REG - Indivior PLC - 3rd Quarter Results
27/10/2022 08:15
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RNS Number : 3199E Indivior PLC 27 October 2022
October 27, 2022
Strong Q3 and YTD 2022 results; Raised guidance for FY net revenue, adjusted
operating profit and mid-point of SUBLOCADE net revenue
Period to September 30th Q3 Q3 % Change YTD YTD % Change
2022 2021 2022 2021
$m $m $m $m
Net Revenue 232 187 24% 659 568 16%
Operating Profit 56 38 47% 173 168 3%
Net Income 41 27 52% 130 169 -23%
Diluted EPS(1) ($) $0.28 $0.18 56% $0.89 $1.11 -20%
Adjusted Basis
Adj. Operating Profit(2) 58 38 53% 172 155 11%
Adj. Net Income(2) 43 27 59% 130 114 14%
Adj. Diluted EPS(1) (2) ($) $0.29 $0.18 61% $0.89 $0.75 19%
(1) On October 10th, 2022, Indivior PLC (the 'Company') 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 6 for further discussion. The 'Group' refers to Indivior PLC and its
consolidated subsidiaries.
(2) 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.
Comment by Mark Crossley, CEO of Indivior PLC
"I am pleased to report another strong quarter of top- and bottom-line
performance, led by our long-acting injectable medicines (LAIs), SUBLOCADE®
(buprenorphine extended-release) and PERSERIS® (risperidone), which are
benefiting from the strategic investments we have made over the past year.
SUBLOCADE, our paradigm shift in the treatment of opioid use disorder (OUD),
exceeded the $100m milestone in quarterly net revenue for the first time from
continued strong execution against our Organized Health Systems (OHS)
strategy. Additionally in the quarter, we took an important strategic step to
elevate the Group's profile in its highest value market and attract a broader
group of biopharma-focused investors with shareholder approval of an
additional listing, which will be in the US.
"Looking to the balance of FY 2022, based on our overall performance to date
and our strong outlook for SUBLOCADE, we are raising total net revenue and
adjusted operating profit guidance. We look forward to sharing our roadmap for
delivering long-term shareholder value at our Capital Markets Day in New York
City on December 7(th)."
YTD / Q3 2022 Financial Highlights
• YTD 2022 total net revenue (NR) of $659m increased 16% (YTD 2021:
$568m); Q3 2022 total NR of $232m increased 24% (Q3 2021: $187m). Net revenue
growth in each period was primarily driven by SUBLOCADE.
• YTD 2022 reported operating profit of $173m increased 3% (YTD
2021: $168m); Q3 2022 reported operating profit of $56m increased 47% (Q3
2021: $38m). On an adjusted basis, YTD 2022 operating profit of $172m
increased 11% (Adj. YTD 2021: $155m) reflecting strong net revenue growth
partially offset by an increase in operating expenses, mainly SG&A
investment to grow SUBLOCADE and PERSERIS. Adj. Q3 2022 operating profit of
$58m increased 53% (Adj. Q3 2021: $38m) reflecting strong net revenue growth.
• YTD 2022 reported net income of $130m decreased 23% (YTD 2021:
$169m); Q3 2022 reported net income of $41m increased 52% (Q3 2021: $27m). On
an adjusted basis, YTD 2022 net income of $130m increased 14% (Adj. YTD 2021
net income: $114m). Adj. Q3 2022 net income of $43m increased 59% (Adj. Q3
2021: $27m).
• Cash and investments totaled $1,035m at the end of Q3 2022
(including $26m restricted for self-insurance) (FY 2021: $1,102m). Refer to
Note 7 for investments and Notes 9 & 10 for obligations.
• Cash generated from operations in YTD 2022 was $63m which includes
exceptional cash litigation settlement payments of $108m and surety bond cash
collateral returned of $64m. Excluding these items, cash generated from
operations reflects strong operating profit which was partially offset by the
expected unwind of trade payables.
YTD / Q3 2022 Operating Highlights
• YTD 2022 SUBLOCADE NR of $290m (+72% vs. YTD 2021); Q3 2022
SUBLOCADE NR of $108m (+66% vs. Q3 2021 and +10% vs. Q2 2022). The strong
growth reflects further OHS channel penetration and increased new US patient
enrollments. Q3 2022 US dispenses were approx. 83,800 units (+73% vs. Q3 2021
and +11% vs. Q2 2022). Total SUBLOCADE patients on a 12-month rolling basis at
the end of Q3 2022 were approximately 73,800 (+72% vs. Q3 2021 and +14% vs. Q2
2022).
• YTD 2022 PERSERIS NR of $20m (+67% vs. YTD 2021); Q3 2022 PERSERIS
NR of $8m (+60% vs. Q3 2021 and +14% vs. Q2 2022) reflects investment in
national field force coverage and improving commercial access in the US
healthcare system.
• SUBOXONE (buprenorphine/naloxone) Film share in Q3 2022 averaged
19% (Q3 2021: 20%) and exited the quarter at 19% (Q3 2021: 20%).
• Aelis Farma Phase 2b study of AEF0117 in the treatment of moderate
to severe cannabis use disorder (ClinicalTrial.gov identifier: NCT05322941) is
ongoing. Results of the study are expected in 2024.
Optimal Listing Structure for Indivior Shares
In September 2022, the Company received shareholder approval to facilitate an
additional listing in the US, which is expected to take place in Spring 2023.
In addition, due to US exchange requirements for share price minimums and
norms, the Company also received shareholder approval to complete a 5:1 share
consolidation as part of this process that became effective October 10, 2022.
See Note 6 for further discussion.
The Group expects to incur pre-tax costs of $10m to $15m in FY 2022 as it
prepares for an additional US listing. Approximately 50% of the total costs
for this are expected to be recorded as exceptional given the non-recurring
nature of these costs. An amount of $4m has been incurred as exceptional costs
in the YTD period.
Share Repurchase Program
On May 3, 2022, Indivior announced a share repurchase program of up to $100m.
Through September 30, 2022, the Group repurchased and cancelled 17,815,033 of
the Company's ordinary shares at a daily weighted average purchase price of
301.27p at a cost of approximately $66m, which includes directly attributable
transaction costs. Considering the 5:1 share consolidation was completed on
October 10, 2022, equivalent ordinary shares repurchased and cancelled would
have been 3,563,007 at an equivalent weighted average purchase price of
1,506.33p. See Note 14 for further discussion.
FY 2022 Guidance
Based on continued strong momentum of the business, the Group is increasing
its net revenue (NR) guidance for FY 2022 to $890m to $915m (previously $840m
to $900m) and expects adjusted operating profit to be modestly higher than
2021. A key component of this increase is driven by the continued strong
SUBLOCADE growth in the OHS channel leading to narrower guidance of
$405m-$420m representing the upper half of updated guidance provided at the
half year.
The Group's FY 2022 expectations are:
• Total FY 2022 expected NR range of $890m to $915m (previously
$840m to $900m, now +14% vs. FY 2021 at the midpoint).
• SUBLOCADE FY 2022 expected NR in the range of $405m to $420m
(previously $390m to $420m, now +69% vs. FY 2021 at the mid-point).
• PERSERIS FY 2022 NR expected to be in the range of $27m to $32m
(unchanged vs. prior guidance, +74% vs. FY 2021 at the mid-point).
• US SUBOXONE Film - While the risk of entry by a fourth generic
remains, the Group has no visibility on the timing of commercial availability
of the approved fourth generic buprenorphine/naloxone sublingual film product.
However, with no evidence of launch having occurred as of the date of this
release, the Group expects any potential impact on Q4 and FY 2022 Film NR to
be covered by the current Group NR guidance range. The Group will continue to
monitor the competitive environment and update the market accordingly.
• Adjusted gross margin expected to be in the low- to mid-80%
range (unchanged vs. prior guidance), reflecting modestly higher cost
inflation and the relative share resilience of SUBOXONE Film.
• Total OPEX (SG&A and R&D combined) expected to be in the
range of $520m to $540m (unchanged vs. prior guidance); the Group anticipates
shifting resources to SG&A from R&D in the 4th quarter to continue to
fuel the growth of SUBLOCADE.
◦ Adjusted SG&A expected to be in the range of $445m to $460m
(increased from $440m to $455m).
◦ R&D expected to be in the range of $75m to $80m (lowered
from $80m to $85m), primarily reflecting phasing of components of SUBLOCADE
Post Marketing Requirement (PMR) studies into 2023.
• Adjusted operating profit expected to be modestly higher than FY
2021's adjusted operating profit of $187m (previously "broadly similar" to FY
2021 adjusted operating profit of $187m).
• Guidance assumes no material change in exchange rates for key
currencies compared with average year to date rates, notably USD/GBP and
USD/EUR; the impact of unfavorable translations on total NR guidance is now
anticipated to be higher than previously expected due to further strengthening
of the USD.
US OUD Market Update
In Q3 2022, the US buprenorphine medication-assisted treatment (BMAT) market
grew in mid-single digits. The Group continues to expect long-term US 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 Q3 2022.
As a result, there is increasing patient access to BMAT. The Group supports
efforts to encourage more eligible healthcare practitioners (HCPs) to provide
BMAT, and the Group continues to expand 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 in the US who are
prescribed BMAT by HCPs.
Financial Performance YTD and Q3 2022
Total net revenue in YTD 2022 increased 16% to $659m (YTD 2021: $568m) at
actual exchange rates (+18% at constant exchange rates). In Q3 2022, total net
revenue increased 24% at actual exchange rates (+27% at constant exchange
rates) to $232m (Q3 2021: $187m).
US net revenue increased 25% in YTD 2022 to $533m (YTD 2021: $428m) and by 32%
in Q3 2022 to $189m (Q3 2021: $143m). Strong year-over-year SUBLOCADE net
revenue growth, along with underlying BMAT market growth were the principal
drivers of the net revenue increase in both periods.
Rest of World (ROW) net revenue decreased 10% at actual exchange rates in YTD
2022 to $126m (YTD 2021: $140m) (-1% at constant exchange rates). In Q3 2022,
ROW net revenue decreased 2% at actual exchange rates to $43m (Q3 2021: $44m)
(+9% at constant exchange rates). In the quarter, positive contributions from
new products (SUBLOCADE / SUBUTEX Prolonged Release and SUBOXONE Film) were
more than offset by unfavorable foreign currency translation and ongoing
competitive pressure on legacy tablet products. YTD 2022 and Q3 2022 SUBLOCADE
/ SUBUTEX Prolonged Release net revenue in ROW were $19m and $7m (at actual
exchange rates), respectively. Net revenue at a constant exchange rate is an
alternative performance measure used by Management to evaluate underlying
performance of the business and is calculated by applying the prior year ago
exchange rate to net revenue in the currency of the foreign entity.
Gross margin as reported in YTD 2022 was 83% (YTD 2021: 85%) and 83% in Q3
2022 (Q3 2021: 86%), respectively. The gross margin declined as expected for
YTD 2022 and Q3 2022 and mainly reflects a greater mix of net revenue in
certain government channels, which are less profitable, and increased
manufacturing costs.
SG&A expenses as reported in YTD 2022 were $331m (YTD 2021: $299m) and
$115m as reported in Q3 2022 (Q3 2021: $131m). YTD 2022 and Q3 2022 included
$4m and $2m, respectively, of exceptional consulting costs incurred in
preparation for the planned additional listing of Indivior shares on a major
US exchange. YTD 2021 and Q3 2021 included $7m and $19m, respectively, of
exceptional costs due to a non cash adjustment to the provision for ANDA
litigation offset by releases of the provisions for False Claims Act
Allegations.
Excluding exceptional items, YTD 2022 SG&A expense increased 12% to $327m
(Adj. YTD 2021: $292m); Q3 2022 SG&A expense increased 1% to $113m (Adj.
Q3 2021: $112m). The increases in YTD 2022 and Q3 2022 primarily reflect sales
and marketing investments to grow the Group's long-acting injectable products,
SUBLOCADE and PERSERIS, along with increased travel and entertainment
expenses.
YTD 2022 and Q3 2022 R&D expenses were $43m and $20m, respectively (YTD
2021: $33m; Q3 2021: $11m). The increases over the year-ago periods reflect
higher R&D activity generally, as certain projects and PMR studies were
delayed in 2021 due to the COVID-19 pandemic.
YTD 2022 and Q3 2022 net other operating income was $3m and net other
operating loss of $1m, respectively, (YTD 2021: $20m income; Q3 2021: $19m
income). YTD 2022 included a fair value loss on equity investments, which were
more than offset by the net proceeds received from the out-licensing of nasal
naloxone opioid overdose patents and a Directors' & Officers' insurance
claim settlement which were recorded as exceptional other operating income.
YTD 2021 and Q3 2021 included $20m and $19m, respectively, of net exceptional
benefits primarily due to the net proceeds received from the sale of the
legacy TEMGESIC®/ BUPREX® / BUPREXX® (buprenorphine) franchise outside of
North America.
YTD 2022 operating profit as reported was $173m (YTD 2021: $168m). Exceptional
benefits of $1m are included in the current period. Net exceptional benefits
of $13m were included in YTD 2021. On an adjusted basis, YTD 2022 operating
profit was $172m (YTD 2021: $155m). The increases on a reported and adjusted
basis primarily reflects strong net revenue growth, partially offset by higher
operating expenses, mainly related to increased sales and marketing
investments to grow the Group's long-acting injectable technologies, SUBLOCADE
and PERSERIS, along with higher research and development expenses.
Q3 2022 operating profit as reported was $56m (Q3 2021: $38m). Exceptional
costs of $2m are included in the current period while exceptional costs items
of $nil are included in the year-ago period. On an adjusted basis, Q3 2022
operating profit was $58m (Adj. Q3 2021: $38m). The increases on a reported
and adjusted basis primarily reflect strong net revenue growth.
YTD 2022 net finance expense as reported was $13m (YTD 2021: $18m expense). An
exceptional expense of $1m is included in the year-ago period for the
write-off of deferred financing costs related to the previous term loan. On an
adjusted basis, YTD 2022 net finance expense was $13m (Adj. YTD 2021: $17m
expense). The modest reduction in net finance expense reflects higher interest
income earned on the Group's investments.
YTD 2022 reported tax expense was $30m, or a rate of 19% (YTD 2021 tax
benefit: $19m, -13%). Adjusted YTD 2022 tax expense was $29m, excluding the
$1m tax expense on exceptional items, an effective tax rate of 18%. Adjusted
YTD 2021 tax expense amounted to $24m, excluding the $43m tax benefit on
exceptional items, an effective tax rate of 17%. The Q3 2022 reported tax
charge was $13m, or a rate of 24% (Q3 2021: $4m, 13%). There were no
exceptional tax items recorded in Q3 2022. The Q3 2022 tax rate was negatively
impacted by the mix of income between territories and restrictions on interest
deductibility as interest rates increase.
YTD 2022 reported and adjusted net income was $130m (YTD 2021 reported net
income: $169m; YTD 2021 Adj. net income: $114m). The increase in net income on
an adjusted basis primarily reflects higher net revenue partially offset by
the increase in operating expense, primarily SG&A investments behind
SUBLOCADE and PERSERIS. Q3 2022 net income on a reported basis was $41m (Q3
2021: $27m), and $43m on an adjusted basis excluding the net after-tax impact
from exceptional items (Adj. Q3 2021: $27m). Higher Q3 2022 net income on an
adjusted basis was primarily due to strong revenue growth.
Diluted earnings per share on a reported and adjusted basis were $0.89 in YTD
2022 (YTD 2021: $1.11 earnings per share on a diluted basis and $0.75 earnings
per share adjusted diluted basis). In Q3 2022, diluted earnings per share and
adjusted diluted earnings per share were $0.28 and $0.29, respectively (Q3
2021: $0.18 earnings per share on a diluted and adjusted diluted basis).
Balance Sheet & Cash Flow
Cash and investments, totaled $1,035m at the end of Q3 2022 (including $26m
restricted for self-insurance) (FY 2021: $1,102m). Cash generated from
operations in YTD 2022 was $63m which includes exceptional cash litigation
settlement payments of $108m and surety bond cash collateral returned of $64m.
Excluding these items, cash generated from operations reflects strong
operating profit which was partially offset by the expected unwind of trade
payables. Gross borrowings, before issuance costs, were $247m at
September 30, 2022 (ending FY 2021: $249m).
Net working capital (inventory plus trade receivables, less trade and other
payables) was negative $332m on September 30, 2022, versus negative $423m at
the end of FY 2021. The change in the period was primarily from the expected
unwind of trade payables.
Net cash inflow from operating activities was $14m in YTD 2022 (YTD 2021 cash
inflow: $186m) reflecting higher interest paid on the Group's term loan
facility, interest paid on settlement payments and income taxes paid in YTD
2022 vs. income tax refunds received in YTD 2021.
YTD 2022 cash outflow from investing activities was $221m (YTD 2021 cash
outflow: $12m) which reflects the net investment in a portfolio of
investment-grade debt and treasury securities. See Note 7 for further
discussion on investments.
YTD 2022 cash outflow from financing activities was $72m (YTD 2021 cash
outflow: $26m) which primarily reflects an increase in payments made for the
Group's share repurchase program.
R&D / Pipeline Update
Indivior's quarterly R&D and pipeline update may be found here
(https://www.indivior.com/en/our-science/pipeline) .
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. The principal
risks and uncertainties affecting the Group's business activities are detailed
on pages 47 to 56 of the Indivior PLC Annual Report and Accounts 2021. The
principal risks and uncertainties include:
• Business Operations
• Product Pipeline, Regulatory and Safety
• Commercialization
• Economic and Financial
• Supply
• Legal and Intellectual Property
• Compliance
As reported with our half-year results, the nature and potential impact of the
principal risks, uncertainties, and emerging risks facing the Group did not
change, and are not expected to change for the remainder of 2022, except for
supply:
The global supply chain has continued to experience significant challenges
disrupting all industries. The Ukraine/Russia war compounded supply chain
troubles caused by the COVID-19 pandemic which include: shortages of materials
and labor; unprecedented demand for goods and services; constricted logistics
capacity; and raising commodity and energy prices. The Group has noted lead
time extension, constricted capacity and minor disruption in some supply
components. Through ongoing management and proactive mitigation, as described
in our Annual Report and Accounts on page 53, the Group has not experienced
any significant disruption to its supply-to-patient delivery process to date.
However, despite these mitigating measures, if major delays or shortages
occur, the delivery of products to our patients could be disrupted and impact
the short-term Group's financial performance.
Exchange Rates
The average and period end exchange rates used for the translation of
currencies into US dollars that have most significant impact on the Group's
results were:
9 Months to September 30, 9 Months to September 30,
2022
2021
GB £ period end 1.1170 1.3530
GB £ average rate 1.2609 1.3853
€ Euro period end 0.9807 1.1682
€ Euro average 1.0664 1.1971
Webcast Details
There will be a live webcast presentation on October 27, 2022 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) .
Webcast link: https://edge.
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Participants may access the presentation telephonically by registering with
the following link:
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Registrants will have an option to be called back 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
US 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 900
individuals globally and its portfolio of products is available in over 40
countries worldwide. Visit www.indivior.com
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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)
.
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 2022 and its medium- and long-term
growth outlook; expectations for profitable growth and for particular
products; the planned additional US stock exchange listing; expected
exceptional and recurring costs related to a US stock exchange listing;
expected market growth rates; expected changes in market share; future
exchange rates; operational goals; its product development pipeline; ongoing
litigation; and other statements containing the words "believe", "anticipate",
"plan", "expect", "intend", "estimate", "potential", "project", "may", "will",
"should", "would", "could", "can", "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.
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. 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, and: 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; and such other factors as set out in this press release or our Annual
Report and Accounts
Condensed consolidated interim income statement
Unaudited Unaudited Unaudited Unaudited
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended September 30 Notes $m $m $m $m
Net Revenue 2 232 187 659 568
Cost of sales (40) (26) (115) (88)
Gross Profit 192 161 544 480
Selling, general and administrative expenses 3 (115) (131) (331) (299)
Research and development expenses 3 (20) (11) (43) (33)
Net other operating (loss)/income 3 (1) 19 3 20
Operating Profit 56 38 173 168
Operating profit before exceptional items 58 38 172 155
Exceptional items 4 (2) - 1 13
Finance income 6 - 8 3
Finance expense (8) (7) (21) (21)
Net Finance Expense (2) (7) (13) (18)
Net finance expense before exceptional items (2) (7) (13) (17)
Exceptional items within finance expense 4 - - - (1)
Profit Before Taxation 54 31 160 150
Income tax (expense)/benefit 5 (13) (4) (30) 19
Taxation before exceptional items (13) (4) (29) (24)
Exceptional items within taxation 4 - - (1) 43
Net Income 41 27 130 169
Earnings per ordinary share (in dollars)*
Basic earnings per share 6 $0.29 $0.18 $0.93 $1.15
Diluted earnings per share 6 $0.28 $0.18 $0.89 $1.11
* Basic and diluted earnings per share have been retrospectively adjusted to
reflect the impact of the Company's share consolidation. Refer to Note 6 for
further details.
Condensed consolidated interim statement of comprehensive income
Unaudited Unaudited Unaudited Unaudited
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended September 30 $m $m $m $m
Net income 41 27 130 169
Other comprehensive loss
Items that may be reclassified to profit or loss in subsequent years:
Net exchange adjustments on foreign currency translation (16) (8) (36) (6)
Other comprehensive loss (16) (8) (36) (6)
Total comprehensive income 25 19 94 163
The notes are an integral part of these condensed consolidated interim
financial statements.
Condensed consolidated interim balance sheet
Unaudited Audited
Sep 30, 2022 Dec 31, 2021
Notes $m $m
ASSETS
Non-current assets
Intangible assets 67 82
Property, plant and equipment 50 58
Right-of-use assets 30 37
Deferred tax assets 5 106 105
Investments 7 117 -
Other assets 8 37 106
407 388
Current assets
Inventories 106 95
Trade receivables 195 202
Other assets 8 25 32
Current tax receivable 5 20 13
Investments 7 97 -
Cash and cash equivalents 821 1,102
1,264 1,444
Total assets 1,671 1,832
LIABILITIES
Current liabilities
Borrowings 9 (3) (3)
Provisions 10 (5) (5)
Other liabilities 10 (77) (61)
Trade and other payables 13 (633) (720)
Lease liabilities (7) (8)
Current tax liabilities 5 (19) (7)
(744) (804)
Non-current liabilities
Borrowings 9 (237) (239)
Provisions 10 (6) (76)
Other liabilities 10 (428) (474)
Lease liabilities (29) (36)
(700) (825)
Total liabilities (1,444) (1,629)
Net assets 227 203
EQUITY
Capital and reserves
Share capital 14 69 70
Share premium 8 7
Capital redemption reserve 5 3
Other reserve (1,295) (1,295)
Foreign currency translation reserve (56) (20)
Retained earnings 1,496 1,438
Total equity 227 203
The notes are an integral part of these condensed consolidated interim
financial statements.
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
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 - - - - - 130 130
Other comprehensive loss - - - - (36) - (36)
Total comprehensive income - - - - (36) 130 94
Transactions recognized directly in equity
Shares issued 1 1 - - - - 2
Share-based plans - - - - - 12 12
Settlement of equity awards - - - - - (10) (10)
Shares repurchased and cancelled (2) - 2 - - (66) (66)
Transfer to share repurchase liability - - - - - (8) (8)
Balance at September 30, 2022 69 8 5 (1,295) (56) 1,496 227
Balance at January 1, 2021 73 6 - (1,295) (13) 1,311 82
Comprehensive income
Net income - - - - - 169 169
Other comprehensive loss - - - - (6) - (6)
Total comprehensive income - - - - (6) 169 163
Transactions recognized directly in equity
Shares issued - 1 - - - - 1
Share-based plans - - - - - 7 7
Deferred taxation on share-based plans - - - - - 8 8
Transfer to share repurchase liability - - - - - (100) (100)
Transfer to capital redemption reserve for shares repurchased and cancelled (1) - 1 - - - -
Balance at September 30, 2021 72 7 1 (1,295) (19) 1,395 161
The notes are an integral part of these condensed consolidated interim
financial statements.
Condensed consolidated interim cash flow statement
Unaudited Unaudited
2022 2021
For the nine months ended September 30 $m $m
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit 173 168
Depreciation and amortization of property, plant and equipment and intangible 11 12
assets
Depreciation of right-of-use assets 6 6
Gain on disposal of intangible assets (1) (20)
Share-based payments 12 7
Impact from foreign exchange movements (9) (3)
Unrealized loss on equity investment 3 -
Settlement of tax on employee awards (10) -
Decrease in trade receivables 2 3
Decrease in current and non-current other assets 73 12
Increase in inventories (22) (5)
(Decrease)/increase in trade and other payables (75) 30
Decrease in provisions and other liabilities(1) (100) (10)
Cash generated from operations 63 200
Interest paid (18) (14)
Interest received 5 1
Exceptional tax refund - 31
Taxes paid (35) (24)
Transaction costs related to debt refinancing (1) (8)
Net cash inflow from operating activities 14 186
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (4) (2)
Purchase of investments (233) -
Maturity of investments 15 -
Purchase of intangible asset - (30)
Proceeds from disposal of intangible assets 1 20
Net cash outflow from investing activities (221) (12)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings - 250
Repayment of borrowings (2) (236)
Payment of lease liabilities (6) (6)
Shares repurchased and cancelled (66) (34)
Proceeds from the issuance of ordinary shares 2 -
Net cash outflow from financing activities (72) (26)
Exchange difference on cash and cash equivalents (2) (1)
Net (decrease)/increase in cash and cash equivalents (281) 147
Cash and cash equivalents at beginning of the period 1,102 858
Cash and cash equivalents at end of the period 821 1,005
(1)Changes in the line item provisions and other liabilities for YTD 2022
include exceptional litigation settlement payments totaling $108m to the DOJ,
DRL and RB (YTD 2021: $10m to RB, $6m for DOJ related matters). $4m of
interest paid on the DOJ Resolution in YTD 2022 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 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 should be read in conjunction
with the Annual Report and Accounts 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 corporate debt and U.S. Treasury securities
and has therefore adopted new accounting policies as disclosed in Note 7. The
three and nine months ended September 30, 2021 condensed consolidated income
statement and Note 3 have been expanded to present net other operating
(loss)/income as a separate line item to provide a consistent comparative
presentation.
The Condensed Financial Statements have been reviewed but 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 Report and Accounts as at December 31, 2021. These Condensed
Financial Statements were approved for issue on October 26, 2022.
As disclosed in Note 10, the Group has liabilities and provisions totaling
$479m (FY 2021: $537m) for the Department of Justice (DOJ) Resolution, False
Claims Act Allegations, 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,
and delivered to the Registrar of Companies. 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 and nine
months to September 30, 2022 and 2021 were as follows:
Net revenue:
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended September 30 $m $m $m $m
United States 189 143 533 428
Rest of World 43 44 126 140
Total 232 187 659 568
On a disaggregated basis, the Group's net revenue by major product line:
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended September 30 $m $m $m $m
Sublingual/other 116 117 349 387
SUBLOCADE 108 65 290 169
PERSERIS 8 5 20 12
Total 232 187 659 568
Non-current assets:
Sep 30, Dec 31,
2022
2021
$m $m
United States 66 133
Rest of World 235 150
Total 301 283
3. OPERATING EXPENSES AND NET OTHER OPERATING (LOSS)/INCOME
The table below sets out selected operating costs and expense information:
Operating expenses
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended September 30 $m $m $m $m
Research and development expenses (20) (11) (43) (33)
Selling and marketing expenses (53) (51) (160) (128)
Administrative and general expenses (62) (80) (171) (171)
Selling, general, and administrative expenses (115) (131) (331) (299)
Depreciation, amortization, and impairment(1) (3) (3) (10) (10)
(1) Depreciation and amortization expense is included in research and
development and selling, general and administrative expenses. Additionally,
depreciation and amortization expense in YTD 2022 of $7m (YTD 2021: $8m) 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
current and prior period as outlined in Note 4.
Net other operating (loss)/income
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended September 30 $m $m $m $m
Net other operating (loss)/ income (1) 19 3 20
Net other operating income is credited to the income statement as earned. YTD
2022 included fair value losses on equity investments ($3m), net proceeds
received from the out-licensing of nasal naloxone opioid overdose patents
($1m), and a Directors' & Officers' insurance claim settlement ($5m),
which was recorded as exceptional other operating income as outlined in Note
4. YTD 2021 includes the net proceeds received from the sale of the TEMGESIC /
BUPREX / BUPREXX (buprenorphine) franchise outside of North America to
Eumedica Pharmaceuticals AG for $19m and the proceeds received from the
out-licensing of nasal naloxone opioid overdose patents for $1m.
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 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 material 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 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 income/(expense) recorded in each period:
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended September 30 $m $m $m $m
Exceptional items within SG&A
Legal expenses/provision(1) - 5 - 18
ANDA litigation(2) - (24) - (24)
Debt refinancing(3) - - - (1)
US listing costs(4) (2) - (4) -
Total exceptional items within SG&A (2) (19) (4) (7)
Exceptional items within net other operating income
Other operating income(5) - 19 5 20
Total exceptional items within other operating income - 19 5 20
Exceptional items within net finance expense
Finance expense(3) - - - (1)
Total exceptional items within finance expense - - - (1)
Total exceptional items before taxes (2) - 1 12
Tax on exceptional items - - (1) -
Exceptional tax item(6) - - - 43
Total exceptional items (2) - - 55
1. Negotiation with DOJ related qui tams in Q3 2021 and YTD 2021
led to a change in the Group's provision for these matters and a release of
$5m and $18m, respectively.
2. In Q3 2021, upon conclusion of expert discovery, the Group
increased the provision for intellectual property related matters - ANDA
Litigation, to $73m, resulting in an exceptional charge for $24m. See Note 10
and 11 for further discussion.
3. Debt refinancing costs in YTD 2021 consist of advisory and
legal fees incurred related to the Group's June 2021 debt refinancing. These
costs are included in SG&A. Additionally, in Q2 2021 the Group wrote-off
$1m of unamortized deferred financing costs due to extinguishment and
settlement of the previous term loan. These costs are included within finance
expense.
4. In YTD 2022 and Q3 2022, the Group recognized $4m and $2m,
respectively, of exceptional consulting costs in preparation for a potential
additional listing of Indivior shares on a major US exchange. The Group
expects to incur pre-tax costs of $10m to $15m in FY 2022 as it prepares for
an additional US listing, of which approximately 50% are expected to be
recorded as exceptional.
5. The Group recognized $5m of exceptional income in Q2 2022
related to the proceeds received from a Directors' & Officers' insurance
reimbursement claim. Exceptional other operating income in Q3 2021 relates to
the net proceeds received from the sale of the TEMGESIC / BUPREX / BUPREXX
(buprenorphine) franchise outside of North America to Eumedica Pharmaceuticals
AG for $19m. Remaining exceptional income in YTD 2021 relates to the proceeds
received from the out-licensing of nasal naloxone opioid overdose patents for
$1m.
6. Exceptional tax benefit recorded YTD 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, the tax
impact of settlement costs incurred with RB which were recorded in the prior
year, reactivation of prior year interest expense restriction, impact of the
ANDA accrual and a tax expense in relation to exceptional other operating
income
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 Q3/YTD 2022 and Q3/YTD 2021.
Reconciliation of operating profit to adjusted operating profit
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended September 30 $m $m $m $m
Operating profit 56 38 173 168
Exceptional selling, general and administrative expenses 2 19 4 7
Exceptional other operating income - (19) (5) (20)
Adjusted operating profit 58 38 172 155
Reconciliation of profit before taxation to adjusted profit before taxation
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended September 30 $m $m $m $m
Profit before taxation 54 31 160 150
Exceptional selling, general and administrative expenses 2 19 4 7
Exceptional other operating income - (19) (5) (20)
Exceptional finance expense - - - 1
Adjusted profit before taxation 56 31 159 138
Reconciliation of net income to adjusted net income
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended September 30 $m $m $m $m
Net income 41 27 130 169
Exceptional selling, general and administrative expenses 2 19 4 7
Exceptional other operating income - (19) (5) (20)
Exceptional finance expense - - - 1
Tax exceptional - - 1 (43)
Adjusted net income 43 27 130 114
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.
In the nine months ended September 30, 2022, the reported total tax expense
was $30m, or a rate of 19% (YTD 2021 tax benefit: $19m, -13%). The tax expense
on YTD 2022 adjusted profits amounted to $29m, excluding the $1m tax expense
on exceptional items, which represented an effective tax rate of 18%. The tax
expense on YTD 2021 adjusted profits amounted to $24m, excluding the $43m tax
benefit on exceptional items, which represented an effective tax rate of 17%.
The change in the effective tax rate on adjusted profits 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.
The Group's balance sheet at September 30, 2022 includes a current tax
receivable of $20m (FY 2021: $13m), a current tax payable of $19m (FY 2021:
$7m), and deferred tax asset of $106m (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 September 30, 2022, the Group's net deferred tax assets of $106m
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 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 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 September 2022, the Company's shareholders approved an additional listing
in the US, which is expected to take place in Spring 2023. Once listed in the
US, US tax laws limit deductibility of compensation for certain management
roles. The Group currently carries approximately $8m of deferred tax assets
that are not expected to be realized once the listing is complete.
Approximately one half of this amount will be charged to equity and one half
will be presented as an exceptional tax charge in the period the listing takes
place.
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 on these financial
statements is immaterial. During 2021, the OECD published a framework for the
introduction of a global minimum effective tax rate of 15%, applicable to
large multinational groups. On 20 July 2022, HM Treasury released draft
legislation to implement these 'Pillar 2' rules with effect from April 1, 2024
in the UK. The Group will review these draft rules to understand any potential
impacts.
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
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended September 30 $ $ $ $
Basic earnings per share $0.29 $0.18 $0.93 $1.15
Diluted earnings per share $0.28 $0.18 $0.89 $1.11
Adjusted basic earnings per share $0.31 $0.18 $0.93 $0.78
Adjusted diluted earnings per share $0.29 $0.18 $0.89 $0.75
Share consolidation
In September 2022, the Company's shareholders approved an additional listing
in the US, which is expected to take place in Spring 2023. Additionally, to
fulfill US exchange requirements for share price minimums and norms, the
Company's shareholders also approved a 5-for-1 share consolidation. On October
10th, 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.
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.
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. These options and awards have been
adjusted to reflect the share consolidation, referred to above. The weighted
average number of shares is adjusted for the number of shares granted assuming
the exercise of stock options performance conditions have been met at the
balance sheet date and as determined per the treasury stock method.
Weighted average number of shares
The weighted average number of ordinary shares outstanding for Q3 2022
includes the favorable impact of 33,763,488 ordinary shares repurchased in FY
2021 (equivalent shares post consolidation: 6,752,697) and 17,815,033 ordinary
shares repurchased through YTD 2022 (equivalent share post consolidation:
3,563,007). See Note 14 for further discussion. In 2022, conditional awards of
7,839k (2021: 14,175k) were granted under the Group's Long-Term Incentive
Plan.
2022 2021
Weighted average number of shares thousands thousands
On a basic basis 140,034 146,665
Dilution from share awards and options 6,594 5,941
On a diluted basis 146,628 152,606
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 are included in finance
income using the effective interest method.
Sep 30, Dec 31,
2022
2021
Current and non-current investments $m $m
Equity securities at FVPL 7 -
Debt securities held at amortized cost 90 -
Total investments, current 97 -
Debt securities held at amortized cost 117 -
Total investments, non-current 117 -
Total 214 -
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 September 30, 2022 as the
holding period expires in less than 12 months. Unrealized loss recorded in YTD
2022 was $3m and included within net other operating (loss)/income.
Debt securities held at amortized cost
In Q1 2022 and Q3 2022, the Group initiated purchases of investment-grade
corporate debt and U.S. Treasury securities. The Group's investments in debt
securities are held at amortized cost based on the Group's intention to hold
these investments to maturity and collect contractual cash flows that are
solely payments of principal and interest. A portion of the investments in
debt securities are held in a separate account to provide for self-insurance.
This investment has been classified as non-current as access to the funds is
restricted for a 12 month period after the term of the insurance. All other
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 corporate debt securities held at amortized cost 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 Group's U.S. Treasury
securities have no default risk since they're guaranteed by the U.S.
government. The majority of the Group's investments held at amortized cost 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 September 30, 2022, 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
September 30, 2022.
Financial assets at fair value Level 1 Level 2 Level 3 Total
$m $m $m $m
Equity securities at FVPL 7 - - 7
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 September 30, 2022,
the carrying value of investments held at amortized cost was above the fair
value by $3m, 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.
8. CURRENT AND NON-CURRENT OTHER ASSETS
Sep 30, Dec 31,
2022
2021
Current and non-current investments $m $m
Short-term prepaid expenses 15 18
Other current assets 10 14
Total other current assets 25 32
Long-term prepaid expenses 19 22
Other non-current assets 18 84
Total other non-current assets 37 106
Total 62 138
Other current and non-current assets primarily represent the funding of surety
bonds in relation to intellectual property related matters (see Note 12 for
further discussion). As a result of the settlement agreement with Dr. Reddy's
Laboratories S.A. and Dr. Reddy's Laboratories, Inc. (together, "DRL"), the
surety bond holders have returned $64m of collateral in July 2022, causing
majority of the decrease in the other non-current balance as of September 30,
2022. Long-term prepaid expenses relate primarily to payments for contract
manufacturing capacity.
9. FINANCIAL LIABILITIES - BORROWINGS
In April 2022, the Group completed an amendment to its existing term loan
which provides the Group greater flexibility in the use of cash being
generated and changes the variable interest rate base from USD LIBOR to USD
SOFR plus a credit spread adjustment of 26 bps. As part of the modification,
the Group incurred $1m of issuance costs, banking fees and legal fees which
are deemed to be incremental and directly attributable to the amendment.
Accordingly, the Group capitalized these costs, which were netted against the
total amount borrowed and are amortized over the maturity period using the
effective interest method.
The table below sets out the current and non-current portion obligation of the
Group's term loan:
Sep 30, Dec 31,
2022
2021
Term loan $m $m
Term loan - current (3) (3)
Term loan - non-current (237) (239)
Total term loan (240) (242)
*Total term loan borrowings reflect the principal amount drawn including debt
issuance costs of $7m (FY 2021: $7m).
At September 30, 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
September 30, 2022, are as follows:
Currency Nominal interest margin Maturity Required annual repayments Minimum
liquidity
Term Loan facility USD SOFR + 26bps + 5.25% 2026 1% Larger of $100m or 50% of Loan Balance
• Nominal interest margin is calculated USD SOFR plus a credit spread
adjustment of 26 bps, subject to a floor of 0.75%.
• There are no revolving credit commitments.
10. PROVISIONS AND OTHER LIABILITIES
Provisions
Total Total
Current Non-Current Sep 30, 2022 Current Non-Current Dec 31, 2021
Current and non-current provisions $m $m $m $m $m $m
Federal false claims allegations (5) - (5) (5) - (5)
Intellectual property related matters - (3) (3) - (73) (73)
Other - (3) (3) - (3) (3)
Total provisions (5) (6) (11) (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.
Litigation costs are expensed as incurred.
The Group carries a provision of $5m (FY 2021: $5m) pertaining to all
outstanding False Claims Act Allegations as discussed in Note 12. These
matters are expected to be settled within the next 12 months.
The provision for intellectual property related matters has been
substantially transferred to other liabilities as a result of the settlement
with DRL. See Note 12, Intellectual property related matters - ANDA
litigation.
Other provisions totaling $3m (FY 2021: $3m) primarily represent retirement
benefit costs which are not expected to be settled within one year.
Other liabilities
Total Total
Current Non-Current Sep 30, 2022 Current Non-Current Dec 31, 2021
Current and non-current other liabilities $m $m $m $m $m $m
DOJ resolution (51) (391) (442) (53) (439) (492)
Intellectual property related matters (10) (11) (21) - - -
RB indemnity settlement (8) (24) (32) (8) (32) (40)
Share repurchase (8) - (8) - - -
Other - (2) (2) - (3) (3)
Total other liabilities (77) (428) (505) (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.
DOJ Resolution Agreement
On July 24, 2020, the Group settled criminal and civil liability with the
United States Department of Justice (DOJ), the US Federal Trade Commission
(FTC), and US 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, an additional payment of $54m (including interest) was made
pursuant to the resolution agreement. Subsequently, five annual installments
of $50m will be due every January 15 from 2023 to 2027 with the final
installment of $200m due in December 2027. Interest accrues 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. The discount rate and interest rate are 1.25%. In YTD 2022, the
Group recorded interest expense totaling $4m (YTD 2021: $5m).
• 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 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.
• 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.
The Group has other liabilities for intellectual property related matters
totaling $21m (FY 2021: $73m; previously classified as a provision), which
relates to a settlement in intellectual property litigation with DRL as
outlined in Note 12, Intellectual property related matters - ANDA litigation.
As announced in June 2022, the Group, together with Aquestive Therapeutics,
Inc. entered into a settlement agreement with DRL resolving intellectual
property litigation. Under the settlement agreement, the Group made a
settlement payment to DRL in June 2022 with final payments due in 2023 and
2024. This liability has been recorded at the net present value, using a
risk-free rate, considering the timing of payments. In YTD 2022, the Group
recorded $1m of finance expense (YTD 2021: $2m) for time value of money on the
liability.
On January 25, 2021, the Group reached a settlement with RB to resolve claims
which RB issued in the Commercial Court in London on November 13, 2020,
seeking indemnity under the Demerger Agreement between amongst others, RB and
the Group (Demerger Agreement). Pursuant to the settlement, RB withdrew the US
$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 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,
followed by an installment payment of $8m in January 2022. Subsequently,
annual installment payments of $8m will be due every January from 2023 to
2026. The Group carries a liability totaling $32m (FY 2021: $40m) related to
this settlement. The effect of discounting was not material.
On May 3, 2022, the Group commenced a share repurchase program of up to
$100m. As of September 30, 2022, the Group recorded a liability for $8m, which
represents the amount to be spent under the program for the month of October
2022, the period closed for modification or termination of the program. This
liability has been classified as current as the Group expects the remaining
shares will be purchased within one year. Refer to Note 14 for further
discussion.
Other liabilities primarily represent deferred revenue related to a supply
agreement.
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 "False Claims Act Allegations" and
"Intellectual Property Related Matters - ANDA Litigation", for which
liabilities or 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.
12. 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 12.
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 (Antitrust MDL). 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 deadline for the class exclusion or
"opt out" was June 5, 2022. The court denied the Group's motion for summary
judgment by order dated August 22, 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 the Antitrust MDL. The Carefirst case
remains pending.
• The Group has evaluated the antitrust class and state claims
in light of the DOJ settlement, which included that 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
Agreement). The Group believes it has valid defenses and continues to
vigorously defend itself. Select plaintiffs in these matters previously made
settlement demands, which were not accepted and are not current offers,
totaling approximately $290 million, 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 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 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 16-20, 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 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
• The Group has been named as a defendant in more than 400 civil
lawsuits brought by state and local governments, public health agencies
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, as well as individuals alleging
personal injury claims. 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. Litigation against the Group in the MDL is
stayed. Motions to remand are currently being considered by the court in over
50 cases to which the Group is a party (among numerous other defendants).
• The Court in the 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. The court agreed no additional bellwether trials
are needed, provided that all of the parties were progressing on a settlement
track. The court held a status conference with this same group of plaintiff
and defendants on September 23, 2022. Certain defendants filed supplemental
briefing in opposition to pending motions to remand on September 30, 2022. The
plaintiffs' responsive briefing is due by October 28, 2022.
• Separately, the Group's response to five individual complaints
filed in West Virginia state court that have not been transferred to the MDL
is due by January 30, 2023.
• 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.
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, 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.
• 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. The claims generally allege that Company 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. The Group has
not yet been served with either claim.
• The Group has begun its evaluation of the claims, believes in
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
• The Group filed actions against 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. In July 2018, the NJ
District Court granted the Group a Preliminary Injunction (PI) pending the
outcome of a trial on the merits of the '305 Patent and required the Group 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. Separately, DRL filed an amended answer alleging various
antitrust counterclaims. The parties reached a settlement following mediation
in June 2022, and the case accordingly was dismissed on June 27, 2022. See
Note 10 for further discussion regarding settlement payments and timing of
those payments.
• The Group 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. 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.
13. TRADE AND OTHER PAYABLES
Sep 30, Dec 31,
2022
2021
$m $m
Accrual for rebates, discounts and returns (423) (436)
Trade payables (76) (137)
Accruals (123) (136)
Other tax and social security payables (11) (11)
Total (633) (720)
Accruals for rebates, discounts and returns, primarily in the US, 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 4,184,940 $0.10 1
Shares repurchased and cancelled (17,815,033) $0.10 (2)
At September 30, 2022 688,809,545 69
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 1,679,825 $0.10 -
Shares repurchased and cancelled (11,730,087) $0.10 (1)
At September 30, 2021 723,585,249 72
Share consolidation
On October 10, 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.
As a result of the consolidation, as at October 10th, 2022 the Company's
issued share capital consisted of 137,761,909 ordinary shares at $0.50 each.
Ordinary shares issued
During the period 4,184,940 ordinary shares (YTD 2021: 1,679,825) were issued
to satisfy vesting/exercises under the Group's Long-Term Incentive Plan and US
Employee Stock Purchase Plan.
Shares repurchased and cancelled
On May 3, 2022, the Group commenced a share repurchase program for an
aggregate purchase price up to no more than $100m or 39,698,610 of ordinary
shares, which is expected to end no later than March 31, 2023.
During the period, the Group repurchased and cancelled 17,815,033 of the
Company's ordinary shares (YTD 2021: 11,730,087) for an aggregate nominal
value of $2m ($0.10 per share), including 256,055 ordinary shares purchased as
part of the Group's share repurchase program executed in 2021 and cancelled in
January 2022 (YTD 2021: $1m). 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 $66m (YTD 2021: $31m). A net repurchase
amount of $8m has been recorded as a financial liability and reduction in
retained earnings which represents the amount to be spent under the program
for the month of October 2022, the period closed for modification or
termination of the program. The effect of discounting is not material. Total
purchases under the share repurchase program will be made out of distributable
profits. On October 10, 2022 the Company completed a share consolidation. See
Note 16 for further details.
15. RELATED PARTIES
On July 7, 2022 the Group announced that it has amended the existing
relationship agreement with Scopia. Under the original terms, the Relationship
Agreement terminated in the event that Scopia (and its affiliates) ceased to
have interests in at least 10% of the Company's issued share capital. As
announced on July 1, 2022, Scopia has sold interests in the Company
representing 2.28% which has taken the total holding of Scopia (and its
affiliates) to 9.71%, below this 10% threshold, and down from 16.9% at
origination of the agreement.
The Group has agreed not to exercise its right to terminate the Relationship
Agreement immediately, and instead has agreed:
• To continue with the agreement until the expiration of its
original term of December 31, 2023, unless the Relationship Agreement is
otherwise extended by mutual agreement or terminated earlier in accordance
with its terms; and
• The threshold for automatic termination will be amended, such
that the Relationship Agreement will terminate in the event that Scopia (and
its affiliates) cease to have interests in at least 5% of the Company's issued
share capital (reduced from 10% under the original terms).
16. POST BALANCE SHEET EVENTS
In September 2022, the Company's shareholders approved an additional listing
in the US, which is expected to take place in Spring 2023. Additionally, to
fulfill US exchange requirements for share price minimums and norms, the
Company's shareholders also approved a 5-for-1 share consolidation. On October
10th, 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.
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. As a result of the
consolidation, as at October 10th, 2022 the Company's issued share capital
consisted of 137,761,909 ordinary shares at $0.50 each.
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
October 26, 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 Q3 and YTD 2022 results
of Indivior PLC for the three and nine month periods ended 30 September 2022.
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
30 September 2022;
• the Condensed consolidated interim income statement and
Condensed consolidated interim statement of comprehensive income for the three
and nine month periods then ended;
• the Condensed consolidated interim statement of changes in
equity for the nine month period then ended;
• the Condensed consolidated interim cash flow statement for the
nine month period then ended; and
• the explanatory notes to the interim financial statements.
The interim financial statements included in the Q3 and YTD 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 (ISRE 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 Q3 and YTD 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 ISRE 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 Q3 and YTD 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 Q3 and YTD 2022 results in accordance with
IAS 34. In preparing the Q3 and YTD 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 Q3 and YTD 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
26 October 2022
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