info@orexo.com

Orexo AB P.O. Box 303 SE-751 05 Uppsala Sweden

info@orexo.com

T: +46 (0)18-780 88 00 F: +46 (0)18-780 88 88 www.orexo.se

Or E x O Ann UA l rEPO r T 2009

Orexo Annual report 2009

Edluar ^™

launched in the US

Our partner Meda launched Edluar™ on the US market in August 2009. Edluar™

is a fast-acting, sublingual formulation of zolpidem that provides an effective and user-friendly treatment of sleeping disorders

“ We are proud that Abstral™ is now sold throughout large areas of Europe and offers rapid and effective pain relief to cancer patients suffering from breakthrough pain”

– Torbjörn Bjerke, Orexo’s President and CEO

License agreement with Novartis

Orexo signed a global license agreement with novartis for the Ox17 program.

Registration application for Abstral™ in the US

ProStrakan, a business partner, submitted a registration application for Abstral™ to the FDA in the US.

Positive data for Abstral™ in Japan

Orexo’s partner in Japan, Kyowa Hakko Kirin, presented positive results in Japan for KW-2246 (Abstral™).

Abstral ^™ launched in Europe

p. 5 p. 5

p. 5 p. 5 p. 5

2009 in brief 1

CEO’s message 2

BOArd Of dirECTOrs’ rEPOrT

Key events during the year 5

Significant events after year-end 6

Business model 7

Project portfolio 8

Pipeline 10

Project portfolio 11

Partners and licensing agreements 14

Technologies 16

Employees and sustainable development 18

The Orexo share 19

Financial trend during 2009 20

fiNANCiAL rEPOrTs 2009

Consolidated statements of operations 24 Consolidated statement of comprehensive income 24

Consolidated balance sheets 25

Changes in consolidated shareholders’ equity 26 Consolidated cash-flow statement 27 Parent Company statement of operations 28

Parent company balance sheet 29

Changes in Parent Company’s shareholders’ equity 30 Parent company cash-flow statement 31

notes 32

Audit report 58

Definitions of key figures 59

Corporate Governance report 60

Board of Directors’ report on internal control 62

Glossary 63

Board of Directors 64

Management 65

Financial information in brief 66

Contents

Orexo AB P.O. Box 303 SE-751 05 Uppsala Sweden

info@orexo.com

T: +46 (0)18-780 88 00 F: +46 (0)18-780 88 88 www.orexo.se

Or E x O Ann UA l rEPO r T 2009

Orexo Annual report 2009

Edluar ^™

launched in the US

Our partner Meda launched Edluar™ on the US market in August 2009. Edluar™

is a fast-acting, sublingual formulation of zolpidem that provides an effective and user-friendly treatment of sleeping disorders

“ We are proud that Abstral™ is now sold throughout large areas of Europe and offers rapid and effective pain relief to cancer patients suffering from breakthrough pain”

– Torbjörn Bjerke, Orexo’s President and CEO

License agreement with Novartis

Orexo signed a global license agreement with novartis for the Ox17 program.

Registration application for Abstral™ in the US

ProStrakan, a business partner, submitted a registration application for Abstral™ to the FDA in the US.

Positive data for Abstral™ in Japan

Orexo’s partner in Japan, Kyowa Hakko Kirin, presented positive results in Japan for KW-2246 (Abstral™).

Abstral ^™ launched in Europe

p. 5 p. 5

p. 5 p. 5 p. 5

2009 in brief 1

CEO’s message 2

BOArd Of dirECTOrs’ rEPOrT

Key events during the year 5

Significant events after year-end 6

Business model 7

Project portfolio 8

Pipeline 10

Project portfolio 11

Partners and licensing agreements 14

Technologies 16

Employees and sustainable development 18

The Orexo share 19

Financial trend during 2009 20

fiNANCiAL rEPOrTs 2009

Consolidated statements of operations 24 Consolidated statement of comprehensive income 24

Consolidated balance sheets 25

Changes in consolidated shareholders’ equity 26 Consolidated cash-flow statement 27 Parent Company statement of operations 28

Parent company balance sheet 29

Changes in Parent Company’s shareholders’ equity 30 Parent company cash-flow statement 31

notes 32

Audit report 58

Definitions of key figures 59

Corporate Governance report 60

Board of Directors’ report on internal control 62

Glossary 63

Board of Directors 64

Management 65

Financial information in brief 66

Contents

Orexo’s products are sold in major regions worldwide

Solid partners

Orexo has contracts with a number of busi- ness partners for r&d and the marketing and sale of drugs. These are Novartis (global), Boehringer ingelheim (global), Meda (global), Prostrakan (EU, Us), Gedeon richter (Eastern Europe), Kyowa Hakko Kirtin (Japan), Nova- Med (China) and Neopharm (israel).

Products on the market

Orexo has four products on the market. Orexo’s business partner Prostrakan markets Abstral™

for the treatment of breakthrough pain in cancer patients – throughout major regions in Europe.

Meda, the Us business partner, sells Edluar™, which is designed to treat insomnia. Via the subsidiary, Kibion, Orexo markets two products for the diagnosis of the stomach ulcer bacterium Helicobacter Pylori. Orexo also has a joint venture company, Prostrakan AB, which sells pharma- ceuticals on the Nordic market.

Competitive product portfolio Orexo has pharmaceutical projects in various development phases ranging from preclinical development to projects in the clinical phase.

Most of these projects are aimed at developing new, superior drugs by combining well-known substances with innovative drug delivery tech- nologies. This results in new, patentable drugs than can be developed over a shorter period and with low risk.

Product Region

Abstral ^™ Europe

Edluar ^™ US

Diabact ^® UBT and Heliprobe ^® System

Africa, Asia, Australia, Central America, Europe, Middle East and South America

Orexo – a pharmaceutical company

Orexo focuses on the development of pharmaceuticals to treat pain as well as respiratory and inflammatory diseases. The company has four products on the market, in addition to a wide-ranging project portfolio in the late development stage. Sales are conducted mainly through international business contracts with major pharmaceutical companies. Orexo – which is headquartered in Uppsala, Sweden – has 108 employees.

Product portfolio

Abstral ^™

Partners:

ProStrakan, Kyowa Hakko Kirin, novaMed, neopharm, Gedeon richter

Edluar ^™

Partner:

Meda

Diabact ^® UBT

Distributors and proprietary sales

Heliprobe ^® System

Distributors and proprietary sales

MEDA

nOVArTIS

BOEHrInGEr InGElHEIM

OX914 COPD/Asthma

OX219 ¹⁾ Substance abuse

OX17 ¹⁾ GERD

OX-NLA ¹⁾ Rhinitis

COPD/Asthma

OX-AAF

Inflammatory pain

OX-MPI

OTC preparation

OX-PKX ¹⁾ Project portfolio

Preclinical/Formulations  Phase I  Phase II  Phase III Partner

1) drug-delivery projects – shorter lead time to final product compared with traditional pharmaceutical projects.

2010 Annual General Meeting

The Annual General Meeting of shareholders in Orexo AB will be held on Wednesday, April 21, 2010 at 3 p.m.

at IVAs Konferenscenter, Grev Turegatan 16, in Stockholm.

Notification, etc.

Shareholders wishing to attend the meeting must be registered in the share register kept by Euroclear Sweden AB (formerly VPC AB) as of Thursday, April 15, 2010, and also notify Orexo at: Orexo AB, Box 303, SE-751 05 Uppsala, or by telephone +46 (0)18-780 88 00, or by fax +46 (0)18-780 88 88 or by e-mail to beata.

augenblick@orexo.com no later than 4 p.m. on Friday, April 16, 2010. notification must include the name, address, telephone number (daytime), personal identity or corporate registration number and information on any representatives/assistants.

To be entitled to participate in the Annual General Meeting, shareholders whose shares are registered with a bank or other trustee must temporarily re-register their shares in their own name in the share registered kept by Euroclear Sweden AB. Such re-registration must be completed no later than Thursday, April 15, 2010, and, thus, the shareholder must inform the trustee in this respect in good time ahead of this date.

Complete information regarding the Annual General Meeting is available at the company’s website at:

www.orexo.com

Contact Investor Relations

Claes Wenthzel, CFO, +46 (0)18-780 88 00, claes.wenthzel@orexo.com Financial calendar, 2010

2010 Annual General Meeting, April 21, 2010

Interim report, January–March 2010 May 5, 2010

Interim report, January–June 2010 August 20, 2010

Interim report, January–September 2010 november 10, 2010

Orexo’s products are sold in major regions worldwide

Solid partners

Orexo has contracts with a number of busi- ness partners for r&d and the marketing and sale of drugs. These are Novartis (global), Boehringer ingelheim (global), Meda (global), Prostrakan (EU, Us), Gedeon richter (Eastern Europe), Kyowa Hakko Kirtin (Japan), Nova- Med (China) and Neopharm (israel).

Products on the market

Orexo has four products on the market. Orexo’s business partner Prostrakan markets Abstral™

for the treatment of breakthrough pain in cancer patients – throughout major regions in Europe.

Meda, the Us business partner, sells Edluar™, which is designed to treat insomnia. Via the subsidiary, Kibion, Orexo markets two products for the diagnosis of the stomach ulcer bacterium Helicobacter Pylori. Orexo also has a joint venture company, Prostrakan AB, which sells pharma- ceuticals on the Nordic market.

Competitive product portfolio Orexo has pharmaceutical projects in various development phases ranging from preclinical development to projects in the clinical phase.

Most of these projects are aimed at developing new, superior drugs by combining well-known substances with innovative drug delivery tech- nologies. This results in new, patentable drugs than can be developed over a shorter period and with low risk.

Product Region

Abstral ^™ Europe

Edluar ^™ US

Diabact ^® UBT and Heliprobe ^® System

Africa, Asia, Australia, Central America, Europe, Middle East and South America

Orexo – a pharmaceutical company

Orexo focuses on the development of pharmaceuticals to treat pain as well as respiratory and inflammatory diseases. The company has four products on the market, in addition to a wide-ranging project portfolio in the late development stage. Sales are conducted mainly through international business contracts with major pharmaceutical companies. Orexo – which is headquartered in Uppsala, Sweden – has 108 employees.

Product portfolio

Abstral ^™

Partners:

ProStrakan, Kyowa Hakko Kirin, novaMed, neopharm, Gedeon richter

Edluar ^™

Partner:

Meda

Diabact ^® UBT

Distributors and proprietary sales

Heliprobe ^® System

Distributors and proprietary sales

MEDA

nOVArTIS

BOEHrInGEr InGElHEIM

OX914 COPD/Asthma

OX219 ¹⁾ Substance abuse

OX17 ¹⁾ GERD

OX-NLA ¹⁾ Rhinitis

COPD/Asthma

OX-AAF

Inflammatory pain

OX-MPI

OTC preparation

OX-PKX ¹⁾ Project portfolio

Preclinical/Formulations  Phase I  Phase II  Phase III Partner

1) drug-delivery projects – shorter lead time to final product compared with traditional pharmaceutical projects.

2010 Annual General Meeting

The Annual General Meeting of shareholders in Orexo AB will be held on Wednesday, April 21, 2010 at 3 p.m.

at IVAs Konferenscenter, Grev Turegatan 16, in Stockholm.

Notification, etc.

Shareholders wishing to attend the meeting must be registered in the share register kept by Euroclear Sweden AB (formerly VPC AB) as of Thursday, April 15, 2010, and also notify Orexo at: Orexo AB, Box 303, SE-751 05 Uppsala, or by telephone +46 (0)18-780 88 00, or by fax +46 (0)18-780 88 88 or by e-mail to beata.

augenblick@orexo.com no later than 4 p.m. on Friday, April 16, 2010. notification must include the name, address, telephone number (daytime), personal identity or corporate registration number and information on any representatives/assistants.

To be entitled to participate in the Annual General Meeting, shareholders whose shares are registered with a bank or other trustee must temporarily re-register their shares in their own name in the share registered kept by Euroclear Sweden AB. Such re-registration must be completed no later than Thursday, April 15, 2010, and, thus, the shareholder must inform the trustee in this respect in good time ahead of this date.

Complete information regarding the Annual General Meeting is available at the company’s website at:

www.orexo.com

Contact Investor Relations

Claes Wenthzel, CFO, +46 (0)18-780 88 00, claes.wenthzel@orexo.com Financial calendar, 2010

2010 Annual General Meeting, April 21, 2010

Interim report, January–March 2010 May 5, 2010

Interim report, January–June 2010 August 20, 2010

Interim report, January–September 2010 november 10, 2010

orexo annual report 2009 2008 i korthet    1

net revenues amounted to Sek 236.1m (233.3).

the loss after tax was Sek 98.1m (loss: 103.1).

earnings per share amounted to a loss of Sek 4.32 (loss: 4.77).

Cash and cash equivalents at year-end totalled Sek 87.4m (188.2).

orexo concluded license and distribution agreement for abstral

  ^™ in China and israel.

orexo signed an exclusive development agreement for ox17.

orexo acquired the British drug delivery company, pharmakodex.

  abstral

  ^™ was approved for marketing in France and Spain.

FDa approved orexo’s product edluar

  ^™ in the uS. approval meant that orexo

received a payment of uSD 5m from its partner Meda.

orexo presented its phase ii results for ox914.

orexo’s annual General Meeting was held on april 23.

orexo announced that abstral

  ^™ was ready for a launch in France.

orexo’s business partner proStrakan submitted a registration application for abstral

  ^™

to the FDa (Food and Drug administration) in the uS.

orexo announced positive phase iii results for abstral

  ^™ in Japan.

orexo announced that its business partner Meda had launched edluar

  ^™ in the uS.

orexo signed a global licensing agreement with novartis for ox17.

orexo initiated an efficiency-enhancement program, which included a reduction  

in the workforce.

orexo announced that the FDa had initiated the final assessment of the registration  

application for abstral ^™ in uS.

orexo strengthened its financial and strategic position.

a registration application for kW-2246 (abstral

  ^™ ) was submitted in Japan.

the registration application for abstral

  ^™ was submitted in Canada.

2009 in brief

2009 2008 2007 2006 2005

net revenues, Sekm 236.1 233.3 76.8 132.0 62.4

Growth, % 1.2 204.0 -41.8 111.6 -28.1

loss for the year, Sekm -98.1 -103.1 -172.6 -33.0 -43.2

earnings per share before dilution, Sek -4.3 -4.8 -11.4 -2.5 -4.3

Cash and cash equivalents, inc.

short-term investments, Sekm 87.4 188.2 291.6 332.5 350.1

Shareholders’ equity, Sekm 548.7 569.8 671.3 324.3 338.9

average number of employees 124 123 80 50 37

of whom, engaged in r&D 93 92 54 31 25

revenues 2005–2009

Sekm 250

2005 2006 2007 2008 2009 200

150 100 50

key events during 2009

Significant events after year-end

key figures Q1

Q2

Q3

Q4

  Ceo'S MeSSaGe orexo annual report 2009

2

orexo annual report 2009 Ceo'S MeSSaGe    3

the targeted programs designed to develop orexo into a leading specialty pharma

company, with sustainable profitability, continue strongly

¹ ⁾ Based on data from our partner ProStrakan, as of January 2010.

Products on the market = our pride

Abstral ^™ , which has been approved in 22 European countries, is now mar­

keted in Sweden, the UK, France, Germany, Spain and Greece by our partner ProStrakan Group Plc. In the Nordic region, Orexo markets Abstral in cooperation with ProStrakan AB. Launches on other European markets are planned.

The launch of Abstral™ has proved to be successful and the product is now helping thousands of cancer patients in Europe. The UK market is a good example of the excellent characteristics of Abstral™, which now accounts for 60 percent of the market for the treatment of breakthrough pain among cancer patients1). Subject to approval by the FDA (Food and Drug Administration), ProStrakan will launch the product in the US market during the second half of 2010. In addition, we expect a launch on the Japanese market during 2011.

Our first product launched in the US was Edluar ^™ for the treatment of insomnia. Edluar ^™ was launched in August 2009 by our partner Meda and we are optimistic about the product’s sales progress during 2010. The deve­

lopment of our diagnostic products Diabact ^® UBT and Heliprobe ^® System was highly favorable during the year. Sales increased 42 percent and profitability at Kibion progressed positively. The strong growth during the year is attribut­

able to the favorable trend in established and new markets and is also the result of the continual development of the company since it was established in 2005.

Rising revenues from Abstral ^™ and Edluar ^™ sales provide a stable plat­

form for a higher future top line and our established vision of being a profit­

able specialty pharma company.

Products in the pipeline = our future

During the fourth quarter, the FDA accepted a registration application for Abstral ^™ , and, provided the approval process advances as scheduled, the product can be launched in the US during the second half of 2010. In early 2010, a registration application was submitted for Abstral ^™ for final evalua­

tion in each of Japan and Canada.

In August, our pipeline was again strengthened when an exclusive license agreement was signed with a new, strong partner, Novartis, covering the OX17 program for the treatment of gastro esophageal reflux disease (GERD).

This development cooperation venture with one of the world’s leading pharma­

ceutical companies was a key milestone for us and we look positively to mak­

ing the new product a success on the market.

In early 2009, the British drug delivery company PharmaKodex was acquired, strengthening our business model, which is aimed at developing unique drugs based on well­established substances. By applying optimal technology, the delivery of these substances can be made faster, safer and/or more effective. The attractive technologies and pharmaceutical projects that accompanied the acquisition create value for Orexo.

Our explicit goal for 2010 is to include more new drug projects in the pipeline and thus develop Orexo and create value for shareholders. Over the course of the coming year, we will continually inform the market of progress in this respect.

Profitable marketing and sales of proprietary products = our goal Orexo’s current business model – based on cooperation agreements with a number of strategic partners – is to retain a large share of the earning potential offered by the products we develop. Through these agreements, Orexo has been enabled to develop more projects within a shorter period and thus, more rapidly develop a portfolio that generates stable revenue.

This has shown to be a successful model and, as proof of this, the company currently has four products on the market in treatment areas that were not previously covered.

In the future we will focus more on developing proprietary products and marketing them under our own auspices.

Our employees + partners = our core

Our competent workforce represents the core of our success. Their efforts over the year have been extraordinary, and despite the current challenging economic situation they have supported our strategy all the way. I would like to express my sincerest thanks to all of them. I also value the constructive cooperation with our many partners, which will contribute to the future posi­

tive development of Orexo.

Strengthened strategic position = our security

A unique opportunity to strengthen Orexo’s financial and strategic posi­

tion was announced in March 2010. At this stage, Novo A/S (through Novo Growth Equity) acquired a shareholding of 10.7 percent through a combined deal, and signed a convertible loan of SEK 111m, at a premium of 25 percent of the current share price.

Novo Growth Equity, which identified Orexo as a company with attrac­

tive growth potential, will be a new committed, long­term owner with a total shareholding of 19 percent (after full conversion of the convertible loan).

The substantial experience in the life science sector of this new investor will contribute to Orexo’s continuing development towards being a leading and profitable company.

We are looking positively at 2010 and expect continuing strong growth for Abstral ^™ in Europe, in addition to a positive announcement by the FDA regarding the approval of Abstral ^™ in the US, and a successful launch of the product in Japan.

We are focusing on becoming a strong, specialty pharma company cen­

tered on the commercialization of a number of proprietary products and greater top line representation. Rising royalty revenues and lower costs, combined with a strong owner base, create a favorable platform for continu­

ing growth as Orexo becomes a pharmaceutical company with sustainable profitability.

Yours sincerely,

Torbjörn Bjerke President and CEO

We have proof that our strategy works! orexo currently has four products on the market and these are sold in some 55 countries, which combine to contribute to a growing top line.

in recent years, we have obtained two major product approvals in key markets.

  BoarD oF DireCtorS’ report orexo annual report 2009 4

Orexo’s operations

Orexo is a pharmaceutical company with a focus on the therapeutic areas of pain and inflammation.

Orexo has four products on the market. Abstral ^™ , for the treatment of breakthrough pain in cancer patients, is sold in major European regions by the business partner ProStrakan Group plc. Edluar ^™ , for the treatment of insomnia, is sold by the busi­

ness partner, Meda AB. Via its subsidiary, Kibion, Orexo also markets two diagnostic products for the gastric ulcer bacterium Helicobacter Pylori, namely Diabact ^® UBT and Heliprobe ^® System.

Orexo has a number of projects in various development stages – ranging from preclinical development to the clinical phase. The company focuses on developing new, superior pharmaceu­

ticals by combining well­known substances with innovative drug delivery technologies. This results in new patentable medicines that can be devel­

oped with lower risk and in shorter time. Orexo

is also pursuing a number of projects based on the company’s expertise in the arachidonic acid cascade. These projects are aimed at develop­

ing new medicines for the treatment of common conditions, such as inflammatory pain, as well as respiratory diseases such as asthma and chronic obstructive pulmonary disease (COPD).

To commercialize drugs and to reduce the risk in the development portfolio, Orexo has license agreements and strategic cooperation with global and regional partners. These are Novartis (global), Boehringer Ingelheim (global), Meda (global), ProStrakan (EU, USA), Gedeon Richter (Eastern Europe), Kyowa Kirin (Japan), NovaMed (China) and Neopharm (Israel). Orexo also has a joint­

venture company with ProStrakan, which sells pharmaceuticals on the Nordic market.

Orexo’s revenues derive from license income, royalties, collaboration agreements and sales of diagnostic products.

Organization

Orexo has broad­based competence throughout the development chain from early preclinical research and development, formulation and clini­

cal development to the registration and production of drugs. Orexo has a GMP facility for the manu­

facture of drugs for clinical trials. For commercial production, manufacture is transferred to contract manufacturers or partners. Orexo also collabo­

rates with consultants and contract research organizations for certain aspects, such as clinical trials. Orexo has a largely project­led organiza­

tion, for which skills are combined on the basis of the specific demands in individual projects. The continual development of the organization is a prerequisite for conducting more projects in paral­

lel and in different phases of development. Orexo has a total of 108 employees in Uppsala, Sweden, and in Bath in the UK.

Board of Directors’ report

the Board of Directors and the president of orexo aB, corporate registration number 556500-0600, herewith submit the annual report and consolidated accounts for the fiscal year January 1 – December 31, 2009. orexo’s registered office is in uppsala, Sweden.

Orexo’s competence covers the entire development chain from early preclinical research and development, formulation and clinical development to the registration of drugs and

trial­scale production.

orexo annual report 2009 BoarD oF DireCtorS’ report    5

key events during the year

2009 was an eventful year for orexo and a number of key steps were taken in the develop- ment of the company. the presentation below outlines the most significant of these.

Abstral ^™

Submission of registration application in the US Orexo’s partner for Abstral ^™ , ProStrakan, submit­

ted a new drug application (NDA) for Abstral ^™ to the FDA in the US. The submission meant that Orexo received a milestone payment of USD 2m from ProStrakan.

Registration application in the US accepted for final assessment

Orexo’s partner, ProStrakan, announced that the registration application for Abstral ^™ had been accepted for final assessment in the US by the FDA. In the event of final approval, ProStrakan plans to launch Abstral ^™ in the US market during the second half of 2010.

EU approval in France and Spain

Abstral ^™ was approved for marketing in France and Spain, and as a result Orexo received a pay­

ment from ProStrakan of EUR 1.3m.

Green light for launch in France

Price negotiations with the French authorities as regards Abstral ^™ were finalized earlier than expected and ProStrakan launched Abstral ^™ on the French market during July. France is a key market for Abstral ^™ as it is one of the largest established European markets for fentanyl.

License and distribution agreement in China Orexo and the Chinese pharmaceutical company NovaMed Pharmaceuticals signed a license and distribution agreement that grants NovaMed exclusive rights in China to seek approval for Abstral ^™ .

The terms and conditions of the agreement entail an upfront payment and remuneration for certain sales levels and regulatory milestones.

In total, the initial milestone payments are USD 4.75m. Orexo will also supply Abstral ^™ to NovaMed and receive a sales margin. NovaMed is responsible for the approval process and the clinical studies required for the approval of Abstral ^™ in China.

Distribution agreement in Israel

Orexo and the Israeli company Neopharm Ltd concluded a distribution agreement that gives Neopharm exclusive rights in Israel to market and sell Abstral ^™ .

Orexo will supply Abstral ^™ to Neopharm in Israel and gain a margin on sales. The terms and condi­

tions of the contract also involve milestone pay­

ments. Neopharm is responsible for the approval process in Israel.

Positive Phase III results in Japan

Orexo’s partner, Kyowa Kirin, reported positive Phase III results in Japan for KW­2246 (Abstral ^™ ), for the treatment of breakthrough pain among cancer patients. Kyowa Kirin is preparing the sub­

mission of a registration application for KW­2246 in Japan for the treatment of acute cancer pain (breakthrough pain). Orexo received a milestone payment of USD 2m in conjunction with the completion of the Phase III study.

Orexo signed a global licensing agreement with Novartis

Orexo and Novartis signed an exclusive global licensing agreement covering the development and commercialization of a new product based on Orexo’s OX17 program for the treatment of gastro esophageal reflux disease (GERD).

According to the terms and conditions of the agreement, Novartis will finance the future deve­

lopment of the new product and will gain an exclusive license to all related intellectual property rights. Orexo will be remunerated when develop­

ment and sales­related targets are met. In addition, Orexo will receive royalties from Novartis’ future sales of the product.

Edluar ^™

FDA approval for the treatment of insomnia The FDA approved Edluar ^™ 5 mg and 10 mg sublingual tablets for the treatment of temporary insomnia. The approval meant that Orexo received remuneration of USD 5m from its US partner, Meda.

Edluar ^™ launched on the US market During August, Meda commenced the launch of Edluar ^™ in the US. Orexo will receive royalties from Meda’s sales of the product.

PharmaKodex

Acquisition of the British drug delivery company, PharmaKodex

PharmaKodex is a British drug delivery company

that specializes in the reformulation and develop­

ment of prescription and consumer­health medi­

cines that contain small molecule drugs. The company has a number of development programs that focus on improving oral, sublingual and trans­

dermal drug treatment.

The company’s product portfolio includes the main program, OX219, for the treatment of opioid dependence.

The company also has a number of drug deliv­

ery technologies.

The acquisition is part of Orexo’s strategy of developing unique drugs based on well­estab­

lished and effective substances and unique pro­

prietary drug delivery technologies. By applying PharmaKodex’ drug­delivery technologies, the dosage schedules can be simplified, leading to safer and/or more effective treatment.

Second payment for the acquisition of PharmaKodex

Orexo acquired the British pharmaceuticals company PharmaKodex in February 2009 for a consideration payable in two tranches. The first tranche was paid in newly issued shares in Orexo on February 23, 2009 and Orexo made a decision regarding the payment of the second tranche on August 21, 2009. As consideration for the first tranche, 843,992 new shares were issued in Orexo to the previous shareholders in Pharma­

Kodex. 933,781 additional shares were issued as an additional payment instead of cash in line with the decision of the Board of Directors on August 21, 2009. As a result of the two payments, PharmaKodex – considering the share price on each occasion – is valued at some GBP 6.5m.

Orexo presented Phase IIa results for OX914 for the treatment of rhinitis (hay fever)

The results from an experimental Phase IIa study

showed that oral treatment using 15 mg or 50 mg

per day did not have any statistically significant

reduction in the patient’s symptoms following

nasal provocation using an allergen (pollen),

compared with the placebo. OX914 displayed

favorable safety and tolerability, and as opposed

to many PDE4 inhibitors, it showed no nausea or

vomiting compared with the placebo.

  BoarD oF DireCtorS’ report orexo annual report 2009 6

Significant events after year-end

Orexos unika kompetens inom arakidonsyraom rådet har öppnat nya vägar i sökandet efter effektiva behandlingar av utbredda sjukdomar som astma och KOL.

read more at www.orexo.com

Orexo strengthened its financial and strategic positions

Subject to the approval of an Extraordinary Meet­

ing of Shareholders, the Board of Directors unani­

mously decided to issue convertibles to Novo A/S.

The issue of convertibles to Novo A/S is a com­

bined transaction, involving a directed placement of SEK 111m and Novo A/S’ acquisition of two major shareholdings from the shareholders Apax and SLS Ventures. The issue was conditional on its approval at an Extraordinary Meeting of Share­

holders on March 31, 2010. The convertible loan’s conversion price entails a premium of 25 percent compared with the closing share price on March 12, 2010. Following conversion, and including the purchase of shares from Apax and SLS Ventures, Novo A/S’ shareholding will amount to about 19 percent.

The investment will be managed by Novo Growth Equity, the unit at Novo A/S that focuses on growth companies. As a result, Orexo gains a committed and long­term shareholder with substantial exper­

tise and experience of the life science sector.

The funds received by the company through the convertible issue strengthen Orexo’s financial and strategic position, and solidifies the conditions for continuing growth.

Registration application for KW-2246 (Abstral ^™ ) submitted in Japan

A registration application for KW­2246 (Abstral ^™ ) in Japan was submitted in February 2010 by Orexo’s partner Kyowa Kirin. Kyowa Kirin has verified KW­2246’s safety and efficacy by means of pharmaceuticals tests in Japan. The drug will be marketed by Kyowa Kirin and Hisamitsu Pharma ceutical Co. Kyowa Kirin and Hisamitsu

will also market HFT­290 (fentanyl transdermal patch) that is being developed by Hisamitsu.

The registration application also demonstrates that Orexo’s sublingual fetanyl products have the potential to be a key medicine in the treat­

ment of difficult pain episodes for cancer patients worldwide.

Registration application for Abstral ^™ submitted in Canada

A registration application for Abstral ^™ was submit­

ted in Canada in February 2010 by ProStrakan’s Canadian partner Paladin Labs Inc., and has been accepted for final evaluation by Health Canada, the Canadian Government Department with responsibility for public health.

The registration application has been given high priority by Health Canada and will therefore be assessed within 180 days.

Significant events during the year

Even if this result shows that oral treatment with OX914 is likely not to be an effective treatment of allergic rhinitis, no conclusions can be drawn regarding the effect in the treatment of COPD.

Based on the favorable effects of the substance in preclinical models and its good safety and toler­

ability profile, Orexo is continuing discussions

with a number of potential development partners

for OX914 and the program’s potential back­up

molecules for the treatment of COPD and other

inflammatory diseases.

orexo annual report 2009 BoarD oF DireCtorS’ report    7

orexo’s business concept is to create value through the development and commercialization of new drugs offering superior medical benefit and commercial potential.

Business model

Patient requirements Sales and

marketing

Balanced project portfolio

Strategic collaboration

Product development Science and technologies

Business model

Patient requirements

Orexo’s drug development starts with an analysis of the patient’s requirements for new and more efficient drugs. This involves improving existing drugs by developing patient­friendly medicines and developing entirely new substances, with the aim of creating new patent­protected medically­

important drugs.

Science and technologies

Orexo’s drug development is based on unique expertise in two areas. One is to develop and commercialize new, patented drugs by combin­

ing well­known pharmaceutical substances with innovative drug­delivery technologies. Orexo has specific expertise with regard to dry formulations, such as tablets and powder preparations. The other area is the development of drugs based on research on arachidonic acid and its significance for inflammatory disease processes. The objective is to develop completely new drugs for inflamma­

tory diseases such as asthma, COPD (smoker’s disease), and inflammatory pain based on new chemical structures.

Product development

Orexo has a wide range of expertise covering the entire development chain from early preclini­

cal, research and development, formulation and clinical development to the registration of drugs and production on an industrial scale. Orexo also cooperates with consultants and contract research organizations for some process components, such as clinical trials.

Strategic collaboration

Orexo has licensing agreements and strategic col­

laboration with both global and regional partners.

Orexo employs a strategy of signing agreements in the phase that provides the greatest increase in value and that best propels the project forward.

This strategy reduces the company’s risk at the same time as Orexo retains a substantial share of the commercial potential.

Project portfolio

Orexo strives to have a project portfolio comprising projects in late development phases. The main emphasis is on pain and inflammatory respira­

tory diseases, but the portfolio also includes other closely related projects.

Sales and marketing

Sales and marketing are primarily carried out

through partners with well­developed distribution

networks in the relevant geographic and medical

markets. To increase profitability, Orexo aims at

building its own sales organization and marketing

capacity. One example of this is the cooperation

with the established joint­venture company,

ProStrakan AB, which markets pharmaceuticals

in the Nordic market. Sales of Orexo’s products

in the area of diagnostics are made through the

Kibion subsidiary.

  BoarD oF DireCtorS’ report orexo annual report 2009 8

Project portfolio

Orexo has four products that are sold on markets worldwide. Sales are conducted via partners that pay royalties to Orexo and via distributors. Orexo also has a joint venture company, ProStrakan AB, which sells products on the Nordic market, as well as a subsidiary, Kibion, which sells products in some 50 countries.

Abstral ^™ – for the treatment of breakthrough cancer pain

Abstral ^™ is a drug that provides fast and effective pain relief. The first approved indication is for breakthrough pain among cancer patients who previously gained pain relief by means of opioids.

Many patients suffering from cancer pain receive pain­relief treatment with long­acting, strong pain­

relief medications such as morphine. Despite this medication, many of these patients also experi­

ence episodes of transient pain attacks, called breakthrough pain.

Abstral™ is a fast­dissolving tablet that is placed under the tongue. The benefit is that its active ingredient is rapidly absorbed into the body through the mucous membrane. The effect is thereby faster and more predictable. The tablet is also easy to use, store and handle. The drug is based on Orexo’s sublingual tablet technology and the analgesic fentanyl.

Approval

The EMEA recommended approval for the market­

ing and sale of Abstral ^™ in Europe in June 2008 and the product has since been approved for the treatment of breakthrough pain in a large number of European countries. In the US, Orexo’s partner ProStrakan submitted a registration application for Abstral ^™ and in the event of approval, the product can be launched in the US during the latter half of 2010.

project portfolio

SEKm

Q1 2009 Q2 2009 Q3 2009 Q4 2009

Q4 2009 Q3 2009 Q2 2009 Q1 2009

1.8 3.3

9.9

1.0

Royalty revenue from Abstral ^™ Marketing and sales

Abstral ^™ was launched in Sweden during the third quarter of 2008. Orexo’s and ProStrakan’s jointly owned sales company ProStrakan AB has the sales rights for the Nordic region and is responsible there for marketing and sales. A product launch on additional Nordic markets is expected during 2010.

ProStrakan Group plc has the rights to sales in Europe and North America. In early 2009, ProStrakan launched Abstral™ in the UK and Germany. This was followed by launches in France, Spain and Greece. A launch on addi­

tional European markets and North America is expected during 2010.

Kyowa Kirin has the sales rights for Japan, where a registration application for the product was prepared during 2009. Distribution agree­

ments for Russia and the CIS (the other countries in the former Soviet Union), Bulgaria and Romania have been signed with Gedeon Richter. A regis­

tration application for Russia was submitted in 2008 and approval is expected during 2010. For the Chinese market, Orexo has signed a license and distribution agreement with NovaMed, while in the Israeli market a distribution agreement was signed with Neopharm.

Edluar ^™ – short-term treatment of insomnia Edluar ^™ is based on the active substance zolpi­

dem and Orexo’s sublingual tablet technology.

Zolpidem is a well­documented substance that has been used for a long time against insomnia.

The Edluar ^™ tablet is placed under the tongue where it rapidly dissolves and the active sub­

stance is absorbed through the mucous mem­

brane. The international specialty pharmaceutical company Meda has acquired the global rights to Edluar ^™ .

Sales

The FDA approved Edluar ^™ for the short­term treatment of insomnia in March 2009. Orexo’s partner, Meda, launched the product on the US market during August 2009.

Kibion

Kibion, a wholly owned subsidiary of Orexo, is a world­leading supplier of breath tests to diagnose the stomach ulcer bacterium Helicobacter Pylori (Hp). Half of the world’s population is estimated to carry the bacterium, which is a key factor under­

lying the incidence of stomach ulcers. Those infected with Hp are also at greater risk of devel­

oping stomach cancer.

orexo annual report 2009 BoarD oF DireCtorS’ report    9

Products

Kibion currently has two products to diagnose Helicobacter Pylori – Diabact ^® UBT and the Heliprobe ^® System. Both are based on the UBT technique, which involves sampling the patient’s exhaled air and then analyzing it. The products complement each other and are suited to different market segments. The most important competitive advantage over other UBT tests is the patented solid formulation (tablet or capsule), which allows shorter sample preparations, lower dosages and faster and more reliable results.

The use of exhaled tests is increasing. These are recommended by leading experts as an equally good alternative to gastroscopy for patients under the age of 55. This diagnostic method is equally reliable but substantially more cost effec­

tive and more comfortable for both patients and doctors. The test can also be used to check the effects of treatment.

Market

The presence of Helicobacter Pylori in the stom­

ach lining is a very common bacterial infection. It is particularly common in developing countries, where up to 80–90 percent of the population may be infected. In Sweden, the incidence is 30 per­

cent in those aged 30–50 and significantly higher among the elderly. The infection is most often transmitted during childhood. Poor sanitary condi­

tions, overcrowding and a lack of cold storage for food raise the risk of infection.

Of those infected, approximately 30 percent develop serious symptoms. An Hp infection can be treated with antibiotics combined with drugs to reduce acid secretion. With reliable diagnosis, Kibion’s test contributes to reducing unnecessary antibiotic treatments.

Business model and growth strategy Kibion’s products are currently sold in some 50 countries, primarily in Europe, the Middle East, Southeast Asia and Latin America. Kibion uses

distributors for its sales, preferably to small and medium­sized companies that can give maximum attention to the products.

Kibion notes considerable potential to continue its organic growth in established markets. Estab­

lishment on new markets is continuously assessed and new establishments take place in countries with a strong potential for growth and profitability.

Also, Kibion continuously evaluates acquisitions of other companies and products that fit its existing structure. Kibion’s organization currently consists of ten current employees that cover all core functions:

Regulatory & Quality, Sales & Marketing and Supply.

In 2009, total sales rose 42 percent, amount­

ing to SEK 40.7m. Both products showed favor­

able growth. The trend in earnings was also positive.

ProStrakan AB

ProStrakan AB is a joint­venture company owned equally by Orexo AB and ProStrakan Group plc.

The company was established in August 2007 as a sales company for Orexo in the Nordic market.

ProStrakan AB markets four specialty drugs, namely, Abstral ^™ , which was developed by Orexo, and three other drugs that derive from ProStrakan Group plc. The company has six employees who work with sales and marketing.

During 2009, the company’s sales increased 11 percent and continuing favorable sales are expected ahead of 2010, through the launch of Abstral ^™ in additional markets in the Nordic region.

ProStrakan AB markets the following products:

Abstral ^™ , for the treatment of breakthrough pain for opioid treated cancer patients. Abstral ^™ is primarily prescribed by doctors active in palliative care and oncologists. During the year, a major focus was placed on increasing the knowledge of the opportunities to treat breakthrough pain among cancer patients using Abstral ^™ , with dos­

ages adjusted to the pain period. The use of new

types of fentanyl preparations for treating break­

through pain among cancer patients is growing sharply as a result of greater awareness among patients of the favorable treatment that is now available. Several similar preparations will emerge in the near future that will drive market growth.

Tostrex ^® – for the treatment of a lack of testos­

terone. The use of this testosterone drug is com­

mon in Sweden, but limited in such markets as Denmark, Norway and Finland. There is favorable potential to increase sales in the years ahead.

Rectogesic ^® – pain relief in connection with chronic anal fissures. Rectogesic ^® is one of a few treatment alternatives for chronic anal fissures and has a favorable market position in the Nordic region.

Dridol ^® – for the treatment and prevention of nausea and vomiting in conjunction with anesthe­

sia. The market for post­operative nausea is sub­

ject to generic competition and the progress of Dridol ^® was sluggish during the year. However, sales in Denmark showed sharp growth.

SEKm

2005 2006 2007 2008 2009

2009 2008 2007 2006 17.3 2005

24.9 28.6

40.7

5.1

Sales of Diabact ^® UBT and Heliprobe ^® System

  BoarD oF DireCtorS’ report orexo annual report 2009 10

pipeline

orexo has four commercialized products and a development portfolio that consists of preclinical and clinical projects.

read more at: www.orexo.com

Product portfolio

Abstral ^™

Partners:

proStrakan, kyowa kirin, novaMed, neopharm, Gedeon richter

Edluar ^™

Partner:

Meda

Diabact ^® UBT

Distributors and proprietary sales

Heliprobe ^® System

Distributors and proprietary sales

MeDa

noVartiS

BoehrinGer inGelheiM

OX914 COPD/Asthma

OX219 ¹⁾ Substance abuse

OX17 ¹⁾ GERD

OX-NLA ¹⁾ Rhinitis

COPD/Asthma

OX-AAF

Inflammatory pain

OX-MPI

OTC drugs

OX-PKX ¹⁾ Project portfolio

Preclinical/Formulations  Phase I  Phase II  Phase III Partner

1) Drug­delivery projects – shorter lead time to final product compared with traditional pharmaceutical projects.

orexo annual report 2009 BoarD oF DireCtorS’ report    11

project portfolio

Projects for which licensing agreements have been signed

OX17 – against gastroesophageal reflux disease

OX17 is being developed for the treatment of gastroesophageal reflux disease (GERD). Patients suffering from GERD experience recurring heartburn involving acidic regurgitation linked to stomach ache, discomfort and pain. Current treatments either provide fast, short­term effects or slow, but lasting relief. By combining two well­

known substances that inhibit acid secretion in the stomach with different time to onset of effect – an H2­receptor blocker and a proton­pump inhibitor (PPI) – OX17 provides both a prompt and prolonged effect. During 2008, a Phase II study was concluded that shows that OX17 can promptly and effectively reduce the formation of stomach acid and that acid reduction continues for a protracted period.

Project status

In August 2009, Orexo signed an exclusive agree­

ment global agreement with Novartis covering

the OX17 program. According to the agreement, Orexo will receive payments when development and sales­related targets are achieved. In addition, Orexo will receive royalties from future product sales.

Market

An estimated 15–20 percent of adults suffer from GERD. The disorder is currently most often treated with H2­receptor antagonists and PPIs.

IMS estimated that, in 2007, sales of H2­receptor antagonists amounted to USD 3bn and to more than USD 25bn for PPI.

OX-NLA – against rhinitis (hay fever)

OX­NLA project is a fast­acting nasal spray based on the antihistamine cetirizine for the treatment of allergic and nonallergic rhinitis (hay fever). Orexo has developed a new formulation of cetirizine that can be administered directly in the nose by means of a spray. This was difficult in the past, since the substance itself causes irritation and stinging in the nasal mucous membrane. Administering the medication locally in the nose provides a faster effect on the allergic symptoms than if it is given orally as a tablet. The rapid effect also means that

OX­NLA can be used safely and effectively for on­demand treatment.

Project status

Clinical Phase II studies of OX­NLA have shown good and fast­acting effects, which makes OX­NLA suitable for on­demand treatment. The nasal spray has favorable tolerance without causing local side effects in the form of stinging and pain.

The international specialty pharmaceutical company Meda has acquired the global rights to OX­NLA and combination products based on it.

Meda is responsible for the continuing develop­

ment of the project.

Market

Allergic rhinitis, or hay fever, causes swelling in the mucous membranes of the nose, which leads to nasal congestion, runny nose, itching and sneezing. The reaction can be triggered by, for example, contact with animals, dust or pollen.

Allergic rhinitis has become much more prevalent in the past 20 years and, today, about 25 percent of the population in the West suffers from allergic rhinitis. Rhinitis can also be non­allergic and trig­

gered by odors, cold air and tobacco smoke.

Through proprietary research, Orexo has developed a number of new drug delivery technologies that can improve therapies using known pharmaceutical substances.

  BoarD oF DireCtorS’ report orexo annual report 2009 12

project portfolio

Antihistamines in tablet form are the most com­

mon medicine to treat rhinitis. In 2007, global sales of antihistamines to treat rhinitis amounted to approximately USD 4bn.

OX-MPI – against pain and inflammation The aim of OX­MPI is to develop an effective and safe new drug for the treatment of inflam­

matory pain, such as from rheumatoid arthritis.

Common drugs currently used to treat inflamma­

tory pain include Non­Steroidal Anti­Inflammatory Drugs (NSAIDs), such as Naproxen. Long­term use of NSAIDs can result in side effects such as gastrointestinal bleeding and higher blood pres­

sure. COX­2 inhibitors, which have a more specific mechanism, were developed to avoid NSAIDs’

side effects and their use grew rapidly. The dis­

covery of cardiovascular side effects led to several COX­2 inhibitors being withdrawn from the market in 2004. The remaining COX­2 inhibitors and prescription­only NSAIDs also carry risk warnings.

OX­MPI is derived from an entirely new mecha­

nism based on the identification of a specific enzyme – membrane­bound prostaglandin (PG) E synthase (mPGES). This enzyme is necessary for the production of PGE 2 , a substance produced by the body, and which plays a pivotal role in many inflammatory processes. The goal for the OX­MPI project is to develop a compound that blocks the mPGES enzyme to prevent the formation of PGE 2 , leading to reduced inflammation and a reduction in pain. Since the mechanism of action is more selective than NSAIDs and COX­2 inhibitors,

OX­MPI offers the potential to be equally effective, but with fewer side effects.

Project status

An exclusive collaboration and license agreement for the development and commercialization of OX­MPI was signed in November 2005 with Boehringer Ingelheim GmbH. Since then, the collaboration has continued around the develop­

ment of selective PGE 2 inhibitors. Activities are in progress to optimize both the biological effect and other characteristics that are important for an effective and safe drug. In November 2009, pri­

mary responsibility for the development work was transferred to Boehringer Ingelheim.

Market

Patients with arthritis are in great need of pain relief and anti­inflammatory drugs, and consume a large share of the NSAIDs and COX­2 inhibitors currently sold. Around 100 million patients world­

wide are estimated to suffer from arthritis. In 2008, sales of NSAIDs and COX­2 inhibitors amounted to about USD 10bn globally according to IMS.

Projects in which collaboration and licensing discussions have been initiated OX914 – against COPD and asthma

OX914 has been developed for the treatment of inflammatory diseases such as COPD (smoker’s disease) and asthma. The anti­inflammatory effect is gained by blocking the PDE4 enzyme. Clinical

studies with substances that block PDE4 have shown positive treatment effects but side­effects as well, mainly nausea. To date, OX914 has not shown a higher frequency of nausea among patients treated with active substances compared with patients receiving a placebo.

Project status

An experimental Phase IIa study on patients with hay fever has shown that oral treatment with 15 mg or 50 mg of OX914 daily did not significantly reduce the patient’s symptoms or provocation in the nose with the allergen (pollen) compared with a placebo. OX914 displayed favorable safety and tolerability and, as opposed to many other PDE4 inhibitors, no signs of nausea or vomiting com­

pared with a placebo.

Although this result shows that oral treatment using OX914 will probably not prove to be an effective treatment for allergic rhinitis, no conclu­

sions can be drawn regarding the effects of treat­

ment of COPD. Based on the substance’s favor­

able effects in preclinical models and its favorable safety and tolerability profile, Orexo is continuing discussions with a number of potential develop­

ment partners concerning OX914 and the pro­

gram’s potential back­up molecules for the treat­

ment of COPD and other inflammatory diseases.

Market

COPD is a very serious disease involving chronic

inflammation in the respiratory tracts (frequently

caused by smoking), which leads to the progres­

orexo annual report 2009 BoarD oF DireCtorS’ report    13

sive and irreversible decrease in lung function.

About 7–8 percent of the population is estimated to suffer from COPD in various stages. Asthma affects 6–8 percent of the adult population and some 10 percent of children. Sales of drugs designed to treat diseases in the respiratory tracts, especially asthma and COPD, totaled USD 29bn in 2007, according to Business Insights’ Septem­

ber 2008 report entitled Innovations and Pipelines for Respiratory Disorders. Asthma patients are treated with inhaled bronchodilating ß2 agonists for fast relief and with inhaled corticosteroids for anti­inflammatory effect. Combination products with long­acting ß2 agonists and steroids are common. However, many would like to avoid ste­

roids as they are viewed as entailing a risk of side effects, such as inhibited growth among children and bone decalcification. Patients with COPD are most often treated with the same drugs as asthma patients and with anticholinergic bronchodilating drugs developed specifically for COPD.

OX-AAF – against inflammatory respiratory diseases

OX­AAF (arachidonic acid franchise) is the gen­

eral term for the Orexo research projects aimed at developing a new generation of pharmaceuticals for the treatment of asthma and COPD that are more effective than current treatments. The pro­

ject is based on Orexo’s leading research in the arachidonic acid cascade.

OX-CLI

The objective of the OX­CLI project is to develop an oral, non­steroidal, anti­inflammatory and bronchodilatory drug for the treatment of all stages of asthma and COPD. The target protein in the OX­CLI project is the enzyme LTC4 synthase, which has a central role in the inflammatory process by acting as a catalyst in the final stage of formation of leukotrienes and eoxins, which are two groups of major pro­inflammatory mediators. Studies on mice that lack the LCT4 synthase have also shown a sharp reduction in inflammatory responses in various models for respiratory tract disorders. The broad mechanisms of action indicate that a better therapeutic effect could be attained using an LCT4 synthase inhibitor rather than with current oral treatments using leukotriene inhibitors such as montelukast (Singulair ^® ).

Project status

Orexo has identified series of proprietary mol­

ecules and established a patent portfolio of poten­

tial drug candidates. A number of these have shown good effects in various pharmacological animal models. Work is continuing in order to opti­

mize biological effects and other characteristics that are important for an effective and safe drug.

OX2477

The objective of project OX2477 is to develop a compound that inhibits the 15­lipoxygenase enzyme (15­LO). This enzyme appears to have a key role in the inflammatory process through, for example, the formation of eoxins and is present in larger amounts in lung tissue among smokers and patients with bronchitis or asthma than among healthy non­smokers.

The objective of the OX2477 project is to develop an oral, non­steroidal, anti­inflammatory compound for the treatment of asthma, COPD and other inflammatory diseases.

Project status

Orexo has developed a patent portfolio around several series of molecules with potential drug candidates. These are being evaluated in terms of their biological effects and other properties that are important for an effective and safe drug.

Market – please refer to the section under OX914 OX219

OX219 is being developed to create a new, pat­

ented drug for substitution treatment of various forms of opioid dependency – such as prescription drug addiction. The active substance in OX219, buprenorphine, has documented favorable effects on opioid addiction within the framework of medi­

cal, social and psychological treatment. Buprenor­

phine, a partial opioid agonist, offers a limited

“high” and dampens the withdrawal symptoms

and desire for opioids, while also blocking the

“kick” from other opioids. OX219 also contains naloxone, which effectively counteracts the

“high” that arises from intravenous injection of dissolved tablets. The combination of naloxone and buprenorphine in the same tablet preparation reduces the risk of intravenous abuse and illegal drug dealing.

Project status

Ready for clinical studies.

Market

In recent years, Suboxone ^™ – the market leader – has increased its sales and generates some USD 900m annually (IMS Q2/09), with sales pri marily in the US. The market is expected to continue growing and the opportunities for new products have opened as the patent protection for Suboxone ^™ ceased in November 2009.

OX-PKX

OX­PKX is a designation for the development and outlicensing of the drug delivery platforms that were included in the acquisition of PharmaKodex. The purpose is to develop proprietary products and to offer major pharmaceutical companies innovative drug delivery technologies to improve and upgrade their products.

Project status

Formulation phase – outlicensing activities are in progress.

Eoxins

­ Inflammation OX-CLI

LTC4 synthase inhibitors combine anti­inflamma­

tory and bronchodilatory effects

Leukotrienes

­ Bronchial contractions

­ Allergic/acute and chronic inflammation

5-LO Cell membrane

15-LO

LTC4 synthase

Arachidonic acid Intermediary Biological mediator­

disease process

Arachidonic acid is released from the cell membrane and is transformed into biological mediators (leukotrienes and eoxins)

that cause inflammation and bronchial contractions. The LTC4 synthase catalyses stage 2 in the formation of these mediators.