Hello and welcome to the Orexo Interim Report Q1 2020. Throughout the call, we'll cover different things that we'll do in a listen-only mode, and afterwards there'll be a question and answer session. Today, I'm pleased to present Nikolaj Sørensen, CEO, and Joseph DeFeo, CFO. Please begin the meeting.
Thank you very much, and good afternoon to all of you in Europe, and good morning to those of you who follow us from the U.S. This quarterly report, or quarterly presentation, promises to be one of those I probably would remember for the rest of my life, not due to Orexo's performance, which was good, but due to the environment we are working in here. Today, I will be joined by Joseph DeFeo, and Joe will join us from the U.S. on a different phone line, if there's any mix-up when we get to the Q&A session, I apologize for that. I am going to present our first quarterly report for this year. I can summarize it in a way that it very much developed as we anticipated.
The one that was positive news for us, of course, was the exchange rate, and development was very favorable for Orexo during this quarter. Apart from that, I think most of it flowed in terms of volume of sales and also how we progressed our different projects was according to plan. I will start making the presentation, and we have the legal disclaimers as usual, so I recommend you to read that because we will provide some outlooks for the business moving forward. Coming into page number four and a summary of this quarter, we continue to see an improvement in our cash position. Of course, some of that has been helped by the favorable exchange rate development, but as Joe will talk to you a little later, we have actually realized that even the amount of that favorable exchange rate evolution.
Fundamentally, we see a positive development in cash flow from operations and also in our EBITDA, which landed on SEK 39 million for this first quarter. The driver behind that has been a stable revenue in the U.S. In Swedish krona, of course, the exchange rate has a positive impact. We continue to see a positive impact of our Cox program to improve our manufacturing efficiency. That now has a full impact, which improves the gross margins. Also, during the first quarter, we have been quite cost-conscious, partly, of course, as the COVID-19 epidemic is holding back some activities, but also in general, Orexo is running a tight shop in terms of cost management. Our cash position and the development that we've seen during the quarter led us to the decision to repurchase a small part of the bond.
It was a little opportunistic based on some of the pricing of the bond in the market, and also we started a repurchase program of 500,000 shares during the first quarter. Again, fortunately, leveraging the weak Swedish krona, so we had positive cash development despite investing quite a lot in buying back bonds and shares. What is very exciting for us moving forward and where I think we have a lot of unique opportunities is within digital therapies. I will talk a little about that, but there's been a lot of movement in the U.S. to improve and facilitate the implementation of digital therapies, as that, of course, in times of social distancing and in particular within mental health, where a lot of the treatment is based on a face-to-face interaction.
FDA has been pushing for a faster route to market for these programs, and that's something we're looking into to see if we can leverage both to have an accelerated launch of , but we're actually also looking into an opportunity to launch OXD-01 when we have finished technical development, and we'll come back to that later. On R&D, we were a little afraid that we would have a delay in our clinical programs. That was the message we got from one of our partners on OX125. However, we are basically ready to start it now during Q2, so we will meet our target of finishing that exposure study for OX125 during the first half. Also, OX124 is progressing according to plan, and we plan to start the pivotal trial in late this year.
We keep the timeline so far despite the challenges provided that come from the COVID-19 epidemic. Just to summarize a little, what are the strategies for Orexo and what are the strategic objectives? What we're really looking at is how can we broaden our portfolio. We have an organization in the US, even though they're grounded at the moment, I still think there's a lot of opportunities to improve efficiency from that organization by adding more products. That can come both from our new therapy area, digital therapeutics, where we are planning to launch the first, maybe two new products in 2020, as it looks like right now. We are, of course, going to work with our pipeline, and we see OX124 could be ready for filing next year, with then launch most likely early 2022.
Of course, Zubsolv maintained that as a growth driver in the company despite some of the recent volume decline that we've seen the last year, and we've talked to that many times before, but I will, of course, come back to that now. Moving to the next page or two pages ahead, going into the Zubsolv franchise, I'm on page number seven. What we've seen is during this quarter, we have seen the market growth has accelerated somewhat. We're now reaching a 15% market growth. We have seen some weeks where it actually was up at 17%. There was a spike in the market during the last week of March, in particular if you look in the volume, and that is the number of tablets. If you look at the number of scripts or the number of new scripts, you would actually see a quite significant decline.
What we've seen in the market in the U.S. is that the scripts in general are getting much larger. For example, Orexo scripts of Zubsolv have increased with nearly 20% during that. That means before we had a script size, I think about 31, 32 tablets of Zubsolv on one script. Now we are closer to 40. That has been part of the effect of the COVID-19, and we saw that spike in March. The most recent weeks, the market has gone a little back to pre-COVID-19 levels, but still, that has maintained a healthy growth compared to last year. We are now going to monitor, and we are going to that moving forward, the market in two segments. One is what we call the open segment, and that is where Zubsolv is reimbursed and has access to the market.
The other one is where it's non-reimbursed, and that's basically where we have no reimbursement, often within Medicaid, but we'll also add cash into that. Even though we are reimbursed for people who are paying cash, with the availability of multiple generics, both generic Suboxone pills and Suboxone tablets, it's very difficult to compete on an out-of-pocket basis if the domains are non-reimbursed. Moving to the next page, let's see how this has evolved. Here we're splitting out the Humana, Healthcare, and Humana, United Healthcare, and Cash, because what happened in the cash segment, why we're putting them into the same group as Humana and United Healthcare, is that the trigger of both Humana and United Healthcare to open up for generic was the availability of Suboxone film generic, and that came during the first quarter last year.
That is also what has driven the cash market to move away, as there are now a lot of film alternatives available in the market. If you look at this, we continue to see a decent development in our open access, where we have seen an 8% growth during the last year. In United and Humana and Cash, we saw a nearly 30% decline, and that's approximately the same as we've seen in the non-reimbursed. However, the non-reimbursed is a much, much smaller part of our sales.
The positive part of this is that when you look at the curve for Humana and UnitedHealth Group, you will see that there was this drop in the early Q1, and I talked about that when we had our Q1 call, and in some of the interviews I've done afterwards, we expected to see a decline in the early part of 2020. That is basically because of the system that you have in both Humana and UnitedHealth Group within the commercial segment, where patients are asked to pay a larger part of all of the prescription when we start a new calendar year. That trigger, we know that from before, that triggers some patients to move to generic alternatives.
As there now were generic alternatives available in the market, we did expect some decline in Humana and UnitedHealth Group, and in particular in UnitedHealth Group, that has led to a decline in the early part of January. After that, in February and March, and in March, Orexo saw a small upward going trend, but I think part of that is explained by the COVID-19 when patients were, you say, hoarding or building their own inventory. The open market continues to work well. Looking ahead, what has really been positive for us in the open market has been the Caremark, where we've seen Caremark being a significant growth driver throughout 2019.
Here, when you look at the differences of Caremark and the other three large PBMs in the U.S., all of the other ones also offer Suboxone film as part of their reimbursement. Caremark took away Suboxone film in October 2019, which led to a bump in Caremark demand. While we never know, I actually anticipate that sooner or later Suboxone film will also have a challenge to maintain that reimbursement level at Prime Therapeutics, Express Scripts, and Optum, and that could give us an additional growth opportunity for Zubsolv. Looking ahead, despite having some negative volume overall on Zubsolv, again, triggered by the loss of or addition of generic alternatives, because we're still reimbursed with Humana and United, but with competition. We see that there are good opportunities for us to continue to improve our market access.
We still see a large part of the Medicaid market where we're not accessed. We're looking at some of the major states in the U.S. to see other ways around where we actually could get into these states and could have a big bump in our market access. We're not there yet, but if we do, that could give us some quite significant growth opportunities. We lost a little access in Medicaid this year. We gained a little in commercial, but in Medicaid, that was in Pennsylvania, and now Pennsylvania is becoming very at one very large state. Of course, if we over time could add on Pennsylvania, that would be a great growth opportunity.
We have seen an acceleration in the last few weeks that the competition from what we call the preferred authorized generic of Suboxone film, that will mean the original Suboxone film package as generic, that was stopped to be supplied by Indivior by the 1st of January this year. We have seen the market share. A few weeks ago, it was actually 18%, and now just over three weeks, I think it's dropped down to 9%. It has nearly gone from the market, and this is something we know from the physicians, that patients often prefer a branded alternative. Here we think there's an opportunity for us to promote Zubsolv to patients and physicians who want to be sure that they know what they're getting when they get to the pharmacy.
I will say that this is an area where the COVID-19 is having a little obstacle for us, because to do that switch, it would be easier if we had full access to the physicians. We are working through a lot of other channels, so we still think this could be a good opportunity moving forward. Of course, one thing that is important is we are the only one who are out there working with the majority of the physicians in this space. The Depo formulations are targeting other physicians, so in that way, we have an open market to physicians Zubsolv, and for those physicians who like the service we can provide, that could hopefully help us to gain more growth for Zubsolv also.
Moving into our pipeline, and I'm jumping into page number 12, we have three pipeline assets where in particular OX124 is getting pretty close to market as we are now moving into the pivotal trial. We are progressing well in establishing commercial manufacturing processes, and the same will go for OX125. It's based on the same base technology, so we can actually leverage a lot of the work we're doing for OX124 on OX125. OX125 is the next one in clinical trial and is due to start now in May. OX338, we had the result early in Q1. We talked about it in the Q4 report for 2019. We had very positive data for OX338, and we now continue to work on the formulation for that. If you look at the potential of these different products, it's quite sizable potential for all of them.
Particularly if you look at just OX124, we think we will have a less competitive situation than we had with Zubsolv in a quite heavily growth market, and we have a product that is clearly differentiated. Going to page 13, why do we think that there is a need for this product? It is again where there is, fortunately, we are seeing that the growth in number of deaths from opioid overdose seem to have ceased a little in 2018. We have seen that the overdose deaths from synthetic opioids have continued to grow. If you say, what is it that we are coming in with with OX124? We are coming in with a product that is designed to target overdose by synthetic opioids by being more powerful, faster to action, and have a longer lasting effect.
When you look at page 14, these are the results from our PK study of OX124 comparing to the leading product in the market, Narcan Nasal Spray. You can see that we had a significantly faster uptake. We had a higher uptake, and we have a longer lasting effect, and that's exactly what we were looking for. We feel quite confident that we have a product that is clinically differentiated in a meaningful way because we can address this overdose epidemic of synthetic products like fentanyl. Moving into digital therapies, our next frontier or our venture that we're working with, which I'm personally very excited about, and moving into page 16.
One of the things that we're seeing right now, and I'm looking at headlines about which industries are benefiting from the lockdown and COVID-19 pandemic we're seeing right now, it's very clear that the online digital health solutions for patients, whether it's meeting your doctor through an app or other support programs, will benefit from this system where patients and physicians are trying to avoid to meet as much as possible. What that has led to was actually now in April, we have seen a new decision in the U.S., which is from the Department of Health and Human Services, where they open up for an accelerated access for what they call digital health devices for treating psychiatric disorders during the coronavirus, the coronavirus disease 2019, and the public health emergency. This is spot on where we are with Vorvida. It is spot on where we are with OXD-01.
This letter coming out from the Department of Health and Human Services and from the FDA is something that we, of course, are looking into leveraging and where we think there could be an accelerated path to market for Vorvida and OXD-01. That, of course, is a tremendous opportunity. Going to page 17 to say, what is it that we're trying to do with Vorvida? We're looking at a fully automated digital therapy to help troublesome drinking behavior. It's already been developed. It's selling in Germany. I know from our partner in Germany that the demand has spiked after the COVID-19 lockdown of Vorvida and their other tools in Germany. In particular, Vorvida, we think, is where it couldn't be more spot on in terms of some of the aftermath of this pandemic.
Just in Sweden, I heard data that the sales of alcohol from Systembolaget has increased to 10%. We saw data from Boston, Massachusetts, where sales of alcohol in the first weeks of the lockdown were spiking dramatically. That is what we've seen in other crises like this. People just tend to drink more, and we think Vorvida is coming in as a very helpful solution to this. OXD-01, same thing. What is needed when you treat patients with opioid use disorder? Today, the counseling sessions and the group sessions are very important elements of that treatment. Coming in with a digital therapy that can actually complement and actually also some data show for Vorvida, for example, can replace these counseling sessions, we think could be very important for the healthcare system in the U.S.
Now we are looking to, can we get this to the market much faster than we were planning for initially? That actually means a launch, not in Q3, but maybe even in Q2 for Vorvida. When we've done the technical development of OXD-01, which is now planned for the autumn, when we're done with that and we see that it works, we're considering, can we launch it immediately without having clinical data, maybe in collaborations with payers in the U.S.? Vorvida on page 18, we're targeting the 16.6 million heavy alcohol users in the U.S. We think that the COVID-19, this amount of patients are expected to grow. This is why we think there's a significant opportunity for us to target that group of heavy alcohol users. Very excited about the opportunity for Vorvida. Coming to page number 19, it's OXD-01.
Why do you think this is important? I think OXD-01 has even had an even more well-defined path to market than what we're seeing for Vorvida. The reason is that today, to treat opioid use disorder with a medication like buprenorphine that we have in Zubsolv, it's compulsory that you should offer psychosocial support. You basically have one leg of the treatment that you can offer with this digital approach. It's very well-defined. We are already there with our commercial organization. We know that the opioid epidemic, unfortunately, continues to evolve under the shadow of COVID-19. Orexo, we are already a strong player in this market. We are well known to most of the physicians. I think to be able to launch this fast is a tremendous opportunity for us also.
With that, I will leave over to Joseph DeFeo to take us through our financial results from the quarter. Joe, please.
Hello. I'm happy to present another strong, profitable quarter for Orexo. If you go, we'll start off with our U.S. business. If you go to slide 21, you can see, if you remember, generic film was launched at the end of the first quarter of last year. Also, as Nikolaj mentioned, you know that two of our exclusive plans added to generics last year. Despite that, you can see that our sales are still holding up very strongly. Our gross profit continues to improve as we realized the benefits of our cost reductions in our cost of sales of Zubsolv. Our profit margin continues to improve. It's grown over the last 12 months to 47.1%. Another strong, profitable quarter for the U.S. business.
If you go to the next slide, this shows our sales. Zubsolv sales did grow slightly, but this was due to currency. We were overall, our sales have flattened. As I mentioned, in the previous year, in the first quarter, we had higher sales because the generic film was just getting launched at the end of last year, and we still had the exclusives on our two main businesses. Our app store royalties, we did have higher than expected royalties from the end of Q4 of 2019. That extra amount was realized in Q1. Those royalties will go down significantly going forward. We had flat sales. Let's go more into depth than that related to Zubsolv on slide 23. You can see that they grew slightly, 1.3, which is mostly due to the positive impact of foreign exchange.
However, when you start at the beginning of this, you can see Nikolaj introduced our open business where we're able to compete. We grew 8%. That was a positive contribution to our sales. We did see some declines in our non-reimbursed and our UnitedHealth Group Humana in cash. As Nikolaj mentioned, we're starting to see that portion starting to flatten out. We also had some wholesaler inventory decreases from the end of the year in the first quarter, which negatively impacted us. You can also see, as we've shown in the last couple of quarters, we continue to see lower returns. Our trade group has done a great job of managing the inventory that's out there, and we expect to see this continue for a couple more quarters. That has been a positive impact on our sales.
Our price increase in payer mix has been favorable as well. Overall, Zubsolv sales did increase year over year. If you go to the next slide, this is our P&L. We mentioned the sales were slightly above last year. I also mentioned that our cost of goods has decreased over the prior year, and that is due to our efforts, which are fully realized now, to reduce our cost of sales. It is having a very good positive impact on our gross profit. Our operating expenses, our selling expenses are up. This is primarily due to the costs related in preparation to launch for Vorvida in the U.S. in Q2. Our administrative costs are down to normal levels.
As you may recall, in Q1 of last year, that is when we had the final cost of our IP litigation, which we won securing our patent until 2032. Our R&D expenses are increased due to our development projects. We had some favorable impact in our exchange, which led to the rest of the operating income that you see of SEK 10.1 million. Our operating costs are down versus prior year. Overall, this leads to a good EBIT number. Last year, we were fairly flat. We now have a good profitable SEK 34 million. Also, what is positive here is our net financial items, which is SEK 44 million. This is due to the strong move in the U.S. dollar and us having a good cash position in U.S. dollar.
However, it's important to realize that SEK 29 million of this SEK 44 million is now fully realized because we took advantage of the strong U.S. dollar and converted some of our money into SEK. That reduces our risk of our U.S. dollar cash position to any strengthening of the SEK in the future. That is a good, strong, realized gain for the month. You can see we had a nice profitable SEK 82 million for the first quarter. If you go to the next slide, this is new that we're doing for starting Q1. We're introducing segment reporting to further get some transparency around the parts of our business. As we just discussed the first part, that is our U.S. pharma operations. You can see that our EBIT improved there. We're also introducing now our digital therapeutics.
This will include Orexo development and commercial expenses for digital therapies around the world. There could be some cost allocation. There will be cost allocation from other parts of the organization, such as when we launch Vorvida, we will have some Salesforce resources allocated from U.S. pharma to digital therapeutics. In the first quarter, this is part of our startup of our commercial organization in the U.S., the expenses that you see. Finally, our headquarters and pipeline, which consists of our Orexo headquarters in Uppsala, our pharmaceutical development, and also some royalty income from our ex-US pharma products. If you go to slide 26, this shows our strong financial position. Yes, you can see that cash flow for the quarter was negative and that a lot of this increase in cash was due to exchange.
However, you can see that our cash flow from operating activity was a good positive SEK 48 million. It is also important to note in the financing activity that this was Orexo during this first quarter, taking advantage of the strong move in the U.S. dollar and buying back some shares at a favorable price, especially a favorable price to today. We also bought back some of our bonds at a favorable price. That was SEK 40 million. When you take those away, we did have a positive operational cash flow for the quarter. Our net cash position is also improved because we reduced our bond by SEK 40 million. This also has led to, we will see lower interest expense going forward with the lower bond amount that is out there at this point.
As I mentioned, we had exchange rate gain and SEK 29 million of this was realized. With that, I'll pass this back to Nikolaj to go over the outlook.
Thank you, Joe. I will move immediately into page number 28. This one is addressing how we see the impact of COVID-19. As we said also during our Capital Markets Day in March, we see very limited impact so far from the COVID-19 disease. We do see a risk in development because we are depending on so many different partners and multiple different geographies. So far, we have been able to work around the hurdles that have come up. We have progressed as we have anticipated. I think the one part that we can say has the opposite effect is that the digital therapies are now grounded under the public health emergency in the U.S.
We see there's an opportunity to accelerate the launch of those. On the supply side, we haven't seen any risk, and we actually don't see any risk moving forward for supply of Zubsolv as a whole manufacturer in the U.S. On sales, we do have the situation that our field reps are not able to move in and visit the offices. We know that a majority of the offices in the U.S. have moved their contacts with patients over to telecalls. They talk to their patients over the phone rather than meeting them in person. There's been a fast reaction by the U.S. authorities to allow an increased use of prescriptions over the telephone. We don't see that this market will have a severe impact.
I do think that looking over time, if this is not, the travel restrictions are maintained, we think there could be some impact on the growth and access for new patients to come in. Also for the new physicians who start feeding in this space, of course, it's more difficult for us to create a relationship with them if we're not able to meet them. As we've said before, we still believe that if the travel restrictions are lifted now during the first half of the year, we think the impact on sales will be limited. Even if they should continue, I think the impact will be limited, but it could be more difficult to grow both the market and also Zubsolv. From a financial perspective, as Joe has just talked about, we don't see that there is any risk to the company.
I recognize here we have the numbers of cash from the end of Q4. This is a little higher cash level than we have in this quarter. Our outlook for 2020 is nearly untouched. The one comment that we have to our outlook is that we find that there is some increased uncertainty due to the COVID-19 and also the quite large fluctuations we have seen in exchange rates. We have decided not to change this compared to where we were last time because we do see while we see some of the expenses that are becoming more expensive because we are paying in dollars, we also see that some expenses, for example, travel, are declining, which so far is kind of about equal.
We are keeping our outlook, but there is some increased uncertainty due to COVID-19 than what we had when we first communicated this in January. Moving to page 30, we see 2020 is a year where we have a steady news flow. Just looking at what's close to us, it's the FDA clearance of Vorvida. Now we probably have a backdoor to the market without the clearance that we're asking for, so we could start commercializing very rapidly. We are also expecting our patents for our new technology, for our nasal spray technology, to be published. That's happened now in Q2. Our OX125 exploratory study is on track to start here in May. Our partner product, Ozempic, they have their first one response anticipated during this quarter. Also, it's not in our control.
I don't know if they've been impacted by COVID-19, but last time we talked to them, it was all on track, as I understand. In Q3, we see the launch of Vorvida, which I've just flagged. If we see this backdoor is open for clearance for Vorvida into the market, we probably start commercializing already now in Q2. For FDA, we're expecting Q3 to have a decision on our application to get fast track designation for OX124, given that it's addressing the public health emergency around opioid overdose. OXD-01, we anticipate to see our technical development finished during Q3. Now we're actually considering should we launch that immediately given the opportunities opened up by the FDA, as I talked about earlier. Also in Q4, we will start the pivotal trial of OX124.
To round off, why do we think Orexo is an exciting company for you as a shareholder? There's no doubt we're addressing a market with significant patient need. I would say, unfortunately, one of the long-term effects of the crisis we're looking at, both from the economic perspective but also from the healthcare perspective, is that we probably see a growth in the number of patients for addiction, both alcohol and opioids. We do that from a strong financial basis and profitability. We have a very strong base of cash that we can now leverage to invest into this opportunity to have an accelerated launch, for example, for digital therapies. We have an established U.S. commercial platform. There's plenty of space to add more products into that, digital therapies or other pharma products. We have a pipeline that's making good progress.
Hopefully, we'll have one phase next year, OX124. Then we have our digital therapy, which I think is one of the next big mega trends in the healthcare space. In particular, I think it's one of those areas where the development has evolved from probably something we could have expected to take years is now going to take months of evolution. A very exciting space to be in. A little unfortunate because I would rather be without COVID-19. With that, we are done with the presentation. Before we open up for questions, I have actually received questions through the internet. I will address those first and then operate, and then we can move on to the Q&A session. I have received some questions around the public market access, which today is about 35%. Can you address the development market access for public?
Yes, I can. We were up at 37 or 38, I think, last year. What we lost were some smaller agreements in Pennsylvania as Pennsylvania decided to put all of the Medicaid formularies under one roof. Before, it had what we called Managed Medicaid and Fee-for-Service Medicaid, and each of them had their own independent formularies. Now it is becoming one formulary, and they were following the Fee-for-Service Medicaid in Pennsylvania's formulary, and their Zubsolv was not reimbursed. Should we come back on Pennsylvania, that, of course, offers a significant growth opportunity. What is your long-term view on the market access for public? As I said before, with the exception of Philadelphia, we are actually seeing we have been added to some smaller lists. I do think that there are some large opportunities in the public space where we sizeable pieces of market access can we get into those plans.
I think there's a good opportunity to improve. At the same time, it is a little awkward time right now. It's difficult to meet the Medicaid providers. It's difficult to negotiate because people are not allowed to meet. We still are optimistic. I would also highlight that to Medicaid providers, we are offering a competitive price, particularly compared to the generic versions of Suboxone film. It's not like we are much more expensive. It's quite highly rebated, but it's an important space because it's a lot of growth and a lot of patients. Will the removal of Suboxone film open up access to public? I think in public, it's one of the areas where Suboxone film has already seen that they have also been removed from some areas.
There are some large, in particular, PBMs focusing on the public space who today maintain Suboxone film as the preferred option. If they remove that, it should definitely open up an opportunity for Zubsolv to be added on to more lists. I received another question from another listener. At the Capital Markets Day this year, it was mentioned that Vorvida launched in Germany in 2019. How has Vorvida been received? We are not in here, we're a little subject to what we can communicate from GAIA. I know that my advice from GAIA is hesitant to share these dates because the commercialization in Germany is actually controlled by an insurance company called BAK, one of the largest insurance companies in Germany. I do think I can say that the effect of the COVID-19 lockdown in Germany has had a rapid impact on Vorvida.
I have been both on the phone for a long discussion early last week and also had several mail interactions with Mario during the last week talking about the opportunity that they have seen in Germany for Vorvida and how we could leverage that for the U.S. No doubt that has had a positive effect, COVID-19, on the product opportunity and how it's been received in Germany. I don't have any numbers I can share. That's under confidentiality. With that, operator, I would open up for questions.
Ladies and gentlemen, if you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw the question, you do so by pressing zero two to cancel. Our first question comes from Samir Devani from RX Securities. Please go ahead. Your line is now open.
Hello everyone. Congrats on a good quarter.
I've just got to guess a few follow-up questions on the basis of COVID-19 impact. What's the feedback that you're getting from doctors in terms of the number of OUD patients that they are seeing in the current environment? I guess you mentioned that it was going to be potentially difficult if this period is relatively extended in terms of the travel restrictions to meet new docs. On the other hand, you talked about accelerating the launch of the Vorvida. Perhaps operationally, you can just explain what that acceleration means for you and how you would then in that environment try and attract new doctors. Thanks very much.
On the first one, feedback from physicians on how many patients they're seeing.
We actually did a survey among some of the physicians that we're calling upon using digital channels as our reps are not meeting them in person. Twenty-five percent of the physicians are operating their clinic as usual. The remaining 75% are either going solely on telemedicine, to be exact. I think that was 34%. The remaining are using a mix of telemedicine, meeting some patients that they know in a face-to-face manner. I'm pretty sure just looking at those numbers that that majority also, it's difficult, at least if you should follow guidelines, to start a new patient on treatment if you are not seeing the patients as you need to control whether the patient has what products they're misusing, what kind of misuse that they're doing. You need to take a urine test to see if they're using opioids.
To start a new patient that you have never met, I think a lot of doctors would be hesitant to, not at least because you're afraid of starting a diversion. Patients who have a problem actually saying that they should get a product and then they can start selling it to other people. I think that is an inhibitor for new patients. At the same time, we have heard that Methadone clinics are moving patients over to sublingual products. Methadone today, you need to come often on a daily basis. As that is basically required, that is chewing up, that is probably one of the reasons why we're seeing a decent growth in Medicaid in the most recent weeks, is that some of these Methadone clinics are moving patients to buprenorphine products.
I do think that physicians like the 34% who are only doing telemedicine, I think that will make it difficult to get new patients. Around meeting new docs, that is true for Vorvida. That, of course, is one of the obstacles you have in the market. At the same time, the research that we have done showed that a lot of the physicians really lack an alternative to offer to these patients right now. We also know that a large share of our Zubsolv prescribers are also seeing patients who have an alcohol addiction problem. For those physicians, the Vorvida sales is going to be relatively easy.
I also think a lot of physicians in the U.S. are quite desperate to have a tool that they can offer for people who are suffering from alcohol misuse and who today can't go to the AA meetings. They can't go and see their counselor. Any tool that comes in, in particular, if you have some kind of clinical data to show that it works, you would be more open to test that. I think one of the positive parts with digital therapy is that the side effect of that is minimal. The only side effect is that whatever you have paid out of pocket, you have lost if you don't get any effect.
The time you're using to do the digital therapy is not like a pharmaceutical where there's basically for all pharmaceuticals, there's some kind of side effects that are negative for the patient that we need to monitor. I think Vorvida is an easier product to sell using digital channels than if you have a pharmaceutical. When the test we've done with Vorvida shows that it resonates quite well, it's quite easily sold to the physicians. We hope that that is something that can help. I think the larger hurdle for Vorvida is to ensure we have a payment structure that works and gets the insurance companies involved in this. That is why we put a lot of our efforts right now to ensure we have that process up and running. How do we get paid?
If we have a product that is insured by the insurance companies, then I think we have a fantastic market opportunity.
That's great. I'll just make one follow-up. Are there any particular medical conferences in this quarter or the next quarter that you are particularly targeting to promote Vorvida?
There would have been, but I think right now we are in the travel restriction where we can't travel. You normally actually think it's right now that you would have the normal ASAM American Society of Addiction Medicine would have been meeting right now, I think, in last week's April normally. That one has been canceled. I think that right now, that unfortunately doesn't offer us an opportunity to promote the product.
Okay, that's great. Thanks very much.
Thank you. Our next question comes from Klaus B from Nordea. Please go ahead.
Your line is now open.
Thank you very much, and thanks for taking my question. It is all from Vorvida, and you addressed most of it already in previous questions. Just to follow up on that, if I understand it correctly, Vorvida has been launched in Germany and Switzerland in the EU. Are there additional launches planned following that? Thank you.
That is a good question, Klaus. I know that GAIA is looking aggressively into that right now. The rights, and here again, I do not know how the rights are looking for the products, but I know for the markets it is sold in, it is commercialized through the insurance company who is actually commercializing it to their clients. It is not through the normal channels of medical devices or pharmaceuticals. I would assume that BAK is only present in these markets, and that is maybe why they are there.
If there's a restriction or other reasons why it's not been launched in other markets, I'm actually not aware of this for Orexo. We have only been focusing on the U.S. market and not for Europe. I'm sorry, I can't give you more details on that. I know that they right now are very enthusiastic about what they've seen in Germany in particular. I'm pretty sure that our friends at GAIA are very actively looking at opportunities to promote Vorvida in other markets in Europe at the moment.
Okay, thank you.
This question comes from Gergana Almquist from Rede ye, please go ahead. You might have no reason.
Hello, I have a question about reimbursement as well. What is the timeframe there? When will you know whether and how much will you be reimbursed for Vorvida and the user who enjoys the treatment ?
Yeah.
The U.S. system works in a way that you have, I think it's 2,000 insurance companies or employers who are reimbursing pharmaceutical and medical devices. I think there's a timeline. There are some of these insurance companies where you can get access to pretty fast depending on what category you end up in. There are others where it's a much longer process. In our original launch plans, we were planning to get approval or clearance for Vorvida now in early Q2 or during May. We would start contacting insurance companies with that clearance in the back. Last week, basically, the letter that I had in the presentation where we were offered by the FDA and a backdoor to the market for these digital therapies, that came last week. We are right now actually looking at how we can accelerate that reimbursement process.
As I say, our original plan was when we talked about launching in September, it would have been to add some insurance companies during the summer and then do a targeted launch together with these insurance companies during the autumn to ensure that all of the processes were up and running and then expand stepwise. Where we are right now, it's a little upside down. We would need to go out and talk to the insurance companies. The thing is, for us to talk to them, we need to have a product that we know we can commercialize. That's what we're looking together with the lawyers right now. We're looking into what are these new exceptions for digital therapies and are there any things that we need to be concerned about before we can start commercializing broadly.
We have done a lot of research with insurance companies the last few months, and it's quite universally positive. Of course, some of them have questions that need to be addressed. We're optimistic we can get insurance coverage quite shortly after we are launching. A lot of the insurance companies are desperately looking for alternatives for their clients, which could help us also. I would say when we launch in Q2, we hope to have some insurance companies covering that. I'm quite certain that that will not be universal coverage of the product in the U.S. I think that will take a few years before you have that in place. COVID-19 accelerates that.
Do you know how much would that reimbursement be approximately? Do you have an idea?
This is a little competitive information, but what we have built our models on is that we had at the Capital Markets Day was a price of $600 per patient for one treatment. That means basically a six-month treatment with Vorvida. We also wrote that was in the lower end of the span that we were communicating. As this is competitive information, I do not want to be more exact. I would say we put a floor around $600 per patient, but it could be higher also. I think we said $600-$1,000 in range.
Okay, thank you.
Thank you. As I have been notified of all your questions, I will return the c onference to you.
Okay, thank you very much for joining our call. It is, as I said, a clearly unusual time. The positive is for Orexo is that we are pretty well positioned.
We have not seen a lot of impact from COVID-19, and we feel very comfortable that we are in a place where some of our pipeline is really coming in at the right time to address some of the issues that we have seen in the market right now. Thank you for your attention, and we will return with any further questions. You can send those through emails, and we will reply to them on email. Thank you very much for your attention, and stay safe, all of you. Bye.