The outcome of the patent dispute has left deep scars in the share price and the market is pricing in extremely limited potential for Zubsolv beyond September 2019. We believe this is based on an overly pessimistic view of the opportunities to defend other approved patents or, for that matter, to be able to operate in an environment where generics can potentially be launched. In a worst-case scenario, where generics of Zubsolv are launched in late 2019, and Orexo has no other products, we derive a fundamental value of SEK 30. In addition, the Orexo share is pressured by uncertainty regarding the two new depot formulations of buprenorphine that are expected to reach the market in 2018. However, we see several obstacles to these rapidly impacting the market and seriously challenging the current well-established and appreciated oral treatments. Instead, we believe the toughest competition continues to come from the oral treatments.
We have cut our forecasts and fair value estimate to SEK 72 (85). We believe that presenting new product opportunities will be the most significant catalyst for the shares.
Note: This is a translation of the original report, written in Swedish, released the 30th of December 2016. Den svenska versionen finns tillgänglig på: http://beta.redeye.se/company/orexo/518372/orexo-osakerhet-pressar-kursen#company-navigation