REG - Indivior PLC - 1st Quarter Results
28/04/2022 07:00
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RNS Number : 6158J Indivior PLC 28 April 2022
http://www.rns-pdf.londonstockexchange.com/rns/6158J_1-2022-4-27.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/6158J_1-2022-4-27.pdf)
April 28, 2022
Q1 2022 Results Announced; On Track to Achieve FY 2022 Guidance; New $100m
Share Repurchase Announced
Quarter to March 31 (Unaudited) 2022 2021 % Change
$m $m
Net Revenue 207 180 15
Operating Profit 54 57 -5
Net Income 41 80 -49
Basic EPS (cents per share) 6 11 -45
Adjusted Basis
Adjusted Operating Profit* 54 51 6
Adjusted Net Income* 41 38 8
Adjusted Basic EPS* (cents per share) 6 5 20
*Adjusted Basis excludes the impact of exceptional items as referenced and
reconciled in Notes 4 and 6. Adjusted results are not a substitute for, or
superior to, reported results presented in accordance with International
Financial Reporting Standards.
This Release Contains Inside Information.
Comment by Mark Crossley, CEO of Indivior PLC
"Our first quarter results show a strong start to the year and put Indivior on
track to meet our FY 2022 guidance. Our key growth driver, SUBLOCADE®
(buprenorphine extended-release) injection, is continuing to make good
progress in penetrating targeted Organized Health Systems (OHS) accounts
following the growth investments we made in the second half of 2021. As a
result, SUBLOCADE is increasingly available to meet the needs of opioid use
disorder patients at a time when combating the U.S. opioid epidemic has never
been more urgent, with over 80,000(1) Americans estimated to have died of an
opioid-related overdose in the latest 12-month period.
Our balance sheet and cash position remain strong as a result of our continued
good operating performance. We are today announcing a new share repurchase
program for up to $100m which underscores our consistent and disciplined
approach to capital allocation that appropriately balances returning capital
to shareholders with maintaining our ability to execute on our strategic
priorities. Lastly, we continue to consult widely with our shareholders on an
additional US listing for Indivior shares and, if supported, we expect to seek
formal shareholder approval in September of this year that would facilitate an
additional listing in the US."
Q1 2022 Financial Highlights
· Net revenue (NR) of $207m +15% versus Q1 2021 NR of $180m.
· Reported operating profit of $54m (-5% vs. Q1 2021 op. profit of
$57m). On an adjusted basis, Q1 2022 operating profit was $54m (+6% vs. adj.
Q1 2021: $51m).
· Reported net income was $41m (-49% vs. Q1 2021 net income of
$80m, which includes $42m of exceptional items). Adjusted net income of $41m
(+8% vs. adj. Q1 2021: $38m).
· Cash of $874m and investments of $150m totaled $1,024m at the end
of Q1 2022 (FY 2021 cash balance of $1,102m). The use of cash primarily
reflects operating profit offset by the expected unwind of trade payables from
year-end 2021 and the required 2022 DOJ payment. Net cash including
investments was $776m (FY 2021 net cash of $853m). In Q1 2022 the Group
invested in a portfolio of investment-grade debt securities ($139m) and
ordinary shares of Aelis Farma ($11m).
Q1 2022 Operating Highlights
· Q1 2022 SUBLOCADE NR of $85m (+98% vs. Q1 2021; +13% vs. Q4 2021)
from strong growth in the OHS channel and continued new US patient
enrollments. Q1 2022 US dispenses were approximately 63,900 units (+79% vs. Q1
2021 and +14% vs. Q4 2021). Total SUBLOCADE patients at the end of Q1 2022
were approximately 57,000(2) (49,000(2) at the end of 2021).
· Q1 2022 PERSERIS® (risperidone) extended-release injection NR of
$5m (+67% vs. Q1 2021).
· Q1 2022 SUBOXONE® (buprenorphine and naloxone) Film share
averaged 22% in Q1 2022 (Q1 2021: 20%) and exited Q1 2022 at 20% (Q1 2021:
20%). The Group does not promote SUBOXONE Film in the U.S.
· In Q2 22, the Aelis Farma asset (AEF 0117) is expected to
commence the 330-patient Phase 2b study in cannabis use disorder
(ClinicalTrials.gov Identifier: NCT05322941).
1 Centers for Disease Control and Prevention (CDC).
2 On a 12-month rolling basis.
On Track to Achieve FY 2022 Guidance
FY 2022 guidance issued by Indivior on February 16, 2022, is unchanged.
Share Repurchase Program
Indivior will commence shortly a new share repurchase program of its ordinary
shares for up to a maximum amount of $100m. To execute the program, Indivior
will enter into a non-discretionary agreement to carry out on-market purchases
of its ordinary shares. Further details and disclosures about the share
repurchase program will be announced upon commencement.
Optimal Listing Structure for Indivior Shares
On March 31, 2022, the Group announced the commencement of formal shareholder
consultations on the potential for an additional listing for Indivior shares
on a major US exchange. If sufficient shareholders indicate their support for
an additional listing during the consultation, the Board's current intention
would be to seek formal shareholder approval in September of this year that
would facilitate an additional listing in the US. A determination whether to
seek formal shareholder approval is expected to be announced with the Group's
H1 2022 results at the end of July.
U.S. Opioid Use Disorder (OUD) Market Update
In Q1 2022, the U.S. buprenorphine medication-assisted treatment (BMAT) market
grew in mid-single digits. The Group continues to expect long-term U.S. market
growth to be sustained in the mid- to high-single digit percentage range due
to increased severity and overall public awareness of the opioid epidemic and
approved treatments, together with regulatory and legislative actions that
have expanded OUD treatment funding and treatment capacity. The number of
physicians, nurse practitioners and physician assistants who have received a
waiver to administer medication-assisted treatment and those able to treat up
to the permitted level of 275 patients continued to grow in Q1 2022.
As a result, there is increasing patient access to BMAT. Indivior supports
efforts to encourage more eligible healthcare practitioners (HCPs) to provide
BMAT, and the Group continues to resource its compliance capabilities for the
growing number of BMAT prescribers and patients.
The Group's focus is to continue to expand access to SUBLOCADE amongst OHS and
core HCPs to ensure availability of this potentially important treatment
option to the estimated 1 million+ patients per month who are prescribed BMAT
by HCPs.
Financial Performance in Q1 2022
Total net revenue in Q1 2022 increased 15% to $207m (Q1 2021: $180m) at actual
exchange rates and by 17% at constant exchange rates.
Q1 2022 U.S. net revenue increased 26% to $165m (Q1 2021: $131m). Growth in
the overall U.S. BMAT market was in-line with Group expectations discussed
above ("U.S. Market Update"). Underlying market growth, together with
SUBLOCADE net revenue growth of 98% to $79m (Q1 2021: $40m) drove the U.S. net
revenue increase. SUBOXONE Film share was resilient with Q1 2022 average share
of 22% versus Q1 2021 average share of 20%. PERSERIS net revenue increased 67%
to $5m (Q1 2021: $3m).
Q1 2022 Rest of World (ROW) net revenue decreased 14% at actual exchange rates
to $42m (Q1 2021: $49m) and 10% at constant exchange rates. ROW SUBLOCADE net
revenue contributed $6m in Q1 2022 (Q1 2021: $3m). The NR decline in ROW was
mainly due to ongoing competitive pressure in the legacy tablet business in
Western Europe and the disposal in 2021 of the legacy TEMGESIC®/ BUPREX® /
BUPREXX® analgesic franchise ($2m of NR in Q1 21), partially offset by NR
from new products.
Q1 2022 gross margin as reported was 82%, unchanged versus the year-ago
period. Q1 2022 gross margin reflects favourable product mix primarily due to
the continued growth of SUBLOCADE offset by the relative strength of SUBOXONE
Film in the U.S., particularly in less profitable government channels, and by
higher cost inflation.
Q1 2022 SG&A expenses as reported were $109m (Q1 2021: $83m). There were
no exceptional items recorded in the current period. Q1 2021 SG&A expenses
included an exceptional $5m release of DOJ related matters provisions. On an
adjusted basis, Q1 2022 SG&A expenses increased 24% to $109m (Q1 2021:
$88m). The increase primarily reflects sales and marketing investments to grow
the Group's long-acting injectable technologies, SUBLOCADE and PERSERIS, along
with increased travel and entertainment.
Q1 2022 R&D expenses were $8m (Q1 2021: $9m). The slight decrease over the
year-ago period is due to the timing of certain post-marketing and early-stage
pipeline studies and production capacity investments in 2022.
Q1 2022 operating profit as reported was $54m (Q1 2021: $57m). Exceptional
benefits of $6m are included in the year-ago period. On an adjusted basis, Q1
2022 operating profit was $54m versus $51m in Q1 2021. The increase primarily
reflects higher net revenue partially offset by increased SG&A expenses.
Q1 2022 net finance expense in the quarter was $6m (Q1 2021: $4m). The
year-ago period includes interest income of $2m generated on tax refunds that
did not repeat in the current period.
Q1 2022 tax expense was $7m giving an effective tax rate of 15% (Q1 2021 tax
benefit: $27m or -51%). There were no exceptional items in the current period.
On an adjusted basis, Q1 2021 tax expense was $9m (effective tax rate: 19%),
excluding a $36m tax exceptional benefit which predominantly relates to the
approval of tax credits by the Internal Revenue Service in relation to
development credits for SUBLOCADE claimed for years 2014 to 2017.
Q1 2022 reported net income was $41m (Q1 2021: $80m). Exceptional benefits of
$42m are included in the year-ago period. On an adjusted basis, Q1 2022 net
income was $41m versus $38m in Q1 2021.
Basic earnings per share was 6 cents on both a reported and adjusted basis (Q1
2021 basic earnings per share of 11 cents and 5 cents on an adjusted basis).
Balance Sheet & Cash Flow
Cash and cash equivalents as of March 31, 2022, were $874m, a decrease of
$228m versus the $1,102m position at year-end 2021. The decrease in cash and
cash equivalents was primarily due to investing $150m in a portfolio of
investment- grade debt securities ($139m) and ordinary shares of Aelis Farma
($11m). The remaining decrease was due to settlement payments made for the DOJ
Resolution ($54m) and RB settlement ($8m) and timing of payments made on
government rebate payables. Gross borrowings, before issuance costs, were
$248m as of March 31, 2022 (ending FY 2021: $249m). As a result, net cash,
including investments (as defined in Note 9) stood at $776m as of March 31,
2022 (FY 2021: $853m), a $77m decrease over the fiscal year.
Net working capital (inventory plus trade receivables, less trade and other
payables) was negative $357m on March 31, 2022, versus negative $423m at the
end of FY 2021. The change in the period was primarily a result of timing of
payments made on government rebate and trade payables.
Cash used by operating activities in Q1 2022 was $64m (Q1 2021 cash generated:
$95m), representing a change of $159m primarily due to settlement payments for
the DOJ Resolution and RB settlement and timing of payments made on government
rebates payables. Net cash outflow from operating activities was $75m in Q1
2022 (Q1 2021 cash inflow: $89m) reflecting interest paid on the Group's term
loan facility and interest paid on settlement payments.
Q1 2022 cash outflow from investing activities was $149m (Q1 2021 cash inflow:
$1m) which reflects investing $150m in a portfolio of investment-grade debt
securities and ordinary shares of Aelis Farma offset by proceeds received from
the out-licensing of nasal naloxone patents.
Q1 2022 cash outflow from financing activities was $2m (Q1 2021: $3m)
reflecting the principal portion of lease payments and quarterly amortization
of the Group's term loan facility offset by proceeds received from the
issuance of shares.
R&D / Pipeline Update
Indivior's quarterly R&D and pipeline update may be found here
(https://www.indivior.com/admin/resources/dam/id/889/FINAL%20Q1%2022%20R%26D%20Update.pdf)
.
Principal Risk Factors
The Group utilizes a formal process to identify, evaluate and manage
significant risks. The Directors have reviewed the principal risks and
uncertainties for the remainder of the 2022 financial year and do not consider
there to be any changes from those reported within the 2021 Indivior PLC
Annual Report. The principal risks and uncertainties affecting the Group's
business activities are detailed on pages 47 to 56 of the 2021 Indivior PLC
Annual Report. These include the following: business operations; product
pipeline, regulatory and safety; commercialization; economic and financial;
supply; legal and intellectual property; and compliance. Please click here
(https://www.indivior.com/en/investors/results-reports-presentations) to
access the report or go to www.indivior.com/annual-reports/
(https://www.indivior.com/en/investors/results-reports-presentations) .
The person responsible for making this announcement is Kathryn Hudson, Company
Secretary of Indivior PLC
Exchange Rates
The average and period end exchange rates used for the translation of
currencies into U.S. dollars that have most significant impact on the Group's
results were:
Q1 2022 Q1 2021
GB £ period end 1.3086 1.3778
GB £ average rate 1.3433 1.3785
€ Euro period end 1.1080 1.1774
€ Euro average 1.1234 1.2069
Webcast Details
There will be a webcast today (April 28, 2022) at 1:00 PM BST (8:00 am EDT)
hosted by Mark Crossley, CEO. The details are below. All required materials
are available on the Group's website at www.indivior.com
(http://www.indivior.com) .
Webcast link:
https://edge.media-server.com/mmc/p/ogy6nn93
(https://nam12.safelinks.protection.outlook.com/?url=https%3A%2F%2Fedge.media-server.com%2Fmmc%2Fp%2Fogy6nn93&data=04%7C01%7Cjason.thompson%40Indivior.com%7C7f902fc594f7414763fc08da13d5198e%7Cbed52191489442999db948e4fb29646e%7C1%7C0%7C637844103237598127%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000&sdata=vOLKrgNqSeD7%2Fizw3CaiELHnKhMFJzYGf39WO5dJgCU%3D&reserved=0)
Confirmation Code: 6687840
Participants, Local - London, United Kingdom: +44 (0) 2071 928338
Participants, Local - New York, United States of America: +1 646 741 3167
For Further Information
Investor Enquiries Jason Thompson VP, Investor Relations +1 804 402 7123
Indivior PLC jason.thompson@indivior.com
Tim Owens Director, Investor Relations Indivior PLC +1 804 263 3978
timothy.owens@indivior.com
Media Enquiries Jonathan Sibun Tulchan Communications +44 (0) 2073 534200
+1 804 594 0836
US Media Inquiries
Indiviormediacontacts@indivior.com
Corporate Website www.indivior.com
This announcement does not constitute an offer to sell, or the solicitation of
an offer to subscribe for or otherwise acquire or dispose of shares in the
Group to any person in any jurisdiction to whom it is unlawful to make such
offer or solicitation.
About Indivior
Indivior is a global pharmaceutical company working to help change patients'
lives by developing medicines to treat addiction and serious mental illnesses.
Our vision is that all patients around the world will have access to
evidence-based treatment for the chronic conditions and co-occurring disorders
of addiction. Indivior is dedicated to transforming addiction from a global
human crisis to a recognized and treated chronic disease. Building on its
global portfolio of opioid dependence treatments, Indivior has a pipeline of
product candidates designed to both expand on its heritage in this category
and potentially address other chronic conditions and co-occurring disorders of
addiction, including alcohol use disorder. Headquartered in the United States
in Richmond, VA, Indivior employs more than 800 individuals globally and its
portfolio of products is available in over 40 countries worldwide. Visit
www.indivior.com to learn more. Connect with Indivior on LinkedIn by visiting
www.linkedin.com/company/indivior (http://www.linkedin.com/company/indivior) .
Forward-Looking Statements
This announcement contains certain statements that are forward-looking. By
their nature, forward-looking statements involve risks and uncertainties as
they relate to events or circumstances that may or may not occur in the
future. Actual results may differ materially from those expressed or implied
in such statements because they relate to future events. Forward-looking
statements include, among other things, statements regarding the Indivior
Group's financial guidance for 2022 and its medium- and long-term growth
outlook, its operational goals, its product development pipeline, ongoing
litigation and other statements containing the words "subject to", "believe",
"anticipate", "plan", "expect", "intend", "estimate", "potential", "project",
"may", "will", "should", "would", "could", "can", the negatives thereof,
variations thereon and similar expressions.
Various factors may cause differences between Indivior's expectations and
actual results, including, among others, the risk factors described in the
most recent Indivior PLC Annual Report and in subsequent releases, and:
factors affecting sales of Indivior Group's products and financial position;
the outcome of research and development activities; decisions by regulatory
authorities regarding the Indivior Group's drug applications or
authorizations; the speed with which regulatory authorizations, pricing
approvals and product launches may be achieved, if at all; the outcome of
post-approval clinical trials; competitive developments; difficulties or
delays in manufacturing and in the supply chain; disruptions in or failure of
information technology systems; the impact of existing and future legislation
and regulatory provisions on product exclusivity; trends toward managed care
and healthcare cost containment; legislation or regulatory action affecting
pharmaceutical product pricing, reimbursement or access; challenges in
commercial execution; claims and concerns that may arise regarding the safety
or efficacy of the Indivior Group's products and product candidates; risks
related to legal proceedings, including the Indivior Group's compliance with
its agreements with the U.S. Department of Justice and with the Office of
Inspector General of the Department of Health and Human Services,
non-compliance with which could result in potential exclusion from
participating in U.S. Federal health care programs; the ongoing investigative
and antitrust litigation matters; the opioid national multi-district
litigation and securities class action litigation; the Indivior Group's
ability to protect its patents and other intellectual property; the outcome of
patent infringement litigation relating to Indivior Group's products,
including the ongoing ANDA lawsuits; changes in governmental laws and
regulations; issues related to the outsourcing of certain operational and
staff functions to third parties; risks related to the evolving COVID-19
pandemic and the potential impact of COVID-19 on the Indivior Group's
operations and financial condition, which cannot be predicted with confidence;
uncertainties related to general economic, political, business, industry,
regulatory and market conditions; and the impact of acquisitions,
divestitures, restructurings, internal reorganizations, product recalls and
withdrawals and other unusual items.
Consequently, forward-looking statements speak only as of the date that they
are made and should be regarded solely as our current plans, estimates and
beliefs. You should not place undue reliance on forward-looking statements. We
cannot guarantee future results, events, levels of activity, performance, or
achievements. Except as required by law, we do not undertake and specifically
decline any obligation to update, republish or revise forward-looking
statements to reflect future events or circumstances or to reflect the
occurrences of unanticipated events.
Condensed consolidated interim income statement
Notes
Unaudited Unaudited
2022 2021
$m $m
For the three months ended March 31
Net Revenue 2 207 180
Cost of sales (37) (32)
Gross Profit 170 148
Selling, general and administrative expenses 3 (109) (83)
Research and development expenses 3 (8) (9)
Other operating income 3 1 1
Operating Profit 54 57
Operating profit before exceptional items 54 51
Exceptional items 4 - 6
Finance income - 2
Finance expense (6) (6)
Net Finance Expense (6) (4)
Profit Before Taxation 48 53
Income tax (expense)/benefit 5 (7) 27
Taxation before exceptional items (7) (9)
Exceptional items within taxation 4 - 36
Net Income 41 80
Earnings per ordinary share (cents)
Basic earnings per share 6 6 11
Diluted earnings per share 6 6 10
Condensed consolidated interim statement of comprehensive income
Unaudited Unaudited
For the three months ended March 31 2022 2021
$m $m
Net income 41 80
Other comprehensive (loss)/income
Items that may be reclassified to profit or loss in subsequent years:
Net exchange adjustments on foreign currency translation
(6) 1
Other comprehensive (loss)/income (6) 1
Total comprehensive income 35 81
The notes are an integral part of these condensed consolidated financial
statements.
Condensed consolidated interim balance sheet
Unaudited Audited
Mar 31, 2022 Dec 31, 2021
Notes $m $m
ASSETS
Non-current assets
Intangible assets 78 82
Property, plant, and equipment 56 58
Right-of-use assets 34 37
Deferred tax assets 5 103 105
Investments 7 85 -
Other assets 8 105 106
461 388
Current assets
Inventories 91 95
Trade receivables 195 202
Other assets 8 25 32
Current tax receivable 5 13 13
Investments 7 65 -
Cash and cash equivalents 9 874 1,102
1,263 1,444
Total assets 1,724 1,832
LIABILITIES
Current liabilities
Borrowings 9 (3) (3)
Provisions 10 (5) (5)
Other liabilities 10 (58) (61)
Trade and other payables 13 (643) (720)
Lease liabilities (8) (8)
Current tax liabilities 5 (11) (7)
(728) (804)
Non-current liabilities
Borrowings 9 (238) (239)
Provisions 10 (76) (76)
Other liabilities 10 (417) (474)
Lease liabilities (33) (36)
(764) (825)
Total liabilities (1,492) (1,629)
Net assets 232 203
EQUITY
Capital and reserves
Share capital 14 71 70
Share premium 7 7
Capital redemption reserve 3 3
Other reserves (1,295) (1,295)
Foreign currency translation reserve (26) (20)
Retained earnings 1,472 1,438
Total equity 232 203
The notes are an integral part of these condensed consolidated financial
statements.
Condensed consolidated interim statement of changes in equity
Notes Share Share Capital redemption Other Foreign Retained Total equity
capital premium reserve reserve currency earnings
translation
reserve
Unaudited $m $m $m $m $m $m $m
Balance at January 1, 2022 70 7 3 (1,295) (20) 1,438 203
Comprehensive income
Net income - - - - - 41 41
Other comprehensive loss - - - - (6) - (6)
Total comprehensive income - - - - (6) 41 35
Transactions recognised directly in equity
Shares issued 1 - - - - - 1
Share-based plans - - - - - 3 3
Settlement of equity awards - - - - - (10) (10)
Balance at March 31, 2022 71 7 3 (1,295) (26) 1,472 232
Balance at January 1, 2021 73 6 - (1,295) (13) 1,311 82
Comprehensive income
Net income - - - - - 80 80
Other comprehensive income - - - - 1 - 1
Total comprehensive income - - - - 1 80 81
Transactions recognised directly in equity
Share-based plans - - - - - 1 1
Balance at March 31, 2021 73 6 - (1,295) (12) 1,392 164
The notes are an integral part of these condensed consolidated interim
financial statements.
Condensed consolidated interim cash flow statement
For the three months ended March 31 Unaudited Unaudited
2022 2021
$m $m
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit 54 57
Depreciation, amortization, and impairment 3 3
Depreciation and impairment of right-of-use assets 2 2
Gain on disposal of intangible assets (1) (1)
Share-based payments 3 -
Settlement of tax on employee awards (10) -
Decrease in trade receivables 6 13
Decrease in other assets 7 28
Decrease in inventories 2 3
(Decrease)/increase in trade and other payables (75) 7
Decrease in provisions and other liabilities(1) (55) (17)
Cash (used in)/generated from operations (64) 95
Interest paid (9) (4)
Taxes paid (2) (2)
Net cash (outflow)/inflow from operating activities (75) 89
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments (150) -
Proceeds from disposal of intangible assets 1 1
Net cash (outflow)/inflow from investing activities (149) 1
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings (1) (1)
Payment of lease liabilities (2) (2)
Proceeds from the issuance of ordinary shares 1 -
Net cash outflow from financing activities (2) (3)
Net (decrease)/increase in cash and cash equivalents (226) 87
Cash and cash equivalents at beginning of the period 1,102 858
Exchange difference (2) -
Cash and cash equivalents at end of the period 874 945
(1)Changes in the line item provisions and other liabilities for Q1 2022
include exceptional payments of $50m for the DOJ Resolution and $8m for the RB
settlement agreement (Q1 2021 includes a $10m initial payment to RB in
accordance with the settlement agreement). $4m of interest paid on the DOJ
Resolution has been recorded in the interest paid line item.
The notes are an integral part of these condensed consolidated interim
financial statements.
Notes to the condensed consolidated interim financial statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Indivior PLC (the 'Company') is a public limited company incorporated on
September 26, 2014 and domiciled in the United Kingdom. In these condensed
consolidated financial statements ('Condensed Financial Statements'),
reference to the 'Group' means the Company and all its subsidiaries.
The Condensed Financial Statements have been prepared in accordance with UK
adopted International Accounting Standard 34, "Interim Financial Reporting"
("IAS 34"). The Condensed Financial Statements should be read in conjunction
with the annual financial statements for the year ended December 31, 2021,
which have been prepared in accordance with UK-adopted International
Accounting Standards and in conformity with the Companies Act 2006 as
applicable to companies reporting under those standards. In preparing these
Condensed Financial Statements, the significant judgments made by management
in applying the Group's accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated financial
statements for the year ended December 31, 2021, except for changes in
estimates that are required in determining the provision for income taxes. In
2022, the Group purchased ordinary shares of a listed company and invested in
a portfolio of investment-grade debt securities and has therefore adopted new
accounting policies as disclosed in Note 7. The 2021 condensed consolidated
income statement and Note 3 have been expanded to present other operating
income as a separate line item to provide a consistent comparative
presentation.
The Condensed Financial Statements have been reviewed and are unaudited and do
not include all the information and disclosures required in the annual
financial statements and therefore should be read in conjunction with the
Group's annual financial statements as at December 31, 2021. These Condensed
Financial Statements were approved for issue on April 27, 2022.
As disclosed in Notes 10, 11, and 12, the Group has liabilities and provisions
totaling $477m (FY 2021: $537m) for the Department of Justice (DOJ) Resolution
and related matters and the Reckitt Benckiser (RB) settlement. The Directors
have assessed the Group's ability to comply with the minimum liquidity
covenant in the Group's debt facility, maintain sufficient liquidity to fund
its operations and fulfill obligations under the DOJ resolution and
RB agreement. The Directors have also modeled the risk that SUBLOCADE will
not meet revenue growth expectations (considering a 15% decline on
forecasts), an accelerated reversion to generic analogues for SUBOXONE Film,
and the risk the ongoing legal proceedings may result in reasonably possible
payments in a severe but plausible downside scenario as part of the Group's
going concern assessment. These risks were balanced against the Group's
current and forecast working capital position. As a result of the factors set
out above, the Directors have a reasonable expectation the Group has
adequate resources to continue in operational existence for at least one year
from the approval of these Condensed Financial Statements and therefore
consider the going concern basis to be appropriate for the accounting and
preparation of these Condensed Financial Statements.
The financial information contained in this document does not constitute
statutory accounts as defined in section 434 and 435 of the Companies Act
2006. The Group's statutory financial statements for the year ended December
31, 2021, were approved by the Board of Directors on March 17, 2022. The
report of the auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement under section
498 of the Companies Act 2006.
2. SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker ('CODM'). The CODM,
who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Chief Executive Officer (CEO).
The Group is predominantly engaged in a single business activity, which is the
development, manufacture, and sale of buprenorphine-based prescription drugs
for treatment of opioid dependence and related disorders. The CEO reviews
disaggregated net revenue on a geographical and product basis. Financial
results are reviewed on a consolidated basis for evaluating financial
performance and allocating resources. Accordingly, the Group operates in a
single reportable segment.
Net revenue and non-current assets
Revenues are attributed to countries based on the country where the sale
originates. The following tables represent net revenues from continuing
operations and non-current assets, net of accumulated depreciation and
amortization, by country. Non-current assets for this purpose consist of
intangible assets, property, plant and equipment, right-of-use assets, and
other assets. Net revenues and non-current assets for the three months to
March 31, 2022 and 2021 were as follows:
Net revenue:
For the three months ended March 31
2022 2021
$m $m
United States 165 131
Rest of World 42 49
Total 207 180
On a disaggregated basis, the Group's net revenue by major product line:
For the three months ended March 31
2022 2021
$m $m
Sublingual/other 117 134
SUBLOCADE 85 43
PERSERIS 5 3
Total 207 180
Non-current assets:
Mar 31 Dec 31
2022 2021
$m $m
United States 131 133
Rest of World 227 150
Total 358 283
3. OPERATING EXPENSES AND OTHER OPERATING INCOME
The table below sets out selected operating costs and expense information:
Operating expenses
For the three months ended March 31
2022 2021
$m $m
Research and development expenses (8) (9)
Selling and marketing expenses (53) (37)
Administrative and general expenses (56) (46)
Selling, general, and administrative expenses (109) (83)
Depreciation, amortization, and impairment(1) (3) (3)
(1 )Depreciation and amortization expense is included in research and
development and selling, general and administrative expenses. Additionally,
depreciation and amortization expense in Q1 2022 of $2m (Q1 2021: $2m) for
intangibles and ROU assets is included within cost of sales.
Medical affairs functional costs are included in administrative and general
expenses. Administrative and general expenses include exceptional items in the
prior period as outlined in Note 4.
Other operating income
For the three months ended March 31
2022 2021
$m $m
Other operating income 1 1
Other operating income is credited to the income statement as incurred. Other
operating income in the current and prior period includes the proceeds
received from the out-licensing of nasal naloxone opioid overdose patents.
4. EXCEPTIONAL ITEMS AND ADJUSTED RESULTS
Exceptional Items
Where significant expenses or income occur that do not reflect the Group's
ongoing operations, these items are disclosed as exceptional items in the
income statement. Examples of such items could include income or restructuring
and related expenses for the reconfiguration of the Group's activities and/or
capital structure, impairment of current and non-current assets, proceeds from
the sale of intangible assets, certain costs arising as a result of material
and non-recurring regulatory and litigation matters, certain non-recurring
benefits, and certain tax related matters. Exceptional items are excluded from
adjusted results consistent with the internal reporting provided to Management
and the Directors. Adjusted results are not a substitute for, or superior to,
reported results presented in accordance with IFRS. Management performs a
quantitative and qualitative assessment to determine if an item should be
considered for exceptional treatment. Exceptional items with an impact of less
than $1m are not considered for exceptional treatment.
The table below sets out exceptional items recorded in the quarter:
For the three months ended March 31
2022 2021
$m $m
Exceptional items within SG&A
Legal expenses/provision(1) - 5
Total exceptional items within SG&A - 5
Exceptional items within other operating income
Other operating income(2) - 1
Total exceptional items within other operating income - 1
Total exceptional items before taxes - 6
Exceptional tax item(3) - 36
Total exceptional items - 42
1. Negotiations with DOJ related plaintiffs in Q1 2021 led to a change
in the Group's provision for DOJ related matters which resulted in a provision
release of $5m.
2. Exceptional other operating income in Q1 2021 relates to the
proceeds received from the out-licensing of nasal naloxone opioid overdose
patents for $1m.
3. Exceptional tax benefit item of $36m in Q1 2021 relates to the
approval of tax credits by the Internal Revenue Service in relation to
development credits for SUBLOCADE claimed for years 2014 to 2017.
Adjusted results
The Board and management team use adjusted results and measures to provide
incremental insight to the financial results of the Group and the way it is
managed. The tables below show the list of adjustments between the reported
and adjusted results for both Q1 2022 and 2021.
Reconciliation of operating profit to adjusted operating profit
For the three months ended March 31 2022 2021
$m $m
Operating profit 54 57
Exceptional selling, general and administrative expenses - (5)
Exceptional other operating income - (1)
Adjusted operating profit 54 51
Reconciliation of profit before taxation to adjusted profit before taxation
For the three months ended March 31 2022 2021
$m $m
Profit before taxation 48 53
Exceptional selling, general and administrative expenses - (5)
Exceptional other operating income - (1)
Adjusted profit before taxation 48 47
Reconciliation of net income to adjusted net income
For the three months ended March 31 2022 2021
$m $m
Net income 41 80
Exceptional selling, general and administrative expenses - (6)
Tax exceptional - (36)
Adjusted net income 41 38
5. TAXATION
The Group calculates tax expense for interim periods using the expected full
year rates, considering the pre-tax income and statutory rates for each
jurisdiction. To the extent practicable, a separate estimated average annual
effective income tax rate is determined for each taxing jurisdiction and
applied individually to the interim period pre-tax income of each
jurisdiction. Similarly, if different income tax rates apply to different
categories of income (such as capital gains or income earned in particular
industries), to the extent practicable a separate rate is applied to each
individual category of interim period pre-tax income. The resulting expense is
allocated between current and deferred taxes based upon the forecasted full
year ratio. The change in the effective tax rate was primarily driven by the
relative contribution to pre-tax income by taxing jurisdiction in the period
and remains lower than the statutory tax rate in the UK due to permanent items
such as the availability of tax incentives for innovation.
In the three months ended March 31, 2022, the reported total tax expense was
$7m, or a rate of 15% (Q1 2021 tax benefit: $27m, -51%). On an adjusted basis
tax expense was $7m (Q1 2021: $9m). There were no exceptional items recorded
in the current period. In the prior period an exceptional benefit of $36m was
recorded which relates to a tax credit receivable in relation to the
development credits for SUBLOCADE claimed in prior years, resulting in a tax
expense on adjusted profit of $9m and represented a 19% effective tax rate for
Q1 2021.
The Group's balance sheet at March 31, 2022 includes a current tax receivable
of $13m (FY 2021: $13m), a current tax payable of $11m (FY 2021: $7m), and
deferred tax asset of $103m (FY 2021: $105m).
The Group recognizes deferred tax assets to the extent that sufficient future
taxable profits are probable against which these future tax deductions can be
utilized. At March 31, 2022, the Group's net deferred tax assets of $103m
relate primarily to inventory costs capitalized for tax purposes, litigation
liabilities (including exceptional items that are not expected to recur),
share-based compensation, and other short term timing differences. Recognition
of deferred tax assets is driven by the Group's ability to utilize the
deferred tax asset which is reliant on forecast taxable profits arising in the
jurisdiction in which the deferred tax asset is recognized. The Group has
assessed recoverability of deferred tax assets using Group-level budgets and
forecasts consistent with those used for the assessment of viability and asset
impairments, particularly in relation to levels of future sales. These
forecasts are therefore subject to similar uncertainties to those assessments.
This exercise is reviewed each year and, to the extent required, an adjustment
to the recognized deferred tax asset may be made. With the exception of
specific assets that are not currently considered accessible, Management have
concluded full recognition of deferred tax assets to be appropriate and do not
consider there a significant risk of a material change in their assessment in
the next 12 months.
Other tax matters
In 2019, a European Commission review into State Aid concluded that the UK's
Finance Company Partial Exemption rules are only partly justified. The UK
government was required to initiate recovery of the alleged State Aid where
they assess a benefit of the potential State Aid has been received. As HMRC
previously confirmed there has been no such benefit to the Group and therefore
the enquiry in relation to this matter up to December 31, 2017 is closed. HMRC
has opened enquiries in relation to the years ended December 31, 2018 and
December 31, 2019 in relation to this matter. Based on the similar fact
pattern applicable to the later years, the Group has determined no provision
is required.
The enacted United Kingdom Statutory Corporation Tax rate is 19% for the year
ended December 31, 2022. On March 3, 2021, the UK Chancellor announced an
increase in the corporation tax rate from 19% to 25% with effect from April 1,
2023. The increase to the corporation tax rate was substantively enacted on
May 24, 2021. The effect of the rate change is immaterial.
As a multinational group, tax uncertainties remain in relation to Group
financing, intercompany pricing, the location of taxable operations and the
tax treatment of exceptional items. Management have concluded tax provisions
made to be appropriate and do not believe a significant risk of material
change to uncertain tax positions exists in the next 12 months.
6. EARNINGS PER SHARE
For the three months ended March 31 2022 2021
cents cents
Basic earnings per share 6 11
Diluted earnings per share 6 10
Adjusted basic earnings per share 6 5
Adjusted diluted earnings per share 6 5
Basic
Basic earnings per share ("EPS") is calculated by dividing profit for the
period attributable to owners of the Company by the weighted average number of
ordinary shares in issue during the period.
Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The Company has dilutive potential ordinary shares
in the form of stock options and awards. The weighted average number of shares
is adjusted for the number of shares granted assuming the exercise of stock
options.
The weighted average number of ordinary shares outstanding for Q1 2022 (on a
basic basis) includes the favorable impact of 33,763,488 ordinary shares
repurchased during the Group's share repurchase program which commenced in
July 2021 and concluded in December 2021. In Q1 2022, conditional awards of
7,491k (Q1 2021: 14,175k) were granted under the Group's Long-Term Incentive
Plan.
Weighted average number of shares 2022 2021
thousands thousands
On a basic basis 703,702 734,220
Dilution from share awards and options 41,322 47,124
On a diluted basis 745,024 781,344
Adjusted Earnings
The Directors believe that diluted earnings per share, adjusted for the impact
of exceptional items after the appropriate tax amount, provides more
meaningful information on underlying trends to shareholders in respect of
earnings per ordinary share. A reconciliation of net income to adjusted net
income is included in Note 4.
7. INVESTMENTS
Investments comprise holdings in equity and debt securities. Investments in
equity securities held for trading or for which the Group has not elected to
recognize fair value gains and losses through other comprehensive income are
initially recorded and subsequently measured at fair value through profit or
loss (FVPL). Investments in debt securities are initially recorded at fair
value plus or minus directly attributable transaction costs and remeasured on
the basis of the Group's business model and the contractual cash flow
characteristics. Interest income from debt securities is included in finance
income using the effective interest method.
Current and non-current investments Mar 31 Dec 31
2022 2021
$m $m
Equity securities at FVPL 11 -
Debt securities held at amortized cost 54 -
Total investments, current 65 -
Debt securities held at amortized cost 85 -
Total investments, non-current 85 -
Total 150 -
Equity securities at FVPL
In February 2022, the Group purchased ordinary shares of Aelis Farma. The
shares are subject to a holding period of 365 days from the acquisition. The
investment is classified as a current investment at March 31, 2022 as the
holding period expires in less than 12 months. Unrealized loss recorded in Q1
2022 was nominal and included as an offset within other operating income.
Debt securities held at amortized cost
In January 2022, the Group initiated purchases of a portfolio of
investment-grade corporate debt securities. The Group's investments in debt
securities are held at amortized cost based on the Group's intention to hold
the investments to maturity and collect contractual cash flows that are solely
payments of principal and interest. Debt securities held at amortized cost are
classified as non-current investments, except for those with maturities less
than 12 months from the end of the reporting period, which are classified as
current investments.
The Group's investments in debt securities do not result in significant
changes to the Group's credit risk, liquidity risk, or interest rate risk. All
the Group's investments in debt securities are considered to be of low credit
risk based on investment-grade credit ratings from Standard and Poor's or
Moody's (BBB-/Baa3 or higher). The majority of the Group's debt securities are
issued at fixed interest rates and changes in floating rates would not have a
significant impact on interest rate risk.
The Group applies an expected credit loss impairment model to financial
instruments held at amortized cost. The recognition of a loss allowance is
limited to 12-month expected credit losses unless credit risk increases
significantly, which would require lifetime expected credit losses to be
applied. When measuring expected credit losses, investments are grouped based
on similar credit risk characteristics. The Group uses judgment in selecting
the inputs to the impairment model based on historical loss rates for similar
instruments, current conditions, and forecasts of future economic conditions.
As of March 31, 2022, expected credit losses for the Group's investments in
debt securities are deemed to be immaterial.
Fair value hierarchy
Fair value is the price that would be received to sell an asset or transfer a
liability in an orderly transaction between market participants at the
measurement date. The different levels have been defined as follows:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets
or liabilities
• Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly
• Level 3: Unobservable inputs for the asset or liability
The Group's only financial instruments which are measured at fair value are
equity securities at FVPL. The fair value of equity securities at FVPL is
based on quoted market prices on the measurement date.
The following table categorizes the Group's financial assets measured at fair
value by valuation methodology used in determining their fair value at March
31, 2022.
Financial assets at fair value Level 1 Level 2 Level 3 Total
$m $m $m $m
Equity securities at FVPL 11 - - 11
The Group also has certain financial instruments which are not measured at
fair value. The carrying value of cash and cash equivalents, trade
receivables, other assets, and trade and other payables is assumed to
approximate fair value due to their short-term nature. At March 31, 2022, the
carrying value of debt securities held at amortized cost was below the fair
value by $1m. The fair value of the debt securities held at amortized cost was
calculated based on quoted market prices which would be classified as Level 1
in the fair value hierarchy above.
8. CURRENT AND NON-CURRENT OTHER ASSETS
Current and non-current other assets Mar 31 Dec 31
2022 2021
$m $m
Short-term prepaid expenses 15 18
Other current assets 10 14
Total other current assets 25 32
Long-term prepaid expenses 23 22
Other non-current assets 82 84
Total other non-current assets 105 106
Total 130 138
Other non-current assets primarily represent the funding of surety bonds in
relation to intellectual property related matters (see Note 12 for further
discussion). Long-term prepaid expenses relate primarily to payments for
contract manufacturing capacity.
9. FINANCIAL LIABILITIES - BORROWINGS
The table below sets out the current and non-current portion obligation of the
Group's term loan:
Term loan Mar 31 Dec 31
2022 2021
$m $m
Term loan - current (3) (3)
Term loan - non-current (238) (239)
Total term loan (241) (242)
The Directors and management use the term net cash and investments, as
presented below, to provide incremental insight to the Group and the
management of short and long-term liquidity needs.
Analysis of net cash and investments Mar 31 Dec 31
2022 2021
$m $m
Cash and cash equivalents 874 1,102
Investments 150 -
Term loan borrowings* (248) (249)
Total net cash and investments 776 853
*Borrowings reflect the principal amount drawn before debt issuance costs of
$7m (FY 2021: $7m). These do not include lease liabilities of $41m (FY 2021:
$44m).
Reconciliation of net cash and investments Mar 31 Dec 31
2022 2021
$m $m
The movements in the period were as follows:
Net cash at beginning of period 853 623
Net (decrease)/increase in cash and cash equivalents (226) 245
New borrowings - (250)
Repayment of borrowings 1 236
Purchase of investments 150 -
Exchange adjustments (2) (1)
Net cash and investments at end of period 776 853
At March 31, 2022, the term loan fair value was approximately 99% (FY 2021:
99%) of par value. The key terms of the term loan in effect at March 31, 2022,
are as follows:
Currency Nominal interest margin Maturity Required annual repayments Minimum
liquidity
Term Loan facility USD Libor* (0.75%) + 5.25% 2026 1% Larger of $100m or 50% of Loan Balance
*While the term loan is USD LIBOR based, the term loan contains fallback
language to convert to a new reference rate when USD LIBOR is discontinued or
becomes non-representative, which is expected to occur in early 2023.
• Nominal interest margin is calculated over three-month USD LIBOR subject
to a floor of 0.75%.
• The minimum liquidity is the larger of $100m or 50% of the outstanding
loan balance.
• There are no revolving credit commitments under the term loan.
10. PROVISIONS AND OTHER LIABILITIES
The Group is involved in legal and intellectual property disputes as described
in Note 12, "Legal Proceedings."
Provisions
Current and non-current provisions Current Non-Current $m Total Current Non-Current $m Total
$m Mar 31 2022 $m $m Dec 31 2021 $m
DOJ related matters (5) - (5) (5) - (5)
Intellectual property related matters - (73) (73) - (73) (73)
Other - (3) (3) - (3) (3)
Total provisions (5) (76) (81) (5) (76) (81)
Provisions are recognized when the Group has a present legal or constructive
obligation as a result of past events, an outflow of resources to settle that
obligation is probable, and the amount can be reliably estimated. Provisions
are measured at the present value of management's best estimate of the
expenditure required to settle the present obligation at the reporting date.
The Group carries a provision of $5m (FY 2021: $5m) pertaining to all
outstanding DOJ related matters as discussed in Note 12. DOJ related matters
of $5m are expected to be settled within the next 12 months.
The Group carries provisions totaling $73m (FY 2021: $73m) for intellectual
property related matters, all of which relate to potential redress for ongoing
intellectual property litigation with Dr. Reddy's Laboratories, S.A., and Dr.
Reddy's Laboratories Inc. (collectively, "DRL") and Alvogen Pharmaceuticals
(Alvogen), should the Group not be successful with those cases outlined in
Note 12, Intellectual property related matters - ANDA litigation. The
provision represents the Group's best estimate of potential damages owed to
DRL and Alvogen for the period between FDA approval and lifting of the
preliminary injunction. This provision has been recorded at the net present
value, using a risk-free rate, considering the estimated timing of settlement
in 2023/2024. In Q1 2022, the Group recorded finance expense totaling $nil (Q1
2021: $1m) for time value of money on this provision. The Group does not
expect this matter to be settled within a year and therefore the provision of
$73m is classified as non-current.
Other provisions totaling $3m (FY 2021: $3m) primarily represent retirement
benefit costs which are not expected to be settled within one year.
Other liabilities
Current and non-current other liabilities Current Non-Current $m Total Current Non-Current $m Total
$m Mar 31 2022 $m $m Dec 31 2021 $m
DOJ resolution (50) (390) (440) (53) (439) (492)
RB indemnity settlement (8) (24) (32) (8) (32) (40)
Other - (3) (3) - (3) (3)
Total other liabilities (58) (417) (475) (61) (474) (535)
Other liabilities represent contractual obligations to third parties where the
amount and timing of payments is fixed. Where other liabilities are not
interest-bearing and the impact of discounting is significant, other
liabilities are recorded at their present value, generally using a risk-free
rate.
On July 24, 2020, the Group reached a resolution with the DOJ and other
litigants described in Note 12 under "DOJ Resolution", which was finalized in
November 2020 and the first payment of $103m (including interest) was made.
Subsequently, six annual instalments of $50m will be due every January 15 from
2022 to 2027 with the final instalment of $200m due in December 2027. Interest
accrues on certain portions of the resolution which will be paid together with
the annual instalment payments. For non-interest-bearing portions, the
liability has been recorded at the net present value based on timing of the
estimated payments. The discount rate and interest rate are 1.25%. In Q1 2022,
the Group recorded interest expense totaling $2m (Q1 2021: $2m). As of March
31, 2022, $50m has been classified as current on the Group's balance sheet.
On January 25, 2021, the Group reached a resolution with Reckitt Benckiser
(RB) to resolve claims which RB issued in the Commercial Court in London on
November 13, 2020, seeking indemnity under the 2014 Demerger Agreement.
Pursuant to the settlement, RB withdrew the US $1.4b claim to release Indivior
from any claim for indemnity under the Demerger Agreement relating to the DOJ
and FTC settlements which RB entered into in July 2019, as well as other
claims for indemnity arising from those matters. The Group has agreed to pay
RB a total of $50m and has agreed to release RB from any claims to seek
damages relating to its settlement with the DOJ and the FTC. The Group made an
initial payment of $10m in February 2021, following the resolution.
Subsequently, annual instalment payments of $8m will be due every January from
2022 to 2026. The Group carries a liability totaling $32m (FY 2021: $40m)
related to this settlement. The effect of discounting was not material.
Other liabilities primarily represent deferred revenue related to a supply
agreement which is non-current as of March 31, 2022.
11. CONTINGENT LIABILITIES
The Group has assessed certain legal and other matters to be not probable
based upon current facts and circumstances, including any potential impact the
DOJ resolution could have on these matters. Where these matters are determined
to be possible, they represent contingent liabilities. Except for those
matters discussed in Note 12 under "DOJ Resolution", "Reckitt Benckiser",
"DOJ-Related Matters" and "Intellectual Property Related Matters", for which
provisions have been recognized, Note 12 sets out the contingent liabilities
for legal and other disputes for which the Group has assessed as contingent
liabilities. Where the company believes that it is possible to reasonably
estimate a range for the contingent liability this has been disclosed. Refer
to Note 5 for discussion on State Aid and other tax related contingent
liabilities.
12. LEGAL PROCEEDINGS
DOJ Resolution
Agreement to Resolve Criminal Charges and Civil Complaints Related to SUBOXONE
Film
· The Group settled with the United States Department of Justice
(Justice Department or DOJ), the US Federal Trade Commission (FTC), and US
state attorneys general the criminal and civil liability in connection with a
multi-count indictment brought in April 2019 by a grand jury in the Western
District of Virginia, a civil lawsuit joined by the Justice Department in
2018, and an FTC investigation. Under the terms of the resolution agreement
with the Justice Department, the Group has agreed to compliance terms
regarding its sales and marketing practices. Compliance with these terms is
subject to annual Board and CEO certifications submitted to the US Attorney's
Office.
· As part of the resolution with the FTC and as detailed in the
text of the stipulated order, for a ten-year period Indivior Inc. is required
to make specified disclosures to the FTC and is prohibited from certain
conduct.
· Under the terms of the five-year Corporate Integrity Agreement
with the HHS Office of the Inspector General (HHS-OIG), the Group will
continue its commitment to promote compliance with laws and regulations and
its ongoing evolution of an effective compliance program, including written
standards, training, reporting, and monitoring procedures. The Group is
subject to reporting and monitoring requirements, including annual reports and
compliance certifications from key management and the Board's Nominating &
Governance Committee, which is submitted to HHS-OIG. In addition, the Group is
subject to monitoring by an Independent Review Organization, which submits
audit findings to HHS-OIG, and review by a Board Compliance Expert, who
prepared a compliance assessment report in the first reporting period and will
prepare a compliance assessment report in the third reporting period. To date,
the Group reasonably believes it has met all of the requirements specified in
these three agreements.
· In November 2020, the Group made a payment of $103m (including
interest) when the resolution was approved by the Court and made a subsequent
payment in January 2022 of $54m (including interest). Subsequently, five
annual installments of $50m plus appropriate interest will be due every
January 15 from 2023 through 2027. The final installment of $200m plus
appropriate interest will be due in December 2027. The Group carries a
liability totalling $440m (FY 2021: $492m) pertaining to the DOJ resolution.
Reckitt Benckiser
· On January 25, 2021, the Group reached a resolution with Reckitt
Benckiser as discussed in Note 10.
DOJ Related Matters
Federal False Claims Act Qui Tam Suits
· In August 2018, the United States unsealed three qui tam suits
pending in the Western District of Virginia that made a variety of allegations
under state and federal False Claims Act statutes regarding marketing and
promotion practices related to SUBOXONE, and in some instances claiming
unlawful retaliation. The suits also sought reasonable attorney's fees and
costs. Three other cases were filed in the District Court of the District of
New Jersey that also made a variety of allegations under state and federal
False Claims Act statutes regarding marketing and promotion practices related
to SUBOXONE, and in some instances claiming unlawful retaliation. The Group
settled these matters in 2020 and 2021.
State and Local Matters
· In November 2016, Indivior was served with a subpoena for records
from the State of California Department of Insurance under its civil
California insurance code authority. Certain of the qui tam suits filed in the
Western District of Virginia and the District of New Jersey assert claims
under the civil California insurance code. The Group settled with the relators
and the California Department of Insurance regarding these matters in 2021.
· In June 2019, the Group learned that the State of Illinois
Insurance Department is investigating potential violations of its civil
Insurance Claims Fraud Prevention Act with respect to its sales and marketing
activity. Certain of the qui tam suits filed in the Western District of
Virginia and the District of New Jersey assert claims under this statute,
including claims for associated attorney's fees and costs. The Group settled
with the relators and the Illinois Insurance Department regarding these
matters in 2021.
· In addition to the federal and state health program claims,
claims have been asserted under the city false claims acts of Chicago and New
York City regarding the promotion of SUBOXONE film. The Group resolved the
matter with the City of Chicago in 2020.
False Claims Act Allegations
· In August 2018, the United States District Court for the Western
District of Virginia unsealed a declined qui tam complaint alleging causes of
action under the Federal and state False Claims Acts against certain entities
within the Group predicated on best price issues and claims of retaliation.
See United States ex rel. Miller v. Reckitt Benckiser Group PLC et al., Case
No. 1:15-cv-00017 (W.D. Va.). The suit also seeks reasonable attorneys' fees
and costs. The Group was served with the complaint in January 2021. The Group
filed a Motion to Dismiss in June 2021. The case was stayed for mediation in
September 2021 and the parties did not reach agreement.
· In May 2018, Indivior Inc. received an informal request from the
United States Attorney's Office ("USAO") for the Southern District of New
York, seeking records relating to the SUBOXONE Film manufacturing process. The
Group is discussing with the USAO certain information and allegations that the
government received regarding SUBOXONE Film.
Securities Class Action Litigation
· In April 2019, Michael Van Dorp filed a putative class action
lawsuit in the United States District Court for the District of New Jersey on
behalf of holders of publicly-traded Indivior securities alleging violations
of the Securities Exchange Act of 1934. The complaint names Indivior PLC,
Shaun Thaxter, Mark Crossley and Cary J. Claiborne as defendants. In February
2021, the parties reached a settlement agreement. A Motion for Entry of Order
Preliminarily Approving Settlement was granted by the court in September 2021.
A settlement fairness hearing occurred in January 2022. The Court approved the
settlement, and the case was dismissed.
Intellectual Property Related Matters
ANDA Litigation
· Indivior filed actions against Dr, Reddy's Laboratories S.A. and
Dr. Reddy's Laboratories, Inc. (together, "DRL") in the United States District
Court for the District of New Jersey ("NJ District Court") alleging that DRL's
generic buprenorphine/naloxone film product infringes US Patent Nos. 9,687,454
and 9,931,305 ("the '454 and '305 Patents") in 2017 and 2018, respectively.
The cases were consolidated in May 2018. DRL received final FDA approval for
all four strengths of its generic buprenorphine/naloxone film product in June
2018, and immediately launched its generic buprenorphine/naloxone film product
"at-risk." In July 2018, the NJ District Court granted Indivior a Preliminary
Injunction (PI) pending the outcome of a trial on the merits of the '305
Patent and required Indivior to post a surety bond for $72m in connection with
the PI. In November 2018, the Court of Appeals for the Federal Circuit (CAFC)
issued a decision vacating the PI against DRL. On remand, and after claim
construction by the NJ District Court, Indivior and DRL stipulated to
noninfringement of the '305 Patent under the court's claim construction, but
Indivior retained its rights to appeal the construction and pursue its
infringement claims pending appeal. Separately, DRL filed an amended answer
alleging various antitrust counterclaims. Indivior's infringement claims
concerning the '454 patent and DRL's antitrust counterclaims remain pending in
the NJ District Court. Summary judgment motions have been fully briefed, but
the NJ District Court has not ruled on those motions. No trial date has been
set. In February 2022, the NJ District Court ordered the parties to mediation.
Mediation is anticipated to occur during Q2 2022.
· In November 2018, DRL filed two petitions for inter partes review
("IPR") of the '454 Patent with the US Patent and Trademark Office's Patent
Trial and Appeal Board ("PTAB"). The PTAB denied institution of one IPR
petition but granted institution for the other. The PTAB issued a decision in
June 2020, finding that claims 1-5, 7, and 9-14 were unpatentable, but that
DRL had not shown that claim 8 is unpatentable. Claim 6 was not challenged and
therefore was not addressed in the PTAB decision. Indivior appealed to the
CAFC, which affirmed the PTAB's decision.
· Indivior filed actions against Alvogen Pine Brook LLC and Alvogen
Inc. (together, "Alvogen") in the NJ District Court alleging that Alvogen's
generic buprenorphine/naloxone film product infringes the '454 and '305
Patents in 2017 and 2018, respectively. The cases were consolidated in May
2018. In January 2019, the NJ District Court granted Indivior a temporary
restraining order ("TRO") to restrain the launch of Alvogen's generic
buprenorphine/naloxone film product pending a trial on the merits of the '305
Patent and Indivior was required to post a surety bond of $36m. Indivior and
Alvogen entered into an agreement whereby Alvogen was enjoined from selling in
the US its generic buprenorphine/naloxone film product unless and until the
CAFC issued a mandate vacating Indivior's separate PI against DRL. The CAFC's
mandate vacating Indivior's PI as to DRL issued in February 2019 and Alvogen
launched its generic product. Any sales in the US by Alvogen are on an
"at-risk" basis, subject to the ongoing litigation against Alvogen in the NJ
District Court. In November 2019, Alvogen filed an amended answer alleging
various antitrust counterclaims. In January 2020, Indivior and Alvogen
stipulated to noninfringement of the '305 Patent under the court's claim
construction, but Indivior retained its rights to appeal the construction and
pursue its infringement claims pending appeal. Indivior's infringement claims
concerning the '454 patent and Alvogen's antitrust counterclaims remain
pending in the NJ District Court. Summary judgment motions have been fully
briefed, but the NJ District Court has not ruled on those motions. No trial
date has been set. In February 2022, the NJ District Court ordered the parties
to mediation. Mediation is anticipated to occur during Q2 2022.
Opposition to SUBLOCADE European Patent
· In October 2018, Teva Pharmaceutical Industries Ltd. ("Teva")
filed a Notice of Opposition with the European Patent Office ("EPO") seeking
to revoke European Patent No. EP 2579874 ("EP 874"), which relates to the
formulation for SUBLOCADE. Oral proceedings took place in September 2021 and
the patent was maintained as granted. Teva filed a notice of appeal with their
grounds for such appeal, and the Group's deadline to respond in writing to
such appeal is June 21, 2022.
· In March 2021, the law firm Elkington & Fife LLP filed a
Notice of Opposition with the EPO seeking to revoke European Patent No. EP
3215223 ("EP 223"), which relates to the dosing regimen for SUBLOCADE. The
Opposition alleges that the claims of EP 223 lack inventive step and extend
beyond the content of the application as originally filed. The Group responded
to the Opposition in August 2021. The oral hearing date has been set for
October 10, 2022.
Antitrust Litigation and Consumer Protection
Antitrust Class and State Claims
· Civil antitrust claims have been filed by (a) a class of direct
purchasers, (b) a class of end payor plaintiffs, and (c) a group of states,
now numbering 41, and the District of Columbia. The various plaintiffs
generally allege, among other things, that Indivior violated US federal and/or
state antitrust and consumer protection laws in attempting to delay generic
entry of alternatives to SUBOXONE Tablets. Plaintiffs further allege that
Indivior unlawfully acted to lower the market share of these products. These
antitrust cases are pending in federal court in the Eastern District of
Pennsylvania. The court has not set a trial date. Summary judgment motions
related to the Direct Purchaser, End Payor, and States actions were fully
briefed and were argued in December 2021. The deadline for the class exclusion
or "opt out" is June 5, 2022.
· In 2013, Reckitt Benckiser Pharmaceuticals, Inc. (now known as
Indivior Inc.) received notice that it and other companies were defendants in
a lawsuit initiated by writ in the Philadelphia County (Pennsylvania) Court of
Common Pleas. See Carefirst of Maryland, Inc. et al. v. Reckitt Benckiser
Inc., et al., Case. No. 2875, December Term 2013. The plaintiffs include
approximately 79 entities, most of which appear to be insurance companies or
other providers of health benefits plans. The Carefirst Plaintiffs have not
served a complaint, but they have indicated that their claims are related to
those asserted by the plaintiffs in In re SUBOXONE, MDL No. 2445 (E.D. Pa.).
The Carefirst case remains pending.
· The Group has evaluated the antitrust class and state claims in
light of the DOJ settlement under which a Group subsidiary pled guilty to one
count of making a false statement relating to health care matters in one state
in 2012 (as discussed above under DOJ Resolution). The Group continues to
believe its defenses and continues to vigorously defend itself. Select
plaintiffs in these matters have previously made settlement demands (which
were not accepted and most of which are not current offers), totalling
approximately $290m, which was used for contingency planning only to model
possible downside financial effects. The final aggregate cost of these
matters, whether resolved by litigation or by settlement, may be materially
different. If the Group were to entertain further settlement discussions, we
make no representations as to what amounts, if any, it may agree to pay, nor
regarding what amounts the plaintiffs will demand.
Other Antitrust and Consumer Protection Claims
· In July 2019, the Indiana Attorney General issued a Civil
Investigative Demand investigating potential violations of Indiana's Civil
Deceptive Consumer Sales Act with respect to sales and marketing activity by
the Company. The Group has cooperated fully in this civil investigation.
· In 2020, the Group was served with lawsuits filed by several
insurance companies, some of whom are proceeding both on their own claims and
through the assignment of claims from affiliated companies. Cases filed by (1)
Humana Inc. and (2) Centene Corporation, Wellcare Healthcare Plans, Inc., New
York Quality Healthcare Corp. (d/b/a Fidelis Care), and Health Net, LLC were
pending in the Eastern District of Pennsylvania. The complaints were dismissed
in July 2021. Plaintiffs filed Notices of Appeal in August 2021 to the United
States Court of Appeals for the Third Circuit ("Third Circuit"). The Third
Circuit heard oral arguments on this appeal on March 31, 2022. Humana also
filed a Complaint in state court in Kentucky with substantially the same
claims as were raised in the Federal Court case. That case has been stayed
pending a decision in the Third Circuit appeal. Cases filed by (1) Blue Cross
and Blue Shield of Massachusetts, Inc., Blue Cross and Blue Shield of
Massachusetts HMO Blue, Inc., (2) Health Care Service Corp., (3) Blue Cross
and Blue Shield of Florida, Inc., Health Options, Inc., (4) BCBSM, Inc. (d/b/a
Blue Cross and Blue Shield of Minnesota) and HMO Minnesota (d/b/a Blue Plus),
(5) Molina Healthcare, Inc., and (6) Aetna Inc. (collectively, the "Roanoke
Plaintiffs") are pending in the Circuit Court for the County of Roanoke,
Virginia. These plaintiffs have asserted claims under federal and state RICO
statutes, state antitrust statutes, state statutes prohibiting unfair and
deceptive practices, state statutes prohibiting insurance fraud, and common
law fraud, negligent misrepresentation, and unjust enrichment. In June 2021,
defendants' motion to stay was denied and certain claims were dismissed
without prejudice. The Roanoke Plaintiffs have filed amended complaints, and
the Group has filed demurrers, seeking dismissal of some of the asserted
claims. Oral arguments on the demurrers are scheduled to occur on September 1,
2022.
· The Group has begun its evaluation of the claims, believes in its
defenses, and intends to vigorously defend itself. Engagement with the
claimants has been minimal. Accordingly, no estimate of the range of potential
loss can be made at this time.
Civil Opioid Litigation
· Indivior has been named as a defendant in more than 400 civil
lawsuits brought by state and local governments, public health agencies, and
individuals against manufacturers, distributors, and retailers of opioids
alleging that they engaged in a longstanding practice to market opioids as
safe and effective for the treatment of long-term chronic pain to increase the
market for opioids and their own market share. Most of these cases have been
consolidated and are pending in a federal multi-district litigation (MDL) in
US District Court for the Northern District of Ohio. At the present time,
litigation against Indivior in the MDL is stayed. The Court has ordered the
parties to provide status updates by June 22, 2022 regarding case management
issues. Given the status and preliminary stage of litigation in both the MDL
and state courts, no estimate of possible loss in the opioid litigation can
be made at this time.
13. TRADE AND OTHER PAYABLES
Mar 31 Dec 31
2022 2021
$m $m
Sales returns and rebates (454) (436)
Trade payables (64) (137)
Accruals (112) (136)
Other tax and social security payables (13) (11)
Total (643) (720)
Sales return and rebate accruals, primarily in the U.S., are provided in
respect of the estimated rebates, discounts, or allowances payable to direct
and indirect customers. Accruals are made at the time of sale while the actual
amounts to be paid are based on claims made some time after the initial
recognition of the sale. The estimated amounts may not reflect the final
outcome and are subject to change dependent upon, amongst other things, the
payor channel (e.g., Medicaid, Medicare, Managed Care, etc.) and product mix.
Accrual balances are reviewed and adjusted quarterly in the light of actual
experience of rebates, discounts or allowances given and returns made and any
changes in arrangements. Future events may cause the assumptions on which the
accruals are based to change, which could affect the future results of the
Group.
14. SHARE CAPITAL
Equity ordinary shares Nominal value paid per share Aggregate nominal value
$m
Issued and fully paid
At January 1, 2022 702,439,638 $0.10 70
Ordinary shares issued 3,840,414 $0.10 1
Shares cancelled (256,055) $0.10 -
At March 31, 2022 706,023,997 71
Equity ordinary shares Nominal value paid per share Aggregate nominal value
$m
Issued and fully paid
At January 1, 2021 733,635,511 $0.10 73
Ordinary shares issued 985,478 $0.10 -
At March 31, 2021 734,620,989 73
Ordinary shares issued
During the period 3,840,414 ordinary shares (2021: 985,478) were issued to
satisfy vesting/exercises under the Group's Long-Term Incentive Plan and U.S.
Employee Stock Purchase Plan. Ordinary shares of 256,055 purchased as part of
the Group's share repurchase program were cancelled in January 2022.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors declare that, to the best of their knowledge:
· This set of Condensed Consolidated Interim Financial Statements,
which have been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting" ("IAS 34"), gives a true
and fair view of the assets, liabilities, financial position, and profit or
loss of Indivior; and
· The interim management report gives a fair review of the
information in line with regulations 4.2.7 and 4.2.8 of the Disclosure
Guidance and Transparency Rules.
The Directors are responsible for the maintenance and integrity of the Group's
website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
Indivior PLC's Directors are listed in the Annual Report and Accounts for
2021.
Details of Indivior PLC's Directors are available on our website at
www.indivior.com (http://www.indivior.com) and are included in the Indivior
Annual Report and Accounts 2021.
By order of the Board
Mark
Crossley
Ryan Preblick
Chief Executive
Officer
Chief Financial Officer
April 27, 2022
Independent review report to Indivior PLC
Report on the Condensed consolidated interim financial statements
Our conclusion
We have reviewed Indivior PLC's Condensed consolidated interim financial
statements (the "interim financial statements") in the Q1 2022 Results of
Indivior PLC for the 3 month period ended 31 March 2022 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' (IAS 34).
The interim financial statements comprise:
· the Condensed consolidated interim balance sheet as at
31 March 2022;
· the Condensed consolidated interim income statement and Condensed
consolidated interim statement of comprehensive income for the period then
ended;
· the Condensed consolidated interim statement of changes in equity
for the period then ended;
· the Condensed consolidated interim cash flow statement for the
period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Q1 2022 Results of Indivior
PLC have been prepared in accordance with IAS 34.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Q1 2022 Results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with this ISRE. However, future events or
conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Q1 2022 Results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Q1 2022 Results in accordance with IAS 34. In
preparing the Q1 2022 Results, including the interim financial statements, the
directors are responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend
to liquidate the group or to cease operations, or have no realistic
alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Q1 2022 Results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. We do not, in giving this conclusion,
accept or assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
27 April 2022
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