CEO's review

Published on 23 October 2019

Marketing authorisation for darolutamide in the United States

“The single most important event of the period under review occurred at the end of July as the United States Food and Drug Administration (FDA) granted marketing authorisation under the Priority Review designation to darolutamide for the treatment of non-metastatic prostate cancer resistant to conventional hormone therapy, under the trade name Nubeqa®. This is Orion's first entirely new molecule that has received marketing authorisation since levosimendan (Simdax®). This is an important milestone for Orion, and I wish to thank our employees and our partner Bayer for having attained it. We received a EUR 45 million milestone payment from Bayer for the first commercial sale of the product in the United States and we have included it into our third quarter result.

In July we also completed patient recruitment for the REFALS trial evaluating orally administered levosimendan (ODM-109) in the treatment of symptoms of amyotrophic lateral sclerosis (ALS). The trial involves monitoring the patients for approximately one year, reaching completion in the summer of 2020. We are conducting the trial alone and if the study results are positive, it is possible that Orion will commercialise the product on its own in Europe as well as in key markets outside Europe. We have initiated an assessment on the prospects of launching the product in the United States on our own.

Orion's net sales in January–September 2019 increased by 9% to EUR 776 million and operating profit by 7% to EUR 198 million. Both figures include the EUR 45 million milestone payment received from Bayer.

Among our proprietary drugs, the sales of the Easyhaler® product family and Simdax® continued to develop well. Growth in the Easyhaler® product family was mostly due to the budesonide-formoterol combined formulation, and the overall progress has also been boosted by the sales and marketing efforts that we have reported in the basis for the 2019 outlook. So far there has been no material generic competition for Simdax®, but marketing authorisation applications have been submitted for generic versions of the drug in Europe. Generic competition for Dexdor® has further expanded in the European Union area, and sales of the product have turned to decline, as expected. The sales of the Parkinson's drugs Stalevo® and Comtess®/Comtan® fell seven per cent in January–September. In the third quarter, however, sales were significantly better than in the comparative period, due to an increase in Orion's own sales and the timing of partner deliveries.

Net sales of the Specialty Products business division turned up in January–September. Mostly the growth was due to biosimilars, prescription drugs in Scandinavia and self-care products in Finland. Disruptions in product availability and tougher price competition in generic drugs had a negative effect on the business division's net sales in Finland in particular. In 2019, the decline in prices in Finland appears to have levelled off for the time being.

We continue our ongoing trial with Bayer which evaluates darolutamide in patients with metastatic prostate cancer. The commercial potential of darolutamide will increase significantly if this second Phase III clinical trial (ARASENS) yields positive results in around 2022. As for earlier phase development projects, we are looking for partners to possible next development phases of the ODM-203 and ODM-207 molecules. The ODM-208 and ODM-209 molecule development projects proceeded as expected in the review period.

The ongoing projects supporting growth are expected to burden Orion's profit in 2019 by an estimated EUR 30 million. This comprises clearly increased depreciation as well as investments in sales and marketing and research. At the same time, operating profit is burdened by intense price competition in the market, availability disruptions and gradually expanding generic competition for Orion's old proprietary drugs.

The outlook remains unchanged. Orion estimates that its net sales in 2019 will be slightly higher than in 2018 and operating profit will be at the same level as in 2018. Both estimated net sales and operating profit include the EUR 45 million milestone payment for the commercialisation of darolutamide. The estimated operating profit also includes significant investments in actions to generate growth."

***

Published on 17 July 2019

Priority Review for darolutamide marketing authorisation application in the United States

”The single most important growth project for Orion in the next few years took a step forward in the review period, as the United States Food and Drug Administration (FDA) granted Priority Review designation for darolutamide for the treatment of non-metastatic prostate cancer resistant to conventional hormone therapy in April. With Priority Review, darolutamide may be granted marketing authorisation in the United States in the coming months. We are eligible to receive significant milestone payments upon first commercial sales, which amount to EUR 45 million in the United States. In May, new research data was published indicating that darolutamide combined with androgen deprivation therapy (ADT) slowed down the worsening of symptoms in men with non-metastatic, conventional hormone therapy-resistant (castration-resistant) prostate cancer (nmCRPC). We also continue our ongoing trial with Bayer which evaluates darolutamide in patients with metastatic prostate cancer. Darolutamide’s commercial potential will grow significantly if this second Phase III clinical trial (ARASENS) yields positive results in around 2022.

Another significant Phase III clinical trial, REFALS, which investigates orally administered levosimendan (ODM-109) in the treatment of amyotrophic lateral sclerosis (ALS), has progressed well. Patient recruitment for the project was completed sooner than expected after the review period in July, and we are expecting results from the REFALS trial in just over a year. We are conducting this trial alone and, if the research findings are positive, it is possible that Orion will commercialise the product on its own not just in Europe but also in some key markets outside Europe.

Our net sales in the first half of 2019 amounted to EUR 493 million and operating profit to EUR 107 million.

In proprietary drugs, the sales of the Easyhaler® product family and Simdax® developed well. Most of the growth in Easyhaler product sales came from the budesonide-formoterol combined formulation. The sales of salmeterol-fluticasone combined formulation have also started, but they have initially developed more slowly than anticipated and for the time being, the product has no material impact on the net sales of the product family. So far there has been no competition for Simdax, but marketing authorisation applications have been submitted for generic versions of the drug in Europe. The sales of Dexdor® was at level with comparative period, but generic competition is expected to intensify in the future.

We have reacquired from Novartis the European sales and distribution rights for the Parkinson’s drugs Stalevo® and Comtan®. Following the reacquisition, we expect the full-year sales of these Parkinson’s drugs to match last year’s despite continuously expanding generic competition. The decline in Parkinson’s drugs sales seen in the first half of the year is explained by the timing of partner deliveries in particular. In 2018, there were more partner deliveries on the first half of the year while this year, we expect there to be more on the second half of the year.

Net sales of specialty products was at level with the previous year although sales in our biggest market, Finland, continued to decline due to price competition. However, the average prices of reference-priced prescription drugs did not decline in the second quarter compared to the first. April to June 2019 was the first quarter in nearly two years when the net sales of this business division increased from the comparative period.

The ongoing projects supporting growth are expected to burden Orion’s profit in 2019 by an estimated
EUR 30 million. This comprises clearly increased depreciation as well as investments in sales and marketing and research. At the same time, operating profit is burdened by intense price competition in the market and gradually expanding generic competition for Orion’s old proprietary drugs.

The outlook remains unchanged. Orion estimates that its net sales in 2019 will slightly increase from 2018. Projected net sales include the possible EUR 45 million milestone payment related to the commercialisation of darolutamide. Operating profit is projected to be on the same level as in 2018. The projection includes the possible EUR 45 million milestone payment associated with the commercialisation of darolutamide as well as significant investments in actions to generate growth."

***

Published on 25 April, 2019

Marketing authorisation applications for darolutamide submitted in main markets

“Orion’s key objective in the upcoming years is to systematically strive for growing more rapidly than the growth in the market and to increase our net sales to EUR 1.5 billion by 2025. The capital gain from the sale of the Orion Diagnostica business division in 2018 allows additional investments in our own pharmaceutical research as well as in strengthening our sales and marketing efforts, among other things. It also allows us to maintain the good level of dividends. The growth projects will burden the profit in 2019, but at the same time the investments lay an important basis for our growth targets.

In the first quarter of 2019 Group net sales were EUR 241 (247) million and operating profit was EUR 55 (70) million.

Our single most important growth project during the next few years is the development of the prostate cancer drug darolutamide. The first findings of the randomised (Phase III) ARAMIS clinical trial were presented at the American Society of Clinical Oncology Genitourinary Cancers Symposium ASCO GU 2019 on 14 February 2019. The results were simultaneously published in The New England Journal of Medicine, a prestigious medical journal. The results showed a statistically significant improvement in metastasis-free survival (MFS) for darolutamide plus androgen deprivation therapy (ADT) in patients with non-metastatic castration resistant prostate cancer (nmCRPC). Darolutamide plus androgen deprivation therapy was associated with few adverse effects compared with placebo plus androgen deprivation therapy. In late 2018, Bayer started discussions with health authorities regarding the submission for a marketing authorisation, and applications were submitted in the review period in the United States, Japan and Europe.

If FDA were to grant the application a priority review status, the product could be launched in the United States already at the end of this year. We expect to receive information about the application process during April. We are eligible to receive significant milestone payments upon first commercial sales, which amount to EUR 45 million in the United States. We also continue our ongoing trial with Bayer which evaluates darolutamide in patients with metastatic prostate cancer. Darolutamide’s commercial potential will grow significantly if this second Phase III clinical trial (ARASENS) yields positive results in around 2022.

The agreement in early December to reacquire the sales and distribution rights for the Parkinson’s disease drug Stalevo from Novartis is a concrete action to reinforce Orion’s growth targets in Europe. After the review period in early April, the European sales and distribution rights for Comtan were also reacquired by Orion. The repatriation of the Stalevo sales rights will initially increase sales by about EUR 20 million on annual level and that of Comtan sales rights by a few million euros.

Last year we also made the decision to start on our own a Phase III clinical trial (REFALS) evaluating orally administered levosimendan (ODM-109) for the treatment of symptoms of amyotrophic lateral sclerosis (ALS). We will invest approximately EUR 60 million over three years in this project. Patient recruitment for the project has proceeded as planned in the first quarter.

Orion has launched a Phase I clinical trial on the new ODM-209 molecule. This molecule is a selective hormone synthesis inhibitor much like the ODM-208. The trial will investigate the safety and tolerability of the drug candidate in breast cancer and prostate cancer patients.

Orion has decided that it will not independently pursue a trial on the drug candidate for the treatment of symptoms of Parkinson’s disease in which a new levodopa/carbidopa formulation is combined with the COMT inhibitor (ODM-104), but will rather look for a potential partner for the project.

Net sales of Proprietary Products decreased slightly from the comparative period. At the moment its most important growth source is the Easyhaler product family for the treatment of asthma and COPD. Due to additional sales following the reacquisition of the Stalevo and Comtan sales and distribution rights, Orion’s branded Parkinson’s drugs sales are expected in 2019 to remain at the same level as in the previous year despite continuously expanding generic competition. Sales of Dexdor intensive care sedative remained at a good level, growing in most of the countries despite generic competition having expanded to several European countries. The drug’s indication patent expired at the end of March. Also the sales of Simdax, a drug for treatment of acute decompensated heart failure, increased.

Net sales of Specialty Products continued to decrease in Finland due to price competition. We expect prices to continue decreasing in 2019, but we estimate the impact on sales to be slightly lower than in 2018.

The ongoing projects supporting growth are expected to burden Orion’s profit in 2019 by an estimated EUR 30 million. This comprises clearly increased depreciation as well as investments in sales and marketing and research. At the same time, operating profit is burdened by intense price competition in the market and gradually expanding generic competition for Orion’s old proprietary drugs.

The outlook remains unchanged. Orion estimates that its net sales in 2019 will slightly increase from 2018. Projected net sales include a possible EUR 45 million milestone payment related to the commercialisation of darolutamide. Operating profit is projected to be on the same level as in 2018. The projection includes the possible EUR 45 million milestone payment associated with the commercialisation of darolutamide as well as significant investments in actions to generate growth."

***

Published on 6 February 2019

Important year for future growth

“Our key objective in the upcoming years is to systematically strive for growing more rapidly than the growth in the market and to increase our net sales to EUR 1.5 billion by 2025. The capital gain from the sale of the Orion Diagnostica business division in 2018 allows additional investments in our own pharmaceutical research as well as in boosting our sales and marketing efforts, among other things. It also allows us to maintain the good level of dividends. The growth projects will burden the profit in 2019, but at the same time the investments lay an important basis for our growth targets.

Our single most important growth project during the next few years is the development of the prostate cancer drug darolutamide, in which crucial progress was made in the year under review. The Phase III trial of darolutamide in patients with non-metastatic castration-resistant prostate cancer, which was carried out in cooperation with Bayer, met the primary endpoint in October: the oral androgen receptor antagonist darolutamide significantly extended metastasis-free survival compared to placebo. More detailed data from the trial will be presented in mid-February at the ASCO GU (Genitourinary Cancers Symposium). Bayer has started the discussions with health authorities regarding the submission for a marketing authorisation application, but the timing is still open. Darolutamide has been granted Fast Track designation by the U.S. Food and Drug Administration (FDA). If the process proceeds as planned, in the best-case scenario, the product could be launched in the United States already at the end of this year. We are eligible to receive significant milestone payments upon first commercial sales, which amount to EUR 45 million in the United States. We also continue our ongoing trial with Bayer which evaluates darolutamide in patients with metastatic prostate cancer. Darolutamide’s potential will attain a significant increase upon completion of this second Phase III clinical trial (ARASENS) approximately in 2022.

The agreement in early December to reacquire the sales and distribution rights for the Parkinson’s disease drug Stalevo from Novartis reinforces Orion’s growth targets in Europe. The repatriation  of the sales rights will initially increase sales by about EUR 20 million on annual level. The fact that we, as the developer and manufacturer of the drug, are also responsible for the sale and distribution of the product in its entire domestic market area in Europe further highlights Orion’s role as a major pharmaceutical company focusing on central nervous system disorders. It will also enable us to more actively promote Stalevo’s sales and extend the life cycle of the product.

In the year under review, we also made the decision to start on our own a Phase III clinical trial (REFALS) evaluating orally administered levosimendan (ODM-109) for the treatment of symptoms of amyotrophic lateral sclerosis (ALS). We will invest approximately EUR 60 million over the next three years in this project.

We also continue to seek in-licensing opportunities of research projects in the late stage of development and new products.

Our profitability in 2018 was good: our operating profit margin for continuing operations was 26%, and above our financial target. Our cash flow was stronger than in the comparative period. Net sales and operating profit for our continuing operations were lower than in the comparative period, which was due to unfavourable exchange rate changes, milestone payments and royalties being lower than in the previous year and research and development expenses being higher than in the comparative period. Other than that, the profitability of the business was on the same level as in the comparative period despite many challenges, including price decreases in Finland and lower sales of biosimilars.

Net sales of Proprietary Products slightly increased from the previous year. Its most promising source of growth in the near term is the Easyhaler product family for the treatment of asthma and COPD, the sales growth of which remained strong especially due to the budesonide-formoterol product. In the period under review, we invested in the sales and marketing of the product family particularly in Germany. The sales of the sixth product of the Easyhaler product family, salmeterol-fluticasone, started in the last quarter of the year in the first European countries. There are also plans to further expand the product family with new products in future. Development of the seventh product, tiotropium, is progressing according to plan.

The sales of branded Parkinson’s drugs were lower than in the previous year, as anticipated. However, the decline in sales was significantly slower than our long-term average has been. We expect sales of Parkinson’s drugs to continue to decrease in the coming years, as the products have generic competition in practically all markets. Due to additional sales following the reacquisition of Stalevo’s sales and distribution rights, Orion’s branded Parkinson’s drugs sales are expected in 2019 to remain at the same level as in the previous year despite continuously expanding generic competition.

Sales of Dexdor intensive care sedative remained at a good level and grew in most of the countries despite generic competition having expanded to several European countries. Sales of Simdax, a drug for treatment of acute decompensated heart failure, increased slightly.

Net sales of Specialty Products decreased in Finland and Scandinavia. Tougher price competition in Finland following decisions made in 2016 regarding the pricing of substitutable generic drugs has led to an overall decrease in the reference priced prescription drugs market. The impact on Orion has been significant due to our broad product range and market share. Price competition reduced our sales in Finland by approximately EUR 15 million a year both in 2017 and 2018. The impact has sustained longer than previously anticipated. We expect prices to continue decreasing in 2019, but we anticipate the impact on sales to be slightly lower than in 2018.

The sales of Remsima biosimilar (infliximab), a driver of Specialty Products sales growth in 2017, were significantly lower than in the comparative period due to intensified competition. In order to succeed in this competitive market, we need a broad product portfolio. In 2018, we expanded it with Amgevita (adalimumab), our first biosimilar for outpatient use, by signing an agreement for its sale and marketing in Finland with Amgen. Amgevita’s sales started in the last quarter of the year.

The Animal Health business developed favourably and net sales grew faster than the market.

The ongoing projects supporting growth are expected to burden Orion’s profit in 2019 by an estimated EUR 30 million. This comprises clearly increased depreciation as well as investments in sales and marketing and research. At the same time, operating profit is burdened by intense price competition in the market and gradually expanding generic competition for Orion’s old proprietary drugs.

Orion estimates that in 2019 net sales will be slightly higher than in 2018. The estimated net sales include the possible EUR 45 million milestone payment associated with the commercialisation of darolutamide. Operating profit is estimated to be at the same level as in 2018. The estimated operating profit includes the possible EUR 45 million milestone payment associated with the commercialisation of darolutamide as well as significant investments in measures to boost growth."