REG - Indivior PLC - 1st Quarter Results
27/04/2023 12:00
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RNS Number : 6182X Indivior PLC 27 April 2023
http://www.rns-pdf.londonstockexchange.com/rns/6182X_1-2023-4-26.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/6182X_1-2023-4-26.pdf)
April 27, 2023
Strong Q1 2023 Financial Results and Integration of Opiant
• SUBLOCADE Net Revenue of $132m, +55% versus Q1 2022
• Opiant Acquisition Completed; May 22nd Prescription Drug User Fee Act
(PDUFA) Date for OPNT003 (emergency treatment of known or suspected opioid
overdose)
• Additional U.S. Listing of Indivior Ordinary Shares Planned for June
Quarter to March 31 (Unaudited) 2023 2022 % Change
$m $m
Net Revenue (NR) 253 207 22%
Operating Profit 57 54 6%
Net Income 44 41 7%
Diluted EPS(1) ($) $0.31 $0.28 11%
Adjusted Basis
Adj. Operating Profit(2) 71 54 31%
Adj. Net Income(2) 56 41 37%
Adj. Diluted EPS(1 2) ($) $0.40 $0.28 43%
1 On October 10, 2022, Indivior PLC completed a 5:1 share consolidation. The
Company's basic and diluted weighted average number of shares outstanding,
basic earnings per share, diluted earnings per share and adjusted earnings per
share (basic and diluted) have been retrospectively adjusted to reflect the
share consolidation in all the periods presented. See Note 7 for further
discussion.
2 Adjusted Basis excludes the impact of exceptional items as referenced and
reconciled in Notes 4 and 7. Adjusted results are not a substitute for, or
superior to, reported results presented in accordance with International
Financial Reporting Standards.
The 'Company' refers to Indivior PLC and the 'Group' refers to the Company and
its consolidated subsidiaries.
Comment by Mark Crossley, CEO of Indivior PLC
"Our first quarter results reflect strong momentum across the business and
continued dedication of the entire Indivior team to our patients. SUBLOCADE®
(buprenorphine extended-release) injection continues to power our growth as we
drive greater depth of prescribing across Organized Health Systems (OHS) in
the treatment of moderate-to-severe opioid use disorder (OUD). Within the
quarter, we also completed the acquisition of Opiant Pharmaceuticals, Inc.
This important strategic step strengthens our addiction portfolio through the
addition of OPNT003 (nalmefene nasal spray), a new potential option for opioid
overdose reversal which we expect to launch in the U.S. in the fourth quarter,
subject to regulatory approval. We have updated our 2023 guidance to include
the financial impact of this acquisition as well as the continued resilient
U.S. share performance of SUBOXONE® (buprenorphine/naloxone) Film. Finally,
we look forward to the additional U.S. listing of our shares on NASDAQ in
June."
Q1 2023 Financial Highlights
• Net revenue (NR) of $253m (+22% versus Q1 2022 NR of $207m).
• Reported operating profit of $57m (+6% vs. Q1 2022 op. profit of
$54m). On an adjusted basis, Q1 2023 operating profit was $71m, a 31% increase
versus the prior year's quarter, when there were no adjustments to operating
profit.
• Reported net income was $44m (+7% vs. Q1 2022 net income of $41m).
Adjusted net income of $56m (+37% vs. Q1 2022 adj net income of $41m).
• Cash and investments of $803m at the end of Q1 2023 (including $26m
restricted for self-insurance) (FY 2022 cash and investments balance of $991m
including $26m for self-insurance).
Q1 2023 Operating Highlights
• Q1 2023 SUBLOCADE NR of $132m (+55% vs. Q1 2022; +12% vs. Q4 2022)
reflects strong growth in the OHS channel and continued new U.S. patient
enrollments. Q1 2023 U.S. dispenses were approximately 107,900 units (+69% vs.
Q1 2022 and +16% vs. Q4 2022). Total SUBLOCADE patients on a 12-month rolling
basis at the end of Q1 2023 were approximately 94,800 (82,500 at the end of FY
2022).
• Q1 2023 PERSERIS® (risperidone) extended-release injection
delivered NR of $8m (+60% vs. Q1 2022).
• Q1 2023 SUBOXONE® (buprenorphine and naloxone) Film share averaged
19% in Q1 2023 (Q1 2022: 22%) and exited Q1 2023 at 19% (Q1 2022: 20%). The
Group does not promote SUBOXONE Film in the U.S.
U.S. Listing
In September 2022, the Company's shareholders approved an additional listing
of its shares in the U.S. The Company has chosen NASDAQ as its trading venue
under the symbol "INDV". The listing is expected to take place in June 2023.
Share Repurchase Program
During the quarter, Indivior completed its second share repurchase program of
$100m which was initiated in 2022. Reflecting the 5:1 share consolidation
(completed on October 10, 2022), the Group repurchased and cancelled a total
of 5,277,072 Indivior ordinary shares, equivalent to approximately 4% of
diluted shares outstanding at a daily weighted average purchase price of
1,567p. Aggregating both the first and second programs which were initiated in
2021 and 2022, the Group repurchased 12,029,769 Indivior ordinary shares,
equivalent to approximately 9% of diluted shares outstanding at a daily
weighted average purchase price of 1,302p. Refer to Note 16 for further
discussion.
Updated FY 2023 Guidance Includes Opiant Acquisition
The Group is updating its FY 2023 guidance to reflect 1) the inclusion of the
Opiant Pharmaceuticals, Inc. business and 2) increased NR expectations
primarily for SUBOXONE due to anticipated delayed timing of a fourth generic
buprenorphine/naloxone sublingual film entrant to the U.S. market. Guidance
for SUBLOCADE NR, PERSERIS NR and adjusted gross margin is unchanged. Guidance
assumes 1) regulatory approval of OPNT003 by the U.S. Food & Drug
Administration (FDA) on or before the PDUFA date of May 22, 2023 and 2) no
material change in exchange rates for key currencies compared with FY 2022
average rates, notably USD/GBP and USD/EUR. The Group continues to expect the
successful commercialization of OPNT003 to be accretive to the Group's
earnings after the second full year of launch.
Updated (April 27, 2023) Previous (February 16, 2023)
Net Revenue (NR)(1) $970m to $1,040m $950m to $1,020m
(+12% vs. FY 2022 at the mid-point)
SUBLOCADE NR No change $550m to $600m
(+41% vs. FY 2022 at the mid-point)
PERSERIS NR No change $45m to $55m
(+82% vs. FY 2022 at the mid-point)
SUBOXONE Film Market Share Accelerated rate of market share decline in the H2 2023(2), along with the Accelerated rate of market share decline in the H2 2023(2), along with the
assumed impact from the launch of a fourth buprenorphine/naloxone sublingual assumed impact from the launch of a fourth buprenorphine/naloxone sublingual
film generic entering the U.S. market in H2 2023 film generic entering the U.S. market in Q2 2023
Adjusted Gross Margin No change Low to mid 80% range
Adjusted SG&A $530m to $540m, reflecting the addition of Opiant commercial and key support $490m to $500m
personnel, as well as planned launch expenses for OPNT003
R&D $90m to $100m, reflecting the addition of Opiant's R&D personnel and $80m to $90m
pipeline activities
Adjusted Operating Profit Slightly below FY 2022's adjusted operating income of $212m, as a result of Higher than 2022's adjusted operating income of $212m
the additional operating expenses associated with the Opiant acquisition,
partially offset by higher NR guidance
1 FY 2023 NR from OPNT003 is expected to be immaterial given the Q4 2023
launch timing, if approved.
2 Reflecting underlying share erosion at a similar rate to the last two years
(approximately 2 share points p.a.)
Legacy Civil Antitrust Matter
Mediation and discussions in the legacy civil antitrust multidistrict
litigation are ongoing, but there has been no new information that would
change the previously disclosed provision from Q4 2022. Because this
litigation is in various stages, Indivior cannot predict with any certainty
how these matters will ultimately be resolved, or the costs, or timing of such
resolution. In particular, any final aggregate costs of these matters, whether
resolved by settlement or trial, may be materially different from the
previously recorded provision. The Group cannot predict with any certainty
whether it will reach settlement with the antitrust claimants (refer to Note
14 for further information).
U.S. OUD Market Update
In Q1 2023, 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 overall public awareness of the opioid epidemic and approved
treatments, together with regulatory and legislative actions, such as the late
2022 enactment of the Mainstreaming Addiction Treatment Act, that have
expanded OUD treatment funding and treatment capacity. The Group believes
these regulatory and legislative actions will help to normalize the chronic
disease of addiction and expand access to evidence-based buprenorphine
treatment in the U.S. and supports these actions.
Financial Performance in Q1 2023
Total net revenue in Q1 2023 increased 22% to $253m (Q1 2022: $207m) at actual
exchange rates and by 24% at constant exchange rates.
Q1 2023 U.S. net revenue increased 27% to $209m (Q1 2022 $165m). Growth in the
overall U.S. BMAT market was in-line with Group expectations discussed above
("U.S. OUD Market Update"). Underlying market growth, together with strong
year-over-year unit volume growth for SUBLOCADE and PERSERIS drove the net
revenue increase. SUBOXONE Film share declined modestly as expected with Q1
2023 average share of 19% versus FY 2022 average share of 20%.
Q1 2023 Rest of World (ROW) net revenue increased 5% at actual exchange rates
to $44m (Q1 2022: $42m) and 13% at constant exchange rates. Q1 2023 ROW net
revenue from SUBLOCADE (also under the brand name SUBUTEX XR®) was $9m (Q1
2022: $6m). NR increased mainly due to higher unit volume growth of SUBLOCADE
in existing and new markets, including Finland and Sweden. Growth from
SUBLOCADE and SUBOXONE Film was partially offset by ongoing competitive
pressure in the legacy tablet business in Western Europe.
Q1 2023 gross margin was 85% (Q1 2022: 82%). Q1 2023 gross margin improvement
over the prior year's period primarily reflects an improved product mix from
continued growth of SUBLOCADE, partially offset by cost inflation. Q1 2023
gross margin was also impacted favorably by FX and lower manufacturing
write-offs.
Q1 2023 SG&A expenses as reported were $131m (Q1 2022: $109m). Q1 2023
SG&A expenses included exceptional items of $14m related to non-recurring
costs associated with the acquisition of Opiant ($12m) and the additional U.S.
listing ($2m). On an adjusted basis, Q1 2023 SG&A expenses increased 7% to
$117m (Q1 2022: $109m). The increase primarily reflects investments to grow
the Group's long-acting injectable (LAI) technologies (SUBLOCADE and
PERSERIS), including further investments to grow SUBLOCADE in the U.S. Justice
System, and cost inflation.
Q1 2023 R&D expenses were $27m (Q1 2022: $8m). The increase over the prior
year's period is primarily due to increased activities related to certain
post-marketing studies for SUBLOCADE and PERSERIS, process validation testing
related to LAI capacity expansion and ongoing early-stage pipeline activities.
Q1 2023 operating profit as reported was $57m (Q1 2021: $54m). Exceptional
items of $14m are included in the current period. On an adjusted basis, Q1
2023 operating profit increased 31% to $71m versus $54m in Q1 2022. There
were no exceptional items in the comparable year-ago period. The increase
primarily reflects higher NR partially offset by increased SG&A and
R&D expenses.
Q1 2023 net finance income in the quarter was $1m (Q1 2022 net finance
expense: $6m). The current period includes interest income of $11m versus nil
in the year-ago period. The increases to finance income and finance expense
were due to rising interest rates from the prior year period.
Q1 2023 tax expense was $14m giving an effective tax rate of 24% (Q1 2022 tax
expense: $7m or 15%). On an adjusted basis, Q1 2023 tax expense was $16m
(adjusted effective tax rate: 22%), excluding a $2m tax benefit related to
permanent differences on exceptional items. The increase in the effective tax
rate on adjusted profits was primarily driven by the increase in the UK tax
rate from 19% to 23.5%, and the temporary reduction in innovation incentives
due to 2022 losses.
Q1 2023 reported net income was $44m (Q1 2022: $41m). On an adjusted basis, Q1
2023 net income was $56m versus $41m in Q1 2022. There were no exceptional
items in the year-ago quarter.
Q1 2023 basic earnings per share was $0.32 on a reported basis and $0.41 cents
on an adjusted basis (Q1 2022 basic earnings per share of $0.29 on both a
reported and adjusted basis).
Balance Sheet & Cash Flow
Cash and investments totaled $803m at the end of Q1 2023, a decrease of $188m
versus the $991m position at year-end 2022. The decrease in cash and
investments in the quarter primarily reflects the net cash outflow of $124m
for the Opiant acquisition, including the transferred cash balance, in
addition to the Group's scheduled litigation settlement payments primarily for
the Department of Justice (DOJ), Reckitt Benckiser (RB) and Dr. Reddy's
Laboratories (DRL) matters totaling $74m.
Net working capital, defined by management as inventory plus trade
receivables, less trade and other payables, was negative $321m on March 31,
2023, versus negative $283m at the end of FY 2022. 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 2023 was $16m (Q1 2022 cash used:
$64m), primarily due to settlement payments for the DOJ Resolution, DRL
settlement, RB settlement and timing of payments made on government rebates
payables. Before these litigation related items, cash generated from
operations in the current period was $58m. Net cash outflow from operating
activities was $36m in Q1 2023 (Q1 2022 cash outflow: $75m) reflecting tax
payments and interest paid on the Group's term loan facility and settlement
payments, partially offset by interest received on investments.
Q1 2023 cash outflow from investing activities was $127m (Q1 2022 cash
outflow: $149m) which reflects $124m for the Opiant acquisition, net of cash
assumed. In the prior year period, the outflow from investing activities
primarily included $150m in a portfolio of investment-grade debt securities
and ordinary shares of Aelis Farma.
Q1 2023 cash outflow from financing activities was $22m (Q1 2022 cash outflow:
$2m) reflecting the extinguishment of debt assumed in the Opiant acquisition,
as well as shares repurchased and cancelled, principal portion of lease
payments and quarterly amortization of the Group's term loan facility
partially 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/1166/Q1-2023_RESULTS_RND_Update_updated_April%2018.pdf)
.
(https://www.indivior.com/admin/resources/dam/id/1166/Q1-2023_RESULTS_RND_Update_updated_April%2018.pdf)
Risk Factors Update
The Board of Directors oversees the approach to risk management so that the
principal risks, including those that would threaten the Group's business
model, future performance or viability, are effectively managed and/or
mitigated. While the Group aims to identify and manage such risks, no risk
management strategy can provide absolute assurance against loss.
The principal risks facing the Group have not significantly changed over the
year and are set out in the Group's Annual Report for the 2022 financial year.
However, as mentioned in Note 1, "Basis of Preparation and Accounting
Policies", and Note 14, "Legal Proceedings", if the Group was found liable in
the currently scheduled September 18, 2023 multidistrict litigation trial to
any of the Plaintiffs and was unable to reduce the claimed damages of such
Plaintiffs group or groups during such trial (or in any subsequent
proceeding), which the Directors believe is beyond 'severe but plausible' (and
therefore remote) within the going concern period, then its financial
position, results and future cash flows could be materially adversely
impacted. If the Group continues with mediation or other settlement
discussions, it makes no guarantee as to whether any settlement can be reached
and if so, what amounts, if any, it may agree to pay, or what amounts the
Plaintiffs will demand. The set of principal risks should not be considered as
an exhaustive list of all risks the Group faces.
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 2023 Q1 2022
GB £ period end 1.2309 1.3086
GB £ average rate 1.2149 1.3433
€ Euro period end 1.0828 1.1080
€ Euro average 1.0726 1.1234
Webcast Details
A live webcast presentation will be held on April 27, 2023, at 13:00 BST (8:00
am EDT) hosted by Mark Crossley, CEO. The details are below. All materials
will be available on the Group's website prior to the event at
www.indivior.com (http://www.indivior.com) .
The webcast link: https://edge.media-server.com/mmc/p/qjdd6559
(https://edge.media-server.com/mmc/p/qjdd6559)
Participants may access the presentation telephonically by registering with
the following link:
https://register.vevent.com/register/BIa24873f5a1524c73b34c473b7761725f
(https://register.vevent.com/register/BIa24873f5a1524c73b34c473b7761725f)
(Registrants will have an option to be called back directly immediately prior
to the call or be provided a call-in # with a unique pin code following their
registration)
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)20 7353 4200
U.S. Media Inquiries +1 804 594 0836
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 substance use disorders (SUD) 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 SUD. Indivior is dedicated to transforming SUD from
a global human crisis to a recognized and treated chronic disease. Building on
its global portfolio of OUD 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
SUD, including alcohol use disorder and cannabis use disorder. Headquartered
in the United States in Richmond, VA, Indivior employs more than 1,000
individuals globally and its portfolio of products is available in 39
countries worldwide. Visit www.indivior.com
(https://nam12.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.indivior.com%2F&data=05%7C01%7Cjason.thompson%40Indivior.com%7C229aeec7b17246ed833208da55c46abe%7Cbed52191489442999db948e4fb29646e%7C1%7C0%7C637916599362456007%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=u6JGYoyD%2BwG914fpSswN7wO0FA4meYgsYi4pnW78lRs%3D&reserved=0)
to learn more. Connect with Indivior on LinkedIn by
visiting www.linkedin.com/company/indivior
(https://nam12.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.linkedin.com%2Fcompany%2Findivior&data=05%7C01%7Cjason.thompson%40Indivior.com%7C229aeec7b17246ed833208da55c46abe%7Cbed52191489442999db948e4fb29646e%7C1%7C0%7C637916599362456007%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=3Frt76TdxC5aWlfbbQay8LOUSNG93zeBJTQoyQOJYIc%3D&reserved=0)
.
Important Cautionary Note Regarding Forward-Looking Statements
This announcement contains certain statements that are forward-looking.
Forward-looking statements include, among other things, statements regarding
the Indivior Group's financial guidance for 2023 and its medium- and long-term
growth outlook; strategies for value creation; expectations for sales levels
for particular products; expectations regarding the cost to resolve the
Group's legal proceedings and regulatory matters; the timing of our planned
additional U.S. stock exchange listing; expected exceptional and recurring
costs related to a U.S. stock exchange listing; expected market growth rates;
expected changes in market share; future exchange rates; operational goals;
our product development pipeline and potential future products; expectations
regarding regulatory approval of such product candidates, the timing of such
approvals, and the timing of commercial launch of such product candidates, and
eventual annual revenues of such future products; expectations regarding the
extent and impact of competition, and other statements containing the words
"believe", "anticipate", "plan", "expect", "intend", "estimate", "forecast,"
"strategy," "target," "guidance," "outlook," "potential", "project",
"priority," "may", "will", "should", "would", "could", "can", "outlook,"
"guidance", the negatives thereof, and variations thereon and similar
expressions. 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. Various factors may cause
differences between Indivior's expectations and actual results, including,
among others, the material risks described in the most recent Indivior PLC
Annual Report and in subsequent releases; our reliance on third parties to
manufacture commercial supplies of most of our products, conduct our clinical
trials and at times to collaborate on products in our pipeline; our ability to
comply with legal and regulatory settlements, healthcare laws and regulations,
requirements imposed by regulatory agencies and payment and reporting
obligations under government pricing programs; the substantial litigation and
ongoing investigations to which we are or may become a party; risks related to
the manufacture and distribution of our products, some of which are controlled
substances; market acceptance of our products as well as our ability to
commercialize our products and compete with other market participants; the
uncertainties related to the development of new products, including through
acquisitions, and the related regulatory approval process; our dependence on a
small number of significant customers; our ability to retain key personnel or
attract new personnel; our dependence on third-party payors for the
reimbursement of our products and the increasing focus on pricing and
competition in our industry; unintended side effects caused by the clinical
study or commercial use of our products; our use of hazardous materials in our
manufacturing facilities; our import, manufacturing and distribution of
controlled substances; our ability to successfully execute acquisitions,
partnerships, joint ventures, dispositions or other strategic acquisitions;
our ability to protect our intellectual property rights and the substantial
cost of litigation or other proceedings related to intellectual property
rights; the risks related to product liability claims or product recalls; the
significant amount of laws and regulations that we are subject to, including
due to the international nature of our business; macroeconomic trends and
other global developments such as the COVID-19 pandemic; the terms of our debt
instruments, changes in our credit ratings and our ability to service our
indebtedness and other obligations as they come due; changes in applicable tax
rate or tax rules, regulations or interpretations; and our ability to realize
our deferred tax assets.
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. 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.
Unaudited condensed consolidated interim income statement
2023 2022
For the three months ended March 31 Notes $m $m
Net Revenue 2 253 207
Cost of sales (39) (37)
Gross Profit 214 170
Selling, general and administrative expenses 3 (131) (109)
Research and development expenses 3 (27) (8)
Net other operating income 3 1 1
Operating Profit 57 54
Operating profit before exceptional items 71 54
Exceptional items 4 (14) -
Finance income 5 11 -
Finance expense 5 (10) (6)
Net Finance Income/(Expense) 1 (6)
Profit Before Taxation 58 48
Income tax expense 6 (14) (7)
Taxation before exceptional items (16) (7)
Exceptional items within taxation 4 2 -
Net Income 44 41
Earnings per ordinary share (in dollars)*
Basic earnings per share 7 $0.32 $0.29
Diluted earnings per share 7 $0.31 $0.28
* Basic and diluted earnings per share reflect the impact of the Company's
share consolidation for all periods presented. Refer to Note 7 for further
details.
Unaudited condensed consolidated interim statement of comprehensive income
2023 2022
For the three months ended March 31 $m $m
Net income 44 41
Other comprehensive loss
Items that may be reclassified to profit or loss in subsequent years:
Foreign currency translation adjustment, net - (6)
Other comprehensive loss - (6)
Total comprehensive income 44 35
The notes are an integral part of these condensed consolidated interim
financial statements.
Unaudited condensed consolidated interim balance sheet
Mar 31, 2023 Dec 31, 2022
Notes $m $m
ASSETS
Non-current assets
Intangible assets 8 200 70
Property, plant and equipment 54 54
Right-of-use assets 34 31
Deferred tax assets 6 201 219
Investments 9 98 98
Other assets 10 46 38
633 510
Current assets
Inventories 123 114
Trade receivables 213 220
Other assets 10 48 27
Current tax receivable 6 33 5
Investments 9 117 119
Cash and cash equivalents 588 774
1,122 1,259
Total assets 1,755 1,769
LIABILITIES
Current liabilities
Borrowings 11 (3) (3)
Provisions 12 (298) (303)
Other liabilities 12 (70) (79)
Trade and other payables 15 (657) (617)
Lease liabilities (8) (8)
Current tax liabilities 6 (7) (9)
(1,043) (1,019)
Non-current liabilities
Borrowings 11 (236) (237)
Provisions 12 (5) (5)
Other liabilities 12 (367) (428)
Lease liabilities (32) (29)
(640) (699)
Total liabilities (1,683) (1,718)
Net assets 72 51
EQUITY
Capital and reserves
Share capital 16 69 68
Share premium 9 8
Capital redemption reserve 6 6
Other reserve (1,295) (1,295)
Foreign currency translation reserve (39) (39)
Retained earnings 1,322 1,303
Total equity 72 51
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Unaudited condensed consolidated interim statement of changes in equity
Notes Share capital Share premium Capital redemption reserve Other reserve Foreign currency translation reserve Retained earnings Total equity
$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 recognized directly in equity
Shares issued 1 - - - - - 1
Share-based plans - - - - - 3 3
Settlement of tax on equity awards - - - - - (10) (10)
Balance at March 31, 2022 71 7 3 (1,295) (26) 1,472 232
Balance at January 1, 2023 68 8 6 (1,295) (39) 1,303 51
Comprehensive income
Net income - - - - - 44 44
Other comprehensive loss - - - - - - -
Total comprehensive income - - - - - 44 44
Transactions recognized directly in equity
Shares issued 1 1 - - - - 2
Share-based plans - - - - - 5 5
Settlement of tax on equity awards - - - - - (21) (21)
Shares repurchased and cancelled 16 - - - - - (11) (11)
Transfer from share repurchase liability - - - - - 9 9
Taxation on share-based plans - - - - - (7) (7)
Balance at March 31, 2023 69 9 6 (1,295) (39) 1,322 72
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Unaudited condensed consolidated interim cash flow statement
2023 2022
For the three months ended March 31 $m $m
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit 57 54
Depreciation and amortization of property, plant and equipment and intangible 4 3
assets
Depreciation of right-of-use assets 2 2
Gain on disposal of intangible assets - (1)
Share-based payments 5 3
Unrealized gain on equity investment (1) -
Settlement of tax on employee awards (21) (10)
Decrease in trade receivables 7 6
(Increase)/Decrease in current and non-current other assets (23) 7
(Increase)/Decrease in inventories (5) 2
Increase/(Decrease) in trade and other payables 30 (75)
Decrease in provisions and other liabilities(1) (71) (55)
Cash used in operations (16) (64)
Interest paid (10) (9)
Interest received 11 -
Taxes paid (21) (2)
Net cash outflow from operating activities (36) (75)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of assets, net of cash acquired (refer to Note 17) (124) -
Purchase of property, plant and equipment (1) -
Purchase of investments (33) (150)
Maturity of investments 36 -
Purchase of intangible asset (5) -
Proceeds from disposal of intangible assets - 1
Net cash outflow from investing activities (127) (149)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings (11) (1)
Principal elements of lease payments (2) (2)
Shares repurchased and cancelled (11) -
Proceeds from the issuance of ordinary shares 2 1
Net cash outflow from financing activities (22) (2)
Exchange difference on cash and cash equivalents (1) (2)
Net decrease in cash and cash equivalents (186) (228)
Cash and cash equivalents at beginning of the period 774 1,102
Cash and cash equivalents at end of the period 588 874
(1)Changes in the line item provisions and other liabilities for Q1 2023
include exceptional litigation settlement payments totaling $74m (Q1 2022:
$58m). $3m of interest paid on the DOJ Resolution in Q1 2023 has been recorded
in the interest paid line item (Q1 2022: $4m).
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Notes to the unaudited 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 unaudited
condensed consolidated interim 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 have been reviewed and are
unaudited and do not include all the information and disclosures required in
the annual financial statements. Therefore the Condensed Financial Statements
should be read in conjunction with the Group's Annual Report and Accounts for
the year ended December 31, 2022, which were 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.
These Condensed Financial Statements were approved for issue on April 26,
2023.
In 2023, the Group acquired 100% of the share capital of Opiant
Pharmaceuticals, Inc. ("Opiant") which has been accounted for as an asset
acquisition as substantially all of the fair value of the gross assets
acquired is concentrated in the value of the in-process research and
development. The Group has disclosed new accounting policies in Note 17
regarding the policy elected for treatment of contingent consideration and the
method used to evaluate whether an acquisition is a business. 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, 2022, except for
estimates used in determining the valuation of the in-process research and
development associated with the acquisition of Opiant and changes in estimates
that are required in determining the provision for income taxes.
The Directors have assessed the Group's ability to maintain sufficient
liquidity to fund its operations, fulfill financial and compliance obligations
as set out in Note 12, and comply with the minimum liquidity covenant in the
Group's debt facility for the period to September 2024 (the going concern
period). A base case model was produced reflecting:
• Board approved forecasts and financial plans for the period;
• the acquisition of Opiant completed in Q1 2023; and
• settlement of liabilities and provisions in line with contractual
or expected terms.
The Directors also assessed a 'severe but plausible' downside scenario which
included the following key changes to the base case within the going concern
period:
• the risk that SUBLOCADE will not meet revenue growth expectations
by modelling a 15% decline on forecasts;
• an accelerated decline in sublingual product sales including
reversion to generic analogues for SUBOXONE Film in the U.S.; and
• stress testing of payments from ongoing legal proceedings.
Under both the base case and the downside scenario, sufficient liquidity
exists and is generated by the business such that all operational and covenant
requirements are met for the going concern period. The Directors believe the
near-term litigation outcomes can be appropriately managed; should this not be
the case, the Group would take the cases to trial where it believes it has a
strong case that would not merit material additional payments in the going
concern periods. These risks were balanced against the Group's current and
forecast liquidity position as well as other mitigating measures available to
the Group. As a result of the analysis described above, the Directors
reasonably expect the Group to have 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, 2022, were approved by the Board of Directors on March 7, 2023,
and delivered to the Registrar of Companies. The auditor's report 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
The Group is engaged in a single business activity, which is predominantly 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 and allocates
resources on a functional basis between Commercial, Supply, Research, and
Development, and other Group functions. 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 geographically based on the country where the sale
originates. The following tables represent net revenues and non-current
assets, net of accumulated depreciation, amortization and impairment, by
country. Non-current assets for this purpose consist of intangible assets,
property, plant and equipment, right-of-use assets, investments, and other
assets.
Net revenue:
2023 2022
For the three months ended March 31 $m $m
United States 209 165
Rest of World 44 42
Total 253 207
On a disaggregated basis, the Group's net revenue by major product line:
2023 2022
For the three months ended March 31 $m $m
Sublingual/other 113 117
SUBLOCADE 132 85
PERSERIS 8 5
Total 253 207
Non-current assets:
Mar 31, Dec 31,
2023
2022
$m $m
United States 201 65
Rest of World 231 226
Total 432 291
3. OPERATING EXPENSES AND NET OTHER OPERATING INCOME
The table below sets out selected operating costs and expense information:
Operating expenses
2023 2022
For the three months ended March 31 $m $m
Research and development expenses (27) (8)
Selling and general expenses (53) (53)
Administrative and general expenses(1) (78) (56)
Selling, general, and administrative expenses (131) (109)
Depreciation, amortization, and impairment(2) (4) (3)
(1) Administrative and general expenses include exceptional costs in the
current period as outlined in Note 4.
(2) Depreciation and amortization expense is included in research and
development and selling, general and administrative expenses. Additionally,
depreciation and amortization expense in Q1 2023 of $2m (Q1 2022: $2m) for ROU
assets and intangibles is included within cost of sales.
The increase in research and development expenses is primarily due to
increased activities related to certain post-marketing studies for SUBLOCADE
and PERSERIS, process validation testing related to LAI capacity expansion and
ongoing early-stage pipeline activities.
Net other operating income
2023 2022
For the three months ended March 31 $m $m
Net proceeds from the sale of intangible assets - 1
Fair value gain on equity investment 1 -
Net other operating income 1 1
4. EXCEPTIONAL ITEMS AND ADJUSTED RESULTS
Exceptional items
Where significant expenses or income occur that do not reflect the Group's
ongoing operations or the adjustment of which may help with the comparison to
prior periods, these items are disclosed as exceptional items in the income
statement. Examples of such items could include income or restructuring and
related expenses from the reconfiguration of the Group's activities and/or
capital structure, impairment of current and non-current assets, gains and
losses from the sale of intangible assets, certain costs arising as a result
of significant and non-recurring regulatory and litigation matters, 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 measures defined by IFRS and 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.
The table below sets out exceptional expense recorded in each period:
2023 2022
For the three months ended March 31 $m $m
Exceptional items within SG&A
Acquisition-related costs(1) (12) -
US listing costs(2) (2) -
Total exceptional items within SG&A (14) -
Total exceptional items before taxes (14) -
Tax on exceptional items 2 -
Total exceptional items (12) -
1. In Q1 2023, the Group recognized $12m of exceptional costs
related to the acquisition of Opiant (refer to Note 17). The Group expects to
incur approximately $3m in additional pre-tax acquisition-related costs in FY
2023 which would be recorded as exceptional.
2. In Q1 2023, the Group recognized $2m of exceptional costs in
preparation for a potential additional listing of Indivior shares on a major
US exchange. The Group expects to incur approximately $3m in additional
exceptional pre-tax costs in FY 2023 as it prepares for an additional US
listing.
Adjusted results
Management believes adjusted results may be useful to investors as they
exclude items which do not reflect the Group's day-to-day operations or may
help with comparisons to prior periods. Similar concepts of adjusted results
are frequently used by securities analysts, investors and other interested
parties in their evaluation of the Group and in comparison to other companies,
many of which also present adjusted performance measures when reporting their
results. Adjusted results have limitations as analytical tools. They are not
recognized terms under IFRS and therefore do not purport to be an alternative
to operating profit as a measure of operating performance. Adjusted results as
presented by the Group are not necessarily comparable to similarly titled
measures used by other companies. As a result, these performance measures
should not be considered in isolation from, or as a substitute analysis for,
the Group's reported results presented in accordance with IFRS.
The tables below show the list of adjustments between the reported and
adjusted results for both Q1 2023 and Q1 2022.
Reconciliation of selling, general and administrative expenses to adjusted
selling, general and administrative expenses
2023 2022
For the three months ended March 31 $m $m
Selling, general and administrative expenses (131) (109)
Exceptional selling, general and administrative expenses 14 -
Adjusted selling, general and administrative expenses (117) (109)
Reconciliation of operating profit to adjusted operating profit
2023 2022
For the three months ended March 31 $m $m
Operating profit 57 54
Exceptional selling, general and administrative expenses 14 -
Adjusted operating profit 71 54
Reconciliation of profit before taxation to adjusted profit before taxation
2023 2022
For the three months ended March 31 $m $m
Profit before taxation 58 48
Exceptional selling, general and administrative expenses 14 -
Adjusted profit before taxation 72 48
Reconciliation of net income to adjusted net income
2023 2022
For the three months ended March 31 $m $m
Net income 44 41
Exceptional selling, general and administrative expenses 14 -
Tax on exceptional items (2) -
Adjusted net income 56 41
5. NET FINANCE INCOME (EXPENSE)
2023 2022
For the three months ended March 31 $m $m
Finance income
Interest income on cash and cash equivalents/investments 11 -
Total finance income 11 -
Finance expense
Interest expense on borrowings (7) (4)
Interest expense on lease liabilities (1) -
Interest expense on legal matters (2) (2)
Total finance expense (10) (6)
Net finance income (expense) 1 (6)
The increases to finance income and finance expense were primarily due to
higher interest rates. Investments in corporate debt and U.S. Treasury
securities in 2022 also contributed to the increase in finance income.
6. 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 on actual movement in
deferred tax for the quarter, with the balance recorded to the current tax
accounts.
In the three months ended March 31, 2023, the reported total tax expense was
$14m, or a rate of 24% (Q1 2022 tax expense: $7m, 15%). The tax expense on Q1
2023 adjusted profits amounted to $16m, excluding the $2m tax benefit on
exceptional items, which represented an effective tax rate of 22%. There were
no exceptional items recorded in the prior period. The increase in the
effective tax rate on adjusted profits was primarily driven by the increase in
the UK tax rate from 19% to 23.5%, and the temporary reduction in innovation
incentives due to 2022 losses.
The Group's balance sheet at March 31, 2023 includes a current tax receivable
of $33m (FY 2022: $5m), current tax liabilities of $7m (FY 2022: $9m), and
deferred tax assets of $201m (FY 2022: $219m). The main decrease in deferred
tax assets is due to share-based compensation.
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, 2023, the Group's net deferred tax assets of $201m
relate primarily to net operating loss carryforwards, share-based
compensation, inventory costs capitalized for tax purposes, litigation
liabilities, and other non-current temporary differences. Recognition of
deferred tax assets 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 net revenues. These
forecasts are subject to similar uncertainties to those assessments. This is
reviewed each quarter 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 realizable, Management have concluded
full recognition of deferred tax assets to be appropriate and do not believe a
significant risk of material change in their assessment exists in the next 12
months.
Other tax matters
In September 2022, the Company's shareholders approved an additional listing
in the U.S., which is expected to take place in June 2023. Once listed in the
U.S., U.S. tax laws limit deductibility of compensation for certain management
roles. The Group currently carries approximately $6m of deferred tax assets
that are not expected to be realized once the listing is complete.
Approximately 55% of this amount will be charged to equity and 45% will be
presented as an exceptional tax charge in the period the listing takes place,
as a reversal of the original booking.
The enacted UK Statutory Corporation Tax rate has increased to 25% as of April
1, 2023, providing a blended rate of 23.5% for the year ended December 31,
2023. A framework for the introduction of a global minimum effective tax rate
of 15%, applicable to large multinational groups has been published. In the
Spring Finance Bill that followed the 2023 Spring Budget, the UK Government
proposed legislation to implement the OECD Global Anti-Base Erosion Model
Pillar Two rules in the UK. The legislation is expected to be enacted in
summer 2023 and will be effective for accounting periods starting on or after
December 31, 2023. The Group is reviewing these draft rules to understand any
potential impacts when ultimately enacted.
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.
7. EARNINGS PER SHARE
Share consolidation
In September 2022, the Company's shareholders approved a 5-for-1 share
consolidation. On October 10, 2022, the Company completed this share
consolidation. Shareholders received 1 new Ordinary share with a nominal value
of $0.50 each for every 5 previously existing Ordinary shares which had a
nominal value of $0.10 each. All share and per share information of the Group,
including basic and diluted weighted average number of shares outstanding,
basic earnings per share, diluted earnings per share and adjusted earnings per
share (basic and diluted) reflect the share consolidation for all periods
presented.
The table below sets out basic and diluted earnings per share for each period:
2023 2022
For the three months ended March 31 $ $
Basic earnings per share $0.32 $0.29
Diluted earnings per share $0.31 $0.28
Adjusted basic earnings per share $0.41 $0.29
Adjusted diluted earnings per share $0.40 $0.28
Basic
Basic earnings per share is calculated by dividing net income for the period
attributable to owners of the Group 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 Group has dilutive potential ordinary shares in
the form of stock options and awards. These options and awards reflect the
share consolidation for all periods presented, referred to above. The weighted
average number of shares is adjusted for the number of shares granted to the
extent performance conditions have been met at the balance sheet date and as
determined using the treasury stock method.
Weighted average number of shares
The weighted average number of ordinary shares outstanding (on a basic basis)
for Q1 2023 includes the favorable impact of 484,362 ordinary shares
repurchased in Q1 2023, 17,815,033 ordinary shares repurchased prior to the
share consolidation in 2022 (equivalent post consolidation: 3,563,007), and
1,280,914 ordinary shares repurchased after the share consolidation in 2022.
See Note 16 for further discussion. Conditional awards of 1,760,805 and
7,491,252 (equivalent post consolidation approximately 1,498,000) were granted
under the Group's Long-Term Incentive Plan in Q1 2023 and Q1 2022,
respectively.
2023 2022
For the three months ended March 31 thousands thousands
On a basic basis 136,536 140,740
Dilution from share awards and options 4,452 5,498
On a diluted basis 140,988 146,238
Adjusted Earnings
Management believes that diluted earnings per share, adjusted for the impact
of exceptional items after the appropriate tax amount, may provide 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.
8. INTANGIBLE ASSETS
Mar 31, Dec 31,
2023
2022
Intangible assets, net of accumulated amortization and impairment $m $m
Products in development 167 36
Marketed products 29 29
Software 4 5
Total 200 70
The increase in products in development is primarily due to the acquisition of
Opiant which resulted in the recognition of an intangible asset related to the
in-process research and development value for the pipeline product OPNT003,
nasal nalmafene, for $126m (refer to Note 17).
9. INVESTMENTS
Mar 31, Dec 31,
2023
2022
Current and non-current investments $m $m
Equity securities at FVPL 11 10
Debt securities held at amortized cost 106 109
Total investments, current 117 119
Debt securities held at amortized cost 98 98
Total investments, non-current 98 98
Total 215 217
The Group's investments in debt and equity securities do not create
significant credit risk, liquidity risk, or interest rate risk. Debt
securities held at amortized cost consist of investment-grade debt. At
March 31, 2023, approximately 25% of the Group's portfolio was invested in
the banking sector; none of those securities were downgraded as a result of
the recent market events in that sector.
As of March 31, 2023, expected credit losses for the Group's investments held
at amortized cost 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, 2023.
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, 2023, the
carrying value of investments held at amortized cost was above the fair value
by $2m, due to rising interest rates. The fair value of investments held at
amortized cost was calculated based on quoted market prices which would be
classified as Level 1 in the fair value hierarchy above.
10. CURRENT AND NON-CURRENT OTHER ASSETS
Mar 31, Dec 31,
2023
2022
Current and non-current investments $m $m
Current prepaid expenses 26 14
Other current assets 22 13
Total other current assets 48 27
Non-current prepaid expenses 20 20
Other non-current assets 26 18
Total other non-current assets 46 38
Total 94 65
Non-current assets primarily represent the funding of surety bonds in relation
to intellectual property related matters (see Note 14 for further discussion).
Long-term prepaid expenses primarily relate to payments for contract
manufacturing capacity.
11. FINANCIAL LIABILITIES - BORROWINGS
The table below sets out the current and non-current portion obligation of the
Group's term loan:
Mar 31, Dec 31,
2023
2022
Term loan* $m $m
Term loan - current (3) (3)
Term loan - non-current (236) (237)
Total term loan (239) (240)
*Total term loan borrowings reflect the principal amount drawn including debt
issuance costs of $6m (FY 2022: $6m).
At March 31, 2023, the term loan fair value was approximately 98% (FY 2022:
98%) of par value. The key terms of the term loan in effect at March 31,
2023, are as follows:
Currency Nominal interest margin Maturity Required annual repayments Minimum
liquidity
Term Loan facility USD SOFR + 0.26% + 5.25% 2027 1% Larger of $100m or 50% of Loan Balance
The term loan amounting to $245m (FY 2022: $246m) is secured against the
assets of certain subsidiaries of the Group in the form of guarantees issued
by respective subsidiaries.
• Nominal interest margin is calculated as USD SOFR plus 0.26%, subject to
a floor of 0.75%, plus a credit spread adjustment of 5.25%.
• There are no revolving credit commitments.
12. PROVISIONS AND OTHER LIABILITIES
Provisions
Total Total
Current Non-Current Mar 31, 2023 Current Non-Current Dec 31, 2022
Current and non-current provisions $m $m $m $m $m $m
Multidistrict antitrust class and state claims (290) - (290) (290) - (290)
Federal false claims allegations (5) - (5) (5) - (5)
Intellectual property related matters - (3) (3) - (3) (3)
Other (3) (2) (5) (8) (2) (10)
Total provisions (298) (5) (303) (303) (5) (308)
The Group carries a current provision of $290m (FY 2022: $290m) for certain
multidistrict antitrust class and state claims. The provision is the Group's
estimate at this time of a potential aggregate settlement. However, the Group
cannot predict with any certainty whether Indivior Inc. will reach a
settlement with any of the Plaintiffs, and the final aggregate cost of these
matters, whether resolved by settlement or trial, may be materially different.
See Note 14, Antitrust Litigation and Consumer Protection for further details.
The effect of discounting was not material.
The Group carries a provision of $5m (FY 2022: $5m) pertaining to all
outstanding False Claims Act Allegations as discussed in Note 14. These
matters are expected to be settled within the next 12 months and are not
expected to materially change.
The Group carries a provision of $3m (FY 2022: $3m ) for intellectual property
related matters (see Note 14, Intellectual property related matters). The
Group does not expect the remaining matters to be settled within a year and
therefore the provision is classified as non-current.
Other provisions totaling $5m (FY 2022: $10m) primarily represent general
legal matters expected to be settled within the next 12 months and retirement
benefit costs which are not expected to be settled within one year.
Other liabilities
Total Total
Current Non-Current Mar 31, 2023 Current Non-Current Dec 31, 2022
Current and non-current other liabilities $m $m $m $m $m $m
DOJ resolution (51) (342) (393) (52) (392) (444)
Intellectual property related matters (11) - (11) (10) (11) (21)
RB indemnity settlement (8) (15) (23) (8) (22) (30)
Share repurchase - - - (9) - (9)
Other - (10) (10) - (3) (3)
Total other liabilities (70) (367) (437) (79) (428) (507)
DOJ resolution
In July 2020, the Group settled criminal and civil liability with the United
States Department of Justice (DOJ), the U.S. Federal Trade Commission (FTC),
and U.S. state attorneys general 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 DOJ in 2018, and an FTC investigation. In November
2020, the first payment of $103m (including interest) was made. In January
2022 and 2023, additional payments of $54m and $53m (including interest)
were made pursuant to the resolution agreement, respectively. Subsequently,
four annual installments of $50m plus interest will be due every January 15
from 2024 to 2027 with the final installment of $200m due in December 2027.
Interest accrues at 1.25% on certain portions of the resolution which will be
paid together with the annual installment payments. For non-interest-bearing
portions, the liability has been recorded at the net present value based on
timing of the estimated payments and using a discount rate equal to the
interest rate on the interest-bearing portions. In Q1 2023, the Group recorded
interest expense totaling $1m (Q1 2022: $2m) related to this resolution.
Under the terms of the resolution agreement with the DOJ, 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 U.S. 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.
In addition to the resolution agreement, the Group entered into a five-year
Corporate Integrity Agreement with the HHS Office of the Inspector General
(HHS-OIG), pursuant to which the Group committed to promote compliance with
laws and regulations and committed to the 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.
IP related matters
The Group has other liabilities for intellectual property related matters
totaling $11m (FY 2022: $21m), which relates to the settlement of intellectual
property litigation with DRL in June 2022. Under the settlement agreement, the
Group made payments to DRL in June 2022 and March 2023 with a final payment
due in 2024. This liability has been recorded at the net present value, using
a market interest rate at the time of the settlement determined to be 4.50%,
considering the timing of payments and other factors.
RB resolution
In January 2021, the Group reached a settlement with RB to resolve claims
which RB issued in the Commercial Court in London in November 2020, seeking
indemnity under the Demerger Agreement between amongst others, RB and the
Group (Demerger Agreement). Pursuant to the settlement, RB withdrew the U.S.
$1.4b claim to release the Group 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 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, followed
by installment payments of $8m in January 2022 and 2023, respectively.
Subsequently, annual installment payments of $8m will be due every January
from 2024 to 2026. The Group carries a liability totaling $23m (FY 2022: $30m)
related to this settlement. This liability has been recorded at the net
present value, using a market interest rate at the time of the settlement
determined to be 3.75%, considering the timing of payments and other factors.
Other
Other liabilities primarily represent employee related liabilities and
deferred revenue related to a supply agreement, which are non-current as of
March 31, 2023.
13. 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 liabilities related to these
matters are determined to be possible, they represent contingent liabilities.
Except for those matters discussed in Note 14 under "Multidistrict Antitrust
Class and State Claims", "False Claims Act Allegations", and "Intellectual
Property Related Matters", for which liabilities or provisions have been
recognized, Note 14 sets out the details for legal and other disputes for
which the Group has assessed as contingent liabilities. Where the Group
believes that it is possible to reasonably estimate a range for the contingent
liability this has been disclosed.
14. LEGAL PROCEEDINGS
There are certain ongoing legal proceedings or threats of legal proceedings in
which the Group is a party, but in which the Group believes the possibility of
an adverse impact is remote and they are not discussed in this Note 14.
Antitrust Litigation and Consumer Protection
Multidistrict Antitrust Class and State Claims
• Civil antitrust claims have been filed by (a) a class of direct
purchasers, (b) a class of end payors, and (c) a group of states, now
numbering 41, and the District of Columbia (collectively, the "Plaintiffs").
The Plaintiffs generally allege, among other things, that Reckitt Benckiser
Pharmaceuticals, Inc. (now known as Indivior Inc.) violated U.S. 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 Inc. unlawfully acted to lower the market share of these
products. These antitrust cases are pending in multidistrict litigation (the
"Antitrust MDL") in federal court in the Eastern District of Pennsylvania. The
court denied Indivior Inc.'s motion for summary judgment by order dated August
22, 2022. Trial is currently scheduled for September 18, 2023.
• In the first quarter of 2023, Indivior Inc. participated in
mediation sessions related to the Antitrust MDL. The Plaintiffs and Indivior
Inc. submitted initial monetary demands and offers prior to the mediation.
Additional demands and offers have been exchanged with the States. Additional
mediation sessions may take place in the future.
• The Group believes Indivior Inc. has meritorious defenses and will
continue to vigorously defend itself in this matter. The Group has evaluated
the current status of mediation, the strengths and weaknesses of the
Plaintiffs' liability and damages claims, the Group's defenses, the inherent
uncertainty of trial, the remaining legal issues to be resolved, and the
benefits of certainty to the Group in resolving these claims and savings in
legal fees and costs. The Group has determined that it is in the interests of
its stakeholders to explore settlement of these matters. As a result, an
exceptional provision of $290 million has been recognized by the Group,
although any settlement could occur at a lower or higher amount. The provision
is the Group's estimate at this time of a potential aggregate settlement in
light of the above analysis. However, the Group cannot predict with any
certainty whether Indivior Inc. will reach a settlement with any of the
Plaintiffs, and the final aggregate cost of these matters, whether resolved by
settlement or trial, may be materially different.
• If Indivior Inc. is found liable in a trial to any of the
Plaintiffs and is unable to reduce the claimed damages of such Plaintiff group
or groups during such trial (or in any subsequent proceeding), which the
Directors believe is beyond "severe but plausible" (and therefore remote)
within the going concern period, then its financial position, results and
future cash flows could be materially adversely affected. If the Group
continues with mediation or other settlement discussions, it makes no
guarantee as to whether any settlement can be reached and if so, what amounts,
if any, it may agree to pay, or what amounts the Plaintiffs will demand.
Other Antitrust and Consumer Protection Claims
• 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 in the Antitrust MDL. The Carefirst case remains pending.
• 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. The plaintiffs filed Notices of Appeal in August 2021 to the
United States Court of Appeals for the Third Circuit ("Third Circuit"). The
Third Circuit affirmed the district court's dismissal by opinion and order
dated December 15, 2022. Humana also filed a Complaint in state court in
Kentucky on August 20, 2021 with substantially the same claims as were raised
in the federal court case. See Humana Inc. v. Indivior Inc., No. 21-CI-004833
(Ky. Cir. Ct.) (Jefferson Cnty). That case was stayed pending a decision by
the Third Circuit, and remains stayed. Centene Corporation and the
above-referenced related companies filed a complaint in the Circuit Court for
the County of Roanoke, Virginia alleging similar claims on January 13, 2023
following the mandate from the Third Circuit affirming the district court's
dismissal. See Centene Corp. v. Indivior Inc., No. CL23000054-00 (Va. Cir.
Ct.) (Roanoke Cnty). Indivior has not been served in the Centene action.
• 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. are pending in the Circuit Court for the County of Roanoke,
Virginia. See Health Care Services Corp. v. Indivior Inc., No. CL20-1474 (Lead
Case) (Va. Cir. Ct.) (Roanoke Cnty). 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
plaintiffs filed amended complaints, and the Group filed demurrers seeking
dismissal of some of the asserted claims. The court heard oral argument on the
demurrers on September 1, 2022, and issued a letter opinion on October 14,
2022 sustaining in part and overruling in part the Group's demurrers. A jury
trial on the Group's pleas in bar has been set for October 30 - November 3,
2023. A jury trial on the merits has been set for July 15, 2024 - August 8,
2024.
• The Group is still in the process of evaluating the claims,
believes it has meritorious defenses, and intends to defend itself. No
estimate of the range of potential loss can be made at this time.
Civil Opioid Litigation
• The Group has been named as a defendant in more than 400 civil
lawsuits alleging that manufacturers, distributors, and retailers of opioids
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 shares for opioids, or alleging individual personal injury
claims. Most of these cases have been consolidated and are pending in a
federal multi-district litigation ("the Opioid MDL") in the U.S. District
Court for the Northern District of Ohio. See In re National Prescription
Opiate Litigation, MDL No. 2804 (N.D. Ohio). Nearly 2/3 of the cases in the
Opioid MDL were filed by cities and counties, while nearly 1/3 of the cases
were filed by individual plaintiffs, most of whom assert claims relating to
neonatal abstinence syndrome ("NAS"). Litigation against the Group in the
Opioid MDL is stayed. On December 12, 2022, the court in the Opioid MDL set
forth procedures requiring plaintiffs to show cause why the court should not
dismiss cases in which plaintiffs have not submitted a plaintiff fact sheet or
timely served the relevant defendants. On April 6, 2023, the court ordered
that plaintiffs must perfect service and governmental subdivision plaintiffs
must serve plaintiff fact sheets within 45 days, or the cases will be
dismissed without prejudice . Separately, motions to remand have been denied
or withdrawn in more than 50 cases to which the Group is a party (among
numerous other defendants). Motions to remand remain pending in additional
cases to which the Group is a party.
• The court in the Opioid MDL held a status conference on June 22,
2022, with county and municipality plaintiffs and certain manufacturer
defendants (including the Group) and distributor defendants to discuss what
information the parties needed to proceed, whether the parties would entertain
settlement and whether there should be any bellwether trials from this subset
of plaintiffs and defendants. During the status conference and at subsequent
conferences, the court expressed its view that no additional bellwether trials
should be needed for these cases, provided that the parties were progressing
on a settlement track. By order dated February 28, 2023, the court indicated
that it will not select hospital cases for bellwether trials at this time, and
set forth a process for selecting six bellwether third-party payor trials.
• Regarding civil opioid cases not in the Opioid MDL:
◦ In 2017, Indivior Inc. was named as one of numerous defendants in
International Brotherhood of Electrical Workers Local 728 Family Healthcare
Plan v. Allergan, PLC et al., Case ID: 190303872 (C.P. Phila. Cnty). That
case was consolidated with Lead Case No. 2017-008095 in Delaware County and
stayed.
◦ Indivior also was named as one of numerous defendants in various
other federal and state court cases that are not in the Opioid MDL and were
brought by municipalities. Many were only recently filed. Indivior is not
yet currently required to respond to the complaints in those actions.
◦ Indivior Inc. was named as a defendant in five individual
complaints filed in West Virginia state court that were transferred to West
Virginia's Mass Litigation Panel. See In re Opioid Litigation, No. 22-C-9000
NAS (W.V. Kanawha Cnty. Cir. Ct.) ("WV MLP Action"). All five of Indivior
Inc.'s cases in the WV MLP Action involved claims related to NAS. Indivior
Inc. moved to dismiss all five complaints on January 30, 2023. The plaintiffs
in those cases separately have moved to strike the defendants' notices of
non-party fault. A hearing on motions to dismiss in the WV MLP Action,
including Indivior Inc.'s motions, was held on March 24, 2023. By order
dated April 17, 2023, the court granted Indivior's motions to dismiss.
• Given the status and preliminary stage of litigation in both the
Opioid MDL and the separate federal and state court actions, no estimate of
possible loss in the opioid litigation can be made at this time.
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 filed a Motion to Dismiss in June 2021. The case was
stayed for mediation in September 2021, but the parties did not reach
agreement. In March 2022, Relator submitted a request for oral argument on the
Motion to Dismiss. On July 21, 2022, the court entered an order staying the
action and reserving a decision on the Group's Motion to Dismiss pending
rehearing en banc by the U.S. Court of Appeals for the Fourth Circuit in U.S.
ex rel. Sheldon v. Allergan Sales, LLC. On rehearing en banc, the Fourth
Circuit affirmed the district court's opinion in U.S. ex rel. Sheldon v.
Allergan Sales, LLC by order dated September 23, 2022. The United States
District Court for the Western District of Virginia has not yet ruled on the
Group's Motion to Dismiss, and instead has further stayed the proceedings
pending decisions by the Supreme Court of the United States in two cases
concerning the False Claims Act-United States ex rel. Proctor v. Safeway,
Inc., and United States ex rel. Schutte v. Supervalu, Inc.
• 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.
UK Shareholder Claims
• On September 21, 2022, certain shareholders issued representative
and multiparty claims against Indivior PLC in the High Court of Justice for
the Business and Property Courts of England and Wales, King's Bench Division.
On January 16, 2023, the representative served its Particular of Claims
setting forth in more detail the claims against the Group, while the same law
firm that represents the representative also sent its draft Particular of
Claims for the multiparty action. The claims made in both the representative
and multiparty actions generally allege that Indivior PLC violated the UK
Financial Services and Markets Act 2000 ("FSMA 2000") by making false or
misleading statements or material omissions in public disclosures, including
the 2014 Demerger Prospectus, regarding an alleged product-hopping scheme
regarding the switch from SUBOXONE® tablets to SUBOXONE® film. Indivior PLC
filed an application to strike out the representative action on February 27,
2023. A hearing on the application to strike out has been scheduled for
November 20-21, 2023.
• The Group has begun its evaluation of the claims, believes it has
meritorious defenses, and intends to vigorously defend itself. Given the
status and preliminary stage of the litigation, no estimate of possible loss
can be made at this time.
Intellectual Property Related Matters
• Various subsidiaries of the Group filed actions against Alvogen
Pine Brook LLC and Alvogen Inc. (together, "Alvogen") in the United States
District Court for the District of New Jersey (the "NJ District Court")
alleging that Alvogen's generic buprenorphine/naloxone film product infringes
U.S. Patent Nos. 9,687,454 (the "454 Patent") and 9,931,305 (the "305 Patent")
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 the subsidiaries of the Group that were a party to the case were
required to post a surety bond of $36m. The parties entered into an agreement
whereby Alvogen was enjoined from selling in the U.S. its generic
buprenorphine/naloxone film product unless and until the Court of Appeals for
the Federal Circuit ("CAFC") issued a mandate vacating Indivior's separate
preliminary injunction entered against Dr. Reddy's Laboratories, Inc. ("DRL")
in a related case. The CAFC's mandate vacating Indivior's preliminary
injunction as to DRL issued in February 2019, and Alvogen launched its generic
product. Any sales in the U.S. 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. In June 2022, the parties participated in court-ordered
mediation. The parties did not reach settlement. Summary judgment motions have
been fully briefed, and the court heard arguments on those motions on August
29, 2022. The NJ District Court has not yet ruled on those motions, and no
trial date has been set.
15. TRADE AND OTHER PAYABLES
Mar 31, Dec 31,
2023
2022
$m $m
Accrual for rebates, discounts and returns (466) (428)
Accounts payable (36) (36)
Accruals and other payables (134) (138)
Other tax and social security payable (21) (15)
Total trade and other payables (657) (617)
16. SHARE CAPITAL
Equity ordinary shares Nominal value paid per share Aggregate nominal value $m
Issued and fully paid
At January 1, 2023 136,480,995 $0.50 68
Ordinary shares issued 1,878,796 $0.50 1
Shares repurchased and cancelled (484,362) $0.50 -
At March 31, 2023 137,875,429 69
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
Ordinary shares issued
During the period, 1,878,796 ordinary shares at $0.50 each (Q1 2022: 3,840,414
at $0.10 each) were issued to satisfy vesting/exercises under the Group's
Long-Term Incentive Plan and U.S. Employee Stock Purchase Plan. In Q1 2023,
net settlement of tax on employee equity awards was $21m (Q1 2022: $10m).
Share consolidation
In October 2022, the Company completed a share consolidation. Shareholders
received 1 new Ordinary share with a nominal value of $0.50 each for every 5
previously existing Ordinary shares which had a nominal value of $0.10 each.
Shares repurchased and cancelled
On May 3, 2022, the Group commenced a second share repurchase program for an
aggregate purchase price up to no more than $100m or 39,698,610 of ordinary
shares (equivalent shares post consolidation: 7,939,722), which concluded on
February 28, 2023. During the period, the Group repurchased and cancelled
484,362 of the Company's ordinary shares at $0.50 per share. In Q1 2022,
256,055 ordinary shares at $0.10 purchased in 2021 as part of the Group's
share repurchase program were cancelled in January 2022.
All ordinary shares repurchased under share repurchase programs were cancelled
resulting in a transfer of the aggregate nominal value to a capital redemption
reserve. The total cost of the purchases made under the share repurchase
program during the period, including directly attributable transaction costs,
was $11m. Total purchases under the share repurchase program will be made out
of distributable profits.
17. ACQUISITION OF OPIANT
On March 2, 2023, the Group acquired 100% of the share capital of Opiant, a
publicly traded company in the United States, for upfront cash consideration
of $146m and an additional amount to be potentially paid upon achievement of
net sales milestones. Opiant is a specialty pharmaceutical company focusing on
developing drugs for addictions and drug overdose. As a result of the
acquisition, the Group added the pipeline product OPNT003, nasal nalmefene, an
opioid overdose treatment well-suited to confront illicit synthetic opioids
like fentanyl, to its addiction and science portfolio. The U.S. Food and Drug
Administration (FDA) has accepted for review the New Drug Application (NDA)
for OPNT003, granted a Priority Review designation and has given a
Prescription Drug User Fee Act (PDUFA) action date of May 22, 2023.
Management has elected to apply the optional concentration test under IFRS 3.
As substantially all of the fair value of the gross assets acquired (excluding
cash and cash equivalents, deferred tax assets, and goodwill resulting from
the effects of deferred tax liabilities) are concentrated in a single asset,
the Group will account for the transaction as an asset acquisition. For the
acquisition of Opiant, substantially all of the fair value of the gross assets
acquired is concentrated in the in-process research and development associated
with OPNT003. As a result, the acquisition has been accounted for as an asset
acquisition. With the closing of this transaction, a relative fair value
approach was taken for allocating the purchase consideration to the acquired
assets and liabilities with no goodwill recognized. The Group has recorded an
intangible asset associated with OPNT003 for $126m. The Group used a
multi-period excess earnings method, a form of the income approach, to
determine the fair value of the intangible asset.
As part of the acquisition of Opiant, the Group agreed to provide a maximum of
$8.00 per share in Contingent Value Rights (CVR) post-acquisition. The Group
will pay $2.00 per CVR for each of the following net revenue thresholds
achieved by OPNT003, during any period of four consecutive quarters prior to
the seventh anniversary of the U.S. commercial launch: (i) $225m, (ii) $300m
and (iii) $325m. The remaining (iv) $2.00 per CVR would be paid if OPNT003
achieves net revenue of $250m during any period of four consecutive quarters
prior to the third anniversary of the U.S. commercial launch. The potential
undiscounted payout of contingent consideration ranges from nil to $68 million
based on the achievement of the milestones. The Group accounts for contingent
consideration associated with asset acquisitions using a cost accumulation
model. No liabilities are initially recognized at the date of acquisition.
When an obligation associated with a variable payment is no longer uncertain,
it is capitalized as part of the cost of the asset, as it represents a direct
cost of the acquisition.
An initial recognition exception applies to the tax attributes acquired
whereby only certain items are recognized with the transaction, such as net
operating loss carryforwards, other tax carryforwards, and tax credits. Such
attributes totaled $9m, recorded as deferred tax assets.
The cash outflow for the acquisition was $124m, net of cash acquired. Direct
transaction costs of $10m are included in this cash outflow and capitalized as
a component of the total cost of the asset acquisition. Of the $146m upfront
consideration, $2m represents acceleration of vesting of employee share
compensation and has been recognized as a post-combination expense. As part of
the acquisition, the Group assumed outstanding debt of $10m which was settled
and included as a cash outflow from financing activities.
Exceptional costs of $12m were incurred during the quarter, primarily relating
to severance, acceleration of vesting of Opiant employee share compensation,
and short-term retention accruals (refer to Note 4).
The following table summarizes the net assets acquired:
Net assets acquired $m
Cash and cash equivalents 30
Inventories 3
Right-of-use assets 2
Intangible assets 126
Deferred tax assets 9
Other assets 6
Trade and other payables (10)
Lease liabilities (2)
Borrowings (10)
Total net assets acquired 154
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.
Details of Indivior PLC's Directors are available on our website at
www.indivior.com (http://www.indivior.com)
By order of the Board
Mark Crossley Ryan Preblick
Chief Executive Officer Chief Financial Officer
April 27, 2023
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 2023 Financial
Results of Indivior PLC for the three month period ended 31 March 2023 (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
2023;
• the Condensed consolidated interim income statement and Condensed
consolidated interim statement of comprehensive income for the period then
ended;
• the Condensed consolidated interim statement in 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 2023 Financial 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 ("ISRE (UK) 2410"). 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 2023 Financial 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 ISRE (UK) 2410. 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 2023 Financial 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 2023 Financial Results in accordance with
IAS 34. In preparing the Q1 2023 Financial 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 2023 Financial 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
26 April 2023
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