Orion Oyj Class A · OMXHEX:ORNAV
Orion Oyj Class A — Investor Presentation (October 2018)
70 slides from Orion Oyj Class A's investor presentation, Oct 24, 2018
Slide 1: Orion Investor presentation
Orion Investor presentation Updated on 24 October 2018
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements which involve risks and uncertainty factors. These statements are not based on historical facts but relate to the Company’s future activities and performance. They include statements about future strategies and anticipated benefits of
Slide 3: Content
Content 1) Orion in brief 2) R&D 3) Highlights of 1−9/2018 4) Outlook and financials 5) Business divisions 6) Responsibility 7) Financial calendar Investor Presentation © Orion Corporation 2018 3
Slide 4: Orion in brief
Orion in brief
Slide 5: Orion today – year 2017 in figures
Orion today – year 2017 in figures Net sales 1,034 MEUR Sales by business Sales by market area Operating profit 284 MEUR 5% 4% 14% Personnel 3,182 7% 34% 32% 7% R&D investments 99 MEUR 50% 30% 17% 6 production sites in Finland Proprietary Products Finland Scandinavia Specialty Products Other Europe
Slide 6: Steady development despite patent expiries
Steady development despite patent expiries Net sales Operating profit EUR million EUR million 1,200 10% 350 33% 1,000 300 32% 8% 800 250 31% 6% 200 30% 600 4% 150 29% 400 100 28% 200 2% 50 27% 0 0% 0 26% 2011 2012 2013 2014 2015 2016 2017 2011 2012 2013 2014 2015 2016 2017 Parkinson franchise + Prec
Slide 7: Orion's product mix has changed
Orion’s product mix has changed Sales by business 2011 Sales by business 2017 Net sales, EUR million 3% 4% 1,200 5% 5% 8% 7% 1,050 47% 34% 900 750 600 450 37% 50% 300 150 Proprietary Products Specialty Products 0 Animal Health Fermion 2011 2012 2013 2014 2015 2016 2017 Contract manufacturing & other
Slide 8: Our businesses
Our businesses Proprietary Products Specialty Products In-house developed drugs and Generic prescription drugs, OTC other drugs with valid product and non-medicinal products, protection biosimilars Animal Health Fermion Medicine and well-being Active pharmaceutical products for animals ingredients (
Slide 9: Orion's strategy – Mission to build well-being
Orion’s strategy – Mission to build well-being Future R&D Investor Presentation © Orion Corporation 2018 9
Slide 10: Orion had ~73,000 shareholders on September 30, 2018
Orion had ~73,000 shareholders on September 30, 2018 By number of shares By number of votes Households (Finnish 5% retail) 4% 5% 7% Non-Finnish holders and 8% nominee-registered 7% Private corporations 7% 43% 13% Public sector 62% Non-profit institutions 7% 32% Financial and insurance corporations O
Slide 11: Research and development
Research and development
Slide 12: Focus areas of Orion's R&D
Focus areas of Orion’s R&D Proprietary Products Animal Health Fermion • CNS Orion utilises the • APIs to Orion’s • Oncology R&D of proprietary proprietary • Respiratory products to develop products (Easyhaler® new medicines for • Generic APIs product family) animals. • Contract development for pharm
Slide 13: Together we can achieve more in R&D
Together we can achieve more in R&D Late stage Research Early development development Target Hit to Lead Lead Candidate Phase I Phase II Phase III identification generation optimisation selection, and validation preclinical development 8‒24 mo. 12‒24 mo. 18‒36 mo. 12‒24 mo. 12‒14 mo. 12‒36 mo. 18‒48
Slide 14: Orion's key clinical drug development projects
Orion's key clinical drug development projects Project Indication Phase Registration Easyhaler® tiotropium COPD Bioequivalence study Darolutamide 1) Prostate cancer (nmCRPC) I II III Darolutamide 1) Prostate cancer (mHSPC) I II III ODM-109 (oral levosimendan) ALS I II III ODM-104 (more effective COM
Slide 15: Phase III trial of darolutamide for nmCRPC: primary endpoint met
Orion and Bayer’s phase III trial of darolutamide for non- metastatic castration-resistant prostate cancer: Primary endpoint was met ● Darolutamide significantly extended metastasis- free survival compared to placebo. ● The full data will be presented at an upcoming scientific meeting. ● Bayer plans
Slide 16: Financial impacts of darolutamide
Financial impacts of darolutamide ● Bayer covered the majority of the development costs and has the right to commercialize darolutamide globally. Orion has the option of co-promoting in Europe. Orion will manufacture the product. ● Milestone payments upon first commercial sales: EUR 45 million in US
Slide 17: Other late-phase clinical trials are also making progress
Other late-phase clinical trials are also making progress ● ODM-201/darolutamide for metastatic ● ODM-109/orally administered levosimendan hormone-sensitive prostate cancer: for ALS: – Phase III trial ARASENS in collaboration – 3-year REFALS trial started in the spring, with Bayer on-going. recruitm
Slide 18: Two trials with Bayer on darolutamide
Two trials with Bayer on darolutamide ● Patients with non-metastatic, castration- ● Patients with metastatic, hormone-sensitive resistant prostate cancer who were being prostate cancer treated with androgen deprivation therapy as ● Treatment: Darolutamide with androgen standard care and at risk of d
Slide 19: ODM-109: Oral levosimendan for ALS
ODM-109: Oral levosimendan for ALS ● First patients recruited in July ● The aim is to apply for marketing authorisation for the Phase III clinical trial (REFALS). in the US and Europe. ● By enhancing respiratory muscle function ● Levosimendan has been granted an Orphan Drug in ALS patients, orally a
Slide 20: ODM-109: REFALS phase III trial
ODM-109: REFALS phase III trial Levosimendan 1-2mg/day (300 patients) 80-100 450 clinical sites patients in US, Canada, Costs of the trial: Placebo (150 patients) Western Europe, ~ EUR 60 million Australia approximately over three years Primary 12 weeks 48 weeks endpoints: SVC% ALSFRS-R + Survival =
Slide 21: ALS (Amyotrophic lateral sclerosis) as a rare disease
ALS (Amyotrophic lateral sclerosis) as a rare disease 1−2∕ ~16,800 ~12,500 ~450−500 100,000 Patients Patients Patients Incidence in the US in 2017 in Europe in Finland Investor Presentation © Orion Corporation 2018 21
Slide 22: ODM-208: Pan-steroid hormone synthesis inhibitor for CRPC
ODM-208: Pan-steroid hormone synthesis inhibitor (CYP11A1 inhibitor) for castration-resistant prostate cancer ● Steroid hormones stimulate the growth of hormonally regulated cancers, such as most prostate and breast cancers. ● Hormonal treatments are highly effective, but Steroid producton drug resi
Slide 23: Highlights in January–September 2018
Highlights in January–September 2018
Slide 24: Darolutamide Phase III met primary endpoint
Orion and Bayer's Phase III trial of prostate cancer drug darolutamide met primary endpoint 1 3 Darolutamide: Discussions Sales of Proprietary Products with authorities regarding were at level with comparative the submission for period. Net sales of Specialty marketing authorization Products continu
Slide 25: Key figures 1−9/2018 (continuing operations)
Key figures 1−9/2018 (continuing operations) Net sales Operating profit Operating profit Cash flow per share margin before financial items** 715 184 26% 2.10 MEUR (768) MEUR (214) (28%) EUR (0.86) -7% -14% +143% **) Cash flow per share before financial items: Continuing and discontinued operations I
Slide 26: Most of the profit decrease due to exchange rate changes and lower milestone payments
Most of the profit decrease due to exchange rate changes and lower milestone payments and royalties − Otherwise, profitability only slightly below comparative period Net sales, EUR million Operating profit, EUR million 214 16 768 25 10 12 15 9 11 1 4 9 8 184 715 48 46 37 37 34 34 (1) Biosimilars in
Slide 27: Geographical breakdown and development of net sales
Geographical breakdown and development of net sales 1−9/2018 1−9/2017 1−9/2018 EUR million 15% 300 -6% 32% -5% 6% 250 200 150 -13% -1% 31% 16% 100 -18% Finland 50 Scandinavia Other Europe 0 North America Finland Scandinavia Other North Other Other markets Europe America markets Investor Presentation
Slide 28: Net sales by business division
Net sales by business division EUR million 1−9/2018 -10% 450 5% 2% 400 387 347 0% 8% 350 300 261 261 36% 250 200 +4% 150 -7% -48% 49% 100 58 56 40 38 50 24 12 0 Proprietary Products Specialty Proprietary Animal Fermion Contract Specialty Products Products Products Health manufacturing Animal Health
Slide 29: Best-selling pharmaceuticals 1−9/2018
Best-selling pharmaceuticals 1−9/2018 Net sales Change vs . Indication (EUR million) 1−9/2017 1. Parkinson’s disease 76 -5% 2. Asthma, COPD 64 +17% 3. Intensive care sedative 48 +2% 4. Acute heart failure 43 +2% 5. Animal sedatives 23 +6% Rheumatoid arthritis, inflammatory 6. Biosimilars bowel disea
Slide 30: Proprietary Products
Proprietary Products
Slide 31: Proprietary Products
Proprietary Products Easyhaler Simdax ● Budesonide-formoterol Easyhaler ● Sales increased continued strong growth. slightly. ● First deliveries of salmeterol- fluticasone Easyhaler have commenced. Dexdor Parkinson’s drugs ● Dexdor sales continued to grow ● Sales lower than in in most countries. Sign
Slide 32: Sales of Proprietary Products at level with comparative period
Sales of Proprietary Products at level with comparative period 1−9/2018 EUR million -5% 90 5% 80 6% 80 76 +17% 70 64 +2% 29% +2% 17% 60 55 47 48 50 43 43 40 -14% 30 18 16 18% 25% 20 10 Parkinson: Stalevo, Comtess & Comtan 0 Easyhaler Parkinson’s Easyhaler Dexdor Simdax Precedex Dexdor drugs family S
Slide 33: Sales of Parkinson's drugs decreased, as anticipated
Sales of Parkinson's drugs decreased from comparative period, as anticipated Sales of Orion's branded Parkinson's drugs by Sales, EUR million market area, MAT6/2018 60 2% 50 40 30% 36% 30 20 10 0 Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3 32% Europe 2013 2014 2015 2016 2017 2018 Japan ROW Deliveri
Slide 34: Easyhaler product family grows
Easyhaler product family grows − Salmeterol-fluticasone deliveries have commenced Sales, EUR million 25 ● Product family total sales: +17% ● Budesonide-formoterol Easyhaler: +27% 20 ● Budesonide-formoterol Easyhaler 15 – On sale in all key European markets. – Market share of volume varies: 10 e.g. S
Slide 35: Sales of Dexdor continued to grow in most European markets
Sales of Dexdor intensive care sedative continued to grow in most European markets Total value of the Sales, EUR million European sedatives 20 18 market: EUR 553 million 16 (+3%) 14 12% 12 10 12% 8 65% 6 4 2 11% 0 Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3 2013 2014 2015 2016 2017 2018 Propofol EU
Slide 36: Specialty Products
Specialty Products GRION Building well-being
Slide 37: Specialty Products
Specialty Products ● Continued price competition ● Sales of biosimilars in Finland has led to a decline continued to decrease due in the entire reference-priced to the situation of tenders, prescription drug market. tightening competition and – Estimated impact on Orion declined price level. EUR 15
Slide 38: Specialty Products: tighter competition and lower biosimilar sales
Specialty Products: tighter competition and lower sales of biosimilars showed as a decrease in sales Development of net sales Net sales by market area Net sales by product EUR 1−9/2018 1−9/2018 million -8% 250 217 14% 6% 200 200 150 13% 58% 24% 70% -29% +1% 100 72 51 47 47 15% 50 0 Finland Scandinav
Slide 39: In Finland, price competition has led to market decline
In Finland, price competition has led to a decline in the entire market of reference priced prescription drugs The market of reference priced The sales of Orion's reference prescription drugs in Finland priced prescription drugs (1–9/2018) in Finland 368 91 MEUR (397) MEUR (102) Market development O
Slide 40: Orion is strong in home market Finland
Orion is strong in home market Finland Human pharma market in Finland (1−9/2018) Medicinal and non-medicinal products Reference Self-care in hospital and pharmacy channels: EUR 1,990 million priced products prescription Orion market share EUR million drugs in pharmacy Orion market share 230 25% 250
Slide 41: Profit impact of the sale of Orion Diagnostica
The profit impact of the sale of Orion Diagnostica closed on 30 April 2018 Capital gain +128 MEUR Pension gain +5 MEUR Administrative costs of the transaction -1 MEUR MEUR Investor Presentation © Orion Corporation 2018 41 41
Slide 42: Outlook
Outlook
Slide 43: Outlook for 2018 remains unchanged
Outlook for 2018 remains unchanged Net sales Due to generic and price competition Orion estimates that in 2018 the net sales excluding Orion Diagnostica will be at the same level or slightly lower than in 2017 (net sales were EUR 1,034 million excluding Orion Diagnostica in 2017). Operating Orion co
Slide 44: Financials
Financials
Slide 45: Orion's financial objectives
Orion’s financial objectives Growing net sales more rapidly than ≥ growth of the pharmaceuticals market. Achievement of this objective requires continuous investment in Keeping the equity ratio at least 50%. development of the product portfolio. Distributing an annual dividend that > Maintaining p
Slide 46: Financial objectives
Financial objectives Net sales Operating profit Dividend 1,200 12% 30% 1.60 300 27% 1.55 1,000 10% 275 250 24% 1.50 800 8% 225 21% 1.45 200 18% 600 6% 175 1.40 150 15% 12% 1.35 400 4% 125 100 9% 1.30 75 6% 1.25 200 2% 50 25 3% 1.20 0 0% 0 0% 1.15 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 201
Slide 47: Key figures by quarter
Key figures by quarter Net Netsales, sales,EUR EURmillion million Operating Operating profit, profit, EUREUR million million 1,500 400 Q4 Q4 1,000 300 59 Q3 273 255 262 279 266 Q3 66 55 51 71 200 64 59 92 55 Q2 237 238 239 259 242 222 67 45 500 Q2 84 71 248 277 255 273 261 246 100 61 86 74 70 Q1 249
Slide 48: Key figures
Key figures Change vs. Orion’s key figures 2013 2014 2015 2016 ADJ.2017 1−9∕2018 1−9∕2017 Net sales, EUR million 1,006.9 1,015.3 1,015.6 1,073.5 1,033.6 715.1 -6.8% Operating profit, EUR million 267.7 272.4 266.6 314.6 284.1 184.2 -13.8% Profit before taxes, EUR million 264.0 267.8 262.3 310.9 277,7
Slide 49: Income statement
Income statement Change vs. Formation of profits, EUR million 2013 2014 2015 2016 ADJ. 2017 1−9∕2018 1−9∕2017 Net sales 1,006.9 1,015.3 1,015.6 1,073.5 1,033.6 715.1 -6.8% Cost of goods sold -393.5 -401.7 -405.8 -421.7 -417.6 -286.7 -8.3% Gross profit 613.4 613.6 609.8 651.8 616.0 428.4 -5.9% Other
Slide 50: Financial position
Financial position 9/ 9/ Change 9/ 9/ Change EUR million 2018 2017 % EUR million 2018 2017 % Non-current assets total 415.3 395.8 +4.9% Inventories 220.0 218.7 +0.6% Equity total 736.8 594.5 +23.9% Interest-bearing non-current Trade receivables 165.4 187.8 -11.9% liabilities 0.6 150.4 -99.6% Other r
Slide 51: Development of capital expenditure
Development of capital expenditure Orion Capex, EUR million 90 80 70 60 50 Property, plant and equipment 40 30 Intangible assets 20 Depreciation, amortisation and 10 impairment 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Investor Presentation © Orion Corporation 2018 51
Slide 52: Development of net working capital
Development of net working capital % of net sales EUR million 40% 400 30% 300 20% 200 10% 100 0% 0 -10% -100 -20% -200 -30% -300 2012 2013 2014 2015 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018 Receivables Receivables Inventories Inventories Short-term non-interest bearing liabilities Short-ter
Slide 53: Dividend distribution policy
Dividend distribution policy • Orion’s dividend distribution takes into account distributable funds and capital expenditure and other financial requirements in medium and long term to achieve the financial objectives. EUR Dividend distribution history 1.75 100% 1.50 0.06 0.12 95% 1.25 0.10 90% Repay
Slide 54: Orion B share performance January 2016 – September 2018
Orion B share performance January 2016 – September 2018 Index 31.12.2015=100 200 Orion B 102.03 190 Orion B Total return 111.42 180 Europe/Pharmaceutical 90.41 170 160 OMXH-Portfolio 125.45 150 140 130 120 110 100 90 80 70 60 31.12.15 31.1.16 29.2.16 31.3.16 30.4.16 31.5.16 30.6.16 31.7.16 31.8.16 3
Slide 55: Business units
Business units
Slide 56: Proprietary Products
Proprietary Products Net sales ● Mainly Orion in-house developed prescription EUR million drugs with valid product protection 450 Other 400 ● Global sales and R&D partner networks 350 Simdax Key drivers for business 300 250 Easyhaler Easyhaler, Simdax 200 Possible milestones from development pip
Slide 57: Proprietary human pharmaceuticals developed by Orion
Proprietary human pharmaceuticals developed by Orion Product Indication Year Year Indication Sedative for ICU use 2011 Salmeterol- 2018 fluticasone Easyhaler® Parkinson’s disease 2003 Budesonide- Acute decompensated 2014 2000 formoterol Easyhaler® heart failure Formoterol Easyhaler® 2004 Asthma and
Slide 58: Steady sales growth for Specialty Products
Steady sales growth for Specialty Products Orion Specialty Products = Gx + OTC including also non-medicinal products EUR million Sales split 2017 Net sales in key markets in 2017, 550 22% 500 20% EUR million 450 18% 13% 400 16% Scandinavia Vs. 2016 350 14% 13% 94 +14% 300 12% 250 10% 200 8% Finland
Slide 59: Specialty Products: Portfolio of hundreds of different products
Specialty Products: Portfolio of hundreds of different product Generic prescription OTC and self-care Biosimilars drugs Investor Presentation © Orion Corporation 2018 59
Slide 60: Animal Health
Animal Health In-house developed EUR million proprietary products 105 12% 90 10% • Medicinal and non-medicinal 8% products for companion animals 75 and livestock 60 6% 4% • In-house developed proprietary 45 products sold globally both 2% 30 through own sales network and 0% through partners 15 -2% •
Slide 61: Fermion has an important strategic role
Fermion has an important strategic role EUR million 70 50% 60 40% 50 30% 40 20% 30 10% 20 0% Generic APIs for APIs for Orion’s Contract 10 -10% Orion and other proprietary development and pharmaceutical 0 -20% products manufacturing companies 2010 2011 2012 2013 2014 2015 2016 2017 Net sales* Growth
Slide 62: Fermion's new production plant operational in Hanko
Fermion's new production plant operational in Hanko – nearly 100% of production is exported ● Special expertise in demanding production of active pharmaceutical ingredients (APIs), e.g. extremely potent substances. ● The aim is to captively manufacture the APIs for Orion's in-house developed proprie
Slide 63: Contract manufacturing & other
Contract manufacturing & other EUR million 50 45% 40 30% 30 15% 20 0% 10 -15% Pharmaceutical Orion has special capacity 0 -30% manufacturing for other e.g. in hormonal products companies 2012 2013 2014 2015 2016 2017 Net sales Growth, % Investor Presentation © Orion Corporation 2018 63
Slide 64: Responsibility
Responsibility GRION Building well-being
Slide 65: Patient safety, ethical operations and responsible supply chain
Patient safety, ethical operations and responsible supply chain Import − The cornerstones of Orion's corporate responsibility In 2017: ● 31% of the energy savings target set for 2025 was achieved. ● New water collection systems were introduced in production to minimise pharmaceutical residue emissio
Slide 66: Patient safety is the guiding value in Orion's operations
Patient safety is the guiding value in Orion’s operations
Slide 67: We assess product safety throughout the lifecycle
We assess product safety throughout the lifecycle Investor Presentation © Orion Corporation 2018 67
Slide 68: Fewer product recalls in 2017, number of audits increased
In 2017 there were fewer product recalls than in the year before, number of audits increased Audits by 3rd Audits Product parties by Orion recalls ● No critical observations in audits carried out by authorities, 81 13 customers and partners. 314 4 10 ● Slightly less critical observations 55 269 3 th
Slide 69: Orion calendar
Orion calendar 2019 Financial Statements Release 2018 6/2/2019 Annual General Meeting 26/3/2019 Interim Report 1−3/2019 25/4/2019 Half-Year Financial Report 1−6/2019 17/7/2019 Interim Report 1−9/2019 23/10/2019
Slide 70: Investor Relations
Investor Relations Jari Karlson CFO jari.karlson@orion.fi +358 10 426 2883 Lilli Riikonen Communications Manager lilli.riikonen@orion.fi +358 10 426 2319 Heidi Ahti Executive Assistant (Investor meeting requests) heidi.ahti@orion.fi +358 10 426 2169 www.orion.fi/EN/Investors twitter.com/OrionCorpIR