REG - Indivior PLC - 3rd Quarter Results
09/11/2023 07:00
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RNS Number : 8648S Indivior PLC 09 November 2023
http://www.rns-pdf.londonstockexchange.com/rns/8648S_1-2023-11-8.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/8648S_1-2023-11-8.pdf)
November 9, 2023
Strong Top-line Performance and Strategic Progress in Q3 2023
• Q3 2023 SUBLOCADE® Net Revenue (NR) of $167m, +55% versus Q3 2022
• FY 2023 SUBLOCADE NR now expected to be $610m to $630m (vs. $590m to
$630m)
• OPVEE® launched; U.S. Biomedical Advanced Research and Development
Authority (BARDA) contract secured
Period to September 30th (Unaudited) Q3 Q3 % Change YTD YTD % Change
2023 2022 2023 2022
$m $m $m $m
Net Revenue 271 232 17% 800 659 21%
Operating (Loss)/Profit(1) (183) 56 NM (65) 173 NM
Net (Loss)/Income (1) (135) 41 NM (52) 130 NM
Diluted (LPS)/EPS(1 2) ($) $(0.98) $0.28 NM $(0.38) $0.89 NM
Adjusted Basis
Adj. Operating Profit(3) 60 58 3% 202 172 17%
Adj. Net Income(3) 49 43 14% 162 130 25%
Adj. Diluted EPS(2 3) ($) $0.34 $0.29 17% $1.14 $0.89 28%
1 Includes the impacts of exceptional 2023 provision increases of $228m and
$12m related to certain antitrust multi-district class claims ("Antitrust
MDL") and an intellectual property-related litigation matter, respectively.
See Note 11 and Note 13 for additional details.
2 On October 10, 2022, Indivior PLC completed a 5:1 share consolidation. The
Company's basic and diluted weighted average number of shares outstanding,
basic earnings per share, diluted earnings per share and adjusted earnings per
share (basic and diluted) have been retrospectively adjusted to reflect the
share consolidation in all the periods presented. See Note 6 for further
discussion.
3 Adjusted Basis excludes the impact of exceptional items and other
adjustments as referenced and reconciled in the "Adjusted Results" appendix on
page 27. Adjusted results are not a substitute for, or superior to, reported
results presented in accordance with International Financial Reporting
Standards.
NM - Not meaningful
The "Company" refers to Indivior PLC and the "Group" refers to the Company and
its consolidated subsidiaries.
Comment by Mark Crossley, CEO of Indivior PLC
"This quarter has again demonstrated the commitment and capabilities of the
Indivior team. We delivered double-digit top-line performance led by strong
growth of SUBLOCADE (buprenorphine extended release), which continues to shift
the paradigm for the treatment of opioid use disorder (OUD). Additionally, we
made good progress against our strategic priorities, with the launch of OPVEE
(nalmefene) nasal spray as well as key transactions to strengthen our pipeline
and to secure long-term product supply. Lastly, we settled the antitrust
multi-district litigation, which provides more certainty for our stakeholders
and allows for even greater focus on serving the needs of patients with
substance use disorders and mental illness."
YTD / Q3 2023 Financial Highlights
• YTD 2023 total net revenue (NR) of $800m increased 21% (YTD
2022: $659m); Q3 2023 total NR of $271m increased 17% (Q3 2022: $232m).
• YTD 2023 reported operating loss was $65m (YTD 2022: $173m
profit); Q3 2023 reported operating loss was $183m (Q3 2022: $56m profit). On
an adjusted basis, YTD 2023 operating profit of $202m increased 17% (Adjusted
YTD 2022: $172m). Adjusted Q3 2023 operating profit of $60m increased 3%
(Adjusted Q3 2022: $58m).
• YTD 2023 reported net loss was $52m (YTD 2022: $130m net
income); Q3 2023 reported net loss was $135m (Q3 2022: $41m net income). On an
adjusted basis, YTD 2023 net income of $162m increased 25% (Adjusted YTD 2022:
$130m). Adjusted Q3 2023 net income of $49m increased 14% (Adjusted Q3 2022:
$43m).
• Cash and investments totaled $774m at the end of Q3 2023
(including $26m restricted for self-insurance) (FY 2022: $991m), primarily
reflecting the YTD 2023 net cash outflow of $124m for the Opiant acquisition
and litigation settlement related outflows of $207m.
YTD / Q3 2023 Product Highlights
• SUBLOCADE: YTD 2023 NR of $454m (+57% vs. YTD 2022); Q3 2023 NR
of $167m (+55% vs. Q3 2022 and +8%vs. Q2 2023). Continued strong growth
primarily reflects further organized health system (OHS) channel penetration
in the U.S. and increased new U.S. patient enrollments. Q3 2023 U.S. dispenses
were approx. 133,600 units (+59% vs. Q3 2022 and +7% vs. Q2 2023). Total U.S.
patients on a 12-month rolling basis at the end of Q3 2023 were approximately
121,600 (+65% vs. Q3 2022 and +13% vs. Q2 2023).
• PERSERIS® (risperidone extended release): YTD 2023 NR of $30m
(+50% vs. YTD 2022); Q3 2023 NR of $11m (+38% vs. Q3 2022 and unchanged vs. Q2
2023) reflects increasing awareness of the treatment across the U.S.
healthcare system.
• SUBOXONE® (buprenorphine/naloxone) Film: U.S. share in Q3 2023
averaged 18% (Q3 2022: 19%) and exited the quarter at 19% (Q3 2022: 19%).
Resolution of Antitrust Multi-District Litigation
On October 22, Indivior reached an agreement to resolve the claims brought by
the direct purchasers in the Antitrust MDL. The agreement with the direct
purchasers will mark the conclusion of the MDL, once the settlements for the
direct purchasers and end payors are finally approved by the United States
District Court for the Eastern District of Pennsylvania. As part of the
Agreement with the direct purchasers, Indivior will pay $385m and has taken a
charge of $228m in the third quarter, which is excluded from adjusted earnings
and represents the additional amount above the previously recorded provision
for the Antitrust MDL. Payment of $385m is expected to be made in November
2023 and funded from Indivior's existing cash.
Key Corporate Developments
• Launched OPVEE in October for the emergency treatment of known or
suspected opioid overdose induced by natural or synthetic opioids and was
awarded a contract(1) up to 10 years by the U.S. Department of Health and
Human Services; Administration for Strategic Preparedness and Response;
Biomedical Advanced Research and Development Authority (BARDA) under contract
number 75A50123C00068 initially worth up to $32m to support FDA-required
post-marketing requirement studies, 3-year stability study to support
shelf-life extension, real world evidence studies, and potential procurement
of finished, packaged OPVEE held as vendor-managed inventory (VMI) as a
medical counter measure in the event of an opioid community or mass casualty
event.
• Acquired full ownership of INDV-2000 (oral Orexin-1 receptor
antagonist - non opioid mechanism for OUD) from C4X Discovery.
• Secured global rights to Alar Pharmaceuticals' portfolio of
buprenorphine-based ultra long-acting injectables to help address unmet
patient needs. This includes Alar's lead asset, ALA-1000, which is potentially
the first three-month long-acting injectable for OUD.
• Acquired, in the fourth quarter, an aseptic manufacturing
facility in Raleigh, North Carolina to secure long-term production and supply
of SUBLOCADE and PERSERIS.
FY 2023 Guidance
The Group continues to expect FY 2023 net revenue (NR) in the range of $1,030m
to $1,090m, reflecting growth of 18% at the mid-point compared with FY 2022.
Within the total, the Group now expects SUBLOCADE NR to be $610m to $630m
(versus the previous range of $590m to $630m), based on continued strong
performance in the OHS channel (including the Criminal Justice System), while
PERSERIS NR is expected to be at the lower end of the $45m to $55m guidance
range, reflecting YTD results and near-term competitive pressures. The Group
now expects adjusted SG&A of $540m to $550m, modestly above previous
guidance of $530m to $540m, reflecting targeted investments to accelerate
SUBLOCADE growth as well as higher legal defense expenses. Overall, the Group
continues to expect adjusted operating profit to be higher than FY 2022.
Guidance continues to assume no material change in exchange rates for key
currencies compared with FY 2022 average rates, notably USD/GBP and USD/EUR.
1 This project has been funded in whole or in part with Federal funds from
the Department of Health and Human Services; Administration for Strategic
Preparedness and Response; Biomedical Advanced Research and Development
Authority, under Contract No. 75A50123C00068.
Updated (November 9, 2023) July 27, 2023
Net Revenue (NR)(1) No change $1,030m to $1,090m
(+18% vs. FY 2022 at the mid-point)
SUBLOCADE NR $610m to $630m $590m to $630m
(+52% vs. FY 2022 at the mid-point)
(+50% vs. FY 2022 at the mid-point)
PERSERIS NR Lower end of $45m to $55m $45m to $55m
(+79% vs. FY 2022 at the mid-point)
SUBOXONE Film Market Share Accelerated rate of share decline in Q4 2023(2), including the impact from the Accelerated rate of share decline in Q4 2023(2), including the assumed impact
launch of a fourth buprenorphine/naloxone sublingual film generic in the U.S. from the launch of a fourth buprenorphine/naloxone sublingual film generic
market entering the U.S. market in early Q4 2023
Adjusted Gross Margin No change Low to mid 80% range
Adjusted SG&A $540m to $550m (+$10m) $530m to $540m
R&D No change $90m to $100m
Adjusted Operating Profit No change Higher than FY 2022's adjusted operating income of $212m, as a result of
higher NR guidance
1 FY 2023 NR from OPVEE is expected to be immaterial given the Q4 2023 launch
timing
2 Reflecting underlying share erosion at a similar rate to the last two years
(approximately 2 share points p.a.)
U.S. OUD Market Update
YTD 2023 the U.S. buprenorphine medication-assisted treatment (BMAT) market
grew in mid-single digits. The Group continues to expect long-term U.S. market
growth to be sustained in the mid- to high-single digit percentage range due
to increased overall public awareness of the opioid epidemic and approved
treatments, together with regulatory and legislative actions, such as the late
2022 enactment of the Mainstreaming Addiction Treatment Act, that have
expanded OUD treatment funding and treatment capacity. The Group believes
these regulatory and legislative actions will help to normalize the chronic
disease of addiction and expand access to evidence-based buprenorphine
treatment in the U.S. and supports these actions.
Financial Performance YTD and Q3 2023
Total net revenue in YTD 2023 increased 21% to $800m (YTD 2022: $659m) at
actual exchange rates (+22% at constant exchange rates(2)). In Q3 2023, total
net revenue increased 17% at actual exchange rates (+16% at constant exchange
rates(2)) to $271m (Q3 2022: $232m).
U.S. net revenue increased 24% in YTD 2023 to $662m (YTD 2022: $533m) and by
20% in Q3 2023 to $227m (Q3 2022: $189m). Strong year-over-year SUBLOCADE and
PERSERIS volume 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 increased 10% at actual exchange rates in YTD
2023 to $138m (YTD 2022: $126m) (+10% at constant exchange rates(2)). In Q3
2023, ROW net revenue increased 2% at actual exchange rates to $44m (Q3 2022:
$43m) (unchanged at constant exchange rates(2)). In both the period and
quarter, positive contributions from new products (SUBLOCADE / SUBUTEX®
Prolonged Release and SUBOXONE Film) were essentially offset primarily by
ongoing competitive pressure on legacy tablet products. YTD 2023 and Q3 2023
SUBLOCADE / SUBUTEX Prolonged Release net revenue in ROW were $30m (YTD 2022:
$19m) and $10m (Q3 2022: $7m) at actual exchange rates, respectively.
Gross margin as reported in YTD 2023 and Q3 2023 was 83% (YTD 2022 and Q3
2022: 83%), respectively. Excluding $5m and $3m of other adjustments for
amortization of acquired intangible assets within cost of sales, adjusted
gross margin in YTD 2023 and Q3 2023 was 84%, respectively. There were no
adjustments to YTD 2022 or Q3 2022 gross margin. The increase in the adjusted
gross margin rate in 2023 primarily reflects an improved product mix from the
continued growth of SUBLOCADE. These benefits were partially offset by cost
inflation.
2 Net revenue at constant exchange rates is an alternative performance measure
used by management to evaluate underlying performance of the business and is
calculated by applying the prior year exchange rate to net revenue in the
currencies of the foreign entities.
SG&A expenses as reported in YTD 2023 were $654m (YTD 2022: $331m) and
$390m as reported in Q3 2023 (Q3 2022: $115m). YTD 2023 and Q3 2023 included
$240m, respectively, of exceptional costs related to the increase in
provisions related to the Antitrust MDL and an intellectual property-related
matter. YTD 2023 also included $22m of exceptional costs related to the
acquisition of Opiant and U.S. listing costs (YTD 2022 and Q3 2022 included
$4m and $2m of exceptional U.S. listing costs, respectively).
Excluding exceptional items, YTD 2023 SG&A expense increased 20% to $392m
(Adjusted YTD 2022: $327m); Q3 2023 SG&A expense increased 33% to $150m
(Adjusted Q3 2022: $113m). The increases in both periods primarily reflect
higher expenses related to increased legal defense costs, the addition of the
Opiant business and launch expenses for OPVEE, increased SUBLOCADE commercial
investments, and cost inflation.
R&D expenses in YTD 2023 and Q3 2023 were $77m and $18m, respectively (YTD
2022: $43m; Q3 2022: $20m) and represented an increase of 79% and a decrease
of 10%, respectively. The increase in the YTD period was primarily due to a
greater activity level related to post-marketing studies for SUBLOCADE,
process validation testing related to LAI (long-acting injectable) capacity
expansion and phasing of ongoing early-stage pipeline activities. The decline
in Q3 2023 was primarily due to high-single digit credits from previously
expensed process validation activities related to the LAI capacity expansion
for SUBLOCADE, which is now substantially complete.
Net other operating income in YTD 2023 and Q3 2023 was $1m and $nil,
respectively, (YTD 2022: $3m income; Q3 2022: $1m loss). YTD 2022 included $5m
of exceptional benefit related to a Directors' & Officers' insurance claim
settlement.
Operating loss as reported was $65m in YTD 2023 (YTD 2022: $173m profit).
Exceptional costs and other adjustments of $267m primarily related to the
settlement of the Antitrust MDL are included in the current period. Net
exceptional benefits of $1m were included in YTD 2022. The change on a
reported basis reflects the exceptional charges related to legal matters. On
an adjusted basis, YTD 2023 operating profit increased 17% to $202m (YTD 2022:
$172m). The increases on an adjusted basis primarily reflected higher NR from
the Group's LAI products, partially offset by increased SG&A (including
Opiant business and launch expenses for OPVEE) and R&D expenses, as
described above.
Q3 2023 operating loss as reported was $183m (Q3 2022: $56m profit).
Exceptional costs and other adjustments of $243m are included in the current
period and exceptional costs of $2m were included in the year-ago period. The
change on a reported basis reflects the exceptional charges related to legal
matters. On an adjusted basis, Q3 2023 operating profit increased 3% to $60m
(Adjusted Q3 2022: $58m). The increases on an adjusted basis primarily
reflected higher NR from the Group's LAI products, partially offset by
increased SG&A (including Opiant business and launch expenses for OPVEE),
as described above.
Net finance income as reported was $4m in YTD 2023 (YTD 2022: $13m expense).
The change in net finance income (expense) reflected higher interest rates on
the Group's investments. We expect investment income may not offset interest
expense in the medium-term as we use cash for the litigation settlements.
Reported tax benefit was $9m in YTD 2023, or a rate of 15% (YTD 2022 tax
expense: $30m, 19%). Adjusted YTD 2023 tax expense was $44m, excluding the
$53m in tax benefit on exceptional items and other adjustments net of
exceptional tax items, an effective tax rate of 21%. Exceptional tax items are
comprised of a $5m write off of deferred tax assets and tax expense due to
limitation on the deduction of executive compensation by U.S. publicly traded
companies and $3m change in estimate as to the tax benefit of legal provisions
booked in the prior year. Adjusted YTD 2022 tax expense was $29m, excluding
the $1m tax expense on exceptional items and other adjustments, an effective
tax rate of 18%. The increase in the effective tax rate on adjusted profits
was primarily driven by the increase in the UK corporation tax rate from 19%
to 23.5%, and the temporary reduction in UK innovation incentives due to 2022
losses.
The Q3 2023 reported tax benefit was $46m, or a rate of 25% (Q3 2022: $13m
expense, 24%). The tax expense on Q3 2023 adjusted profits amounted to $13m,
excluding the $59m tax benefit on exceptional items and other adjustments,
which represented an effective tax rate of 21%. There were no exceptional tax
items recorded in Q3 2022.
Reported net loss in YTD 2023 was $52m and adjusted net income was $162m (YTD
2022 reported net income: $130m; YTD 2022 Adjusted net income: $130m). The 25%
increase in net income on an adjusted basis primarily reflected higher NR
partially offset by the increase in operating expense. Q3 2023 net loss on a
reported basis was $135m (Q3 2022 net income: $41m), and $49m net income on an
adjusted basis excluding the net after-tax impact from exceptional items and
other adjustments (Adjusted Q3 2022: $43m profit). Higher Q3 2023 net income
on an adjusted basis was primarily due to strong NR growth.
Diluted (loss)/earnings per share were $(0.38) on a reported basis and $1.14
on an adjusted basis in YTD 2023 (YTD 2022: $0.89 earnings per share on a
diluted basis and $0.89 earnings per share adjusted diluted basis). In Q3
2023, diluted (loss)/earnings per share were $(0.98) and adjusted diluted
earnings per share were $0.34 (Q3 2022: $0.28 earnings per share on a diluted
basis and $0.29 earnings per share adjusted diluted basis).
Balance Sheet & Cash Flow
Cash and investments totaled $774m at the end of Q3 2023, a decrease of $217m
versus the $991m position at year-end 2022. The decrease was primarily due to
the net cash outflow of $124m for the Opiant acquisition, including the
transferred cash balance, and litigation settlement related outflows of $207m,
partially offset by beneficial timing of payments made on government rebate
and trade payables. The litigation settlement related outflows include the
Antitrust MDL settlement payment of $103m with States (refer to Note 13),
transfer of $30m into an escrow account for the settlement with the Antitrust
MDL end payors, subject to final court approval (refer to Note 13), in
addition to the Group's scheduled litigation settlement payments totaling $74m
primarily for the Department of Justice (DOJ), Reckitt Benckiser (RB) and Dr.
Reddy's Laboratories (DRL) matters.
Net working capital, defined by management as inventory plus trade
receivables, less trade and other payables, was negative $327m on
September 30, 2023, versus negative $283m at the end of FY 2022. The change
in the period was primarily a result of timing of payments made on government
rebate and trade payables.
Cash used in operations in YTD 2023 was $2m (YTD 2022 cash provided by
operations: $63m), primarily due to payments related to the Antitrust MDL, DOJ
Resolution, DRL settlement, RB settlement and timing of payments made on
government rebate and trade payables. Before these settlement related items,
cash generated from operations in the current period was $205m. Net cash
outflow from operating activities was $34m in YTD 2023 (YTD 2022 cash inflow:
$14m) reflecting tax payments and interest paid on the Group's term loan
facility and settlement payments, partially offset by interest received on
investments.
YTD 2023 cash outflow from investing activities was $104m (YTD 2022 cash
outflow: $221m) which reflects $124m for the Opiant acquisition, net of cash
assumed. In the prior year period, the outflow from investing activities
primarily reflects the net investment in a portfolio of investment-grade debt
securities (net) and ordinary shares of Aelis Farma.
YTD 2023 cash outflow from financing activities was $25m (YTD 2022 cash
outflow: $72m) reflecting the extinguishment of debt assumed in the Opiant
acquisition, shares repurchased and cancelled, principal portion of lease
payments and quarterly amortization of the Group's term loan facility,
partially offset by proceeds received from the issuance of shares for employee
compensation agreements. In the prior year period, the outflow from financing
activities primarily reflects shares repurchased and cancelled.
R&D / Pipeline Update
Indivior's pipeline update may be found on our website, www.indivior.com under
the tab Our Science/Pipeline. Information contained in or accessible through
our website should not be considered a part of this press release.
Risk Factors Update
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 2023 financial year. The principal
risks and uncertainties affecting the Group's business activities are detailed
on pages 58 to 66 of the Indivior PLC Annual Report and Accounts 2022.
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 were not expected to change for the remainder of 2023, except for
legal and intellectual property related risks because of the Antitrust MDL.
However, as discussed in Note 11 "Provisions and Other Liabilities" and Note
13 "Legal Proceedings", on October 22, 2023, the Group entered into a
settlement agreement with the remaining plaintiff, and settlement agreements
have now been entered with all classes of plaintiffs to fully resolve
anti-trust claims without the need for any trial. The settlement with the last
class of plaintiffs removed the uncertainties related to the Antitrust MDL and
the material uncertainty about the Group's ability to continue to adopt the
going concern basis of accounting.
Exchange Rates
The average and period end exchange rates used for the translation of
currencies into U.S. dollars that have most significant impact on the Group's
results were:
9 Months to September 30, 9 Months to September 30,
2023
2022
GB £ period end 1.2125 1.1170
GB £ average rate 1.2444 1.2609
€ Euro period end 1.0503 0.9807
€ Euro average 1.0835 1.0664
Webcast Details
A live webcast presentation will be held on November 9th, 2023, at 13:00 BST
(8:00 am EDT) hosted by Mark Crossley, CEO. The details are below. All
materials will be available on the Group's website prior to the event at
www.indivior.com.
The webcast link: https://edge.media-server.com/mmc/p/stcq4w5c
Participants may access the presentation telephonically by registering with
the following link:
https://register.vevent.com/register/BIf8e71289ddc241b399540e669d753461
(Registrants will have an option to be called back directly immediately prior
to the call or be provided a call-in # with a unique pin code following their
registration)
For Further Information
Investor Enquiries Jason Thompson VP, Investor Relations +1 804 402 7123
Indivior PLC jason.thompson@indivior.com
Tim Owens Director, Investor Relations Indivior PLC +1 804 263 3978
timothy.owens@indivior.com
Media Enquiries Jonathan Sibun Teneo +44 (0)20 7353 4200
U.S. Media Inquiries +1 804 594 0836
Indiviormediacontacts@indivior.com
Corporate Websitewww.indivior.com
This announcement does not constitute an offer to sell, or the solicitation of
an offer to subscribe for or otherwise acquire or dispose of shares in the
Group to any person in any jurisdiction to whom it is unlawful to make such
offer or solicitation.
About Indivior
Indivior is a global pharmaceutical company working to help change patients'
lives by developing medicines to treat substance use disorders (SUD) and
serious mental illnesses. Our vision is that all patients around the world
will have access to evidence-based treatment for the chronic conditions and
co-occurring disorders of SUD. Indivior is dedicated to transforming SUD from
a global human crisis to a recognized and treated chronic disease. Building on
its global portfolio of OUD treatments, Indivior has a pipeline of product
candidates designed to both expand on its heritage in this category and
potentially address other chronic conditions and co-occurring disorders of
SUD, including alcohol use disorder and cannabis use disorder. Headquartered
in the United States in Richmond, VA, Indivior employs more than 1,000
individuals globally and its portfolio of products is available in 37
countries worldwide. Visit www.indivior.com to learn more. Connect with
Indivior on LinkedIn by visiting www.linkedin.com/company/indivior.
Important Cautionary Note Regarding Forward-Looking Statements
This announcement contains certain statements that are forward-looking.
Forward-looking statements include, among other things, statements regarding
the Indivior Group's financial guidance for 2023 and its medium- and long-term
growth outlook; strategies for value creation and operational goals;
expectations for sales levels for particular products; expected market growth
rates, growing normalization of medically assisted treatment for opioid use
disorder, and expanded access to treatment; expected changes in market share;
future exchange rates; our product development pipeline and potential future
products, expectations regarding regulatory approval of such product
candidates, the timing of such approvals, and the timing of commercial launch
of such products or product candidates, and eventual annual revenues of such
future products; expectations regarding the extent and impact of competition;
and other statements containing the words "believe", "anticipate", "plan",
"expect", "intend", "estimate", "forecast," "strategy," "target," "guidance,"
"outlook," "potential", "project", "priority," "may", "will", "should",
"would", "could", "can", "outlook," "guidance", the negatives thereof, and
variations thereon and similar expressions. By their nature, forward-looking
statements involve risks and uncertainties as they relate to events or
circumstances that may or may not occur in the future.
Actual results may differ materially from those expressed or implied in such
statements because they relate to future events. Various factors may cause
differences between Indivior's expectations and actual results, including,
among others, the material risks described in the most recent Indivior PLC
Annual Report and in subsequent releases; the substantial litigation and
ongoing investigations to which we are or may become a party; 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; 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; the terms of our debt instruments,
changes in our credit ratings and our ability to service our indebtedness and
other obligations as they come due; changes in applicable tax rate or tax
rules, regulations or interpretations; and our ability to realize our deferred
tax assets.
Forward-looking statements speak only as of the date that they are made and
should be regarded solely as our current plans, estimates and beliefs. Except
as required by law, we do not undertake and specifically decline any
obligation to update, republish or revise forward-looking statements to
reflect future events or circumstances or to reflect the occurrences of
unanticipated events.
Unaudited condensed consolidated interim income statement
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 Notes $m $m $m $m
Net Revenue 2 271 232 800 659
Cost of sales (46) (40) (135) (115)
Gross Profit 225 192 665 544
Selling, general and administrative expenses 3 (390) (115) (654) (331)
Research and development expenses 3 (18) (20) (77) (43)
Net other operating (loss)/income - (1) 1 3
Operating (Loss)/Profit (183) 56 (65) 173
Finance income 4 12 6 33 8
Finance expense 4 (10) (8) (29) (21)
Net Finance Income/(Expense) 2 (2) 4 (13)
(Loss)/Profit Before Taxation (181) 54 (61) 160
Income tax benefit/(expense) 5 46 (13) 9 (30)
Net (Loss)/Income (135) 41 (52) 130
(Loss)/Earnings per ordinary share (in dollars)*
Basic (loss)/earnings per share 6 $(0.98) $0.29 $(0.38) $0.93
Diluted (loss)/earnings per share 6 $(0.98) $0.28 $(0.38) $0.89
* Basic and diluted (loss)/earnings per share reflect the impact of the
Company's share consolidation for all periods presented. Refer to Note 6 for
further details.
Unaudited condensed consolidated interim statement of comprehensive
(loss)/income
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 $m $m $m $m
Net (loss)/income (135) 41 (52) 130
Other comprehensive loss
Items that may be reclassified to profit or loss in subsequent years:
Foreign currency translation adjustment, net (13) (16) (9) (36)
Other comprehensive loss (13) (16) (9) (36)
Total comprehensive (loss)/income (148) 25 (61) 94
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Unaudited condensed consolidated interim balance sheet
Sep 30, 2023 Dec 31, 2022
Notes $m $m
ASSETS
Non-current assets
Intangible assets 7 218 70
Property, plant and equipment 53 54
Right-of-use assets 32 31
Deferred tax assets 5 252 219
Investments 8 52 98
Other assets 9 25 38
632 510
Current assets
Inventories 142 114
Trade receivables 245 220
Other assets 9 95 27
Current tax receivable 5 16 5
Investments 8 112 119
Cash and cash equivalents 610 774
1,220 1,259
Total assets 1,852 1,769
LIABILITIES
Current liabilities
Borrowings 10 (3) (3)
Provisions 11 (438) (303)
Other liabilities 11 (71) (79)
Trade and other payables 14 (714) (617)
Lease liabilities (8) (8)
Current tax liabilities 5 (5) (9)
(1,239) (1,019)
Non-current liabilities
Borrowings 10 (236) (237)
Provisions 11 (2) (5)
Other liabilities 11 (369) (428)
Lease liabilities (30) (29)
(637) (699)
Total liabilities (1,876) (1,718)
Net (liabilities)/assets (24) 51
EQUITY
Capital and reserves
Share capital 15 69 68
Share premium 11 8
Capital redemption reserve 6 6
Other reserve (1,295) (1,295)
Foreign currency translation reserve (48) (39)
Retained earnings 1,233 1,303
Total equity (24) 51
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Unaudited condensed consolidated interim statement of changes in equity
Notes Share capital Share premium Capital redemption reserve Other reserve Foreign currency translation reserve Retained earnings Total equity
$m $m $m $m $m $m $m
Balance at January 1, 2022 70 7 3 (1,295) (20) 1,438 203
Comprehensive income
Net income - - - - - 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 tax on 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, 2023 68 8 6 (1,295) (39) 1,303 51
Comprehensive loss
Net loss - - - - - (52) (52)
Other comprehensive loss - - - - (9) - (9)
Total comprehensive loss - - - - (9) (52) (61)
Transactions recognized directly in equity
Shares issued 1 3 - - - - 4
Share-based plans - - - - - 16 16
Settlement of tax on equity awards - - - - - (22) (22)
Shares repurchased and cancelled - - - - - (11) (11)
Transfer from share repurchase liability - - - - - 9 9
Taxation on share-based plans - - - - - (10) (10)
Balance at September 30, 2023 69 11 6 (1,295) (48) 1,233 (24)
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Unaudited condensed consolidated interim cash flow statement
2023 2022
For the nine months ended September 30 $m $m
CASH FLOWS FROM OPERATING ACTIVITIES
Operating (Loss)/Profit (65) 173
Depreciation and amortization of property, plant and equipment and intangible 13 11
assets
Depreciation of right-of-use assets 6 6
Gain on disposal of intangible assets - (1)
Share-based payments 16 12
Impact from foreign exchange movements (11) (9)
Unrealized loss on equity investment - 3
Settlement of tax on employee awards (22) (10)
(Increase)/decrease in trade receivables (26) 2
(Increase)/decrease in current and non-current other assets (50) 73
Increase in inventories (26) (22)
Increase/(decrease) in trade and other payables 91 (75)
Increase/(decrease) in provisions and other liabilities(1) 72 (100)
Cash (used in)/provided by operations (2) 63
Interest paid (24) (18)
Interest received 32 5
Taxes paid (40) (35)
Transaction costs related to debt refinancing - (1)
Net cash (outflow)/inflow from operating activities (34) 14
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of assets, net of cash acquired (refer to Note 16) (124) -
Purchase of property, plant and equipment (4) (4)
Purchase of investments (40) (233)
Maturity of investments 95 15
Purchase of intangible asset (31) -
Proceeds from disposal of intangible assets - 1
Net cash outflow from investing activities (104) (221)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings (12) (2)
Principal elements of lease payments (6) (6)
Shares repurchased and cancelled (11) (66)
Proceeds from the issuance of ordinary shares 4 2
Net cash outflow from financing activities (25) (72)
Exchange difference on cash and cash equivalents (1) (2)
Net decrease in cash and cash equivalents (164) (281)
Cash and cash equivalents at beginning of the period 774 1,102
Cash and cash equivalents at end of the period 610 821
(1)Changes in the line item provisions and other liabilities for YTD 2023
include litigation settlement payments totaling $177m (YTD 2022: $108m). $3m
of interest paid on the DOJ Resolution in YTD 2023 has been recorded in the
interest paid line item (YTD 2022: $4m).
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Notes to the unaudited condensed consolidated interim financial statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Indivior PLC (the 'Company') is a public limited company incorporated on
September 26, 2014 and domiciled in the United Kingdom. In these unaudited
condensed consolidated interim financial statements ('Condensed Financial
Statements'), reference to the 'Group' means the Company and all its
subsidiaries.
The Condensed Financial Statements have been prepared in accordance with UK
adopted International Accounting Standard 34, Interim Financial Reporting
("IAS 34"). The Condensed Financial Statements have been reviewed and are
unaudited and do not include all the information and disclosures required in
the annual financial statements. Therefore the Condensed Financial Statements
should be read in conjunction with the Group's Annual Report and Accounts for
the year ended December 31, 2022, which were prepared in accordance with UK
adopted International Accounting Standards and in conformity with the
Companies Act 2006 as applicable to companies reporting under those standards.
These Condensed Financial Statements were approved for issue on November 8,
2023.
In May 2023, the International Accounting Standards Board issued International
Tax Reform-Pillar Two Model Rules which amended IAS 12 Income Taxes. Refer to
Note 5 for details.
In March 2023, the Group acquired 100% of the share capital of Opiant
Pharmaceuticals, Inc. ("Opiant") which has been accounted for as an asset
acquisition as substantially all of the fair value of the gross assets
acquired is concentrated in the value of the in-process research and
development. The Group has disclosed new accounting policies in Note 16
regarding the policy elected for treatment of contingent consideration and the
method used to evaluate whether an acquisition is a business combination or
asset acquisition.
Following the effectiveness of the additional U.S. listing of Indivior shares,
presentation of exceptional items and adjusted results has been removed from
the Condensed Financial Statements. This change creates consistency with
presentation of financial statements included in Indivior's SEC registration
statement and better aligns to the market practice for companies with U.S.
listings. The change has been applied to all periods presented.
In preparing these Condensed Financial Statements, the significant judgments
made by management in applying the Group's accounting policies and the key
sources of estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended December 31, 2022,
except for estimates used in determining the valuation of the in-process
research and development associated with the acquisition of Opiant and changes
in estimates that are required in determining the provision for income taxes.
The Directors have assessed the Group's ability to maintain sufficient
liquidity to fund its operations, fulfill financial and compliance obligations
as set out in Note 11, and comply with the minimum liquidity covenant in the
Group's debt facility for the period to March 2025 (the going concern period).
The base case scenario reflects:
• Board reviewed forecasts and financial plans for the period; and
• settlement of liabilities and provisions in line with
contractual terms, which are expected to be fully approved by the courts as
agreed.
The Directors also assessed a 'severe but plausible' downside scenario, which
included the following changes to the base case within the going concern
period:
• the risk that SUBLOCADE will not meet revenue growth
expectations by modelling a 15% decline on forecasts;
• an accelerated decline in U.S. SUBOXONE Film sales, including
reversion to generic analogues; and
• moderation of revenue growth outside the U.S.
Under both the base case and the downside scenario, sufficient liquidity
exists and is generated from operations such that all business and covenant
requirements are met for the going concern period. As a result of the analysis
described above, the Directors reasonably expect the Group to have adequate
resources to continue in operational existence for at least one year from the
approval of these Condensed Financial Statements and therefore consider the
going concern basis to be appropriate for the accounting and preparation of
these Condensed Financial Statements. The previous material uncertainty
relating to the Group's ability to apply the going concern basis of accounting
has been removed as a result of the settlement of antitrust multi-district
class claims ("Antitrust MDL"). Refer to Note 13 for further details. The
Group has assessed the likelihood of the settlement with the direct purchaser
class not being approved by the courts as remote as preliminary approval was
granted on October 30, 2023. Final approval is expected in Q1 2024.
The financial information contained in this document does not constitute
statutory accounts as defined in section 434 and 435 of the Companies Act
2006. The Group's statutory financial statements for the year ended
December 31, 2022, were approved by the Board of Directors on March 7, 2023,
and delivered to the Registrar of Companies. The auditor's report on those
accounts was unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement under section 498 of the Companies Act 2006.
2. SEGMENT INFORMATION
The Group is engaged in a single business activity, which is predominantly the
development, manufacture, and sale of buprenorphine-based prescription drugs
for treatment of opioid dependence and related disorders. The CEO reviews
disaggregated net revenue on a geographical and product basis and allocates
resources on a functional basis between Commercial, Supply, Research and
Development, and other Group functions. Financial results are reviewed on a
consolidated basis for evaluating financial performance and allocating
resources. Accordingly, the Group operates in a single reportable segment.
Net revenue and non-current assets
Revenues are attributed geographically based on the country where the sale
originates. The following tables represent net revenues and non-current
assets, net of accumulated depreciation, amortization and impairment, by
country. Non-current assets for this purpose consist of intangible assets,
property, plant and equipment, right-of-use assets, investments, and other
assets.
Net revenue:
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 $m $m $m $m
United States 227 189 662 533
Rest of World 44 43 138 126
Total 271 232 800 659
On a disaggregated basis, the Group's net revenue by major product line:
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 $m $m $m $m
Sublingual/other 93 116 316 349
SUBLOCADE® 167 108 454 290
PERSERIS® 11 8 30 20
Total 271 232 800 659
Non-current assets:
Sep 30, Dec 31,
2023
2022
$m $m
United States 197 65
Rest of World 183 226
Total 380 291
3. OPERATING EXPENSES
The table below sets out selected operating costs and expense information:
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 $m $m $m $m
Research and development expenses (18) (20) (77) (43)
Selling and marketing expenses (57) (53) (168) (160)
Administrative and general expenses(1) (333) (62) (486) (171)
Selling, general, and administrative expenses (390) (115) (654) (331)
Depreciation, amortization, and impairment(2) (3) (3) (11) (10)
(1) Administrative and general expenses in YTD 2023 and Q3 2023 include $240m
related to an increase in legal provisions. Refer to Note 11 for details.
(2) Depreciation and amortization expense is included in research and
development and selling, general and administrative expenses. Additionally,
depreciation and amortization expense in YTD 2023 of $8m (YTD 2022: $7m) and
Q3 2023 of $3m (Q3 2022: $2m) for intangibles and right-of-use assets is
included within cost of sales.
The increase in research and development expenses is primarily due to greater
activity level related to post-marketing studies for SUBLOCADE, process
validation testing related to LAI (long-acting injectable) capacity expansion
and phasing of ongoing early-stage pipeline activities.
Higher selling, general, and administrative expenses primarily reflect an
increase in legal provisions (refer to Note 11). Other contributing factors
include increased legal defense costs, addition of the Opiant business and
launch expenses for OPVEE, increased SUBLOCADE commercial investments, and
cost inflation.
4. NET FINANCE INCOME (EXPENSE)
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 $m $m $m $m
Finance income
Interest income on cash and cash equivalents/investments 12 6 33 8
Total finance income 12 6 33 8
Finance expense
Interest expense on borrowings (8) (5) (21) (13)
Interest expense on lease liabilities (1) (1) (2) (2)
Interest expense on legal matters (1) (1) (5) (5)
Other interest expense - (1) (1) (1)
Total finance expense (10) (8) (29) (21)
Net finance income (expense) 2 (2) 4 (13)
The increases to finance income and finance expense were primarily due to
higher interest rates. Investments in corporate debt and U.S. Treasury
securities in 2022 also contributed to the increase in finance income.
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 on actual movement in
deferred tax for the quarter, with the balance recorded to the current tax
accounts.
In the nine months ended September 30, 2023, the reported total tax benefit
was $9m, or a rate of 15% (YTD 2022 tax expense: $30m, 19%). In the three
months ended September 30, 2023, the reported total tax benefit was $46m, or
a rate of 25% (Q3 2022 tax expense: $13m, 24%). The enacted UK Statutory
Corporation Tax rate has increased to 25% as of April 1, 2023, providing a
blended rate of 23.5% for the year ended December 31, 2023. The effective tax
rate in both periods was primarily impacted by this increase in the UK tax
rate as well as the temporary reduction in UK innovation incentives due to
2022 losses, and the write off of $5m (8%) of deferred tax assets due to
limitations on the deduction of executive compensation by U.S. publicly traded
companies. Additional impacts in the reporting period of $3m (6%) relate to a
change in estimate as to the tax benefit of legal provisions booked in the
prior year.
The Group's balance sheet at September 30, 2023 includes a current tax
receivable of $16m (FY 2022: $5m), current tax liabilities of $5m (FY 2022:
$9m), and deferred tax assets of $252m (FY 2022: $219m). The increase in
deferred tax assets is primarily due to net operating loss carryforwards in
the UK resulting from litigation provisions.
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, 2023, the Group's net deferred tax assets of $252m
relate primarily to net operating loss carryforwards, inventory costs
capitalized for tax purposes, and litigation liabilities. Recognition of
deferred tax assets is reliant on forecast taxable profits arising in the
jurisdiction in which the deferred tax asset is recognized. The Group has
assessed recoverability of deferred tax assets using Group-level budgets and
forecasts consistent with those used for the assessment of viability and asset
impairments, particularly in relation to levels of future net revenues. These
forecasts are subject to similar uncertainties to those assessments. This is
reviewed each quarter and, to the extent required, an adjustment to the
recognized deferred tax asset may be made. With the exception of specific
assets that are not currently considered realizable, Management have concluded
full recognition of deferred tax assets to be appropriate and do not believe a
significant risk of material change in their assessment exists in the next 12
months.
Other tax matters
U.S. tax laws limit deductibility of compensation for certain management roles
for U.S. listed companies. With the U.S. listing completed in June 2023, the
Group wrote off deferred tax assets of $5m to tax expense and $7m to equity
relating to future tax deductions of share-based compensation for which book
expense has already been recognized. Additionally, the Group's current tax
liabilities increased by $5m, due to disallowance of current year
compensation.
In June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK,
introducing a global minimum effective tax rate of 15%. The legislation
implements a domestic top-up tax and a multinational top-up tax, effective for
accounting periods starting on or after December 31, 2023. The Group has
applied the recent amendment to IAS 12 which provides temporary relief to the
recognition of deferred taxes relating to top-up minimum income taxes.
Accordingly, the legislation is not expected to impact the Group's taxes in
2023. The Group is reviewing this new UK tax legislation and similar proposed
legislation in other jurisdictions to evaluate the potential impact on its
effective tax rate in future periods.
As a multinational group, tax uncertainties remain in relation to Group
financing, intercompany pricing, and the location of taxable operations.
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. (LOSS)/EARNINGS PER SHARE
Share consolidation
In September 2022, the Company's shareholders approved a 5-for-1 share
consolidation. In October 2022, the Company completed this share
consolidation. Shareholders received 1 new ordinary share with a nominal value
of $0.50 each for every 5 previously existing ordinary shares which had a
nominal value of $0.10 each. All share and per share information of the Group,
including basic and diluted weighted average number of shares outstanding,
basic earnings per share, and diluted earnings per share reflect the share
consolidation for all periods presented.
The table below sets out basic and diluted (loss)/earnings per share for each
period:
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 $ $ $ $
Basic (loss)/earnings per share $(0.98) $0.29 $(0.38) $0.93
Diluted (loss)/earnings per share $(0.98) $0.28 $(0.38) $0.89
Basic
Basic (loss)/earnings per share is calculated by dividing net (loss)/income
for the period attributable to owners of the Group by the weighted average
number of ordinary shares in issue during the period.
Diluted
Diluted (loss)/earnings per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion of all
dilutive potential ordinary shares. The Group has dilutive potential ordinary
shares in the form of stock options and awards. The weighted average number of
shares is adjusted for the number of shares granted to the extent performance
conditions have been met at the balance sheet date and as determined using the
treasury stock method.
Weighted average number of shares
The weighted average number of ordinary shares outstanding (on a basic basis)
for YTD 2023 includes the favorable impact 484,362 ordinary shares repurchased
in YTD 2023 and 1,280,914 ordinary shares repurchased in Q4 2022. See Note 15
for further discussion. Conditional awards of 1,760,805 and 1,567,841
(reflective of the share consolidation in October 2022) were granted under the
Group's Long-Term Incentive Plan in YTD 2023 and YTD 2022, respectively.
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 thousands thousands thousands thousands
Weighted average shares on a basic basis 137,694 140,034 137,299 140,034
Dilution from share awards and options 5,502 6,594 5,040 6,594
Weighted average shares on a diluted basis 143,196 146,628 142,339 146,628
7. INTANGIBLE ASSETS
Sep 30, Dec 31,
2023
2022
Intangible assets, net of accumulated amortization and impairment $m $m
Products in development 65 36
Marketed products 150 29
Software 3 5
Total 218 70
The increase in marketed products is primarily due to the acquisition of
Opiant which resulted in the recognition of an intangible asset related to the
in-process research and development value for OPVEE® (nalmefene nasal spray),
formerly the pipeline product OPNT003, for $126m (refer to Note 16). Upon
approval by the U.S. Food and Drug Administration (FDA) in May 2023, the
intangible asset became classified as a marketed product and amortization
commenced over the patent life.
The increase in products in development is primarily due to the acquisition of
full ownership of INDV-2000 (oral Orexin-1 receptor antagonist) from C4X
Discovery.
8. INVESTMENTS
Sep 30, Dec 31,
2023
2022
Current and non-current investments $m $m
Equity securities at FVPL 10 10
Debt securities held at amortized cost 102 109
Total investments, current 112 119
Debt securities held at amortized cost 52 98
Total investments, non-current 52 98
Total 164 217
The Group's investments in debt and equity securities do not create
significant credit risk, liquidity risk, or interest rate risk. Debt
securities held at amortized cost consist of investment-grade debt. As of
September 30, 2023, expected credit losses for the Group's investments held
at amortized cost are deemed to be immaterial.
Fair value hierarchy
Fair value is the price that would be received to sell an asset or transfer a
liability in an orderly transaction between market participants at the
measurement date. The different levels have been defined as follows:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets
or liabilities
• Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly
• Level 3: Unobservable inputs for the asset or liability
The Group's only financial instruments which are measured at fair value are
equity securities at FVPL. The fair value of equity securities at FVPL is
based on quoted market prices on the measurement date.
The following table categorizes the Group's financial assets measured at fair
value by valuation methodology used in determining their fair value at
September 30, 2023.
Financial assets at fair value Level 1 Level 2 Level 3 Total
$m $m $m $m
Equity securities at FVPL 10 - - 10
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, 2023,
the carrying value of investments held at amortized cost was above the fair
value by $1m, 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.
9. CURRENT AND NON-CURRENT OTHER ASSETS
Sep 30, Dec 31,
2023
2022
Current and non-current other assets $m $m
Current prepaid expenses 28 14
Other current assets 67 13
Total other current assets 95 27
Non-current prepaid expenses 18 20
Other non-current assets 7 18
Total other non-current assets 25 38
Total 120 65
The increase in current assets is primarily due to the funding placed in
escrow for the Antitrust MDL (refer to Note 13) end payor settlement of $30m,
subject to final court approval, and funding of surety bonds in relation to
intellectual property related matters of $18m which were reclassified as
current (see Note 13 for further discussion). Long-term prepaid expenses
primarily relate to payments for contract manufacturing capacity.
10. FINANCIAL LIABILITIES - BORROWINGS
The table below sets out the current and non-current portion obligation of the
Group's term loan:
Sep 30, Dec 31,
2023
2022
Term loan $m $m
Term loan - current (3) (3)
Term loan - non-current (236) (237)
Total term loan (239) (240)
*Total term loan borrowings reflect the principal amount drawn including debt
issuance costs of $5m (FY 2022: $6m).
At September 30, 2023, the term loan fair value was approximately 100% (FY
2022: 98%) of par value. The key terms of the term loan in effect at
September 30, 2023, are as follows:
Currency Nominal interest margin Maturity Required annual repayments Minimum
liquidity
Term Loan facility USD SOFR + 0.26% + 5.25% 2026 1% Larger of $100m or 50% of Loan Balance
The term loan amounting to $244m (FY 2022: $246m) is secured against the
assets of certain subsidiaries of the Group in the form of guarantees issued
by respective subsidiaries.
• Nominal interest margin is calculated as USD SOFR plus 26 bps, subject
to a floor of 0.75%, plus a credit spread adjustment of 5.25%.
• There are no revolving credit commitments.
11. PROVISIONS AND OTHER LIABILITIES
Provisions
Total Total
Current Non-Current Sep 30, 2023 Current Non-Current Dec 31, 2022
Current and non-current provisions $m $m $m $m $m $m
Multi-district antitrust class and state claims (415) - (415) (290) - (290)
Federal false claims allegations (5) - (5) (5) - (5)
Intellectual property related matters (15) - (15) - (3) (3)
Other (3) (2) (5) (8) (2) (10)
Total provisions (438) (2) (440) (303) (5) (308)
The Group carries a current provision of $415m (FY 2022: $290m) for certain
multi-district antitrust class claims. Settlement agreements have been entered
into with three classes of plaintiffs to fully resolve these antitrust claims
without the need for any trial. The State settlement amount of $103m was paid
in June 2023. The provision of $415m at September 30, 2023 is Indivior's best
estimate at this time, and reflects the amounts that Indivior is required to
pay in the settlement agreements with the direct purchaser class and the end
payor class for $385m and $30m, respectively. This provision will be released
following final approval by the Court of the settlements and release of funds
from escrow. Refer to Note 13, Antitrust Litigation and Consumer Protection
for additional details, including certain requirements to obtain final
approval of the settlement agreement by the Court.
The Group carries a provision of $5m (FY 2022: $5m) pertaining to all
outstanding False Claims Act Allegations as discussed in Note 13. These
matters are expected to be settled within the next 12 months and are not
expected to materially change.
The Group carries a provision of $15m (FY 2022: $3m ) for intellectual
property related matters (see Note 13, Intellectual property related matters).
The parties have entered into an agreement settling this matter, and the
provision has been classified as current.
Other provisions totaling $5m (FY 2022: $10m) primarily represent general
legal matters expected to be settled within the next 12 months and retirement
benefit costs which are not expected to be settled within one year.
Other liabilities
Total Total
Current Non-Current Sep 30, 2023 Current Non-Current Dec 31, 2022
Current and non-current other liabilities $m $m $m $m $m $m
DOJ resolution (52) (343) (395) (52) (392) (444)
Intellectual property related matters (11) - (11) (10) (11) (21)
RB indemnity settlement (8) (15) (23) (8) (22) (30)
Share repurchase - - - (9) - (9)
Other - (11) (11) - (3) (3)
Total other liabilities (71) (369) (440) (79) (428) (507)
DOJ Resolution Agreement
In July 2020, the Group settled criminal and civil liability with the United
States Department of Justice (DOJ), the U.S. Federal Trade Commission (FTC),
and U.S. state attorneys general. Pursuant to the resolution agreement,
aggregate payments of $210m (including interest) have been made to date,
including $53m in January 2023. Additionally, four annual installments of $50m
plus interest will be due every January 15 from 2024 to 2027, with the final
installment of $200m due in December 2027. Interest accrues at 1.25% on
certain portions of the resolution and will be paid with the annual
installment payments. For non-interest-bearing portions, the liability has
been recorded at the net present value based on timing of the estimated
payments and using a discount rate equal to the interest rate on the
interest-bearing portions. In YTD 2023, the Group recorded interest expense
totaling $4m (YTD 2022: $4m).
IP related matters
Other liabilities for intellectual property related matters of $11m (FY 2022:
$21m) relate to the settlement of intellectual property litigation with DRL in
June 2022. Under the settlement agreement, the Group has made payments to DRL
of $60m to date with a final payment due in 2024. This liability has been
recorded at net present value, using a market interest rate at the time of the
settlement determined to be 4.50%, considering the timing of payments and
other factors. In YTD 2023, the Group recorded $nil of finance expense (YTD
2022: $1m) for time value of money on the liability.
RB indemnity settlement
Under the RB indemnity settlement, the Group has paid $26m of the $50m
settlement agreement to date, with remaining annual installment payments of
$8m due every January from 2024 to 2026. The Group carries a liability
totaling $23m (FY 2022: $30m) related to this settlement. This liability has
been recorded at the net present value, using a market interest rate at the
time of the settlement determined to be 3.75%, considering the timing of
payments and other factors. In YTD 2023, the Group recorded $1m of finance
expense (YTD 2022: $nil) for time value of money on the liability.
Other
Other liabilities primarily represent employee related liabilities and
deferred revenue related to a supply agreement, which are non-current as of
September 30, 2023.
12. CONTINGENT LIABILITIES
The Group has assessed certain legal and other matters to be not probable
based upon current facts and circumstances, including any potential impact the
DOJ resolution could have on these matters. Where liabilities related to these
matters are determined to be possible, they represent contingent liabilities.
Except for those matters discussed in Note 13 under "Multidistrict Antitrust
Class and State Claims", "False Claims Act Allegations", and "Intellectual
Property Related Matters", for which liabilities or provisions have been
recognized, Note 13 sets out the details for legal and other disputes for
which the Group has assessed as contingent liabilities. Where the Group
believes that it is possible to reasonably estimate a range for the contingent
liability this has been disclosed.
13. 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 13.
Antitrust Litigation and Consumer Protection
Multidistrict Antitrust Class and State Claims
• Indivior Inc. has entered into settlement agreements to resolve
all claims of all plaintiff groups in the company's previously-disclosed
antitrust multi-district litigation ("Antitrust MDL"). In the Antitrust MDL,
civil antitrust claims had been filed by three classes of Plaintiffs -namely,
(i) 41 states and the District of Columbia (the "States"), (ii) end payors and
(iii) direct purchasers (collectively, the "Plaintiffs"). The Plaintiffs
generally alleged, among other things, that Reckitt Benckiser Pharmaceuticals,
Inc. ("RBPI," now known as Indivior Inc.) violated U.S. federal and/or state
antitrust and consumer protection laws in attempting to delay generic entry of
alternatives to SUBOXONE Tablets. Plaintiffs further alleged that RBPI
unlawfully acted to lower the market share of these products.
• After engaging in informal settlement discussions and formal
mediation, Indivior Inc. reached a settlement with the States for $103m on
June 1, 2023. After payment of the State settlement amount, the remaining
$188m provision remained Indivior's best estimate at that time of a potential
aggregate settlement for the remaining Plaintiffs in the Antitrust MDL.
Indivior Inc. entered into the settlement agreement with the end payor class
for $30m on August 14, 2023, which was in line with the remaining $188m
provision. The end payor settlement remains subject to final approval by the
Court. After final approval by the Court, the final settlement amount will be
recorded against the $188m provision. On October 22, 2023, Indivior Inc.
entered into a settlement agreement with the remaining direct purchaser class
for $385m. The direct purchaser settlement has been preliminarily approved by
the Court, and remains subject to a notice period and final approval by the
Court.
Other Antitrust and Consumer Protection Claims
• In 2013, RBPI, (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 plaintiffs have not served a complaint, but they have indicated
that their claims are related to those asserted in the Antitrust MDL. The
Carefirst plaintiffs' claims will be resolved and are expected to be dismissed
following final court approval of the end payor settlement in the Antitrust
MDL. Until such time, however, the Carefirst case remains pending.
• In 2020, the Group was served with lawsuits filed by several
insurance companies, some of whom are proceeding both on their own claims and
through the assignment of claims from affiliated companies. Cases filed by (1)
Humana Inc. and (2) Centene Corporation, Wellcare Healthcare Plans, Inc., New
York Quality Healthcare Corp. (d/b/a Fidelis Care), and Health Net, LLC were
pending in the Eastern District of Pennsylvania. The complaints were dismissed
in July 2021. The plaintiffs filed Notices of Appeal in August 2021 to the
United States Court of Appeals for the Third Circuit ("Third Circuit"). The
Third Circuit affirmed the district court's dismissal by opinion and order
dated December 15, 2022. Humana also filed a Complaint in state court in
Kentucky on August 20, 2021 with substantially the same claims as were raised
in the federal court case. See Humana Inc. v. Indivior Inc., No. 21-CI-004833
(Ky. Cir. Ct.) (Jefferson Cnty). That case was stayed pending a decision by
the Third Circuit. The court lifted the stay on October 30, 2023. Centene
Corporation and the above-referenced related companies filed a complaint in
the Circuit Court for the County of Roanoke, Virginia alleging similar claims
on January 13, 2023 following the mandate from the Third Circuit affirming the
district court's dismissal. See Centene Corp. v. Indivior Inc., No.
CL23000054-00 (Va. Cir. Ct.) (Roanoke Cnty). Indivior was served in the
Centene action in October 2023 and currently is required to respond to the
complaint in December 2023.
• Cases filed by (1) Blue Cross and Blue Shield of Massachusetts,
Inc., Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc., (2) Health
Care Service Corp., (3) Blue Cross and Blue Shield of Florida, Inc., Health
Options, Inc., (4) BCBSM, Inc. (d/b/a Blue Cross and Blue Shield of Minnesota)
and HMO Minnesota (d/b/a Blue Plus), (5) Molina Healthcare, Inc., and (6)
Aetna Inc. are pending in the Circuit Court for the County of Roanoke,
Virginia. See Health Care Services Corp. v. Indivior Inc., No. CL20-1474 (Lead
Case) (Va. Cir. Ct.) (Roanoke Cnty). These plaintiffs have asserted claims
under federal and state RICO statutes, state antitrust statutes, state
statutes prohibiting unfair and deceptive practices, state statutes
prohibiting insurance fraud, and common law fraud, negligent
misrepresentation, and unjust enrichment. In June 2021, defendants' motion to
stay was denied and certain claims were dismissed without prejudice. The
plaintiffs filed amended complaints, and the Group filed demurrers seeking
dismissal of some of the asserted claims. The court sustained in part and
overruled in part the Group's demurrers. Separately, Indivior Inc. filed
counterclaims against several plaintiffs alleging violations of certain
insurance fraud statutes. The plaintiffs demurred. A hearing on the
plaintiffs' demurrers to Indivior Inc.'s counterclaims was held on July 17,
2023. Although the court had indicated orally at the hearing that it would
overrule the plaintiffs' demurrers, the court entered a written order on
September 19, 2023 overruling only HCSC's demurrer and sustaining the
demurrers of the remaining plaintiffs named in Indivior Inc.'s counterclaims.
On July 16, Indivior Inc. and BCBSM, Inc. and HMO Minnesota agreed to mutual
releases and settlement. A jury trial on the Group's pleas in bar to the
remaining plaintiffs' fraud claims was held on October 30 - November 3, 2023.
The jury rendered a verdict finding that the plaintiffs' fraud claims are not
barred by the statute of limitations. A jury trial on the merits has been set
for July 15, 2024 - August 8, 2024.
• The Group is still in the process of evaluating the claims,
believes it has meritorious defenses, and intends to defend itself. No
estimate of the range of potential loss can be made at this time.
Civil Opioid Litigation
• The Group has been named as a defendant in more than 400 civil
lawsuits alleging that manufacturers, distributors, and retailers of opioids
engaged in a longstanding practice to market opioids as safe and effective for
the treatment of long-term chronic pain to increase the market for opioids and
their own market shares for opioids, or alleging individual personal injury
claims. Most of these cases have been consolidated and are pending in a
federal multi-district litigation ("the Opioid MDL") in the U.S. District
Court for the Northern District of Ohio. See In re National Prescription
Opiate Litigation, MDL No. 2804 (N.D. Ohio). Nearly 2/3 of the cases in the
Opioid MDL were filed by cities and counties, while nearly 1/3 of the cases
were filed by individual plaintiffs, most of whom assert claims relating to
neonatal abstinence syndrome ("NAS"). Litigation against the Group in the
Opioid MDL is stayed. Motions to remand have been denied or withdrawn in more
than 50 cases to which the Group is a party (among numerous other defendants).
Motions to remand remain pending in additional cases to which the Group is a
party.
• The court in the Opioid MDL has indicated that it does not
expect to set additional bellwether trials involving county and municipality
plaintiffs, provided that the parties are progressing on a settlement track.
By order dated October 25, 2023, the Court selected four third-party payor
(TPP) cases for bellwether trials. Indivior is not named as a defendant in any
of the four TPP cases selected for bellwether trials.
• The court in the Opioid MDL held a status conference concerning
all remaining Tier 2 and Tier 3 defendants on October 30, 2023, having been
rescheduled from September 27, 2023. The court indicated that it does not
intend to set additional bellwether trials for Tier 2 and Tier 3 defendants.
The plaintiffs' executive committee indicated that it may seek leave to amend
complaints to name additional defendants based on ARCOS data concerning opioid
products. The court has set a status conference for January 17, 2024.
• Regarding civil opioid cases not in the Opioid MDL:
◦ In 2017, Indivior Inc. was named as one of numerous defendants
in International Brotherhood of Electrical Workers Local 728 Family Healthcare
Plan v. Allergan, PLC et al., Case ID: 190303872 (C.P. Phila. Cnty). That case
was consolidated with Lead Case No. 2017-008095 in Delaware County and stayed.
The court held a hearing on September 29, 2023 regarding the status of
settlement discussions and other issues in various groups of cases in the
consolidated action, but did not render decisions regarding whether to remand
any cases or set any bellwether trials.
◦ Indivior also was named as one of numerous defendants in
various other federal and state court cases that are not in the Opioid MDL and
were brought by municipalities. These cases include, for example, 35 actions
filed in New York state court that were removed to federal court, as well as
cases filed in federal district courts sitting in Alabama, Florida, and
Georgia. The plaintiffs' motions to remand the New York cases are due in
October 2023, and the defendants' oppositions are due in November 2023. The
plaintiffs in the case filed in the Northern District of Alabama have
voluntarily dismissed their complaint, subject to certain tolling agreements.
The various other federal actions currently are stayed, and Indivior is not
yet required to substantively respond to the complaints.
◦ Indivior Inc. was named as a defendant in five individual
complaints filed in West Virginia state court that were transferred to West
Virginia's Mass Litigation Panel. See In re Opioid Litigation, No. 22-C-9000
NAS (W.V. Kanawha Cnty. Cir. Ct.) ("WV MLP Action"). All five of Indivior
Inc.'s cases in the WV MLP Action involved claims related to NAS. Indivior
Inc. moved to dismiss all five complaints on January 30, 2023. By order dated
April 17, 2023, the court granted Indivior's motions to dismiss. The
plaintiffs filed a notice of appeal on June 30, 2023. Briefing deadlines have
been set for November 17, 2023, January 19, 2024, and February 16, 2024.
• Given the status and preliminary stage of litigation in both the
Opioid MDL and the separate federal and state court actions, no estimate of
possible loss in the opioid litigation can be made at this time.
False Claims Act Allegations
• In August 2018, the United States District Court for the Western
District of Virginia unsealed a declined qui tam complaint alleging causes of
action under the Federal and state False Claims Acts against certain entities
within the Group predicated on best price issues and claims of retaliation.
See United States ex rel. Miller v. Reckitt Benckiser Group PLC et al., Case
No. 1:15-cv-00017 (W.D. Va.). The suit also seeks reasonable attorneys' fees
and costs. The Group filed a Motion to Dismiss in June 2021. The case was
stayed for mediation in September 2021, but the parties did not reach
agreement. In March 2022, Relator submitted a request for oral argument on the
Motion to Dismiss. The court thereafter stayed proceedings pending decisions
by the U.S. Court of Appeals for the Fourth Circuit and the Supreme Court of
the United States in certain False Claims Act cases. On June 2, 2023, the
court vacated the stay and ordered the parties to submit briefs regarding the
effects of Supervalu on the pending motion to dismiss, which the parties
submitted. By order dated October 17, 2023, the court granted in part and
denied in part the motion to dismiss, with leave to amend.
• 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 provided the USAO certain information regarding allegations that the
government received regarding SUBOXONE Film. There has been no communication
regarding this matter with the USAO since 2022.
UK Shareholder Claims
• On September 21, 2022, certain shareholders issued
representative and multiparty claims against Indivior PLC in the High Court of
Justice for the Business and Property Courts of England and Wales, King's
Bench Division. On January 16, 2023, the representative served its Particular
of Claims setting forth in more detail the claims against the Group, while the
same law firm that represents the representative also sent its draft
Particular of Claims for the multiparty action. The claims made in both the
representative and multiparty actions generally allege that Indivior PLC
violated the UK Financial Services and Markets Act 2000 ("FSMA 2000") by
making false or misleading statements or material omissions in public
disclosures, including the 2014 Demerger Prospectus, regarding an alleged
product-hopping scheme regarding the switch from SUBOXONE tablets to SUBOXONE
film. Indivior PLC filed an application to strike out the representative
action on February 27, 2023. A hearing on the application to strike out has
been scheduled for November 20-21, 2023.
• The Group has begun its evaluation of the claims, believes it
has meritorious defenses, and intends to vigorously defend itself. Given the
status and preliminary stage of the litigation, no estimate of possible loss
can be made at this time.
Intellectual Property Related Matters
• On October 30, 2023, subsidiaries of the Group and Alvogen Inc.,
which is the successor in interest by merger of Alvogen Pine Brook LLC
("Alvogen") entered into a settlement agreement to fully resolve the matter
for $15m. The settlement agreement follows the lawsuit filed by subsidiaries
of the Group in the United States District Court for the District of New
Jersey (the "NJ District Court") alleging that Alvogen's generic
buprenorphine/naloxone film product infringes U.S. Patent Nos. 9,687,454 (the
"454 Patent") and 9,931,305 (the "305 Patent") in 2017 and 2018, respectively.
In January 2019, the NJ District Court granted Indivior a temporary
restraining order ("TRO") to restrain the launch of Alvogen's generic
buprenorphine/naloxone film product pending a trial on the merits of the '305
Patent, and the subsidiaries of the Group that were a party to the case were
required to post a surety bond of $36m. The parties entered into an agreement
whereby Alvogen was enjoined from selling in the U.S. its generic
buprenorphine/naloxone film product unless and until the Court of Appeals for
the Federal Circuit ("CAFC") issued a mandate vacating Indivior's separate
preliminary injunction entered against Dr. Reddy's Laboratories, Inc. ("DRL")
in a related case. The CAFC's mandate vacating Indivior's preliminary
injunction as to DRL issued in February 2019, and Alvogen launched its generic
product. Any sales in the U.S. by Alvogen were 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. On June 26, 2023, the court denied Alvogen's motion for summary
judgment on Indivior's patent claims; granted in part and denied in part
Indivior's motion for summary judgment on Alvogen's antitrust counterclaims.
The parties entered into a settlement agreement October 30, 2023, and a
stipulation of dismissal was filed with the Court on November 7, 2023.
Tooth Damage Allegations
• The Group has been named as a defendant in more than 10 lawsuits
filed in the Northern District of Ohio and other federal district courts in
which individual plaintiffs claim that Suboxone caused them to suffer dental
caries, tooth loss, or other damage to their teeth. See, e.g., Sorensen v.
Indivior, Inc., et al., No. 1:23-cv-01855 (N.D. Ohio). The plaintiffs
generally allege that the Group failed to properly warn physicians of the risk
of dental injury, and further allege that Suboxone products were defectively
designed. The plaintiffs generally seek compensatory damages, as well as
punitive damages and attorneys' fees and costs. Product liability cases such
as these typically involve issues relating to medical causation, label
warnings and reliance on those warnings, scientific evidence and findings,
actual, provable injury and other matters. These cases are in their
preliminary stages. The Group is evaluating the claims and its defenses,
believes it has meritorious defenses, and intends to defend itself. No
estimate of the range of potential loss can be made at this time. These
lawsuits follow a June 2022 required revision to the Prescribing Information
and patient Medication Guide about dental problems reported in connection with
buprenorphine medicines dissolved in the mouth to treat opioid use disorder.
This revision was required by the FDA of all manufacturers of these products.
14. TRADE AND OTHER PAYABLES
Sep 30, Dec 31,
2023
2022
$m $m
Accrual for rebates, discounts and returns (486) (428)
Accounts payable (71) (36)
Accruals and other payables (142) (138)
Other tax and social security payable (15) (15)
Total trade and other payables (714) (617)
15. SHARE CAPITAL
Equity ordinary shares Nominal value paid per share Aggregate nominal value $m
Issued and fully paid
At January 1, 2023 136,480,995 $0.50 68
Ordinary shares issued 1,942,540 $0.50 1
Shares repurchased and cancelled (484,362) $0.50 -
At September 30, 2023 137,939,173 69
Equity ordinary shares Nominal value paid per share Aggregate nominal value $m
Issued and fully paid
At January 1, 2022 702,439,638 $0.10 70
Ordinary shares issued 4,184,940 $0.10 1
Shares repurchased and cancelled (17,815,033) $0.10 (2)
At September 30, 2022 688,809,545 69
Ordinary shares issued
During the period, 1,942,540 ordinary shares at $0.50 each (YTD 2022:
4,184,940 at $0.10 each) were issued to satisfy vesting/exercises under the
Group's Long-Term Incentive Plan, the Indivior UK Savings-Related Share Option
Scheme, and the U.S. Employee Stock Purchase Plan. In YTD 2023, net settlement
of tax on employee equity awards was $22m (YTD 2022: $10m).
Share consolidation
In October 2022, the Company completed a share consolidation. Shareholders
received 1 new ordinary share with a nominal value of $0.50 each for every 5
previously existing ordinary shares which had a nominal value of $0.10 each.
Shares repurchased and cancelled
On May 3, 2022, the Group commenced a share repurchase program for an
aggregate purchase price up to no more than $100m or 39,698,610 of ordinary
shares, (equivalent shares post consolidation: 7,939,722) which concluded on
February 28, 2023. During the period, the Group repurchased and cancelled
484,362 of the Company's ordinary shares at $0.50 per share. In YTD 2022,
17,815,033 ordinary shares at $0.10 (equivalent shares post consolidation:
3,563,007) were repurchased and cancelled for an aggregate nominal value of
$2m, including 256,055 ordinary shares purchased as part of the Group's share
repurchase program executed in 2021 and cancelled in January 2022.
All ordinary shares repurchased under share repurchase programs were cancelled
resulting in a transfer of the aggregate nominal value to a capital redemption
reserve. The total cost of the purchases made under the share repurchase
program during the period, including directly attributable transaction costs,
was $11m (YTD 2022: $66m). Total purchases under the share repurchase program
will be made out of distributable profits.
16. ACQUISITION OF OPIANT
On March 2, 2023, the Group acquired 100% of the share capital of Opiant,
which at the time was a publicly traded company in the United States, for
upfront cash consideration of $146m and an additional amount to be potentially
paid upon achievement of net sales milestones. Opiant was a specialty
pharmaceutical company focusing on developing drugs for addictions and drug
overdose. As a result of the acquisition, the Group added OPVEE (nalmefene
nasal spray), formerly the pipeline product OPNT003, an opioid overdose
treatment well-suited to confront illicit synthetic opioids like fentanyl, to
its addiction and science portfolio. OPVEE was approved by the FDA in May 2023
and launched in October 2023.
Management elected to apply the optional concentration test under IFRS 3. For
the acquisition of Opiant, substantially all of the fair value of the gross
assets acquired was concentrated in the in-process research and development
associated with OPVEE. As substantially all of the fair value of the gross
assets acquired (excluding cash and cash equivalents, deferred tax assets, and
goodwill resulting from the effects of deferred tax liabilities) were
concentrated in a single asset, the Group accounted for the transaction as an
asset acquisition. With the closing of this transaction, a relative fair value
approach was taken for allocating the purchase consideration to the acquired
assets and liabilities with no goodwill recognized. The Group recorded an
intangible asset associated with OPVEE for $126m (refer to Note 7). The Group
used a multi-period excess earnings method, a form of the income approach, to
determine the fair value of the intangible asset.
As part of the acquisition of Opiant, the Group agreed to provide a maximum of
$8.00 per share in Contingent Value Rights (CVR) post-acquisition. The Group
will pay $2.00 per CVR for each of the following net revenue thresholds
achieved by OPNT003, during any period of four consecutive quarters prior to
the seventh anniversary of the U.S. commercial launch: (i) $225m, (ii) $300m
and (iii) $325m. The remaining (iv) $2.00 per CVR would be paid if OPNT003
achieves net revenue of $250m during any period of four consecutive quarters
prior to the third anniversary of the U.S. commercial launch. The potential
undiscounted payout of contingent consideration ranges from $nil to $68m based
on the achievement of the milestones. The Group accounts for contingent
consideration associated with asset acquisitions using a cost accumulation
model. No liabilities are initially recognized at the date of acquisition.
When an obligation associated with a variable payment is no longer uncertain,
it is capitalized as part of the cost of the asset, as it represents a direct
cost of the acquisition.
An initial recognition exception applies to the tax attributes acquired
whereby only certain items are recognized with the transaction, such as net
operating loss carryforwards, other tax carryforwards, and tax credits. Such
attributes totaled $9m, recorded as deferred tax assets.
The cash outflow for the acquisition was $124m, net of cash acquired. Direct
transaction costs of $10m are included in this cash outflow and capitalized as
a component of the total cost of the asset acquisition. Of the $146m upfront
consideration, $2m represents acceleration of vesting of employee share
compensation and has been recognized as a post-combination expense. As part of
the acquisition, the Group assumed outstanding debt of $10m which was settled
and included as a cash outflow from financing activities.
Additional acquisition-related costs of $16m were incurred in YTD 2023 and
included in selling, general, and administrative expenses, primarily relating
to severance, acceleration of vesting of Opiant employee share compensation,
and short-term retention accruals.
The following table summarizes the net assets acquired:
Net assets acquired $m
Cash and cash equivalents 30
Inventories 3
Right-of-use assets 2
Intangible assets 126
Deferred tax assets 9
Other assets 6
Trade and other payables (10)
Lease liabilities (2)
Borrowings (10)
Total net assets acquired 154
17. POST BALANCE SHEET EVENTS
On October 11, 2023, the Group secured global rights to develop, manufacture,
and commercialize Alar Pharmaceuticals Inc.'s ("Alar") portfolio of
buprenorphine-based ultra long-acting injectables, including lead asset
ALA-1000, which is potentially the first three-month long-acting injectable
for OUD. Under the agreement, the Group will make an upfront payment of $10m,
which is in addition to the $5m option payment made by the Group in Q1 2023.
Alar is entitled to potential milestone payments if various developmental,
regulatory, and commercial goals are achieved and royalties in the low double
digit to mid-teens as a percentage of net revenue.
On November 1, 2023, the Group acquired an aseptic manufacturing facility in
the United States for upfront consideration of $5m in cash and assumption of
certain contract manufacturing obligations. The site will be further developed
to secure the long-term production and supply of SUBLOCADE and PERSERIS. Due
to the proximity of the acquisition to the approval date of the Group
financial statements, the Group has not completed the initial accounting for
the acquisition and hence disclosures related to the fair valuation of the
assets and liabilities acquired and potential goodwill (including the factors
that make up the goodwill) and any contingent liabilities were not
determinable by the approval date of the Group financial statements. The
acquisition is expected be accounted for as a business combination using the
acquisition method of accounting in accordance with IFRS 3 Business
Combinations and consequently the assets acquired, and liabilities assumed
will be recorded by the Group at fair value, with any excess of the purchase
price over the fair value of the identifiable assets and liabilities being
recognized as goodwill. The accounting impact of this acquisition and the
results of the operations for facility from the date of acquisition will be
included in the Group's annual financial statements for the year ended
December 31, 2023.
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
By order of the Board
Mark Crossley Ryan Preblick
Chief Executive Officer Chief Financial Officer
November 8, 2023
Independent review report to Indivior PLC
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Indivior PLC's condensed consolidated interim financial
statements (the "interim financial statements") in the 'Q3 2023 Financial
Results' of Indivior PLC for the three and nine month periods ended 30
September 2023.
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'.
The interim financial statements comprise:
• the Condensed consolidated interim balance sheet as at 30
September 2023;
• the Condensed consolidated interim income statement and
Condensed consolidated interim statement of comprehensive (loss)/income for
the three and nine month periods then ended;
• the Condensed consolidated interim cash flow statement for the
nine month period then ended;
• the Condensed consolidated interim statement in changes in
equity for the nine month period then ended; and
• the explanatory notes to the interim financial statements.
The interim financial statements included in the Q3 2023 Financial Results of
Indivior PLC have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting'.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Q3 2023 Financial Results
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Q3 2023 Financial Results, including the interim financial statements, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the Q3 2023 Financial Results in accordance with
UK adopted International Accounting Standard 34, 'Interim Financial
Reporting'. In preparing the Q3 2023 Financial Results, including the interim
financial statements, the directors are responsible for assessing the group's
ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Q3 2023 Financial Results based on our review. Our
conclusion, including our Conclusions relating to going concern, is based on
procedures that are less extensive than audit procedures, as described in the
Basis for conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the purpose of
complying with UK adopted International Accounting Standard 34, 'Interim
Financial Reporting' and for no other purpose. 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
8 November 2023
APPENDIX: ADJUSTED RESULTS
Exceptional items and other adjustments
Exceptional items and other adjustments represent significant expenses or
income that do not reflect the Group's ongoing operations or the adjustment of
which may help with the comparison to prior periods. Exceptional items and
other adjustments are excluded from adjusted results consistent with the
internal reporting provided to management and the Directors. Examples of such
items could include income or restructuring and related expenses from the
reconfiguration of the Group's activities and/or capital structure,
amortization of acquired intangible assets, impairment of current and
non-current assets, gains and losses from the sale of intangible assets,
certain costs arising as a result of significant and non-recurring regulatory
and litigation matters, and certain tax related matters.
Adjusted results are not measures defined by IFRS and are not a substitute
for, or superior to, reported results presented in accordance with IFRS.
Adjusted results as presented by the Group are not necessarily comparable to
similarly titled measures used by other companies. As a result, these
performance measures should not be considered in isolation from, or as a
substitute analysis for, the Group's reported results presented in accordance
with IFRS. Management performs a quantitative and qualitative assessment to
determine if an item should be considered for adjustment. The table below sets
out exceptional items and other adjustments recorded in each period:
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 $m $m $m $m
Exceptional items and other adjustments within cost of sales
Amortization of acquired intangible assets(1) (3) - (5) -
Total exceptional items and other adjustments within cost of sales (3) - (5) -
Exceptional items and other adjustments within SG&A
Legal costs/provision(2) (240) - (240) -
Acquisition-related costs(3) - - (16) -
U.S. listing costs(4) - (2) (6) (4)
Total exceptional items and other adjustments within SG&A (240) (2) (262) (4)
Exceptional items and other adjustments within net other operating income
Insurance reimbursement(5) - - - 5
Total exceptional items and other adjustments within net other operating - - - 5
income
Total exceptional items and other adjustments before taxes (243) (2) (267) 1
Tax on exceptional items and other adjustments 59 - 61 (1)
Exceptional tax items(6) - - (8) -
Total exceptional items and other adjustments (184) (2) (214) -
1. With the acquisition of Opiant and approval of OPVEE, the
Group reported adjusted cost of sales to exclude amortization of acquired
intangible assets on a prospective basis from Q2 2023. Prior period adjusted
results have not been restated as the impact is not material.
2. In Q3 2023, the Group increased the provision for certain
multidistrict antitrust class claims by $228m and the provision for IP related
matters by $12m. Refer to Note 13, Legal Proceedings, for further details.
3. In YTD 2023, the Group recognized $16m of exceptional costs
related to the acquisition of Opiant (refer to Note 16).
4. In YTD 2023, the Group recognized $6m of exceptional costs in
preparation for a potential additional listing of Indivior shares on a major
U.S. exchange (YTD 2022 and Q3 2022: $4m and $2m).
5. The Group recognized $5m of exceptional income in YTD 2022
related to the proceeds received from a Directors' & Officers' insurance
reimbursement claim.
6. Exceptional tax items are comprised of $5m write off of
deferred tax assets and tax expense due to limitation on the deduction of
executive compensation by U.S. publicly traded companies and $3m change in
estimate as to the tax benefit of legal provisions booked in the prior year.
Adjusted results
Management provides certain adjusted financial measures which may be useful to
investors. These adjusted financial measures exclude items which do not
reflect the Group's day-to-day operations and therefore may help with
comparisons to prior periods or among companies. Occasionally, management may
use these financial measures to better understand trends in the business.
The tables below show the list of adjustments between the reported and
adjusted results for both Q3/YTD 2023 and Q3/YTD 2022.
Reconciliation of gross profit to adjusted gross profit
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 $m $m $m $m
Gross profit 225 192 665 544
Exceptional items and other adjustments in cost of sales 3 - 5 -
Adjusted gross profit 228 192 670 544
Reconciliation of selling, general and administrative expenses to adjusted
selling, general and administrative expenses
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 $m $m $m $m
Selling, general and administrative expenses (390) (115) (654) (331)
Exceptional items and other adjustments in selling, general and administrative 240 2 262 4
expenses
Adjusted selling, general and administrative expenses (150) (113) (392) (327)
Reconciliation of operating (loss)/profit to adjusted operating profit
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 $m $m $m $m
Operating (loss)/profit (183) 56 (65) 173
Exceptional items and other adjustments in cost of sales 3 - 5 -
Exceptional items and other adjustments in selling, general and administrative 240 2 262 4
expenses
Exceptional items and other adjustments in net other operating income - - - (5)
Adjusted operating profit 60 58 202 172
Reconciliation of (loss)/profit before taxation to adjusted profit before
taxation
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 $m $m $m $m
(Loss)/profit before taxation (181) 54 (61) 160
Exceptional items and other adjustments in cost of sales 3 - 5 -
Exceptional items and other adjustments in selling, general and administrative 240 2 262 4
expenses
Exceptional items and other adjustments in net other operating income - - - (5)
Adjusted profit before taxation 62 56 206 159
Reconciliation of tax benefit/(expense) to adjusted tax expense
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 $m $m $m $m
Tax benefit/(expense) 46 (13) 9 (30)
Tax on exceptional items and other adjustments (59) - (61) 1
Exceptional tax items - - 8 -
Adjusted tax expense (13) (13) (44) (29)
Reconciliation of net (loss)/income to adjusted net income
Q3 Q3 YTD YTD
2023 2022 2023 2022
For the three and nine months ended September 30 $m $m $m $m
Net (loss)/income (135) 41 (52) 130
Exceptional items and other adjustments in cost of sales 3 - 5 -
Exceptional items and other adjustments in selling, general and administrative 240 2 262 4
expenses
Exceptional items and other adjustments in net other operating income - - - (5)
Tax on exceptional items and other adjustments (59) - (61) 1
Exceptional tax items - - 8 -
Adjusted net income 49 43 162 130
Adjusted diluted earnings per share
Management believes that diluted (loss)/earnings per share, adjusted for the
impact of exceptional items and other adjustments after the appropriate tax
amount, may provide meaningful information on underlying trends to
shareholders in respect of earnings per ordinary share. A reconciliation of
net (loss)/income to adjusted net income is included above.
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