REG - Indivior PLC - Final Results
16/02/2023 07:00
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RNS Number : 0777Q Indivior PLC 16 February 2023
http://www.rns-pdf.londonstockexchange.com/rns/0777Q_1-2023-2-15.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/0777Q_1-2023-2-15.pdf)
February 16, 2023
FY 2022 Financial Results Announced - Executed Against Our Growth Strategy
• SUBLOCADE NR of $408m, +67% YOY
• Opiant Pharmaceuticals, Inc. Acquisition Expected to Close in Early
March
• Additional US Listing On Track for this Spring
Period to Dec 31 (Unaudited) Q4 Q4 % Change FY FY % Change
2022 2021 2022 2021
$m $m $m $m
Net Revenue (NR) 241 222 9% 901 791 14%
Operating (Loss)/Profit(1) (258) 45 NM (85) 213 NM
Net (Loss)/Income(1) (183) 35 NM (53) 205 NM
Diluted (LPS)/EPS(1 2) ($) $(1.34) $0.23 NM $(0.38) $1.35 NM
Adjusted Basis
Adj. Operating Profit(3) 40 32 25% 212 187 13%
Adj. Net Income(3) 39 25 56% 169 140 21%
Adj. Diluted EPS(2 3) ($) $0.27 $0.17 59% $1.16 $0.92 26%
1 Reflects an exceptional provision of $290m for legacy civil multidistrict
antitrust litigation matters.
2 On October 10, 2022, Indivior PLC completed a 5:1 share consolidation. The
Company's basic and diluted weighted average number of shares outstanding,
basic earnings per share, diluted earnings per share and adjusted earnings per
share (basic and diluted) have been retrospectively adjusted to reflect the
share consolidation in all the periods presented. See Note 6 for further
discussion.
3 Adjusted Basis excludes the impact of exceptional items as referenced and
reconciled in Notes 4 and 6. Adjusted results are not a substitute for, or
superior to, reported results presented in accordance with International
Financial Reporting Standards.
NM - Not meaningful
The 'Company' refers to Indivior PLC and the 'Group' refers to the Company and
its consolidated subsidiaries.
Comment by Mark Crossley, CEO of Indivior PLC
"I am pleased to report another strong year of execution against our strategic
priorities, resulting in double-digit underlying growth across our key
financial metrics. We saw excellent momentum from our increased efforts to
access the millions of opioid use disorder (OUD) patients in Organized Health
Systems (OHS) and the U.S. Justice System. This helped SUBLOCADE®
(buprenorphine extended-release) injection become our largest selling product
with annual net revenue (NR) of $408 million, an increase of 67% versus 2021.
At our Capital Markets Day in December, we increased our peak annual NR
expectations for SUBLOCADE to more than $1.5 billion and reiterated our
confidence in achieving peak annual NR for PERSERIS® (risperidone)
extended-release injection for schizophrenia of $200 to $300 million.
Additionally, because we are attempting to settle our outstanding legacy
multidistrict antitrust litigation, we recorded a provision related to these
matters.
Looking ahead, we expect 2023 to be another year of progress for Indivior,
marked by continued strong NR growth of SUBLOCADE and PERSERIS, the planned
integration of Opiant and the listing of our shares on NASDAQ. As a proven
leader in addiction treatment and science, Indivior is well-positioned to
deliver for patients and drive long term value creation for all our
stakeholders. I believe our prospects have never been brighter."
Initial mediation sessions in late January 2023 regarding legacy civil
multidistrict antitrust litigation provided the Group with new information on
the previously disclosed contingent liability. Accordingly, the Group recorded
an exceptional provision of $290m in FY 2022. Because these matters are in
various stages, Indivior cannot predict with any certainty how these matters
will ultimately be resolved, or the costs, or timing of such resolution. In
particular, any final aggregate costs of these matters, whether resolved by
settlement or trial, may be materially different from this provision. The
Group cannot predict with any certainty whether it will reach settlement with
the antitrust claimants (refer to Note 12 for further information).
FY 2022 / Q4 2022 Financial Highlights
• FY 2022 total net revenue (NR) of $901m increased 14% (FY 2021:
$791m); Q4 2022 total NR of $241m increased 9% (Q4 2021: $222m). NR growth in
each period was primarily driven by SUBLOCADE unit growth.
• FY 2022 reported operating loss of $85m (FY 2021 reported
operating profit: $213m); Q4 2022 reported operating loss of $258m (Q4 2021
reported operating profit: $45m). The losses in both periods are attributable
to the aforementioned provision. On an adjusted basis, FY 2022 operating
profit of $212m increased 13%
(Adj. FY 2021: $187m) reflecting strong NR growth partially offset by
increased sales and marketing expenses. Adj. Q4 2022 operating profit of $40m
increased 25% (Adj. Q4 2021: $32m), reflecting strong NR growth.
• FY 2022 reported net loss of $53m (FY 2021 reported net income:
$205m); Q4 2022 reported net loss of $183m (Q4 2021 reported net income:
$35m). On an adjusted basis, FY 2022 net income of $169m increased 21% (Adj.
FY 2021 net income: $140m). Adj. Q4 2022 net income of $39m increased 56%
(Adj. Q4 2021: $25m).
• Cash and investments totaled $991m at the end of Q4 2022
(including $26m restricted for self-insurance) (FY 2021: $1,102m). Refer to
Note 7 for investments and Notes 9 & 10 for obligations.
FY 2022 / Q4 2022 Operating Highlights
• FY 2022 SUBLOCADE NR of $408m (+67% vs. FY 2021); Q4 2022
SUBLOCADE NR of $118m (+57% vs. Q4 2021 and +9% vs. Q3 2022). Strong growth
reflected further OHS channel penetration and increased new US patient
enrollments. FY 2022 US units dispensed were approx. 316,200 (+73% vs. FY
2021). Q4 2022 US units dispensed were approx. 93,000 units (+66% vs. Q4 2021
and +11% vs. Q3 2022). Total SUBLOCADE patients on a 12-month rolling basis at
the end of Q4 2022 were approx. 82,500 (+68% vs. Q4 2021 and +12% vs. Q3
2022).
• FY 2022 PERSERIS NR of $28m (+65% vs. FY 2021); Q4 2022 PERSERIS
NR of $8m (+60% vs. Q4 2021 and unchanged vs. Q3 2022) reflected investment in
national field force coverage.
• FY 2022 SUBOXONE® (buprenorphine/naloxone) Film share averaged
20% (2021: 20%) and exited the year at 19% (2021: 22%).
• Aelis Farma Phase 2b study of AEF0117 in the treatment of
moderate to severe cannabis use disorder (ClinicalTrial.gov identifier:
NCT05322941) continued to recruit patients. Results from the study are
expected in 2024.
• The Group's acquisition of Opiant Pharmaceuticals, Inc. is
expected to close in early March, subject to Opiant shareholder approval. The
transaction has received required US government regulatory approvals.
US Listing
In September 2022, the Company received shareholder approval to additionally
list its shares in the US. The Company has chosen NASDAQ as its trading venue.
The listing is expected to take place in Spring 2023.
Share Repurchase Program
On May 3, 2022, Indivior announced a second share repurchase program of up to
$100m. Reflecting the 5:1 share consolidation (completed on October 10, 2022),
the Group repurchased and cancelled 4,792,710 Indivior ordinary shares,
equivalent to approximately 3% of diluted shares outstanding, through December
31, 2022 at a daily weighted average purchase price of 1,537p. The cost was
approximately $90m, which includes directly attributable transaction costs.
Refer to Note 14 for further discussion.
FY 2023 Guidance
The Group is introducing the below guidance for FY 2023. Guidance excludes the
impact of the pending completion of the acquisition of Opiant Pharmaceuticals,
Inc.
Total FY 2023 expected NR range of $950m to $1,020m (+9% vs. FY 2022 at the
mid-point), reflecting continued strong SUBLOCADE and PERSERIS growth and
accelerated share erosion for US SUBOXONE Film.
• SUBLOCADE FY 2023 expected NR range of $550m to $600m (+41% vs. FY
2022 at the mid-point), primarily based on strong penetration and growth in
the OHS channel, including the US Justice system. This expected NR range is
consistent with the Group's expectation that SUBLOCADE will reach an
annualized NR run rate of $1bn exiting FY 2025, and ultimately achieve peak
annual NR of >$1.5bn.
• PERSERIS FY 2023 expected NR range of $45m to $55m (+82% vs. FY
2022 at the mid-point), primarily based on continued progress with building
national US awareness and prescription growth.
• An accelerated rate of SUBOXONE Film market share decline,
reflecting underlying erosion at a similar rate to the last two years
(approximately 2 share points p.a.), together with the assumed impact from an
approved fourth buprenorphine/naloxone sublingual film generic entering the US
market in Q2 2023.
• Adjusted gross margin expected to be in the low to mid 80%
range, as the beneficial mix impact from increased SUBLOCADE NR is expected to
be offset by cost inflation.
• Adjusted SG&A expected to be in the range of $490m to $500m,
primarily reflecting cost inflation and incremental commercial investments to
accelerate access to SUBLOCADE in the US Justice System.
• R&D expected to be in the range of $80m to $90m, primarily
reflecting expenses related to ongoing SUBLOCADE long-term efficacy and safety
studies, early-stage asset advancement and cost inflation.
• Adjusted operating profit expected to be higher than FY 2022's
adjusted operating income of $212m, with year-over-year margin expansion.
• Guidance assumes no material change in exchange rates for key
currencies compared with FY 2022 average rates, notably USD/GBP and USD/EUR.
US OUD Market Update
In Q4 2022, the US buprenorphine medication-assisted treatment (BMAT) market
grew in mid-single digits. The Group continues to expect long-term US market
growth to be sustained in the mid- to high-single digit percentage range due
to increased 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 December 29, 2022 enactment of the Consolidated Appropriations Act, 2023
(P.L. 117-328), including the Mainstreaming Addiction Treatment Act (MAT Act),
eliminated the requirement for health care practitioners (HCP) to apply for a
separate waiver through the Drug Enforcement Administration (DEA) to dispense
certain treatments for maintenance or detoxification of patients with OUD,
including buprenorphine. Historically, HCPs treating patients with OUD with
buprenorphine had to undertake special additional registration, meet training
requirements that did not apply to any other medicine class, and limit the
number of patients they could treat. Indivior believes the elimination of
these requirements as part of this legislation will help to normalize the
chronic disease of addiction and expand access to evidence-based buprenorphine
treatment. The Group supports efforts to encourage more HCPs to provide BMAT
as a treatment option, and the Group continues to expand its compliance
capabilities for the growing number of BMAT prescribers and patients.
Financial Performance FY 2022 and Q4 2022
Total NR in FY 2022 increased 14% to $901m (FY 2021: $791m) at actual exchange
rates (+16% at constant exchange rates). In Q4 2022, total NR increased 9% at
actual exchange rates (+11% at constant exchange rates) to $241m (Q4 2021:
$222m).
US NR increased 21% in FY 2022 to $731m (FY 2021: $603m) and by 13% in Q4 2022
to $198m (Q4 2021: $176m). Strong year-over-year unit volume growth for
SUBLOCADE and PERSERIS, along with underlying BMAT market growth were the
principal drivers of the increase in both periods. Price changes were
insignificant to changes in NR.
Rest of World (ROW) NR decreased 10% at actual exchange rates in FY 2022 to
$170m (FY 2021: $188m) (+1% at constant exchange rates). In Q4 2022, ROW NR
decreased 7% at actual exchange rates to $43m (Q4 2021: $46m) (+4% at constant
exchange rates). In FY 2022 and in Q4 2022, positive contributions from
product launches in new markets (SUBLOCADE / SUBUTEX Prolonged Release and
SUBOXONE Film) were more than offset by unfavorable foreign currency
translation and ongoing competitive pressure on legacy tablet products. FY
2022 and Q4 2022 SUBLOCADE / SUBUTEX® Prolonged Release NR in ROW were $27m
and $8m (at actual exchange rates), respectively. NR at a constant exchange
rate is an alternative performance measure used by Management to evaluate
underlying performance of the business and is calculated by applying the FY
2021 exchange rate to NR in the currency of the foreign entity.
Gross margin as reported in FY 2022 was 82% (FY 2021: 84%) and 82% in Q4 2022
(Q4 2021: 83%). Gross margin declined slightly as expected in both FY 2022 and
Q4 2022, reflecting a higher mix of less profitable government channels for
SUBOXONE film in the US and some cost impacts from inflation.
SG&A expenses as reported in FY 2022 were $763m (FY 2021: $431m) and $431m
as reported in Q4 2022 (Q4 2021: $132m). FY 2022 and Q4 2022 both included
exceptional items of $296m for litigation provisions primarily related to the
antitrust litigation and consumer protection claims. FY 2022 and Q4 2022 also
included $6m and $2m, respectively, of exceptional legal and consulting costs
incurred in preparation for the planned additional listing of Indivior shares
on a US exchange. FY 2021 included exceptional costs of $6m due to a non-cash
adjustment to the provision for ANDA litigation offset by release of
provisions.
Excluding exceptional items, FY 2022 SG&A expense increased 8% to $461m
(Adj. FY 2021: $425m). Excluding exceptional items, Q4 2022 SG&A expense
was unchanged at $133m (Adj. Q4 2021: $133m). The increase in FY 2022
primarily reflects sales and marketing investments to grow the Group's
long-acting injectable products, SUBLOCADE and PERSERIS, along with cost
inflation.
FY 2022 and Q4 2022 R&D expenses were $72m and $29m, respectively (FY
2021: $52m; Q4 2021: $19m). The increases over the year-ago periods reflect
higher R&D activity for SUBLOCADE studies (safety and efficacy and Post
Marketing Requirement (PMR) studies), process validation testing related to
LAI capacity expansion and continued early-stage asset development.
FY 2022 and Q4 2022 net other operating income was $8m and $4m, respectively,
(FY 2021: $32m; Q4 2021: $12m). Q4 2022 included a fair value gain on equity
investments and FY 2022 included the net proceeds received from the
out-licensing of nasal naloxone opioid overdose patents and a Directors' &
Officers' insurance claim settlement that were recorded as exceptional other
operating income. FY 2021 and Q4 2021 included $32m and $12m, respectively, of
net exceptional benefits primarily due to the net proceeds received from the
sale of the legacy TEMGESIC®/ BUPREX® / BUPREXX® (buprenorphine) franchise
outside of North America and a Directors' & Officers' insurance claim
settlement.
FY 2022 operating loss as reported was $85m (FY 2021 operating profit: $213m).
Net exceptional costs of $297m are included in the current period. Net
exceptional benefits of $26m were included in FY 2021. On an adjusted basis,
FY 2022 adjusted operating profit increased 13% to $212m (FY 2021: $187m). The
loss in FY 2022 on a reported basis primarily reflected the exceptional
litigation provision. The increase in FY 2022 on an adjusted basis reflected
strong NR growth partially offset by higher operating expenses, mainly related
to increased sales and marketing investments to grow the Group's long-acting
injectable technologies, SUBLOCADE and PERSERIS, and higher R&D expenses.
Q4 2022 operating loss as reported was $258m (Q4 2021 operating profit: $45m).
Exceptional costs of $298m are included in the current period while
exceptional benefit items of $13m are included in Q4 2021. On an adjusted
basis, Q4 2022 operating profit increased 25% to $40m (Adj. Q4 2021: $32m).
The loss in Q4 2022 on a reported basis primarily reflected the exceptional
litigation provision. The increase in Q4 2022 on an adjusted basis primarily
reflected strong NR growth partially offset by higher operating expenses,
principally increased R&D activity.
FY 2022 net finance expense as reported was $10m (FY 2021: $23m expense). The
reduction in net finance expense reflected higher interest income earned on
the Group's investments and rising interest rates.
FY 2022 reported tax benefit was $42m, or a rate of 44% (FY 2021 tax benefit:
$15m, -8%). FY 2022 adjusted tax expense was $33m, excluding the $75m tax
benefit on exceptional items, an effective tax rate of 16%. FY 2021 adjusted
tax expense amounted to $25m, excluding the $40m tax benefit on exceptional
items, an effective tax rate of 15%. The Q4 2022 reported tax benefit was
$73m, or a rate of 29% (Q4 2021: $4m, 10%). Q4 2022 adjusted tax expense was
$3m, excluding the $76m tax benefit on exceptional items, an effective tax
rate of 7%. The Q4 2022 adjusted tax rate was positively impacted by
revaluation of deferred taxes for US state rate and nexus changes.
FY 2022 reported net loss was $53m (FY 2021 reported net income: $205m)
primarily reflecting the exceptional litigation provision. Excluding the net
after tax impact from exceptional items, FY 2022 adjusted net income increased
21% to $169m (Adj. FY 2021: $140m). The increase in net income on an adjusted
basis primarily reflected higher NR partially offset by the increase in
operating expense, primarily SG&A investments behind SUBLOCADE and
PERSERIS. Q4 2022 net loss on a reported basis was $183m (Q4 2021 reported net
income: $35m). On an adjusted basis excluding the net after-tax impact from
exceptional items, Q4 2022 net income increased 56% to $39m (Adj. Q4 2021:
$25m). Higher Q4 2022 net income on an adjusted basis was primarily due to
strong NR growth and lower net finance expense.
Diluted (loss)/earnings per share were $(0.38) on a reported basis and $1.16
on an adjusted basis in FY 2022 (FY 2021: $1.35 earnings per share on a
diluted basis and $0.92 earnings per share adjusted diluted basis). In Q4
2022, diluted (loss)/earnings per share were $(1.34) and adjusted diluted
earnings per share were $0.27 (Q4 2021: $0.23 and $0.17 earnings per share on
a diluted and adjusted diluted basis, respectively).
Balance Sheet & Cash Flow
Cash and investments totaled $991m at the end of Q4 2022 (including $26m
restricted for self-insurance) (FY 2021: $1,102m). Cash generated from
operations in FY 2022 was $63m (FY 2021: $395m). This included exceptional
cash litigation settlement payments totaling $108m in H1 2022, partially
offset by the return of surety bond cash collateral of $64m. Excluding these
items, the remaining decrease in cash generated from operations was primarily
due to the timing of settlement of trade payables. Gross borrowings, before
issuance costs, were $246m at December 31, 2022 (ending FY 2021: $249m).
Net working capital, defined by management as inventory plus trade
receivables, less trade and other payables, was negative $283m on
December 31, 2022, versus negative $423m at the end of FY 2021. The change in
the period was primarily the result of the timing of settlement of trade
payables.
Net cash outflow from operating activities was $4m in FY 2022 (FY 2021 cash
inflow: $353m) reflecting the changes in cash generated from operations and
higher interest paid on the Group's term loan facility, interest paid on
settlement payments and income taxes paid in FY 2022 vs. income tax refunds
received in FY 2021.
FY 2022 cash outflow from investing activities was $223m (FY 2021 cash
outflow: $14m) which reflected the net investment in a portfolio of
investment-grade debt and treasury securities. See Note 7 for further
discussion on investments.
FY 2022 cash outflow from financing activities was $100m (FY 2021 cash
outflow: $94m) which primarily reflected an increase in payments made for the
Group's share repurchase program.
R&D / Pipeline Update
Indivior's quarterly R&D and pipeline update may be found here
(https://www.indivior.com/en/our-science/pipeline) .
Risk Factors Update
The Board of Directors oversees the approach to risk management so that the
principal risks, including those that would threaten the Group's business
model, future performance or viability, are effectively managed and/or
mitigated. While the Group aims to identify and manage such risks, no risk
management strategy can provide absolute assurance against loss.
The principal risks facing the Group have not significantly changed over the
year and will be set out in the Group's Annual Report for the 2022 financial
year available in March 2023. However, as mentioned in Note 1, "Basis of
Preparation and Accounting Policies", and Note 12, "Legal Proceedings", if the
Group was found liable in the currently scheduled September 18, 2023
multidistrict litigation trial to any of the Plaintiffs and was unable to
reduce the claimed damages of such Plaintiffs group or groups during such
trial (or in any subsequent proceeding), which the Directors believe is beyond
'severe but plausible' (and therefore remote) within the going concern period,
then its financial position, results and future cash flows could be materially
adversely impacted. If the Group continues with mediation or other settlement
discussions, it makes no guarantee as to whether any settlement can be reached
and if so, what amounts, if any, it may agree to pay, or what amounts the
Plaintiffs will demand. The set of principal risks should not be considered as
an exhaustive list of all risks the Group faces.
Exchange Rates
The average and period end exchange rates used for the translation of
currencies into US dollars that have most significant impact on the Group's
results were:
Full Year to December 31, Full Year to December 31,
2022
2021
GB £ period end 1.2083 1.3532
GB £ average rate 1.2386 1.3763
€ Euro period end 1.0698 1.1378
€ Euro average 1.0545 1.1840
Webcast Details
A live webcast presentation will be held on February 16, 2023 at 13:00 BST
(8:00 am EDT) hosted by Mark Crossley, CEO. The details are below. All
materials will be available on the Group's website prior to the event at
www.indivior.com (http://www.indivior.com) .
Webcast link: https://edge.media-server.com/mmc/p/7wfjw5s4
(https://edge.media-server.com/mmc/p/7wfjw5s4)
Participants may access the presentation telephonically by registering with
the following link:
https://register.vevent.com/register/BI6229b9170b5d4c04924cf0da6c6c7016
(https://register.vevent.com/register/BI6229b9170b5d4c04924cf0da6c6c7016)
Registrants will have an option to be called back immediately prior to the
call or be provided a call-in # with a unique pin code following their
registration).
For Further Information
Investor Enquiries Jason Thompson VP, Investor Relations +1 804 402 7123
Indivior PLC jason.thompson@indivior.com
Tim Owens Director, Investor Relations Indivior PLC +1 804 263 3978
timothy.owens@indivior.com
Media Enquiries Jonathan Sibun Tulchan Communications +44 (0)20 7353 4200
US Media Inquiries +1 804 594 0836
Indiviormediacontacts@indivior.com
Corporate Website www.indivior.com
This announcement does not constitute an offer to sell, or the solicitation of
an offer to subscribe for or otherwise acquire or dispose of shares in the
Group to any person in any jurisdiction to whom it is unlawful to make such
offer or solicitation.
About Indivior
Indivior is a global pharmaceutical company working to help change patients'
lives by developing medicines to treat substance use disorders (SUD) and
serious mental illnesses. Our vision is that all patients around the world
will have access to evidence-based treatment for the chronic conditions and
co-occurring disorders of SUD. Indivior is dedicated to transforming SUD from
a global human crisis to a recognized and treated chronic disease. Building on
its global portfolio of OUD treatments, Indivior has a pipeline of product
candidates designed to both expand on its heritage in this category and
potentially address other chronic conditions and co-occurring disorders of
SUD, including alcohol use disorder and cannabis use disorder. Headquartered
in the United States in Richmond, VA, Indivior employs more than 900
individuals globally and its portfolio of products is available in 39
countries worldwide. Visit www.indivior.com
(https://nam12.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.indivior.com%2F&data=05%7C01%7Cjason.thompson%40Indivior.com%7C229aeec7b17246ed833208da55c46abe%7Cbed52191489442999db948e4fb29646e%7C1%7C0%7C637916599362456007%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=u6JGYoyD%2BwG914fpSswN7wO0FA4meYgsYi4pnW78lRs%3D&reserved=0)
to learn more. Connect with Indivior on LinkedIn by
visiting www.linkedin.com/company/indivior
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.
Important Cautionary Note Regarding Forward-Looking Statements
This announcement contains certain statements that are forward-looking.
Forward-looking statements include, among other things, statements regarding
the Indivior Group's financial guidance for 2023 and its medium- and long-term
growth outlook; expectations for NR levels for particular products; the
pending acquisition of Opiant; expectations regarding the Group's provisions,
legal proceedings and matters, the planned additional US stock exchange
listing; expected exceptional and recurring costs related to a US stock
exchange listing; expected market growth rates; expected changes in market
share; future exchange rates; operational goals; its product development
pipeline and potential future products; ongoing litigation; and other
statements containing the words "believe", "anticipate", "plan", "expect",
"intend", "estimate", "forecast," "strategy," "target," "guidance," "outlook,"
"potential", "project", "priority," "may", "will", "should", "would", "could",
"can", "outlook," "guidance", the negatives thereof, and variations thereon
and similar expressions. By their nature, forward-looking statements involve
risks and uncertainties as they relate to events or circumstances that may or
may not occur in the future.
Actual results may differ materially from those expressed or implied in such
statements because they relate to future events. Various factors may cause
differences between Indivior's expectations and actual results, including,
among others, the material risks described in the most recent Indivior PLC
Annual Report and in subsequent releases; our reliance on third parties to
manufacture commercial supplies of most of our products, conduct our clinical
trials and at times to collaborate on products in our pipeline; our ability to
comply with legal and regulatory settlements, healthcare laws and regulations,
requirements imposed by regulatory agencies and payment and reporting
obligations under government pricing programs; the substantial litigation and
ongoing investigations to which we are or may become a party; Risks related to
the manufacture and distribution of our products, some of which are controlled
substances; market acceptance of our products as well as our ability to
commercialize our products and compete with other market participants; the
uncertainties related to the development of new products, including through
acquisitions, and the related regulatory approval process; our dependence on a
small number of significant customers; our ability to retain key personnel or
attract new personnel; our dependence on third-party payors for the
reimbursement of our products and the increasing focus on pricing and
competition in our industry; unintended side effects caused by the clinical
study or commercial use of our products; our use of hazardous materials in our
manufacturing facilities; our import, manufacturing and distribution of
controlled substances; our ability to successfully execute acquisitions,
partnerships, joint ventures, dispositions or other strategic acquisitions;
our ability to protect our intellectual property rights and the substantial
cost of litigation or other proceedings related to intellectual property
rights; the risks related to product liability claims or product recalls; the
significant amount of laws and regulations that we are subject to, including
due to the international nature of our business; macroeconomic trends and
other global developments such as the COVID-19 pandemic; the terms of our debt
instruments, changes in our credit ratings and our ability to service our
indebtedness and other obligations as they come due; changes in applicable tax
rate or tax rules, regulations or interpretations and our ability to realize
our deferred tax assets; and such other factors as set out in this press
release.
Forward-looking statements speak only as of the date that they are made and
should be regarded solely as our current plans, estimates and beliefs. Except
as required by law, we do not undertake and specifically decline any
obligation to update, republish or revise forward-looking statements to
reflect future events or circumstances or to reflect the occurrences of
unanticipated events.
Unaudited condensed consolidated income statement
Q4 Q4 FY FY
2022 2021 2022 2021
For the three and twelve months ended December 31 Notes $m $m $m $m
Net Revenue 2 241 222 901 791
Cost of sales (43) (38) (159) (127)
Gross Profit 198 184 742 664
Selling, general and administrative expenses 3 (431) (132) (763) (431)
Research and development expenses 3 (29) (19) (72) (52)
Net other operating income 3 4 12 8 32
Operating (Loss)/Profit (258) 45 (85) 213
Operating profit before exceptional items 40 32 212 187
Exceptional items 4 (298) 13 (297) 26
Finance income 10 1 19 4
Finance expense (8) (7) (29) (27)
Net Finance Income/(Expense) 2 (6) (10) (23)
Net finance income/(expense) before exceptional items 2 (6) (10) (22)
Exceptional items within finance expense 4 - - - (1)
(Loss)/Profit Before Taxation (256) 39 (95) 190
Income tax benefit/(expense) 5 73 (4) 42 15
Taxation before exceptional items (3) (1) (33) (25)
Exceptional items within taxation 4 76 (3) 75 40
Net (Loss)/Income (183) 35 (53) 205
(Loss)/Earnings per ordinary share (in dollars)*
Basic (loss)/earnings per share 6 $(1.34) $0.25 $(0.38) $1.41
Diluted (loss)/earnings per share 6 $(1.34) $0.23 $(0.38) $1.35
* Basic and diluted (loss)/earnings per share have been retrospectively
adjusted to reflect the impact of the Company's share consolidation. Refer to
Note 6 for further details.
Unaudited condensed consolidated statement of comprehensive (loss)/income
Q4 Q4 FY FY
2022 2021 2022 2021
For the three and twelve months ended December 31 $m $m $m $m
Net (loss)/income (183) 35 (53) 205
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss in subsequent years:
Foreign currency translation adjustment, net 17 (1) (19) (7)
Other comprehensive income/(loss) 17 (1) (19) (7)
Total comprehensive (loss)/income (166) 34 (72) 198
The notes are an integral part of these unaudited condensed consolidated
financial statements.
Unaudited condensed consolidated balance sheet
Dec 31, 2022 Dec 31, 2021
Notes $m $m
ASSETS
Non-current assets
Intangible assets 70 82
Property, plant and equipment 54 58
Right-of-use assets 31 37
Deferred tax assets 5 219 105
Investments 7 98 -
Other assets 8 38 106
510 388
Current assets
Inventories 114 95
Trade receivables 220 202
Other assets 8 27 32
Current tax receivable 5 5 13
Investments 7 119 -
Cash and cash equivalents 774 1,102
1,259 1,444
Total assets 1,769 1,832
LIABILITIES
Current liabilities
Borrowings 9 (3) (3)
Provisions 10 (303) (5)
Other liabilities 10 (79) (61)
Trade and other payables 13 (617) (720)
Lease liabilities (8) (8)
Current tax liabilities 5 (9) (7)
(1,019) (804)
Non-current liabilities
Borrowings 9 (237) (239)
Provisions 10 (5) (76)
Other liabilities 10 (428) (474)
Lease liabilities (29) (36)
(699) (825)
Total liabilities (1,718) (1,629)
Net assets 51 203
EQUITY
Capital and reserves
Share capital 14 68 70
Share premium 8 7
Capital redemption reserve 6 3
Other reserve (1,295) (1,295)
Foreign currency translation reserve (39) (20)
Retained earnings 1,303 1,438
Total equity 51 203
The notes are an integral part of these unaudited condensed consolidated
financial statements.
Unaudited condensed consolidated statement of changes in equity
Notes Share capital Share premium Capital redemption reserve Other reserve Foreign currency translation reserve Retained earnings Total equity
$m $m $m $m $m $m $m
Balance at January 1, 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
Share-based plans - - - - - 11 11
Settlement of tax on equity awards - - - - - (1) (1)
Shares repurchased and cancelled 14 (3) - 3 - - (101) (101)
Taxation on share-based plans - - - - - 13 13
Balance at December 31, 2021 70 7 3 (1,295) (20) 1,438 203
Balance at January 1, 2022 70 7 3 (1,295) (20) 1,438 203
Comprehensive loss
Net loss - - - - - (53) (53)
Other comprehensive loss - - - - (19) - (19)
Total comprehensive loss - - - - (19) (53) (72)
Transactions recognized directly in equity
Shares issued 1 1 - - - - 2
Share-based plans - - - - - 16 16
Settlement of tax on equity awards - - - - - (10) (10)
Shares repurchased and cancelled 14 (3) - 3 - - (90) (90)
Transfer to share repurchase liability - - - - - (9) (9)
Taxation on share-based plans - - - - - 11 11
Balance at December 31, 2022 68 8 6 (1,295) (39) 1,303 51
The notes are an integral part of these unaudited condensed consolidated
financial statements.
Unaudited condensed consolidated cash flow statement
2022 2021
For the twelve months ended December 31 $m $m
CASH FLOWS FROM OPERATING ACTIVITIES
Operating (Loss)/Profit (85) 213
Depreciation and amortization of property, plant and equipment and intangible 13 15
assets
Depreciation of right-of-use assets 8 7
Gain on disposal of intangible assets (1) (20)
Share-based payments 16 11
Impact from foreign exchange movements (3) (3)
Settlement of tax on employee awards (10) (1)
Increase in trade receivables (21) (25)
Decrease in current and non-current other assets 72 16
Increase in inventories (25) (3)
(Decrease)/increase in trade and other payables (98) 201
Increase/(Decrease) in provisions and other liabilities(1) 197 (16)
Cash generated from operations 63 395
Interest paid (24) (18)
Interest received 15 1
Exceptional tax refund - 31
Taxes paid (57) (48)
Transaction costs related to debt refinancing (1) (8)
Net cash (outflow)/inflow from operating activities (4) 353
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (5) (4)
Purchase of investments (245) -
Maturity of investments 27 -
Purchase of intangible asset (1) (30)
Proceeds from disposal of intangible assets 1 20
Net cash outflow from investing activities (223) (14)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings - 250
Repayment of borrowings (3) (236)
Principal elements of lease payments (9) (8)
Shares repurchased and cancelled (90) (101)
Proceeds from the issuance of ordinary shares 2 1
Net cash outflow from financing activities (100) (94)
Exchange difference on cash and cash equivalents (1) (1)
Net (decrease)/increase in cash and cash equivalents (327) 245
Cash and cash equivalents at beginning of the period 1,102 858
Cash and cash equivalents at end of the period 774 1,102
(1)Changes in the line item provisions and other liabilities for FY 2022
include exceptional litigation settlement payments totaling $108m to the DOJ,
DRL and RB (FY 2021: $10m to RB, $9m for DOJ related matters). $4m of interest
paid on the DOJ Resolution in YTD 2022 has been recorded in the interest paid
line item.
The notes are an integral part of these condensed consolidated financial
statements.
Notes to the unaudited condensed consolidated financial statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Indivior PLC (the 'Company') is a public limited company incorporated on
September 26, 2014 and domiciled in the United Kingdom. In these unaudited
condensed consolidated financial statements ('Condensed Financial
Statements'), reference to the 'Group' means the Company and all its
subsidiaries.
The Condensed Financial Statements are unaudited and do not include all the
information and disclosures required in the annual financial statements.
Therefore the Condensed Financial Statements should be read in conjunction
with the Group's Annual Report and Accounts for the year ended December 31,
2021, which have been prepared in accordance with UK-adopted International
Accounting Standards and in conformity with the Companies Act 2006 as
applicable to companies reporting under those standards. These Condensed
Financial Statements were approved for issue on February 15, 2023. In
preparing these Condensed Financial Statements, the significant judgments made
by management in applying the Group's accounting policies and the key sources
of estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended December 31, 2021,
except for in relation to ongoing litigation matters, whereby a judgment was
previously taken to treat multidistrict antitrust class and state claims as a
contingent liability and this judgment has now changed such that a provision
has been recorded at December 31, 2022. This provision is deemed to be a
significant estimate (see Notes 10 and 12 for further discussion).
In 2022, the Group purchased ordinary shares of a listed company and invested
in a portfolio of investment-grade corporate debt and U.S. Treasury securities
and has therefore adopted new accounting policies related to classification,
and initial and subsequent recognition as disclosed in Note 7. As discussed in
Notes 6 and 14, the Company effected a 5-for-1 share consolidation on October
10, 2022. Shareholders received 1 new Ordinary share with a nominal value of
$0.50 each for every 5 previously existing Ordinary shares which had a nominal
value of $0.10 each. The Company's basic and diluted weighted average number
of shares outstanding, basic (loss)/earnings per share, diluted
(loss)/earnings per share and adjusted earnings per share (basic and diluted)
have been retrospectively adjusted to reflect the share consolidation in all
the periods presented.
The Directors have assessed the Group's ability to maintain sufficient
liquidity to fund its operations, fulfil financial and compliance obligations
as set out in Note 10, and comply with the minimum liquidity covenant in the
Group's debt facility for the period to June 2024 (the going concern period).
A base case model was produced reflecting:
• Board approved budgets for the period;
• the proposed acquisition of Opiant Pharmaceuticals, Inc. which
is expected to complete in Q1 2023; and
• settlement of liabilities and provisions in line with
contractual or expected terms.
The Directors also assessed a 'severe but plausible' downside scenario which
included the following key changes to the base case within the going concern
period:
• the risk that SUBLOCADE will not meet revenue growth
expectations by modelling a 15% decline on forecasts;
• an accelerated decline in sublingual product sales including
reversion to generic analogues for SUBOXONE Film in the US; and
• stress testing of payments from ongoing legal proceedings.
Under both the base case and the downside scenario, sufficient liquidity
exists and is generated by the business such that all operational and covenant
requirements are met for the going concern period. The Directors believe the
near-term litigation outcomes can be appropriately managed; should this not be
the case, the Group would take the cases to trial where it believes it has a
strong case that would not merit material additional payments in the going
concern periods. These risks were balanced against the Group's current and
forecast liquidity position as well as other mitigating measures available to
the Group. As a result of the analysis described above, the Directors
reasonably expect the Group to have adequate resources to continue in
operational existence for at least one year from the approval of these
Condensed Financial Statements and therefore consider the going concern basis
to be appropriate for the accounting and preparation of these Condensed
Financial Statements.
The financial information contained in this document does not constitute
statutory accounts as defined in section 434 and 435 of the Companies Act
2006. The Group's statutory financial statements for the year ended
December 31, 2021, were approved by the Board of Directors on March 17, 2022,
and delivered to the Registrar of Companies. The report of the auditors on
those accounts was unqualified, did not contain an emphasis of
matter paragraph and did not contain any statement under section 498 of the
Companies Act 2006.
2. SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker ('CODM'). The CODM,
who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Chief Executive Officer (CEO).
The Group is predominantly engaged in a single business activity, which is the
development, manufacture, and sale of buprenorphine-based prescription drugs
for treatment of opioid dependence and related disorders. The CEO reviews
disaggregated net revenue on a geographical and product basis. Financial
results are reviewed on a consolidated basis for evaluating financial
performance and allocating resources. Accordingly, the Group operates in a
single reportable segment.
Net revenue and non-current assets
Revenues are attributed to countries based on the country where the sale
originates. The following tables represent net revenues from continuing
operations and non-current assets, net of accumulated depreciation and
amortization, by country. Non-current assets for this purpose consist of
intangible assets, property, plant and equipment, right-of-use assets,
investments, and other assets. Net revenues for the three and twelve months to
and non-current assets as of December 31, 2022 and 2021 were as follows:
Net revenue:
Q4 Q4 FY FY
2022 2021 2022 2021
For the three and twelve months ended December 31 $m $m $m $m
United States 198 176 731 603
Rest of World 43 46 170 188
Total 241 222 901 791
On a disaggregated basis, the Group's net revenue by major product line:
Q4 Q4 FY FY
2022 2021 2022 2021
For the three and twelve months ended December 31 $m $m $m $m
Sublingual/other 115 142 465 530
SUBLOCADE 118 75 408 244
PERSERIS 8 5 28 17
Total 241 222 901 791
Non-current assets:
Dec 31, Dec 31,
2022
2021
$m $m
United States 65 133
Rest of World 226 150
Total 291 283
3. OPERATING EXPENSES AND NET OTHER OPERATING INCOME
The table below sets out selected operating costs and expense information:
Operating expenses
Q4 Q4 FY FY
2022 2021 2022 2021
For the three and twelve months ended December 31 $m $m $m $m
Research and development expenses (29) (19) (72) (52)
Selling and general expenses (58) (63) (218) (192)
Administrative expenses(1) (373) (69) (545) (239)
Selling, general, and administrative expenses (431) (132) (763) (431)
Depreciation, amortization, and impairment(2) (3) (3) (13) (13)
(1) Administrative expenses include exceptional costs in the current period as
outlined in Note 4.
(2) Depreciation and amortization expense is included in research and
development and selling, general and administrative expenses. Additionally,
depreciation and amortization expense in FY 2022 of $8m (FY 2021: $9m) for ROU
assets and intangibles is included within cost of sales.
Medical affairs functional costs are included in administrative and general
expenses. Administrative and general expenses include exceptional items in the
current and prior period as outlined in Note 4.
Net other operating income
Q4 Q4 FY FY
2022 2021 2022 2021
For the three and twelve months ended December 31 $m $m $m $m
Net proceeds from the sale of intangible assets - - 1 20
Directors' and Officers' insurance reimbursements - 12 5 12
Fair value gain on equity investment 3 - - -
Other income 1 - 2 -
Net other operating income 4 12 8 32
Net other operating income is credited to the income statement as earned. See
further discussion in Note 4 and Note 7.
4. EXCEPTIONAL ITEMS AND ADJUSTED RESULTS
Exceptional items
Where significant expenses or income occur that do not reflect the Group's
ongoing operations or the adjustment of which may help with the comparison to
prior periods, these items are disclosed as exceptional items in the income
statement. Examples of such items could include income or restructuring and
related expenses from the reconfiguration of the Group's activities and/or
capital structure, impairment of current and non-current assets, gains and
losses from the sale of intangible assets, certain costs arising as a result
of significant and non-recurring regulatory and litigation matters, and
certain tax related matters. Exceptional items are excluded from adjusted
results consistent with the internal reporting provided to management and the
Directors. Adjusted results are not measures defined by IFRS and are not a
substitute for, or superior to, reported results presented in accordance with
IFRS. Management performs a quantitative and qualitative assessment to
determine if an item should be considered for exceptional treatment.
The table below sets out exceptional income/(expense) recorded in each period:
Q4 Q4 FY FY
2022 2021 2022 2021
For the three and twelve months ended December 31 $m $m $m $m
Exceptional items within SG&A
Restructuring costs(1) - 1 - 1
Legal expenses/provision(2) (296) - (296) 18
ANDA litigation(3) - - - (24)
Debt refinancing(4) - - - (1)
US listing costs(5) (2) - (6) -
Total exceptional items within SG&A (298) 1 (302) (6)
Exceptional items within net other operating income
Net proceeds from disposal of intangible asset(6) - - - 20
Insurance reimbursement(7) - 12 5 12
Total exceptional items within other operating income - 12 5 32
Exceptional items within net finance expense
Finance expense(4) - - - (1)
Total exceptional items within finance expense - - - (1)
Total exceptional items before taxes (298) 13 (297) 25
Tax on exceptional items 58 (3) 57 (3)
Exceptional tax item(8) 18 - 18 43
Total exceptional items (222) 10 (222) 65
1. In 2020, cost saving actions were 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.
2. In Q4 2022, the Group recognized a provision for $290m
related to certain multidistrict antitrust class and state claims (refer to
Note 12, Legal proceedings for further discussion) and $6m to settle a dispute
over reimbursement of legal costs with a supplier. In FY 2021, negotiation
with DOJ-related plaintiffs led to a change in the Group's provision for
DOJ-related matters which resulted in a provision release of $18m.
3. In FY 2021, upon conclusion of expert discovery, the Group
increased the provision for intellectual property related matters - ANDA
Litigation, to $73m, resulting in an exceptional charge for $24m. See Note 10
and 11 for further discussion.
4. Debt refinancing costs in FY 2021 consist of advisory and
legal fees incurred related to the Group's debt refinancing. These costs are
included in SG&A. Additionally, in FY 2021 the Group wrote-off $1m of
unamortized deferred financing costs due to extinguishment and settlement of
the previous term loan. These costs are included within finance expense.
5. In FY 2022 and Q4 2022, the Group recognized $6m and $2m,
respectively, of exceptional costs in preparation for a potential additional
listing of Indivior shares on a major US exchange.
6. In Q4 2021, the Group received net proceeds from the sale of
the TEMGESIC / BUPREX / BUPREXX (buprenorphine) franchise outside of North
America to Eumedica Pharmaceuticals AG for $19m. In FY 2021, the Group also
received proceeds from the out-licensing of nasal naloxone opioid overdose
patents for $1m.
7. In FY 2022 and FY 2021, the Group recognized $5m and $12m
exceptional other income related to Directors' & Officers' insurance
reimbursement claims.
8. Exceptional tax benefits recorded FY 2022 relate mainly to
the impact of the re-measurement of certain deferred tax assets. See Note 5
for further discussion. Exceptional tax benefit recorded 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 RB which were recorded in the prior
year.
Adjusted results
Management believes adjusted results may be useful to investors as they
exclude items which do not reflect the Group's day-to-day operations or may
help with comparisons to prior periods. Similar concepts of adjusted results
are frequently used by securities analysts, investors and other interested
parties in their evaluation of the Group and in comparison to other companies,
many of which also present adjusted performance measures when reporting their
results. Adjusted results have limitations as analytical tools. They are not
recognized terms under IFRS and therefore do not purport to be an alternative
to operating profit as a measure of operating performance. Adjusted results as
presented by the Group are not necessarily comparable to similarly titled
measures used by other companies. As a result, these performance measures
should not be considered in isolation from, or as a substitute analysis for,
the Group's reported results presented in accordance with IFRS.
The tables below show the list of adjustments between the reported and
adjusted results for both Q4/FY 2022 and Q4/FY 2021.
Reconciliation of operating (loss)/ profit to adjusted operating profit
Q4 Q4 FY FY
2022 2021 2022 2021
For the three and twelve months ended December 31 $m $m $m $m
Operating (loss)/profit (258) 45 (85) 213
Exceptional selling, general and administrative expenses 298 (1) 302 6
Exceptional net other operating income - (12) (5) (32)
Adjusted operating profit 40 32 212 187
Reconciliation of (loss)/profit before taxation to adjusted profit before
taxation
Q4 Q4 FY FY
2022 2021 2022 2021
For the three and twelve months ended December 31 $m $m $m $m
(Loss)/profit before taxation (256) 39 (95) 190
Exceptional selling, general and administrative expenses 298 (1) 302 6
Exceptional net other operating income - (12) (5) (32)
Exceptional finance expense - - - 1
Adjusted profit before taxation 42 26 202 165
Reconciliation of net (loss)/ income to adjusted net income
Q4 Q4 FY FY
2022 2021 2022 2021
For the three and twelve months ended December 31 $m $m $m $m
Net (loss)/income (183) 35 (53) 205
Exceptional selling, general and administrative expenses 298 (1) 302 6
Exceptional net other operating income - (12) (5) (32)
Exceptional finance expense - - - 1
Tax on exceptional items (58) 3 (57) 3
Exceptional tax item (18) - (18) (43)
Adjusted net income 39 25 169 140
5. TAXATION
In the twelve months ended December 31, 2022, the reported total tax benefit
was $42m, or a rate of 44% (YTD 2021 tax benefit: $15m, -8%). The tax expense
on FY 2022 adjusted profits amounted to $33m, excluding the $75m tax benefit
on exceptional items, which represented an effective tax rate of 16%. The tax
expense on FY 2021 adjusted profits amounted to $25m, excluding the $40m tax
benefit on exceptional items, which represented an effective tax rate of 15%.
The change in the effective tax rate on adjusted profits was primarily driven
by the relative contribution to pre-tax income by taxing jurisdiction in the
period.
The Group's balance sheet at December 31, 2022 includes a current tax
receivable of $5m (FY 2021: $13m), current tax liabilities of $9m (FY 2021:
$7m), and deferred tax assets of $219m (FY 2021: $105m). The main increase in
deferred tax assets is due to loss carryforwards in the UK, share-based
compensation, and inventory in the US.
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, 2022, the Group's net deferred tax assets of $219m
relate primarily to net operating loss carryforwards, share-based
compensation, inventory costs capitalized for tax purposes, litigation
liabilities (including exceptional items that are not expected to recur), and
other non-current temporary differences. Recognition of deferred tax assets is
reliant on forecast taxable profits arising in the jurisdiction in which the
deferred tax asset is recognized. The Group has assessed recoverability of
deferred tax assets using Group-level budgets and forecasts consistent with
those used for the assessment of viability and asset impairments, particularly
in relation to levels of future net revenues. These forecasts are subject to
similar uncertainties to those assessments. This is reviewed each quarter and,
to the extent required, an adjustment to the recognized deferred tax asset may
be made. With the exception of specific assets that are not currently
considered realizable, Management have concluded full recognition of deferred
tax assets to be appropriate and do not believe a significant risk of material
change in their assessment exists in the next 12 months.
Other tax matters
In September 2022, the Company's shareholders approved an additional listing
in the US, which is expected to take place in Spring 2023. Once listed in the
US, US tax laws limit deductibility of compensation for certain management
roles. The Group currently carries approximately $12m of deferred tax assets
that are not expected to be realized once the listing is complete.
Approximately three-quarters of this amount will be charged to equity and
one-quarter will be presented as an exceptional tax charge in the period the
listing takes place, as a reversal of the original booking.
The enacted UK Statutory Corporation Tax rate is 19% for the year ended
December 31, 2022. In March 2021, the UK Chancellor announced an increase in
the corporation tax rate from 19% to 25% with effect from April 2023. The
increase to the corporation tax rate was enacted in June 2021. A framework for
the introduction of a global minimum effective tax rate of 15%, applicable to
large multinational groups has been published. In July 2022, the UK Treasury
released draft legislation to implement these rules with effect from April
2024. The Group is reviewing these draft rules to understand any potential
impacts when ultimately enacted.
As a multinational group, tax uncertainties remain in relation to Group
financing, intercompany pricing, the location of taxable operations and the
tax treatment of exceptional items. Management have concluded tax provisions
made to be appropriate and do not believe a significant risk of material
change to uncertain tax positions exists in the next 12 months.
6. (LOSS)/EARNINGS PER SHARE
Q4 Q4 FY FY
2022 2021 2022 2021
For the three and twelve months ended December 31 $ $ $ $
Basic (loss)/earnings per share $(1.34) $0.25 $(0.38) $1.41
Diluted (loss)/earnings per share $(1.34) $0.23 $(0.38) $1.35
Adjusted basic earnings per share $0.29 $0.18 $1.22 $0.96
Adjusted diluted earnings per share $0.27 $0.17 $1.16 $0.92
Share consolidation
In September 2022, the Company's shareholders approved an additional listing
in the US, which is expected to take place in Spring 2023. Additionally, to
fulfill US exchange requirements for share price minimums and norms, the
Company's shareholders also approved a 5-for-1 share consolidation. On October
10, 2022, the Company completed this share consolidation. Shareholders
received 1 new Ordinary share with a nominal value of $0.50 each for every 5
previously existing Ordinary shares which had a nominal value of $0.10 each.
The Company's basic and diluted weighted average number of shares outstanding,
basic (loss)/earnings per share, diluted (loss)/earnings per share and
adjusted earnings per share (basic and diluted) have been retrospectively
adjusted to reflect the share consolidation in all the periods presented.
Basic
Basic (loss)/earnings per share ("LPS" or "EPS") is calculated by dividing
(loss)/profit for the period attributable to owners of the Company by the
weighted average number of ordinary shares in issue during the period.
Diluted
Diluted (loss)/earnings per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion of all
dilutive potential ordinary shares. The Company has dilutive potential
ordinary shares in the form of stock options and awards. These options and
awards have been adjusted to reflect the share consolidation, referred to
above. The weighted average number of shares is adjusted for the number of
shares granted to the extent performance conditions have been met at the
balance sheet date and as determined using the treasury stock method.
Weighted average number of shares
The weighted average number of ordinary shares outstanding (on a basic basis)
includes the favorable impact of 17,815,033 ordinary shares repurchased prior
to the share consolidation in FY 2022 (equivalent post consolidation:
3,563,007), 1,280,914 ordinary shares repurchased after the share
consolidation in FY 2022, and 33,507,433 ordinary shares repurchased through
FY 2021 (equivalent post consolidation: 6,701,487). See Note 14 for further
discussion. Conditional awards of 7,839,441 (equivalent post consolidation
approximately 1,568,000) and 14,174,745 (equivalent post consolidation
approximately 2,835,000) were granted under the Group's Long-Term Incentive
Plan in FY 2022 and FY 2021, respectively.
Q4 Q4 FY FY
2022 2021 2022 2021
Weighted average number of shares thousands thousands thousands thousands
On a basic basis 136,784 142,677 139,012 145,660
Dilution from share awards and options 7,164 6,923 6,605 6,280
On a diluted basis 143,948 149,600 145,617 151,940
Adjusted Earnings
Management believes that diluted (loss)/earnings per share, adjusted for the
impact of exceptional items after the appropriate tax amount, may provide
meaningful information on underlying trends to shareholders in respect of
(loss)/earnings per ordinary share. A reconciliation of net (loss)/income to
adjusted net income is included in Note 4.
7. INVESTMENTS
Investments comprise holdings in equity and debt securities. Investments in
equity securities held for trading or for which the Group has not elected to
recognize fair value gains and losses through other comprehensive income are
initially recorded and subsequently measured at fair value through profit or
loss (FVPL). Investments in debt securities are initially recorded at fair
value plus or minus directly attributable transaction costs and remeasured on
the basis of the Group's business model and the contractual cash flow
characteristics. Interest income from debt securities are included in finance
income using the effective interest method.
Dec 31, Dec 31,
2022
2021
Current and non-current investments $m $m
Equity securities at FVPL 10 -
Debt securities held at amortized cost 109 -
Total investments, current 119 -
Debt securities held at amortized cost 98 -
Total investments, non-current 98 -
Total 217 -
Equity securities at FVPL
In February 2022, the Group purchased ordinary shares of Aelis Farma. The
shares were subject to a holding period of 365 days from the acquisition. The
investment is classified as a current investment at December 31, 2022 as the
holding period expires in less than 12 months. Fair value gain/(loss) recorded
in FY 2022 was nominal and included within net other operating income.
Debt securities held at amortized cost
In 2022, the Group initiated purchases of investment-grade corporate debt and
U.S. Treasury securities. The Group's investments in debt securities are held
at amortized cost as the Group's intention is to hold these investments to
maturity and collect contractual cash flows that are solely payments of
principal and interest. A portion of the investments in debt securities are
held in a separate account through an insurance contract with a third party.
This investment has been classified as non-current as access to the funds is
restricted for a 12 month period after the term of the insurance. All other
debt securities held at amortized cost are classified as non-current
investments, except for those with maturities less than 12 months from the end
of the reporting period, which are classified as current investments.
The Group's investments in debt securities do not create significant credit
risk, liquidity risk, or interest rate risk. All the Group's corporate debt
securities held at amortized cost are considered to be of low credit risk
based on investment-grade credit ratings from Standard and Poor's or Moody's
(BBB-/Baa3 or higher). The Group's U.S. Treasury securities have minimal
default risk as they are guaranteed by the U.S. government. The majority of
the Group's investments in debt securities are issued at fixed interest rates
and changes in floating rates would not have a significant impact on interest
rate risk.
The Group applies an expected credit loss impairment model to financial
instruments held at amortized cost. The recognition of a loss allowance is
limited to 12-month expected credit losses unless credit risk increases
significantly, which would require lifetime expected credit losses to be
applied. When measuring expected credit losses, investments are grouped based
on similar credit risk characteristics. The Group uses judgment in selecting
the inputs to the impairment model based on historical loss rates for similar
instruments, current conditions, and forecasts of future economic conditions.
As of December 31, 2022, expected credit losses for the Group's investments
held at amortized cost are deemed to be immaterial.
Fair value hierarchy
Fair value is the price that would be received to sell an asset or transfer a
liability in an orderly transaction between market participants at the
measurement date. The different levels have been defined as follows:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets
or liabilities
• Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly
• Level 3: Unobservable inputs for the asset or liability
The Group's only financial instruments which are measured at fair value are
equity securities at FVPL. The fair value of equity securities at FVPL is
based on quoted market prices on the measurement date.
The following table categorizes the Group's financial assets measured at fair
value by valuation methodology used in determining their fair value at
December 31, 2022.
Financial assets at fair value Level 1 Level 2 Level 3 Total
$m $m $m $m
Equity securities at FVPL 10 - - 10
The Group also has certain financial instruments which are not measured at
fair value. The carrying value of cash and cash equivalents, trade
receivables, other assets, and trade and other payables is assumed to
approximate fair value due to their short-term nature. At December 31, 2022,
the carrying value of investments held at amortized cost was above the fair
value by $3m, due to rising interest rates. The fair value of investments held
at amortized cost was calculated based on quoted market prices which would be
classified as Level 1 in the fair value hierarchy above.
8. CURRENT AND NON-CURRENT OTHER ASSETS
Dec 31, Dec 31,
2022
2021
Current and non-current investments $m $m
Current prepaid expenses 14 18
Other current assets 13 14
Total other current assets 27 32
Non-current prepaid expenses 20 22
Other non-current assets 18 84
Total other non-current assets 38 106
Total 65 138
Other current and non-current assets primarily represent the funding of surety
bonds in relation to intellectual property related matters (see Note 12 for
further discussion). As a result of the settlement agreement with Dr. Reddy's
Laboratories S.A. and Dr. Reddy's Laboratories, Inc. (together, "DRL"), the
surety bond holders returned $64m of collateral in July 2022, causing majority
of the decrease in the other non-current balance as of December 31, 2022.
Long-term prepaid expenses primarily relate to payments for contract
manufacturing capacity.
9. FINANCIAL LIABILITIES - BORROWINGS
In April 2022, the Group completed an amendment to its existing term loan
which provides the Group greater flexibility in the use of cash being
generated and changes the variable interest rate base from USD LIBOR to USD
SOFR plus a credit spread adjustment of 26 bps. As part of the modification,
the Group incurred $1m of issuance costs, banking fees and legal fees which
are deemed to be incremental and directly attributable to the amendment.
Accordingly, the Group capitalized these costs, which were netted against the
total amount borrowed and are amortized over the maturity period using the
effective interest method.
The table below sets out the current and non-current portion obligation of the
Group's term loan:
Dec 31, Dec 31,
2022
2021
Term loan $m $m
Term loan - current (3) (3)
Term loan - non-current (237) (239)
Total term loan (240) (242)
*Total term loan borrowings reflect the principal amount drawn including debt
issuance costs of $6m (FY 2021: $7m).
At December 31, 2022, the term loan fair value was approximately 98% (FY
2021: 99%) of par value. The key terms of the term loan in effect at
December 31, 2022, are as follows:
Currency Nominal interest margin Maturity Required annual repayments Minimum
liquidity
Term Loan facility USD SOFR + 0.26% + 5.25% 2026 1% Larger of $100m or 50% of Loan Balance
• Nominal interest margin is calculated as USD SOFR plus 0.26%, subject to
a floor of 0.75%, plus a credit spread adjustment of 5.25%.
• There are no revolving credit commitments.
10. PROVISIONS AND OTHER LIABILITIES
Provisions
Total Total
Current Non-Current Dec 31, 2022 Current Non-Current Dec 31, 2021
Current and non-current provisions $m $m $m $m $m $m
Antitrust class and state claims (290) - (290) - - -
Federal false claims allegations (5) - (5) (5) - (5)
Intellectual property related matters - (3) (3) - (73) (73)
Other (8) (2) (10) - (3) (3)
Total provisions (303) (5) (308) (5) (76) (81)
Provisions are recognized when the Group has a present legal or constructive
obligation as a result of past events, an outflow of resources to settle that
obligation is probable, and the amount can be reliably estimated. Provisions
are measured at the present value of management's best estimate of the
expenditure required to settle the present obligation at the reporting date.
Litigation costs are expensed as incurred.
In FY 2022, the Group recorded a current provision of $290m for certain
multidistrict antitrust class and state claims, included in exceptional costs
(see Note 4). The provision is the Group's estimate at this time of a
potential aggregate settlement. However, the Group cannot predict with any
certainty whether Indivior Inc. will reach a settlement with any of the
Plaintiffs, and the final aggregate cost of these matters, whether resolved by
settlement or trial, may be materially different. See Note 12, Antitrust
Litigation and Consumer Protection for further details. The effect of
discounting was not material.
The Group carries a provision of $5m (FY 2021: $5m) pertaining to all
outstanding False Claims Act Allegations as discussed in Note 12. These
matters are expected to be settled within the next 12 months.
The provision for intellectual property related matters has been
substantially transferred to other liabilities as a result of the settlement
with DRL. See Note 12, Intellectual property related matters.
Other provisions totaling $10m (FY 2021: $3m) primarily represent general
legal matters expected to be settled within the next 12 months, including $6m
classified as exceptional (see Note 4), and retirement benefit costs which are
not expected to be settled within one year.
Other liabilities
Total Total
Current Non-Current Dec 31, 2022 Current Non-Current Dec 31, 2021
Current and non-current other liabilities $m $m $m $m $m $m
DOJ resolution (52) (392) (444) (53) (439) (492)
Intellectual property related matters (10) (11) (21) - - -
RB indemnity settlement (8) (22) (30) (8) (32) (40)
Share repurchase (9) - (9) - - -
Other - (3) (3) - (3) (3)
Total other liabilities (79) (428) (507) (61) (474) (535)
Other liabilities represent contractual obligations to third parties where the
amount and timing of payments is fixed. Other liabilities are initially
recorded at fair value and subsequently measured at amortized cost. 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 discount rate appropriate to the liability or approximating a market
interest rate at the time the Group entered into the obligation.
DOJ resolution
On July 24, 2020, Indivior Inc. settled criminal and civil liability with the
United States Department of Justice (DOJ), the US Federal Trade Commission
(FTC), and US state attorneys general in connection with a multi-count
indictment brought in April 2019 by a grand jury in the Western District of
Virginia, a civil lawsuit joined by the DOJ in 2018, and an FTC investigation.
In November 2020, the first payment of $103m (including interest) was made. In
January 2022, an additional payment of $54m (including interest) was made
pursuant to the resolution agreement. Subsequently, five annual installments
of $50m plus interest will be due every January 15 from 2023 to 2027 with the
final installment of $200m due in December 2027. Interest accrues at 1.25% on
certain portions of the resolution which will be paid together with the annual
installment payments. For non-interest-bearing portions, the liability has
been recorded at the net present value based on timing of the estimated
payments and using a discount rate equal to the interest rate on the
interest-bearing portions. In FY 2022, the Group recorded interest expense
totaling $6m (FY 2021: $6m) related to this resolution.
Under the terms of the resolution agreement with the DOJ, Indivior Inc. has
agreed to compliance terms regarding its sales and marketing practices.
Compliance with these terms is subject to annual Board and CEO certifications
submitted to the US Attorney's Office. As part of the resolution with the FTC
and as detailed in the text of the stipulated order, for a ten-year period
Indivior Inc. is required to make specified disclosures to the FTC and is
prohibited from certain conduct.
In addition to the resolution agreement, the Group entered into a five-year
Corporate Integrity Agreement with the HHS Office of the Inspector General
(HHS-OIG), pursuant to which the Group committed to promote compliance with
laws and regulations and committed to the ongoing evolution of an effective
compliance program, including written standards, training, reporting, and
monitoring procedures. The Group is subject to reporting and monitoring
requirements, including annual reports and compliance certifications from key
management and the Board's Nominating & Governance Committee, which is
submitted to HHS-OIG. In addition, the Group is subject to monitoring by an
Independent Review Organization, which submits audit findings to HHS-OIG, and
review by a Board Compliance Expert, who prepared a compliance assessment
report in the first reporting period and will prepare a compliance assessment
report in the third reporting period.
To date, the Group reasonably believes it has met all of the requirements
specified in these three agreements.
IP related matters
The Group has other liabilities for intellectual property related matters
totaling $21m (FY 2021: $73m; previously classified as a provision), which
relates to a settlement of intellectual property litigation with DRL. As
announced in June 2022, the Group entered into a settlement agreement with DRL
resolving intellectual property litigation. Under the settlement agreement,
the Group made a settlement payment to DRL in June 2022 with final payments
due in 2023 and 2024. This liability has been recorded at the net present
value, using a market interest rate at the time of the settlement determined
to be 4.50%, considering the timing of payments and other factors. In FY 2022,
the Group recorded $1m of finance expense (FY 2021: $2m) for time value of
money on the liability.
RB resolution
On January 25, 2021, the Group reached a settlement with RB to resolve claims
which RB issued in the Commercial Court in London on November 13, 2020,
seeking indemnity under the Demerger Agreement between amongst others, RB and
the Group (Demerger Agreement). Pursuant to the settlement, RB withdrew the US
$1.4b claim to release the Group from any claim for indemnity under the
Demerger Agreement relating to the DOJ and FTC settlements which RB entered
into in July 2019, as well as other claims for indemnity arising from those
matters. The Group agreed to pay RB a total of $50m and has agreed to release
RB from any claims to seek damages relating to its settlement with the DOJ and
the FTC. The Group made an initial payment of $10m in February 2021, followed
by an installment payment of $8m in January 2022. Subsequently, annual
installment payments of $8m will be due every January from 2023 to 2026. The
Group carries a liability totaling $30m (FY 2021: $40m) related to this
settlement. This liability has been recorded at the net present value, using a
market interest rate at the time of the settlement determined to be 3.75%,
considering the timing of payments and other factors.
Share repurchase
On May 3, 2022, the Group commenced a share repurchase program of up to
$100m. As of December 31, 2022, the Group recorded a liability for $9m, which
represents the amount to be spent under the program up to February 16, 2023,
the period closed for modification or termination of the program. This
liability has been classified as current. Refer to Note 14 for further
discussion.
Other
Other liabilities primarily represent deferred revenue related to a supply
agreement.
11. CONTINGENT LIABILITIES
The Group has assessed certain legal and other matters to be not probable
based upon current facts and circumstances, including any potential impact the
DOJ resolution could have on these matters. Where these matters are determined
to be possible, they represent contingent liabilities. Except for those
matters discussed in Note 12 under "Antitrust Class and State Claims", "False
Claims Act Allegations", and "Intellectual Property Related Matters - ANDA
Litigation", for which liabilities or provisions have been recognized, Note 12
sets out the contingent liabilities for legal and other disputes for which the
Group has assessed as contingent liabilities. Where the company believes that
it is possible to reasonably estimate a range for the contingent liability
this has been disclosed.
12. LEGAL PROCEEDINGS
There are certain ongoing legal proceedings or threats of legal proceedings in
which the Group is a party, but in which the Group believes the possibility of
an adverse impact is remote and they are not discussed in this Note 12.
Antitrust Litigation and Consumer Protection
Antitrust Class and State Claims
• Civil antitrust claims have been filed by (a) a class of direct
purchasers, (b) a class of end payor plaintiffs, and (c) a group of states,
now numbering 41, and the District of Columbia (Antitrust MDL) (collectively,
the "Plaintiffs"). The Plaintiffs generally allege, among other things, that
Indivior Inc. violated US federal and/or state antitrust and consumer
protection laws in attempting to delay generic entry of alternatives to
SUBOXONE Tablets. Plaintiffs further allege that Indivior Inc. 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
denied Indivior Inc.'s motion for summary judgment by order dated August 22,
2022. Trial is currently scheduled for September 18, 2023.
• In January 2023, Indivior Inc. participated in a mediation
session related to the Antitrust MDL with the Plaintiffs, including certain
plaintiffs who purported to represent plaintiffs in the Carefirst case
discussed below under Other Antitrust and Consumer Protection Claims. The
Plaintiffs and Indivior Inc. submitted initial monetary demands and offers
prior to the mediation, and no subsequent monetary demands or offers have
since been made. Additional mediation sessions may take place in the future.
• The Group believes Indivior Inc. has meritorious defenses and
will continue to vigorously defend itself in this matter. The Group has
evaluated the current status of mediation, the strengths and weaknesses of the
Plaintiffs' liability and damages claims, the Group's defenses, the inherent
uncertainty of trial, the remaining legal issues to be resolved, and the
benefit of certainty to the Group in resolving these claims and the savings in
legal fees and costs. The Group has determined that it is in the interests of
its stakeholders to explore settlement of these matters. As a result, an
exceptional provision of $290 million has been recorded by the Group, although
any settlement could occur at a lower or higher amount. The provision is the
Group's estimate at this time of a potential aggregate settlement in light of
the above analysis. However, the Group cannot predict with any certainty
whether Indivior Inc. will reach a settlement with any of the Plaintiffs, and
the final aggregate cost of these matters, whether resolved by settlement or
trial, may be materially different.
• If Indivior Inc. were found liable in a trial to any of the
Plaintiffs and was unable to reduce the claimed damages of such Plaintiffs
group or groups during such trial (or in any subsequent proceeding), which the
Directors believe is beyond 'severe but plausible' (and therefore remote)
within the going concern period, then its financial position, results and
future cash flows could be materially adversely affected. If the Group
continues with mediation or other settlement discussions, it makes no
guarantee as to whether any settlement can be reached and if so, what amounts,
if any, it may agree to pay, or what amounts the Plaintiffs will demand.
Other Antitrust and Consumer Protection Claims
• In 2013, Reckitt Benckiser Pharmaceuticals, Inc. (now known as
Indivior Inc.) received notice that it and other companies were defendants in
a lawsuit initiated by writ in the Philadelphia County (Pennsylvania) Court of
Common Pleas. See Carefirst of Maryland, Inc. et al. v. Reckitt Benckiser
Inc., et al., Case. No. 2875, December Term 2013. The plaintiffs include
approximately 79 entities, most of which appear to be insurance companies or
other providers of health benefits plans. The Carefirst Plaintiffs have not
served a complaint, but they have indicated that their claims are related to
those asserted by the plaintiffs in the Antitrust MDL. The Carefirst case
remains pending.
• In 2020, the Group was served with lawsuits filed by several
insurance companies, some of whom are proceeding both on their own claims and
through the assignment of claims from affiliated companies. Cases filed by (1)
Humana Inc. and (2) Centene Corporation, Wellcare Healthcare Plans, Inc., New
York Quality Healthcare Corp. (d/b/a Fidelis Care), and Health Net, LLC were
pending in the Eastern District of Pennsylvania. The complaints were dismissed
in July 2021. Plaintiffs filed Notices of Appeal in August 2021 to the United
States Court of Appeals for the Third Circuit ("Third Circuit"). The Third
Circuit affirmed the district court's dismissal by opinion and order dated
December 15, 2022. Humana also filed a Complaint in state court in Kentucky on
August 20, 2021 with substantially the same claims as were raised in the
Federal Court case. See Humana Inc. v. Indivior Inc., No. 21-CI-004833 (Ky.
Cir. Ct.) (Jefferson Cnty). That case was stayed pending a decision in the
Third Circuit appeal, and remains stayed. Centene Corporation and the
above-referenced related companies filed a complaint in the Circuit Court for
the County of Roanoke, Virginia alleging similar claims on January 13, 2023
following the mandate from the Third Circuit affirming the district court's
dismissal. See Centene Corp. v. Indivior Inc., No. CL23000054-00 (Va. Cir.
Ct.) (Roanoke Cnty).
• Cases filed by (1) Blue Cross and Blue Shield of Massachusetts,
Inc., Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc., (2) Health
Care Service Corp., (3) Blue Cross and Blue Shield of Florida, Inc., Health
Options, Inc., (4) BCBSM, Inc. (d/b/a Blue Cross and Blue Shield of Minnesota)
and HMO Minnesota (d/b/a Blue Plus), (5) Molina Healthcare, Inc., and (6)
Aetna Inc. are pending in the Circuit Court for the County of Roanoke,
Virginia. See Health Care Services Corp. v. Indivior Inc., No. CL20-1474 (Lead
Case) (Va. Cir. Ct.) (Roanoke Cnty). These plaintiffs have asserted claims
under federal and state RICO statutes, state antitrust statutes, state
statutes prohibiting unfair and deceptive practices, state statutes
prohibiting insurance fraud, and common law fraud, negligent
misrepresentation, and unjust enrichment. In June 2021, defendants' motion to
stay was denied and certain claims were dismissed without prejudice. The
plaintiffs filed amended complaints, and the Group filed demurrers, seeking
dismissal of some of the asserted claims. The court heard oral argument on the
demurrers on September 1, 2022, and issued a letter opinion on October 14,
2022 sustaining in part and overruling in part the Group's demurrers. A jury
trial on the Group's pleas in bar has been set for October 16-20, 2023. A jury
trial on the merits has been set for July 15, 2024-August 8, 2024.
• The Group is still in the process of evaluating the claims,
believes it has meritorious defenses, and intends to defend itself. No
estimate of the range of potential loss can be made at this time.
Civil Opioid Litigation
• The Group has been named as a defendant in more than 400 civil
lawsuits brought by state and local governments, public health agencies, among
others, against manufacturers, distributors, and retailers of opioids alleging
that they engaged in a longstanding practice to market opioids as safe and
effective for the treatment of long-term chronic pain to increase the market
for opioids and their own market share, as well as individuals alleging
personal injury claims. Most of these cases have been consolidated and are
pending in a federal multi-district litigation ("the Opioid MDL") in US
District Court for the Northern District of Ohio. See In re National
Prescription Opiate Litigation, MDL No. 2804 (N.D. Ohio); see also, e.g.,
Winston County, Alabama v. AmerisourceBergen Drug Corp., et al., 6:22-cv-01394
(N.D. Ala.) (filed November 2022, not yet served, and not consolidated in
Opioid MDL proceedings); International Brotherhood of Electrical Workers Local
728 Family Healthcare Plan v. Allergan, PLC et al., Case ID: 190303872 (C.P.
Phila. Cnty) (consolidated with Lead Case No. 2017-008095 in Delaware County
and stayed). Litigation against the Group in the Opioid MDL is stayed. Motions
to remand are currently pending in over 50 cases to which the Group is a party
(among numerous other defendants). On December 12, 2022, the court set forth
procedures requiring plaintiffs to show cause why the court should not dismiss
cases in which plaintiffs have not submitted a plaintiff fact sheet or timely
served the relevant defendants. The Court on January 12, 2023 denied motions
to remand on federal officer grounds, and has directed the parties to apply
the rulings in that order to other pending remand motions within 30 days after
the day of the order.
• The court in the Opioid MDL held a status conference on June 22,
2022, with county and municipality plaintiffs and certain manufacturer
defendants (including the Group) and distributor defendants to discuss what
information the parties needed to proceed, whether the parties would entertain
settlement and whether there should be any bellwether trials from this subset
of plaintiffs and defendants. During the status conference and at subsequent
conferences, the court expressed its view that no additional bellwether trials
should be needed for these cases, provided that the parties were progressing
on a settlement track. On January 25, 2023, the court held a status conference
concerning cases filed by school districts, hospitals, and third-party payors,
and indicated that the court plans to set two hospital bellwether trials and
two third-party payor bellwether trials.
• Separately, Indivior Inc. was named as a defendant in five
individual complaints filed in West Virginia state court that have not been
transferred to the MDL, and instead have been transferred to West Virginia's
Mass Litigation Panel. See In re Opioid Litigation, No. 22-C-9000 NAS (W.V.
Kanawha Cnty. Cir. Ct.). Indivior Inc. responded to all five complaints on
January 30, 2023. The plaintiffs in those cases separately have moved to
strike the defendants' notices of non-party fault. The defendants' responses
to plaintiffs' motions to strike are due on or before February 24, 2023.
• Given the status and preliminary stage of litigation in both the
Opioid MDL and state courts, no estimate of possible loss in the opioid
litigation can be made at this time.
False Claims Act Allegations
• In August 2018, the United States District Court for the Western
District of Virginia unsealed a declined qui tam complaint alleging causes of
action under the Federal and state False Claims Acts against certain entities
within the Group predicated on best price issues and claims of retaliation.
See United States ex rel. Miller v. Reckitt Benckiser Group PLC et al., Case
No. 1:15-cv-00017 (W.D. Va.). The suit also seeks reasonable attorneys' fees
and costs. The Group filed a Motion to Dismiss in June 2021. The case was
stayed for mediation in September 2021, but the parties did not reach
agreement. In March 2022, Relator submitted a request for oral argument on the
Motion to Dismiss. On July 21, 2022, the court entered an order staying the
action and reserving a decision on the Group's Motion to Dismiss pending
rehearing en banc by the U.S. Court of Appeals for the Fourth Circuit in U.S.
ex rel. Sheldon v. Allergan Sales, LLC. On rehearing en banc, the Fourth
Circuit affirmed the district court's opinion in U.S. ex rel. Sheldon v.
Allergan Sales, LLC by order dated September 23, 2022. The United States
District Court for the Western District of Virginia has not yet ruled on the
Group's Motion to Dismiss, and instead has further stayed the proceedings
pending decisions by the Supreme Court of the United States in two cases
concerning the False Claims Act-United States ex rel. Proctor v. Safeway,
Inc., and United States ex rel. Schutte v. Supervalu, Inc.
• In May 2018, Indivior Inc. received an informal request from the
United States Attorney's Office ("USAO") for the Southern District of New
York, seeking records relating to the SUBOXONE Film manufacturing process. The
Group is discussing with the USAO certain information and allegations that the
government received regarding SUBOXONE Film.
UK Shareholder Claims
• On September 21, 2022, certain shareholders issued
representative and multiparty claims against Indivior PLC in the High Court of
Justice for the Business and Property Courts of England and Wales, King's
Bench Division. On January 16, 2023, the representative served its Particular
of Claims setting forth in more detail the claims against the Group, while the
same law firm that represents the representative also sent its draft
Particular of Claims for the multiparty action. The claims made in both the
representative and multiparty actions generally allege that Indivior PLC
violated the UK Financial Services and Markets Act 2000 ("FSMA 2000") by
making false or misleading statements or material omissions in public
disclosures, including the 2014 Demerger Prospectus, regarding an alleged
product-hopping scheme regarding the switch from SUBOXONE® tablets to
SUBOXONE® film. Indivior PLC has until February 27, 2023 to issue its
applications to strike out the representative action.
• The Group has begun its evaluation of the claims, believes it
has meritorious defenses, and intends to vigorously defend itself. Given the
status and preliminary stage of the litigation, no estimate of possible loss
can be made at this time.
Intellectual Property Related Matters
• Various subsidiaries of the Group filed actions against Alvogen
Pine Brook LLC and Alvogen Inc. (together, "Alvogen") in the United States
District Court for the District of New Jersey (the "NJ District Court")
alleging that Alvogen's generic buprenorphine/naloxone film product infringes
U.S. Patent Nos. 9,687,454 (the "'454 Patent") and 9,931,305 (the '305
Patent") in 2017 and 2018, respectively. The cases were consolidated in May
2018. In January 2019, the NJ District Court granted Indivior a temporary
restraining order ("TRO") to restrain the launch of Alvogen's generic
buprenorphine/naloxone film product pending a trial on the merits of the '305
Patent, and the subsidiaries of the Group that were a party to the case were
required to post a surety bond of $36m. The parties entered into an agreement
whereby Alvogen was enjoined from selling in the US its generic
buprenorphine/naloxone film product unless and until the Court of Appeals for
the Federal Circuit ("CAFC") issued a mandate vacating Indivior's separate
preliminary injunction entered against Dr. Reddy's Laboratories, Inc. ("DRL")
in a related case. The CAFC's mandate vacating Indivior's preliminary
injunction as to DRL issued in February 2019, and Alvogen launched its generic
product. Any sales in the US by Alvogen are on an "at-risk" basis, subject to
the ongoing litigation against Alvogen in the NJ District Court. In November
2019, Alvogen filed an amended answer alleging various antitrust
counterclaims. In January 2020, Indivior and Alvogen stipulated to
noninfringement of the '305 Patent under the court's claim construction, but
Indivior retained its rights to appeal the construction and pursue its
infringement claims pending appeal. Indivior's infringement claims concerning
the '454 Patent and Alvogen's antitrust counterclaims remain pending in the NJ
District Court. In June 2022, the parties participated in court-ordered
mediation. The parties did not reach settlement. Summary judgment motions have
been fully briefed, and the court heard arguments on those motions on August
29, 2022. The NJ District Court has not yet ruled on those motions, and no
trial date has been set.
13. TRADE AND OTHER PAYABLES
Dec 31, Dec 31,
2022
2021
$m $m
Accrual for rebates, discounts and returns (428) (436)
Trade payables (36) (137)
Accruals (138) (136)
Other tax and social security payables (15) (11)
Total (617) (720)
Accruals for rebates, discounts and returns, primarily in the US, are provided
in respect of the estimated rebates, discounts, or allowances payable to
direct and indirect customers. Accruals are made at the time of sale while the
actual amounts to be paid are based on claims made some time after the initial
recognition of the sale. The estimated amounts may not reflect the final
outcome and are subject to change dependent upon, amongst other things, the
payor channel (e.g., Medicaid, Medicare, Managed Care, etc.) and product mix.
Accrual balances are reviewed and adjusted quarterly in the light of actual
experience of rebates, discounts or allowances given and returns made and any
changes in arrangements. Future events may cause the assumptions on which the
accruals are based to change, which could affect the future results of the
Group.
The change in the period was primarily the result of the timing of settlement
of trade payables.
14. SHARE CAPITAL
Equity ordinary shares Nominal value paid per share Aggregate nominal value $m
Issued and fully paid
At January 1, 2022 702,439,638 $0.10 70
Ordinary shares issued 4,184,940 $0.10 1
Shares repurchased and cancelled (17,815,033) $0.10 (2)
Share consolidation (551,047,636)
Shares repurchased and cancelled (post share consolidation) (1,280,914) $0.50 (1)
At December 31, 2022 136,480,995 68
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
Ordinary shares issued
During the period, prior to share consolidation, 4,184,940 ordinary shares at
$0.10 each (FY 2021: 2,311,560 at $0.10 each) were issued to satisfy
vesting/exercises under the Group's Long-Term Incentive Plan and US Employee
Stock Purchase Plan.
Share consolidation
On October 10, 2022, the Company completed a share consolidation. Shareholders
received 1 new Ordinary share with a nominal value of $0.50 each for every 5
previously existing Ordinary shares which had a nominal value of $0.10 each.
As a result of the consolidation, as at October 10, 2022 the Company's issued
share capital consisted of 137,761,909 ordinary shares at $0.50 each
(equivalent shares pre-consolidation: 688,809,545).
Shares repurchased and cancelled
In July 2021, the Group commenced an irrevocable share repurchase program for
an aggregate purchase price up to no more than $100m or 73,462,098 of ordinary
shares. In December 2021, the program concluded with the Group repurchasing
33,507,433 of the Group's ordinary shares over the duration of the program for
an aggregate nominal value of $3m ($0.10 per share). In addition, 256,055
ordinary shares purchased as part of the share repurchase program at $0.10
each were canceled in January 2022. These shares are included in the total
number of share capital outstanding as at December 31, 2021.
On May 3, 2022, the Group commenced a second share repurchase program for an
aggregate purchase price up to no more than $100m or 39,698,610 of ordinary
shares (equivalent shares post consolidation: 7,939,722), which is expected to
end no later than March 31, 2023. During the period, prior to the share
consolidation, the Group repurchased and cancelled 17,815,033 of the Company's
ordinary shares for an aggregate nominal value of $2m ($0.10 per share),
including the 256,055 ordinary shares purchased as part of the Group's share
repurchase program executed in 2021 and cancelled in January 2022. Subsequent
to the share consolidation, the Group repurchased and cancelled 1,280,914 of
the Company's ordinary shares for an aggregate nominal value of $1m ($0.50 per
share).
All ordinary shares repurchased under share repurchase programs were cancelled
resulting in a transfer of the aggregate nominal value to a capital redemption
reserve. The total cost of the purchases made under the share repurchase
program during the period, including directly attributable transaction costs,
was $90m (FY 2021: $101m). A repurchase amount of $9m has been recorded as a
financial liability and reduction in retained earnings which represents the
amount to be spent under the program up to February 16, 2023, the period
closed for modification or termination of the program. Total purchases under
the share repurchase program will be made out of distributable profits.
15. RELATED PARTIES
On July 7, 2022 the Group announced that it has amended the existing
relationship agreement with Scopia. Under the original terms, the Relationship
Agreement terminated in the event that Scopia (and its affiliates) ceased to
have interests in at least 10% of the Company's issued share capital. As
announced on July 1, 2022, Scopia has sold interests in the Company
representing 2.28% which has taken the total holding of Scopia (and its
affiliates) to 9.71%, below this 10% threshold, and down from 16.9% at
origination of the agreement.
The Group has agreed not to exercise its right to terminate the Relationship
Agreement immediately, and instead has agreed:
• To continue with the agreement until the expiration of its
original term of December 31, 2023, unless the Relationship Agreement is
otherwise extended by mutual agreement or terminated earlier in accordance
with its terms; and
• The threshold for automatic termination will be amended, such
that the Relationship Agreement will terminate in the event that Scopia (and
its affiliates) cease to have interests in at least 5% of the Company's issued
share capital (reduced from 10% under the original terms).
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