REG - Indivior PLC - Final Results
13/02/2020 07:00
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RNS Number : 8384C Indivior PLC 13 February 2020
http://www.rns-pdf.londonstockexchange.com/rns/8384C_1-2020-2-12.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/8384C_1-2020-2-12.pdf)
February 13, 2020
FY 2019 Adjusted Financial Results In-Line with Guidance. FY 2020 Guidance
Introduced.
Period to Dec. 31st Q4 Q4 % ∆ % ∆ FY FY % ∆ % ∆
2019 2018 Actual Constant 2019 2018 Actual Constant
$m $m FX FX $m $m FX FX
Net Revenue 133 236 -44 -43 785 1,005 -22 -21
Op. (Loss)/Profit (42) 20 NM NM 178 292 -39 -36
Net (Loss)/ Income (55) 24 NM NM 134 275 -51 -47
EPS (cents/share) (8) 3 NM NM 18 38 -53 -46
Adj. Op. (Loss)/Profit* (46) 78 NM NM 202 332 -39 -36
Adj. Net (Loss)/ Income * (37) 67 NM NM 176 272 -35 -31
Adj. Basic EPS* (5) 9 NM NM 24 37 -35 -31
(*)Adjusted basis excludes the impact of exceptional items as referenced in
Notes 3 and 4 on pages 20 and 21.
NM: not meaningful
This Release Contains Inside Information.
Comment by Shaun Thaxter, CEO of Indivior PLC
"2019 was a challenging year for Indivior but I am proud that it brought out
the very best in our people as we focused our efforts on improving the lives
of patients suffering from addiction and its co-occurring disorders. Our solid
operating performance allowed us to raise our full-year financial guidance
twice, helped by the resilience of SUBOXONE® (buprenorphine and naloxone)
Film in the face of buprenorphine/naloxone film generics and by our strict
financial disclipline and cash conservation. At the same time, we were able to
lay the foundations for the future success of our key growth drivers,
SUBLOCADE® (buprenorphine extended-release) injection and PERSERIS®
(risperidone) extended-release injection, while also further extending our
scientific leadership in opioid use disorder (OUD).
Looking to 2020, I am inspired by the opportunity we have in front of us to
profoundly impact patient lives in a more meaningful way: our groundbreaking
direct-to-consumer (DTC) campaign is focused on helping more patients connect
to treatment and our publication of new science is building a strong evidence
base supporting SUBLOCADE®'s differentiated product profile. Supported by our
enhanced compliance capabilities to meet the growing number of buprenorphine
medication-assisted treatment (BMAT) patients and prescribers, we expect these
efforts to help us make marked progress toward our peak net revenue goal of
$1bn for SUBLOCADE®. With our new schizophrenia depot PERSERIS® also set to
deliver a greater net revenue contribution, 2020 is shaping up to be a pivotal
year for Indivior.
Although we are optimistic about delivering on our strategic priorities in
2020, we of course recognise the legal uncertainties we face. We are
proactively working to manage these risks while our teams remain focused on
leveraging the strategic and operational accomplishments of the past year to
further our leadership position in addiction science and diversification into
behavioral health."
FY 2019 Financial Highlights
· Total net revenue of $785m declined 22% (-21% at constant currency).
U.S. net revenue declined 25% primarily due to SUBOXONE® Film share loss to
generic competitors, albeit at a lower rate than suggested by historical
industry analogues((1)). The impact of share loss was partially offset by good
underlying market growth for BMAT, net revenue from SUBLOCADE® of $72m (FY
2018: $12m) and net revenue contribution from the authorized generic
buprenorphine/naloxone film program. Rest of World net revenue declined 9%,
primarily due to continued austerity measures in certain EU markets.
· Reported operating profit was $178m (FY 2018: $292m). On an adjusted
basis operating profit decreased 39% to $202m (Adj. FY 2018: $332m), primarily
due to lower overall net revenue and gross profit, partially offset by the
significant decrease in operating expenses (SG&A and R&D combined).
· Reported net income was $134m (FY 2018: $275m). On an adjusted basis,
net income decreased 35% to $176m (Adj. FY 2018: $272m), primarily reflecting
lower operating profit partially offset by net finance income (versus net
finance expense in FY 2018).
· Ending FY 2019 cash balance grew to $1,060m (FY 2018: $924m). Net
cash was $821m (FY 2018: $681m) as outlined in note 9 on page 23.
FY 2019 Operating Highlights
· U.S. BMAT market growth continued at low double-digit levels; growth
continues to be driven primarily by government channels.
· SUBOXONE® Film market share averaged 32% (FY 2018: 53%) and exited
FY 2019 at 24% (FY 2018: 53%). Share erosion since the "at-risk" launch of
generic buprenorphine/naloxone film products in February 2019 has been lower
than suggested by historical industry analogues((1)).
· Indivior notified partner Sandoz Inc. of its intention to cease its
authorized generic buprenorphine/naloxone sublingual film program in response
to the passage of H.R. 4378 (see pg. 3, "U.S. Market Update"). Final shipments
of Indivior-produced authorized generic buprenorphine/naloxone film were made
in Q4 2019.
· SUBLOCADE® key performance indicators (KPIs) continued to improve;
dispense yield consistently over 60%, while healthcare professional (HCP)
initiations and administrations also increased during the year.
· U.S. DTC advertising campaign launched to increase patient and HCP
awareness of BMAT and SUBLOCADE®.
· PERSERIS® (risperidone) extended-release injection net revenue was
in-line with the Group's expectations.
FY 2020 Guidance Introduced
· Net revenue is expected to be in the range of $525m to $585m and a
net loss in the range of ($50m) to ($20m) (excluding exceptional items and at
constant exchange rates).
· Net revenue guidance assumes continued share erosion of SUBOXONE®
Film toward historical industry analogues((1)).
· SUBLOCADE® net revenue of between $150m-$200m; PERSERIS® net
revenue of between $15-$25m.
· Guidance reflects increased investments in promotion, channel
development and treatment advocacy, including direct to consumer (DTC)
advertising through the first quarter. As the Group continues to advance
SUBLOCADE® toward a sustainable $1bn franchise, it will continue to evaluate
opportunities to deploy any net revenue overdelivery toward furthering
treatment and SUBLOCADE® penetration.
· A modest tax benefit.
Department of Justice Action
· On April 9, 2019, a federal grand jury in the Western District of
Virginia indicted Indivior PLC and Indivior Inc. on charges of health care
fraud, wire fraud, mail fraud, and conspiracy, in connection with the
marketing and promotion practices, pediatric safety claims, and
overprescribing of SUBOXONE® Film and/or SUBOXONE® Tablet by certain
physicians. DOJ is seeking to recover $3 billion in monetary forfeitures and
all
(1) IMS Institute Report, January 2016, "Price Declines after Branded
Medicines Lose Exclusivity in the U.S."
assets derived from the commission of the alleged offenses. Indivior believes
it has strong defenses to the government's charges and will vigorously defend
itself. On August 14, 2019, in response to Indivior's Motion
to Dismiss the original indictment, DOJ obtained a Superseding Indictment that
did not add to or change the charges, but changed certain factual allegations.
On November 14, 2019, the Court denied the Motion to Dismiss the original
indictment, and on December 19, 2019, Indivior filed a Motion to Dismiss the
superseding indictment, which is pending before the Court.
· The Group's legal strategy remains unchanged. In concert with its
legal and other technical advisers, the Group is diligently preparing for
trial in May 2020. It is not possible to predict with any certainty the
potential impact of this litigation or to quantify the ultimate cost of a
verdict or resolution, but it could have a material impact on the Group.
· Please see Notes 10, 11 and 12 beginning on page 24 for further
details on Provisions, Contingent Liabilities and Legal Proceedings.
Operating Review
U.S. Market Update
The market for BMAT products continued to grow at low double-digit rates in
2019 versus the comparable period in 2018. Market volume growth benefited both
from increased overall public awareness of the opioid epidemic and approved
treatments, and from regulatory and legislative changes that have expanded
opioid use disorder (OUD) treatment funding and treatment capacity. States are
also realizing that providing treatment brings substantial value to both
patients and society, but BMAT remains underutilized((1)).
In response, both the number of physicians who have received a waiver to
administer medication-assisted treatment and those able to treat to the
permitted level of 275 patients continued to grow in 2019. The number of nurse
practitioners and physician assistants who have received a waiver also
continued to grow in 2019. Indivior supports efforts to encourage more
eligible healthcare practitioners to provide treatment, and the Group
continues to invest in expanding its compliance program to meet the growing
number of BMAT prescribers and patients.
On February 19, 2019, the market for generic buprenorphine/naloxone film
products began to form rapidly after the Court of Appeals for the Federal
Circuit (CAFC) vacated the preliminary injunction (PI) granted to Indivior
against Dr. Reddy's Laboratories (DRL) and Alvogen Pine Brook LLC (Alvogen).
As a result of the launch of generic buprenorphine/naloxone film products,
branded SUBOXONE® Film experienced significant market share loss in 2019,
albeit at a lower rate than suggested by historical industry analogues((2)).
SUBOXONE® Film market share exiting 2019 was 24% compared to 2018 exit share
of 53%. Overall formulary access for SUBOXONE® Film remains above
expectations at this point in its lifecycle. However, Indivior prudently
assumes the pace of market share loss will intensify for SUBOXONE® Film,
ultimately resulting in a branded market share position in-line with industry
analogues((2)). However, the timing for reaching this level is uncertain at
this point.
On October 15, 2019, Indivior notified partner Sandoz Inc. of its intention to
cease its authorized generic buprenorphine/naloxone sublingual film program in
response to the passage of H.R. 4378 - Continuing Appropriations Act, 2020,
and Health Extenders Act of 2019 (the "legislation"). The legislation, which
came into effect on October 1, 2019, included changes to the methodology for
calculating the average manufacturer price (AMP) for branded drugs that
prohibit including the Group's authorized generic offering in its AMP
calculation, but maintaining the Group's authorized generic offering as the
"best price" for calculating mandatory rebates.
(1) JAMA Network Open. 2019;2(6):e196373.
Doi:10.1001/jamanetworkopen.2019.6373
(2) IMS Institute Report, January 2016, "Price Declines after Branded
Medicines Lose Exclusivity in the U.S."
As a consequence of this change, mandatory rebating in U.S. government
channels increased. Based on the current business dynamics and material
discounting already provided to U.S. government accounts and managed Medicaid
entities, this legislative change would have resulted in negative gross profit
on SUBOXONE® Film in the majority of U.S. government channels. The Group's
decision to terminate the authorized generic buprenorphine/naloxone film
program has not affected availability of branded or generic
buprenorphine/naloxone film, but enables Indivior's ability to resource
SUBLOCADE®, its once-monthly depot buprenorphine for opioid use disorder
patients.
Final shipments of Indivior-produced authorized generic buprenorphine/naloxone
film were made in Q4 2019 and, as such, the Group does not expect any further
impact to its U.S. business from the legislation discussed above.
Indivior made good progress in the following KPIs that it believes will drive
accelerated net revenue growth for SUBLOCADE® in pursuit of its $1
billion-plus peak net revenue goal:
SUBLOCADE® Prescription Journey KPIs as of December 31, 2019:
· Formulary Access is at 89% of covered U.S. lives.
· The Prescription Journey is at or above target (12 to 17 days).
· The Dispensing Yield Rate is consistently over 60%.
SUBLOCADE® Demand KPIs (December 31, 2019 vs. December 31, 2018):
· HCPs Initiating a Prescription increased to 4,338 versus 2,430.
· HCPs Administered SUBLOCADE® increased to 3,083 versus 1,325.
· HCPs Administered SUBLOCADE® to 5-plus patients increased to 924
versus 232.
Financial Performance FY & Q4 2019
Total net revenue FY 2019 decreased 22% to $785m (FY 2018: $1,005m) at actual
exchange rates (-21% at constant exchange rates). In Q4 2019, total net
revenue decreased 44% at actual exchange rates (-43% at constant exchange
rates) to $133m (Q4 2018: $236m).
FY 2019 U.S. net revenue decreased 25% to $589m (FY 2018: $790m) and by 56% in
Q4 2019 to $80m (Q4 2018: $182m). The U.S. BMAT market continued to grow at
low double-digit rates, primarily from strength in government channels.
Underlying market strength, net revenue contribution from the authorized
generic buprenorphine/naloxone film program until termination in Q4 2019 (see
pg. 3, "U.S. Market Update") and SUBLOCADE® net revenue of $72m (2018: $12m)
were more than offset by SUBOXONE® Film share loss due to the introduction of
generic buprenorphine/naloxone film alternatives in Q1 2019.
Q4 2019 U.S. net revenue dynamics were substantially the same as those in FY
2019, with SUBOXONE® Film net revenue further adversely impacted by $47m due
to the enactment of new legislation that included new methodology for
calculating a branded drug's "best price" for U.S. government channels (see
pg. 3, "U.S. Market Update"). The net revenue benefits from authorized generic
buprenorphine/naloxone film volume was more than offset by a one-time accrual
adjustment for higher Medicaid-related sales by Sandoz.
FY 2019 Rest of World net revenue decreased 9% at actual exchange rates to
$196m (FY 2018: $215m) (-3% at constant exchange rates). In Q4 2019, Rest of
World net revenue decreased 2% at actual exchange rates to $53m (Q4 2018:
$54m) (nil at constant exchange rates). In FY 2019, expected volume and
pricing impacts from ongoing austerity measures in certain European markets
were partially offset by continued growth in Australasia. The Rest of World
net revenue dynamics in Q4 2019 were substantially the same as those as FY
2019, with Q4 2019 volume benefitting from generic stock outages in the
Canadian market.
FY 2019 gross profit was $645m, or 82% of net revenue (FY 2018: $877m; margin
87%). Q4 2019 gross profit was $90m, or 68% of net revenue (Q4 2018: $201m;
margin 85%). The decline in gross profit in both periods was principally due
to lower overall net revenue from branded SUBOXONE® Film together with
impacts from legislation that included new methodology for calculating
SUBOXONE Film's mandated rebate within U.S. government channels (see pg. 3,
"U.S. Market Update"), unfavourable product mix related to the Group's
authorized generic buprenorphine/naloxone film and inventory adjustments. Q4
2019 gross profit was disproportionately impacted by all of these factors as
the mandated rebate impacts and higher authorized generic volumes occurred in
the period. With the termination of the authorized generic program, the Group
expects SUBOXONE® Film to generate positive gross margin contribution from
government channels going forward.
FY 2019 SG&A expenses as reported were $414m (FY 2018: $494m) and $115m
as reported in Q4 2019 (Q4 2018: $140m). FY 2019 SG&A expenses included
exceptional costs of $24m. The exceptional costs comprised of $20m primarily
related to redundancy costs and supply chain restructuring, $8m related to
potential redress for ongoing intellectual property related litigation, and
$4m of income from the 2018 out-licensing agreement related to the Group's
intranasal naloxone opioid overdose patents. FY 2018 SG&A included net
exceptional costs of $16m. The exceptional costs comprised $13m related to
restructuring and $40m related primarily to potential redress for ongoing
intellectual property related litigation, partially offset by a $37m gain from
the out-licensing related to the Group's intranasal naloxone opioid overdose
patents.
Q4 2019 SG&A included exceptional income of $4m from the 2017
out-licensing agreement related to the Group's intranasal naloxone opioid
overdose patents. Q4 2018 SG&A included net exceptional costs of $34m. The
exceptional costs comprised $13m related to restructuring and $40m related
primarily to potential redress for ongoing intellectual property related
litigation, partially offset by an exceptional gain of $19m related to a
further payment for the intranasal naloxone opioid overdose patents as
discussed above.
On an adjusted basis FY 2019 SG&A expenses declined 18% to $390m (Adj. FY
2018: $478m). The decline largely reflects savings from streamlining actions,
including significant headcount reduction actions completed in Q1 2019. In Q4
2019 SG&A expenses on an adjusted basis increased by 12% to $119m (Adj. Q4
2018: $106m). The increase in Q4 2019 reflects increased SUBLOCADE® marketing
expenses, chiefly the development and launch of the national DTC television
advertising campaign.
FY 2019 and Q4 2019 R&D expenses as reported decreased by 42% to $53m and
by 59% to $17m, respectively (FY 2018: $91m; Q4 2018: $41m). Excluding
exceptional items of $24m in FY 2018 and Q4 2018 related to the impairment of
the Arbaclofen Placarbil and ADDEX lead compounds, FY 2019 and Q4 2019 R&D
expenses decreased by 21% and by nil respectively (Adj. FY 2018: $67m; Adj. Q4
2018: $17m). This primarily reflects lower clinical activity and the
reprioritization of R&D activities principally to support SUBLOCADE®
Health Economics and Outcomes Research (HEOR), the generation of scientific
evidence supporting SUBLOCADE®'s differentiated product profile, as well as
post-marketing study requirements and commitments for SUBLOCADE® and
PERSERIS®.
On an adjusted basis, FY 2019 operating expenses (SG&A and R&D
expenses combined) were $443m, consistent with company guidance of
$440m-$460m, including incremental marketing expenses in Q4 2019 to develop
and launch the DTC campaign for SUBLOCADE®. These expenses were partially
offset by one-off benefits primarily related to the non-vesting of conditional
share awards.
FY 2019 operating profit as reported was $178m, 39% lower compared to the
prior year (FY 2018: $292m). On an adjusted basis, FY 2019 operating profit
was $202m (26% margin), a decrease of 39% versus $332m (33% margin) in FY
2018. Q4 2019 operating loss on a reported and adjusted basis were $42m and
$46m, respectively (Q4 2018 profit: $20m, Adj. Q4 2018 profit: $78m). The
decrease in FY 2019 adjusted operating profit primarily reflects overall lower
SUBOXONE® Film net revenue and lower gross profit that was partially offset
by operating expense reductions (SG&A and R&D combined). The operating
loss in Q4 2019 primarily reflects lower overall net revenue as well as the
net revenue and gross profit impact from the enactment of new legislation that
included new methodology for calculating SUBOXONE® Film's "best price" for
U.S. government channels (see pg. 3, "U.S. Market Update") and increased
SUBLOCADE® marketing expenses.
FY 2019 net finance income was $2m (FY 2018: $14m expense). The net
improvement reflects lower interest and amortization of financing costs due to
the voluntary debt repayments of $235m of the principal term loan balance in
FY 2018, and higher interest income earned from the Group's increased cash
balance.
FY 2019 reported tax expense was $46m, an effective tax rate of 26% (FY 2018:
$3m, 1%). Excluding the $18m exceptional tax expense, the adjusted FY 2019 tax
expense was $28m, an effective rate of 14% (FY 2018: 15%). The exceptional tax
expense is made up of a $4m tax benefit on exceptional items and net tax
expense of $22m relating to a reversal of development credits claimed in prior
years (see Note 12), partially offset by a benefit from new regulation changes
stemming from U.S. Tax Reform. The adjusted FY 2018 tax charge was $46m,
excluding one-time items principally related to development credits
recognized, an effective tax rate of 15%. On an adjusted basis, the tax rate
year over year is substantially consistent, reflecting the geographic mix of
earnings.
Q4 2019 reported total tax expense was $13m, an effective tax rate of 31% (Q4
2018: $4m tax benefit). Excluding $22m of exceptional tax, the adjusted Q4
2019 tax benefit was $9m, an effective tax rate of 20%. In Q4 2018, the
adjusted tax charge was $11m, an effective rate of 14%. Q4 2019 tax
exceptionals are consistent with those described above for the full year. Q4
2018 tax exceptional included a $10m tax impact on exceptional items and $5m
of exceptional tax items; $2m relating to finalization of prior year US rate
change; and $3m to the finalization of prior year development credits.
FY 2019 net income was $134m (FY 2018: $275m), and $176m on an adjusted basis
excluding the net $28m after-tax impact from exceptional items and $22m
exceptional tax item (Adj. FY 2018: $272m). Q4 2019 net loss was $55m and
adjusted net loss was $37m, reflecting the impact of the exceptional items
discussed above (Q4 2018: $24m; Adj. Q4 2018: $67m). The decrease in FY 2019
adjusted net income was due to the decline in net revenue and gross profit,
partially offset by lower operating expenses (SG&A and R&D combined)
and net finance income. The adjusted net loss in Q4 2019 was primarily due to
lower net revenue and gross profit, as well as an increase in operating
expense primarily due to increased marketing investment for SUBLOCADE®.
FY 2019 EPS on a diluted and adjusted diluted basis were 18 cents (FY 2018: 38
cents on a diluted and 37 cents adjusted diluted basis). In Q4 2019, loss per
share on a diluted basis was 8 cents and 5 cents on an adjusted diluted basis
(Q4 2018: 3 cents on a diluted and 9 adjusted diluted basis).
Balance Sheet & Cash Flow
FY 2019 cash and cash equivalents were $1,060m, an increase of $136m versus
the $924m position at FY 2018. Borrowings, before issuance costs, were $239m
at the end of FY 2019 (FY 2018: $243m). As a result, net cash stood at $821m
at the end of FY 2019 (FY 2018: $681), a $140m improvement over the prior
year.
Net working capital (inventory plus trade and other receivables, less trade
and other payables) was negative $323m at year end, a decline of $33m from
negative $356m at the end of FY 2018 primarily driven by a decrease in sales
returns and rebates in the U.S. within payables and a reduction in accrual
levels and lower trade and other receivables.
Cash generated from operations in FY 2019 was $128m (FY 2018: $327m), a
decrease of $199m. The reduction in cash generated versus the year-ago period
was primarily due to lower operating profit along with lower rebates, trade
payables, and accrual balances resulting from lower revenues and costs.
FY 2019 net cash inflow from operating activities was $151m (FY 2018: $303m),
a decrease of $152m reflecting lower cash from operations slightly offset by
higher net interest received of $5m versus net interest payment of $8m in the
prior year and tax refunds of $18m versus tax payment of $16m in 2018.
FY 2019 cash outflow from investing activities was $2m, with $7m for the
purchase of equipment and building outfits (FY 2018: $4m) offset by $4m
received relating to the disposal of the nasal naloxone intangible asset. The
2018 balance reflects upfront payments for licensing arrangements with ADDEX
Therapeutics and C4X Discovery, capitalized development costs, and ongoing
investments in facilities, mostly offset by proceeds received from the
disposal of the nasal naloxone intangible asset.
FY 2019 cash outflow from financing activities decreased $224m to $13m from
$237m in FY 2018. The current year outflows reflect the new classification of
lease payments adopted under IFRS 16 Leases, and the quarterly amortisation of
the term loan facility. The prior year reflects the impact of the voluntary
repayments of $235m of the outstanding Term Loan balance in H2 2018.
R&D / Pipeline Update
Indivior's quarterly R&D and pipeline update may be found
at: http://www.indivior.com/research-and-development/
(http://www.indivior.com/research-and-development/) .
Risk Factors
The Board of Directors oversees the approach to risk management and ensures
that the principal risks, including those that would threaten the Group's
business model, future performance or viability, are effectively managed
and/or mitigated. While the Group aims to identify and manage such risks, no
risk management strategy can provide absolute assurance against loss.
Set out are what the Group considers to be the principal risks, that could
cause the Group's business model, future performance and solvency or liquidity
to differ materially from expected and historical results. Additional risks,
not listed here, that the Group cannot presently predict or does not believe
to be equally significant, may also materially and adversely affect the
Group's business, results of operations and financial position. The principal
risks and uncertainties are not listed in order of significance
Business Operations
· The Group's operations rely on complex processes and systems,
strategic partnerships, as well as specially qualified and high performing
personnel to develop, manufacture and sell our products. Failure to
continuously maintain operational processes and systems as well as to recruit
and/or retain qualified personnel could adversely impact products availability
and patient health, and ultimately the Group's performance and financials.
Additionally, an ever evolving regulatory, political and technological
landscape requires that we have the right priorities, capabilities and
structures in place to successfully execute on our business strategy and adapt
to this changing environment. Uncertainties of the impact of Brexit on our
operations remain a risk closely monitored as it impacts various areas of the
Group, including Operations, Regulatory, Supply Chain, and Quality.
Product Pipeline, Regulatory & Safety
· The development and approval of the Group's products is an
inherently risky and lengthy process requiring significant financial, research
and development resources, and strategic partnerships. Complex regulations
with strict and high safety standards govern the development, manufacturing,
and distribution of our products. In addition, strong competition exists for
strategic collaboration, licensing arrangements, and acquisition targets.
Patient safety depends on our ability to perform robust safety assessment and
interpretation to ensure that appropriate decisions are made regarding to the
benefit/risk profiles of our products. Deviations from these quality and
safety practices can impact patient safety and market access, which can have a
material effect on the Group's performance and prospects.
Commercialization
· Successful commercialization of our products is a critical factor
for the Group's sustained growth and robust financial position. Launch of new
product involves substantial investment in marketing, market access and sales
activities, product stocks, and other investments. Generic and brand
competition, pricing pressures, private and government reimbursement schemes
and systems, negotiations with payors, erosion and/or infringement of
intellectual property (IP) rights, political and socioeconomic factors and
HCP/Patient adoption and adherence, if different than anticipated, can
significantly impact the Group's performance and position.
Economic & Financial
· The nature of the pharmaceutical business is inherently risky and
uncertain and requires that we make significant financial investments to
develop and support the success of our product portfolio. External financing
is a key factor in sustaining our financial position and expanding our
business growth. Unfavourable outcome from government resolutions and/or from
legal proceedings (including the Western District of Virginia Indictment), as
well as potential exclusion from participating in US Federal Health Care
Programs may negatively impact our financial position and therefore, our
ability to comply with our debt covenants. Our ability to realize value on
those investments is often dependent upon regulatory approvals, market
acceptance, strategic partnerships, competition, and legal developments. As a
global business, we are also subject to political, economic, and capital
markets changes.
Supply Chain
· The manufacturing and supply of our products are highly complex
and rely on a combination of internal manufacturing capabilities and third
parties for the timely supply of our finished drug and combination drug
products. The Group has a single source of supply for buprenorphine, an active
pharmaceutical ingredient (API) in the Group's products and uses contract
manufacturing organizations (CMOs) to manufacture, package and distribute our
products. The manufacturing of non-sterile pharmaceutical and sterile filled,
pharma/combination drug products is subject to stringent global regulatory
quality and safety standards, including Good Manufacturing Practice (GMP).
Delays or interruptions in our supply chain, and/or product quality failures
could significantly disrupt patient access, adversely impact the Group's
financial performance; lead to product recalls, and/or potential regulatory
actions against the Group, along with reputational damages.
Legal & Intellectual Property
· Our pharmaceutical operations, which include controlled
substances, are subject to a wide range of laws and regulations from various
governmental and non-governmental bodies. Perceived noncompliance with these
applicable laws and regulations may result in investigations or proceedings
leading the Group to become subject to civil or criminal sanctions and/or pay
fines and/or damages, as well as reputational damages. Intellectual Property
(IP) rights protecting our products may be challenged by external parties,
including generic manufacturers. Although we have developed robust patent
protection for our products, we are exposed to the risk that courts may decide
that our IP rights are invalid and/or that third parties do not infringe our
asserted IP rights. Unfavorable outcome from government investigations and/or
resolutions from legal proceedings (including the Western District of Virginia
Indictment), expiry and/or loss of IP rights could have a material adverse
impact on the Group's prospects, results of operations and financial
condition, including potential exclusion from participating in US Federal
Health Care Programs. As previously disclosed in the Prospectus dated November
17, 2014, Indivior has indemnification obligations in favor of Reckitt
Benckiser (RB) (page 43). Some of these indemnities are unlimited in terms of
amount and duration and amounts potentially payable by the Group pursuant to
such indemnity obligations could be significant and could have a material
adverse effect on the Group's business, financial condition and/or operating
results. Requests for indemnification may be subject to legal challenge. Notes
1 and 11 to the condensed financial statements (pages 18 and 24) provide
information related to the potential impact of the legal proceedings on the
Group's financial position and going concern.
Compliance
· Our Group operates on a global basis and the pharmaceutical
industry is both highly competitive and regulated. Complying with all
applicable laws and regulations, including engaging in commercial activities
that are consistent with legal and industry standards, and our Group's Code of
Conduct are core to the Group's mission, culture, and practices. Failure to
comply with applicable laws and regulations may subject the Group to civil,
criminal and administrative liability, including the imposition of substantial
monetary penalties, fines, damages and restructuring the Group's operations
through the imposition of compliance or integrity obligations and have a
potential adverse impact on the Group's prospects, reputation, results of
operations and financial condition.
The Group's Annual Report for the 2019 financial year will contain additional
details on these principal business risks.
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:
Full Year to Full Year to
December 31, 2019
December 31, 2018
GB £ period end 1.3263 1.2746
GB £ average rate 1.2768 1.3362
€ Euro period end 1.1228 1.1451
€ Euro average 1.1198 1.1819
Presentation / Webcast Details
There will be a presentation at 11:30 am GMT (6:30 am EST) hosted by Shaun
Thaxter, CEO. This presentation will also be webcast live. The details are
below. All required materials are available on the Group's website at
www.indivior.com (http://www.indivior.com) .
Webcast link:
https://edge.media-server.com/mmc/p/tiukodrn
(https://edge.media-server.com/mmc/p/tiukodrn)
Confirmation Code: 7975237
Participants, Local - London, United Kingdom: +44 (0) 2071 928000
Participants, Local - New York, United States of America: +1 631 510 7495
For Further Information
Investor Enquiries Jason Thompson VP Investor Relations, Indivior PLC +1 804 402 7123
jason.thompson@indivior.com
Media Enquiries Jonathan Sibun Tulchan Communications +44 207 353 4200
+1 804 594 0836
US Media Inquiries
Indiviormediacontacts@indivior.com
Corporate Website www.indivior.com
This announcement does not constitute an offer to sell, or the solicitation of
an offer to subscribe for or otherwise acquire or dispose of shares in the
Group to any person in any jurisdiction to whom it is unlawful to make such
offer or solicitation.
Forward-Looking Statements
This announcement contains certain statements that are forward-looking. By
their nature, forward-looking statements involve risks and uncertainties as
they relate to events or circumstances that may or may not occur in the
future. Actual results may differ materially from those expressed or implied
in such statements because they relate to future events. Forward-looking
statements include, among other things, statements regarding the Indivior
Group's financial guidance for 2020 and its medium- and long-term growth
outlook, its operational goals, its product development pipeline and
statements regarding ongoing litigation and other statements containing the
words "subject to", "believe", "anticipate", "plan", "expect", "intend",
"estimate", "project", "may", "will", "should", "would", "could", "can", the
negatives thereof, variations thereon and similar expressions.
Various factors may cause differences between Indivior's expectations and
actual results, including, among others (including those described in the risk
factors described in the most recent Indivior PLC Annual Report and in
subsequent releases): factors affecting sales of Indivior Group's products and
financial position; the outcome of research and development activities;
decisions by regulatory authorities regarding the Indivior Group's drug
applications or authorizations; the speed with which regulatory
authorizations, pricing approvals and product launches may be achieved, if at
all; the outcome of post-approval clinical trials; competitive developments;
difficulties or delays in manufacturing and in the supply chain; disruptions
in or failure of information technology systems; the impact of existing and
future legislation and regulatory provisions on product exclusivity; trends
toward managed care and healthcare cost containment; legislation or regulatory
action affecting pharmaceutical product pricing, reimbursement or access;
challenges in the commercial execution; claims and concerns that may arise
regarding the safety or efficacy of the Indivior Group's products and product
candidates; risks related to legal proceedings, including the indictment by
the U.S. Department of Justice, potential exclusion from participating in U.S.
Federal Health Care Programs; the ongoing investigative and antitrust
litigation matters; the opioid national multi-district litigation and
securities class action litigation; the Indivior Group's ability to protect
its patents and other intellectual property; the outcome of patent
infringement litigation relating to Indivior Group's products, including the
ongoing ANDA lawsuits; changes in governmental laws and regulations; issues
related to the outsourcing of certain operational and staff functions to third
parties; uncertainties related to general economic, political, business,
industry, regulatory and market conditions; and the impact of acquisitions,
divestitures, restructurings, internal reorganizations, product recalls and
withdrawals and other unusual items.
Consequently, forward-looking statements speak only as of the date that they
are made and should be regarded solely as our current plans, estimates and
beliefs. You should not place undue reliance on forward-looking statements. We
cannot guarantee future results, events, levels of activity, performance or
achievements. Except as required by law, we do not undertake and specifically
decline any obligation to update, republish or revise forward-looking
statements to reflect future events or circumstances or to reflect the
occurrences of unanticipated events.
SUBOXONE® (BUPRENORPHINE AND NALOXONE) SUBLINGUAL FILM (CIII)
Indication
SUBOXONE(®) (buprenorphine and naloxone) Sublingual Film (CIII) is a
prescription medicine indicated for treatment of opioid dependence and should
be used as part of a complete treatment plan to include counseling and
psychosocial support.
Treatment should be initiated under the direction of healthcare providers
qualified under the Drug Addiction Treatment Act.
Important Safety Information
Do not take SUBOXONE® Film if you are allergic to buprenorphine or naloxone
as serious negative effects, including anaphylactic shock, have been reported.
SUBOXONE® Film can be abused in a manner similar to other opioids, legal or
illicit.
SUBOXONE® Film contains buprenorphine, an opioid that can cause physical
dependence with chronic use. Physical dependence is not the same as addiction.
Your healthcare provider can tell you more about the difference between
physical dependence and drug addiction. Do not stop taking SUBOXONE® Film
suddenly without talking to your healthcare provider. You could become sick
with uncomfortable withdrawal symptoms because your body has become used to
this medicine.
SUBOXONE® Film can cause serious life-threatening breathing problems,
overdose and death, particularly when taken by the intravenous (IV) route in
combination with benzodiazepines or other medications that act on the nervous
system (i.e., sedatives, tranquilizers, or alcohol). It is extremely dangerous
to take nonprescribed benzodiazepines or other medications that act on the
nervous system while taking SUBOXONE® Film.
You should not drink alcohol while taking SUBOXONE® Film, as this can lead to
loss of consciousness or even death.
Death has been reported in those who are not opioid dependent.
Your healthcare provider may monitor liver function before and during
treatment.
SUBOXONE® Film is not recommended in patients with severe hepatic impairment
and may not be appropriate for patients with moderate hepatic impairment.
However, SUBOXONE® Film may be used with caution for maintenance treatment in
patients with moderate hepatic impairment who have initiated treatment on a
buprenorphine product without naloxone.
Keep SUBOXONE® Film out of the sight and reach of children. Accidental or
deliberate ingestion of SUBOXONE® Film by a child can cause severe breathing
problems and death.
Do not take SUBOXONE® Film before the effects of other opioids (e.g., heroin,
hydrocodone, methadone, morphine, oxycodone) have subsided as you may
experience withdrawal symptoms.
Injecting the SUBOXONE® Film product may cause serious withdrawal symptoms
such as pain, cramps, vomiting, diarrhea, anxiety, sleep problems, and
cravings.
Before taking SUBOXONE® Film, tell your healthcare provider if you are
pregnant or plan to become pregnant. If you are pregnant, tell your healthcare
provider as withdrawal signs and symptoms should be monitored closely and the
dose adjusted as necessary. If you are pregnant or become pregnant while
taking SUBOXONE® Film, alert your healthcare provider immediately and you
should report it using the contact information provided below.
Opioid‐dependent women on buprenorphine maintenance therapy may require
additional analgesia during labour.
Neonatal opioid withdrawal syndrome (NOWS) is an expected and treatable
outcome of prolonged use of opioids during pregnancy, whether that use is
medically authorized or illicit. Unlike opioid withdrawal syndrome in adults,
NOWS may be life-threatening if not recognized and treated in the neonate.
Healthcare professionals should observe newborns for signs of NOWS and manage
accordingly.
Before taking SUBOXONE® Film, talk to your healthcare provider if you are
breastfeeding or plan to breastfeed your baby. The active ingredients of
SUBOXONE® Film can pass into your breast milk. You and your healthcare
provider should consider the development and health benefits of breastfeeding
along with your clinical need for SUBOXONE® Film and should also consider any
potential adverse effects on the breastfed child from the drug or from the
underlying maternal condition.
Do not drive, operate heavy machinery, or perform any other dangerous
activities until you know how SUBOXONE® Film affects you. Buprenorphine in
SUBOXONE® Film can cause drowsiness and slow reaction times during
dose-adjustment periods.
Common side effects of SUBOXONE® Film include nausea, vomiting, drug
withdrawal syndrome, headache, sweating, numb mouth, constipation, painful
tongue, redness of the mouth, intoxication (feeling lightheaded or drunk),
disturbance in attention, irregular heartbeat, decrease in sleep, blurred
vision, back pain, fainting, dizziness, and sleepiness.
This is not a complete list of potential adverse events associated with
SUBOXONE® Film. Please see full Prescribing Information www.suboxoneREMS.com
(http://www.suboxoneREMS.com) .
for a complete list.
*To report pregnancy or side effects associated with taking SUBOXONE® Film,
please call 1-877-782-6966. You are encouraged to report negative side effects
of prescription drugs to the FDA. Visit www.fda.gov/medwatch
(http://www.fda.gov/medwatch) or call 1-800-FDA-1088
For more information about SUBOXONE® Film, SUBOXONE(®) (buprenorphine and
naloxone) Sublingual Tablets (CIII), or SUBUTEX(®) (buprenorphine) Sublingual
Tablets (CIII), please see the respective full Prescribing Information and
Medication Guide at www.suboxoneREMS.com (http://www.suboxoneREMS.com) .
SUBLOCADE® (BUPRENORPHINE EXTENDED-RELEASE) INJECTION FOR SUBCUTANEOUS USE
(CIII)
INDICATION AND HIGHLIGHTED SAFETY INFORMATION
INDICATION
SUBLOCADE® is indicated for the treatment of moderate to severe opioid use
disorder in patients who have initiated treatment with a transmucosal
buprenorphine-containing product, followed by dose adjustment for a minimum of
7 days.
SUBLOCADE should be used as part of a complete treatment plan that includes
counselling and psychosocial support.
WARNING: RISK OF SERIOUS HARM OR DEATH WITH INTRAVENOUS ADMINISTRATION;
SUBLOCADE RISK EVALUATION AND MITIGATION STRATEGY
● Serious harm or death could result if administered
intravenously. SUBLOCADE forms a solid mass upon contact with body fluids and
may cause occlusion, local tissue damage, and thrombo-embolic events,
including life threatening pulmonary emboli, if administered intravenously.
● Because of the risk of serious harm or death that could
result from intravenous self-administration, SUBLOCADE is only available
through a restricted program called the SUBLOCADE REMS Program. Healthcare
settings and pharmacies that order and dispense SUBLOCADE must be certified in
this program and comply with the REMS requirements.
HIGHLIGHTED SAFETY INFORMATION
Prescription use of this product is limited under the Drug Addiction Treatment
Act.
CONTRAINDICATIONS
SUBLOCADE should not be administered to patients who have been shown to be
hypersensitive to buprenorphine or any component of the ATRIGEL® delivery
system
WARNINGS AND PRECAUTIONS
Addiction, Abuse, and Misuse: SUBLOCADE contains buprenorphine, a Schedule III
controlled substance that can be abused in a manner similar to other opioids.
Monitor patients for conditions indicative of diversion or progression of
opioid dependence and addictive behaviours.
Respiratory Depression: Life threatening respiratory depression and death have
occurred in association with buprenorphine. Warn patients of the potential
danger of self-administration of benzodiazepines or other CNS depressants
while under treatment with SUBLOCADE.
Neonatal Opioid Withdrawal Syndrome: Neonatal opioid withdrawal syndrome is an
expected and treatable outcome of prolonged use of opioids during pregnancy.
Adrenal Insufficiency: If diagnosed, treat with physiologic replacement of
corticosteroids, and wean patient off of the opioid.
Risk of Opioid Withdrawal With Abrupt Discontinuation: If treatment with
SUBLOCADE is discontinued, monitor patients for several months for withdrawal
and treat appropriately.
Risk of Hepatitis, Hepatic Events: Monitor liver function tests prior to and
during treatment.
Risk of Withdrawal in Patients Dependent on Full Agonist Opioids: Verify that
patient is clinically stable on transmucosal buprenorphine before injecting
SUBLOCADE.
Treatment of Emergent Acute Pain: Treat pain with a non-opioid analgesic
whenever possible. If opioid therapy is required, monitor patients closely
because higher doses may be required for analgesic effect.
ADVERSE REACTIONS
Adverse reactions commonly associated with SUBLOCADE (in ≥5% of subjects)
were constipation, headache, nausea, injection site pruritus, vomiting,
increased hepatic enzymes, fatigue, and injection site pain.
For more information about SUBLOCADE, the full Prescribing Information
including BOXED WARNING, and Medication Guide visit www.sublocade.com
(http://www.sublocade.com) .
PERSERIS® (risperidone) for extended-release injectable suspension
INDICATION AND HIGHLIGHTED SAFETY INFORMATION
PERSERIS® (risperidone) is indicated for the treatment of schizophrenia in
adults.
WARNING: INCREASED MORTALITY IN ELDERLY PATIENTS WITH DEMENTIA-RELATED
PSYCHOSIS
See full prescribing information for complete boxed warning.
• Elderly patients with dementia-related psychosis treated
with antipsychotic drugs are at an increased risk of death.
• PERSERIS is not approved for use in patients with
dementia-related psychosis.
CONTRAINDICATIONS
PERSERIS should not be administered to patients with known hypersensitivity to
risperidone, paliperidone, or other components of PERSERIS.
WARNINGS AND PRECAUTIONS
Cerebrovascular Adverse Reactions, Including Stroke in Elderly Patients with
Dementia-Related Psychosis: Increased risk of cerebrovascular adverse
reactions (e.g., stroke, transient ischemic attack), including fatalities.
PERSERIS is not approved for use in patients with dementia-related psychosis.
Neuroleptic Malignant Syndrome (NMS): Manage with immediate discontinuation
and close monitoring.
Tardive Dyskinesia: Discontinue treatment if clinically appropriate.
Metabolic Changes: Monitor for hyperglycemia, dyslipidemia and weight gain.
Hyperprolactinemia: Prolactin elevations occur and persist during chronic
administration. Long-standing hyperprolactinemia, when associated with
hypogonadism, may lead to decreased bone density in females and males.
Orthostatic Hypotension: Monitor heart rate and blood pressure and warn
patients with known cardiovascular disease or cerebrovascular disease, and
risk of dehydration or syncope.
Leukopenia, Neutropenia, and Agranulocytosis: Perform complete blood counts
(CBC) in patients with a history of a clinically significant low white blood
cell count (WBC) or history of leukopenia or neutropenia. Consider
discontinuing PERSERIS if a clinically significant decline in WBC occurs in
absence of other causative factors.
Potential for Cognitive and Motor Impairment: Use caution when operating
machinery.
Seizures: Use caution in patients with a history of seizures or with
conditions that lower the seizure threshold.
ADVERSE REACTIONS
The most common adverse reactions in clinical trials (≥ 5% and greater than
twice placebo) were increased weight, sedation/somnolence and musculoskeletal
pain. The most common injection site reactions (≥ 5%) were injection site
pain and erythema (reddening of the skin).
For more information about PERSERIS, the full Prescribing Information
including BOXED WARNING, and Medication Guide visit www.perseris.com
(http://www.perseris.com) .
Condensed consolidated income statement
For the three and twelve months ended December 31 Notes Unaudited Unaudited Unaudited Audited
Q4 Q4 FY FY
2019 2018 2019 2018
$m $m $m $m
Net Revenues 2 133 236 785 1,005
Cost of Sales (43) (35) (140) (128)
Gross Profit 90 201 645 877
Selling, general and administrative expenses 3 (115) (140) (414) (494)
Research and development expenses 3 (17) (41) (53) (91)
Operating (Loss)/Profit (42) 20 178 292
Operating profit before exceptional items (46) 78 202 332
Exceptional items 3 4 (58) (24) (40)
Finance income 5 6 24 17
Finance expense (5) (6) (22) (31)
Net finance income/(expense) - - 2 (14)
(Loss)/Profit before Taxation (42) 20 180 278
Income tax (expense)/credit (13) 4 (46) (3)
Taxation before exceptional items 5 9 (11) (28) (46)
Exceptional items within taxation 3/5 (22) 15 (18) 43
Net (loss)/income (55) 24 134 275
Earnings per ordinary share (cents)
Basic (loss)/earnings per share 6 (8) 3 18 38
Diluted (loss)/earnings per share 6 (8) 3 18 37
The notes are an integral part of these condensed consolidated financial
statements.
Condensed consolidated statement of comprehensive income
For the three and twelve months ended December 31 Unaudited Unaudited Unaudited Audited
Q4 Q4 FY FY
2019 2018 2019 2018
$m $m $m $m
Net income (55) 24 134 275
Other comprehensive income
Items that may be reclassified to profit or loss in subsequent years:
Net exchange adjustments on foreign currency translation 14 (10) 9 (18)
Other comprehensive income/(loss) 14 (10) 9 (18)
Total comprehensive (loss)/income (41) 14 143 257
The notes are an integral part of these condensed consolidated financial
statements.
Condensed consolidated balance sheet
Notes Unaudited Audited
Dec 31, 2019 Dec 31, 2018
$m $m
ASSETS
Non-current assets
Intangible assets 72 84
Property, plant and equipment 60 57
Right-of-use assets 1/7 47 -
Deferred tax assets 5 40 44
Other assets 8 73 33
292 218
Current assets
Inventories 73 78
Trade and other receivables 227 287
Current tax receivable 5 - 40
Cash and cash equivalents 1,060 924
1,360 1,329
Total assets 1,652 1,547
LIABILITIES
Current liabilities
Borrowings 9 (4) (4)
Provisions 10 (71) (69)
Trade and other payables 13 (623) (721)
Lease liabilities 1/7 (5) -
Current tax liabilities 5 (39) (24)
(742) (818)
Non-current liabilities
Borrowings 9 (233) (237)
Provisions 10 (417) (424)
Lease liabilities 1/7 (51) -
Other non-current liabilities - (2)
(701) (663)
Total liabilities (1,443) (1,481)
Net assets 209 66
EQUITY
Capital and reserves
Share capital 13 73 73
Share premium 5 5
Other Reserves (1,295) (1,295)
Foreign currency translation reserve (23) (32)
Retained Earnings 1,449 1,315
Total equity 209 66
The notes are an integral part of these condensed consolidated financial
statements.
Condensed consolidated statement of changes in equity
Notes Share Share Other Foreign Retained Total equity
capital Premium reserve currency earnings
translation
reserve
Unaudited $m $m $m $m $m $m
Balance at January 1, 2019 73 5 (1,295) (32) 1,315 66
Comprehensive income
Net income - - - - 134 134
Other comprehensive income - - - 9 - 9
Total comprehensive income - - - 9 134 143
Transactions recognised directly in equity
IFRS 16 impact (adjustment to opening balance) - - - - (2) (2)
Share-based plans - - - - 3 3
Deferred taxation on share-based plans and IFRS 16 - - - - (1) (1)
Balance at December 31, 2019 73 5 (1,295) (23) 1,449 209
Audited
Balance at January 1, 2018 72 2 (1,295) (14) 1,032 (203)
Comprehensive income
Net income - - - - 275 275
Other comprehensive income - - - (18) - (18)
Total comprehensive income - - - (18) 275 257
Transactions recognised directly in equity
Share-based plans 1 3 - - 15 19
Deferred taxation on share-based plans - - - - (7) (7)
Balance at December 31, 2018 73 5 (1,295) (32) 1,315 66
The notes are an integral part of these condensed consolidated financial
statements.
Condensed consolidated cash flow statement
For the twelve months ended December 31 Unaudited Audited
2019 2018
$m $m
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit 178 292
Depreciation, amortization and impairment 20 40
Gain on disposal of intangible assets (4) (37)
Depreciation of right-of-use assets 8 -
Share-based payments 3 15
Impact from foreign exchange movements 2 (12)
Decrease/(Increase) in trade and other receivables 62 (33)
Increase in other assets (39) -
Decrease/(Increase) in inventories 7 (31)
(Decrease)/Increase in trade and other payables (101) 58
(Decrease)/Increase in provisions (8) 35
Cash generated from operations 128 327
Interest paid (17) (25)
Interest received 22 17
Taxes refunded/(paid) 18 (16)
Net cash inflow from operating activities 151 303
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (7) (11)
Proceeds from lease incentives 1 -
Purchase of intangible assets - (30)
Proceeds from disposal of intangible assets 4 37
Net cash outflow from investing activities (2) (4)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings (4) (240)
Payment of lease liabilities (9) -
Proceeds from the issuance of ordinary shares - 3
Net cash outflow from financing activities (13) (237)
Net increase in cash and cash equivalents 136 62
Cash and cash equivalents at beginning of the period 924 863
Exchange differences - (1)
Cash and cash equivalents at end of the period 1,060 924
The notes are an integral part of these condensed consolidated financial
statements.
Notes to the condensed consolidated financial statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Indivior PLC (the 'Company') is a public limited company incorporated and
domiciled in the United Kingdom on September 26, 2014. In these condensed
consolidated financial statements ('Condensed Financial Statements'),
reference to the 'Group' means the Company and all its subsidiaries.
The financial information herein has been prepared in the basis of the
accounting policies set out in the annual accounts of the Group for the year
ended December 31, 2018 and should be read in conjunction with those annual
accounts, except with regards to IFRS 16 and IFRIC 23 which was implemented in
2019. No standards or interpretations have been adopted before the required
implementation date. The Group prepares its annual accounts in accordance with
International Financial Reporting Standards (IFRS) and IFRS Interpretations
Committee (IFRIC) interpretations as adopted by the European Union and the
Companies Act 2006 (the Act) applicable to companies reporting under IFRS. In
preparing these condensed consolidated 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, 2018.
The Condensed Financial Statements reflect the Group's adoption of IFRS 16
Leases. On adoption of IFRS 16, the Group recognized lease liabilities in
relation to all leases, including those which had previously been classified
as 'operating leases' under the principles of IAS 17 Leases. Assets and
liabilities arising from a lease are initially measured at the net present
value of lease payments which are discounted using the lease's incremental
borrowing rate. Leases executed prior to adoption were discounted at the
January 1, 2019 incremental borrowing rate. The Group applied the modified
retrospective approach, which requires recognition of the cumulative effect of
initially applying IFRS 16, as of January 1, 2019, to retained earnings.
As at January 1, 2019, the Group recognized $27 million of right-of-use assets
and $33 million of lease liabilities and an impact to beginning retained
earnings of $2 million. The remaining $4m related to deferred tax and
previously recognized straight-line lease liability. Having adopted IFRS 16,
the Group will recognise interest payments and lease liability payments in
cashflow from financing activities; both of which are expected to be
immaterial.
The Group applied practical expedients permitted by the standard on
transition, the most significant of which were the reliance on a previous
assessment of whether a lease is onerous, the exclusion of initial direct
costs for the measurement of the right-of-use asset at the date of initial
application, application of a single discount rate to leases with similar
characteristics, the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease, and the accounting
for operating leases with a remaining lease term of less than 12 months as at
January 1, 2019 as short-term leases. Since adoption, the Group continues to
apply practical expedients including , the exclusion of initial direct costs
for the measurement of the right-of-use asset, application of a single
discount rate to leases with similar characteristics. Leases of less than 12
months are not capitalized.
The Group is using one or more practical expedients permitted by the standard
on transition and going forward; including the reliance on a previous
assessment of whether a lease is onerous, the exclusion of initial direct
costs for the measurement of the right-of-use asset at the date of initial
application, application of a single discount rate to leases with similar
characteristics, the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease, and the accounting
for operating leases with a remaining lease term of less than 12 months as at
January 1, 2019 as short-term leases.
The Group adopted IFRIC 23 Uncertainty over Income Tax Treatments and Annual
Improvements to IFRSs 2015-2017 Cycle in 2019, however, there was no impact to
the financials as a result of this.
The condensed consolidated financial statements do not include all the
information and disclosures required in the annual financial statements, and
should be read in conjunction with the Group's annual financial statements as
at December 31, 2018. These condensed consolidated financial statements have
been reviewed and not audited. These condensed consolidated financial
statements were approved for issue on February 12, 2020.
As disclosed in Notes 10 and 12, the Group carries a provision of $438m,
substantially all relating to the Department of Justice (D0J) litigation
matters. While the Directors believe the Group has strong defences to the
government's charges and will vigorously defend itself, they will still
endeavour to pursue a settlement. If a settlement cannot be reached, the final
court outcome relating to the DoJ indictment is not expected to impact the
Group during the going concern period over the next 12 months. However, an
unfavorable outcome from legal proceedings (including the Western District of
Virginia Indictment), or potential exclusion from participating in US Federal
Health Care Programs would negatively impact the financial position and
long-term viability of the Group including the ability to comply with debt
covenants. The final resolution of the Group's legal proceedings as disclosed
in Note 12 may be materially higher than the amount provided, require payment
over a shorter period or could adversely impact the ongoing business operation
as noted above which, together with the failure for new products to meet
revenue growth expectations and/or lower than forecast revenue of SUBOXONE®,
could impact the Group's ability to operate. The Directors have already taken
significant steps to reduce the cost base of the business and manage its
capital structure to ensure the Group will comply with the Term Loan covenant
as specified in Note 9. A combination of the above risks may require
additional measures to be taken such as further cost reductions. The above
factors indicate the existence of a material uncertainty which may cast
significant doubt about the Group's ability to continue as a going concern.
However, the Directors believe the Group has sufficient liquidity and the
ability to carry out any further measures that may be necessary for the Group
to continue as a going concern for at least the next twelve months. The
Condensed Financial Statements do not include the adjustments that would
result if the Group were unable to continue as a going concern.
The financial information contained in this document does not constitute
statutory accounts as defined in section 434 and 435 of the Act. For the
Group's financial statements for the year ended December 31, 2018, the
auditors issued (1) an emphasis of matter dealing with the outcome of legal
proceedings, details of which are included above and in Notes 10 and 12; and
(2) a material uncertainty related to going concern. This dealt with the
existence of a material uncertainty which may cast significant doubt about the
Group's ability to continue as a going concern in relation to the Group's
involvement in investigations by the Department of Justice and the Federal
Trade Commissions as well as antitrust litigation, which will be adversely
affected by the significant decline in revenue in 2019 and beyond following
the "at-risk" launch of generic buprenorphine/naloxone sublingual film
products and the potential risk of failure for new products to meet revenue
growth expectations. The Group's statutory financial statements for the year
ended December 31, 2018 were approved by the Board of Directors on March 1,
2019 and have been delivered to the Registrar of Companies.
2. SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker ('CODM'). The CODM,
who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Chief Executive Officer (CEO).
The Group is predominately engaged in a single business activity, which is the
development, manufacture and sale of buprenorphine-based prescription drugs
for treatment of opioid dependence. The CEO reviews net revenues to third
parties, operating expenses by function, and financial results on a
consolidated basis for evaluating financial performance and allocating
resources. Accordingly, the Group operates in a single reportable segment.
Net revenues
Revenues are attributed to countries based on the country where the sale
originates. The following table represents net revenues from continuing
operations and non-current assets, net of accumulated depreciation and
amortization, by country. Non-current assets for this purpose consist of
property, plant and equipment, right-of-use assets, intangible assets, and
other receivables. Net revenues for the three and twelve months and
non-current assets for the twelve months to December 31, 2019 and 2018 were as
follows:
Net revenues from sale of goods:
For the three and twelve months ended December 31 Q4 Q4 FY FY
2019 2018 2019 2018
$m $m $m $m
United States 80 182 589 790
ROW 53 54 196 215
Total 133 236 785 1,005
On a disaggregated basis, the Group's net revenue by major product line:
For the three and twelve months ended December 31 Q4 Q4 FY FY
2019 2018 2019 2018
$m $m $m $m
SUBLOCADE® 24 6 72 12
Sublingual/Other 109 230 713 993
Total 133 236 785 1,005
Non-current assets:
Dec 31, 2019 Dec 31, 2018
$m $m
United States 68 62
ROW 184 112
Total 252 174
3. OPERATING EXPENSES
The table below sets out selected operating expenses information:
For the three and twelve months ended December 31 Q4 Q4 FY FY
2019 2018 2019 2018
$m $m $m $m
Research and development expenses (17) (41) (53) (91)
Selling and general expenses (70) (53) (199) (205)
Administrative expenses(1) (40) (82) (196) (271)
Depreciation and amortization* (5) (4) (19) (13)
Operating lease rentals(2) - (1) - (5)
Total (115) (140) (414) (494)
* Additional depreciation and amortization of $9m (2018: $3n) for intangibles
and ROU assets is included within cost of sales.
(1)Administrative expenses include exceptional costs in the current and prior
FY period as outlined in table below. Prior year administrative expenses also
included non-exceptional expenses of $4m related to the ongoing protection of
the company's intellectual property. These costs were not considered
exceptional as they primarily related to non-litigation expenses for the
ongoing protection of the Group's prospective revenues.
(2)Following the group's adoption of IFRS 16, Leases on January 1, 2019,
operating lease rentals have been reclassified to the balance sheet as lease
liabilities with a portion being recorded as interest on the P&L.
Exceptional Items
Where significant expenses or income that do not reflect the Group's ongoing
operations are incurred during the year, these items are disclosed as
exceptional items in the income statement. Examples of such items could
include restructuring and other expenses relating to the integration of an
acquired business and related expenses for the reconfiguration of the Group's
activities and/or capital structure, impairment of current and non-current
assets, certain costs arising as a result of material and non-recurring
regulatory and litigation matters, and certain tax related matters.
The table below sets out selected operating costs and expenses information:
For the three and twelve months ended December 31 Q4 Q4 FY FY
2019 2018 2019 2018
$m $m $m $m
Other operating income(1) 4 19 4 37
Restructuring costs(2) - (13) (20) (13)
Legal expenses/provision(3) - (40) (8) (40)
Intangible impairment (R&D)(4) - (24) - (24)
Total exceptional items before taxes 4 (58) (24) (40)
Tax on exceptional items - 10 4 8
Exceptional items within tax(5) (22) 5 (22) 35
Total exceptional items (18) (43) (42) 3
(1)Exceptional income in both years relates to the proceeds received from the
out-licensing of nasal naloxone opioid overdose patents which are included
within SG&A.
(2)Restructuring costs in FY 2019 and 2018 as well as Q4 2018 relate to the
cost saving initiative to offset the financial impact of recent adverse U.S.
market developments. These consist primarily of supply chain restructuring (in
2019), redundancy and related costs (in both years). These are included in
SG&A.
(3)Legal expenses in the FY 2019 and FY and Q4 2018 relate to potential
redress for ongoing intellectual property related litigation with DRL and
Alvogen Pharmaceuticals. These are included within SG&A.
(4)In 2018, Q4 and FY R&D expenses include $24m of impairment charges
related to the Arbaclofen Placarbil and lead ADDEX compounds for which
development has ceased due to challenges in the Phase 1 and preclinical
studies, respectively thereby reduction of their probability of success below
hurdle rates for further investment.
(5)The tax expense of $22m for Q4 and FY 2019 primarily consists of $34m of
tax expense relating to a reversal of development credits (relating to orphan
drug designation) claimed and reported as exceptional in prior years, offset
by a tax benefit of $11m due to regulation changes stemming from U.S. Tax
Reform. Prior year included a benefit of $34m for the booking of development
credits, and $1m related to the impact of the 2017 US tax reform rate change.
(Refer to Notes 5 and 12)
4. ADJUSTED RESULTS
The board and management team use adjusted results and measures to give
greater insight to the financial results of the Group and the way it is
managed. The tables below show the list of adjustments between the reported
and adjusted operating profit and net income for both Q4/FY 2019 and Q4/FY
2018. Refer to Note 3 for more information on exceptional items.
Reconciliation of operating profit to adjusted operating profit
For the three and twelve months ended December 31 Q4 Q4 FY FY
2019 2018 2019 2018
$m $m $m $m
Operating profit (42) 20 178 292
Exceptional selling, general and administrative expenses - 53 28 53
Exceptional research and development expenses - 24 - 24
Exceptional operating income (4) (19) (4) (37)
Adjusted operating profit (46) 78 202 332
Reconciliation of profit before taxation to adjusted profit before taxation:
For the three and twelve months ended December 31 Q4 Q4 FY FY
2019 2018 2019 2018
$m $m $m $m
(Loss)/Profit before taxation (42) 20 180 278
Exceptional selling, general and administrative expenses - 53 28 53
Exceptional research and development expenses - 24 - 24
Exceptional operating income (4) (19) (4) (37)
Adjusted (loss)/profit before taxation (46) 78 204 318
Reconciliation of net income to adjusted net income
For the three and twelve months ended December 31 Q4 Q4 FY FY
2019 2018 2019 2018
$m $m $m $m
Net Income (55) 24 134 275
Exceptional selling, general and administrative expenses - 53 28 53
Exceptional research and development expenses - 24 - 24
Exceptional operating income (4) (19) (4) (37)
Tax on exceptional items - (10) (4) (8)
Exceptional items within tax 22 (5) 22 (35)
Adjusted net income (37) 67 176 272
5. TAXATION
In Q4 2019, the tax benefit on adjusted profits amounted to $9m excluding
exceptionals (Q4 2018: $11m expense) and represented a quarterly effective tax
rate of -20% (Q4 2018: 14% excluding exceptionals). The variance was primarily
driven by income mix and prior year UK return filings. Exceptional tax expense
of $22m was recognized this quarter; $34m due to reversal of prior year
development tax credits (relating to orphan drug designation), offset by $11m
of tax benefit due to regulation changes stemming from U.S. Tax Reform. In Q4
2018, $3m of tax credits were recognized, along with $2m due to finalization
of impact of U.S. Tax Reform rate reduction.
In the year ended December 31, 2019, the reported total tax expense was $46m,
or a rate of 26% (FY 2018: $3m, 1%). The tax expense on adjusted profits was
$28m (FY 2018: $46m) and represented an adjusted effective tax rate of 14%
(2018: 15%).
The Group's balance sheet at December 31, 2019 included a current tax payable
of $39m (FY 2018: $24m), current tax receivable of $0m (FY 2018: $40m), and
deferred tax asset of $40m (FY 2018: $44m). The current tax asset decreased
due the receipt of refunds during the year. The current tax payable increased
due to reversal of the exceptional tax credit booked in 2018.
Other tax matters
The European Commission issued a press release on April 2, 2019 announcing its
conclusion that the United Kingdom ('UK') Finance Company Partial Exemption
Rules are partly justified. The UK government has made an annulment
application to the General Court against this decision. The UK government is
now required to initiate recovery of the alleged State Aid irrespective of any
appeal against the decision. The group has responded to the information
requested from HMRC following the EU Commission decision regarding the UK
Finance Company Exemption. In December 2019, the group received a
communication from the CCM attaching a statement regarding EC decision on
State Aid and were advised that HMRC will be writing to us shortly. The Group
has not received any additional correspondence from HMRC.
The Group continues to monitor its position in regard to the potential State
Aid challenge and continues to believe there is still significant uncertainty
at this stage to quantify any potential future liability that may arise, so no
provision has been made at this time. The Group has benefited from the UK
controlled foreign company financing exemption and the tax thereon is
approximately $24 million including interest.
The UK's withdrawal from the European Union ('EU') may have a material effect
on our taxes. Whilst the UK has left the EU on the 31 January 2020, the impact
of the withdrawal will not be known until both the EU and the UK develop the
exit plan and the related changes in tax laws are enacted. The UK has entered
into a transition period and has until 31 December 2020 to negotiate and
conclude additional arrangements. We will adjust our current and deferred
income taxes when tax law changes related to the UK withdrawal are
substantively enacted and/or when EU law ceases to apply in the UK.
6. EARNINGS PER SHARE
For the three and twelve months ended December 31 Q4 Q4 FY FY
2019 2018 2019 2018
cents cents cents cents
Basic (loss)/earnings per share (8) 3 18 38
Diluted (loss)/earnings per share (8) 3 18 37
Adjusted basic earnings per share (5) 9 24 37
Adjusted diluted earnings per share (5) 9 23 36
Basic
Basic earnings per share ("EPS") is calculated by dividing profit for the
period attributable to owners of the Company by the weighted average number of
ordinary shares in issue during the period.
Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The Company has dilutive potential ordinary shares
in the form of stock options and awards. The weighted average number of shares
is adjusted for the number of shares granted assuming the exercise of stock
options.
Weighted average number of shares 2019 2018
thousands thousands
On a basic basis 730,235 727,148
Dilution from share awards and options 25,123 23,994
On a diluted basis 755,358 751,142
Adjusted Earnings
The Directors believe that diluted earnings per share, adjusted for the impact
of exceptional items after the appropriate tax amount, provides more
meaningful information on underlying trends to shareholders in respect of
earnings per ordinary share. A reconciliation of net income to adjusted net
income is included in Note 4.
7. ROU ASSETS & LEASE LIABILITY
The following tables summarize the movements of the right-of-use assets and
lease liabilities in the year:
Right of Use Assets Land & Plant & Total
Buildings
Machinery
$m
$m
$m
January 1, 2019 15 12 27
Additions 6 23 29
Lease incentives (1) (1)
Depreciation (3) (5) (8)
December 31, 2019 17 30 47
Lease Liabilities Land & Plant & Total
Buildings
Machinery
$m
$m
$m
January 1, 2019 20 13 33
Additions 6 23 29
Interest expense related to lease liabilities 2 1 3
Repayment of lease liabilities (including interest) (4) (5) (9)
December 31, 2019 24 32 56
8. OTHER ASSETS
Dec 31 Dec 31
2019 2018
$m $m
Long-term prepaid expenses 23 33
Other non-current assets 50 -
Total 73 33
Long-term prepaid expenses relate primarily to payments for contract
manufacturing capacity and other non-current assets relate to surety bond
funding.
9. FINANCIAL LIABILITIES - BORROWINGS
Current Dec 31 Dec 31
2019 2018
$m $m
Bank loans (4) (4)
(4) (4)
Non-current Dec 31 Dec 31
2019 2018
$m $m
Bank loans (233) (237)
(233) (237)
Analysis of net cash Dec 31 Dec 31
2019 2018
$m $m
Cash and cash equivalents 1,060 924
Borrowings* (239) (243)
821 681
*Borrowings reflects the principal amount drawn before debt issuance costs of
$2m (FY 2018: $2m). These do not include lease liabilities of $56m.
Reconciliation of net cash Dec 31 Dec 31
2019 2018
$m $m
The movements in the period were as follows:
Net cash at beginning of period (January 1) 681 376
Net increase in cash and cash equivalents 136 61
Net repayment of borrowings 4 240
Exchange adjustments - 4
Net cash at end of period 821 681
Net cash is presented as it is relevant to our Term Loan maximum leverage
ratio
The net carrying value of the term loan was trading at approximately 93% of
par value. Cash at bank, trade receivables, and trade payables are assumed to
approximate their fair values. The terms of the loan in effect at December 31,
2019 are as follows:
Currency Nominal interest margin Maturity Required annual repayments Maximum leverage ratio
Term loan facility USD Libor* (1%) + 4.5% 2022 $4m 3.0
*The Term Loan matures after publication of LIBOR is expected to end. We have
engaged with the administrative agent and expect to work with other market
participants in the transition to a reasonable substitute base rate. No
financial impact is expected in 2020.
• Nominal interest margin is calculated over three-month LIBOR subject to
the LIBOR floor.
• The maximum leverage ratio (adjusted aggregated net debt divided by
Adjusted EBITDA) is a financial covenant to maintain net secured leverage
below 3.0x.
• A $50m revolving credit facility is available to the Group which remained
undrawn at the balance sheet date.
10. PROVISIONS
Dec 31 Dec 31
2019 2018
$m $m
Litigation/Investigative matters (438) (438)
Intellectual property related matters (45) (44)
Restructuring costs (2) (8)
Other (3) (3)
Total (488) (493)
The Group is involved in legal and intellectual property disputes as described
in Note 12, "Legal Proceedings."
The Group carries a provision for investigative and antitrust litigation
matters of $438m. Substantially all of the provision relates to the DoJ
litigation, described in Note 12 under "Western District of Virginia
Indictment." The Group remains open to resolving the matter, although it
cannot predict with any certainty whether, when, or at what cost it will reach
an ultimate resolution.
The final resolution may be materially higher than this provision which,
together with lower than forecast revenue of SUBOXONE® or the failure for
SUBLOCADE and PERSERIS to meet revenue growth expectations, could impact the
Group's ability to operate. The Directors have already taken significant steps
to reduce the cost base of the business and manage its capital structure. A
combination of the above risks may require additional measures to be taken
such as further cost reductions.
The Group also carries provisions totalling $45m for intellectual property
related matters, all of which relate to potential redress for ongoing
intellectual property related litigation with DRL and Alvogen, and have been
recognized as exceptional costs (see Note 3).
The final aggregate cost of these matters may be materially higher than the
amount provided.
The Group believes that it has strong defences in the antitrust and other
litigations and is actively litigating these matters. Indivior cannot predict
with any certainty whether, when, or at what cost it will reach ultimate
resolution of the antitrust and other litigation matters.
11. CONTINGENT LIABILITIES
Other than the disputes for which provisions have been taken as disclosed in
Note 10, 'Provisions' or as separately disclosed in Note 5, 'Taxation',
reliable estimates could not be made of the potential range of cost required
to settle legal or intellectual property disputes where the possibility of
losses is more than remote. Descriptions of the significant tax, legal and
other disputes to which the Group is a party are set out in Note 5, 'Taxation'
and Note 12, 'Legal Proceedings.'
12. LEGAL PROCEEDINGS
Litigation/Investigative Matters
Western District of Virginia Indictment
· On April 9, 2019, a federal grand jury in the Western District of
Virginia indicted Indivior PLC and Indivior Inc. on charges of health care
fraud, wire fraud, mail fraud, and conspiracy, in connection with the
marketing and promotion practices, pediatric safety claims, and
overprescribing of SUBOXONE® Film and/or SUBOXONE® Tablet by certain
physicians. DoJ is seeking to recover $3 billion in monetary forfeitures and
all assets derived from the commission of the alleged offenses. Indivior
believes it has strong defenses to the government's charges and will
vigorously defend itself. On August 14, 2019, in response to Indivior's Motion
to Dismiss the original indictment, DoJ obtained a Superseding Indictment that
did not add to or change the charges, but changed certain factual allegations.
On November 14, 2019, the Court denied the Motion to Dismiss the original
indictment, and on December 19, 2019, Indivior filed a Motion to Dismiss the
superseding indictment, which is pending before the Court. On January 29,
2020, DoJ filed an Application For Post-Indictment Protective Order seeking to
prevent transactions in the assets sought to be forfeited in the superseding
indictment, transactions not in the ordinary course of business and
transactions of a value of more than $1 million without prior court approval,
and to require defendants to maintain $438 million in a financial account, and
for other relief. Indivior will oppose this Application. It is not possible to
predict with any certainty the potential impact of this litigation or to
quantify the ultimate cost of a verdict or resolution, but it could have a
material impact on the Group.
State Subpoenas and Civil Investigative Demands
· On October 12, 2016, Indivior was served with a subpoena for
records from the State of Connecticut Office of the Attorney General under its
Connecticut civil false claims act authority. The subpoena requests documents
related to the Group's marketing and promotion of SUBOXONE® products and its
interactions with a non-profit third-party organization. The Group has fully
cooperated in this civil investigation.
· On November 16, 2016, Indivior was served with a subpoena for
records from the State of California Department of Insurance under its civil
California insurance code authority. The subpoena requests documents related
to SUBOXONE® Film, SUBOXONE® Tablet, and SUBUTEX® Tablet. The State of
California served additional deposition subpoenas on Indivior in 2017 and
served a subpoena in 2018 requesting documents relating to the bioavailability
/ bioequivalency of SUBOXONE® Film, manufacturing records for the product and
its components, and the potential to develop dependency on SUBOXONE Film. The
Group has fully cooperated in this civil investigation and is in discussions
aimed toward resolving the matter.
· In June 2019, the Group learned that the State of Illinois
Insurance Department is investigating potential violations of its civil
Insurance Claims Fraud Prevention Act with respect to sales and marketing
activity by the Company. The Group is in discussions aimed toward resolving
this matter.
· On July 1, 2019, the Indiana Attorney General issued a Civil
Investigative Demand investigating potential violations of Indiana's Civil
Deceptive Consumer Sales Act with respect to sales and marketing activity by
the Company. The Group is cooperating fully in this civil investigation.
FTC investigation and Antitrust Litigation
· The U.S. Federal Trade Commission's investigation remains
pending. Litigation regarding privilege claims has now been resolved. Indivior
has produced certain documents that it had previously withheld as privileged;
other such documents have not been produced.
· Civil antitrust claims have been filed by (a) a class of direct
purchasers, (b) a class of end payor plaintiffs, and (c) a group of states,
now numbering 41, and the District of Columbia. Each set of plaintiffs filed
generally similar claims alleging, among other things, that Indivior violated
U.S. federal and/or state antitrust and consumer protection laws in attempting
to delay generic entry of alternatives to SUBOXONE® Tablets. Plaintiffs
further allege that Indivior unlawfully acted to lower the market share of
these products. These antitrust cases are pending in federal court in the
Eastern District of Pennsylvania. Pre-trial proceedings were coordinated. The
fact and expert discovery periods have closed. On September 27, 2019, the
court certified a class of direct purchasers of branded Suboxone® Tablets.
The same day, the court also certified, with respect to specified issues, a
class of end-payor plaintiffs. The court denied certification of a putative
"nationwide injunctive class" of end-payor plaintiffs. On November 4, 2019,
the Court of Appeals for the Third Circuit granted Indivior's petition for
permission to appeal the certification of the direct purchaser class; this
appeal is pending. The District Court ordered that scheduling for submissions
of summary judgment motions and for trial will be set after the Third
Circuit's ruling on class certification.
Opioid Class Action Litigation
· In February 2019, Indivior, along with other manufacturers of
opioid products, was first named but not served in one of the national
multi-district litigation cases brought by state and local governments and
public health agencies in the Northern District of Ohio, alleging misleading
marketing messages. Thereafter, Indivior was named in additional cases brought
in both federal and state courts by additional state and local government
entities as well as individual plaintiffs. To date, there are 292 lawsuits
pending against Indivior. The vast majority of these cases (280) have been
consolidated and are pending in the multi-district litigation in the Northern
District of Ohio. There is currently one case pending in the Fourth Circuit
Court of Appeals on appeal from a decision to remand the case to Virginia
state court, where the case originated. An additional seven cases filed in
Virginia state courts have been removed to federal district courts by
defendants seeking to consolidate those cases in the multi-district
litigation. Indivior has also been named in one case in the Commonwealth of
Pennsylvania, two cases in the Commonwealth of Virginia and one case in the
State of Arizona. All proceedings in the multi-district litigation pending in
the Northern District of Ohio and Pennsylvania state court have been stayed.
The cases pending in Virginia and Arizona state courts are proceeding with
litigation and the Company will be vigorously defending against these
complaints.
Securities Class Action Litigation
· On April 23, 2019, Michael Van Dorp filed a putative class action
lawsuit in the United States District Court for the District of New Jersey on
behalf of holders of publicly traded Indivior securities alleging violations
of U.S. federal securities laws under the Securities Exchange Act of 1934. The
complaint names Indivior PLC, Shaun Thaxter, Mark Crossley and Cary J.
Claiborne as defendants. On July 30, 2019, the Court granted Mr. Van Dorp's
motion for appointment as lead plaintiff on behalf of the putative class. On
September 30, 2019, Mr. Van Dorp filed an amended complaint on behalf of the
putative class. On November 29, 2019, the Defendants filed a motion to dismiss
the amended complaint. Plaintiff filed its opposition to the motion on January
28, 2020, and Defendants' reply is due on February 27, 2020.
Intellectual property related matters
ANDA Litigation
· On December 18, 2019, Indivior settled its SUBOXONE® Film patent
litigation against Aveva Drug Delivery Systems, Inc. ("Aveva"), the terms of
which are confidential. So far as Indivior is aware, FDA to date has not
granted tentative or final approval for Aveva's generic buprenorphine/naloxone
film product.
· On October 24, 2017, Actavis Laboratories UT, Inc. ("Actavis,"
formerly known as Watson Laboratories Inc.) received tentative approval from
FDA for its 8mg/2mg generic product under its Abbreviated New Drug Application
(ANDA) No. 204383 and on November 15, 2017, it received tentative approval for
its 12mg/3mg generic product under ANDA No. 207087. Actavis is currently
enjoined from launching a generic buprenorphine/naloxone film product until
April 2024 based on a June 3, 2016 ruling by the United States District Court
for the District of Delaware finding the asserted claims of the '514 Patent
valid and infringed. That ruling was affirmed by the Court of Appeals for the
Federal Circuit ("CAFC") on July 12, 2019. Litigation against Actavis in the
District of Delaware on the '305 and '454 patents was dismissed on September
16, 2019.
· On August 31, 2017, the United States District Court for the
District of Delaware found that asserted claims of the '150 Patent, U.S.
Patent No. 8,900,497 ("the '497 Patent") and the '514 Patent are valid but not
infringed by Dr. Reddy's Laboratories, S.A. and Dr. Reddy's Laboratories Inc.
(collectively, "DRL"). Indivior appealed the rulings as to the '514 and '150
patents, and on July 12, 2019, the CAFC upheld the District Court ruling,
finding the patents not invalid but also not infringed by DRL. DRL has
requested that the District of Delaware award it attorneys' fees and costs,
and Indivior has opposed that request. A hearing on DRL's request has been
scheduled for February 12, 2020, and a decision is pending before the court.
· Litigation against DRL is currently pending in the District of
New Jersey regarding the '454 and '305 Patents. DRL received final FDA
approval for all four strengths of its generic buprenorphine/naloxone film
product on June 14, 2018, and immediately launched its generic
buprenorphine/naloxone film product "at-risk." On July 13, 2018, the District
Court issued a ruling granting Indivior a Preliminary Injunction (PI) pending
the outcome of a trial on the merits of the '305 Patent. Indivior was required
to post a surety bond for $72 million in connection with the PI. On November
20, 2018, the CAFC issued a decision vacating the PI against DRL. Indivior's
motion for rehearing and rehearing en banc was denied on February 4, 2019, and
the mandate issued on February 19, 2019. DRL is no longer prevented from
selling, offering to sell, or importing their generic buprenorphine/naloxone
sublingual film products. DRL has re-launched its generic product, and any
sales in the U.S. are on an "at-risk" basis, subject to the outcome of the
ongoing litigation in the District of New Jersey. On June 18, 2019, DRL
filed a motion for leave to file their first amended Answer, Affirmative
Defenses, and Counterclaims to add counterclaims for anticompetitive conduct
by Indivior in violation of federal antitrust laws and for recovery against
Indivior' sureties for damages resulting from the injunction that was issued
against DRL. The motion was granted by the Magistrate Judge on November 20,
2019. Indivior appealed that ruling to the District Court Judge on December 4,
2019 and a decision is still pending with the court. The Court held a claim
construction hearing in October of 2019, and entered its ruling in November of
2019. In light of the claim construction, the parties filed a Stipulated Order
and Judgment of non-infringement on the '305 Patent, which was entered by the
Court on January 7, 2020.
· On November 13, 2018, DRL filed two separate petitions for inter
partes review ("IPR") of the '454 Patent with the USPTO. The USPTO denied
institution of one of the IPR petitions but granted institution for the second
IPR petition. Indivior filed its Patent Owner's Response on the granted
petition in September 2019. DRL filed its Reply on December 10, 2019. Indivior
filed its Patent Owner's Sur-Reply on January 21, 2020. Oral argument is set
for March 3, 2020. A final decision on the IPR is expected in or about June of
2020.
· Teva Pharmaceuticals USA, Inc. ("Teva") filed a 505(b)(2) New
Drug Application (NDA) for a 16mg/4mg strength of buprenorphine/naloxone film
(CASSIPA™). Indivior, Aquestive Pharmaceuticals (formerly known as MonoSol
Rx) and Teva agreed that infringement of the '514, '497, and '150 patents by
Teva's 16mg/4mg dosage strength would be governed by the infringement ruling
as to DRL's 8mg/2mg dosage strength that was the subject of the trial in
November 2016. Accordingly, the non-infringement ruling by the District of
Delaware in the DRL case means that the Teva 16mg/4mg dosage strength has been
found not to infringe those patents. Indivior appealed the November 2016 DRL
ruling as to the '514 and '150 patents, and on July 12, 2019, the CAFC upheld
the District Court finding of noninfringement. Teva received final approval
from the FDA for CASSIPA on September 7, 2018 and has agreed to be bound by
the decision in the District of New Jersey DRL case for the '454 and '305
Patents. Teva was therefore able to launch CASSIPA at-risk as of February 19,
2019, when the CAFC issued a mandate vacating the PI against DRL. Any sales of
CASSIPA in the U.S. would be on an "at-risk" basis, subject to the outcome of
the ongoing litigation against Teva and DRL in the District of New Jersey.
· Trial against Alvogen Pine Brook, Inc. ("Alvogen") in the lawsuit
involving the '514 and '497 Patents took place in September 2017. The trial
was limited to the issue of infringement because Alvogen did not challenge the
validity of either patent. On March 22, 2018, the United States District Court
for the District of Delaware ruled both patents were not infringed by Alvogen.
Indivior appealed this ruling, and on July 12, 2019, the CAFC upheld the
noninfringement judgments. Alvogen has requested that the District of
Delaware award it attorneys' fees and costs, and Indivior has opposed that
request. A hearing on Alvogen's request has been scheduled for February 12,
2020, and a decision is pending before the court.
· Litigation against Alvogen is pending in the United States
District Court for the District of New Jersey regarding the '454 and '305
Patents. On January 22, 2019, Indivior filed a motion for a temporary
restraining order ("TRO") and preliminary injunction in the District of New
Jersey, requesting that the Court restrain the launch of Alvogen's generic
buprenorphine/naloxone film product until a trial on the merits of the '305
Patent. Alvogen received approval for its generic product on January 24, 2019.
The same day, the District of New Jersey granted a TRO until February 7, 2019.
On January 31, 2019, Indivior and Alvogen entered in to an agreement whereby
Alvogen was enjoined from the use, offer to sell, or sale within the United
Sates, or importation into the United States, of its generic buprenorphine and
naloxone sublingual film product unless and until the CAFC issued a mandate
vacating the PI against DRL. The mandate vacating the DRL PI issued on
February 19, 2019, and Alvogen launched its generic product. Any sales in the
US are on an "at-risk" basis, subject to the ongoing litigation against
Alvogen in the District of New Jersey. On June 21, 2019, Alvogen filed a
motion for recovery on the bond for improper restraints and asked that the
court set a schedule for an accounting of damages. Indivior filed its
opposition on July 15, 2019 and Alvogen filed a reply on July 29, 2019. This
motion was denied on November 5, 2019. On August 9, 2019, Alvogen filed a
motion for leave to file an amended Answer to Complaint and Separate Defenses
and Counterclaims to add counter claims alleging anticompetitive conduct by
Indivior in violation of federal and state antitrust laws. The motion was
granted by the Magistrate Judge on November 20, 2019. Indivior appealed that
ruling to the District Court Judge on December 4, 2019, and a decision is
still pending with the court. The Court held a claim construction hearing in
October of 2019, and the Court entered its ruling in November of 2019. In
light of the claim construction, the parties filed a Stipulated Order and
Judgment of non-infringement on the '305 Patent, which was signed by the Court
on January 9, 2020.
· By a Court order dated August 22, 2016, Indivior's SUBOXONE®
Film patent litigation against Sandoz was dismissed without prejudice because
Sandoz is no longer pursuing Paragraph IV certifications for its proposed
generic formulations of SUBOXONE® Film. Sandoz launched an authorized generic
version of SUBOXONE® Film on February 19, 2019.
· On September 25, 2017, Indivior settled its SUBOXONE® Film
patent litigation against Mylan Technologies Inc.; Mylan Pharmaceutics Inc.;
and Mylan N.V. ("Mylan"), the terms of which are confidential. Mylan received
final FDA approval for its generic version of the 8mg/2mg
buprenorphine/naloxone film product on June 14, 2018. Mylan launched its
generic version on or about February 22, 2019.
· On May 11, 2018, Indivior settled its SUBOXONE® Film patent
litigation against Par Pharmaceutical, Inc. ("Par"). Under the terms of the
settlement agreement, Par can launch its generic buprenorphine/naloxone film
product on January 1, 2023, or earlier under certain circumstances. Other
terms of the settlement agreement are confidential. So far as Indivior is
aware, FDA to date has not granted tentative or final approval for Par's
generic buprenorphine/naloxone film product.
Regulatory exclusivity related matters
Braeburn Inc. v. FDA and Indivior Inc.
· On December 21, 2018, Braeburn Inc. received tentative approval
for its injectable depot buprenorphine product, BrixadiTM. FDA did not grant
final approval to Braeburn because it determined that the monthly version of
BrixadiTM was blocked until November 30, 2020 by Indivior's three-year
exclusivity period for injectable depot buprenorphine products that are
approved to treat moderate to severe opioid use disorder.
· On April 9, 2019, Braeburn Inc. sued the FDA in the United States
District Court for the District of Columbia, asking the Court for an order
holding unlawful, vacating, and setting aside FDA's decision that
SUBLOCADE®'s three-year exclusivity period bars approval of its monthly
Brixadi product. Indivior moved to intervene on April 11, 2019, and that
motion was granted on April 12, 2019. Braeburn moved for summary judgment on
May 13, 2019, and both the FDA and Indivior filed cross-motions for summary
judgment on June 3, 2019. The court heard oral argument on the parties'
cross-motions on July 15, 2019.
· On July 22, 2019, the U.S. District Court for the District of
Columbia granted Braeburn's motion for summary judgment, and vacated FDA's
initial three-year exclusivity decision. The Court remanded the issue for FDA
"to reconsider, with deliberate speed, Braeburn's application for final
approval of Brixadi Monthly."
· On November 7, 2019, FDA issued a decision concluding that the
3-year exclusivity recognized for SUBLOCADE® precludes final approval of
Brixadi monthly until November 30, 2020.
Braeburn Citizen Petition
· On April 5, 2019, Braeburn submitted a Citizen Petition to the
FDA asking that FDA revoke the Orphan Drug Designation that previously was
granted to Indivior and applied to SUBLOCADE®, and that the FDA further
refuse to grant Orphan Drug Exclusivity to SUBLOCADE®. Indivior submitted a
response to this Citizen Petition on July 24, 2019. Braeburn submitted two
additional supplements on August 27, 2019. Indivior submitted a response to
those supplements on October 4, 2019. On October 9, 2019, FDA issued an
interim response stating that it was still considering the petition because it
raises significant issues requiring extensive review and analysis by Agency
officials, and it would respond to the petition as soon as the Agency has
reached a decision. Braeburn submitted additional comments on October 11,
2019. A substantive response is still pending with FDA.
· FDA issued a response on November 7, 2019, revoking the orphan
drug designation for buprenorphine for "treatment of opiate addiction in
opiate users" because the Agency had determined that buprenorphine was not
eligible for orphan drug designation at the time it was requested. See Notes 3
and 5 for more information.
13. TRADE AND OTHER PAYABLES
Dec 31 Dec 31
2019 2018
$m $m
Sales returns and rebates (460) (510)
Trade payables (39) (47)
Accruals (113) (149)
Other tax and social security payables (11) (15)
Total (623) (721)
Sales return and rebate accruals, primarily in the U.S., are provided in
respect of the estimated rebates, discounts or allowances payable to direct
and indirect customers. Accruals are made at the time of sale while the actual
amounts to be paid are based on claims made some time after the initial
recognition of the sale. The estimated amounts may not reflect the final
outcome and are subject to change dependent upon, amongst other things, the
payor channel (e.g. Medicaid, Medicare, Managed Care, etc.) and product mix.
Accrual balances are reviewed and adjusted quarterly in the light of actual
experience of rebates, discounts or allowances given and returns made and any
changes in arrangements. Future events may cause the assumptions on which the
accruals are based to change, which could affect the future results of the
Group.
14. SHARE CAPITAL
Equity Ordinary Shares Issue price Nominal value
$m
Issued and fully paid
At January 1, 2019 728,441,653 $0.10 73
Allotments 2,346,066 $0.10 -
At December 31, 2019 730,787,719 73
Equity Ordinary Shares Issue price Nominal value
$m
Issued and fully paid
At January 1, 2018 721,462,733 $0.10 72
Allotments 6,978,920 $0.10 1
At December 31, 2018 728,441,653 73
Allotment of ordinary shares
During the period, 2,346,066 ordinary shares (2018: 6,978,920) were allotted
to satisfy vestings/exercises under the Group's Long-Term Incentive Plan and
U.S. Employee Stock Purchase Plan.
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