Hello, everyone. Good afternoon, and welcome to Orexo's Q2 Presentation 2022. This conference call is being recorded and will be posted on Orexo's and Financial Hearings' webpages afterwards. Today, I am pleased to present Nikolaj Sørensen, Joseph DeFeo, and Dennis Urbaniak. With that, I will hand over to Mr. Sørensen. Go ahead.
Thank you very much, and good afternoon to all of you in Sweden, and good morning to those of you in the U.S. When I drove in this morning to the office, the Swedish flag was up in front of the building, and in lack of humbleness, I thought that was because of our Q2 report, which we actually thought was quite good internally. Now looking at how the share price has moved during the day, I realized that that was not shared by the stock market, and also that the flag was actually due to the crown prince's birthday. That teach me a little of humbleness. I actually think that from an Orexo perspective, we have a decent Q2 report, or actually a good Q2 report on several numbers.
We have some good development in the States, not only due to foreign exchange, but we also see that some particular Zubsolv has shown some stabilization. We have moved the other direction on our cash position, which has strengthened from our Q1 to where we are right now, and we continue to see some strong profitability in the U.S. I also realized that there are some areas where we still have to show improvement, but I think there are a lot of good stuff moving at the moment, and we're doing that from a very strong position from an Orexo perspective. Moving into the agenda for today, I will talk a little about the key achievements.
I will provide a business update on U.S. Pharma and our pipeline, and we have Dennis Urbaniak with us today to talk about Digital Therapies, in particular about the fantastic news we had yesterday where we were granted reimbursement on the Veterans Affairs Federal Supply Schedule. Dennis will talk a little more about what that means. Joe DeFeo will then talk us through the financial overview, and I will summarize from a company perspective on future value drivers. Moving into our key achievements for the company. I think on the headquarters pipeline perspective, the positive thing is that everything proceed as planned. With our OX-124, we are planning to file it in the second half. That will now be Q4. Our OX-640, we have the first participants in the exploratory trial.
The first human trial has already been dosed last week, and we have all of the participants have been named, so we should be ready to complete this in time during the summer. We've also seen the first sale of Zubsolv outside the U.S. in terms of prescriptions in Spain and Sweden. Our Zubsolv sales in Europe and hopefully soon also some royalty income from Europe can be expected. On the U.S. Pharma side, we have seen Zubsolv has been stabilized. We actually saw a little growth in the quarter over Q1. That's positive. If we look at our market access, we've seen both New York, where we were added in March, and Kentucky, where we were added last year, continue to show some strong growth from relatively small base.
Again, it is early days, in particular in New York, where the field forces first become in place during the second quarter. We have a very strong financial performance in the U.S. We have seen a little increase in our selling expenses as we have recruited reps back into the organization after COVID-19 and also the investment in New York. In Digital Therapies, the overarching or shining star here is that we got the reimbursement in place with Veterans Affairs. That's a huge accomplishment from Dennis and his team. We have expected to see some commercial sales for Trinity Health during the quarter. Dennis will talk a little more about that, but I'm happy to know that they are in good progress, and they have identified the first patients that they believe should be added to Deprexis and MODIA.
We have seen a very good development on our MODIA trial program, with now more than 650 participants in that study. Dennis will talk more about that later also. Very short on the financials. In the financials, our Zubsolv revenue have grown. A lot of that is explained by foreign exchange, but also favorable price development we have seen compared to last year. Both the price increase and then more favorable with the payer mix. Our operating expenses are stable from a year ago, and that is actually despite a very unfavorable foreign exchange development. What helps us on the revenue is, of course. It costs us. A lot of our expenses are dollar-denominated.
We see a lot of these, our ability to control costs is coming from synergies in the U.S. between U.S. Pharma and DTX. Again, our U.S. Pharma EBIT margin is exceeding the 50% we applied, with 55% for this quarter. On the cash position, we had a little more challenging Q4 and Q1 because of changes in working capital. I did say last quarterly call that we expect that to be somewhat mitigated in the second quarter, and that is what has happened. We've seen our cash and cash equivalent position, that is short-term investments, and we'll talk even more about that later, which improved with SEK 30 million. Coming into U.S. Pharma, we have our volume has been stabilized.
We have maintained so far all access that we have, that is agreement with payers for the second half of 2022 and also those who have been published in 2023. We are not aware of any changes in 2023, but some of it will be published a little later. When we come to our field force, we have increased our investment in the field force during the second quarter in New York. That is, we've also filled the vacancies that we had after COVID-19. During the COVID-19, when we got vacancies, we didn't backfill them because we had difficulties reaching the physicians. Finally, our field force is continuing. The Zubsolv field force is working with the MODIA campaign, and that has helped us a lot, and we'll show a little more numbers on that shortly.
Overall, our development is slightly positive, 0.2%, and that is driven by the open segment where we have Kentucky and New York. Also, we have the non-reimbursed market which has grown a little, and that is mitigating the decline we're seeing in Humana and UnitedHealthcare. However, United and Humana are, it's a slower decline than we have seen for the last two years, and actually in the second half of the second quarter, we have seen a very stable development. Looking at Kentucky, we continue to see a pretty good growth. Quarter growth of 18% in Kentucky, from a relatively small but growing base. We're basically seeing Kentucky growing for every quarter since we added last summer.
It does take time to get through into when you get a new reimbursement in new geography in the U.S. We are seeing we need to ensure that the products are on the shelf in the pharmacies, and that is what we need to see in Kentucky, where we have to work with the pharmacies to get on the shelf. It will take time before we get the full effect, but it has been positive contributor. The same in New York, where we added in March, we have seen 22% growth quarter-over-quarter. With the MODIA and our MODIA development, we have some data here showing that when we're adding MODIA to a sales call, we're seeing the access to physician is improving significantly.
When we have MODIA and Zubsolv together in a sales call with a clinic, we see that we get to the doctor in 61% of these calls, versus when we just have Zubsolv, it's 40% of the call. If you go before COVID-19, we actually met the physicians in most of the calls. During COVID-19, due to restrictions, due to a lot of physicians have moved to telemedicine and also a lot of them are cautious about meeting the sales representatives, it has been much more difficult for us to get to the physician. Now when we're adding MODIA, we can see strong synergies which will benefit also Zubsolv as we move along. Taking a more holistic perspective on what is it that we believe that we're building right now. We have a portfolio today of three unique products.
One of them is coming, OX124, but we now have Zubsolv and MODIA, where together we can offer a much more comprehensive solution to the physicians when they are setting up the treatment for the patients, both with medication, with, say, psychotherapy through MODIA, and also soon with OX124, a rescue medication. For us, that is giving us a unique ability to reach out to larger stakeholders, larger hospital systems, states in the US to have a dialogue about how we can support as a company to drive the efforts against opioid dependence. Coming into the overall market development, we have seen a continuous, a little flattening of the sales development. We saw a slight negative development in Q1.
It has grown a little in Q2, but we are still on a single-digit growth with 5% compared to last year. Now we still believe that some of the effect of this could be explained by COVID-19. We are now seeing so many activities on the federal and state level that we're still optimistic that we should see an increased growth in the market as we proceed. For Orexo specifically, I think for us to be able to win when we see a growing market, the market access for Zubsolv is incredibly important, and there we have maintained our market access position. When it comes to MODIA, we have already now seen how MODIA added to the portfolio is helping us in the work with Zubsolv.
Coming to the R&D portfolio and pipeline, it is relatively short. As I said before, OX124, we are on track to be filed in Q4 in 2022. One of the things that is when you're using a device is that you need to do a human factors study to show that people can use the device correctly. This has been scheduled, rescheduled to happen now in Q3. And that of course comes with an uncertainty.
If we have a delay, I believe this is one of the more significant risks into this is because when you're doing a human factor study, you need to be sure that the people participating are using the nasal device correctly, put it up into the nose, give the full dose into the subject, which will be a doll in this case. But for the human factor, there's a human factor playing in, of course. We're doing this in Q3. We have OX640, where we had the first patients have been dosed in our exploratory clinical trial, and we have the results expected in Q4 2022. Finally, we are exploring on OX640.
This is outside our disease area focus, so we are looking for opportunities to go into partnerships with this product when we are receiving the results from the clinical trial. I will open up to Dennis Urbaniak, who will talk a little about our digital therapies. Dennis, please.
Thank you, Nikolaj. We'll go straight into slide 15 on digital therapeutics. Starting off, if you think about the ideal scenario to build a digital therapeutics business, there's three core factors. Obviously, reimbursement and access, high-quality products, which we have with our GAIA platform, but you also need awareness and trial because that builds the demand that ultimately drives sales. I'm very happy to report that we continue to make strong progress, first in the overall portfolio in terms of the numbers of users that have accessed our therapies. While we have a couple of key ones driving volume, it's also nice to start to see the diversity of entities and channels where the products are starting to be tried and used.
As Nikolaj alluded to earlier, our execution of the Modia early commercial plan as well as the randomized clinical trial is right on track, and we're incredibly excited about the strong response we've seen in the market to Modia in both of those areas. Obviously, with Modia one, we get a lot of feedback from our users directly. I can tell you I've been in the field speaking to physicians and office staff myself recently, and feedback from the patients and the physicians on Modia continues to be quite strong. We really see this fitting a very important need in the marketplace for digital therapy with opioid use disorder. With that, and as I said, it's demand, high-quality products and reimbursement.
If we go to slide 16, two critical reimbursement steps that we've taken to improve our overall access position. One, with Trinity Health in North Dakota. They continue to be a very strong partner. I'm very happy to report that all the operational processes, which I'll share with you a little bit more detail on what we've been doing, are complete. We are moving now to physician training. I spoke with the CEO this week. We'll have our first patient in this month, with a strong plan to scale as we go across the back half of the year, and I'll share a little bit more detail on what that looks like. Trinity is a terrific partner and a great example of a model that we can take across this hospital business.
Of course, the news this week with the Department of Veterans Affairs. This is a significant access position for us around deprexis, which really aligns to an important need within the VA. We now have significant access to a population with reimbursement coverage for Deprexis. This is exciting, and I'll share with you our early steps and our plan to build the business within the VA. But let's jump back to Trinity. Let's go to slide 17. Just as a reminder, Trinity Health North Dakota, what you see here on slide 17 is a map of Trinity's catchment area. This is important because they are a network. They have an anchor facility in Minot, North Dakota, just under 500 beds.
They service an area through their hospitals and clinics that's almost 500 miles wide. It's a massive geography. They have a lot of remote patients and people that have to travel for care. The idea of digital therapy has been a very attractive one to Trinity Health management. In working with their operations, clinical, and executive staff, we see a lot of enthusiasm for that. The model here that we're creating is based on the American Psychiatric Association's collaborative care model. That's important because this collaborative care model is an evidence-driven approach, and it has specific reimbursement pathways in the marketplace today that our therapies fit within in terms of satisfying the counseling criteria. It also recognizes the time and the effort that the hospital staff and clinicians put in managing these patients.
This team-based approach is a bit of a different operational approach than the standard that a lot of facilities have in place. A lot of the work that we've been doing with Trinity has been establishing these healthcare teams, one in the area of depression, one in the area of problem drinking. We will move to opioid use disorder later as we get these first two up and running and implementing those processes. We now have physician training scheduled starting this month and next month. We even got a call from them this week to add six more doctors to the platform. A lot of hard work and effort and partnership.
What I'm excited about is not only how the therapies will help benefit the patients in need within the Trinity Health population, but this will inform an approach that we can then replicate in similar centers across the U.S. There's about 5,000 community hospitals, so there's a sizable opportunity there. Then, of course, from Trinity Health moving to slide 18, the news for this week around the VA FSS. Specifically what this means is we will now have access for deprexis with three distinct groups under the umbrella of VA FSS. Our main initial priority and starting point will be in the Department of Veterans Affairs, which is a large integrated delivery system that has a combination of hospitals and outpatient sites of care. These are organized regionally into what's called a VISN, a Veterans Integrated Service Network.
There's actually 18 of these around the country, and they serve over 9 million veterans in that care delivery system. This is where we're gonna start. I'll show you in just a second our plan. However, this contract also gives us access to the Indian Health Service and to the U.S. Department of Defense. Each of these entities are quite sizable on their own. Each of them have their own unique makeup, and serve a number of veterans and employees, and family members. It's a large, complex system, and we're gonna take a very targeted approach. One of the critical things about VA FSS to be successful is you have to really follow their processes and kinda speak their language, if you will. On 19, slide 19, I'm gonna show you here our plan.
We're in right now that first 30 days. We literally got the notice of confirming the contract this week. There's some very important administrative setup and logistical steps that we need to take over the next one to three months, and this is understanding the rules for each VISN, for example. There's some internal communication components, the permissions we have to engage with each of the centers, how we can communicate the products distribution, some of those, you know, basic administrative setup and logistical work. As you get into the VISNs, each VISN has their own way of operating that you need to adhere to and work with, but we now have full permission and access to do that, which is terrific. As we move out of that logistics and setup phase, we'll start to implement deprexis within specific targeted VISNs.
We have two selected from the total 18 that we know based on their appetite for innovative therapies, their need for mental health, and their proximity. They're good starting points, and they are influential to the other VISNs, so we'll start in two and 15. Then as we establish deprexis within each of those areas, we will in phase four begin to expand more broadly out across the rest of the VA. The environment here is perfect. The VA has shown that they are very supportive and very responsive to digital approaches. During COVID, they actually immediately shifted to telemedicine. They do about 43 million telemedicine visits a day, so their members are used to using digital approaches.
They're open to it, which is great, and there's a tremendous need for mental health and substance abuse services for the veteran population. We're excited to have the opportunity to serve this group. We're gonna take a focused, targeted approach to build the business correctly, follow the processes, and then move to scale as we move into next year. With that's a wrap on the DTX summary for Q2. From here, I'd like to turn it over to Joe to talk about financials.
Okay. Thank you, Dennis. Good afternoon. Would you go to slide 20, which is our revenue? You could see actually Zubsolv sales actually grew quarter-over-quarter, which you can see on the bottom. If we focus on the top first, our total revenues are higher in Q2 of this year versus Q2 of last year, and the first half is also higher than last year. Part of that is exchange, but also part of that is due to the stabilization of Zubsolv, which we show on the bottom of this slide versus Q1 we're actually up. If you focus on the three bars after the Q1 2022, you will see that our demand has actually grown versus Q1. We do have some negative impact from returns adjustment, but that was because in the past couple
Two years, as you know, we were able to optimize our supply chain very efficiently and reduce our returns reserve significantly. We successfully accomplished that. When you look versus prior year, we would have negative adjustments there. That's more than offset by the positive exchange rate that helps out our sales as well. Good quarter. We're stabilizing our Zubsolv revenue and moving forward. We anticipate Zubsolv sales to grow in the second half of the year. Going to next slide, our P&L. As I mentioned, our revenues are up and our gross profit is up. When you look at our operating expenses, we are focused on driving future opportunities, which include our OX124 that we're expecting to file later this year, spending on that.
We also have a MODIA study going on, and we're also developing OX640. Our investments are focused on future growth drivers. Although operating costs look just slightly below last year, about 10% of the operating cost is due to the higher dollar. That really plays into the fact that when you see the operating costs look stable versus last year, without FX, they would actually be down about 10% or 11%, and that affects our EBIT as well. Net financial items where you could see a big positive versus negative last year, and this is due to the fact that the majority of our cash is in U.S. dollars. With the strong dollar, that has given us a positive effect there.
We've also, as you'll see in a second, started to invest some of our money in short-term and stable investments to earn some of the interest rate increases that we started to see. Overall, a positive quarter from financial standpoint. Also, as Nikolaj mentioned earlier, our U.S. EBIT once again a very strong quarter. The margin was 55%. We continue to see strong profits out of our U.S. pharma business. Next slide is our cash flow. Cash flow from operating activities was positive for the quarter, but negative year to date. As we talked in the first quarter, we did see a negative impact due to working capital. Well, as Nikolaj and I mentioned last time, that does swing, and in this quarter we saw a positive impact from working capital.
That helped us achieve a positive cash flow from operating activities. You can also see that we've invested some of our money in short-term investments. Basically, we're investing both U.S. dollars and also some SEK that's not currently needed. We're actually investing in what you would call ladders, so three months, six months, nine, 12 months. As each of those roll off, we decide how much more we want to push out and invest more. That helps us make sure we ensure that we have enough money for our business needs and also take advantage as interest rates move.
As you probably know, interest rates have, even since we started investing last month, moved even higher in the U.S., and they're anticipated to move even higher now that the inflation report came out with a high 9% inflation. We are investing approximately 65% of our money. We do not speculate on currency. The predominant amount of our business, both our U.S. pharma business, our DTx business, and the anticipated launch of OX124, are all in the U.S. We keep sufficient funds for our U.S. business. We also keep sufficient funds to fund our Swedish business in SEK. You could see from our cash position, as Nikolaj mentioned, we actually increased our cash position from the end of Q1.
You could see in the last column our liquid funds was 504, and right now they're at 468. We've been able to keep our cash usage to a minimum during the first half of the year while still moving forward our investments. With that, I'll turn it back to Nikolaj for the legal update. The following slide was just our outlook. We're reaffirming all of the things we mentioned before in Q1. Nikolaj.
Thank you, Joe. On the legal side, I think the one news is that we now have a date for the district court hearing for our Zubsolv patent dispute with Sun Pharmaceutical Industries, with Sun Pharmaceuticals, and that is now set to the first full week of November, so November 4th to November 11th. This is earlier than we had anticipated partly due to a shift of judge. We have got a new judge just a month ago who had a clean calendar, so we were able to come faster than first anticipated. This will also mean that we will see an increase in the expenses during Q3 and early Q4 for the patent litigations expenses that were otherwise was expected next year. However, reviewing our OpEx guidance, we still believe that we can be within the OpEx guidance.
The positive part is that we will basically have an end of the expenses for this IP challenge in November. On the subpoena case, nothing has really happened during the last quarter. On the financial outlook, we have reaffirmed this and we have no changes to this. The only thing we have to review is whether we could still manage the group OpEx, given the rescheduling of the Sun litigation process, which is a quite costly process, and also the FX effect on our OpEx. We still believe that we will be able to do this. We are optimistic that we will see the market for Zubsolv to increase from the current 5%, so we'll see a slightly higher growth in the second half.
Also that we'll see Zubsolv have a good growth opportunity if we will compare the second half of this year compared to the first half, partly driven by the opportunity in New York and continued growth in Kentucky. Looking forward from an Orexo perspective, I believe we continue to have a very strong and profitable U.S. pharma. This is the basis on the financing of the company, both in terms of our continuous profit contribution, but it also is an important foundation for the launch of both MODIA and OX124. We see that with the U.S. pharma, we have a very solid ground to stand on. We have a pipeline that is, with OX124, quite close to enter filing stage with FDA. With that will enter a market north of.
which is worth north of $400 million. The platform behind OX124 has turned out to be incredibly valuable for a lot of other APIs. For example, epinephrine and OX640, where we're expecting to get clinical results during the second half of this year. And also for other products outside Orexo, we have an ongoing dialogue and we're even doing feasibility study for an external company right now on the platform. Finally, we have digital therapies, where we recognize that it has taken some time, longer than we anticipated. It has been more complex than we expected. We have been fortunate to have a partner like Trinity Health who have invested a lot of resources together with Orexo to set up a process and care program where we can be integrated in.
Now we finally expect to see the first patients coming through during this month, and that will enable us to build both within Trinity Health but also to other customers. Then of course, we have our VA opportunity, which is fantastic accomplishment, but something where, as Dennis explained, there are some administrative steps that need to be in place before we can build from where we are right now. With that, I would thank you for your attention for this last half hour and open up for questions. We have received some questions online, and also by mail, but I will open up, operator, for any questions from the people on the call before I check the questions that we have received.
Thank you. If you wish to ask a question, please press zero-one on your number pad. If you would wish to withdraw your question, you may do so by pressing zero-two. There will now be a brief pause while questions are being registered. Thank you.
Okay. While we're waiting, I would like to comment on some of the questions. We received some questions by mail, and I will check those first. The first question we have is how will the FX rates with a weaker dollar from where we are right now, how we will act if the FX rate has a weaker dollar compared to where we are right now. Regarding our cash position, if the dollar weaken, does that affect your ability to execute your goals without refinancing? Joe, I will ask you to answer this one.
Okay. Thanks, Nikolaj. First of all, if the FX rate were to weaken, currently we have sufficient funds in SEK to finance our operations in Sweden, and obviously we have a lot of money in U.S. dollars. We don't speculate on currencies, as I mentioned. We keep our money where we expect our investments. Right now, I just looked this morning. If you look at a three-month U.S. Treasury, the rate is 2.3%, and the STIBOR is just under 1%. Rates are significantly in favor of the U.S. dollar, and there is an expectation for rates to go higher, as clearly the Federal Reserve is being more aggressive than the European central banks.
Like I said, we don't speculate on currencies, and it won't affect our ability to execute our goals because as I mentioned, our DTx investments and then also our OX124, and also if you look at the legal expenses, they're all in U.S. dollars. We'll keep a sufficient amount of dollars. Yes, it might make our cash position fluctuate some, but we're confident we're in the right position. We also our investments that we've been making, as I mentioned, are on a ladder of three months, six months, nine months, 12 months. As each one rolls off, we decide whether we're gonna push that out another year or whether we're gonna keep some of the money or convert it into the opposite currency when it comes due.
We're keeping short-term flexibility, and we're also able to earn decent money and take advantage of the exchange rate at this time and finance our
Thank-
Financing our goals.
Thank you, Joseph DeFeo.
Thank you.
Next question is for Dennis. You guided in your year-end report that revenues from DTx would increase in Q2, which did not realize. Any new guidance for H2, and did any revenues come from Walgreens in Q2? Dennis.
Yeah. Thank you, Nikolaj. Two key drivers to the Q2 performance in terms of sales. As we mentioned, the main things we identified in the last quarter were Trinity getting started and Walgreens. On Trinity, as I shared, the operational processes were still being put in place and finalized within Q2. We're now moving to physician training, and those steps have to occur before a patient volume comes in. We do expect initial preliminary patients this month at Trinity, and then we do expect those patient volumes to grow starting with the practice and then with Vorvida through the second half of this year. All of those patients will be reimbursed patients through the model that we've implemented. At Trinity, we do expect that in H2.
Specific to Walgreens, as a reminder, Walgreens is a partnership with SilverCloud. SilverCloud has experienced, I would say, some fairly significant management changes internally within the organization. It contributed to a little bit of things slowing down as they were sorting through that. The good news here is we maintain a very strong partnership with SilverCloud. Just last week, our team has really been driving a dialogue with SilverCloud and Walgreens, looking at ways to leverage Find Care. We have. The benefit of working with Walgreens is we have a proposal with them to look at a store-based campaign to complement the online efforts. Where we can put some signage and some advertisement at the point of sale around common areas and test that.
We look forward to implementing that and help that inform how we could drive more targeted pull-through within Walgreens Find Care as we go forward. That will also initiate later in the second half with learnings probably towards the end of the year that we can apply as we move into 2023.
Thank you, Dennis. We have one more question but I can take that also could have gone to you, Dennis. It's when we'll receive the first sales from MODIA? We are expecting that to happen during the second half. As we are right now working with several physicians on implementing a reimbursed system for MODIA also. To some other questions I received online. One is that can you discuss opportunity and your approach regarding partnership with AmorphOX or AmorphOX platform projects? I can do that. We are talking to other companies both in terms of small molecules and larger molecules. The approach we have is simply we will do a feasibility study on the AmorphOX technology and see if it works from a chemical perspective.
The partner would need to test it from a clinical perspective. If they're moving into clinical, that will of course be based on an agreement between the companies which would be published. What we're doing right now is we do have one ongoing study right now actually in the office for a U.S.-based company on a small molecule where we're testing whether the AmorphOX platform could work for their product. If it then moves on, it will become some kind of traditional license agreement where we will be paid some milestones, and there will probably be a royalty in the back end. All depending on how much risk we are going to take in those projects and what kind of project it is. We have a question here.
The main risk to the timeline for OX124 was human factors study, and what kind of risk are we talking about? This is a study that has to be done for all medical technical devices that are to be used by, you say, laypersons, so people on the street. What we need to do is to take a certain number of people who have no background in pharmaceuticals, give them the device, and we have to test that they can understand the instructions and use the device as intended. For example, if they should come over a person who overdosed, they should be able to give the dose with the device in the correct fashion. We are of course testing this in several different ways to ensure that we have as good instructions as possible.
In the end, we need to do a study and as that is a human factor with a random group of people, there's always some uncertainty to how they could use it. We have seen some strange examples during the first trials we have done with laypersons, where people have used it in the wrong way, which we of course have done everything we can to mitigate by making even better instructions how to use it. There is always a risk when you do these studies that a couple of people are misunderstanding the way that they're using the dose, and that could result in a negative outcome. Then there's a lot of questions here and there's one here.
If Mylan is a partner for marketing and sales for Edluar in the U.S., as OX640 is a head-to-head competitor to Mylan's EpiPen in the U.S. as well. In the U.S., Mylan is perceived as the optimum partner for Orexo for OX640. If we're not planning to reach out to them, wouldn't the development of OX640 be considered a hostile towards Mylan, an existing partner to Orexo? First of all, Edluar is a very small product for Mylan, so I don't think anyone on Mylan top level is aware really of the product. We are of course looking at Mylan or Viatris because Mylan was acquired by Pfizer, who then spun off the part of the business which is now called Viatris. So we have a discussion with them.
I don't see that there's any controversy of them also looking at this product together with Edluar . Of course, they should be on the list for a partnering opportunity. Then we have some comments about how we are growing in Kentucky and New York, but still have a slight decline in our U.S. sales in the quarter. How does that come? We are growing in one, we have to lose in some others. I think the basics here is that both Kentucky and New York are both growing. Kentucky has been growing quarter-over-quarter. Remember when we started in Kentucky, we didn't have any sales presence, and I've never had that in Kentucky. We have to build everything from scratch.
They're coming from a small base showing good double-digit growth quarter-over-quarter. At the same time, we have a large part of our business has been for years, and even though it is diminishing, it is still a quite significant part of our business is within UnitedHealth Group and Humana. The increase in those two are some way outweighed by the decrease in Humana and UnitedHealth Group. Now, this quarter is actually the first quarter for quite a while where our overall demand increased compared to last quarter. That is due to a slowdown in the decrease in UnitedHealth Group, but also a positive development in our other plans, and there are definitely Kentucky and New York, as they are important drivers for that growth.
Even large payers like CVS Caremark and Express Scripts have also shown a positive development in the quarter. We have a question about when deprexis will be available in Italy and Spain. We don't have the rights for deprexis in Europe, and it's promoted by GAIA together with different partners in different parts of Europe. I'm actually not aware of the plans for deprexis in Italy and Spain. Let me go here, see what we have more. What's happening in Kentucky? I have answered that question, I believe a couple of times now. Those were all of the questions we have received. Any other questions on the call before we hang up?
Yes, we have received two questions from the telephone line. The first question comes from an anonymous speaker. Which line is now open? Please go ahead.
Okay. The anonymous speaker remains anonymous, so.
Yes, we will take the next question, which is from Filip Einarsson from Redeye. Your line is now open. Please go ahead.
Thank you, Orexo, for your presentation. I have a few questions, and the first one is, when do you believe we will be able to see the effects and results from your hard work with Trinity Health, regarding identifying a reimbursement pathway for the practices and Vorvida in terms of revenues and profits?
Thank you, Filip. Trinity Health, we are expecting the first patients to come in now during July, and as Dennis said, they will be fully commercial. They will start with a smaller group just to ensure that the process is working as it should be. The majority of the payment will be done up front, and that is really the confirmation we're looking for that it works out. We do expect to see sales from Trinity Health coming in Q3, and then it will build over the next quarters. That of course depends that we don't see any hiccup in the administrative process. We have been very thorough in the work with Trinity Health, which has been one of the reasons why it has taken some time. This quarter.
After the launch of OX124, and in light of Orexo having its own sales force in the U.S., what are your thoughts on future sales and marketing costs?
OX124 is. It is a product that would require some new resources compared to where we are right now. I do know that the maker of Narcan, when they started in the U.S. being an Irish company, the entire organization, I believe, was around 10 people. And some of those 10 people are of course overlapping with people we already have. I don't believe that this is a major addition to the sales force that we have today. At least we are not planning. We would not be starting with a big investment. We will build and see that we can get traction with the resources that we have, and then move from there.
Where I do think we would need some additional resources is on institutional sales because more than half of the volume in this space is for institutional selling. You're selling to first responders, police officers, fire departments, to community houses, schools and other public installations where they want to have rescue medications available. That's a new area for us where we'd need some additional resources, but they are not sized.
The last question. With regard to reimbursement, and especially the testing of reimbursement models, with MODIA one program, what are your hopes in terms of the confirmation of the reimbursement model? Do you see any risks that could cause the MODIA one program to not be converted into commercialization of MODIA?
I actually think Modia one is what we label our trial program. When we come to MODIA, we believe that we have identified an even smoother reimbursement opportunity than what we have for deprexis and Vorvida. We are working with physicians in some of the regions in the U.S., most specifically Michigan and Maryland, I believe, to set up the reimbursement system and test that on the patients. I think the one uncertainty, of course, is how it will be received from the payers, and also to see what kind of documentation is needed. Do we need to build more documentation into the system than what we have?
Which is actually one of the drivers of the delay with Trinity Health was that we needed to build a system to collect the documentation needed from the payers. There needed to be basically build up a new system for collecting that data from our outpatient therapies. There are some uncertainties, but at least the reports I'm receiving from Dennis and the team is that it is more smooth and should have less hurdles than what we've seen with Vorvida and deprexis.
Thank you.
Thank you everyone for taking the time to listen to us for the last 45 minutes. I can see we had quite a few large audience online and probably also some people dialing in. Thank you a lot for taking the time. This call was actually the last call for Joe DeFeo to work with us as CFO as Fredrik Järrsten will join us after the summer. Our Q3 report, we will be able to meet Fredrik Järrsten for the first time. Thank you, Joe, a lot for the last few years. You made a big contribution to Orexo in your role as the CFO. Thank you, and good summer to all of you.