REG - Indivior PLC - Final Results
16/02/2022 07:00
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RNS Number : 7960B Indivior PLC 16 February 2022
http://www.rns-pdf.londonstockexchange.com/rns/7960B_1-2022-2-15.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/7960B_1-2022-2-15.pdf)
February 16, 2022
FY 2021 Financial Results Announced. FY 2022 Guidance Introduced.
Will Explore Optimal Listing Structure for Indivior Shares.
Period to Dec. 31(st) (Unaudited) Q4 Q4 FY FY
2021 2020 % 2021 2020 %
$m $m Change $m $m Change
Net Revenue 222 185 20 791 647 22
Operating Profit/(Loss) 45 (9) NM 213 (156) NM
Net Income/(Loss) 35 (13) NM 205 (148) NM
Basic EPS/(LPS) (cents/share) 5 (2) NM 28 (20) NM
Adj. Basis
Adj. Operating Profit* 32 32 - 187 88 113
Adj. Net Income* 25 26 -4 140 59 137
Adj. Basic EPS* 3 4 -25 19 8 138
*Adjusted (Adj.) basis excludes the impact of exceptional items as referenced
and reconciled in Note 4 and 6. Adjusted results are not a substitute for, or
superior to, reported results presented in accordance with International
Financial Reporting Standards. NM - Not meaningful.
Comment by Mark Crossley, CEO of Indivior PLC
"In FY 2021 we made excellent progress against our Strategic Priorities and
delivered strong financial results. Most importantly, our investment in the
Organized Health Systems channel helped us to nearly double SUBLOCADE®
(buprenorphine extended-release) injection net revenue to $244 million,
putting us on track to meet our $1 billion+ annual net revenue target."
"In FY 2022, we expect to build on this momentum. The commercial investments
we are making to extend our leadership in addiction and to accelerate our
diversification with PERSERIS® (risperidone) extended-release injection for
schizophrenia are expected to provide the Group with a solid foundation for
future growth and value creation. Our FY 2022 plans for SUBLOCADE suggest this
transformative treatment will become the largest net revenue driver for the
Group during the year. Furthermore, with over $1 billion in cash on our
balance sheet, we have the financial strength and flexibility to pursue a
balanced capital allocation strategy. Our primary focus remains on reinvesting
in the business, but we also have the potential for additive inorganic growth
opportunities and consideration of other value enhancement options."
"Finally, together with the Board we have been assessing the optimal listing
structure for Indivior's shares. Our preliminary view is that an additional US
listing is likely to be beneficial to the Group's profile and visibility, as
approximately 80% of the Group's net revenue is generated in the US. We are
aware that this is an important topic, and the Board and management intend to
consult extensively with shareholders before concluding on any future path."
FY 2021 / Q4 2021 Financial Highlights
· Net revenue (NR) of $791m (+22% vs. FY 2020); Q4 2021 NR of $222m
(+20% vs. Q4 2020).
· Reported operating profit of $213m (FY 2020 operating loss:
$156m); Q4 2021 reported operating profit of $45m (Q4 2020 operating loss:
$9m). On an adjusted basis, FY 2021 operating profit was $187m (+113% vs. Adj.
FY 2020); Adjusted operating profit for Q4 2021 and Q4 2020 was $32m.
· Reported net income of $205m (FY 2020 net loss of $148m); Q4 2021
reported net income of $35m (Q4 2020 net loss: $13m). FY 2021 Adj. net
income of $140m (+137% vs. Adj. FY 2020); Q4 2021 Adj. net income of $25m (4%
decline vs. Adj. Q4 2020).
· FY 2021 ending cash balance of $1,102m (FY 2020: $858m); net
cash, as calculated in Note 8, was $853m (FY 2020: $623m).
FY 2021 / Q4 2021 Operating Highlights
· FY 2021 SUBLOCADE NR of $244m (+88% vs. FY 2020) and Q4 2021 NR
of $75m (+92% vs. Q4 2020); strong growth from the Organized Health
Systems (OHS) channel and increased new patient enrolments. FY 2021 US units
dispensed were approximately 183,000* (+66% vs. FY 2020); Q4 2021 US units
dispensed were approximately 55,900* (+74% vs. Q4 2020 and +15% vs. Q3
2021). Total SUBLOCADE patients at the end of 2021 were approximately 49,000.
· FY 2021 PERSERIS NR of $17m (+21% vs. FY 2020); Q4 2021 PERSERIS
NR of $5m (+25% vs. Q4 2020). The Group is investing to expand the
PERSERIS sales force to achieve US national coverage in 2022.
· FY 2021 SUBOXONE Film share averaged 20% (FY 2020: 21%) and
exited the quarter at 22% (Q4 2020: 21%). Share performance since the
"at-risk" launch of generic buprenorphine/naloxone film products in February
2019 has continued to diverge from historical industry analogues**.
· Regulatory approval of SUBLOCADE (SUBUTEX® Prolonged Release)
outside of the US has now been granted in 10 countries. 2021 approvals
include Norway, Germany and Italy. Prior approvals include Canada, Australia,
New Zealand, Israel, Sweden, Finland and Denmark. Launched in Canada,
Australia, and Israel.
· Regulatory approval of SUBOXONE Film outside of the US in 2021
was granted in New Zealand, Qatar, and United Arab Emirates. Prior approvals
include Australia, Canada, Israel, all EU Member States and the UK, Iceland,
Norway, and Liechtenstein.
· Indivior has terminated its agreement with Zhejiang Pukang
Biotechnology Co., Ltd. ("Pukang") for the rights related to the Sai Bo Song
(buprenorphine, naloxone) tablet in China.
* Excludes one-time in-nature orders from criminal justice system customers
Share Repurchase Program Update
On December 23, 2021, the Group completed its $100m irrevocable share
repurchase program. Through the program, the Group repurchased and cancelled
34m or 5% of the Group's ordinary shares at a daily weighted average purchase
price of 219p. See Note 13 for further discussion.
FY 2022 Guidance
The Group is introducing the below guidance for FY 2022. The guidance assumes
that near-term constraints in the US healthcare system ease as the Omicron
wave of COVID-19 subsides. These near-term constraints include challenged
access to parts of our OHS platform, particularly the US Criminal Justice
System, and healthcare professional staffing shortages due to COVID-related
absenteeism. This is expected to result in SUBLOCADE and PERSERIS growth being
stronger in the second half of 2022 compared to the first half of 2022.
· Total FY 2022 expected NR range of $840m to $900m (+10% vs. FY
2021 at the mid-point); reflects strong SUBLOCADE growth and relative
market share stability for SUBOXONE Film, which continues to deviate from
industry analogues** as a genericized treatment.
· SUBLOCADE FY 2022 expected NR range of $360m to $400m (+56% vs.
FY 2021 at the mid-point), primarily based on strong penetration and
growth in the OHS channel.
· PERSERIS FY 2022 expected NR range of $27m to $32m (+74% vs. FY
2021 at the mid-point).
· Adjusted gross margin expected to be in the low- to mid-80% range
mainly due to expected continued relative strength of SUBOXONE Film and
higher cost inflation.
· Adjusted SG&A expected to be in the range of $440m to $455m,
primarily reflecting the annualization of commercial investments to grow
SUBLOCADE and PERSERIS together with costs associated with the US listing
review.
· R&D expected to be in the range of $80m to $85m, primarily
reflecting additional SUBLOCADE Lifecycle Management studies, SUBLOCADE
manufacturing capacity expansion and early-stage asset advancement.
· Adjusted operating income expected to be broadly similar to FY
2021's adjusted operating income of $187m.
· Guidance assumes no material change in exchange rates for key
currencies compared with average rates year to date, notably USD/GBP and
USD/EUR.
Optimal Listing Structure for Indivior Shares
The Board has been assessing the optimal listing structure for Indivior shares
for some time. The preliminary view of the Board is that an additional US
listing is likely to be beneficial to the Group's profile and ability to
attract a broader group of shareholders. In coming to this view, the Board has
considered the fact that approximately 80% of Group NR is generated in the US,
the US is the Group's highest value at-stake opportunity set, the majority of
the senior management team are US based, that approximately 40%-plus of
shareholders are North American-based and that it provides the Group the
optionality to pursue a potential primary or sole US listing over the
longer-term.
The Board is aware that this is an important topic for shareholders and
intends to consult extensively before deciding whether to put a formal
resolution to shareholders regarding an additional listing in the US. The
Group expects to start formal consultations with shareholders in the Spring of
2022.
**IMS Institute Report, January 2016, "Price Declines after Branded Medicines
Lose Exclusivity in the U.S."
U.S. Opioid Use Disorder (OUD) Market Update
In FY 2021, the U.S. buprenorphine medication-assisted treatment (BMAT) market
grew in mid-single digits. Moderation in the growth rate versus 2020 reflects
the high base period for comparison, when the BMAT market grew in the low- to
mid-teens as a result of COVID-19-related demand and the implementation of new
federal and state government actions to facilitate OUD patient access to
medication-assisted treatment (MAT). Over the approximate two-year period just
ended (2020 and 2021), the BMAT market averaged mid- to high-single digits
growth.
The Group continues to expect long-term U.S. market growth to be sustained in
the mid- to high-single digit percentage range due to increased severity and
overall public awareness of the opioid epidemic and approved treatments,
together with regulatory and legislative actions that have expanded OUD
treatment funding and treatment capacity. The number of physicians, nurse
practitioners and physician assistants who have received a waiver to
administer MAT and those able to treat up to the permitted level of 275
patients continued to grow in 2021.
As a result, there is increasing patient access to BMAT. Indivior supports
efforts to encourage more eligible healthcare practitioners (HCPs) to provide
BMAT, and the Group continues to resource its compliance capabilities for the
growing number of BMAT prescribers and patients.
The Group's focus is to continue to expand access to SUBLOCADE amongst OHS and
core HCPs to ensure availability of this potentially important treatment
option to the estimated 1 million+ patients per month who are prescribed BMAT
by HCPs.
Financial Performance: FY 2021 & Q4 2021
Total net revenue in FY 2021 grew 22% to $791m at actual exchange rates (FY
2020: $647m; +21% at constant exchange rates). In Q4 2021, total net revenue
grew 20% to $222m at actual exchange rates (Q4 2020: $185m; +21% at constant
exchange rates). The strong increase in both periods was primarily driven by
higher NR from SUBLOCADE (+88% vs. FY 2020, +92% vs. Q4 2020), continued
growth in the BMAT market, and by relatively stable market share for
SUBOXONE® (buprenorphine and naloxone) Film in the US.
FY 2021 U.S. net revenue increased 32% to $603m (FY 2020: $456m) and by 31% in
Q4 2021 to $176m (Q4 2020: $134m). Strong year-over-year SUBLOCADE net revenue
growth, SUBOXONE Film share resilience along with underlying BMAT market
growth were the principal drivers of the net revenue increase in both periods.
FY 2021 Rest of World (ROW) net revenue decreased 2% at actual exchange rates
to $188m (FY 2020: $191m; -7% at constant exchange rates). The NR decline was
mainly due to ongoing competitive pressure in the legacy tablet business in
Western Europe, the disposal of the legacy TEMGESIC®/ BUPREX® / BUPREXX®
analgesic franchise (FY 2021 NR impact of -$5m), partially offset by NR from
new products (FY 2021 ROW SUBLOCADE NR: $16m) and favorable foreign currency
translation benefits.
In Q4 2021, ROW net revenue decreased 10% at actual exchange rates to $46m (Q4
2020: $51m; -8% at constant exchange rates). The NR decline in Q4 was mainly
attributable to ongoing competitive pressure in the legacy tablet business in
Western Europe and the disposal of the legacy TEMGESIC®/ BUPREX® / BUPREXX®
analgesic franchise, partially offset by NR from new products (Q4 2021 ROW
SUBLOCADE NR: $5m).
FY 2021 reported and adjusted gross margin was 84% (FY 2020: 85%; Adj. FY
2020: 86%). FY 2020 adjusted gross margin excludes $5m of net exceptional
costs of sales related to inventory provisions due to the adverse impact of
COVID-19. Q4 2021 reported and adjusted gross margin was 83% (Q4 2020: 88%;
Adj. Q4 2020: 84%). Q4 2020 adjusted gross margin excludes a $6m benefit
related to a change in estimate used to calculate inventory provisions. The
FY2021 and Q4 2021 adjusted gross margin decline primarily reflects the
continued relative strength of SUBOXONE Film in the United States,
particularly in less profitable government channels.
FY 2021 SG&A expenses as reported were $431m (FY 2020: $666m). FY 2021
included $6m of net exceptional costs which include the adjustments to
provisions related to DOJ-related matters (+$18m) and ANDA litigation matters
(-$24m). FY 2020 SG&A expenses included exceptional costs of $239m,
primarily related to resolution of litigation matters. Q4 2021 SG&A
expenses as reported were $132m (Q4 2020: $158m). In Q4 2021, an exceptional
benefit of $1m was recorded related to the release of a restructuring
provision. Exceptional costs in Q4 2020 were $47m. See Note 4 for details on
exceptional costs.
On an adjusted basis, FY 2021 SG&A expense decreased slightly from FY 2020
to $425m (FY 2020: $427m). The decline largely reflects one-time costs related
to the US direct-to-consumer (DTC) advertising campaign for SUBLOCADE in the
prior period and lower legal fees and expenses related to the DOJ matter
(settled in Q3 2020). These were essentially offset by sales and marketing
investments to grow the Group's long-acting injectable technologies, SUBLOCADE
and PERSERIS in the current period. On an adjusted basis, Q4 2021 SG&A
expenses increased 20% to $133m (Q4 2020: $111m). The increase in the quarter
largely reflects the sales and marketing investments to grow SUBLOCADE and
PERSERIS.
FY 2021 and Q4 2021 other operating income was $32m and $12m, respectively (FY
2020 and Q4 2020: $nil). FY 2021 included $32m of net exceptional other
operating income related to the net proceeds received from the disposal of the
legacy TEMGESIC®/ BUPREX® / BUPREXX® (buprenorphine) analgesic franchise
outside of North America (+$19m), net proceeds received from the out-licensing
of nasal naloxone opioid overdose patents (+$1m) and Directors & Officers
insurance claim settlement (+$12m in Q4 2021).
FY 2021 and Q4 2021 R&D expenses were $52m and $19m, respectively (FY
2020: $40m; Q4 2020: $13m). The increases over the year-ago periods reflect
planned higher R&D activity, as certain projects and post-market studies
were suspended in 2020 due to the pandemic, and strategic pipeline and
production capacity investments in 2021.
FY 2021 operating profit as reported was $213m (FY 2020 operating loss:
$156m). Net exceptional benefits of $26m are included in FY 2021 and
exceptional costs of $244m are included in FY 2020. On an adjusted basis, FY
2021 operating profit was $187m (FY 2020 adj. op. profit: $88m). The
improvement in FY 2021 adjusted operating profit was primarily driven by
strong net revenue growth.
Q4 2021 operating profit as reported was $45m (Q4 2020 operating loss: $9m).
Exceptional benefits of $13m are included in Q4 2021 and exceptional costs of
$41m are included in Q4 2020. On an adjusted basis, Q4 2021 operating profit
was $32m (Adj. Q4 2020: $32m). In Q4 2021, while net revenue increased,
operating expenses were higher versus Q4 2020 due to sales and marketing
investments to grow SUBLOCADE and PERSERIS (risperidone) extended-release
injection and increased R&D expenditures, as discussed above.
FY 2021 net finance expense as reported was $23m (FY 2020: $17m). The increase
primarily reflects lower interest income on the Group's cash balance due to
lower short-term interest rates versus the year-ago period and higher expense
primarily related to interest on the Group's outstanding DOJ settlement
amount. An exceptional expense of $1m is included in FY 2021 due to the
write-off of deferred financing costs on the previous term loan. On an
adjusted basis, FY 2021 net finance expense was $22m. There were no
exceptional items in the prior period.
FY 2021 reported total tax benefit was $15m, an effective tax rate of -8% (FY
2020 tax benefit: $25m, 14% rate). Excluding the $40m tax benefit on
exceptional items in FY 2021, total tax expense was $25m, an effective tax
rate of 15% (FY 2020: $12m, 17% rate). Q4 2021 reported total tax expense was
$4m, representing an effective tax rate of 10% (Q4 2020 tax benefit: $1m, 7%
rate). Excluding the $3m tax on exceptional items in Q4 2021, the effective
tax rate was 4% (Q4 2020 excluding tax benefit of $2m, 4% rate).
FY 2021 reported net income was $205m (FY 2020 net loss: $148m). Excluding the
$65m after-tax benefit from exceptional items, FY 2021 adjusted net income was
$140m (Adj. FY 2020: $59m). The significant increases in FY 2021 adjusted net
income was primarily driven by higher operating profit, partially offset by
higher tax and net finance expenses.
Q4 2021 net income on a reported basis was $35m (Q4 2020 reported net loss:
$13m). Excluding the $10m after-tax benefit from exceptional items, Q4 2021
adjusted net income was $25m (Adj. Q4 2020: $26m). The slight decline in Q4
2021 adjusted net income was primarily driven by net revenue growth that was
more than offset by an increase in strategic SG&A investments and higher
finance expense.
FY 2021 diluted earnings per share was 27 cents and 18 cents on an adjusted
diluted basis (FY 2020: 20 cents loss per share on a diluted basis and 8 cents
earnings per share adjusted diluted basis). Q4 2021 diluted earnings per share
was 5 cents and 3 cents on an adjusted diluted basis (Q4 2020: 2 cents loss
per share on a diluted basis and 3 cents earnings per share on an adjusted
diluted basis). Higher FY 2021 EPS on an adjusted diluted basis is primarily
due to higher net revenue and the impact of the share repurchase program.
Balance Sheet & Cash Flow
December 31, 2021, cash and cash equivalents were $1,102m, an increase of
$244m versus the $858m position at year-end 2020. The increase was due to
higher operating profit, timing of payments made on government rebate
payables, proceeds from the disposal of the legacy TEMGESIC®/ BUPREX® /
BUPREXX® (buprenorphine) analgesic franchise outside of North America, offset
by cash used to repurchase approximately 34m ordinary shares as part of the
Group's $100m share repurchase program. Gross borrowings, before issuance
costs, were $249m at December 31, 2021 (Ending FY 2020: $235m). As a result,
net cash (as defined in Note 8) stood at $853m at December 31, 2021 (FY 2020:
$623m), a $230m increase over the fiscal year.
Net working capital (inventory plus trade receivables, less trade and other
payables) was negative $423m at December 31, 2021, versus negative $252m at
the end of FY 2020. The change in the period was primarily a result of timing
of payments made on government rebate and trade payables.
Cash generated by operating activities in FY 2021 was $395m (FY 2020 cash
used: $148m), representing a change of $543m primarily due to strong FY 2021
operating profit, timing of government rebates payable and the surety bond
refunded in Q1 2021. Net cash inflow from operating activities was $353m in FY
2021 (FY 2020 net cash outflow: $193m) reflecting higher cash from operations
and an exceptional tax refund from the IRS which were offset by taxes paid,
interest paid, and transaction costs paid related to the Group's debt
refinancing.
FY 2021 cash outflow from investing activities was $14m (FY 2020: $4m) which
reflects a payment made to Aelis Farma for an exclusive option and license
agreement to develop its leading compound (AEF0117) targeting cannabis use
disorders which was partially offset by the proceeds received from the sale of
the legacy TEMGESIC®/ BUPREX® / BUPREXX® (buprenorphine) analgesic
franchise outside of North America.
FY 2021 cash outflow from financing activities was $94m (FY 2020: $10m) which
reflects payments made for the Group's share repurchase program and principal
lease payments which were partially offset by the gross proceeds received upon
refinancing of the Group's term loan facility. See Note 8 for further
discussion related to the debt refinancing.
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 Update
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, 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 below 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 condition.
The principal risks and uncertainties are not listed in order of significance.
The COVID-19 pandemic is continuing longer than expected with the emergence of
new variants, resulting in continuing uncertainty. Governments worldwide have
deployed vaccination programs and other health measures to lower virus
infection and mortality rates, which should, in time, enable businesses to
return to normal or near normal operations. While operations continue to be
disrupted, our focus has been on the health, safety and wellbeing of our
employees, patients, and the workforce of our partners.
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 and compliance processes and systems, as well as to retain and/or
recruit 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.
COVID-19 Pandemic - In response to COVID-19, the Group established an agile
cross-functional response structure and implemented a number of mitigation and
contingency actions to help maintain the functioning of operations across the
organization, supply of all products to our patients, and the welfare of our
employees. The Group continuously monitors the potential impact on the health
and well-being of our employees, as well as the workforce of our key third
parties, which ultimately may impact our operations, and ensures our
mitigation and contingency actions are as appropriate and effective as
possible. In the fourth quarter of 2021, we introduced a hybrid working model
(i.e., in-office and remote working) in those countries where work from home
restrictions were no longer in place. Given the shift to a remote working
environment started in 2020, the Group continues to closely monitor
cybersecurity threats and the overall operating effectiveness of the
monitoring and control activities.
The current industry-wide challenging labor environment may have a potential
negative impact on the Group's attrition rate and its ability to recruit for
certain key positions in some geographies. The Group has established tools,
development, performance management and reward programs to develop, retain,
and recruit key personnel.
The incidence of sophisticated phishing and malware attacks, including
ransomware, across industries, is rising with an increase of companies
suffering operational disruption and loss of data. The Group continuously
accesses cyber risk and manages the maturity of our infrastructure to
effectively defend against any cyber attacks.
Product Pipeline, Regulatory and Safety
The development and approval of the Group's products is an inherently
uncertain and lengthy process requiring significant financial, research and
development resources, and strategic partnerships. The Group is developing its
early-stage assets (i.e., preclinical to phase- two assets) in partnership
with external organizations. Complex regulations with strict and high safety
standards govern the development, manufacturing, and distribution of our
products. Patient safety depends on our ability to perform robust safety
assessment and interpretation to ensure that appropriate decisions are made
regarding the benefit/risk profiles of our products. Deviations from these
quality and safety practices could impact patient safety and market access,
which can have a material effect on the Group's performance and prospects. In
addition, strong competition exists for strategic collaborations, licensing
arrangements and acquisition targets. If we are unable to execute strategic
transactions or if such transactions do not yield the expected product
development, synergies or financial performance, our business prospects may
suffer.
COVID-19 Pandemic - The COVID-19 pandemic continues to negatively impact our
R&D operations, specifically trial patient enrollments and chemistry,
manufacturing & controls (CMC) operations, therefore causing certain
delays in the execution of our internal and third-party clinical and/or CMC
studies.
Commercialization
Successful commercialization of our products is a critical factor for the
Group's sustained growth and robust financial position. New products involve
substantial investment in marketing, market access and sales activities,
product stocks, and other investments. Certain factors, if different than
anticipated, can significantly impact the Group's performance and position.
These factors include: final label claims; healthcare professionals
(HCP)/patient adoption and adherence; 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; and political and socioeconomic factors.
COVID-19 Pandemic - The pandemic continues to result in overall fewer patient
visits to healthcare provider offices for non-COVID-19 reasons or essential
treatments, as patients become unable or unwilling to make visits due to
overburdened healthcare systems, safety concerns, quarantines, other travel
restrictions, or elect to have remote consultations with their providers.
Furthermore, even though the Group has developed remote (digital) meeting
capability with healthcare providers, the Group's commercial organization
continues to only be able to engage with a limited number of HCPs and OHS.
Although we experienced an overall increase in new US patient enrollments and
number of interactions with HCPs and OHS in 2021 as compared to 2020, we have
not yet returned to pre-pandemic levels. Potential significant decline in
patient enrollments, or adherence to the patient journey, or the inability to
effectively engage with HCPs and OHS due to the continuing COVID-19 pandemic
could have a negative impact on the Group's financial results and position.
Governments across the world continue to consider and take actions to lower
drug prices. In the US, there is bi-partisan support for drug pricing reforms
at both federal and state levels, which include potential legislative and
regulatory actions to encourage the import of drugs, to price drugs according
to a defined international pricing reference, to encourage more competition,
and to undertake other initiatives. These, together with federal and state
government fiscal constraints resulting from the COVID-19 pandemic which
constrain public benefit health programs, pose direct and indirect downward
pressure risk on drug prices. The Group continues to monitor potential
legislative and regulatory changes and their impacts, advocating for the
Group's products based on scientific studies and patient-centered outcomes.
However, certain potential legislative and regulatory drug pricing changes
could have an adverse impact on the Group's financial performance and results
in the future.
Economic and Financial
The pharmaceutical business includes inherent risks and uncertainties,
requiring the Group to make significant financial investments to develop and
support the success of our product portfolio. Generating cash flow from our
approved products, together with external financing, sustains our financial
position, allows development of new products and funds business growth.
Realizing value on those investments is dependent upon regulatory approvals,
market acceptance (including pricing reimbursement levels), strategic
partnerships, competition, and legal developments. Unfavorable outcome from
resolutions of legal proceedings, impacts from the continuing COVID-19
pandemic, and/or changes in government pricing regulations could negatively
impact our operating results and financial position. Together with potential
pressure on our level of net working capital, our ability to comply with our
debt covenants could be negatively impacted. As a global business, we are also
subject to political, economic, capital markets, and tax regulation changes.
Supply
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
uses third parties, including contract manufacturing organizations (CMOs), to
manufacture, package and distribute our products. The manufacturing of oral
solid dose, film products and aseptically filled injectables is subject to
stringent global regulatory, quality and safety standards, including Good
Manufacturing Practice (GMP). Major delays or interruptions in our supply
chain and/or product quality failures could significantly disrupt patient
access, adversely impact the Group's financial performance, and lead to
product recalls and/or potential regulatory actions against the Group, along
with potential reputational damages.
COVID-19 Pandemic - The continuing pandemic could adversely impact our broad
supply chain (i.e., "supply to patient delivery" process) if we experience
either a significant absence of our employees and/or employees at our CMOs,
vendors and service providers due to infection and/or government containment
measures, and/or capacity issues at our airfreight and road logistics
providers. Through ongoing management and proactive risk mitigation,
internally and with our CMOs, the Group has not experienced any significant
COVID-19 related disruptions to its supply to patient delivery process to
date.
The Company's products are filled and packaged by CMOs in the US and Europe,
and some are single sourced. The Company's supply monitoring and contingency
planning processes include: proactive management of inventories throughout the
supply to patient delivery process, initiatives to identify and qualify
alternative sites and/or suppliers. Despite these mitigating measures, if
major delays, interruptions, or quality events occur at those CMOs, the
delivery of products to our patients could be significantly disrupted.
Legal and Intellectual Property
Our pharmaceutical operations, which include the use of controlled substances,
are subject to a wide range of laws and regulations. Perceived or actual
noncompliance with these applicable laws and regulations by a pharmaceutical
company can result in investigations or proceedings leading to civil or
criminal sanctions, fines and/or damages, as well as reputational damages.
IP rights protecting our products may be challenged by external parties,
including generic pharmaceutical manufacturers. Although we have developed
patent protection for our products, including SUBLOCADE, 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.
In connection with the agreements entered in 2020 to resolve criminal charges
and civil complaints related to SUBOXONE Film, the Group has specific
requirements that are in addition to the Group's preexisting obligations to
comply with applicable laws and regulations associated with its US
pharmaceutical operations. The Group is subject to penalties if it fails to
fulfill the requirements within the agreements.
The Group is also a party to several civil lawsuits, including ongoing
litigation in the Federal FCA Qui Tam suits, and civil antitrust and state
claims filed by various plaintiffs. Some of the civil claims in part relate to
the same conduct at issue in the Superseding Indictment filed by the DOJ.
The Group is also a defendant in approximately 400 civil lawsuits brought by
various plaintiffs as part of the opioid class action litigation. These cases
are at a preliminary stage and are currently stayed.
Unfavorable outcomes from resolutions of these legal proceedings could have a
material adverse impact on the Group's business, financial condition and/or
operating results (See Note 11, Legal Proceedings, to the condensed
consolidated financial statements).
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 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. The Group has processes and
procedures to identify, analyze and investigate any potential or actual
violations of policy or law and, if necessary, take appropriate remedial or
corrective actions. Effective procedures and controls are necessary to provide
reliable information, prevent and detect potential fraud. 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.
In 2020, as part of the Group's resolution of federal criminal and civil
charges related to its legacy products (See Note 11, Legal Proceedings, to the
condensed consolidated financial statements), the Group has also entered into
a Corporate Integrity Agreement (CIA) with HHS-OIG. The five-year CIA
requires, among other things, that the Group implement measures designed to
ensure compliance with the statutes, regulations, and written directives of
U.S. Medicare, U.S. Medicaid, and all other U.S. Federal health care programs,
as well as with the statutes, regulations, and written directives of the U.S.
Food and Drug Administration. The Group is subject to additional periodic
reporting and monitoring requirements related to the Agreements. In addition,
the CIA requires reviews by an independent review organization,
compliance-related certifications from the Group's executives and certain
Board members, and the implementation of a risk assessment and mitigation
process. The CIA sets forth specified monetary penalties that may be imposed
on a per day basis for failure to comply with the obligations specified in the
CIA. The CIA also includes specific procedures under which the Group must
notify HHS-OIG if it fails to meet the requirements under the CIA. In the
event that HHS-OIG determines the Group to be in material breach of certain
requirements of the CIA (including repeated violations or any flagrant
obligations under the CIA, a failure by the Group to report a reportable event
and/or take corrective action, a failure to engage and use an independent
review organization, or a failure to respond to certain requests from
HHS-OIG), the Group may be subject to exclusion from participation in the U.S.
Federal health care programs, which would have a severe impact on the Group's
ability to comply with the financial covenants in the Group's debt facility,
maintain sufficient liquidity to fund its operations, pay off its debt in
2026, generate future revenue and ultimately impact the Group's viability.
The Resolution Agreement with the United States Attorney's Office for the
Western District of Virginia and Consumer Protection Branch contains certain
requirements, such as reporting obligations and that the Group's Chief
Executive Officer (a) certify on an annual basis that, to the best of their
knowledge, after a reasonable inquiry, the Group was in compliance with the US
Federal Food, Drug and Cosmetic Act and has not committed health care fraud,
or (b) provide a list of all non-compliant activities and steps taken to
remedy the activity. The FTC Stipulated Order contains specific notice and
reporting requirements over a ten-year period related to certain activities
(e.g., product switching conduct, filing of a Citizen Petition). The Group is
subject to contempt prosecution if it fails to comply with any terms of the
Resolution Agreement.
The Group's Annual Report for the 2021 financial year will contain additional
details on these principal 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 December 31, Full Year to December 31,
2021 2020
GB £ period end 1.3532 1.3651
GB £ average rate 1.3763 1.2833
€ Euro period end 1.1378 1.2226
€ Euro average 1.1840 1.1403
Webcast Details
There will be a live webcast presentation at 13:00 GMT (8:00 am EST) hosted by
Mark Crossley, CEO. The details are below. All materials will be available on
the Group's website prior to the event at www.indivior.com
(http://www.indivior.com) .
Webcast link:
https://edge.media-server.com/mmc/p/8tao6fad
(https://edge.media-server.com/mmc/p/8tao6fad)
Confirmation Code: 8268632
Participants, Local - London, United Kingdom: +44 (0) 2071 928338
Participants, Local - New York, United States of America: +1 646 741 3167
For Further Information
Investor Enquiries Jason Thompson VP Investor Relations, Indivior PLC +1 804 402 7123
jason.thompson@indivior.com
Media Enquiries Jonathan Sibun Tulchan Communications +44 (0) 2073 534200
+1 804 594 0836
US Media Inquiries
Indiviormediacontacts@indivior.com
Corporate Website www.indivior.com
This announcement does not constitute an offer to sell, or the solicitation of
an offer to subscribe for or otherwise acquire or dispose of shares in the
Group to any person in any jurisdiction to whom it is unlawful to make such
offer or solicitation.
About Indivior
Indivior is a global pharmaceutical company working to help change patients'
lives by developing medicines to treat addiction and serious mental illnesses.
Our vision is that all patients around the world will have access to
evidence-based treatment for the chronic conditions and co-occurring disorders
of addiction. Indivior is dedicated to transforming addiction from a global
human crisis to a recognized and treated chronic disease. Building on its
global portfolio of opioid dependence treatments, Indivior has a pipeline of
product candidates designed to both expand on its heritage in this category
and potentially address other chronic conditions and cooccurring disorders of
addiction, including alcohol use disorder. Headquartered in the United States
in Richmond, VA, Indivior employs more than 800 individuals globally and its
portfolio of products is available in over 40 countries worldwide. Visit
www.indivior.com to learn more. Connect with Indivior on LinkedIn by visiting
www.linkedin.com/company/indivior (http://www.linkedin.com/company/indivior) .
Forward-Looking Statements
This announcement contains certain statements that are forward-looking. By
their nature, forward-looking statements involve risks and uncertainties as
they relate to events or circumstances that may or may not occur in the
future. Actual results may differ materially from those expressed or implied
in such statements because they relate to future events. Forward-looking
statements include, among other things, statements regarding the Indivior
Group's financial guidance for 2022 and its medium- and long-term growth
outlook, its operational goals, its product development pipeline, ongoing
litigation and other statements containing the words "subject to", "believe",
"anticipate", "plan", "expect", "intend", "estimate", "potential", "project",
"may", "will", "should", "would", "could", "can", the negatives thereof,
variations thereon and similar expressions.
Various factors may cause differences between Indivior's expectations and
actual results, including, among others, the risk factors described in the
most recent Indivior PLC Annual Report and in subsequent releases, and:
factors affecting sales of Indivior Group's products and financial position;
the outcome of research and development activities; decisions by regulatory
authorities regarding the Indivior Group's drug applications or
authorizations; the speed with which regulatory authorizations, pricing
approvals and product launches may be achieved, if at all; the outcome of
post-approval clinical trials; competitive developments; difficulties or
delays in manufacturing and in the supply chain; disruptions in or failure of
information technology systems; the impact of existing and future legislation
and regulatory provisions on product exclusivity; trends toward managed care
and healthcare cost containment; legislation or regulatory action affecting
pharmaceutical product pricing, reimbursement or access; challenges in
commercial execution; claims and concerns that may arise regarding the safety
or efficacy of the Indivior Group's products and product candidates; risks
related to legal proceedings, including the Indivior Group's compliance with
its agreements with the U.S. Department of Justice and with the Office of
Inspector General of the Department of Health and Human Services,
non-compliance with which could result in potential exclusion from
participating in U.S. Federal health care programs; the ongoing investigative
and antitrust litigation matters; the opioid national multi-district
litigation and securities class action litigation; the Indivior Group's
ability to protect its patents and other intellectual property; the outcome of
patent infringement litigation relating to Indivior Group's products,
including the ongoing ANDA lawsuits; changes in governmental laws and
regulations; issues related to the outsourcing of certain operational and
staff functions to third parties; risks related to the evolving COVID-19
pandemic and the potential impact of COVID-19 on the Indivior Group's
operations and financial condition, which cannot be predicted with confidence;
uncertainties related to general economic, political, business, industry,
regulatory and market conditions; and the impact of acquisitions,
divestitures, restructurings, internal reorganizations, product recalls and
withdrawals and other unusual items.
Consequently, forward-looking statements speak only as of the date that they
are made and should be regarded solely as our current plans, estimates and
beliefs. You should not place undue reliance on forward-looking statements. We
cannot guarantee future results, events, levels of activity, performance, or
achievements. Except as required by law, we do not undertake and specifically
decline any obligation to update, republish or revise forward-looking
statements to reflect future events or circumstances or to reflect the
occurrences of unanticipated events.
Condensed consolidated income statement
For the three and twelve months ended December 31 Notes Unaudited Unaudited Unaudited Audited
Q4 Q4 FY FY
2021 2020 2021 2020
$m $m $m $m
Net Revenue 2 222 185 791 647
Cost of Sales (38) (23) (127) (97)
Gross Profit 184 162 664 550
Gross profit before exceptional items 184 156 664 555
Exceptional items 4 - 6 - (5)
Selling, general and administrative expenses 3 (132) (158) (431) (666)
Research and development expenses 3 (19) (13) (52) (40)
Other operating income 3 12 - 32 -
Operating Profit/(Loss) 45 (9) 213 (156)
Operating profit before exceptional items 32 32 187 88
Exceptional items 4 13 (41) 26 (244)
Finance income 1 3 4 9
Finance expense (7) (8) (27) (26)
Net Finance Expense (6) (5) (23) (17)
Net finance expense before exceptional items (6) (5) (22) (17)
Exceptional items within finance expense 4 - - (1) -
Profit/(Loss) Before Taxation 39 (14) 190 (173)
Income tax (expense)/benefit 5 (4) 1 15 25
Taxation before exceptional items (1) (1) (25) (12)
Exceptional items within taxation 4 (3) 2 40 37
Net Income/(Loss) 35 (13) 205 (148)
Earnings/(loss) per ordinary share (cents)
Basic earnings/(loss) per share 6 5 (2) 28 (20)
Diluted earnings/(loss) per share 6 5 (2) 27 (20)
Condensed consolidated statement of comprehensive income/(loss)
For the three and twelve months ended December 31 Unaudited Unaudited Unaudited Audited
Q4 Q4 FY FY
2021 2020 2021 2020
$m $m $m $m
Net income/(loss) 35 (13) 205 (148)
Other comprehensive (loss)/income
Items that may be reclassified to profit or loss in subsequent years:
Net exchange adjustments on foreign currency translation (1) 15 (7) 10
Other comprehensive (loss)/income (1) 15 (7) 10
Total comprehensive income/(loss) 34 2 198 (138)
The notes are an integral part of these condensed consolidated financial
statements.
Condensed consolidated balance sheet
Notes Unaudited Audited
Dec 31, 2021 Dec 31, 2020
$m $m
ASSETS
Non-current assets
Intangible assets 82 62
Property, plant, and equipment 58 60
Right-of-use assets 37 43
Deferred tax assets 5 105 75
Other assets 7 106 104
388 344
Current assets
Inventories 95 93
Trade receivables 202 179
Other assets 7 32 50
Current tax receivable 5 13 7
Cash and cash equivalents 8 1,102 858
1,444 1,187
Total assets 1,832 1,531
LIABILITIES
Current liabilities
Borrowings 8 (3) (4)
Provisions 9 (5) (38)
Other liabilities 9 (61) (10)
Trade and other payables 12 (720) (524)
Lease liabilities (8) (8)
Current tax liabilities 5 (7) (15)
(804) (599)
Non-current liabilities
Borrowings 8 (239) (230)
Provisions 9 (76) (51)
Other liabilities 9 (474) (526)
Lease liabilities (36) (43)
(825) (850)
Total liabilities (1,629) (1,449)
Net assets 203 82
EQUITY
Capital and reserves
Share capital 13 70 73
Share premium 7 6
Capital redemption reserve 13 3 -
Other reserves (1,295) (1,295)
Foreign currency translation reserve (20) (13)
Retained earnings 1,438 1,311
Total equity 203 82
The notes are an integral part of these condensed consolidated financial
statements.
Condensed consolidated statement of changes in equity
Notes Share Share Capital redemption reserve Other Foreign Retained Total equity
capital Premium reserve currency earnings
translation
reserve
Audited $m $m $m $m $m $m $m
Balance at January 1, 2020 73 5 - (1,295) (23) 1,449 209
Comprehensive loss
Net loss - - - - - (148) (148)
Other comprehensive income - - - - 10 - 10
Total comprehensive loss - - - - 10 (148) (138)
Transactions recognized directly in equity
Shares issued - 1 - - - - 1
Share-based plans - - - - - 8 8
Deferred taxation on share-based plans - - - - - 2 2
Balance at December 31, 2020 73 6 - (1,295) (13) 1,311 82
Unaudited
Balance at January 1, 2021 73 6 - (1,295) (13) 1,311 82
Comprehensive income
Net income - - - - - 205 205
Other comprehensive loss - - - - (7) - (7)
Total comprehensive income - - - - (7) 205 198
Transactions recognized directly in equity
Shares issued - 1 - - - - 1
Shares repurchased and cancelled (3) - 3 - - (101) (101)
Share-based plans - - - - - 11 11
Settlement of equity awards - - - - - (1) (1)
Deferred taxation on share-based plans - - - - - 13 13
Balance at December 31, 2021 70 7 3 (1,295) (20) 1,438 203
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
2021 2020
$m $m
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit/(Loss) 213 (156)
Depreciation, amortization, and impairment 15 18
Gain on disposal of right-of-use assets - (2)
Net gain on disposal of intangible asset (20) -
Depreciation and impairment of right-of-use assets 7 8
Share-based payments 11 8
Settlement of tax on employee awards (1) -
Impact from foreign exchange movements (3) (5)
(Increase)/Decrease in trade receivables (25) 15
Decrease/(Increase) in current and non-current other assets 16 (44)
Increase in inventories (3) (16)
Increase/(Decrease) in trade and other payables 201 (103)
(Decrease)/Increase in provisions and other liabilities(1) (16) 129
Cash generated from/(used in) operations 395 (148)
Interest paid (18) (20)
Interest received 1 9
Exceptional tax refund 31 -
Taxes paid (48) (34)
Transaction costs related to debt refinancing (8) -
Net cash inflow/(outflow) from operating activities 353 (193)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment (4) (4)
Purchase of intangible asset (30) -
Exceptional net proceeds from disposal of intangible assets 20 -
Net cash outflow from investing activities (14) (4)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 250 -
Repayment of borrowings (236) (4)
Payment of lease liabilities (8) (7)
Proceeds from the issuance of ordinary shares 1 1
Cash paid for the repurchase and cancellation of shares (including direct (101) -
transaction costs)
Net cash outflow from financing activities (94) (10)
Net increase/(decrease) in cash and cash equivalents 245 (207)
Cash and cash equivalents at beginning of the period 858 1,060
Exchange difference (1) 5
Cash and cash equivalents at end of the period 1,102 858
(1)Changes in provisions and other liabilities for FY 2021 line include
exceptional payments of $10m for the RB settlement agreement and $9m for DOJ
related matters (FY 2020 includes a $103m initial payment under the DOJ
resolution).
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 Condensed Financial Statements should be read in conjunction with the
annual financial statements for the year ended December 31, 2020 which have
been prepared in accordance with International Financial Reporting Standards
(IFRS) and IFRS Interpretations Committee interpretations in conformity with
the Companies Act 2006 and pursuant to Regulation (EC) No 1606/2002 as it
applies to the European Union. In respect of accounting standards applicable
to the Group in the current period, there is no difference between IFRS in
conformity with the Companies Act 2006, the UK-adopted International
Accounting Standards and International Accounting Standards Board
(IASB)-adopted IFRS. In preparing these Condensed Financial Statements, the
significant judgments made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the consolidated financial statements for the year ended
December 31, 2020, except for the inclusion of estimates and judgements used
in impairment review of intangible assets. The estimates used in calculating
the recoverable amount for one of the Group's intangible assets amounting to
$10m is considered significant due to the sensitivity of key assumptions and
limited headroom which could give rise to future impairment. The 2020 balance
sheet has been expanded to present provisions and other liabilities on
separate lines to improve the presentation and transparency.
The Condensed Financial Statements are unaudited and 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, 2020. These Condensed Financial Statements were approved for
issue on February 15, 2022.
As disclosed in Notes 9, 10, and 11, the Group has liabilities and provisions
totaling $537m (FY 2020: $568m) for the Department of Justice (DOJ) Resolution
and related matters and the Reckitt Benckiser (RB) settlement. The Directors
have assessed the Group's ability to comply with the minimum liquidity
covenant in the Group's debt facility, maintain sufficient liquidity to fund
its operations and fulfill obligations under the DOJ resolution and
RB agreement. The Directors have also modeled the risk that SUBLOCADE will
not meet revenue growth expectations (considering a 15% decline on
forecasts), an accelerated reversion to generic analogues for SUBOXONE Film,
and the risk the ongoing legal proceedings may result in reasonably possible
payments as part of the Group's going concern assessment and downside
scenario. These risks were balanced against the Group's current and forecast
working capital position. As a result of the factors set out above,
the Directors have a reasonable expectation the Group has adequate
resources to continue in operational existence for at least one year from the
approval of these Condensed Financial Statements and therefore consider the
going concern basis to be appropriate for the accounting and preparation
of these Condensed Financial Statements.
The financial information contained in this document does not constitute
statutory accounts as defined in section 434 and 435 of the Companies Act
2006. The Group's statutory financial statements for the year ended December
31, 2020, were approved by the Board of Directors on March 18, 2021, and have
been filed with Companies House.
2. SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker ('CODM'). The CODM,
who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Chief Executive Officer (CEO).
The Group is predominantly engaged in a single business activity, which is the
development, manufacture, and sale of buprenorphine-based prescription drugs
for treatment of opioid dependence and related disorders. The CEO reviews
disaggregated net revenue on a geographical and product basis. Financial
results are reviewed on a consolidated basis for evaluating financial
performance and allocating resources. Accordingly, the Group operates in a
single reportable segment.
Net revenue and non-current assets
Revenues are attributed to countries based on the country where the sale
originates. The following tables represent net revenues from continuing
operations and non-current assets, net of accumulated depreciation and
amortization, by country. Non-current assets for this purpose consist of
intangible assets, property, plant and equipment, right-of-use assets, and
other assets. Net revenues and non-current assets for the three and twelve
months to December 31, 2021, and 2020 were as follows:
Net revenue:
For the three and twelve months ended December 31 Q4 Q4 FY FY
2021 2020 2021 2020
$m $m $m $m
United States 176 134 603 456
Rest of World (ROW) 46 51 188 191
Total 222 185 791 647
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
2021 2020 2021 2020
$m $m $m $m
SUBLOCADE 75 39 244 130
PERSERIS 5 4 17 14
Sublingual/Other 142 142 530 503
Total 222 185 791 647
Non-current assets:
Dec 31, 2021 Dec 31, 2020
$m $m
United States 133 141
ROW 150 128
Total 283 269
In FY 2021, the Group entered into a strategic collaboration for $30m with
Aelis Farma that includes an exclusive option for the license of the global
rights to AEF0117, a leading compound to treat cannabis-related disorders. The
increase in non-current assets reflects the investment in Aelis partially
offset by depreciation and amortization of intangible and right-of-use assets.
3. OPERATING EXPENSES AND OTHER OPERATING INCOME
The table below sets out selected operating costs and expense information:
Operating expenses
For the three and twelve months ended December 31 Q4 Q4 FY FY
2021 2020 2021 2020
$m $m $m $m
Research and development expenses (19) (13) (52) (40)
Selling and general expenses (63) (53) (192) (202)
Administrative expenses (69) (105) (239) (464)
Selling, general and administrative expenses (132) (158) (431) (666)
Depreciation, amortization, and impairment(1) (3) (3) (13) (17)
(1 )Depreciation and amortization expense is included in research and
development and selling, general and administrative expenses. Depreciation and
amortization expense in FY 2021 of $9m (FY 2020: $9m) for intangibles and ROU
assets is included within cost of sales.
Medical affairs functional costs are included in administrative expenses.
Administrative expenses include exceptional items in the current and prior
period as outlined in Note 4.
Other operating income
For the three and twelve months ended December 31 Q4 Q4 FY FY
2021 2020 2021 2020
$m $m $m $m
Other operating income 12 - 32 -
Other operating income include exceptional items in the current periods as
outlined in Note 4.
4. EXCEPTIONAL ITEMS AND ADJUSTED RESULTS
Exceptional items
Where significant expenses or income occur that do not reflect the Group's
ongoing operations, these items are disclosed as exceptional items in the
income statement. Examples of such items could include income or restructuring
and related expenses for the reconfiguration of the Group's activities and/or
capital structure, impairment of current and non-current assets, proceeds from
the sale of intangible assets, certain costs arising as a result of material
and non-recurring regulatory and litigation matters, certain non-recurring
benefits, and certain tax related matters. Exceptional items are excluded from
adjusted results consistent with the internal reporting provided to Management
and the Directors. Adjusted results are not a substitute for, or superior to,
reported results presented in accordance with IFRS. Exceptional items with an
impact of less than $1m are not considered for exceptional treatment.
The table below sets out exceptional income/(expense) recorded in each period:
For the three and twelve months ended December 31 Q4 Q4 FY FY
2021 2020 2021 2020
$m $m $m $m
Exceptional items within cost of sales
Cost of sales credit/(charge)(1) - 6 - (5)
Total exceptional items within cost of sales - 6 - (5)
Exceptional items within SG&A
Restructuring costs(2) 1 (2) 1 (11)
Legal expenses/provision(3) - (45) 18 (228)
ANDA litigation(4) - - (24) -
Debt refinancing(5) - - (1) -
Total exceptional items within SG&A 1 (47) (6) (239)
Exceptional items within other operating income
Net proceeds from disposal of intangible asset(6) - - 20 -
Insurance reimbursement(7) 12 - 12 -
Total exceptional items within other operating income 12 - 32 -
Exceptional items within net finance expense
Finance expense(5) - - (1) -
Total exceptional items within net finance expense - - (1) -
Total exceptional items before taxes 13 (41) 25 (244)
Tax on exceptional items (3) 2 (3) 37
Exceptional tax item(8) - - 43 -
Total exceptional items 10 (39) 65 (207)
1. FY 2020 exceptional cost of sales, net, relate to changes in
inventory provision estimates due to the adverse impact of COVID-19 on the
business. These changes in inventory provision estimates have been considered
as exceptional as they are one-off and do not reflect the underlying
performance of the business. In Q4 2020 the Group corrected its estimation of
inventory consumed from Q3 with the resulting exceptional provision release of
$6m offsetting the exceptional charge taken in Q3 2020.
2. Restructuring costs incurred in Q4 2020 and FY 2020 relate to cost
saving actions taken by the Group in response to ongoing challenges posed by
COVID-19. In Q4 2021 the restructuring program concluded, and the remaining
provision was released which resulted in an exceptional benefit of $1m.
3. Negotiation with DOJ related plaintiffs in FY 2021 led to a change
in the Group's provision for DOJ related matters which resulted in a provision
release of $18m. In January 2021, the Group reached a resolution with RB for
$50m which was recognized in Q4 2020, offset by a reduction in provision for
DOJ related matters for $5m. $228m of legal settlement related expenses in FY
2020 relate to resolution with RB and DOJ, $50m and $178m, respectively.
4. In Q3 2021, upon conclusion of expert discovery, the Group
increased the provision for intellectual property related matters - ANDA
Litigation, to $73m, resulting in an exceptional charge for $24m. See Note 9
and 11 for further discussion.
5. Debt refinancing costs in FY 2021 consist of advisory and legal
fees incurred related to the Group's 2021 debt refinancing. These costs are
included in SG&A. Additionally, in FY 2021 the Group wrote-off $1m of
unamortised deferred financing costs due to extinguishment and settlement of
the previous term loan. These costs are included within finance expense.
6. Exceptional other operating income in FY 2021 relates to the net
gain on disposal received from the sale of the TEMGESIC / BUPREX / BUPREXX
(buprenorphine) analgesic franchise outside of North America to Eumedica
Pharmaceuticals AG for $19m. Remaining exceptional income in FY 2021 relates
to the proceeds received from the out-licensing of nasal naloxone opioid
overdose patents for $1m.
7. In Q4 2021, the Group recognized $12m exceptional other income
related to a Directors & Officers insurance reimbursement claim.
8. Exceptional tax benefit recorded in FY 2021 relates to the approval
of tax credits by the Internal Revenue Service in relation to development
credits for SUBLOCADE claimed for years 2014 to 2017 and the tax impact of
settlement costs incurred with Reckitt Benckiser (RB) which were recorded in
the prior year.
Adjusted results
The Board and management team use adjusted results and measures to provide
incremental insight to the financial results of the Group and the way it is
managed. The tables below show the list of adjustments between the reported
and adjusted results for both Q4/FY 2021 and Q4/FY 2020.
Reconciliation of gross profit to adjusted gross profit
For the three and twelve months ended December 31 Q4 Q4 FY FY
2021 2020 2021 2020
$m $m $m $m
Gross profit 184 162 664 550
Exceptional cost of sales (credit)/charge - (6) - 5
Adjusted gross profit 184 156 664 555
Reconciliation of operating profit/(loss) to adjusted operating profit
For the three and twelve months ended December 31 Q4 Q4 FY FY
2021 2020 2021 2020
$m $m $m $m
Operating profit/(loss) 45 (9) 213 (156)
Exceptional cost of sales credit/(charge) - (6) - 5
Exceptional selling, general and administrative expenses (1) 47 6 239
Exceptional other operating income (12) - (32) -
Adjusted operating profit 32 32 187 88
Reconciliation of profit/(loss) before taxation to adjusted profit before
taxation
For the three and twelve months ended December 31 Q4 Q4 FY FY
2021 2020 2021 2020
$m $m $m $m
Profit/(loss) before taxation 39 (14) 190 (173)
Exceptional cost of sales credit/(charge) - (6) - 5
Exceptional selling, general and administrative expenses (1) 47 6 239
Exceptional other operating income (12) - (32) -
Exceptional finance expense - - 1 -
Adjusted profit before taxation 26 27 165 71
Reconciliation of net income/(loss) to adjusted net income
For the three and twelve months ended December 31 Q4 Q4 FY FY
2021 2020 2021 2020
$m $m $m $m
Net income/(loss) 35 (13) 205 (148)
Exceptional cost of sales credit/(charge) - (6) - 5
Exceptional selling, general and administrative expenses (1) 47 6 239
Exceptional other operating income (12) - (32) -
Exceptional finance expense - - 1 -
Tax on exceptional items 3 (2) 3 (37)
Tax exceptional - - (43) -
Adjusted net income 25 26 140 59
5. TAXATION
In the twelve months ended December 31, 2021, the reported total tax benefit
was $15m, or a rate of -8% (FY 2020 tax benefit: $25m, 14%). The tax expense
on adjusted profits amounted to $25m (FY 2020: $12m) and represented a
year-to-date effective tax rate of 15% (FY 2020: 17%). The decrease in the
adjusted effective tax rate from 2020 was primarily driven by the relative
contribution to pre-tax income by taxing jurisdiction in the year.
The current year tax benefit on exceptional items of $40m predominantly relate
to approval of tax credits by the Internal Revenue Service in relation to
development credits for SUBLOCADE claimed for years 2014 to 2017 ($34m). Other
elements include the tax impact of settlement costs incurred with Reckitt
Benckiser (RB) which were recorded in the prior year, impact of the ANDA
accrual and a tax expense in relation to exceptional other operating income.
The Group's balance sheet on December 31, 2021, included a current tax
receivable of $13m (FY 2020: $7m), current tax payable of $7m (FY 2020: $15m),
and deferred tax asset of $105m (FY 2020: $75m). The increase in the deferred
tax asset is due to current year activity including the deferred benefit of
inventory costs capitalized for tax purposes and the increase in anticipated
tax relief for share awards due to increases in the group's share price.
The Group recognizes deferred tax assets to the extent that sufficient future
taxable profits are probable against which these future tax deductions can be
utilized. At December 31, 2021, the Group's net deferred tax assets of $105m
includes $81m (FY 2020: $51m) in USA and $11m (FY 2020: $7m) in UK. Deferred
tax assets relate primarily to inventory costs capitalized for tax purposes,
litigation liabilities (including exceptional items that are not expected to
recur), share-based compensation, and other short term timing differences.
Recognition of deferred tax assets is driven by the Group's ability to utilize
the deferred tax asset which is reliant on forecast taxable profits arising in
the jurisdiction in which the deferred tax asset is recognized. The Group has
assessed recoverability of deferred tax assets using Group-level budgets and
forecasts consistent with those used for the assessment of viability and asset
impairments, particularly in relation to levels of future sales. These
forecasts are therefore subject to similar uncertainties to those assessments.
This exercise is reviewed each year and, to the extent required, an adjustment
to the recognized deferred tax asset may be made. With the exception of
specific assets that are not currently considered accessible, Management have
concluded full recognition of deferred tax assets to be appropriate and do not
consider there a significant risk of a material change in their assessment in
the next 12 months.
Other tax matters
In 2019, a European Commission review into State Aid concluded that the UK's
Finance Company Partial Exemption rules are only partly justified. The UK
government was required to initiate recovery of the alleged State Aid where
they assess a benefit of the potential State Aid has been received. HMRC has
confirmed that there has been no such benefit to the Group and therefore the
enquiry in relation to this matter up to FY2017 is closed. HMRC has opened
enquiries in relation to FY18 and FY19 in relation to this matter. Based on
the similar fact pattern applicable to the later years, the Group has
determined no provision is required.
The enacted United Kingdom Statutory Corporation Tax rate is 19% for the year
ended December 31, 2021. On March 3, 2021, the UK Chancellor announced an
increase in the corporation tax rate from 19% to 25% with effect from April 1,
2023. The increase to the corporation tax rate was substantively enacted on
May 24, 2021. The effect of the rate change is immaterial.
As disclosed in Note 9, the Group reached a settlement with Reckitt Benckiser
on January 25, 2021. Based on the strength of external advice received, an $8m
tax benefit from the settlement cost has been recognized in the year. Tax
authorities may potentially challenge the Group's position.
As a multinational group, tax uncertainties remain in relation to Group
financing, intercompany pricing, the location of taxable operations and the
tax treatment of exceptional items. Management have concluded tax provisions
made to be appropriate and do not believe a significant risk of material
change to uncertain tax positions exists in the next 12 months.
6. EARNINGS/(LOSS) PER SHARE
For the three and twelve months ended December 31 Q4 Q4 FY FY
2021 2020 2021 2020
cents cents cents cents
Basic earnings/(loss) per share 5 (2) 28 (20)
Diluted earnings/(loss) per share 5 (2) 27 (20)
Adjusted basic earnings per share 3 4 19 8
Adjusted diluted earnings per share 3 3 18 8
Basic
Basic earnings/(loss) per share ("EPS" or "LPS") is calculated by dividing
profit/(loss) for the period attributable to owners of the Group by the
weighted average number of ordinary shares in issue during the period.
Diluted
Diluted earnings/(loss) per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion of all
dilutive potential ordinary shares. The Group has dilutive potential ordinary
shares in the form of stock options and awards. The weighted average number of
shares is adjusted for the number of shares granted assuming the exercise of
stock options.
The weighted average number of ordinary shares outstanding for 2021 (on a
basic basis) includes the favorable impact of the share repurchase program.
Refer to Note 13 for further details.
Weighted average number of shares 2021 2020
thousands thousands
On a basic basis 728,299 732,863
Dilution from share awards and options 42,842 37,132
On a diluted basis 771,141 769,995
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. CURRENT AND NON-CURRENT OTHER ASSETS
Current and non-current other assets Dec 31 Dec 31
2021 2020
$m $m
Short-term prepaid expenses 18 17
Other current assets 14 33
Total other current assets 32 50
Long-term prepaid expenses 22 22
Other non-current assets 84 82
Total other non-current assets 106 104
Total 138 154
Other current and non-current assets as of December 31, 2020, primarily
represent the funding of surety bonds in relation to intellectual property
related matters (see Note 11 for further discussion). In FY 2021, one of the
surety bond holders returned $26m causing a decrease in other current assets,
which is partially offset by a $6m increase related to a Directors &
Officers insurance claim settlement receivable.
Long-term prepaid expenses relate primarily to payments for contract
manufacturing capacity.
8. FINANCIAL LIABILITIES - BORROWINGS AND NET CASH
On June 30, 2021, the Group completed a refinancing of its term loan, repaying
in full the existing $235m term loan and replacing it with a new term loan
with a principal amount of $250m. As a result of the debt refinancing, in FY
2021, the Group incurred a collective charge of $2m related to writing off
unamortized deferred financing costs due to the extinguishment and settlement
of previous term loan ($1m) and advisory fees incurred in conjunction with the
refinancing ($1m). These costs were classified as exceptional. See Note 4 for
further details.
The Group capitalized $8m of deferred financing and original issue discount
costs related to the new term loan, which were netted against the total amount
borrowed and are amortized over the maturity period. The key terms of the new
term loan in effect at December 31, 2021, are as follows:
Currency Nominal interest margin Maturity Required annual repayments Minimum
liquidity
Term Loan facility USD Libor* (0.75%) + 5.25% 2026 1% Larger of $100m or 50% of Loan Balance
*While the new term loan is USD LIBOR based, the new term loan contains
fallback language to convert to a new reference rate when USD LIBOR is
discontinued or becomes non-representative, which is expected to occur in
early 2023.
• Nominal interest margin is calculated over three-month USD LIBOR subject
to a floor of 0.75%.
• The minimum liquidity is the larger of $100m or 50% of the outstanding
loan balance.
• There are no revolving credit commitments under the new Term Loan.
The table below sets out the current and non-current portion obligation of the
Term Loan:
Term loan Dec 31 Dec 31
2021 2020
$m $m
Term loan - current (3) (4)
Term loan - non-current (239) (230)
Total term loan (242) (234)
At December 31, 2021, the term loan fair value was approximately 99% (FY 2020:
98%) of par value. Cash at bank, trade receivables, and trade payables are
assumed to approximate their fair values.
Net cash, as presented below, is presented consistently with prior periods,
and represents a measure of liquidity considered by the Directors.
Analysis of net cash Dec 31 Dec 31
2021 2020
$m $m
Cash and cash equivalents 1,102 858
Term loan borrowings* (249) (235)
Total net cash 853 623
*Borrowings reflect the principal amount drawn before debt issuance costs of
$7m (FY 2020: $1m). These do not include lease liabilities of $44m (FY 2020:
$51m).
Reconciliation of net cash FY FY
2021 2020
$m $m
The movements in the period were as follows:
Net cash at beginning of period 623 821
Net increase/(decrease) in cash and cash equivalents 245 (207)
New borrowings (250) -
Repayment of borrowings 236 4
Exchange adjustments (1) 5
Net cash at end of period 853 623
9. PROVISIONS AND OTHER LIABILITIES
The Group is involved in legal and intellectual property disputes as described
in Note 11, "Legal Proceedings."
Provisions
Current and non-current provisions Current Non-Current $m Total Current Non-Current Total
$m Dec 31 2021 $m $m $m Dec 31 2020 $m
DOJ related matters (5) - (5) (32) - (32)
Intellectual property related matters - (73) (73) - (47) (47)
Restructuring costs - - - (6) - (6)
Other - (3) (3) - (4) (4)
Total provisions (5) (76) (81) (38) (51) (89)
Provisions are recognized when the Group has a present legal or constructive
obligation as a result of past events, an outflow of resources to settle that
obligation is probable, and the amount can be reliably estimated. Provisions
are measured at the present value of management's best estimate of the
expenditure required to settle the present obligation at the reporting date.
The Group carries a provision of $5m (FY 2020: $32m) pertaining to DOJ related
matters as discussed in Note 11. Negotiations with DOJ related plaintiffs
resulted in an exceptional provision release of $18m in FY 2021 (see Note 4).
The remaining movement of $9m in the provision relates to amounts settled and
paid in the year. DOJ related matters of $5m are expected to be settled within
the next 12 months.
The Group carries provisions totaling $73m (FY 2020: $47m) for intellectual
property related matters, all of which relate to potential redress for ongoing
intellectual property litigation with Dr. Reddy's Laboratories, S.A., and Dr.
Reddy's Laboratories Inc. (collectively, "DRL") and Alvogen Pharmaceuticals
(Alvogen), should the Group not be successful with those cases outlined in
Note 11, Intellectual property related matters - ANDA litigation. In Q3 2021,
upon conclusion of expert discovery, the Group increased the provision for
intellectual property related matters to $73m, resulting in an exceptional
charge of $24m. The provision represents the Group's best estimate of
potential damages owed to DRL and Alvogen for the period between FDA approval
and lifting of the preliminary injunction. This provision has been recorded at
the net present value, using a risk-free rate, considering the estimated
timing of settlement in 2023/2024. In FY 2021, the Group recorded finance
expense totaling $2m (FY 2020: $2m) for time value of money on this provision.
The Group does not expect this matter to be settled within a year and
therefore the provision of $73m is classified as non-current.
The restructuring provision related to cost saving initiatives announced and
implemented in 2020 which consisted of redundancy and related costs has been
fully utilized as of December 31, 2021.
Other provisions totaling $3m (FY 2020: $4m) primarily represent retirement
benefit costs which are not expected to be settled within one year.
Other liabilities
Current and non-current other liabilities Current Non-Current $m Total Current Non-Current Total
$m Dec 31 2021 $m $m $m Dec 31 2020 $m
DOJ resolution (53) (439) (492) - (486) (486)
RB indemnity settlement (8) (32) (40) (10) (40) (50)
Other - (3) (3) - - -
Total other liabilities (61) (474) (535) (10) (526) (536)
Other liabilities represent contractual obligations to third parties where the
amount and timing of payments is fixed. Where other liabilities are not
interest-bearing and the impact of discounting is significant, other
liabilities are recorded at their present value, generally using a risk-free
rate.
On July 24, 2020, the Group reached a resolution with the DOJ and other
litigants described in Note 11 under "DOJ Resolution", which was finalized in
November 2020 and the first payment of $103m (including interest) was made.
Subsequently, six annual instalments of $50m will be due every January 15 from
2022 to 2027 with the final instalment of $200m due in December 2027. Interest
accrues on certain portions of the resolution which will be paid together with
the annual instalment payments. For non-interest-bearing portions, the
liability has been recorded at the net present value based on timing of the
estimated payments. The discount rate and interest rate are 1.25%. In FY 2021,
the Group recorded interest expense totaling $6m (FY 2020: $3m). As of
December 31, 2021, $53m has been classified as current on the Group's balance
sheet.
On January 25, 2021, the Group reached a resolution with Reckitt Benckiser
(RB) to resolve claims which RB issued in the Commercial Court in London on
November 13, 2020, seeking indemnity under the 2014 Demerger Agreement.
Pursuant to the settlement, RB withdrew the US $1.4b claim to release Indivior
from any claim for indemnity under the Demerger Agreement relating to the DOJ
and FTC settlements which RB entered into in July 2019, as well as other
claims for indemnity arising from those matters. The Group has agreed to pay
RB a total of $50m and has agreed to release RB from any claims to seek
damages relating to its settlement with the DOJ and the FTC. The Group made an
initial payment of $10m in February 2021, following the resolution.
Subsequently, annual instalment payments of $8m will be due every January from
2022 to 2026. The Group carries a liability totaling $40m (FY 2020: $50m)
related to this settlement. The effect of discounting was not material. The
next instalment payment is due in January 2022 and therefore $8m has been
classified as current.
Other liabilities primarily represent deferred revenue related to a supply
agreement which is non-current as of December 31, 2021.
10. CONTINGENT LIABILITIES
The Group has assessed certain legal and other matters to be not probable
based upon current facts and circumstances, including any potential impact the
DOJ resolution could have on these matters. These represent contingent
liabilities. Except for those matters discussed in Note 11 under "DOJ
Resolution", "DOJ Related Matters" and "Intellectual Property Related
Matters", for which provisions have been recognized, Note 11 sets out the
contingent liabilities for legal and other disputes for which the Group has
assessed as contingent liabilities. Refer to Note 5 for discussion on State
Aid and other tax related contingent liabilities.
11. LEGAL PROCEEDINGS
DOJ Resolution
Agreement to Resolve Criminal Charges and Civil Complaints Related to SUBOXONE
Film
· The Group settled with the United States Department of Justice
(Justice Department or DOJ), the U.S. Federal Trade Commission (FTC), and U.S.
state attorneys general the criminal and civil liability in connection with a
multi-count indictment brought in April 2019 by a grand jury in the Western
District of Virginia, a civil lawsuit joined by the Justice Department in
2018, and an FTC investigation. Under the terms of the resolution agreement
with the Justice Department, the Group has agreed to compliance terms
regarding its sales and marketing practices. Compliance with these terms is
subject to annual Board and CEO certifications submitted to the U.S.
Attorney's Office.
· As part of the resolution with the FTC and as detailed in the
text of the stipulated order, for a ten-year period Indivior Inc. is required
to make specified disclosures to the FTC and is prohibited from certain
conduct.
· Under the terms of the five-year Corporate Integrity Agreement
with the HHS Office of the Inspector General (HHS-OIG), the Group will
continue its commitment to promote compliance with laws and regulations and
its ongoing evolution of an effective compliance program, including written
standards, training, reporting, and monitoring procedures. The Group is
subject to reporting and monitoring requirements, including annual reports and
compliance certifications from key management and the Board's Nominating &
Governance Committee, which is submitted to HHS-OIG. In addition, the Group is
subject to monitoring by an Independent Review Organization, who submits audit
findings to HHS-OIG, and review by a Board Compliance Expert, who prepared a
compliance assessment report in the first reporting period and will prepare a
compliance assessment report in the third reporting period.
In November 2020, the Group made a payment of $103m (including interest) when
the resolution was approved by the Court and made a subsequent payment in
January 2022 of $54m (including interest). Subsequently, five annual
instalments of $50m will be due every January 15 from 2023 through 2027. The
final instalment of $200m will be due in December 2027. The Group carries a
liability totaling of $492m (FY 2020: $486m) pertaining to the DOJ resolution.
Reckitt Benckiser
· On January 25, 2021, the Group reached a resolution with Reckitt
Benckiser as discussed in Note 9.
DOJ Related Matters
Federal False Claims Act Qui Tam Suits
· In August 2018, the United States unsealed three qui tam suits
pending in the Western District of Virginia that made a variety of allegations
under state and federal False Claims Act statutes regarding marketing and
promotion practices related to SUBOXONE, and in some instances claiming
unlawful retaliation. The suits also sought reasonable attorney's fees and
costs. Three other cases were filed in the District Court of the District of
New Jersey that also made a variety of allegations under state and federal
False Claims Act statutes regarding marketing and promotion practices related
to SUBOXONE, and in some instances claiming unlawful retaliation. The Group
settled these matters in 2020 and 2021.
State and Local Matters
· In November 2016, Indivior was served with a subpoena for records
from the State of California Department of Insurance under its civil
California insurance code authority. Certain of the qui tam suits filed in the
Western District of Virginia and the District of New Jersey assert claims
under the civil California insurance code. The Group settled with the relators
and the California Department of Insurance in 2021.
· In June 2019, the Group learned that the State of Illinois
Insurance Department is investigating potential violations of its civil
Insurance Claims Fraud Prevention Act with respect to its sales and marketing
activity. Certain of the qui tam suits filed in the Western District of
Virginia and the District of New Jersey assert claims under this statute,
including claims for associated attorney's fees and costs. The Group settled
with the relators and the Illinois Insurance Department in 2021.
· In addition to the federal and state health program claims,
claims have been asserted under the city false claims acts of Chicago and New
York City regarding the promotion of Suboxone film. The Group resolved the
matter with the City of Chicago in 2020.
False Claims Act Allegations
· In August 2018, the United States District Court for the Western
District of Virginia unsealed a declined qui tam complaint alleging causes of
action under the Federal and state False Claims Acts against certain entities
within the Group predicated on best price issues and claims of retaliation
(United States ex rel. Miller v. Reckitt Benckiser Group PLC et al., Case No.
1:15-cv-00017 (W.D. Va.)). The suit also seeks reasonable attorneys' fees and
costs. We understand that all government plaintiffs have declined to
intervene. The Group was served with the complaint in January 2021. We are in
discussions regarding this matter with the plaintiff-relator. The Group filed
a Motion to Dismiss on June 24, 2021.
· In May 2018, Indivior Inc. received an informal request from the
Office of the United States Attorney ("OUSA") for the Southern District of New
York, seeking records relating to the Suboxone manufacturing process and the
Group is discussing with the OUSA certain information and allegations
regarding the Suboxone manufacturing process the government received.
Securities Class Action Litigation
· In April 2019, Michael Van Dorp filed a putative class action
lawsuit in the United States District Court for the District of New Jersey on
behalf of holders of publicly traded Indivior securities alleging violations
of 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. In February 2021, the parties reached a settlement
agreement. A Motion for Entry of Order Preliminarily Approving Settlement was
granted by the court in September 2021. A settlement fairness occurred in
January 2022 and the case was dismissed.
Intellectual Property Related Matters
ANDA Litigation
· Indivior filed actions against Dr, Reddy's Laboratories S.A. and
Dr. Reddy's Laboratories, Inc. (together, "DRL") in the United States District
Court for the District of New Jersey ("NJ District Court") alleging that DRL's
generic buprenorphine/naloxone film product infringes U.S. Patent Nos.
9,687,454 and 9,931,305 ("the '454 and '305 Patents") in 2017 and 2018,
respectively. The cases were consolidated in May 2018. DRL received final FDA
approval for all four strengths of its generic buprenorphine/naloxone film
product in June 2018, and immediately launched its generic
buprenorphine/naloxone film product "at-risk." In July 2018, the NJ District
Court granted Indivior a Preliminary Injunction (PI) pending the outcome of a
trial on the merits of the '305 Patent, and required Indivior to post a surety
bond for $72m in connection with the PI. In November 2018, the Court of
Appeals for the Federal Circuit (CAFC) issued a decision vacating the PI
against DRL. On remand, the NJ District Court construed the claims of the '454
and '305 Patents. Indivior and DRL stipulated to noninfringement of the '305
Patent under the court's claim construction, but Indivior retained its rights
to appeal the construction and pursue its infringement claims pending appeal.
Separately, DRL filed an amended answer alleging various antitrust
counterclaims. Indivior's infringement claims concerning the '454 patent and
DRL's antitrust counterclaims remain pending in the NJ District Court. Summary
judgment motions have been fully briefed, but the NJ District Court has not
ruled on those motions. No trial date has been set. In February 2022, the NJ
District Court ordered the parties to mediation.
· In November 2018, DRL filed two petitions for inter partes review
("IPR") of the '454 Patent with the U.S. Patent and Trademark Office's Patent
Trial and Appeal Board ("PTAB"). The PTAB denied institution of one IPR
petition but granted institution for the other. The PTAB issued a decision in
June 2020, finding that claims 1-5, 7, and 9-14 were unpatentable, but that
DRL had not shown that claim 8 is unpatentable. Claim 6 was not challenged and
therefore was not addressed in the PTAB decision. Indivior appealed to the
CAFC. In December 2021, the CAFC affirmed the PTAB's decision. Indivior filed
a petition with the CAFC for a panel rehearing or rehearing en banc in January
2022. The CAFC has not yet ruled on Indivior's petition.
· Indivior filed actions against Alvogen Pine Brook LLC and Alvogen
Inc. (together, "Alvogen") in the NJ District Court alleging that Alvogen's
generic buprenorphine/naloxone film product infringes U.S. Patent Nos.
9,687,454 and 9,931,305 ("the '454 and '305 Patents") in 2017 and 2018,
respectively. The cases were consolidated in May 2018. In January 2019, the NJ
District Court granted Indivior a temporary restraining order ("TRO") to
restrain the launch of Alvogen's generic buprenorphine/naloxone film product
pending a trial on the merits of the '305 Patent and Indivior was required to
post a surety bond of $36M. Indivior and Alvogen entered into an agreement
whereby Alvogen was enjoined from selling in the US its generic
buprenorphine/naloxone film product unless and until the CAFC issued a mandate
vacating Indivior's separate PI against DRL. The CAFC's mandate vacating
Indivior's PI as to DRL issued in February 2019 and Alvogen launched its
generic product. Any sales in the US by Alvogen are on an "at-risk" basis,
subject to the ongoing litigation against Alvogen in the NJ District Court. In
November 2019, Alvogen filed an amended answer alleging various antitrust
counterclaims. In January 2020, Indivior and Alvogen stipulated to
noninfringement of the '305 Patent under the court's claim construction, but
Indivior retained its rights to appeal the construction and pursue its
infringement claims pending appeal. Indivior's infringement claims concerning
the '454 patent and Alvogen's antitrust counterclaims remain pending in the NJ
District Court. Summary judgment motions have been fully briefed, but the NJ
District Court has not ruled on those motions. No trial date has been set. In
February 2022, the NJ District Court ordered the parties to mediation.
Opposition to SUBLOCADE European Patent
· In October 2018, Teva Pharmaceutical Industries Ltd. ("Teva")
filed a Notice of Opposition with the European Patent Office ("EPO") seeking
to revoke European Patent No. EP 2579874 ("EP 874"), which relates to the
formulation for SUBLOCADE. Oral proceedings took place in September 2021 and
the patent was maintained as granted. Teva filed a notice of appeal in
November 2021 and has until the end of February 2022 to submit their grounds
for appeal.
· In March 2021, the law firm Elkington & Fife LLP filed a
Notice of Opposition with the EPO seeking to revoke European Patent No. EP
3215223 ("EP 223"), which relates to the dosing regimen for SUBLOCADE. The
Opposition alleges that the claims of EP 223 lack inventive step and extend
beyond the content of the application as originally filed. The Group responded
to the Opposition in August 2021. No oral hearing date has been set by the
EPO.
Antitrust Litigation and Consumer Protection
Antitrust Class and State Claims
· Civil antitrust claims have been filed by (a) a class of direct
purchasers, (b) a class of end payor plaintiffs, and (c) a group of states,
now numbering 41, and the District of Columbia. 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. The court has not set a trial date. Summary judgment
motions related to the Direct Purchaser, End Payor, and States actions were
fully briefed and were argued in December 2021. The deadline for the class
exclusion or "opt out" is April 17, 2022.
· In 2013, Reckitt Benckiser Pharmaceuticals, Inc. (now known as
Indivior Inc.) received notice that it and other companies were defendants in
a lawsuit initiated by writ in the Philadelphia County (Pennsylvania) Court of
Common Pleas. See Carefirst of Maryland, Inc. et al. v. Reckitt Benckiser
Inc., et al., Case. No. 2875, December Term 2013. The plaintiffs include
approximately 79 entities, most of which appear to be insurance companies or
other providers of health benefits plans. The Carefirst Plaintiffs have not
served a complaint, but they have indicated that their claims are related to
those asserted by the plaintiffs in re Suboxone, MDL No. 2445 (E.D. Pa.). The
Carefirst case remains pending.
The Group has evaluated the antitrust class and state claims in light of the
DOJ settlement under which a Group subsidiary pled guilty to one count of
making a false statement relating to health care matters in one state in 2012
(as discussed above under DOJ Resolution). The Group continues to believe its
defenses and continues to vigorously defend itself. Select plaintiffs in these
matters have previously made settlement demands (which were not accepted and
most of which are not current offers), totaling approximately $290m, which was
used for contingency planning only to model possible downside financial
effects. The final aggregate cost of these matters, whether resolved by
litigation or by settlement, may be materially different. If the Group were to
entertain further settlement discussions, we make no representations as to
what amounts, if any, it may agree to pay, nor regarding what amounts the
plaintiffs will demand.
Other Antitrust and Consumer Protection Claims
· In July 2019, the Indiana Attorney General issued a Civil
Investigative Demand investigating potential violations of Indiana's Civil
Deceptive Consumer Sales Act with respect to sales and marketing activity by
the Company. The Group has cooperated fully in this civil investigation.
· In 2020, the Group was served with lawsuits from a number of
insurance companies, some of whom are proceeding both on their own claims and
through the assignment of claims from affiliated companies. Cases filed by (1)
Humana Inc. and (2) Centene Corporation, Wellcare Healthcare Plans, Inc., New
York Quality Healthcare Corp. (d/b/a Fidelis Care), and Health Net, LLC were
pending in the Eastern District of Pennsylvania. The complaints were dismissed
in July 2021. Plaintiffs filed Notices of Appeal in August 2021 to the United
States Court of Appeals for the Third Circuit ("Third Circuit"). The Third
Circuit has indicated it may hear oral arguments on this appeal in March 2022.
Humana also filed a Complaint in state court in Kentucky with substantially
the same claims as were raised in the Federal Court case. That case has been
stayed pending a decision in the Third Circuit appeal. Cases filed by (1) Blue
Cross and Blue Shield of Massachusetts, Inc., Blue Cross and Blue Shield of
Massachusetts HMO Blue, Inc., (2) Health Care Service Corp., (3) Blue Cross
and Blue Shield of Florida, Inc., Health Options, Inc., (4) BCBSM, Inc. (d/b/a
Blue Cross and Blue Shield of Minnesota) and HMO Minnesota (d/b/a Blue Plus),
(5) Molina Healthcare, Inc., and (6) Aetna Inc. are pending in the Circuit
Court for the County of Roanoke, Virginia (the "Roanoke Plaintiffs"). The
allegations in these cases include many allegations made in other litigations,
including prior antitrust complaints, indictments, and qui tam complaints.
These plaintiffs have asserted claims under federal and state RICO statutes,
state antitrust statutes, state statutes prohibiting unfair and deceptive
practices, state statutes prohibiting insurance fraud, and common law fraud,
negligent misrepresentation, and unjust enrichment. In June 2021, defendants'
motion to stay was denied and certain claims were dismissed without prejudice.
The Roanoke Plaintiffs have filed amended complaints, and the Group has filed
demurrers, seeking dismissal of some of the asserted claims. Briefing is
scheduled to be completed on these demurrers in March of 2022.
The Group has begun its evaluation of the claims, believes in its defenses,
and intends to vigorously defend itself. Engagement with the claimants has
been minimal. Accordingly, no estimate of the range of potential loss can be
made at this time.
Civil Opioid Litigation
· Indivior has been named as a defendant in approximately 400 civil
lawsuits brought by state and local governments, public health agencies, and
individuals against manufacturers, distributors and retailers of opioids
alleging that they engaged in a longstanding practice to market opioids as
safe and effective for the treatment of long-term chronic pain in order to
increase the market for opioids and their own market share. The vast majority
of these cases have been consolidated and are pending in a federal
multi-district litigation (MDL) in U.S. District Court for the Northern
District of Ohio. At the present time, litigation against Indivior in the MDL
is stayed. Given the status and preliminary stage of litigation in both the
MDL and state courts, no estimate of possible loss in the opioid litigation
can be made at this time.
12. TRADE AND OTHER PAYABLES
Trade and other payables Dec 31 Dec 31
2021 2020
$m $m
Sales returns and rebates (436) (396)
Trade payables (137) (20)
Accruals (136) (99)
Other tax and social security payables (11) (9)
Total (720) (524)
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.
The increase in trade payables is primarily driven by timing of payments made
on government rebate payables in the U.S.
13. SHARE CAPITAL
Equity Ordinary Shares Nominal value paid per share Aggregate nominal value
$m
Issued and fully paid
At January 1, 2021 733,635,511 $0.10 73
Ordinary shares issued 2,311,560 $0.10 -
Shares repurchased and cancelled (33,507,433) $0.10 (3)
At December 31, 2021 702,439,638 70
In addition, 256,055 ordinary shares purchased as part of the share repurchase
program (discussed below) were cancelled in January 2022. These shares are
included in the total number of share capital outstanding as at December 31,
2021.
Equity Ordinary Shares Nominal value paid per share Aggregate nominal value
$m
Issued and fully paid
At January 1, 2020 730,787,719 $0.10 73
Ordinary shares issued 2,847,792 $0.10 -
At December 31, 2020 733,635,511 73
Ordinary shares issued
During the period, 2,311,560 ordinary shares (2020: 2,847,792) were allotted
to satisfy vesting/exercises under the Group's Long-Term Incentive Plan and
U.S. Employee Stock Purchase Plan.
Shares repurchased and cancelled
On July 30, 2021, the Group commenced an irrevocable share repurchase program
for the aggregate purchase price up to no more than $100m or 73,462,098 of
ordinary shares. On December 23, 2021, the program concluded with the Group
repurchasing 33,763,488 of the Group's ordinary shares over the duration of
the program for an aggregate nominal value of $3m ($0.10 per share). All
ordinary shares repurchased during the program were cancelled (except for
those cancelled in January 2022 as noted above) which resulted in a transfer
of the aggregate nominal value to a capital redemption reserve. The total cost
of the share repurchase program was $101m, consisting of $100m paid for the
repurchase of shares and $1m of directly attributable transaction costs paid,
which include advisory fees and stamp duties.
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