Orexo in transformation

After six years of investigation, I am pleased that Orexo has reached a settlement in principle with the DOJ. Under the proposed agreement, Orexo would pay USD 4 million in ­installments over several years, along with a capped contingent payment equal to five percent of net sales if specified sales thresholds are met in 2030–2031. Pursuing a settlement does not constitute an admission of wrongdoing; ­rather, it reflects the significant cost of continuing the process and the need to focus on Orexo’s future development. Since the August announcement, discussions with the DOJ have continued, primarily concerning the two former employees who are also part of the investigation.

The Q3 financial result was significantly affected by the final stages of restructuring the US operations and the DOJ settlement. During the quarter, we continued to invest in our projects as they approach key milestones. Quarterly expenses also included nearly SEK 24 million in external costs for commercial-scale production of OX640 and completion of the reliability and stability studies required for the Izipry resubmission.

Cash flow was negatively affected by the operating result, final rebate payments related to 2025 Zubsolv sales, and the settlement payment to close the final part of our digital mental health business. The quarter-end cash position was SEK 152.6 million, of which SEK 90.5 million related to 2026 Zubsolv® sales payable to Dexcel or as rebates to payers. Administrative circumstances have delayed the BARDA payment in Q3 related to Q1–Q3 2026 expenses, which will have a positive cash effect in Q4 instead.

With the restructuring of the US commercial operations complete, expenses and cash outflow are expected to ­decline in Q4 and into 2027. Continued reductions in fixed costs will improve control over our financial runway. ­Together, the rights issue and the Zubsolv® earn-out will ­provide a stronger financial foundation as we build a company that relies primarily on business development for funding.

After successfully completing the stability and reliability studies required by the FDA for Izipry™, we resubmitted the application as planned in the third quarter, with potential approval in the first half of 2027. Meeting the FDA’s ­requirements and advancing the resubmission are key milestones in our partnering strategy. As we complete the final supporting analyses, we are intensifying efforts to secure a US commercial partner.

Our OX640 development program for treatment of anaphylactic shock progressed well during the quarter. The FDA accepted our Investigational New Drug (IND) ­application, enabling preparations to continue for the ­pivotal nasal allergy challenge trial scheduled to begin in Q4. To support the trial and the required stability and reliability studies, we scaled manufacturing to commercial levels and produced 12,000 units of OX640 during the quarter. Testing is underway, and we remain on schedule to start the trial on time and report pivotal results in Q1 2027.

For OX390, BARDA approved a contract modification extending the initial development stage through 2027 and increasing funding by up to USD 2.99 million. Following discussions with the FDA, the modification supports additional scientific and technical work to align the program with evolving regulatory expectations and strengthen the path toward a future submission and potential approval. The need for OX390 is underscored by the emergence of medetomidine, a newer and more potent alpha-2 agonist that is surpassing xylazine in parts of the US. In 2024, it became the most common adulterant in the illicit opioid supply in the Philadelphia area. Estimated to be more than 100 times as potent as xylazine, medetomidine reinforces the urgent need for a rescue treatment such as OX390.

We see significant potential to create value by applying AmorphOX^® to large molecules, with GLP-1 agonists and vaccines as our primary focus areas.

In Q3, we conducted our first in vivo study of oral semaglutide to assess whether AmorphOX could improve its bioavailability. The lead formulation achieved bioavailability comparable to the reference product before any optimization of the formulation. These results deepen our understanding of AmorphOX and oral semaglutide delivery. We will now work with our industry partner to further explore other drug delivery pathways with an aim to reach superior bio-availability.

In vaccines, we continued to advance our understanding of how AmorphOX could be applied and strengthened the scientific rationale for this opportunity. We have initiated collaborations with leading US and Swedish vaccine research institutions to evaluate the platform and explore non-dilutive funding. Discussions are underway to assess mRNA, DNA, and live attenuated virus vaccines formulated with AmorphOX, focusing on viability, stability, and immunogenicity.

Within six months, Orexo could have a fifth product ­advance from concept to regulatory approval, receive results from the pivotal OX640 trial, and make further ­progress in applying AmorphOX to GLP-1 agonists and vaccines. In parallel, ongoing business development ­discussions for our development programs and AmorphOX technology are creating new partnering opportunities.

To support Orexo’s long-term viability, we continue to streamline operations and increase flexibility in the cost base, extending our financial runway. In 2026, we made significant organizational changes, relocated our offices in Sweden and in the US to more suitable facilities, and eliminated nearly all legacy costs from the former US commercial operations.

We will enter 2027 as a leaner, more efficient organization with a pipeline of near-term commercial and partnering opportunities and a differentiated drug delivery technology. AmorphOX has demonstrated the ability to deliver high bioavailability, thermal stability, and needle-free administration of sensitive medicines. These attributes address growing demand, particularly for biomolecules, for ­patient-friendly delivery, reduced dependence on cold-chain distribution, and longer shelf life.