Orexo AB (publ)

Welcome to the conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star 5 on their telephone keypad. Now I will hand the conference over to the speakers. Please go ahead.

Thank you very much, and welcome to this third quarter call for Rexo. It has indeed been a transformative quarter in many ways for the company, in particular in our R&D departments where we have made very good progress in two projects, and I will come back to that a little later. Today, I'm Nicolai Sorensen, and I will be joined by Fredrik Gerstein, our CFO, and this time also Ed Kim, our chief medical officer, who I believe will be new to many of you, but Ed Kim will talk a little bit more about our OEC 390 project and why we think this is an important project both for Oryxo, but also for the U.S. We will go through the business update. I will take that, and as I said, it will come in on the products under development, focusing on OECD 390. Frederik will take us through the financials before I will close out with the legal update and some approach for expansion for where we think we have some future value drivers. Starting with a brief overview of the quarter, as I said in the introduction here, we have made some great progress in our pipeline, in particular with our GLP-1 agonist project that we have works 472, where we showed some very promising in vivo data. And also we received a BARDA fund, which initially is worth $8 million, but could be all the way up to $51 million, where BARDA will finance the majority of our Work 390 project. During the quarter, our work with ICPRI, formerly known as OX124, has proceeded well, and we are now starting the reliability and stability testing that was required by FDA more or less on time. With regard to OX640, we have during the quarter, we have manufactured the first batches of the amorphox powder with a pennefrin at commercial scale. We have continued partner discussions, but we've also, as I wrote in the CEO comments, seen some increased uncertainty around the market in the U.S. We believe that is something that will be solved, and I will come back to that a little later. Looking at the revenues, clearly in the Swedish kronor, the dollar Swedish exchange rate has had a strong headwind during the quarter for the company. It impacted with nearly 11 million Swedish kronor, which is kind of close to 10%. But we have also seen during the quarter that the wholesale inventory has declined in the U.S. which explain a lot of the development compared to last year. Then on EBITDA, we have a negative EBITDA, which was not entirely according to our plans, but that is very much associated with the increased value of the share price during the quarter, where we are reserving for provisions for the for taxes, and particularly around the social securities in Sweden, which is impacting negatively in the quarter, but not from a cash flow perspective, but from a P&L perspective. Fredrik will come back to that a little later. Looking at the outlook, we reaffirmed the 2025 outlook, and what's worth noting is that we still believe that it's possible for us to reach our positive EBITDA number for the full year. Moving into our U.S. commercial update, we're seeing the Buknoven and Aleksandr market is picking up a little pace, getting closer to 5% with 4% growth year over year. And also over the last quarter, we saw a slight increase with 1%. this is particular now which is the interesting is behind the scene is that the market has really been been driven by the commercial segment which is now basically on the edge of surpassing medicaid as the largest segment in the us that is important for us because of two reasons first of all the commercial segment has a lower rebate so it's more valuable each patients within the commercial segment is worth much more for us than a patient with medicaid but also we have And we maintain into next year unrestricted access to nearly the entire market with 99% of the volume today sitting with payers where we have no limitations in access for sub-salt. And we have no changes expected for next year. In the public segment, we have seen Medicaid decline. This quarter has actually increased a little, but at a much slower pace than the commercial segment. And we have seen in both Medicaid and Medicare that our access is merely unchanged. There's a small, small plan where we got some restrictions for 2026, but it's not really material for the company. One thing that is interesting in this space is particularly where we see um our largest account is with humana medicare and humana medicare have for a subsoil perspective had a significant impact of two reasons so the one is that we have seen humana medicare medicare declining because they they had new restrictions for certain part of their patients populations but also that the rebate increased for that particular account so we kind of both at lower prices but also we saw negative volumes which have had an impact on the company year over year, which is actually the main explanation behind the year over year negative development. From a quarter over quarter perspective, we actually from a pure demand perspective, we have no major changes. We are quite stable in both Medicaid and open, actually grow a little in some of the segments, but we do still have some negative impact from Humana and to less extent of the United Health Group. For those of you who are new to the companies, These were the formally exclusive contracts where OREXO had nearly the entire volumes within these accounts. But after the introduction of generics in 2019, we have seen a steady decline in the two accounts. One thing that I have shown before is a little around the inventory and this because we have a strong expectations of a build up here in Q4. And to validate that a little, I just want to show some more interesting data here. So one is looking at the sales to pharmacies. That means that the wholesaler sales to the pharmacies is down about 1% compared to last year. Some of that is, of course, pricing. When you compare to our net sales, in these numbers, we also have a 4% price increase in the start of the year. But that's also something we anticipate will happen next year. From a growth sales perspective, we are also stable, despite the volatility you can see here on the dark line. And we're down about 1% year to date. And that is despite the destocking we have seen. And I'm just looking a little closer on the inventory levels at wholesalers. This is a new picture for all of you, I believe. You can see these two peaks that are in the picture. They're both in the end of the year 2023 and also 2024. And if you look at the level of inventory when we enter 2025, It was 60% above the inventory that we have today in the end of Q3. But even just looking into the inventory in the end of Q2, it was actually 30% higher than where we are now in the end of Q3. So there has been an inventory decline and it follows the same pattern that we've seen previous years. So we are now expecting to see the Q4 that there will be some inventory built which help us when we reiterate our guidance for the year that we actually believe we can hit the sales numbers that are in here and also overall the company hit the positive EBITDA number. Coming in on the products and the development, first area I will go a little into depth with is we did show some promising data in semaglutide where we have done a nasal nasal administration. But for most of you should be aware, and I'm sure following the pharmaceutical industry, that this anti-obesity medications, which is kind of a collective name for these GLP-1s, is growing substantially. One is within obesity and diabetes, but also looking forward, there are a lot of expectations in more neurodegenerative diseases such as Alzheimer's and Parkinson's. We also see that there are areas within addiction where these have shown promising data. So it's really in one way a drop with a very wide range of applications and where we see some of these patients segments would have benefit from a new administration form. On top of that, we also see with our dry powder formulation, we can add a lot of stability to the products. So what are some of the reasons why we believe? It's, of course, compared, it's a small needle today that you need to take subcutaneous for most of the GLP-1s. Most of them only have an injectable allosin pipeline. There are a couple who also have an oral formulation, but with very poor performance in terms of bioavailability. But taking it into the nose, it's quite easy to self-administer. It's, of course, needle-free, so it's a non-invasive route of administration. It will bypass the first past metabolism where you would normally, and that's why we see this low bioavailability of GLP-1 medications when they're taken orally in the GI tract. We don't see any need for refrigeration. We have data for six months of semaglutide in our formulation, and during those six months in 40 degrees heat, we're basically not seeing any degradation of the active substance. So we think there are a lot of advantages coming in with the powder formulation, both from a patient perspective, from a stability perspective, and we think that can help also with improved adherence for the patients. With the data that we presented, this is a preclinical in vivo study, so I will say this is very early stage. We think semaglutide is the perfect model substance but this could probably be applied to other peptides used for GLP-1s. Semaglutide is a very difficult peptide in the sense it's a very large peptide, but we're still showing this quite impressive uptake when we compare to the oral formulation of semaglutide with basically up to about seven times higher bioavailability using the nasal route of administration in the studies. We, as I said before, we have continued to do stability studies and we see minimal degradations after six months. And what we're doing now is that based on the learnings from this study, we will continue working on the formulation because the study was in seven milligram. We know that seven milligram of Rebelsus, we know some of the the obesity, obesity data that we've seen from Novo Nordisk is about 25 milligram for obesity. So we probably have to work a little on the formulation to increase the dosing also. The aim is, of course, to take this into a human trial, but we will have to look at the timeline. So it's a little early for us to commit to a timeline, but this is, of course, the ambition that we're working towards is to show that we can replicate the data we've seen in dogs, also in humans, with improved bioavailability over the oral formulation. Then I will invite Ed into the conference, and Ed will talk a little about our ORH 390 project and why we think this is so important for the US. So, Ed, the word is yours.

Okay, thank you very much, Nikolai, and good morning, good afternoon to everybody. For those of you who may not recall, it was in April of 2023 that the White House declared fentanyl-xylosine mixtures as an emerging public health threat. So that was about two and a half years ago. And in the latest DEA National Drug Threat Assessment, which goes back over the past three years, the prevalence of xylosine in illicit opioid samples that are confiscated by the DEA has increased over four times. And it's no longer a problem just in the Northeast, but it's spreading. And certainly, if you look at this heat map, has already reached significant numbers on the West Coast. And it's been identified in all 50 states. Now, it's not just how common it is now. But what we see here is that the deaths due to xylosine fentanyl overdoses continue to rise. This is a paper that analyzed CDC data, which currently only goes to 2023. Now, if you recall, 2023 was the first year where the total number of overdose deaths started decreasing. What you see here, though, is that in 2023, the number of xylosine fentanyl overdose deaths continued to increase. So we're hearing this from market research as well as informal discussions that we have with colleagues and customers in the substance use disorder space that this really is a problem. In the last two to three years, there's been emerging animal data suggesting that while xylosine is an FDA-approved veterinary product that is safe and effective when used appropriately in animals, when xylosine and fentanyl is given to these animals, in this case usually mice or rats, it actually increases and sometimes multiplies the lethality and the opioid-induced respiratory depression. There is a paper published in 2023, it's the title on the left, which identified, it didn't measure respiration, but identified that a moderate dose of xylosine increased the lethality of fentanyl by over 100 times. So it took one 100th the dose to kill 50% of the animals. So we believe that this is truly a public health threat and it is growing over time. Now, the BARDA partnership that we recently announced is a true partnership with this agency that is part of the Department of Health and Human Services. They're not only contributing a substantial amount of financial support, but BARDA has technical experts in all phases of drug development and public health who are at our disposal to continue to consult with us, advise us, and advocate for the continued development of OX390. You heard Nikolai mention that the total value is $51 million. The current base period is going to be dedicated to the IND-enabling toxicity studies, formulation development, and in-house manufacturing capabilities. And that total is $8.5 million. Based on achieving certain regulatory, manufacturing, clinical milestones, there are four option periods to continue the development. And these are negotiated with BARDA at each stage so that this is a staged approach to manage the risk of this program. Because as you know, drug development always carries some degree of technical risk. The goal is to develop an intranasal rescue medication for use by laypersons or first responders in the community where these overdoses are happening. It'll be developed on Orexo's own Amorphox platform that you know so much about, and it will continue to leverage the existing manufacturing supply chain that we've already developed for OX124 and OX640. Back to you.

Thank you very much, Ed. And maybe worth noting also is we received the grant was signed in the last few days of September and that's also the last few days of Q2. We have not included any effect of this grant into the Q3 numbers. So you will start to see some effect in the Q4 numbers and of course continuing into next year. What it is, is it's a cost covering, so we would basically invoice for the expenses running the project, and then BADA will cover the majority of the expenses for the project upon invoice, and the cost coverage will be recognized as other income by the company. So, going on to ICPRI. ICPRI is, of course, as I said, intimately connected to the same issue Ed was just talking about. Here we have basically proceeded according to plan with our upscaling of the manufacturing. We have had some good dialogue with FDA also around the nasal device where we can now use the new nasal device without any further studies. We would say that looking at the entire market for Naloxone, it's very highly competitive and that's something we're taking into account when we're looking at the launch strategy. So we are reviewing how we can put this to the market with the least amount of financial risk to the company based on a more competitive market in the US and also the need for financing some of these other projects we just talked about. We do see that the product as such and getting approved is something that's highly valuable for the entire value chain. Every partner we're talking to is talking about the commercialization and for those of you In Sweden, I've probably seen some of our colleagues in the industry just recently have had issues with manufacturing. So manufacturing is central, and I would say the number one cause of delays of many approval processes. So that we can have a product that has been approved on a supply chain, I think is immensely valuable for other discussions and other projects. But actually, even also some of the exceptions, the unique exceptions we're using for our MOFACs. is something with an approved product that is also supportive evidence for some of the other products that we have in pipeline. So in many ways, I think ICPRI is paving the way for a lot of other products moving forward. And one of them is, of course, OX640. And with OX640, we have continued to do the upscaling. We have manufactured the first batches of powder, which are now being analyzed. We have had some partnering discussions, but I will say that the data we received from The first launch of a nasal product in the US and even in Europe, that launch have gone somewhat slower than some of our partners had anticipated. And that have had a negative impact on these discussions where there's a little more, let's see how the market evolves over the next quarter or two. But from an Orexo perspective, when we look at this market, We see the first product has come out with a strong growth and we actually see from a financial perspective, some investors are seeing it's performing above expectations. But some of the industry players, maybe based on some early expectations from the company launching the product in the US, AOS Pharmaceuticals, they find that this is somewhat slower than what they have seen. And when we are looking into this space, we're seeing it's around physicians' hesitance to prescribe before they see real-world data supporting that the nasal delivery is as effective as an injectable. We know that patients in the U.S. who have allergies have quite infrequent interactions with healthcare. A lot of them don't see an issue in the daily day, so it's the annual meeting with that. which is the time when you can get a new product. But also from a more market perspective and something pushback is around the first ANDA that was filed in August by Lupin Pharmaceuticals on this product. So that have created some uncertainty. But if you look at the expectations by the investors, we see that the valuations are still significant. Our competitor, AOS Pharmaceuticals, actually according to the Wall Street Journal markets, have a buy rating by all analysts. We have some of the largest investors in AIS pharmaceuticals have just continued financing with up to $250 million in the launch of NEFI in the U.S. So for those who are close to the company, there's clearly an expectation that this market will go through. And from a REXA perspective, we still believe that OX640 has significant opportunity. Looking at the naloxone market, which we know very well, we saw that it didn't really take off before after 18 months. And we saw exactly the same concerns by physicians and patients. But today, I don't think anyone in the U.S. questions the benefits of a nasal administration, which is probably a lead for some of the decline. We've seen a number of people dying from overdose in the U.S. And we also believe that coming in with OX640, we're actually looking at competitively. We have done some market research. We know some of our potential partners have done some market research. All of that confirms that we have a very competitive product in the U.S. We still have IP until 2044. But to continue understanding the market and to get more evidence, we have started a market research using some external experts running the study in the U.S., That will be concluded during Q4 to ensure that we actually focus on the right market differentiating parameters of OX640 when we proceed and to confirm the attractiveness of the market. So OX640, we continue with the development. We have seen some, you could say, delay in the partnering discussions and also there's a concern from OREXO is the attractiveness with the uncertainty of some of these partnering opportunities where if you go a little further, get more certainty around the market, we see that could be a significant value inflection for a potential partnership. Moving into the financial section, I will invite Fredrik to talk a little about our financial results.

Thanks, Nikolaj. So on page 22, looking at revenues, if we start looking on the top part of this page, you can see that our total Q3 revenue for the group was $119 million. And the vast majority of that, $114 million, or 96%, came from subsoil in our U.S. commercial business. Now, that's down about $17 million SEC year-over-year, mainly driven by a negative $11 million SEC FX impact. But we also had lower demand in net revenue terms, primarily from the previously exclusive contracts within United Health Group and Humana. So that was about a 3% demand reduction year-over-year. Now, partly offsetting this, we had a lower destocking effect versus last year that contributed to the positive 2 million stack. In local currencies, subsoil revenue declined 4.8% year-over-year. Looking at other revenues within HQM pipeline, Amstral royalties were higher, but that's largely because Q3 last year included a negative adjustment to historic reported royalties. Ezra royalties were stable, but Subsov ex-US revenues were lower, mainly because that didn't have any tablet sales to a partner called Healthcare this quarter. That's following the one-time inventory build earlier this year ahead of Accord starting manufacturing in Europe. Now if we switch to the quarter-over-quarter view for sub-sub-revenue, the waterfall chart on the bottom part of the page shows that opposite to the year-over-year trend reported net revenues in local currency increased slightly in Q3 by approximately 2% versus reported Q2 numbers that though include the non-recurring rebate payment we had in Q2 of 9 million. In SEC terms, with the negative FX impact of 1.5 million, quarter-over-quarter net revenue shows only very marginal growth, reflecting a broadly stable demand picture in the quarter, as shown in the first three bars of the chart. And working against the growth was also a sizable negative inventory destocking effect of 6 million during the quarter, as Nicolai previously talked about. Moving on to the next page, the P&L, we already touched on our net revenues, total of 990 million. FX effect was a negative 12 million year-over-year. But the weakening of the US dollar year-over-year has, of course, also had a positive effect on our USD denominated costs, which account for approximately 65% of total expenses. The declining COGS, as you can see this quarter, is driven largely by this favorable FX effect within US commercial. And that was about 6 million tech. Also improved production costs for self-serve. So as a result, gross margin increased from 85% in Q3 last year to 94%. On operating expenses in Q3, which landed at 133 million, We're pleased to see that's down 4% compared to last year, although about $12 million is coming from the weaker U.S. dollar. But we also saw lower costs from a performance perspective with lower selling expenses in our U.S. operations in relation to staffing, as well as lower marketing-related costs for ICIPRI. We also had lower admin costs, mainly from reduced legal fees. R&D costs on the other hand, though, were higher, mostly related to high costs for OX6 for the upscaling of manufacturing. And then we had these costs of 13 million for the long-term incentive programs, mainly related to provision for social security fees following the sharp increase in our share price during the quarter. EBITDA was negative for the quarter by minus 9.8 million. And that, though, includes this 13 million negative LTIP impact. So if you would exclude those costs, EBITDA would be positive 3 million instead. If you look at the US business specifically, EBIT was an impressive 38 million SEG for the quarter, and that's up from 25 million a year ago. So that's an EBIT margin of 34% and an improvement from 19% last year. Let's move to the next page, cash flow. We reported negative cash flow of 15 million SEK for the period. After adjusting for a negative FX effect of 0.8 million, that resulted in a decrease in cash and cash equivalents of 16 million in the quarter. Operating cash flow was negative, and that's mainly due to negative operating earnings and interest paid on the bond. Adjustments to non-cash items had a positive effect, especially from the provisions related to timing of rebate payments, and also from adding back these non-cash LTIP related costs we had this quarter. So by the end of Q3, cash and cash equivalents were approximately 106 million SEK. And just a reminder, at the end of Q3, we still held 20 million in our own bond, which could serve as an additional funding going forward. And then we're looking at the next page, our financial outlook for 2025. These metrics are reaffirmed, and specifically, EBITDA guidance remains unchanged, driven by expectations of a positive inventory impact for subselect Q4, as well as stable demand. Continued strong cost control is also expected to have a positive effect, and then we should probably also see positive impact the board award and the covering of incurred costs in Q4. However, the EBITDA outlook is related to some increased risk due to impact from non-budgeted one-time items such as the non-recurring rebate payment we had in Q2, 9 million. Also provisions we talked about associated with LTIP program and also significant exchange rate fluctuations.

Maybe a word also on the barter contract and work 390 is that it's covering also our internal expenses and particularly in the first phases of the project it's really our existing staff that is working on the project so we will have covering of salaries that we would otherwise have to finance ourselves among others Ed Kim's part of Ed Kim's salary that you listened to him earlier today, is also covered partly by this award by BARA. So a short legal update. The one process we still have ongoing, never ending, is the Department of Justice, where we have not really any material movement during the quarter, what is worth saying is the U.S. system with U.S. prosecutors, which are the ones leading these processes, that's political appointees. U.S. prosecutors are political appointees, and that process has been going on during the quarter. There actually was a change of the appointed U.S. prosecutor in the district that we worked with, and they really need to be confirmed before we think we can make any movement here. This is of course a process that is taking unnecessary time and also money and it's something we would like to resolve, but we would need to have a US prosecutor in place to have that discussion. So looking at the future, we can say we have three buckets that we really focus on. One is our commercial assets, where, of course, we have some of the revenue of rights generating assets like ,, which is still there, even though on a low level. But the most important is where we continue to work on how can we optimize the value contribution to long term. On top of that, we, of course, have ,, which we're not putting into the semi-commercial space here, as we are making good progress towards an approval, so where we would then look at what is the right go-to-market strategy, both looking at the market potential and the amount of expenses needed. But really, value optimizing those are important to enable the next areas, which is running our own projects, which today consist of three projects. One is OEC 390 that you heard. One is OEC 472 and GLP-1s. And the last one is OEC 640. On top of that, we have the Morphix technology and how we can apply that to other partnerships and to other companies APIs. And really with the goal to become the partner of choice in nasal powder delivery technology. We believe today we have the world's leading nasal powder delivery. We think the powder has a lot of advantages over a liquid nasal delivery, and this is something we are working to apply together on partners, in particular in large molecules, where we think this can move from injectables to nasal delivery, among others to vaccines, which is in our partnership with Abira. And we also have other non-disclosed partnerships where we're testing on larger molecules using our technology. With that, I will open up for Q&As.

If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Samir Devani from RX Securities. Please go ahead.

Hi, everyone. Thanks for taking my questions. It's probably easier if I just give them to you one at a time. I guess kicking off on a couple of the positive developments that we've seen over the quarter. On OX390, the $8 million initial period, how long will that cover? And can you make any further comment on how 390 will be differentiated from existing rescue medications? I don't think you've disclosed yet the active and maybe when we might hear about that. Thanks.

So I will take the first, and then Ed can answer your second question around the differentiation and difference. So the $8 million is lasting until the first gateway, and that is right now planned to be in the first half of 2027. So this will cover the expenses until the first half of 2027. And with regards to the differentiation, Ed, could you give a little comment on how this is different than other naloxone and nalmethane rescue medications?

Sure. Thanks, Nikolai. Thanks for the question. So what the preclinical evidence shows is that naloxone does not have a beneficial effect on the respiratory depression associated with xylosine. So there is nothing else available. This will be specifically targeted to reverse the toxic negative effects of xylosine and drugs like it. So it'll be a first in class.

And when do you think you'll be in a position to tell us what that active is?

I'll leave that to Nikolai. I think he's going. We're not prepared, certainly today, to disclose specifics around the API.

I think we will do that relatively soon. I would say in the start of next year, it's a little around the supply chain. It's around the IP and others that we want to get control of before we will disclose the details. Okay, that's totally fair enough.

And then just maybe moving on to semaglutide. Obviously, this is a non-core area for you. And I'm just, again, thinking about, obviously, we've got OX640 on the sort of partnering table. When do you think you'll have enough or what further investment do you need to make before you think you could be in a position to partner this?

So I think that the OIS 4772 or semaglutide is an interesting one because we see that as a two-legged opportunity. One is of course semaglutide as a product where that one will, before you can get to market, will be subject to semaglutide API which I believe some of the large market is in the early thirties before they go. So there is an opportunity in semi-glutide and before you get to a partnering around that, I think there could be opportunities short term, but really to get through human data, I think will be an important milestone to have the first human data showing that it actually works, not only in vivo and animal testing, but also in humans. I think that would be a great value infection point, and I also think the expenses to take us to that level is not that high. On the other leg, which is more other GLP-1s, where today Novo Nordisk and Eli Lilly, they have an old formulation. There are some of the other, but not a lot, who have old formulations. But there are basically a large number of companies who have peptides for GLP-1s, which don't have access to an oral or nasal formulation. And that could give an opportunity, which is coming much faster, to test whether we could have the product tested on that GLP-1, which, of course, then in that end, you will have to decide whether you can run both legs or you will have to decide which one you're going on. But we really think from a partnering, more in a pharmaceutical company, with semaglutide, the real value and friction point is likely to come with the first human study. The other ones could come earlier than that.

Okay, that's great. And then just on my final question, just on is it pre, I just wanted to double check that nothing has changed since we last spoke in terms of the likely timeline for the FDA filing, which you've said is mid-2026. Just wanted to confirm that's your current expectation. That is still our current expectation. That's great. Thanks very much.

The next question comes from Klaus Palin from DNB Carnegie. Please go ahead.

Yes, hello, and thanks for taking my questions. The first one relates to OX390, and I wonder if you are perhaps willing to share some further details about the clinical program needed to get an approval for this, what you have had for kind of discussions with the FDA and the scope of such trials perhaps.

We refer that to Ed with keeping the communication line, as we have discussed, that we can't go into too much detail, but on a high level, Ed, you can maybe answer this.

Sure. Thanks, Nikolai. Yeah, good questions. We are, because OX390 is a new chemical entity, we are going through the IND enabling studies currently. Our initial conversations with the FDA are going to be around getting to first in human. So the clinical program and the pathway to developing this important rescue medication, those conversations need to be had once we're getting closer to our first in human studies.

Okay. Okay, thank you.

And just to confirm, the device that you are intending to use there, is this very similar to the one for iCIPRI?

Yes, that's the plan.

Okay, perfect. And then let's jump to OX640. You are sort of downplaying the expectations of a near-term partnership at least. What I'm hearing and just wonder is the negotiations on pause awaiting this market research analysis or what's going on?

So there's a limit to how much I can go into individual discussions, but we still have ongoing discussions with interested parties. I think some of the opportunities, there's a question mark from us whether the attractiveness of entering a partnership with that market uncertainty is attractive or we would have more value to take this a step further while monitoring the market development. So there's a little on the value that you can get from the product partnering today, but there is still companies interested in the game with different setups. So there are still opportunities for partnership, relatively short term, but I think the company needs to decide on what level of risk are we willing to take because we think there could be more value taking this a step further if we believe the market development is in line with some of the valuation indications for AI's pharmaceuticals and what some of their larger investors believe how this will evolve.

Okay, great. Then my last question is about OX472. And you talked about perhaps conducting a human trial before partnering. Is it possible to provide some sort of time frame when you perhaps could enter clinical trials with this compound?

I think so this has gone very, very fast for us. Of course, we've been working on the formulation and it has been even in the patent since quite quite some years back, but the real work started this year. And what we are discussing internally, and we are looking into the market opportunities, is what is the target profile that we're looking for? For example, is the dosing that you need for obesity likely to be higher than what you need for some of the other indications? But that'll also increase the risk in the study. If you have to go very high in dose, that could lead to more frequent dosing through the nose. And that comes with some other potential issues that we don't know. So there's a discussion where we're leading and that comes from two sides. One is to understand the market and the clinical profile that we think is desirable. And the other one is purely formulation to say how can we work on excipients How much can we get into one dose of the nasal spray? So that is some formulation work that we would like to conduct, probably followed up with some in vivo study before we move into humans with what you can say a targeted formulation. So we will have to wait a little to see where that is going. But it is to run this first exploratory clinical study in humans. is not a large study and it's not something that's going to be quite very time consuming since we could make a decision and we could run it relatively fast. As you might know, we have manufacturing capacity for clinical trial materials internally, so we don't have to wait for slot times at a contract manufacturer.

Okay. Thank you so much. That was all for me.

Thank you, and I believe we've received some questions on the telephone conference here. So I will go through those here. So have you applied or intend to apply for these FDA vouchers, given the company much shorter timelines, so one to two months of approval for drugs of importance for the US, for example, OX390 and OX124? For 124, we have tested to see if we could get accelerated approval. We think we came in a little late because there are other alternatives on the market, so we didn't have that pathway available. For 390, that could be a possibility, and that, of course, is something we're exploring. What's worth noting here is Ed said BADA is not only a financing. They are an active part in the development. BADA is part of the HHS in the U.S., which is under the same department as the FDA. So I think even here, there are opportunities for us to work with BARDA to find the most optimal pathway to approval in the US. So that is something we expect. Then there's a question whether OX390 will be a single agent product, or we could combine it with Naloxone together with an alpha-2 receptor antagonist. So alpha-2 is the target for xylosin, for those of you who don't know that. And the use of a combination product in the U.S. is, from FDA perspective, it's a hard sell. It requires quite a lot of data to combine the two products. Often it would be easier to have some kind of combination package, or you will have to work with pharmacists to make a combination of the two agents. We will have to see how we would, what is kind of the emergency steps you would take when you see someone who is potentially overdosed with psilocin or similar agent, and then decide what is the best distribution way. But to combine it in one nasal spray, we believe will be a very complicated process from an FDA perspective. Then we have a question here, which is around whether we think inhaled semaglutide would be a better solution than the oral production in clinical trials given higher toxicology of discontinuation seen in trials such as those led by Viking, which is another company, just for those of you who don't know it, who works with a GLP-1. Do you see interest from new investors, including international investors, given potentially huge market opportunity coming from that product? We think there's a lot of advantages of using a nasal delivery of a GLP-1. Working with inhaled could be, but here I'm not a physician. It is, of course, so maybe I will take it to you later. But I would just say, in general, I have seen that inhaled products come with more toxic stories at least historically than what we have seen with others because you get it into the lung and the long-term toxicology effect of that is difficult to predict and I at least have been part of withdrawing a product from the market because of late coming toxic indications from real-world data. The nasal distribution or nasal, at least with our powder formulation, with the seven times higher uptake through the nose without the issues that you have with using an oral tablet, what we've seen with Rebelsus is very low bioavailability and also high variability among the individuals who receive Rebelsus. And taking it through the nose, at least in our in vivo study, we saw much more consistent data from the nasal delivery than the than the oral delivery. So we think there could be a great advantage, say, from a nasal delivery over the oral. On the inhaled, I'm not that sure. I don't know, Ed, if you have any thinking around inhaled semaglutide.

Yeah, Nicola, I think you've stated it all, that the inhaled route of administration carries some risks, and what we want to focus on is de-risking as much as we can the development of of novel formulations. And we believe that re-internasal de-risks it the most.

And then there was a second part of the questions, which is around whether we have seen interest from new investors, including international investors, given potentially huge market opportunity. What I can see is that our share price have increased, even though today it probably came with some disappointment, I can understand from the commentaries. A lot of that's related to week 640. where we, of course, also had hoped and had some qualified expectations that we could have come to an agreement this autumn. But I would say that the quarterly data and also the patent litigation that areas ended up with came as a surprise to both us and at least the lead potential partner that we had during the summer. But looking at what has happened after the GLP-1 announcement and also OECD 390, which one of them is driving? It's a little hard, but I actually think they might have very complementary with the GLP-1s having a huge market potential and OECD 390 actually give us some financial stability in the company. by supporting a development program with a lot of the staff that we're working with. We're a small company, of course, the same people who have to work on both the GLP-1s and also on the WIC-390. And what we have seen is increased, significantly increased volumes. We have seen more block trades in the stock than we've seen recently. Some of the block trades are managed by international banks or banks which are at least a part of the banks not present in Sweden. and that indicates in my my view that it's either some very affluent private individuals or more likely it's an institutional investor that is is buying the share we have not seen that in our statistics and i think that is due to many international investors don't disclose their holdings so we just see that we have an international custodian bank that hold an additional amount of shares then we normally would see that there are some of these investors will call us and ask for individual presentations. And I will say that we have had more inbound interest in the company after the GLP-1s from international investors than we have seen for quite a while. So that's maybe different indications that the hypothesis presented here and the question that we have new investors and that there has been an increasing interest is correct. And then we have another question, which I think came before the conference, which is around whether OREX is involved in a various long-term study for its influenza vaccine. What data was presented quite recently, which was quite promising. The short answer is no. We were not a part of this long-term study, but I also think looking at how you design these studies, it would be natural for a bearer to actually focus on the delivery method with the least noise. And that is probably working with an injectable or the way of delivering the product that they have done for most of their studies. That said, we still have an intimate dialogue with Ibera. We have discussions about future studies that we could conduct together. So this is just supportive of Ibera's vaccine that they have some great data that they could show. For us, that is very good news because it, of course, helped us in the discussion with Abira for where the powder could add value to Abira's vaccine candidate. But we have not been involved in the study. With that, I believe we have no further questions. And I would thank all of you that you listened in. I hope this is a new partner we work with for the conference call. From our side, it seems to have been work. very well I hope it's the same for you so thank you so much for your time and you're welcome to reach out to Rex if you have any further questions thank you there are no more questions at this time so I hand the conference back to the speakers for any closing comments so thank you so much your participation in the

Welcome to the conference call.

For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing star 5 on their telephone keypad. Now I will hand the conference over to the speakers. Please go ahead.

Thank you very much, and welcome to this third quarter call for Rexo. It has indeed been a transformative quarter in many ways for the company, in particular in our R&D where we have made very good progress in two projects, and I will come back to that a little later. Today, I'm Nicolai Sorensen, and I will be joined by Fredrik Gerstein, our CFO, and this time also Ed Kim, our chief medical officer, who I believe will be new to many of you, but Ed Kim will talk a little bit more about our OEC 390 project and why we think this is an important project both for Rexel but also for the U.S. We will go through the business update. I will take that, and as I said, Ed will come in on the products under development, focusing on OECD 390. Frederik will take us through the financials before I will close out with the legal update and some approach for expansion for where we think we have some future value drivers. Starting with a brief overview of the quarter, as I said in the introduction here, we have made some great progress in our pipeline, in particular with our GLP-1 agonist project that we have works 472, where we showed some very promising in vivo data. And also we received a BARDA fund, which initially is worth $8 million, but could be all the way up to $51 million, where BARDA will finance the majority of our Work 390 projects. During the quarter, our work with ICPRI, formerly known as OX124, has proceeded well, and we are now starting the reliability and stability testing that was required by FDA more or less on time. With regard to OX640, we have during the quarter, we have manufactured the first batches of the amorphox powder with epinephrine at commercial scale, and we have continued partner discussions, but we have also, as I wrote in the CEO comments, seen some increased uncertainty around the market in the U.S. We believe that is something that will be solved, and I will come back to that a little later. Looking at the revenues, clearly in Swedish kronor, the dollar Swedish exchange rate has had a strong headwind during the quarter for the company. It impacted with nearly 11 million Swedish kronor, which is kind of close to 10%. But we have also seen during the quarter that the wholesale inventory has declined in the U.S. which explain a lot of the development compared to last year. Then on EBITDA, we have a negative EBITDA, which was not entirely according to our plans, but that is very much associated with the increased value of the share price during the quarter, where we are reserving for provisions for the for taxes, and particularly around the social securities in Sweden, which is impacting negatively in the quarter, but not from a cash flow perspective, but from a P&L perspective. Frederik will come back to that a little later. Looking at the outlook, we reaffirmed the 2025 outlook, and what's worth noting is that we still believe that it's possible for us to reach our positive EBITDA number for the full year. Moving into our U.S. commercial update, we're seeing the Buknoven and Aleksandr market is picking up a little pace, getting closer to 5% with 4% growth year over year. And also over the last quarter, we saw a slight increase with 1%. This is particular now, which is the interesting is behind the scene is that the market has really been driven by the commercial segment, which is now basically on the edge of surpassing Medicaid as the largest segment in the US. That is important for us because of two reasons. First of all, the commercial segment has a lower rebate, so it's more valuable. Each patient within the commercial segment is worth much more for us than a patient with Medicaid. But also we have, and we maintain into next year, unrestricted access to nearly the entire market with 99% of the volume today sitting with payers where we have no limitations in access for sub-salt. And we have no changes expected for next year. In the public segment, we have seen Medicaid decline. This quarter has actually increased a little, but at a much slower pace than the commercial segment. And we have seen in both Medicaid and Medicare that our access is merely unchanged. There's a small, small plan where we got some restrictions for 2026, but it's not really material for the company. One thing that is interesting in this space is particularly where we see Our largest account is with Humana Medicare and Humana Medicare have for a subsoil perspective had a significant impact of two reasons. So the one is that we have seen Humana Medicare declining because they had new restrictions for certain part of their patients populations. but also that the rebate increased for that particular account. So we kind of both had lower prices, but also we saw negative volumes, which have had an impact on the company year over year, which is actually the main explanation behind the year over year negative development. From a quarter over quarter perspective, we're actually from a pure demand perspective, we have no major changes. We are quite stable in both Medicaid and open, actually grow a little in some of the segments, but we do still have some negative impact from Humana and to less extent of the United Health Group. For those of you who are new to the companies, these were the formerly exclusive contracts where Orexo had nearly the entire volumes within these accounts. But after the introduction of Generics in 2019, we have seen a steady decline in the two accounts. One thing that I have shown before is a little around the inventory and this because we have a strong expectations of of a build-up here in Q4. And to validate that a little, I just want to show some more interesting data here. So one is looking at the sales to pharmacies. That means that the wholesaler sales to the pharmacies is down about 1% compared to last year. Some of that is, of course, pricing. When you compare to our net sales, in these numbers, we also have a 4% price increase in the start of the year. But that's also something we anticipate will happen next year. From a gross sales perspective, we are also stable despite the volatility you can see here on the dark line. And we're down about 1% year to date. And that is despite the destocking we have seen. And I'm just looking a little closer on the inventory levels at wholesalers. This is a new picture for all of you, I believe. You can see these two peaks that are in the picture. They're both in the end of the year 2023 and also 2024. And if you look at the level of inventory when we entered 2025, it was 60% above the inventory that we have today in the end of Q3. But even just looking into the inventory in the end of Q2, it was actually 30% higher than where we are now in the end of Q3. So there has been an inventory decline and it follows the same pattern that we've seen previous years. So we are now expecting to see the Q4 that there will be some inventory built which help us when we reiterate our guidance for the year that we actually believe we can hit the sales numbers that are in here and also overall for the company hit the positive EBITDA number. Coming in on the products and the development, first area I will go a little into depth with is we did show some promising data in semaglutide where we have done a nasal nasal administration. And for most of you should be aware, and I'm sure following the pharmaceutical industry, that this anti-obesity medications, which is kind of a collective name for these GLP-1s, is growing substantially. One is within obesity and diabetes, but also looking forward, there are a lot of expectations in more neurodegenerative diseases such as Alzheimer's and Parkinson's. We also see that there are areas within addiction where these have shown promising data. So it's really, you can say in one way, a drug with a very wide range of applications and where we see some of these patients segments would have benefit from a new administration form. On top of that, we also see with our dry powder formulation, we can add a lot of stability to the products. So what are some of the reasons why we believe? It's, of course, compared, it's a small needle today that you need to take subcutaneous for most of the GLP-1s. Most of them only have an injectable allosin pipeline. There are a couple who also have an oral formulation, but with very poor performance in terms of bioavailability. But taking it into the nose, it's quite easy to self-administer. It's, of course, needle-free, so it's a non-invasive route of administration. bypass the first past metabolism where you would normally, and that's why we see this low bioavailability of GLP-1 medications when they're taken orally in the GI tract. We don't see any need for refrigeration. We have data for six months of semaglutide in our formulation, and during those six months in 40 degrees heat, we're basically not seeing any degradation of the active substance. So we think there are a lot of advantages coming in with the powder formulation, both from a patient perspective, from a stability perspective, and we think that can help also with improved adherence for the patients. With the data that we presented, this is a preclinical in vivo study, so I will say this is very early stage. We think semaglutide is the perfect model substance but this could probably be applied to other peptides used for GLP-1s. Semaglutide is a very difficult peptide in the sense it's a very large peptide, but we're still showing this quite impressive uptake when we compare to the oral formulation of semaglutide with basically up to about seven times higher bioavailability using the nasal route of administration in the studies. We, as I said before, we have continued to do stability studies and we see minimal degradations after six months. And what we're doing now is that based on the learnings from this study, we will continue working on the formulation because the study was in seven milligram. We know that seven milligram of Rebelsus, we know some of the obesity data that we've seen from Novo Nordisk is over 25 milligram for obesity. So we probably have to work a little on the formulation to increase the dosing also. The aim is, of course, to take this into a human trial. But we will have to look at the timeline. So it's a little early for us to commit to a timeline. But this is, of course, the ambition that we're working towards is to show that we can replicate the data we've seen in dogs, also in humans, with improved bioavailability over the old formulation. Then I will invite Ed. into the conference, and Ed will talk a little about our ORF390 project and why we think this is so important for the US. So, Ed, the word is yours.

Okay, thank you very much, Nikolai, and good morning, good afternoon to everybody. For those of you who may not recall, it was in April of 2023 that the White House declared fentanyl xylosine mixtures as an emerging public health threat. So that was about two and a half years ago. And in the latest DEA National Drug Threat Assessment, which goes back over the past three years, the prevalence of xylosine in illicit opioid samples that are confiscated by the DEA has increased over four times. And it's no longer a problem just in the Northeast, but it's spreading. And certainly, if you look at this heat map, has already reached significant numbers on the West Coast. And it's been identified in all 50 states. Now, it's not just how common it is now. But what we see here is that the deaths due to xylosine fentanyl overdoses continue to rise. This is a paper that analyzed CDC data, which currently only goes to 2023. Now, if you recall, 2023 was the first year where the total number of overdose deaths started decreasing. What you see here, though, is that in 2023, the number of xylosine fentanyl overdose deaths continued to increase. So we're hearing this from market research as well as informal discussions that we have with colleagues and customers in the substance use disorder space that this really is a problem. And in the last two to three years, there's been emerging animal data suggesting that while xylosine is an FDA approved veterinary product that is safe and effective when used appropriately in animals, when xylosine and fentanyl is given to these animals, in this case, usually mice or rats, it actually increases and sometimes multiplies the lethality and the opioid-induced respiratory depression. There is a paper published in 2023, it's the title on the left, which identified, it didn't measure respiration, but identified that a moderate dose of xylosine increased the lethality of fentanyl by over 100 times. So it took 1 100th the dose to kill 50 of the animals so we believe that this is truly a public health threat and it is growing over time now the barter partnership that we recently announced is a true partnership with this agency that is part of the department of health and human services They're not only contributing a substantial amount of financial support, but BARDA has technical experts in all phases of drug development and public health who are at our disposal to continue to consult with us, advise us, and advocate for the continued development of OX390. You heard Nikolai mention that the total value is $51 million. The current base period is going to be dedicated to the IND-enabling toxicity studies, formulation development, and in-house manufacturing capabilities. And that total is $8.5 million. Based on achieving certain regulatory, manufacturing, clinical milestones, there are four option periods to continue the development. And these are negotiated with BARDA at each stage so that this is a staged approach to manage the risk of this program. Because as you know, drug development always carries some degree of technical risk. The goal is to develop an intranasal rescue medication for use by laypersons or first responders in the community where these overdoses are happening. It'll be developed on Orexo's own Amorphox platform that you know so much about, and it will continue to leverage the existing manufacturing supply chain that we've already developed for OX124 and OX640. Back to you.

Thank you very much, Ed. And maybe worth noting also is we received the grant was signed in the last few days of September and that's also the last few days of Q2. We have not included any effect of this grant into the Q3 numbers. So you will start to see some effect in the Q4 numbers and of course continuing into next year. What it is, is it's a cost covering, so we would basically invoice for the expenses running the project, and then BADA will cover the majority of the expenses for the project upon invoice. And the cost coverage will be recognized as all the income by the company. So going on to ICPRI. ICPRI is, of course, as I said, intimately connected to the same issue Ed was just talking about. Here we have basically proceeded according to plan with our upscaling of the manufacturing. We have had some good dialogue with FDA also around the nasal device where we can now use the new nasal device without any further studies. We would say that looking at the entire market for Naloxone, it's very highly competitive and that's something we're taking into account when we're looking at the launch strategy. So we are reviewing how we can put this to the market with the least amount of financial risk to the company based on a more competitive market in the US and also the need for financing some of these other projects we just talked about. We do see that the product as such and getting approved is something that's highly valuable for the entire value chain. Every partner we're talking to is talking about the commercialization and for those of you In Sweden, I've probably seen some of our colleagues in the industry just recently have had issues with manufacturing. So manufacturing is central, and I would say the number one cause of delays of many approval processes. So that we can have a product that has been approved on a supply chain, I think is immensely valuable for other discussions and other projects. But actually, even also some of the exceptions, the unique exceptions we're using for our MoFARCs. is something with an approved product that is also supportive evidence for some of the other products that we have in pipeline. So in many ways, I think ICPRI is paving the way for a lot of other products moving forward. And one of them is, of course, OX640. And with OX640, we have continued to do the upscaling. We have manufactured the first batches of powder, which are now being analyzed. We have had some partnering discussions, but I will say that the data we received from the first launch of a nasal product in the US and even in Europe, that launch have gone somewhat slower than some of our partners had anticipated. And that have had a negative impact on these discussions where there's a little more, let's see how the market evolves over the next quarter or two. But from an Orexo perspective, when we look at this market, We see the first product has come out with a strong growth and we actually see from a financial perspective, some investors are seeing it's performing above expectations. But some of the industry players, maybe based on some early expectations from the company launching the product in the US, AOS Pharmaceuticals, they find that this is somewhat slower than what they have seen. And when we are looking into this space, we're seeing it's around physicians' hesitance to prescribe before they see real-world data supporting that the nasal delivery is as effective as an injectable. We know that patients in the U.S. who have allergies have quite infrequent interactions with healthcare. A lot of them don't see an issue in the daily day, so it's the annual meeting with their Allergist, which is the time when you can get a new product. But also from a more market perspective and something pushback is around the first ANDA that was filed in August by Lupin Pharmaceuticals on this product. So that have created some uncertainty. But if you look at the expectations by the investors, we see that the valuations are still significant. Our competitor, AOS Pharmaceuticals, actually, according to the Wall Street Journal markets, have a buy rating by all analysts. We have some of the largest investors in AIS pharmaceuticals have just continued financing with up to $250 million in the launch of NEFI in the US. So for those who are close to the company, there's clearly an expectation that this market will go through. And from a REXA perspective, we still believe that OX640 has significant opportunity. Looking at the Naloxone market, which we know very well, we saw that it didn't really take off before after 18 months. And we saw exactly the same concerns by physicians and patients. But today, I don't think anyone in the U.S. questions the benefits of a nasal administration, which is probably a lead for some of the decline. We've seen a number of people dying from overdose in the U.S. And we also believe that coming in with the 640, we're actually looking at competitively. We have done some market research. We know some of our potential partners have done some market research. All of that confirms that we have a very competitive product in the U.S. We still have IP until 2044. But to continue understanding the market and to get more evidence, we have started a market research using some external experts running the study in the U.S., That will be concluded during Q4 to ensure that we actually focus on the right market differentiating parameters of OX640 when we proceed and to confirm the attractiveness of the market. So OX640, we continue with the development. We have seen some, you could say, delay in the partnering discussions. And also there's a concern from Orexo is the attractiveness. with the uncertainty of some of these partnering opportunities, where if you go a little further, get more certainty around the market, we see that could be a significant value inflection for a potential partnership. Moving into the financial section, I will invite Fredrik to talk a little about our financial results.

Thanks, Nikolaj. So on page 22, looking at revenues, if we start looking on the top part of this page, you can see that our total Q3 revenue for the group was $119 million. And the vast majority of that, $114 million, or 96%, came from subsoil in our U.S. commercial business. Now, that's down about $17 million sec year over year, mainly driven by a negative $11 million sec FX impact. But we also had lower demand in net revenue terms, primarily from the previously exclusive contracts within United Health Group and Humana. So that was about a 3% demand reduction year over year. Now, partly offsetting this, we had a lower destocking effect versus last year that contributed to the positive 2 million stack. In local currencies, sub-sub-revenue declined 4.8% year over year. Looking at other revenues within HQM pipeline, Amstral royalties were higher, but that's largely because Q3 last year included a negative adjustment to historic reported royalties. Ezra royalties were stable, but Subsov ex-US revenues were lower, mainly because that didn't have any tablet sales to a partner called Healthcare this quarter. That's following the one-time inventory build earlier this year ahead of Accord starting manufacturing in Europe. Now if we switch to the quarter-over-quarter view for sub-sub-revenue, the waterfall chart on the bottom part of the page shows that opposite to the year-over-year trend reported net revenues in local currency increased slightly in Q3 by approximately 2% versus reported Q2 numbers that though include the non-recurring rebate payment we had in Q2 of 9 million. In SEC terms, with the negative FX impact of 1.5 million, quarter-over-quarter net revenue shows only very marginal growth, reflecting a broadly stable demand picture in the quarter, as shown in the first three bars of the chart. And working against the growth was also sizable negative inventory destocking effect of 6 million during the quarter, as Nicolai previously talked about. Moving on to the next page, the P&L, we already touched on our net revenues, total of 990 million. FX effect was a negative 12 million year-over-year. But the weakening of the US dollar year-over-year has, of course, also had a positive effect on our USD denominated costs, which account for approximately 65% of total expenses. The declining COGS, as you can see this quarter, is driven largely by this favorable FX effect within U.S. commercial. And that was about 6 million tech. Also, improved production costs for subsoil. So as a result, gross margin increased from 85% in Q3 last year to 94%. On operating expenses in Q3, which landed at 133 million, We're pleased to see that's down 4% compared to last year, although about $12 million is coming from the weaker U.S. dollar. But we also saw lower costs from a performance perspective with lower selling expenses in our U.S. operations in relation to staffing, as well as lower marketing-related costs for ICIPRI. We also had lower admin costs, mainly from reduced legal fees. R&D costs, on the other hand, were higher, mostly related to high costs for OX6 for the upscaling of manufacturing. And then we had these costs of 13 million for the long-term incentive programs, mainly related to provision for social security fees following the sharp increase in our share price during the quarter. EBITDA was negative for the quarter by minus 9.8 million. And that, though, includes this 13 million negative LTIP impact. So if you would exclude those costs, EBITDA would be positive 3 million instead. If you look at the US business specifically, EBIT was an impressive 38 million SEG for the quarter, and that's up from 25 million a year ago. So that's an EBIT margin of 34% and an improvement from 19% last year. Let's move to the next page, cash flow. We reported negative cash flow of 15 million SEK for the period. After adjusting for a negative FX effect of 0.8 million, that resulted in a decrease in cash and cash equivalents of 16 million in the quarter. Operating cash flow was negative, and that's mainly due to negative operating earnings and interest paid on the bond. Adjustments to non-cash items had a positive effect, especially from the provisions related to timing of rebate payments, and also from adding back these non-cash LTIP related costs we had this quarter. So by the end of Q3, cash and cash equivalents were approximately 106 million SEK. And just a reminder, at the end of Q3, we still held 20 million in our own bond, which could serve as an additional funding going forward. And then we're looking at the next page, our financial outlook for 2025. These metrics are reaffirmed, and specifically, EBITDA guidance remains unchanged, driven by expectations of a positive inventory impact for subselect Q4, as well as stable demand. Continued strong cost control is also expected to have a positive effect, and then we should probably also see positive impact the board award and the covering of incurred costs in Q4. However, the EVTA outlook is related to some increased risk due to impact from non-budgeted one-time items such as the non-recurring rebate payment we had in Q2, 9 million. Also provisions we talked about associated with LTIP program and also significant exchange rate fluctuations.

Maybe a word also on the barter contract and work 390 is that it's covering also our internal expenses and particularly in the first phases of the project it's really our existing staff that is working on the project so we will have covering of salaries that we would otherwise have to finance ourselves among others Ed Kim's part of Ed Kim's salary that you listen to him earlier today, is also covered partly by this award by BARA. So a short legal update. The one process we still have ongoing, never ending, is the Department of Justice, where we have not really any materials movement during the quarter, what is worth saying is the U.S. system with U.S. prosecutors, which are the ones leading these processes, that's political appointees. U.S. prosecutors are political appointees, and that process has been going on during the quarter. There actually was a change of the appointed U.S. prosecutor in the district that we worked with, and they really need to be confirmed before we think we can make any movement here. This is of course a process that is taking unnecessary time and also money and it's something we would like to resolve, but we would need to have a US prosecutor in place to have that discussion. So looking at the future, we can say we have three buckets that we really focus on. One is our commercial assets, where, of course, we have some of the revenue of rights generating assets, like ,, which is still there, even though on a low level. But the most important is where we continue to work on how can we optimize the value contribution for long term. On top of that, we, of course, have ,, which we're now putting into the semi-commercial space here as we are making good progress towards a and approval, so where we would then look at what is the right go-to-market strategy, both looking at the market potential and the amount of expenses needed. But really, value optimizing those are important to enable the next areas, which is running our own projects, which today consist of three projects. One is OEC 390 that you heard. One is OEC 472 and GLP-1s. And the last one is OEC 640. On top of that, we have the Morphix technology and how we can apply that to other partnerships and to other companies' APIs. And really with the goal to become the partner of choice in nasal powder delivery We believe today we have the world's leading nasal powder delivery. We think the powder has a lot of advantages over a liquid nasal delivery. And this is something we are working to apply together on partners, in particular in large molecules, where we think this can move from injectables to nasal delivery, among others to vaccines, which is in our partnership with Abira. And we also have other non-disclosed partnerships where we're testing on larger molecules using our technology. With that, I will open up for Q&As.

If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Samir Devani from RX Securities. Please go ahead.

Hi, everyone. Thanks for taking my questions. Probably easier if I just give them to you one at a time. So I guess kicking off on a couple of the positive developments that we've seen over the quarter. On OX390, the $8 million initial period, how long will that cover? And can you make any further comment on how 390 will be differentiated from existing rescue medications. I don't think you've disclosed yet the active and maybe when we might hear about that. Thanks.

So I will take the first and then Ed can answer your second question around the differentiation and difference. So the $8 million is lasting until the first gateway and that is right now planned to be in the first half of 2027. So this will cover the expenses until the first half of 2027. And with regards to the differentiation, Ed, could you give a little comment on how this is different than other naloxone and nalmephine rescue medications?

Sure. Thanks, Nikolai. Thanks for the question. So what the preclinical evidence shows is that naloxone does not have a beneficial effect on the respiratory depression associated with xylosine. So there is nothing else available. This will be specifically targeted to reverse the toxic negative effects of xylosine and drugs like it. So it'll be a first in class.

And when do you think you'll be in a position to tell us what that active is?

I'll leave that to Nikolai. We're not prepared, certainly today, to disclose specifics around the API.

I think we will do that relatively soon, but I would say in the start of next year. It's a little around the supply chain. It's around the IP and others that we want to get control of before we will disclose the details. Okay, that's totally fair enough.

And then just maybe moving on to semaglutide. Obviously, this is a non-core area for you. And I'm just, again, thinking about, obviously, we've got OX640 on the sort of partnering table. When do you think you'll have enough or what further investment do you need to make before you think you could be in a position to partner this?

So I think that the OX472 or semaglutide is an interesting one because we see it as a two-legged opportunity. One is, of course, semaglutide as a product, where that one will, before you can get to market, will be subject to semaglutide API patterns, which I believe some of the large market is in the early 30s before they go. So there is an opportunity in semaglutide. Before you get to a partnering around that, I think there could be opportunities short term, but really to get through human data, I think will be an important milestone to have the first human data showing that it actually works, not only in vivo and animal testing, but also in humans. I think that would be a great value infection point and also think the expenses to take us to that level is not that high. On the other leg, which is more other GLP-1s, where today Novo Nordisk and Eli Lilly, they have an oil formulation. There are some of the other, but not a lot, who have oil formulations. But there are basically a large number of companies who have peptides for GLP-1s, which don't have access to an oral or nasal formulation. And that could give an opportunity, which is coming much faster, to test whether we could have the product tested on that GLP-1, which, of course, then in that end, you will have to decide whether you can run both legs or you will have to decide which one you're going on. But we really think from a partnering, more in a pharmaceutical company, with semaglutide, the real value infection point is likely to come with the first human study. The other ones could come earlier than that.

Okay, that's great. And then just on my final question, just on is it pre, I just wanted to double check that nothing has changed since we last spoke in terms of the likely timeline for the FDA filing, which you've said is mid-2026. Just wanted to confirm that's your current expectation. That is still our current expectation. That's great. Thanks very much.

The next question comes from Klaus Palin from DNB Carnegie. Please go ahead.

Yes, hello, and thanks for taking my questions. The first one relates to OX390, and I wonder if you are perhaps willing to share some further details about the clinical program needed to get an approval for this, what you have had for kind of discussions with the FDA and the scope of such trials perhaps.

We refer that to Ed with keeping the communication line as we have discussed that we can't go into too much details, but on a high level, Ed, you can maybe answer this.

Sure. Thanks, Nikolai. Yeah, good questions. We are, because OX390 is a new chemical entity, we are going through the IND enabling studies currently. Our initial conversations with the FDA are going to be around getting to first in human. So the clinical program and the pathway to developing this important rescue medication, those conversations need to be had once we're getting closer to our first in human studies.

OK. Okay, thank you.

And just to confirm, the device that you are intending to use there, is this very similar to the one for ICIPRI?

Yes, that's the plan.

Okay, perfect. And then let's jump to OX640. You are sort of downplaying the expectations of a near-term partnership at least.

what i'm hearing and just wonder is the negotiations on pause awaiting this market research analysis or or what's going on so there's a limit to how much i can go into individual discussions but but we still have ongoing discussions with interested parties i think some of the some of the opportunities there's a question mark from us whether the attractiveness of entering a partnership with that market uncertainty is attractive or we would have more value to take this a step further while monitoring the market development. So there's a little on the value that you can get from the product partnering today, but there is still companies interested in the game with different setups. So there are still opportunities for partnership, relatively short term, but I think the company needs to decide on what level of risk are we willing to take because we think there could be more value taking this a step further if we believe the market development is in line with some of the valuation indications for AI's pharmaceuticals and what some of their larger investors believe how this will evolve.

Okay, great. Then my last question is about OX472. And you talked about perhaps conducting a human trial before partnering. Is it possible to provide some sort of time frame when you perhaps could enter clinical trials with this compound?

I think this has gone very, very fast for us. Of course, we've been working on the formulation, and it has been even in the patent since quite quite some years back, but the real work started this year. And what we are discussing internally and we are looking into the market opportunities is what is the target profile that we're looking for? For example, is the dosing that you need for obesity is likely to be higher than what you need for some of the other indications, but that'll also increase the risk in the study. If you have to go very high in dose, That could lead to more frequent dosing through the nose, and that comes with some other potential issues that we don't know. So there's a discussion where we're leading, and that comes from two sides. One is to understand the market and the clinical profile that we think is desirable, and the other one is purely formulation to say how can we work on excipients and How much can we get into one dose of the nasal spray? So that is some formulation work that we would like to conduct, probably followed up with some in vivo study before we move into humans with what you can say a targeted formulation. So we will have to wait a little to see where that is going. But it is to run this first exploratory clinical study in humans. is not a large study, and it's not something that's going to be quite very time-consuming, since we could make a decision and we could run it relatively fast. As you might know, we have manufacturing capacity for clinical trial materials internally, so we don't have to wait for slot times at a contract manufacturer.

Okay. Thank you so much. That was all for me.

Thank you, and I believe we've received some questions on the telephone conference here. So I will go through those here. So have you applied or intend to apply for these FDA vouchers, given the company much shorter timelines, so one to two months of approval for drugs of importance for the US, for example, OX390 and OX124? For 124, we have tested to see if we could get accelerated approval. We think we came in a little late because there are other alternatives on the market, so we didn't have that pathway available. For 390, that could be a possibility, and that, of course, is something we're exploring. What's worth noting here is EDCET and BARDA is not only a financing. They are an active part in the development. BARDA is part of the HHS in the U.S., which is under the same department as the FDA. So I think even here, there are opportunities for us to work with BARDA to find the most optimal pathway to approval in the U.S. So that is something we expect. Then there's a question whether OX390 will be a single-agent product, or we could combine it with naloxone together with an alpha-2 receptor antagonist. So alpha-2 is the target for xylosin, for those of you who don't know that. And the use of a combination product in the U.S. is, from FDA perspective, it's a hard sell. It requires quite a lot of data to combine the two products. Often it would be easier to have some kind of combination package, or you will have to work with pharmacists to make a combination of the two agents We will have to see how we would, what is kind of the emergency steps you would take when you see someone who is potentially overdosed with psilocin or similar agent, and then decide what is the best distribution way. But to combine it in one nasal spray, we believe will be a very complicated process from an FDA perspective. Then we have a question here which is around whether we think inhaled semaglutide would be a better solution than the oral products in clinical trials given, oral production in clinical trials given higher toxicology of discontinuation seen in trials such as those led by Viking, which is another company, just for those of you who don't know it, who works with a GLP-1. Do you see interest from new investors, including international investors, given potentially huge market opportunity coming from that product? We think there's a lot of advantages of using a nasal delivery of a GLP-1. Working with inhaled could be, but here I'm not a physician. It is, of course, so maybe I will take it to you later. But I would just say, in general, I have seen that inhaled products come with more toxic stories at least historically than what we have seen with others because you get it into the lung and the long-term toxicology effect of that is difficult to predict and I at least have been part of withdrawing a product from the market because of late-coming toxic indications from real-world data. The nasal distribution or nasal at least with our powder formulation with the seven times higher uptake through the nose without the issues that you have with using an oral tablet. What we've seen with repelsus is very low bioavailability and also high variability among the individuals who receive repelsus. And taking it through the nose, at least in our in vivo study, we saw much more consistent data from the nasal delivery than the oral delivery. So we think there could be a great advantage, say, from a nasal delivery over the oral. On the inhaled, I'm not that sure. I don't know, Ed, if you have any thinking around inhaled semaglutide.

Yeah, Nicola, I think you've stated it all, that the inhaled route of administration carries some risks. And what we want to focus on is de-risking as much as we can the development of novel formulations. And we believe that the intranasal de-risks it the most.

And then there was a second part of the questions, which is around whether we have seen interest from new investors, including international investors, given potentially huge market opportunity. What I can see is that our share price have increased, even though today it probably came with some disappointment, I can understand from the commentaries. A lot of that's related to week 640. where we, of course, also had hoped and had some qualified expectations that we could have come to an agreement this autumn. But I would say that the quarterly data and also the patent litigation that areas ended up with came as a surprise to both us and at least the lead potential partner that we had during the summer. But looking at what has happened after the GLP-1 announcement and also OECD 390, which one of them is driving, it's a little hard, but I actually think they might are very complementary with the GLP-1s having a huge market potential and OECD 390 actually give us some financial stability in the company by supporting a development program with a lot of the staff that we're working with. We're a small company, of course, the same people who have to work on both the GLP-1s and also on the WIC-390. And what we have seen is increased, significantly increased volumes. We have seen more block trades in the stock than we've seen recently. Some of the block trades are managed by international banks or banks which are at least a part of the banks not present in Sweden. and that indicates in my view that it's either some very affluent private individuals or more likely it's an institutional investor that is buying the share. We have not seen that in our statistics and I think that is due to many international investors don't disclose their holdings. So we just see that we have an international custodian bank that holds an additional amount of shares. Then we normally would see that there are some of these investors will call us and ask for individual presentations. And I will say that we have had more inbound interest in the company after the GLP-1s from international investors than we have seen for quite a while. So that's maybe different indications that the hypothesis presented here and the question that we have new investors and that there has been an increasing interest is correct. And then we have another question, which is, I think, came before the conference, which is around whether OREX is involved in a various long-term study for its influenza vaccine. What data was presented quite recently, which was quite promising. The short answer is no. We were not a part of this long-term study, but I also think looking at how you design these studies, it would be natural for Abira to actually focus on the delivery method with the least noise. And that is probably working with an injectable or the way of delivering the product that they have done for most of their studies. That said, we still have an intimate dialogue with Ibera. We have discussions about future studies that we could conduct together. So this is just supportive of Ibera's vaccine that they have some great data that they could show. For us, that is very good news because it, of course, helped us in the discussion with Abira for where the powder could add value to Abira's vaccine candidate. But we have not been involved in the study. With that, I believe we have no further questions. And I would thank all of you that you listened in. I hope this is a new partner we work with for the conference call. From our side, it seems to have been work. very well I hope it's the same for you so thank you so much for your time and you're welcome to reach out to Rex if you have any further questions thank you there are no more questions at this time so I hand the conference back to the speakers for any closing comments so thank you so much