FX.co ★ Orion Stock Up On FY24 Outlook Upgrade After Opevesostat Deal With Merck

Orion shares climbed approximately 8% in Finland as the Finnish pharmaceutical company upgraded its fiscal 2024 outlook following a deal with U.S. pharmaceutical giant Merck & Co., Inc. (MRK) regarding opevesostat (MK-5684/ODM-208).

The companies have mutually agreed to exercise an option to convert their ongoing co-development and co-commercialization agreement, granting Merck global exclusive rights to Opevesostat, an investigational CYP11A1 inhibitor designed for the treatment of metastatic castration-resistant prostate cancer.

Orion and Merck announced that they have provided notice of the mutual exercise of this option, enabling other candidates targeting CYP11A1 to be included in an exclusive global license for Merck.

Following this decision, Orion stated it will release the 60 million euros reserved on its balance sheet to cover its share of accrued R&D costs related to the co-development. This release will positively impact both third-quarter net sales and operating profit.

Orion noted that all its business segments have shown positive development during the first half of the year.

For the full year, Orion now forecasts net sales of 1.44 billion euros to 1.48 billion euros, up from the previous estimate of 1.34 billion euros to 1.41 billion euros.

Operating profit is now projected to range between 350 million euros and 380 million euros, compared to the earlier forecast of 280 million euros to 310 million euros.

Under the original co-development and co-commercialization agreement, each party had an option to convert the co-exclusive license into an exclusive global license for Merck.

With the exercise of this option, Merck gains global exclusive rights to develop and commercialize opevesostat and other CYP11A1-targeting candidates covered by the agreement.

According to the deal terms, Orion is now entitled to receive development milestone payments up to $30 million, regulatory milestone payments up to $625 million, and sales-based milestone payments up to $975 million. Additionally, Orion will receive annually tiered royalty payments ranging from a low double-digit rate up to a low twenties rate on net sales of any commercialized product.

Orion mentioned that to achieve the total sales milestones and the higher end of the royalty rate, annual sales would need to exceed several billion US dollars. Moreover, due to the exercise of the option, Merck will assume full responsibility for all past and future development and commercialization expenses associated with the agreement-covered candidates.

Orion will continue to be responsible for the manufacture of clinical and commercial supply for Merck. No payment is required for exercising the option.

The exclusive global license is subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions, with effectiveness anticipated in the third quarter of 2024.

In Finland, Orion shares were trading at 43.05 euros, up 8%.

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