Orexo AB

STO:ORX

Earnings Call Transcript 2021-Q3

[Operator]

Welcome to the Orexo's Q3 report for 2021. [Operator Instructions] Today, I am pleased to present our first speaker, CEO, Nikolaj Sorensen. Please begin your meeting.

[Nikolaj Sørensen, President & CEO]

Thank you very much, and welcome to this third quarter presentation for Orexo. Some of you will notice, we've been following us for a while, and we have chosen a new format for our presentation, and I hope it's something that you will appreciate. I will start on Page #2 with the agenda. So I will talk a little about the key achievements during the third quarter. Then we -- I will continue talking about the U.S. pharma progress. But I know based on the number of questions we have received prior to the call during the morning, but there's a lot of focus on because of therapeutics. So we have invited Dennis Urbaniak, who will join us from Chicago, where we have a kickoff meeting with part of our feed force or the sales of modia. And Dennis, as you know, he is responsible for digital therapeutics new business franchise. So Dennis will join us to talk more about that. I will then talk about our pipeline. And Joe DeFeo will take over talking about the financial situation of the company before I will finish up with some legal updates and our future value drivers.So moving into the key achievements for the quarter on Page 5. I actually think that this quarter on the foundational elements for Orexo's few quite some time, a kind of a sliding continuous decline on revenues. While we did get a little help on some onetime effect this quarter, we actually see a development where it's basically flat for ZUBSOLV and overall in net revenues we have a plus 8% this quarter. In addition to that, we also have an EBIT margin from ZUBSOLV, which is now actually higher than it was 1 year ago. And this is really important for us because the ZUBSOLV revenues and EBIT is what is fueling our investment in digital therapies and to the pipeline.When it comes to digital therapy, we are making some good progress within signing of new partners. Just in this quarter, we have 3 partners that we have announced, and we're making good progress in discussions with other partners. One of them is Benefis Health System, a Montana-based health system of similar size as Trinity Health. We have Jasmine, which is a more virtual caregiver in the Chicago region. And then we have Sober Grid, which is the world's largest online community for people with substance abuse issues. The 2 first in the first step, Sober Grid is making some really good progress, and we have seen some of the first patients coming through the Sober Grid partnership.We will now, in our digital therapies, we have basically been forced since we started with Movida in the autumn of 2020 and late spring with deprexis this year, we focused on the direct-to-consumer promotion, partly because the lack of reimbursement pathways to caregivers and to insurance companies, and partly because we saw an opportunity in our direct to -- very targeted direct-to-consumer promotions using social media. As some of you will recall from our Q2 call, we have made some challenges during the targeted media approach for our product. And we have during the summer decided now to focus on the B2B segment. That would mean that we are now reducing our activity level in direct to consumers to focus much more on caregivers.What we've also seen during the last 1.5 years is like everyone else, we have had a severe issue of getting to the customers due to the COVID-19 restriction, and we see much better selling process when we're able to meet the customers' face-to-face. And that's what we see in the health care providers right now that we can actually meet them. And that accelerates the prices significantly compared to before when we have more themes and Zoom meetings.OX124 is basically in pivotal trial right now. So we're expecting the results quite shortly. And we are now expecting the launch in 2023, probably during the summer, if you look at the current time line. That product is quite exciting because the technology and the -- all the way from the formulation to the use of a device something that we have gained a lot of insight, and then we will continue to see new opportunities bringing out of that technology platform, something we will talk more about later in the quarter, which is this new R&D technology platform [indiscernible]. We aware that we think that there are a lot of new quite exciting opportunities coming out of the technology that we have invested in the OX124.Going into the U.S. pharma presentation, and then I'm moving to Page #7. We have seen a quite stable overall development in ZUBSOLV. We got reimbursed by Kentucky on July 1st, in the beginning of the quarter, that resulted an 85% increase in the Kentucky number of prescriptions in the quarter, admittedly from a relatively low level, but it is a quite good start. And we also see some good growth in other Medicaid accounts like Ohio. It's another very large state where we have seen good development in the quarter. And on a year-over-year basis, we have seen some of the largest PBMs like CVS Caremark and Express Script also showing some seasonal development. However, that, of course, is come in the way by some more negative development on other accounts, and we still see some decline in United Health Group and Humana, even though it's on an actual basis, it's the lowest decline that we have seen since we last reimbursement early half of 2019.What you will recall probably from previous meetings also, we had a situation where the field force literally right after the COVID-19 in April, May of 2020, we saw a decline in our fuel force activities with more than 80%. That has continuously improved, but we still see that the access to prescribers is less than we saw in a pre-COVID level. And for that reason, we have actually decided to consolidate some of our sales districts for -- starting now in Q4. So you will see an effect on the cost basis from that a little in Q4, but predominantly on next year. If you look at the overall market, moving to Page #8, we've seen the market growth has slowed down a little compared to what we have been used to, where we have seen double-digit growth. But when you look at all data in the U.S. show that this issue is opioid use disorder on the right, quite dramatic rise when it comes to overdoses. But even when we look at people who are basic overusing opioids, that one has increased quite significantly.And we have, for the first time in quite a few years, seen an increase also in prescriptions of opioid painkiller. Some of that probably because people have to wait longer time for surgery. So they have been forced to use painkillers while they've been waiting for surgery. Unfortunately, we know that quite a few people will make close to opioids over a longer period of time, will grow into an addicted situation. What we see now -- so why do we believe that there will be some good effect on the market moving forward, as I said, the COVID-19 is something that has led to a quite steep increase in the number of people overdosing and suffering from opioid use disorder.We know that there are a lot of focus on both the federal and state levels to increase access to treatment all the way from quite strong lobbying groups, who find that the limitation call data 2,000 should be removed completely, which would mean that buprenorphine/naloxone products would be like any other medication and could be prescribed by all doctors in the U.S., to basically would just like to make it much more easy as always been done by President Biden. it's become more easy now to get the base 2,000 certification compared to previously.We do see from a more ZUBSOLV perspective that our market access overall is improving. We have been -- we have had much less market access in the public sector compared to commercial. While in public, we have now gone from 34% to 42% of the patients having unrestricted access to ZUBSOLV. We have seen a very little decline in commercial access by Blue Cross Blue Shield in Massachusetts that decided to put ZUBSOLV out of that preferred list.And the final part is what Dennis is preparing today in Chicago is the launch of modia, which is our digital therapy opioid use disorder. And we know already now from the first group of sales reps, we have basically due to COVID-19, where you can't have too many people in the same room., we have started the education of field force last week at the next group today and the final group next week. We've seen already now that adding modia into the course is improving the length and quality of the care of the rest that have been out just a few days now with modia.With that, I will invite Dennis to give you an update on our digital therapies and what we are doing in different therapies. So Dennis the word is yours. Right now I'm on Page 9. So please take us through the presentation.

[Dennis Urbaniak, Executive Vice President of Digital Therapeutics]

Thank you, Nikolaj, and Good morning and good afternoon to everyone who's joining us today. And as Nikolaj pointed out, that the promise of digital health today is one of the most exciting areas in life sciences. And our segment of digital therapeutics is particularly exciting because it's highly relevant for the areas we work in, in mental health and substance abuse, the opportunity to bring not only a peer-reviewed clinical evidence in the form of trials, but also to demonstrate that evidence in the real-world around the impact of the therapy is quite significant. And most importantly, digital therapies offer a way to truly focus on the patient and address those real gaps in the patient journey, particularly that we see in the businesses that we work in.And if you can move to Slide #10, this is not just Orexo recognizing this. I think if you consider the amount of investment that's been placed into the market and broader digital health year-to-date 2021, we see USD21.3 billion. So this represents massive enthusiasm for this trend that's coming forward. And I think these 2 quotes here are a great descriptor of the current market dynamics.So you see from McKinsey, this opportunity that suggests that digital, whether it be digital health or digital therapeutics will absolutely become foundational in terms of care delivery as we go forward. There's no question about that. However, today, in 2021, there's significant opportunities in the infrastructure and the systems and processes that deliver care in the traditional format that need to be adapted to really enable digital therapy broadly to take hold and grow. And that's the focus of the business right now is aligning to the significant enthusiasm and need, but also working aggressively to bring those systems forward where we can really drive these opportunities at scale.And if you could go to Slide #11, some reasons to believe and some confidence, if you look at the actual market dynamics, and I'll talk about kind of 2 key areas on the slide. The first is from a provider and system point of view. The fact of the matter is there's simply experiencing a level of demand and costs that's never been seen before. Certainly, a lot of that's related to COVID, but on top of that, you've got an aging population. And so the traditional methods of care have been stressed at levels that they've never seen, and it's forcing institutions and providers of all types to consider different approaches and will be a foundational shift towards more value. And value-based care is perfect for digital therapy.Because of the way that evidence can be gathered and can be analyzed and can be collected to demonstrate true outcomes, we can align these new payment pathways and access models around value in ways that you simply can't look more traditional approaches. So you have the system payer value effect. The other dynamic here is with the individuals. And we have people who are moving from this kind of passive patient mindset following the doctor's orders to being truly active consumers of health care.And COVID has just driven an adoption of technology that is quite diverse. There's hardly a demographic at the moment that hasn't experienced some uptick in technology and has gained a comfort level. So we've moved away from this idea of small groups of digital nomads that are power users to broad acceptance. And so these 2 underlying trends, systems to value and the person to active consumer of health care demanding more are significant and will be real drivers of growth in digital therapy across the board.And so if you could go to Slide 12, what Orexo is doing now to position ourselves in helping to build that infrastructure as well as helping to demonstrate that impact is we're working closely in these 2 key areas. Establishing reimbursement is a high priority of ours. And we do that through our advocacy work as members of the digital therapeutic alliance as well as working with many other key influencers around identifying existing pathways that can be leveraged and also advocating for new approaches.Now I'll talk a little bit more about that in just a minute. But also, as we're working to put those access pathways in place, you have to gain trust and confidence on the consumer side and on the provider side. And so while we're building the reimbursement pathways, we're working closely with providers and with patients so that they can develop trust in what Orexo is offering, they can get confidence by using the therapies with patients in real-world settings. And because of the data opportunities we have to demonstrate the impact of that, not only in clinical ways, but also when you look at cost outcomes and most importantly, satisfaction, that will enable that acceleration, that real world experience, and that's a big focus of our commercialization as we go forward.If you could go to the next slide, please. In order to deliver on this, you have to have good products, and it sounds kind of obvious. But with a lot of the new technologies that are out there, there's a lot of skepticism and a lot of question around what really are these products, these digital therapies, how do they work and how will people like them. And I can say with great confidence, our partnership with Gaia, a world leader with literal decades of developing high quality, highly effective digital therapies puts us in a very unique position, in a very positive position.And so we have this broad portfolio of assets from modia taking on what Nikolaj described in his opening of the significant issue of opioid dependence in the U.S. following this prescription digital path with a big randomized trial underway at the moment. And then also an opportunity to drive early experience through the FDA emergency use authorization. modia will be truly integrated with treatment and that it's part of MAT driven by the doctor, medication-assisted treatments, bundled with drug therapy, which is the standard approach for opioid use disorder.To Vorvida, which is a very unique product, a terrific trial showing its effect, particularly in near a binge drinking, which is a huge issue. And this is a category that people don't really engage a lot with the health care system, but there's a growing problem in terms of alcohol misuse and the discrete nature and the opportunity to bring Vorvida again under the emergencies authorization and it is a significant one.And finally, Deprexis, which remains one of the most studied digital therapies in the world today, significant amount of peer-reviewed trials. And most importantly, in a number of different use cases and settings that demonstrate consistent effectiveness of the therapy, both as a standalone as well as a complement to core approaches. And so -- and Deprexis has already been cleared under the enforcement discretion pathway. So on the product side, our CBT based artificial intelligence therapies really stand out, and that's an area that we have great confidence in, and that's being backed up as people begin to use the therapies.In the next slide, so you have the products, you also want to make sure you're focusing in areas where there's true unmet need. And if you look at each of our 3 areas of focus for each of the 3 therapies, both have this dynamic of significant and growing unmet need. You can see very large population sizes in terms of those that qualify within our instructions for use areas, but also relatively low rates of treatment, meaning there's certain barriers that exist from the current traditional offerings. And what that represents for digital therapy and for modia, Vorvida and Deprexis are a true opportunity to help a lot of patients with some very serious conditions and really make improvements in people's lives in a very significant way. While we also create that next growth engine for Orexo at a corporate level, you can see there's material sales opportunities here when you look at the size of the market and the opportunity to get more people into various forms of treatment and care using our digital therapies.And so on Slide 16, the next slide, we talk about how we're delivering that and how we're taking this promise, which you can see is so significant. And now getting into, okay, now we have to execute. And it's more than just telling people about the therapies and expecting them to start using them immediately. You need to deliver a full-service platform that can adapt to the customer experience, whether that's a doctor or health care system, whether that's the patient or whether that's the payer, and there's thousands of different types of payers in the U.S.The system needs to be able to demonstrate and integrate your therapies into their current areas of work, needs to support the therapies through pull-through content, customer relationship management and also needs to have data and activity and analytics to track the impact, everything from basic utilization all the way through those outcome measures that I had referenced earlier, clinical, economic and patient satisfaction. So we've been building this platform. We've been adding different segments. This is powered by leading technology organizations, such as Accenture through the Google Cloud platform. We've even brought on -- we're attracting new innovators.Evidation Health, which is an exciting, one of the world-leading real-world evidence organizations in the market today has just joined with Orexo on a really unique opioid use disorder project as an example. And so this is one of the reasons why despite the huge need and enthusiasm, you don't see necessarily massive revenue uptake early because you need to develop and deploy a platform like we've been doing and back to that customer experience, you need to have -- you need to earn the trust with your customers, get the confidence that they can see this works, and then you'll start to see the scale.And on Slide 17, the next slide, kind of like our therapies, while the technology is exciting, the technology does not matter if it's not delivering a relevant patient-focused customer experience. And one of the things we've also been able to do since the time that we launched in market with Vorvida and Deprexis is we've developed -- have experienced now in developing a number of different content assets and communication assets that align to the channels that most resonate with our customers. And this is important because as we gain true access and reimbursement pathways, we can use our platform and our content to drive and accelerate pull-through.We can target these content assets very specifically to the channels that our customers prefer and the channels that our customers respond to. And our team, our marketing team and analytics team has done a great job of trying different formats, understanding what works and creating a digital asset content library that allows us to deploy these quickly and customize these against those customer opportunities. So we're ready to drive pull-through using the marketing capabilities that we've built on the platform. And again, that goes back to ensuring that we optimize that patient experience.And so on Slide 18, the focus for Orexo today and as we go into 2022, is going to be on partnering and demonstration. And here, you see at the top examples of some of the partnerships that Nikolaj shared with you in the past and earlier earnings calls, Trinity Health in North Dakota continues to be a true foundational partner for Orexo in our commercialization efforts. And it's a great example of what I talked about from a market dynamic. So you heard from Nikolaj about Trinity much earlier in the year and I'm sure many of you are wondering when we're going to see the revenue impact from Trinity.And with Trinity, we've worked through a process where first we've understood after the initial kind of consideration phase and clinical presentation, how we can help their employees with our therapies to gain some of that initial trust that I referenced is the first phase. We've then, over time, as they gain confidence in therapy, has been working with each of their care delivery departments to set up the proper processes to make these billable services within their medical service delivery and that takes time. You need to really understand how care is delivered from department to department and nuances from primary care to behavioral health, for example, and the connection to the local payer environment, the setup of the right financial processes and the demonstration of proper reimbursement and patient experience.We've also had to respect their schedules as the pandemic has evolved, as demands spike at different levels and things come up that you typically wouldn't expect in a normal course of business. But what gives me great confidence is the feedback and response from the team at Trinity has been so positive. And for me, the strongest example I can share with you is one of the new partnerships in Q3 Benefis.So Trinity, based on our experience with them has begun to share with other systems, the experience with Orexo and has actually been referring other like systems to us, based on how positive they are, about how we've supported them, and how we're setting them up to ultimately be an innovator with digital therapy. And so Benefis is a new system, a neighboring system in Montana, similar size to Trinity, and we've already gone through the clinical presentation and already started an employee program in a significantly faster period of time on the back of that referral. And we expect that to continue. And this to me is another sign of confidence that I have that we have the right therapies and where we can get the demonstration to market, we'll see the growth.I'm also very excited about our partnership with Sober Grid, the largest recovery community in the U.S., very active across many areas. And what we've seen so far, we've just announced this partnership over the summer, but this combination of the peer coaching that Sober Grid brings along with Orexo's digital therapies is one that people are really starting to respond to. We're starting to see a great introduction by the peer coaches to our therapies. Also though, we're starting to build a joint pursuit pipeline with the Sober Grid team, because we've seen some examples of customer opportunities where our combined offerings create an even stronger value proposition.And I think that, that's going to continue and grow, and you'll see nice developments in terms of some new customers that will win together with Sober Grid. Also Jasmine, we announced this one just a few weeks ago. This is another example of a partnership that I'm very excited about. This is a company that owns a very large primary care practice here in Chicago, a large brick-and-mortar practice. And what's great about Jasmine is they take their platform, which is a broad digital delivery platform, which we are now integrating Orexo's digital therapies within that platform. They demonstrate the effectiveness of all their offerings within their real-world brick-and-mortar practice. And then once they show that, they then offer that nationally in their business, which they're scaling to employers. And so we're just getting started with Jasmine. We're just starting to work with the Crexus and Vorvida in the Chicago practice. And we look forward to watching our partnership growth.And lastly, EHBS, Employer Benefit Solutions, that $21.3 billion brings a lot of companies and a lot of new offerings, and a lot of people decided they wanted to bring everything to employers. And it's become quite a crowded market on the employer side. And we have taken this partnership with the EHBS, who is a solutions broker. Their business is working with employers to bring novel health solutions to their employee base and value formats.And so as they're already there representing the best interest of the employer with a broad range of offerings, we're testing this broker model to see if that can help build our employer pipeline. And again, I'm incredibly encouraged by the rapid development of the pipeline that they've put together and gives me great confidence that we'll see quite soon, tangible opportunities coming from that. So we have partnerships we've been building, and we have new ones that we're putting forward, and you'll continue to see new partners from Orexo digital therapy.And so for the last slide and to summarize, what to expect from digital therapeutics in general and what to expect from Orexo as we go forward? There's no question that we're on the forefront of the next standard of care. Our focus will be on new partnerships, specifically putting ourselves in position to gain that trust from customers, to gain that confidence through experience, to demonstrate the impact and then to put the processes in place to enable broad access to large catchment areas, large patient bases.You'll see this through our work with Sober Grid as we expand that offering in that pipeline. And you will see additional partners coming in at a faster pace as we can build this momentum of referrals and experience. The other thing though that's critically important for us is access is important. However, what builds the business is demand. And so we will be equally focused on as we gain tangible access in the market using our platform and our content assets to drive sustainable demand, where we have access, and you'll start to see this with some first commercial patients coming through from some of those early partners that we're putting together.Nd finally, as Nikolaj mentioned, modia is just another incredibly exciting opportunity, tremendous area of unmet need. Medication-assisted treatment is the standard of care. However, there are real significant barriers and the supply and demand here, unfortunately, is completely in the wrong balance. And so modia offers a patient developed therapy through a sales force that knows opioid use disorder better than anyone in the market. And we're very excited about getting the education out there, getting the initial trial, and we expect revenues from modia to start in H1 of 2022. So interesting market dynamics, a lot of great opportunity, enthusiasm and a focus here on partnering and execution actually going forward.And with that, I'll turn it back to Nikolaj to cover the pipeline and headquarters.

[Nikolaj Sørensen, President & CEO]

Thank you very much, Dennis, and thank you for a good presentation on DTx. Just from -- I will go quite quickly through some of the next slides. So we'll catch up some time. But also so that I understood that the slides are coming a little slow on the webcast. So some of you are interested, the slides are now available on our home page also, you can download them and control the page yourself. So coming into our headquarter and pipeline, the main asset is OX124. As you know, we've developed that product to -- as a response to the fast increase in overdose of fentanyl and unfortunately, we've been a little ahead of the curve.So moving into page, and I here will jump a few pages in to Page #23. You will see the number of people overdosing in the U.S. have gone from that to much worse. We have seen an increase during the pandemic of more than 30%. The numbers -- most recent numbers here from that actual climbing numbers just last week, I think, for a period later, and it's just continued to increase in the U.S. and what's really driving the overdraws is the fentanyl prices. We are right now doing our a pivotal trial OX124 and we expect to announce those results a little later in Q4. We see basically, when we look at the market for OX124 today, it's dominated by a product called Narcan.What is interesting to see is that there are, today only 4 states where there's what's called mandatory co-prescription of these products. But with the overdose of opioids continue to escalate, there's a lot of push to make mandatory co-prescriptions of the first medication across the nation. And if that happens, this market is likely to grow quite significantly. We have seen in the states where mandatory co-prescription is mandated today, that the sales is nearly 4x the average on the U.S. market. We have reasons to talk about OX124 much more later, and in particular, when we start to get the clinical results and get closer to pricing in the U.S.With that, I will leave over to Joe to walk us through some of the financial results. So Joe, please start on Page 25.

[Joseph DeFeo, Executive VP & CFO]

Good afternoon. I'll go over the financial section for the company. If you go to Slide 26, on Slide 26, if you look at the right side, you can see that we continue to have a very strong base business in the U.S. pharma. Sales have stabilized as you'll see. Our profit is very strong, and we have an ever-increasing EBIT margin. So that provides a strong base, which will continue for our overall business. And it gives us the ability to invest in the business as we talked about, the DTx business and OX124 in our pipeline. And you could also see from that aspect, we have a very good cash position for the company, which gives us the ability to invest in these new business opportunities.Slide 27. This is our sales. And at the top, you could see Q3 of this year versus last year, there's a slight decrease in ZUBSOLV, which is less than 3%. So that decline has slowed dramatically. Most of this decline is due to those previous exclusive plans that were no longer exclusive in second half of 2019. When you look at the bottom, you could see Q3 versus Q2, we had a strong 8.2% growth. Most of this is due to selling days and also some positive FX. But you can see on the left side, the 3 bars that the decline in demand is very small. It's actually less than 2%. So once again, we've been able to stabilize the U.S. pharma business, grow the sales in Q3 and deliver. As you'll see on the next slide, Slide 28, a good profit, margin, and a good EBIT overall. If you look at focus on the bottom part, you can see that our EBIT margin continues to grow quarter-over-quarter and now is a high 57%. And also, when you look at the EBIT bar, you could see that now we're growing that EBIT again. So that EBIT has stayed up at a very strong level for many quarters. And so like I said, we have a very strong U.S. pharma base and profitable base.Next Slide 29. This is our overall P&L. We talked about the revenues. Cost of goods sold higher than last year. This is mostly due to production variances. It will vary quarter-to-quarter. And in Q3, our manufacturer was down for maintenance most of the quarter. So the production buying was lower. So the fixed cost over that lower production makes that cost higher mixed across good higher during the quarter. However, in Q4, that production will get ramped up. So we expect that to be offset in Q4 and have a lower COG. when we get to Q4. When you look at operating expenses, we do have higher legal expenses for the 2 cases that what Nikolaj will talk about in a little bit. And obviously, we're investing our OX124 and also into our DTx business.But what you could see when you look at the selling expenses, the DTx business launch modia and what we've done so far, there's been a lot of synergies for the U.S. pharma business. And also, we've continued to look at expenses in our U.S. pharma business and optimize those. So you can actually see selling expense is down for the quarter versus last year. So we continue to focus on our OpEx. We will invest where the opportunities are. So we will also look at our base spending to make sure it's efficient, and we're not raising money, so we can optimize where operating expense is and also minimize our EBIT loss that we have currently.If you go to Slide 30, this shows our cash flow. We have sufficient cash position, as you can see, liquid funds of almost SEK600 million. So it's still strong -- very strong cash position. This gives us the ability to continue and invest in DTx and OX124. We did have a negative contribution from operating activities, which is right around $80 million. But we continue to focus, as I said, on making sure we spend our money wisely and focus on the things that are going to drive future revenue.And with that, I will turn it back to Nikolaj for legal update. Thank you.

[Nikolaj Sørensen, President & CEO]

Thank you very much, Joe, and I will also underline that we are very diligent in the way we expand. And we would -- we are aiming internally having what we're calling recurring revenues should cover our recurring costs. Then we do investments, for example, pivotal trial. And right now, we have some extraordinary investments and legal expenses, which are outside that. But looking at an overall company basis, we're actually in a quite solid position with a balanced P&L, but we are doing some additional investments right now in clinical trials, both for modia and OX124, and we have some legal expenses, which are extraordinary. When it comes to the legal update on Page 31, on the patented trip with Sun Therapeutics, that one is following the normal route. And there's not that much to say, except that we continue to strengthen our patent and orange book.We actually started the process with Flight, and now I believe we have 9 patents listed in the orange book. And so I think we have a very strong case. It's very difficult for us to go into any details of the case because all of the information that's in there is under what's called protected order. So we can't really comment on that. I have said it before, but some therapeutics is one of the most active ANDA that means generic filers in the U.S. They're basically filing a generic nearly every product that is in the market. So they decide to go in ZUBSOLV. I don't think it's based on a lot of analysis of the market. It's simply that strategy is to go or not go in when they challenge these patents. And most of the cases are settled, but we'll see where this case will end up.But so far, this is definitely not keeping me awake at night. I feel that we have a very strong case that happen is due. And then when it comes to the subpoena. We haven't heard anything back from the -- giving us more insight into the background to the subpoena from the court. We have had our own legal teams, actually 2 different law firms who consist of former prosecutors who have gone through all of the material we have handed over to the U.S. government. And so far, there's no what you can say, red flags or concerns that have come up in that material. And I know that we have been extremely diligent in the way that we have promoted ZUBSOLV since the beginning.So I would be surprised if that comes. But also realize in the U.S., just looking at the number of trials for companies working in the opioid space. But then I think we were probably the last burnout, which have not been subject to subpoena in this case. But looking into the data we have submitted, we have no reason to concern. And at the same time, there is, of course, some kind of reason why they issued the subpoena, which we so far have no insights into. So that one has not moved either since basically July 2014 or 14th of July when we received this.Our financial outlook, we've just done some small adjustments on the financial outlook and the key market development, where we expected a double-digit growth when we started. We're now downgrading that to 5% to 6%, 8% growth also in Q4. And we can -- basically, as we are already nearly halfway through. I think that's a pretty good estimate, probably in the higher range of this. But that's where the market is headed. ZUBSOLV sales, we expect Q4 to be in line with Q3. As you saw, there were some onetime positive effects on ZUBSOLV for Q3, but we believe that we can compensate for that to other buildups of during the quarter.And when it comes to OpEx, we do expect that again the OpEx to be in line. And we expect to see a more focused investment in both ZUBSOLV and in DTx during the quarter, but we have the pivotal trial, for example, which is on Q4, which is now getting finalized, and that will come in at a cost on overall group OpEx. And finally, revise that a little upwards, before it was 50%, now we expect it to exceed 50%. And as you can see in the numbers in Joe's presentation, we are in good shape there.Finally, on Page #34, our strong value drivers in the future, as you hear and so on the EBIT numbers at least. And the issue was mentioned as the overdose and substance abuse, is something that is unfortunate that has accelerated during the COVID-19 crisis. I was reminded that, that just this morning when I drove to work, that was actually on the radio where people were talking about. How many more people were suffering now for depression. So it's really something that is a major issue. We have an established infrastructure in the U.S., which will help us a lot, in particular when it comes to modia.As Dennis said, I don't think there's any field force or sales organizations out there who have a better relationship broadly within the opioid dependent spaces we have. We have a pharma pipeline, which both with OX124, and I would say, equally exciting the technology and inventions behind OX124, the way that we can apply that to new spaces with significant unmet need is going to be very exciting to follow. And we do that from a position of strong cash position where we feel that we have the cash flow needed to invest into the establishment of DTx on to profitability and also into advancing our pipeline.There will be periods where we will invest more in clinical sides, but on the basis, we have right now an economy which is quite balanced in the sense that we have recurring income and costs are in balance. And then we have a completely new frontier. It's not a sprint. This is American for us to develop the digital therapy market. But just looking at how it's advancing in particular, now we can see when COVID-19 restrictions are equal, because our access to customers is much more is improving significantly. And we simply see that every meeting we have face-to-face has some much better traction than what we could accomplish over teams meeting. So I think that's a very important trigger for us to get more momentum in our digital therapy business.With that, I will open up for some questions and answers, and thank you for your patience and attention to our presentation. Thank you.

[Operator]

[Operator Instructions] Our first question comes from Gergana Almquist with Redeye.

[Gergana Almquist, Equity Analyst]

I have many questions for Dennis. And the first one is on the taxes. Could you elaborate a little bit more about the marketing strategy for this therapy?

[Dennis Urbaniak, Executive Vice President of Digital Therapeutics]

Absolutely. So for Deprexis, we lead from a messaging point of view underlying the significant evidence base. And what's important is in that range of clinical trials that I mentioned, there are our number of highly applicable guided therapy has demonstrated benefit. And so initially, we had a focus to educate consumers directly about Deprexis, about depression and new options. And as we move to this path with partnering more closely with systems, we'll be more closely working with providers to position Deprexis as a complement. In depression, there's -- it's a very crowded market in terms of the number and range of available therapies, including both digital health and digital therapeutics. And in particular, we've seen some of the providers, particularly counselors, are a bit more skeptical because they see some of these products as possibly competitive. And so we are taking the time to work with the providers to emphasize that we're here to help complement their practice and then outline with them where it can be best used, where it best fits in their toolbox, if you will, in terms of delivering care and addressing some of the barriers that they have. So that will be the focus with Deprexis that will move to an even more provider and system focus as we go forward. And similarly, doing those demonstrations in market, as I talked about.If I can just complement, Dennis here, I would also just highlight that, again, it is -- if you see as a consumer, there are endless number of apps on App store and similar, which are giving quite a similar promise of digital therapy with cognitive behavioral therapy, where very few of them will not have any clinical evidence of effect, but they do come in, I would say, a lot of them are like a PowerPoint presentation with a voice over. But they -- from the surface, they come out as much cheaper than Deprexis. And of course, based on all of the investments that made in Deprexis and our focus on payers, and so that's both large health care providers and insurance companies with price Deprexis in a B2B pricing more than a B2C pricing. So the list price of deprexis is $399.We right now have some campaigns that could bring down the price. But if you look at App store, several of these other tools, maybe cost to $10 per month. So it's -- we are priced based on where we see the value and based on all the clinical evidence behind Deprexis, but some of the competitors who are more focused on direct to consumers have a lower price. I would say that we do know that FDA is quite concerned about some of these unvalidated claims that a lot of the PPT providers give right now. So I guess this market will get more regulated in the future, which would benefit us because we have probably the strongest evidence space of any integration.

[Gergana Almquist, Equity Analyst]

And then next question is on modia. You mentioned that there will be synergies with ZUBSOLV, which will open new market niche, which niches are those.

[Dennis Urbaniak, Executive Vice President of Digital Therapeutics]

So with modia, the great thing about modia is, it's been developed the standard of care as where MAT is being delivered. And so for medication, it's just a treatment, that means all buprenorphine, buprenorphine/naloxone products, of course, ZUBSOLV, with all the others that are available. It's also can be used in MAT, for example, in methadone clinics or even with Levitra. And so some of those other approaches where we may not be there directly for ZUBSOLV at the moment, because those are not open channels for us. Modia offers an opportunity to expand, but still maintain our focus on medication-assisted treatment and how modia can uniquely help support the assisted treatment, the counseling aspect.

[Gergana Almquist, Equity Analyst]

Thank you and my last question is under your distribution of subpoena. Do you have any updates on that?

[Dennis Urbaniak, Executive Vice President of Digital Therapeutics]

Yes. So as we have announced before, we have a packaging site in Romania that have been faced with some regulatory challenges because they need to have a license to handle book in often. And due to COVID-19, the audit that was planned already in March 2020, and first happened now during the late spring of 2021. And then it took time before the documents are there. But right now, everything seems to be moving quite well according to plan. So we are now expecting to see the launch during Q1 of next year. But it has taken time.But I will also highlight that the packaging of ZUBSOLV for Europe is more complex, because we need to pack into relatively small volumes with different languages. Whereas in the U.S., you have one package, one line that could go to the entire market. In Europe, you basically need to have much smaller batches and be able to manage the different languages that is for each country. And that limits the number of possible suppliers who could do it at a reasonable price. And you would probably also recall that when we got the product back from Mundipharma, we saw that their cost of goods were simply too high to be competitive in the European market, and that was driven a lot by packaging. So the Romanian packaging side is unfortunately where we are right now. And I think they are a good partner, but have been facing some regulatory challenges that were unexpected.

[Operator]

[Operator Instructions] Our next question comes from Samir Devani with Rx Securities.

[Samir Devani, Research Analyst]

Thanks for taking my questions. I've got 3. I guess, just sticking on the DTx thing for a moment. So our discussion with payers seem to highlight that 510(k) is sort of a critical requirement. And I'm just wondering, it's obviously encouraging that you're talking about modia applies to 510(k). I'm just wondering in your discussions on modia and Deprexis, has that not pushed you to think about getting 510(k) for those products? That's the first question. Perhaps you want to deal with that, and then I'll come back with DT for Joseph. Thanks.

[Dennis Urbaniak, Executive Vice President of Digital Therapeutics]

Thanks Samir. So I guess for the PDT route, 510(k) is at this point essentially mandatory to be classified as a prescription digital therapeutic. With Vorvida and Deprexis, as these are seen as more digitized counseling, they better align to the medical benefit side of the house as a medical service. And so more of our focus has been with identifying the proper medical billing pathways that exist for counsel and confirming that they can be covered under those pathways. And we've seen -- that's not been pushing that direction, that's in deep discussions with different payers, the strategy that they're taking as they try to divide prescription versus medical services. So right now, we think that both modia and Deprexis have a proper regulatory position that can be supported with a different reimbursement approach than the PDT lab.

[Samir Devani, Research Analyst]

Okay. And then just a couple of questions for Joseph. I know that there's quite a significant provision taken in the quarter. Could you just talk a little bit about that? And then just on the net financial items, there was a positive gain of $13.5 million in the quarter. You had a $2.8 million bond charge. But what was the rest that got you to a negative $0.1 million net financials? Thanks very much.

[Joseph DeFeo, Executive VP & CFO]

Well, on that question, the exchange rate, we have most of our cash in U.S. dollars. So the stronger dollar during the quarter resulted in the gain. And I'm sorry, your first question is on the provision.

[Samir Devani, Research Analyst]

Just before you go continue, so I understand you had a $13.5 million FX gain in the P&L, but you put net financials at minus $0.1 million. So what was the negative component of that that offset the FX gain?

[Joseph DeFeo, Executive VP & CFO]

The negative component relates to, obviously, interest expense on our bond, right, which is $2.8 million, right. And also because we have a loss, there's some impact right there as well.

[Samir Devani, Research Analyst]

Okay. Maybe we can handle that off-line, Joseph, but that doesn't seem to add up to me.

[Joseph DeFeo, Executive VP & CFO]

Okay. Let me...

[Samir Devani, Research Analyst]

You can pick that up offline. Perhaps you could just talk a little bit about the provisions.

[Joseph DeFeo, Executive VP & CFO]

I'm sorry, when you say provisions, what provisions are you thinking?

[Samir Devani, Research Analyst]

I think there's a $32 million charge on the cash flow for a change in provisions in the quarter?

[Joseph DeFeo, Executive VP & CFO]

On the cash flow.

[Samir Devani, Research Analyst]

So yes, the change in provision, $34.4 million negative?

[Joseph DeFeo, Executive VP & CFO]

So, okay. So the change in provisions. So we have investments, which we mentioned on the slide we've talked about. But we also have movement in our working capital as well. And then we also have investments in DTx that we're amortizing, starting to amortize some of those as well.

[Operator]

While we have no further questions, I hand back to our speakers.

[Nikolaj Sørensen, President & CEO]

Okay. Thank you so much. I think we've certainly -- just have received some questions over the Internet. So I will try to address some of them. We've talked about the DTx and our goal out, how it will proceed for the next 1 to 3 years. And I think we're making very good progress with some of the partnerships, but then as also the question here is around reimbursement and how would that proceed? I think when we look at some of the work that Trinity Health have actually taken the lead on is to work with this medical benefit route and to get that validated with their payers, which of course, taking some time, but I'm quite pleased to see that we are there right now. So now we just need to get the final administrative processes moving. And I think that will be served at a very good benchmark and learning for other payers who like to follow the same.Then there is a question of where do we have the reported revenues from? And admittedly, the reported revenues are all from direct-to-consumer sales. There were -- so it is basically patients who have been on our home page and bought it using their credit card either among the installment or on a onetime payment. We haven't seen any institutional sales right now, and that's basically because we have to establish these reimbursement pathways and find ways to set it up also within these larger organizations.Then there's a question around the plan for modia in Europe. So now when we are finalizing in the U.S., we have started a process in Europe, where we are actually planning to talk or we already set up meetings with different European organizations who could work with us in Europe to roll it out, and we are starting to assess what are the right regulatory pathways, how the reimbursement landscape looking, which is right now very, very fragmented in Europe. So there's a question about ZUBSOLV EU. I think I have addressed those already. And then there were some questions around legal and where we are with both the subpoena and the sun litigation. I also believe I have addressed those questions in the presentation.So with that, I will thank all of you for your time, and asking and hopefully that all of you will have a great day. And as I hope you get the impression that we feel that we are on a very strong pathway with those ZUBSOLV where we announced starting to that we have -- we started to very stabilized sales, both from the one the drivers negative the last few years, UnitedHealth Group and Humana and we actually this quarter had a quite good development on the safe ZUBSOLV. When it comes to DTx, there's a lot of stuff moving. It's something that some of it will take time. But I think we are really on the right pathway. We're also in the right business, and this is something that I'm a strong believer, together with many others, that this is -- this will become a very important element of health care in the future. And finally, on our pipeline, I think there's a lot of exciting stuff coming both with OX124, but also on other technical opportunities or product opportunities coming out of that platform in the future. So I hope you will stay tuned and focused and follow us also in the next quarter, as I think there's a lot of exciting opportunities. Thank you.