query type of the webcast.

Upcoming occasions

The Monetary Statements and the Report of the Board of Administrators for 2024 can be printed on the Firm’s web site on the newest in week 11/2025.

Espoo, 8 August 2024

Board of Administrators of Orion Company

For extra details about the report:

Tuukka Hirvonen, Investor Relations, tel. +358 10 426 2721 or +358 50 966 2721

Writer:

Orion Company

http://www.orion.fi/en
http://www.twitter.com/OrionCorpIR

Orion is a globally working Finnish pharmaceutical firm – a builder of well-being. We develop, manufacture and market human and veterinary prescribed drugs and lively pharmaceutical elements. Orion has an intensive portfolio of proprietary and generic medicines and self-care merchandise. The core remedy areas of our pharmaceutical R&D are oncology and ache. Medicines developed by Orion are used to deal with most cancers, neurological ailments and respiratory ailments, amongst others. Orion’s web gross sales in 2023 amounted to EUR 1,190 million and the corporate had about 3,600 staff on the finish of the 12 months. Orion’s A and B shares are listed on Nasdaq Helsinki.

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