REG - Indivior PLC - Half-year Report
27/07/2023 07:15
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RNS Number : 3434H Indivior PLC 27 July 2023
http://www.rns-pdf.londonstockexchange.com/rns/3434H_1-2023-7-26.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/3434H_1-2023-7-26.pdf)
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated by the Market Abuse Regulation
(EU) No.596/2014, as it forms part of UK law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"). Upon the publication of this announcement, the
inside information is now considered to be in the public domain.
July 27, 2023
Strong H1 and Q2 2023 Financial Results; FY 2023 Guidance Raised
• Q2 2023 SUBLOCADE® Net Revenue (NR) of $155m, +58% versus Q2 2022
• OPVEE® launch projected for Q4 2023
• FY 2023 SUBLOCADE NR and overall NR guidance raised; FY 2023 adjusted
operating income now expected to be higher than FY 2022
Period to June 30th (Unaudited) Q2 Q2 % Change H1 H1 % Change
2023 2022 2023 2022
$m $m $m $m
Net Revenue 276 221 25% 529 428 24%
Operating Profit 61 63 -3% 118 117 1%
Net Income 39 48 -19% 83 89 -7%
Diluted EPS(1) ($) $0.27 $0.33 -18% $0.59 $0.61 -3%
Adjusted Basis
Adj. Operating Profit(2) 71 60 18% 142 114 25%
Adj. Net Income(2) 56 45 24% 112 86 30%
Adj. Diluted EPS(1 2) ($) $0.39 $0.31 26% $0.79 $0.59 34%
1 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.
2 Adjusted Basis excludes the impact of exceptional items and other
adjustments as referenced and reconciled in the "Adjusted Results" appendix on
page 28. Adjusted results are not a substitute for, or superior to, reported
results presented in accordance with International Financial Reporting
Standards.
The 'Company' refers to Indivior PLC and the 'Group' refers to the Company and
its consolidated subsidiaries.
Comment by Mark Crossley, CEO of Indivior PLC
"This has been another strong quarter of financial results and delivery
against our strategic priorities, and I would like to thank our teams for
their unwavering dedication to our patients. The growth of SUBLOCADE
(buprenorphine extended release) continues as we further increased the depth
of prescribing in Organized Health Systems (OHS), in line with our strategy,
and reached a major milestone of over 100,000 U.S. SUBLOCADE patients.
We also achieved additional key milestones to help secure our future growth
potential and were pleased with the decision of the U.S. Food & Drug
Administration (FDA) to approve OPVEE (nalmefene) nasal spray, our new and
differentiated overdose reversal agent for natural and synthetic opioids, such
as fentanyl, and we remain on track for a fourth quarter launch. We were also
excited to complete our additional listing on Nasdaq which we believe will
provide us with a broadened platform to increase awareness of Indivior in the
U.S. and the substance use disorder disease space. Finally, we made
significant progress in addressing legacy litigation. As previously disclosed,
during the quarter we were able to reach a settlement with a class of
anti-trust plaintiffs, and are focused on resolving outstanding matters at the
right value.
Our progress in the first six months and positive expectations for the
remainder of the year support an increase to our guidance for 2023, and
further reinforce our confidence in our attractive medium-term profitable
growth aspirations."
H1 / Q2 2023 Financial Highlights
• H1 2023 total net revenue (NR) of $529m increased 24% (H1 2022:
$428m); Q2 2023 total NR of $276m increased 25% (Q2 2022: $221m).
• H1 2023 reported operating profit of $118m increased 1% (H1
2022: $117m); Q2 2023 reported operating profit of $61m declined 3% (Q2 2022:
$63m). On an adjusted basis, H1 2023 operating profit of $142m increased 25%
(Adjusted H1 2022: $114m). Adjusted Q2 2023 operating profit of $71m increased
18% (Adjusted Q2 2022: $60m).
• H1 2023 reported net income of $83m decreased 7% (H1 2022:
$89m); Q2 2023 reported net income of $39m declined 19% (Q2 2022: $48m). On an
adjusted basis, H1 2023 net income of $112m increased 30% (Adjusted H1 2022
net income: $86m). Adjusted Q2 2023 net income of $56m increased 24% (Adjusted
Q2 2022: $45m).
• Cash and investments totaled $782m at the end of H1 2023
(including $26m restricted for self-insurance) (FY 2022: $991m), primarily
reflecting the net cash outflow of $124m for the Opiant acquisition and
litigation settlement payments of $177m.
H1 / Q2 2023 Operating Highlights
• H1 2023 SUBLOCADE NR of $287m (+57% vs. H1 2022); Q2 2023
SUBLOCADE NR of $155m (+58% vs. Q2 2022 and +17%vs. Q1 2023). The strong
growth primarily reflects further OHS channel penetration in the U.S. and
increased new U.S. patient enrollments. Q2 2023 U.S. dispenses were approx.
124,800 units (+65% vs. Q2 2022 and +16% vs. Q1 2023). Total U.S. SUBLOCADE
patients on a 12-month rolling basis at the end of Q2 2023 were approximately
107,600 (+65% vs. Q2 2022 and +14% vs. Q1 2023).
• H1 2023 PERSERIS® NR of $19m (+58% vs. H1 2022); Q2 2023
PERSERIS NR of $11m (+57% vs. Q2 2022 and +38% vs. Q1 2023) reflects
increasing awareness of the treatment across the U.S. healthcare system.
• SUBOXONE® (buprenorphine/naloxone) Film share in Q2 2023
averaged 19% (Q2 2022: 19%) and exited the quarter at 19% (Q2 2022: 19%).
• FDA approval of OPVEE for the emergency treatment of known or
suspected opioid overdose induced by natural or synthetic opioids.
U.S. Listing
On June 12, 2023, the Company's shares began trading on the Nasdaq Global
Select Market under the symbol "INDV". Indivior has retained its premium
listing status on the London Stock Exchange and inclusion on the FTSE 250
index. No shares were offered as part of the additional U.S. listing.
Updated FY 2023 Guidance
The Group is updating its FY 2023 guidance to primarily reflect 1) increased
NR expectations for SUBLOCADE based on the strong H1 2023 performance and
expectations for the remainder of the year and 2) increased NR expectations
for SUBOXONE Film due to the anticipated delayed timing of an approved fourth
generic buprenorphine/naloxone sublingual film entrant to the U.S. market.
Guidance continues to assume 1) commercial launch of OPVEE in the fourth
quarter and 2) no material change in exchange rates for key currencies
compared with FY 2022 average rates, notably USD/GBP and USD/EUR.
Updated (July 27, 2023) Previous (April 27, 2023)
Net Revenue (NR)(1) $1,030m to $1,090m $970m to $1,040m
(+18% vs. FY 2022 at the mid-point)
(+12% vs. FY 2022 at the mid-point)
SUBLOCADE NR $590m to $630m $550m to $600m
(+50% vs. FY 2022 at the mid-point)
(+41% vs. FY 2022 at the mid-point)
PERSERIS NR No change $45m to $55m
(+82% vs. FY 2022 at the mid-point)
SUBOXONE Film Market Share Accelerated rate of share decline in Q4 2023(2), including the assumed impact Accelerated rate of share decline in the H2 2023(2), along with the assumed
from the launch of a fourth buprenorphine/naloxone sublingual film generic impact from the launch of a fourth buprenorphine/naloxone sublingual film
entering the U.S. market in early Q4 2023 generic entering the U.S. market in H2 2023
Adjusted Gross Margin No change Low to mid 80% range
Adjusted SG&A No change $530m to $540m
R&D No change $90m to $100m
Adjusted Operating Profit Higher than FY 2022's adjusted operating income of $212m, as a result of Slightly below FY 2022's adjusted operating income of $212m, as a result of
higher NR guidance the additional operating expenses associated with the Opiant acquisition,
partially offset by higher NR guidance
1 FY 2023 NR from OPVEE is expected to be immaterial given the Q4 2023 launch
timing
2 Reflecting underlying share erosion at a similar rate to the last two years
(approximately 2 share points p.a.)
U.S. OUD Market Update
In Q2 2023, the U.S. buprenorphine medication-assisted treatment (BMAT) market
grew in mid-single digits. The Group continues to expect long-term U.S. market
growth to be sustained in the mid- to high-single digit percentage range due
to increased overall public awareness of the opioid epidemic and approved
treatments, together with regulatory and legislative actions, such as the late
2022 enactment of the Mainstreaming Addiction Treatment Act, that have
expanded OUD treatment funding and treatment capacity. The Group believes
these regulatory and legislative actions will help to normalize the chronic
disease of addiction and expand access to evidence-based buprenorphine
treatment in the U.S. and supports these actions.
Financial Performance H1 and Q2 2023
Total net revenue in H1 2023 increased 24% to $529m (H1 2022: $428m) at actual
exchange rates (+25% at constant exchange rates). In Q2 2023, total net
revenue increased 25% at actual exchange rates (+25% at constant exchange
rates) to $276m (Q2 2022: $221m).
U.S. net revenue increased 26% in H1 2023 to $435m (H1 2022: $344m) and by 26%
in Q2 2023 to $226m (Q2 2022: $179m). Strong year-over-year SUBLOCADE and
PERSERIS volume growth, along with underlying BMAT market growth were the
principal drivers of the net revenue increase in both periods.
Rest of World (ROW) net revenue increased 12% at actual exchange rates in H1
2023 to $94m (H1 2022: $84m) (+18% at constant exchange rates(1)). In Q2 2023,
ROW net revenue increased 19% at actual exchange rates to $50m (Q2 2022: $42m)
(+20% at constant exchange rates(1)). In both the period and quarter, positive
contributions from new products (SUBLOCADE / SUBUTEX® Prolonged Release and
SUBOXONE Film) were partially offset by ongoing competitive pressure on legacy
tablet products. Unfavorable foreign currency translation also impacted
underlying growth. H1 2023 and Q2 2023 SUBLOCADE / SUBUTEX Prolonged Release
net revenue in ROW were $20m (H1 2022: $12m) and $10m (Q2 2022: $6m) at actual
exchange rates, respectively.
1 Net revenue at constant exchange rates is an alternative performance measure
used by management to evaluate underlying performance of the business and is
calculated by applying the prior year exchange rate to net revenue in the
currencies of the foreign entities.
Gross margin as reported in H1 2023 was 83% (H1 2022: 82%) and 82% in Q2 2023
(Q2 2022: 83%), respectively. Excluding $2m of other adjustments for
amortization of acquired intangible assets within cost of sales, adjusted
gross margin in H1 2023 and Q2 2023 was 84% and 83%, respectively. The
adjusted gross margin improvement for H1 2023 primarily reflects an improved
product mix from the continued growth of SUBLOCADE. These benefits were
partially offset by cost inflation. Adjusted Q2 2023 gross margin was
essentially unchanged versus the same year-ago quarter.
SG&A expenses as reported in H1 2023 were $264m (H1 2022: $217m) and $133m
as reported in Q2 2023 (Q2 2022: $109m). H1 2023 and Q2 2023 included $22m and
$8m, respectively, of exceptional costs related to the acquisition of Opiant
Pharmaceuticals, Inc. and to the preparation of the additional listing of
Indivior shares on Nasdaq. H1 2022 and Q2 2022 included $2m of exceptional
consulting costs incurred in preparation for the additional listing of
Indivior shares on the Nasdaq.
Excluding exceptional items, H1 2023 SG&A expense increased 13% to $242m
(Adjusted H1 2022: $215m); Q2 2023 SG&A expense increased 17% to $125m
(Adjusted Q2 2022: $107m). The increases in both periods primarily reflect
higher personnel related expenses, legal defense costs, and cost inflation.
R&D expenses in H1 2023 and Q2 2023 were $59m and $32m, respectively (H1
2022: $23m; Q2 2022: $14m), and represented increases of 157% and 129%,
respectively. The increases in both periods were primarily due to a greater
activity level related to certain post-marketing studies for SUBLOCADE and
PERSERIS, process validation testing related to LAI (long-acting injectable)
capacity expansion and the start-up of OPVEE production, as well as ongoing
early-stage pipeline activities, including pipeline assets from the Opiant
acquisition.
Net other operating income in H1 2023 and Q2 2023 was $1m and $nil,
respectively, (H1 2022: $4m income; Q2 2022: $3m income). H1 2022 and Q2 2022
included $5m of exceptional benefit related to a Directors' & Officers'
insurance claim settlement.
Operating profit as reported was $118m in H1 2023 (H1 2022: $117m).
Exceptional costs and other adjustments of $24m are included in the current
period. Net exceptional benefits of $3m were included in H1 2022. On an
adjusted basis, H1 2023 operating profit increased 25% to $142m (H1 2022:
$114m). The increases on a reported and adjusted basis primarily reflected
higher NR from the Group's LAI products, partially offset by increased
SG&A and R&D expenses, as described above.
Q2 2023 operating profit as reported was $61m (Q2 2022: $63m). Exceptional
costs and other adjustments of $10m are included in the current period while
exceptional benefits of $3m were included in the year-ago period. On an
adjusted basis, Q2 2023 operating profit increased 18% to $71m (Adjusted Q2
2022: $60m). The increase on an adjusted basis primarily reflected the same
factors as noted above.
Net finance income as reported was $2m in H1 2023 (H1 2022: $11m expense). The
change in net finance income (expense) reflected higher interest income earned
on the Group's investments.
Reported tax expense was $37m in H1 2023, or a rate of 31% (H1 2022 tax
expense: $17m, 16%). Adjusted H1 2023 tax expense was $32m, excluding the $5m
in exceptional tax items and tax expense on exceptional items and other
adjustments, an effective tax rate of 22%. Exceptional tax items are comprised
of a $5m write off of deferred tax assets and tax expense due to limitation on
the deduction of executive compensation by U.S. publicly traded companies and
$3m change in estimate as to the tax benefit of legal provisions booked in the
prior year. The Q2 2023 reported tax expense was $23m, or a rate of 37% (Q2
2022: $10m, 17%). The tax expense on Q2 2023 adjusted profits amounted to
$16m, excluding the $7m in tax related exceptional items and other
adjustments, which represented an effective tax rate of 22%. There were no
exceptional tax items recorded in H1 2022 and Q2 2022, respectively. The
increase in the effective tax rate on adjusted profits was primarily driven by
the increase in the UK corporation tax rate from 19% to 23.5%, and the
temporary reduction in UK innovation incentives due to 2022 losses.
Reported and adjusted net income in H1 2023 was $83m and $112m, respectively
(H1 2022 reported net income: $89m; H1 2022 Adjusted net income: $86m). The
increase in net income on an adjusted basis of 30% primarily reflected higher
NR partially offset by the increase in operating expense. Q2 2023 net income
on a reported basis was $39m (Q2 2022: $48m), and $56m on an adjusted basis
excluding the net after-tax impact from exceptional items and other
adjustments (Adjusted Q2 2022: $45m). Higher Q2 2023 net income on an adjusted
basis was primarily due to strong NR growth.
Diluted earnings per share on a reported and adjusted basis were $0.59 and
$0.79 in H1 2023, respectively (H1 2022: $0.61 earnings per share on a diluted
basis and $0.59 earnings per share adjusted diluted basis). In Q2 2023,
diluted earnings per share and adjusted diluted earnings per share were $0.27
and $0.39, respectively (Q2 2022: $0.33 earnings per share on a diluted basis
and $0.31 earnings per share adjusted diluted basis).
Balance Sheet & Cash Flow
Cash and investments totaled $782m at the end of Q2 2023, a decrease of $209m
versus the $991m position at year-end 2022. Generation of cash primarily from
operating profit of $118m in H1 2023 was offset by the net cash outflow of
$124m for the Opiant acquisition, including the transferred cash balance,
settlement payment of $103m related to the multidistrict antitrust class state
claims (refer to Note 13), in addition to the Group's scheduled litigation
settlement payments totaling $74m primarily for the Department of Justice
(DOJ), Reckitt Benckiser (RB) and Dr. Reddy's Laboratories (DRL) matters.
See also "Risk Factor Update" below.
Net working capital, defined by management as inventory plus trade
receivables, less trade and other payables, was negative $329m on June 30,
2023, versus negative $283m at the end of FY 2022. The change in the period
was primarily a result of timing of payments made on government rebate and
trade payables.
Cash used in operations in H1 2023 was $26m (H1 2022 cash used: $14m),
primarily due to settlement payments related to the multidistrict antitrust
class state claims, DOJ Resolution, DRL settlement, RB settlement and timing
of payments made on government rebate and trade payables. Before these
settlement related items, cash generated from operations in the current period
was $151m. Net cash outflow from operating activities was $55m in H1 2023 (H1
2022 cash outflow: $48m) reflecting tax payments and interest paid on the
Group's term loan facility and settlement payments, partially offset by
interest received on investments.
H1 2023 cash outflow from investing activities was $103m (H1 2022 cash
outflow: $162m) which reflects $124m for the Opiant acquisition, net of cash
assumed. In the prior year period, the outflow from investing activities
primarily reflects the net investment in a portfolio of investment-grade debt
securities and ordinary shares of Aelis Farma.
H1 2023 cash outflow from financing activities was $24m (H1 2022 cash outflow:
$34m) reflecting the extinguishment of debt assumed in the Opiant acquisition,
as well as shares repurchased and cancelled, principal portion of lease
payments and quarterly amortization of the Group's term loan facility
partially offset by proceeds received from the issuance of shares.
R&D / Pipeline Update
Indivior's quarterly R&D and pipeline update may be found on our website,
www.indivior.com under the tab "Our Science"/Pipeline. Information contained
in or accessible through our website should not be considered a part of this
press release.
Risk Factors Update
The nature and potential impact of the principal risks, uncertainties, and
emerging risks facing the Group did not change in the first half of 2023, and
are not expected to change in the second half of 2023, except for legal and
intellectual property:
As discussed in Note 13 "Legal Proceedings", the Group is a party to legacy
lawsuits filed by various private plaintiffs alleging violations of civil
antitrust laws and other claims relating to the Group's marketing of SUBOXONE
Film. A majority of those actions have been consolidated in multidistrict
litigation (the "Antitrust MDL") in the Eastern District of Pennsylvania.
In 2022, the Group recorded a provision of $290m for the purpose of settlement
with respect to the Antitrust MDL claims filed by all three plaintiff classes.
On June 1, 2023, the Group reached a settlement with one of those classes, the
states, for $103m. The settlement is consistent with the 2022 Provision, which
has been reduced by the $103m payment made to the states.
As mentioned in Note 1, "Basis of Preparation and Accounting Policies", and
Note 13, "Legal Proceedings", the Group has not reached a settlement with the
end payors class or direct purchasers class.
The Directors continue to believe the near-term litigation outcomes can be
appropriately managed and that, should such ongoing legal proceedings go to
trial, the Group has meritorious defenses against liability, and meritorious
arguments that could substantially reduce claimed damages, should liability be
found. However, if Indivior Inc. were found liable in respect of the remaining
claims filed by various private plaintiffs alleging violations of civil
antitrust laws and other claims relating to the Group's marketing of SUBOXONE
Film (the "Antitrust MDL"), if the Plaintiffs were awarded damages, and if the
Group were to be unable to significantly reduce the claimed damages at trial
or in any subsequent proceeding (and considering treble damages to be awarded
under U.S. antitrust laws), then the Group's financial position, results and
future cash flows would be materially adversely affected and the amount of
damages would exceed the Group's resources to pay. There is a reasonable
prospect the timing of any appeal (or any subsequent proceeding) and/or
required payment of the damages could now fall within the going concern
period.
Notwithstanding the Group's belief that it can appropriately manage the
remaining claims has not changed (including no change in the quantum of
provision recognized for settlement purposes) and that it has meritorious
defenses against liability and meritorious arguments that could substantially
reduce the claimed damages and any resulting award should it be found liable
at trial, the Directors have concluded the possibility the Group could be
found liable at trial in respect of the remaining claims and could be unable
to reduce the damages at trial (or in any subsequent proceeding) within the
current going concern period represents a material uncertainty that may cast
significant doubt upon the Group's ability to continue to adopt the going
concern basis of accounting in the future. Nevertheless, the Directors have
concluded the going concern basis of accounting remains appropriate for the
accounting and preparation of these Condensed Financial Statements, with the
addition of the material uncertainty as described above. See Note 1 "Basis of
Preparation and Accounting Policies".
Exchange Rates
The average and period end exchange rates used for the translation of
currencies into U.S. dollars that have most significant impact on the Group's
results were:
6 Months to June 30, 6 Months to June 30,
2023
2022
GB £ period end 1.2648 1.2194
GB £ average rate 1.2329 1.3015
€ Euro period end 1.0911 1.0524
€ Euro average 1.0807 1.0952
Webcast Details
A live webcast presentation will be held on July 27, 2023, at 13:00 BST (8:00
am EDT) hosted by Mark Crossley, CEO. The details are below. All materials
will be available on the Group's website prior to the event at
www.indivior.com.
The webcast link: https://edge.media-server.com/mmc/p/z4yh2znf
Participants may access the presentation telephonically by registering with
the following link:
https://register.vevent.com/register/BI80255ae130d847e3944c2584e201ae3e
(Registrants will have an option to be called back directly immediately prior
to the call or be provided a call-in # with a unique pin code following their
registration)
For Further Information
Investor Enquiries Jason Thompson VP, Investor Relations +1 804 402 7123
Indivior PLC jason.thompson@indivior.com
Tim Owens Director, Investor Relations Indivior PLC +1 804 263 3978
timothy.owens@indivior.com
Media Enquiries Jonathan Sibun Teneo +44 (0)20 7353 4200
U.S. Media Inquiries +1 804 594 0836
Indiviormediacontacts@indivior.com
The person responsible for the release of this announcement on behalf of
Indivior for the purposes of MAR
is Kathryn Hudson (Company Secretary).
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 1,000
individuals globally and its portfolio of products is available in 39
countries worldwide. Visit www.indivior.com to learn more. Connect with
Indivior on LinkedIn by visiting www.linkedin.com/company/indivior.
Important Cautionary Note Regarding Forward-Looking Statements
This announcement contains certain statements that are forward-looking.
Forward-looking statements include, among other things, statements regarding
the Indivior Group's financial guidance for 2023 and its medium- and long-term
growth outlook; strategies for value creation; expectations for sales levels
for particular products; expectations regarding the cost to resolve the
Group's legal proceedings and regulatory matters; expected market growth
rates, growing normalization of medically assisted treatment for opioid use
disorder, and expanded access to treatment; expected changes in market share;
future exchange rates; operational goals; our product development pipeline and
potential future products; expectations regarding regulatory approval of such
product candidates, the timing of such approvals, and the timing of commercial
launch of such products or product candidates, and eventual annual revenues of
such future products; expectations regarding the extent and impact of
competition; and other statements containing the words "believe",
"anticipate", "plan", "expect", "intend", "estimate", "forecast," "strategy,"
"target," "guidance," "outlook," "potential", "project", "priority," "may",
"will", "should", "would", "could", "can", "outlook," "guidance", the
negatives thereof, and variations thereon and similar expressions. By their
nature, forward-looking statements involve risks and uncertainties as they
relate to events or circumstances that may or may not occur in the future.
Actual results may differ materially from those expressed or implied in such
statements because they relate to future events. Various factors may cause
differences between Indivior's expectations and actual results, including,
among others, the material risks described in the most recent Indivior PLC
Annual Report and in subsequent releases; the substantial litigation and
ongoing investigations to which we are or may become a party; our reliance on
third parties to manufacture commercial supplies of most of our products,
conduct our clinical trials and at times to collaborate on products in our
pipeline; our ability to comply with legal and regulatory settlements,
healthcare laws and regulations, requirements imposed by regulatory agencies
and payment and reporting obligations under government pricing programs; risks
related to the manufacture and distribution of our products, some of which are
controlled substances; market acceptance of our products as well as our
ability to commercialize our products and compete with other market
participants; the uncertainties related to the development of new products,
including through acquisitions, and the related regulatory approval process;
our dependence on a small number of significant customers; our ability to
retain key personnel or attract new personnel; our dependence on third-party
payors for the reimbursement of our products and the increasing focus on
pricing and competition in our industry; unintended side effects caused by the
clinical study or commercial use of our products; our use of hazardous
materials in our manufacturing facilities; our import, manufacturing and
distribution of controlled substances; our ability to successfully execute
acquisitions, partnerships, joint ventures, dispositions or other strategic
acquisitions; our ability to protect our intellectual property rights and the
substantial cost of litigation or other proceedings related to intellectual
property rights; the risks related to product liability claims or product
recalls; the significant amount of laws and regulations that we are subject
to, including due to the international nature of our business; macroeconomic
trends and other global developments; the terms of our debt instruments,
changes in our credit ratings and our ability to service our indebtedness and
other obligations as they come due; changes in applicable tax rate or tax
rules, regulations or interpretations; and our ability to realize our deferred
tax assets.
Forward-looking statements speak only as of the date that they are made and
should be regarded solely as our current plans, estimates and beliefs. Except
as required by law, we do not undertake and specifically decline any
obligation to update, republish or revise forward-looking statements to
reflect future events or circumstances or to reflect the occurrences of
unanticipated events.
Unaudited condensed consolidated interim income statement
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 Notes $m $m $m $m
Net Revenue 2 276 221 529 428
Cost of sales (50) (38) (89) (75)
Gross Profit 226 183 440 353
Selling, general and administrative expenses 3 (133) (109) (264) (217)
Research and development expenses 3 (32) (14) (59) (23)
Net other operating income 3 - 3 1 4
Operating Profit 61 63 118 117
Finance income 4 11 2 21 2
Finance expense 4 (10) (7) (19) (13)
Net Finance Income/(Expense) 1 (5) 2 (11)
Profit Before Taxation 62 58 120 106
Income tax expense 5 (23) (10) (37) (17)
Net Income 39 48 83 89
Earnings per ordinary share (in dollars)*
Basic earnings per share 6 $0.28 $0.34 $0.61 $0.63
Diluted earnings per share 6 $0.27 $0.33 $0.59 $0.61
* Basic and diluted earnings per share reflect the impact of the Company's
share consolidation for all periods presented. Refer to Note 6 for further
details.
Unaudited condensed consolidated interim statement of comprehensive income
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $m $m $m $m
Net income 39 48 83 89
Other comprehensive income/(loss)
Items that may be reclassified to profit or loss in subsequent years:
Foreign currency translation adjustment, net 4 (14) 4 (20)
Other comprehensive income/(loss) 4 (14) 4 (20)
Total comprehensive income 43 34 87 69
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Unaudited condensed consolidated interim balance sheet
Jun 30, 2023 Dec 31, 2022
Notes $m $m
ASSETS
Non-current assets
Intangible assets 7 199 70
Property, plant and equipment 54 54
Right-of-use assets 35 31
Deferred tax assets 5 210 219
Investments 8 93 98
Other assets 9 46 38
637 510
Current assets
Inventories 131 114
Trade receivables 229 220
Other assets 9 34 27
Current tax receivable 5 11 5
Investments 8 97 119
Cash and cash equivalents 592 774
1,094 1,259
Total assets 1,731 1,769
LIABILITIES
Current liabilities
Borrowings 10 (3) (3)
Provisions 11 (196) (303)
Other liabilities 11 (70) (79)
Trade and other payables 14 (689) (617)
Lease liabilities (9) (8)
Current tax liabilities 5 (5) (9)
(972) (1,019)
Non-current liabilities
Borrowings 10 (236) (237)
Provisions 11 (5) (5)
Other liabilities 11 (368) (428)
Lease liabilities (33) (29)
(642) (699)
Total liabilities (1,614) (1,718)
Net assets 117 51
EQUITY
Capital and reserves
Share capital 15 69 68
Share premium 9 8
Capital redemption reserve 6 6
Other reserve (1,295) (1,295)
Foreign currency translation reserve (35) (39)
Retained earnings 1,363 1,303
Total equity 117 51
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Unaudited condensed consolidated interim statement of changes in equity
Notes Share capital Share premium Capital redemption reserve Other reserve Foreign currency translation reserve Retained earnings Total equity
$m $m $m $m $m $m $m
Balance at January 1, 2022 70 7 3 (1,295) (20) 1,438 203
Comprehensive income
Net income - - - - - 89 89
Other comprehensive loss - - - - (20) - (20)
Total comprehensive income - - - - (20) 89 69
Transactions recognized directly in equity
Shares issued 1 - - - - - 1
Share-based plans - - - - - 7 7
Settlement of tax on equity awards - - - - - (10) (10)
Shares repurchased and cancelled (1) - 1 - - (29) (29)
Transfer to share repurchase liability - - - - - (13) (13)
Taxation on share-based plans - - - - - 2 2
Balance at June 30, 2022 70 7 4 (1,295) (40) 1,484 230
Balance at January 1, 2023 68 8 6 (1,295) (39) 1,303 51
Comprehensive income
Net income - - - - - 83 83
Other comprehensive income - - - - 4 - 4
Total comprehensive income - - - - 4 83 87
Transactions recognized directly in equity
Shares issued 1 1 - - - - 2
Share-based plans - - - - - 11 11
Settlement of tax on equity awards - - - - - (21) (21)
Shares repurchased and cancelled - - - - - (11) (11)
Transfer from share repurchase liability - - - - - 9 9
Taxation on share-based plans - - - - - (11) (11)
Balance at June 30, 2023 69 9 6 (1,295) (35) 1,363 117
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Unaudited condensed consolidated interim cash flow statement
2023 2022
For the six months ended June 30 $m $m
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit 118 117
Depreciation and amortization of property, plant and equipment and intangible 7 7
assets
Depreciation of right-of-use assets 5 4
Gain on disposal of intangible assets - (1)
Share-based payments 11 7
Impact from foreign exchange movements 2 (6)
Unrealized (gain)/loss on equity investment (1) 2
Settlement of tax on employee awards (21) (10)
(Increase)/decrease in trade receivables (8) 3
(Increase)/decrease in current and non-current other assets (8) 3
Increase in inventories (11) (10)
Increase/(decrease) in trade and other payables 60 (29)
Decrease in provisions and other liabilities(1) (180) (101)
Cash used in operations (26) (14)
Interest paid (17) (13)
Interest received 21 1
Taxes paid (33) (21)
Transaction costs related to debt refinancing - (1)
Net cash outflow from operating activities (55) (48)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of assets, net of cash acquired (refer to Note 16) (124) -
Purchase of property, plant and equipment (2) (2)
Purchase of investments (36) (171)
Maturity of investments 64 10
Purchase of intangible asset (5) -
Proceeds from disposal of intangible assets - 1
Net cash outflow from investing activities (103) (162)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings (11) (1)
Principal elements of lease payments (4) (4)
Shares repurchased and cancelled (11) (29)
Proceeds from the issuance of ordinary shares 2 -
Net cash outflow from financing activities (24) (34)
Exchange difference on cash and cash equivalents - (1)
Net decrease in cash and cash equivalents (182) (245)
Cash and cash equivalents at beginning of the period 774 1,102
Cash and cash equivalents at end of the period 592 857
(1)Changes in the line item provisions and other liabilities for H1 2023
include litigation settlement payments totaling $177m (H1 2022: $108m). $3m of
interest paid on the DOJ Resolution in H1 2023 has been recorded in the
interest paid line item (H1 2022: $4m).
The notes are an integral part of these unaudited condensed consolidated
interim financial statements.
Notes to the unaudited condensed consolidated interim financial statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Indivior PLC (the 'Company') is a public limited company incorporated on
September 26, 2014 and domiciled in the United Kingdom. In these unaudited
condensed consolidated interim financial statements ('Condensed Financial
Statements'), reference to the 'Group' means the Company and all its
subsidiaries.
The Condensed Financial Statements have been prepared in accordance with UK
adopted International Accounting Standard 34, Interim Financial Reporting
("IAS 34"). The Condensed Financial Statements have been reviewed and are
unaudited and do not include all the information and disclosures required in
the annual financial statements. Therefore the Condensed Financial Statements
should be read in conjunction with the Group's Annual Report and Accounts for
the year ended December 31, 2022, which were prepared in accordance with
UK-adopted International Accounting Standards and in conformity with the
Companies Act 2006 as applicable to companies reporting under those standards.
These Condensed Financial Statements were approved for issue on July 26,
2023.
In May 2023, the International Accounting Standards Board issued International
Tax Reform-Pillar Two Model Rules which amended IAS 12 Income Taxes. Refer to
Note 5 for details.
In 2023, the Group acquired 100% of the share capital of Opiant
Pharmaceuticals, Inc. ("Opiant") which has been accounted for as an asset
acquisition as substantially all of the fair value of the gross assets
acquired is concentrated in the value of the in-process research and
development. The Group has disclosed new accounting policies in Note 16
regarding the policy elected for treatment of contingent consideration and the
method used to evaluate whether an acquisition is a business combination or
asset acquisition.
Following the effectiveness of the additional U.S. listing of Indivior shares,
presentation of exceptional items and adjusted results has been removed from
the Condensed Financial Statements. This change creates consistency with
presentation of financial statements included in Indivior's SEC registration
statement and better aligns to the market practice for companies with U.S.
listings. The change has been applied to all periods presented.
In preparing these Condensed Financial Statements, the significant judgments
made by management in applying the Group's accounting policies and the key
sources of estimation uncertainty were the same as those that applied to the
consolidated financial statements for the year ended December 31, 2022,
except for estimates used in determining the valuation of the in-process
research and development associated with the acquisition of Opiant and changes
in estimates that are required in determining the provision for income taxes.
The Directors have assessed the Group's ability to maintain sufficient
liquidity to fund its operations, fulfill financial and compliance obligations
as set out in Note 11, and comply with the minimum liquidity covenant in the
Group's debt facility for the period to December 2024 (the going concern
period). A base case model was produced reflecting:
• Board approved forecasts and financial plans for the period;
• the acquisition of Opiant completed 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 U.S.; and
• stress testing of settlement 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 continue to believe the near-term litigation outcomes can be
appropriately managed and that, should such ongoing legal proceedings go to
trial, the Group has meritorious defenses against liability, and meritorious
arguments that could substantially reduce claimed damages, should liability be
found. However, if Indivior Inc. were found liable in respect of the remaining
claims filed by various private plaintiffs alleging violations of civil
antitrust laws and other claims relating to the Group's marketing of
SUBOXONE® Film, if the Plaintiffs were awarded damages, and if the Group were
to be unable to significantly reduce the claimed damages at trial or in any
subsequent proceeding (and considering treble damages to be awarded under U.S.
antitrust laws), then the Group's financial position, results and future cash
flows would be materially adversely affected and the amount of damages would
exceed the Group's resources to pay. There is a reasonable prospect the timing
of any appeal (or any subsequent proceeding) and/or required payment of the
damages could now fall within the going concern period.
Notwithstanding the Group's belief that it can appropriately manage the
remaining claims has not changed and that it has meritorious defenses against
liability and meritorious arguments that could substantially reduce the
claimed damages and any resulting award should it be found liable at trial,
the Directors have concluded the possibility the Group could be found liable
at trial in respect of the remaining claims and could be unable to reduce the
damages at trial (or in any subsequent proceeding) within the current going
concern period represents a material uncertainty that may cast significant
doubt upon the Group's ability to continue to adopt the going concern basis of
accounting in the future. Nevertheless, the Directors have concluded the going
concern basis of accounting remains appropriate for the accounting and
preparation of these Condensed Financial Statements, with the addition of the
material uncertainty as described above.
The financial information contained in this document does not constitute
statutory accounts as defined in section 434 and 435 of the Companies Act
2006. The Group's statutory financial statements for the year ended
December 31, 2022, were approved by the Board of Directors on March 7, 2023,
and delivered to the Registrar of Companies. The auditor's report on those
accounts was unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement under section 498 of the Companies Act 2006.
2. SEGMENT INFORMATION
The Group is engaged in a single business activity, which is predominantly the
development, manufacture, and sale of buprenorphine-based prescription drugs
for treatment of opioid dependence and related disorders. The CEO reviews
disaggregated net revenue on a geographical and product basis and allocates
resources on a functional basis between Commercial, Supply, Research and
Development, and other Group functions. Financial results are reviewed on a
consolidated basis for evaluating financial performance and allocating
resources. Accordingly, the Group operates in a single reportable segment.
Net revenue and non-current assets
Revenues are attributed geographically based on the country where the sale
originates. The following tables represent net revenues and non-current
assets, net of accumulated depreciation, amortization and impairment, by
country. Non-current assets for this purpose consist of intangible assets,
property, plant and equipment, right-of-use assets, investments, and other
assets.
Net revenue:
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $m $m $m $m
United States 226 179 435 344
Rest of World 50 42 94 84
Total 276 221 529 428
On a disaggregated basis, the Group's net revenue by major product line:
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $m $m $m $m
Sublingual/other 110 116 223 233
SUBLOCADE® 155 98 287 183
PERSERIS® 11 7 19 12
Total 276 221 529 428
Non-current assets:
Jun 30, Dec 31,
2023
2022
$m $m
United States 200 65
Rest of World 227 226
Total 427 291
3. OPERATING EXPENSES AND NET OTHER OPERATING INCOME
The table below sets out selected operating costs and expense information:
Operating expenses
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $m $m $m $m
Research and development expenses (32) (14) (59) (23)
Selling and marketing expenses (58) (55) (111) (107)
Administrative and general expenses(1) (75) (54) (153) (110)
Selling, general, and administrative expenses (133) (109) (264) (217)
Depreciation, amortization, and impairment(2) (3) (3) (7) (6)
(1) Administrative and general expenses in H1 2023 and Q2 2023 include $22m
and $8m of costs related to the acquisition of Opiant Pharmaceuticals, Inc.
and to the preparation of the additional listing of Indivior shares on Nasdaq.
(2) Depreciation and amortization expense is included in research and
development and selling, general and administrative expenses. Additionally,
depreciation and amortization expense in H1 2023 of $5m (H1 2022: $5m) and Q2
2023 of $3m (Q2 2022: $3m) for intangibles and ROU assets is included within
cost of sales.
The increase in research and development expenses is primarily due to greater
activity level related to certain post-marketing studies for SUBLOCADE and
PERSERIS, process validation testing related to LAI (long-acting injectable)
capacity expansion and the start-up of OPVEE production, as well as ongoing
early-stage pipeline activities, including pipeline assets from the Opiant
acquisition.
The increase in selling, general, and administrative expenses primarily
reflects costs related to the acquisition of Opiant (refer to Note 16), higher
personnel related expenses, consulting costs incurred in preparation for the
additional listing of Indivior shares on the Nasdaq, legal defense costs, and
cost inflation.
Net other operating income
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $m $m $m $m
Net proceeds from the sale of intangible assets - - - 1
Directors' and Officers' insurance reimbursements - 5 - 5
Fair value gain/(loss) on equity investment - (2) 1 (2)
Net other operating income - 3 1 4
4. NET FINANCE INCOME (EXPENSE)
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $m $m $m $m
Finance income
Interest income on cash and cash equivalents/investments 11 2 21 2
Total finance income 11 2 21 2
Finance expense
Interest expense on borrowings (7) (4) (13) (8)
Interest expense on lease liabilities - (1) (1) (1)
Interest expense on legal matters (2) (2) (4) (4)
Other interest expense (1) - (1) -
Total finance expense (10) (7) (19) (13)
Net finance income (expense) 1 (5) 2 (11)
The increases to finance income and finance expense were primarily due to
higher interest rates. Investments in corporate debt and U.S. Treasury
securities in 2022 also contributed to the increase in finance income.
5. TAXATION
The Group calculates tax expense for interim periods using the expected full
year rates, considering the pre-tax income and statutory rates for each
jurisdiction. To the extent practicable, a separate estimated average annual
effective income tax rate is determined for each taxing jurisdiction and
applied individually to the interim period pre-tax income of each
jurisdiction. Similarly, if different income tax rates apply to different
categories of income (such as capital gains or income earned in particular
industries), to the extent practicable a separate rate is applied to each
individual category of interim period pre-tax income. The resulting expense is
allocated between current and deferred taxes based on actual movement in
deferred tax for the quarter, with the balance recorded to the current tax
accounts.
In the six months ended June 30, 2023, the reported total tax expense was
$37m, or a rate of 31% (H1 2022 tax expense: $17m, 16%). In the three months
ended June 30, 2023, the reported total tax expense was $23m, or a rate of
37% (Q2 2022 tax expense: $10m, 17%). The enacted UK Statutory Corporation Tax
rate has increased to 25% as of April 1, 2023, providing a blended rate of
23.5% for the year ended December 31, 2023. The increase in the effective tax
rate on profits in both periods was primarily driven by this increase in the
UK tax rate as well as the temporary reduction in UK innovation incentives due
to 2022 losses, and the write off of $4m (3%) of deferred tax assets due to
limitations on the deduction of executive compensation by U.S. publicly traded
companies. Additional impacts in the reporting period of $4m (3%) relate to a
change in estimate as to the tax benefit of legal provisions booked in the
prior year.
The Group's balance sheet at June 30, 2023 includes a current tax receivable
of $11m (FY 2022: $5m), current tax liabilities of $5m (FY 2022: $9m), and
deferred tax assets of $210m (FY 2022: $219m). The decrease in deferred tax
assets is primarily due to the write off of share-based compensation future
deductions.
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 June 30, 2023, the Group's net deferred tax assets of $210m
relate primarily to net operating loss carryforwards, inventory costs
capitalized for tax purposes, and litigation liabilities. Recognition of
deferred tax assets is reliant on forecast taxable profits arising in the
jurisdiction in which the deferred tax asset is recognized. The Group has
assessed recoverability of deferred tax assets using Group-level budgets and
forecasts consistent with those used for the assessment of viability and asset
impairments, particularly in relation to levels of future net revenues. These
forecasts are subject to similar uncertainties to those assessments. This is
reviewed each quarter and, to the extent required, an adjustment to the
recognized deferred tax asset may be made. With the exception of specific
assets that are not currently considered realizable, Management have concluded
full recognition of deferred tax assets to be appropriate and do not believe a
significant risk of material change in their assessment exists in the next 12
months.
Other tax matters
U.S. tax laws limit deductibility of compensation for certain management roles
for U.S. listed companies. With the U.S. listing completed in June 2023, the
Group wrote off deferred tax assets of $4m to tax expense and $7m to equity
relating to future tax deductions of share-based compensation for which book
expense has already been recognized. Additionally, the Group's current tax
liabilities increased by $7m, due to disallowance of current year
compensation.
In June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK,
introducing a global minimum effective tax rate of 15%. The legislation
implements a domestic top-up tax and a multinational top-up tax, effective for
accounting periods starting on or after December 31, 2023. The Group has
applied the recent amendment to IAS 12 which provides temporary relief to the
recognition of deferred taxes relating to top-up minimum income taxes.
Accordingly, the legislation is not expected to impact the Group's taxes in
2023. The Group is reviewing this new UK tax legislation and similar proposed
legislation in other jurisdictions to evaluate the potential impact on its
effective tax rate in future periods.
As a multinational group, tax uncertainties remain in relation to Group
financing, intercompany pricing, the location of taxable operations.
Management have concluded tax provisions made to be appropriate and do not
believe a significant risk of material change to uncertain tax positions
exists in the next 12 months.
6. EARNINGS PER SHARE
Share consolidation
In September 2022, the Company's shareholders approved a 5-for-1 share
consolidation. In October 2022, the Company completed this share
consolidation. Shareholders received 1 new Ordinary share with a nominal value
of $0.50 each for every 5 previously existing Ordinary shares which had a
nominal value of $0.10 each. All share and per share information of the Group,
including basic and diluted weighted average number of shares outstanding,
basic earnings per share, and diluted earnings per share reflect the share
consolidation for all periods presented.
The table below sets out basic and diluted earnings per share for each period:
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $ $ $ $
Basic earnings per share $0.28 $0.34 $0.61 $0.63
Diluted earnings per share $0.27 $0.33 $0.59 $0.61
Basic
Basic earnings per share is calculated by dividing net income for the period
attributable to owners of the Group by the weighted average number of ordinary
shares in issue during the period.
Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The Group has dilutive potential ordinary shares in
the form of stock options and awards. These options and awards reflect the
share consolidation for all periods presented, 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)
for H1 2023 includes the favorable impact 484,362 ordinary shares repurchased
in H1 2023, 10,187,491 ordinary shares repurchased in H2 2022 prior to the
share consolidation (equivalent share post consolidation: 2,037,498), and
1,280,914 ordinary shares repurchased after the share consolidation in H2
2022. See Note 15 for further discussion. Conditional awards of 1,760,805 and
7,491,252 (equivalent post consolidation approximately 1,498,000) were granted
under the Group's Long-Term Incentive Plan in H1 2023 and H1 2022,
respectively.
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 thousands thousands thousands thousands
Weighted average shares on a basic basis 138,101 140,686 137,098 140,713
Dilution from share awards and options 4,629 6,595 4,531 6,162
Weighted average shares on a diluted basis 142,730 147,281 141,629 146,875
7. INTANGIBLE ASSETS
Jun 30, Dec 31,
2023
2022
Intangible assets, net of accumulated amortization and impairment $m $m
Products in development 42 36
Marketed products 153 29
Software 4 5
Total 199 70
The increase in marketed products is primarily due to the acquisition of
Opiant which resulted in the recognition of an intangible asset related to the
in-process research and development value for OPVEE® (nalmefene nasal spray),
formerly the pipeline product OPNT003, for $126m (refer to Note 16). Upon
approval by the U.S. Food and Drug Administration (FDA) in May 2023, the
intangible asset became classified as a marketed product and amortization
commenced over the patent life.
8. INVESTMENTS
Jun 30, Dec 31,
2023
2022
Current and non-current investments $m $m
Equity securities at FVPL 11 10
Debt securities held at amortized cost 86 109
Total investments, current 97 119
Debt securities held at amortized cost 93 98
Total investments, non-current 93 98
Total 190 217
The Group's investments in debt and equity securities do not create
significant credit risk, liquidity risk, or interest rate risk. Debt
securities held at amortized cost consist of investment-grade debt. At
June 30, 2023, approximately 25% of the Group's portfolio was invested in the
banking sector; none of those securities were downgraded as a result of the
recent market events in that sector.
As of June 30, 2023, expected credit losses for the Group's investments held
at amortized cost are deemed to be immaterial.
Fair value hierarchy
Fair value is the price that would be received to sell an asset or transfer a
liability in an orderly transaction between market participants at the
measurement date. The different levels have been defined as follows:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets
or liabilities
• Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly
• Level 3: Unobservable inputs for the asset or liability
The Group's only financial instruments which are measured at fair value are
equity securities at FVPL. The fair value of equity securities at FVPL is
based on quoted market prices on the measurement date.
The following table categorizes the Group's financial assets measured at fair
value by valuation methodology used in determining their fair value at
June 30, 2023.
Financial assets at fair value Level 1 Level 2 Level 3 Total
$m $m $m $m
Equity securities at FVPL 11 - - 11
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 June 30, 2023, the
carrying value of investments held at amortized cost was above the fair value
by $2m, due to rising interest rates. The fair value of investments held at
amortized cost was calculated based on quoted market prices which would be
classified as Level 1 in the fair value hierarchy above.
9. CURRENT AND NON-CURRENT OTHER ASSETS
Jun 30, Dec 31,
2023
2022
Current and non-current other assets $m $m
Current prepaid expenses 21 14
Other current assets 13 13
Total other current assets 34 27
Non-current prepaid expenses 20 20
Other non-current assets 26 18
Total other non-current assets 46 38
Total 80 65
Non-current assets primarily represent the funding of surety bonds in relation
to intellectual property related matters (see Note 13 for further discussion).
Long-term prepaid expenses primarily relate to payments for contract
manufacturing capacity.
10. FINANCIAL LIABILITIES - BORROWINGS
The table below sets out the current and non-current portion obligation of the
Group's term loan:
Jun 30, Dec 31,
2023
2022
Term loan $m $m
Term loan - current (3) (3)
Term loan - non-current (236) (237)
Total term loan (239) (240)
*Total term loan borrowings reflect the principal amount drawn including debt
issuance costs of $6m (FY 2022: $6m).
At June 30, 2023, the term loan fair value was approximately 100% (FY 2022:
98%) of par value. The key terms of the term loan in effect at June 30, 2023,
are as follows:
Currency Nominal interest margin Maturity Required annual repayments Minimum
liquidity
Term Loan facility USD SOFR + 0.26% + 5.25% 2027 1% Larger of $100m or 50% of Loan Balance
The term loan amounting to $245m (FY 2022: $246m) is secured against the
assets of certain subsidiaries of the Group in the form of guarantees issued
by respective subsidiaries.
• Nominal interest margin is calculated as USD SOFR plus 26 bps, subject
to a floor of 0.75%, plus a credit spread adjustment of 5.25%.
• There are no revolving credit commitments.
11. PROVISIONS AND OTHER LIABILITIES
Provisions
Total Total
Current Non-Current Jun 30, 2023 Current Non-Current Dec 31, 2022
Current and non-current provisions $m $m $m $m $m $m
Multidistrict antitrust class and state claims (188) - (188) (290) - (290)
Federal false claims allegations (5) - (5) (5) - (5)
Intellectual property related matters - (3) (3) - (3) (3)
Other (3) (2) (5) (8) (2) (10)
Total provisions (196) (5) (201) (303) (5) (308)
The Group carries a current provision of $188m (FY 2022: $290m) for certain
multidistrict antitrust class claims. Refer to Note 13, Antitrust Litigation
and Consumer Protection for an update and details on related matters including
the settlement reached with States in June 2023 for $103m. After payment of
this settlement amount, the remaining $188m provision remains Indivior's best
estimate at this time of anticipated settlement for the remaining Plaintiffs
in the Antitrust MDL. However, the Group cannot predict with any certainty
whether Indivior Inc. will reach a settlement with the remaining Plaintiffs,
and the final aggregate cost of these matters, whether resolved by settlement
or trial, may be materially different. The effect of discounting was not
material.
The Group carries a provision of $5m (FY 2022: $5m) pertaining to all
outstanding False Claims Act Allegations as discussed in Note 13. These
matters are expected to be settled within the next 12 months and are not
expected to materially change.
The Group carries a provision of $3m (FY 2022: $3m ) for intellectual
property related matters (see Note 13, Intellectual property related matters).
The Group does not expect the remaining matters to be settled within a year
and therefore the provision is classified as non-current.
Other provisions totaling $5m (FY 2022: $10m) primarily represent general
legal matters expected to be settled within the next 12 months and retirement
benefit costs which are not expected to be settled within one year.
Other liabilities
Total Total
Current Non-Current Jun 30, 2023 Current Non-Current Dec 31, 2022
Current and non-current other liabilities $m $m $m $m $m $m
DOJ resolution (51) (343) (394) (52) (392) (444)
Intellectual property related matters (11) - (11) (10) (11) (21)
RB indemnity settlement (8) (15) (23) (8) (22) (30)
Share repurchase - - - (9) - (9)
Other - (10) (10) - (3) (3)
Total other liabilities (70) (368) (438) (79) (428) (507)
DOJ Resolution Agreement
In July 2020, the Group settled criminal and civil liability with the United
States Department of Justice (DOJ), the U.S. Federal Trade Commission (FTC),
and U.S. state attorneys general 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 and 2023, additional payments of $54m and $53m (including interest) were
made pursuant to the resolution agreement, respectively. Subsequently, four
annual installments of $50m plus interest will be due every January 15 from
2024 to 2027 with the final installment of $200m due in December 2027.
Interest accrues at 1.25% on certain portions of the resolution 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 H1 2023, the Group recorded
interest expense totaling $3m (H1 2022: $3m).
Under the terms of the resolution agreement with the DOJ, the Group has agreed
to compliance terms regarding its sales and marketing practices. Compliance
with these terms is subject to annual Board and CEO certifications submitted
to the U.S. Attorney's Office. As part of the resolution with the FTC and as
detailed in the text of the stipulated order, for a ten-year period Indivior
Inc. is required to make specified disclosures to the FTC and is prohibited
from certain conduct.
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 $11m (FY 2022: $21m), which relates to the settlement of intellectual
property litigation with DRL in June 2022. Under the settlement agreement, the
Group made payments to DRL of $50m in June 2022 and $10m in March 2023 with a
final payment due in 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 H1 2023,
the Group recorded $nil of finance expense (H1 2022: $1m) for time value of
money on the liability.
RB indemnity settlement
In January 2021, the Group reached a settlement with RB to resolve claims
which RB issued in the Commercial Court in London in November 2020, seeking
indemnity under the Demerger Agreement between amongst others, RB and the
Group (Demerger Agreement). Pursuant to the settlement, RB withdrew the U.S.
$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 installment payments of $8m in January 2022 and 2023. Subsequently, annual
installment payments of $8m will be due every January from 2024 to 2026. The
Group carries a liability totaling $23m (FY 2022: $30m) related to this
settlement. This liability has been recorded at the net present value, using a
market interest rate at the time of the settlement determined to be 3.75%,
considering the timing of payments and other factors.
Other
Other liabilities primarily represent employee related liabilities and
deferred revenue related to a supply agreement, which are non-current as of
June 30, 2023.
12. CONTINGENT LIABILITIES
The Group has assessed certain legal and other matters to be not probable
based upon current facts and circumstances, including any potential impact the
DOJ resolution could have on these matters. Where liabilities related to these
matters are determined to be possible, they represent contingent liabilities.
Except for those matters discussed in Note 13 under "Multidistrict Antitrust
Class and State Claims", "False Claims Act Allegations", and "Intellectual
Property Related Matters", for which liabilities or provisions have been
recognized, Note 13 sets out the details for legal and other disputes for
which the Group has assessed as contingent liabilities. Where the Group
believes that it is possible to reasonably estimate a range for the contingent
liability this has been disclosed.
13. LEGAL PROCEEDINGS
There are certain ongoing legal proceedings or threats of legal proceedings in
which the Group is a party, but in which the Group believes the possibility of
an adverse impact is remote and they are not discussed in this Note 13.
Antitrust Litigation and Consumer Protection
Multidistrict Antitrust Class and State Claims
• Civil antitrust claims were filed by a group of plaintiffs (the
"Plaintiffs") that generally allege, among other things, that Reckitt
Benckiser Pharmaceuticals, Inc. ("RBPI," now known as Indivior Inc.) violated
U.S. federal and/or state antitrust and consumer protection laws in attempting
to delay generic entry of alternatives to SUBOXONE Tablets. Plaintiffs further
allege that RBPI unlawfully acted to lower the market share of these products.
These matters are pending in multidistrict litigation (the "Antitrust MDL") in
federal court in the Eastern District of Pennsylvania. Trial is currently
scheduled for October 30, 2023.
• As part of a mediation process, in the first quarter of 2023,
the three groups that comprised the Plaintiffs - (i) 41 states and the
District of Columbia (the "States), (ii) the end payors and (iii) the direct
purchasers - and Indivior Inc. submitted monetary demands and offers.
Subsequent negotiations with the States led to Indivior Inc. reaching a
settlement for $103m on June 1, 2023. After payment of the state settlement
amount, the remaining $188m provision remains Indivior's best estimate at this
time of a potential aggregate settlement for the remaining Plaintiffs in the
Antitrust MDL. Additional mediation sessions with the remaining Plaintiffs may
take place in the future.
• Indivior Inc. is preparing for trial while it continues to
explore the possibility of settlement with the remaining Plaintiff classes.
The Directors continue to believe the near-term litigation outcomes can be
appropriately managed and that, should such ongoing legal proceedings go to
trial, the Group has meritorious defenses against liability, and meritorious
arguments that could substantially reduce claimed damages, should liability be
found. However, if Indivior Inc. were found liable in respect of the remaining
Antitrust MDL claims, if the Plaintiffs were awarded damages, and if the Group
were to be unable to significantly reduce the claimed damages at trial or in
any subsequent proceeding (and considering treble damages to be awarded under
U.S. antitrust laws), then the Group's financial position, results and future
cash flows would be materially adversely affected and the amount of damages
would exceed the Group's resources to pay. There is a reasonable prospect the
timing of any appeal (or any subsequent proceeding) and/or required payment of
the damages could now fall within the going concern period. See Note 1.
• If Indivior Inc. were to lose at trial, it would look to appeal
the verdict.
Other Antitrust and Consumer Protection Claims
• In 2013, RBPI, (now known as Indivior Inc.) received notice that
it and other companies were defendants in a lawsuit initiated by writ in the
Philadelphia County (Pennsylvania) Court of Common Pleas. See Carefirst of
Maryland, Inc. et al. v. Reckitt Benckiser Inc., et al., Case. No. 2875,
December Term 2013. The plaintiffs include approximately 79 entities, most of
which appear to be insurance companies or other providers of health benefits
plans. The Carefirst Plaintiffs have not served a complaint, but they have
indicated that their claims are related to those asserted 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. The plaintiffs filed Notices of Appeal in August 2021 to the
United States Court of Appeals for the Third Circuit ("Third Circuit"). The
Third Circuit affirmed the district court's dismissal by opinion and order
dated December 15, 2022. Humana also filed a Complaint in state court in
Kentucky on August 20, 2021 with substantially the same claims as were raised
in the federal court case. See Humana Inc. v. Indivior Inc., No. 21-CI-004833
(Ky. Cir. Ct.) (Jefferson Cnty). That case was stayed pending a decision by
the Third Circuit, 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). Indivior has not been served in the Centene action.
• Cases filed by (1) Blue Cross and Blue Shield of Massachusetts,
Inc., Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc., (2) Health
Care Service Corp., (3) Blue Cross and Blue Shield of Florida, Inc., Health
Options, Inc., (4) BCBSM, Inc. (d/b/a Blue Cross and Blue Shield of Minnesota)
and HMO Minnesota (d/b/a Blue Plus), (5) Molina Healthcare, Inc., and (6)
Aetna Inc. are pending in the Circuit Court for the County of Roanoke,
Virginia. See Health Care Services Corp. v. Indivior Inc., No. CL20-1474 (Lead
Case) (Va. Cir. Ct.) (Roanoke Cnty). These plaintiffs have asserted claims
under federal and state RICO statutes, state antitrust statutes, state
statutes prohibiting unfair and deceptive practices, state statutes
prohibiting insurance fraud, and common law fraud, negligent
misrepresentation, and unjust enrichment. In June 2021, defendants' motion to
stay was denied and certain claims were dismissed without prejudice. The
plaintiffs filed amended complaints, and the Group filed demurrers seeking
dismissal of some of the asserted claims. The court sustained in part and
overruled in part the Group's demurrers. Separately, Indivior Inc. filed
counterclaims against several plaintiffs alleging violations of certain
insurance fraud statutes. The plaintiffs demurred. A hearing on the
plaintiffs' demurrers to Indivior Inc.'s counterclaims was held on July 17,
2023. The court overruled the plaintiffs' demurrers. On July 16, Indivior Inc.
and BCBSM, Inc. and HMO Minnesota agreed to mutual releases and settlement. A
jury trial on the Group's pleas in bar has been set for October 30 - November
3, 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 alleging that manufacturers, distributors, and retailers of opioids
engaged in a longstanding practice to market opioids as safe and effective for
the treatment of long-term chronic pain to increase the market for opioids and
their own market shares for opioids, or alleging individual personal injury
claims. Most of these cases have been consolidated and are pending in a
federal multi-district litigation ("the Opioid MDL") in the U.S. District
Court for the Northern District of Ohio. See In re National Prescription
Opiate Litigation, MDL No. 2804 (N.D. Ohio). Nearly 2/3 of the cases in the
Opioid MDL were filed by cities and counties, while nearly 1/3 of the cases
were filed by individual plaintiffs, most of whom assert claims relating to
neonatal abstinence syndrome ("NAS"). Litigation against the Group in the
Opioid MDL is stayed. Motions to remand have been denied or withdrawn in more
than 50 cases to which the Group is a party (among numerous other defendants).
Motions to remand remain pending in additional cases to which the Group is a
party.
• The court in the Opioid MDL 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. By order dated February 28, 2023, the court indicated
that it will not select hospital cases for bellwether trials at this time, and
set forth a process for selecting six bellwether third-party payor trials. The
court subsequently ordered third-party payor plaintiffs to dismiss by July 7,
2023 any cases in which they are not willing to serve as a bellwether trial. A
status conference concerning all remaining Tier 2 and Tier 3 defendants has
been set for September 27, 2023.
• Regarding civil opioid cases not in the Opioid MDL:
◦ In 2017, Indivior Inc. was named as one of numerous defendants
in International Brotherhood of Electrical Workers Local 728 Family Healthcare
Plan v. Allergan, PLC et al., Case ID: 190303872 (C.P. Phila. Cnty). That case
was consolidated with Lead Case No. 2017-008095 in Delaware County and stayed.
◦ Indivior also was named as one of numerous defendants in
various other federal and state court cases that are not in the Opioid MDL and
were brought by municipalities. Many were only recently filed. Indivior's
deadline to respond to the complaint filed by the City of Atlanta and other
Georgia counties in the federal district court in the Northern District of
Georgia has been set for September 1, 2023. Indivior is not yet required to
respond to the complaints in the remaining actions.
◦ Indivior Inc. was named as a defendant in five individual
complaints filed in West Virginia state court that were transferred to West
Virginia's Mass Litigation Panel. See In re Opioid Litigation, No. 22-C-9000
NAS (W.V. Kanawha Cnty. Cir. Ct.) ("WV MLP Action"). All five of Indivior
Inc.'s cases in the WV MLP Action involved claims related to NAS. Indivior
Inc. moved to dismiss all five complaints on January 30, 2023. By order dated
April 17, 2023, the court granted Indivior's motions to dismiss. The
plaintiffs filed a notice of appeal on June 30, 2023.
• Given the status and preliminary stage of litigation in both the
Opioid MDL and the separate federal and state court actions, no estimate of
possible loss in the opioid litigation can be made at this time.
False Claims Act Allegations
• In August 2018, the United States District Court for the Western
District of Virginia unsealed a declined qui tam complaint alleging causes of
action under the Federal and state False Claims Acts against certain entities
within the Group predicated on best price issues and claims of retaliation.
See United States ex rel. Miller v. Reckitt Benckiser Group PLC et al., Case
No. 1:15-cv-00017 (W.D. Va.). The suit also seeks reasonable attorneys' fees
and costs. The Group filed a Motion to Dismiss in June 2021. The case was
stayed for mediation in September 2021, but the parties did not reach
agreement. In March 2022, Relator submitted a request for oral argument on the
Motion to Dismiss. The court thereafter stayed proceedings pending decisions
by the U.S. Court of Appeals for the Fourth Circuit and the Supreme Court of
the United States in certain False Claims Act cases. On June 2, 2023, the
court vacated the stay and ordered the parties to submit briefs regarding the
effects of Supervalu on the pending motion to dismiss. The parties have
submitted their briefs, but the court has not yet ruled on Indivior's motion
to dismiss.
• In May 2018, Indivior Inc. received an informal request from the
United States Attorney's Office ("USAO") for the Southern District of New
York, seeking records relating to the SUBOXONE Film manufacturing process. The
Group is discussing with the USAO certain information and allegations that the
government received regarding SUBOXONE Film.
UK Shareholder Claims
• On September 21, 2022, certain shareholders issued
representative and multiparty claims against Indivior PLC in the High Court of
Justice for the Business and Property Courts of England and Wales, King's
Bench Division. On January 16, 2023, the representative served its Particular
of Claims setting forth in more detail the claims against the Group, while the
same law firm that represents the representative also sent its draft
Particular of Claims for the multiparty action. The claims made in both the
representative and multiparty actions generally allege that Indivior PLC
violated the UK Financial Services and Markets Act 2000 ("FSMA 2000") by
making false or misleading statements or material omissions in public
disclosures, including the 2014 Demerger Prospectus, regarding an alleged
product-hopping scheme regarding the switch from SUBOXONE tablets to SUBOXONE
film. Indivior PLC filed an application to strike out the representative
action on February 27, 2023. A hearing on the application to strike out has
been scheduled for November 20-21, 2023.
• The Group has begun its evaluation of the claims, believes it
has meritorious defenses, and intends to vigorously defend itself. Given the
status and preliminary stage of the litigation, no estimate of possible loss
can be made at this time.
Intellectual Property Related Matters
• 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 U.S. its generic
buprenorphine/naloxone film product unless and until the Court of Appeals for
the Federal Circuit ("CAFC") issued a mandate vacating Indivior's separate
preliminary injunction entered against Dr. Reddy's Laboratories, Inc. ("DRL")
in a related case. The CAFC's mandate vacating Indivior's preliminary
injunction as to DRL issued in February 2019, and Alvogen launched its generic
product. Any sales in the U.S. by Alvogen 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. On June 26, 2023, the court
denied Alvogen's motion for summary judgment on Indivior's patent claims, and
granted in part and denied in part Indivior's motion for summary judgment on
Alvogen's antitrust counterclaims. No trial date has been set.
14. TRADE AND OTHER PAYABLES
Jun 30, Dec 31,
2023
2022
$m $m
Accrual for rebates, discounts and returns (463) (428)
Accounts payable (53) (36)
Accruals and other payables (156) (138)
Other tax and social security payable (17) (15)
Total trade and other payables (689) (617)
15. SHARE CAPITAL
Equity ordinary shares Nominal value paid per share Aggregate nominal value $m
Issued and fully paid
At January 1, 2023 136,480,995 $0.50 68
Ordinary shares issued 1,881,946 $0.50 1
Shares repurchased and cancelled (484,362) $0.50 -
At June 30, 2023 137,878,579 69
Equity ordinary shares Nominal value paid per share Aggregate nominal value $m
Issued and fully paid
At January 1, 2022 702,439,638 $0.10 70
Ordinary shares issued 3,840,414 $0.10 1
Shares repurchased and cancelled (7,883,597) $0.10 (1)
At June 30, 2022 698,396,455 70
Ordinary shares issued
During the period, 1,881,946 ordinary shares at $0.50 each (H1 2022: 3,840,414
at $0.10 each) were issued to satisfy vesting/exercises under the Group's
Long-Term Incentive Plan and U.S. Employee Stock Purchase Plan. In H1 2023,
net settlement of tax on employee equity awards was $21m (H1 2022: $10m).
Share consolidation
In October 2022, the Company completed a share consolidation. Shareholders
received 1 new Ordinary share with a nominal value of $0.50 each for every 5
previously existing Ordinary shares which had a nominal value of $0.10 each.
Shares repurchased and cancelled
On May 3, 2022, the Group commenced a share repurchase program for an
aggregate purchase price up to no more than $100m or 39,698,610 of ordinary
shares, (equivalent shares post consolidation: 7,939,722) which concluded on
February 28, 2023. During the period, the Group repurchased and cancelled
484,362 of the Company's ordinary shares at $0.50 per share. In H1 2022,
7,883,597 ordinary shares at $0.10 (equivalent shares post consolidation:
1,576,719) were repurchased and cancelled for an aggregate nominal value of
$1m, including 256,055 ordinary shares purchased as part of the Group's share
repurchase program executed in 2021 and cancelled in January 2022.
All ordinary shares repurchased under share repurchase programs were cancelled
resulting in a transfer of the aggregate nominal value to a capital redemption
reserve. The total cost of the purchases made under the share repurchase
program during the period, including directly attributable transaction costs,
was $11m (H1 2022: $29m). Total purchases under the share repurchase program
will be made out of distributable profits.
16. ACQUISITION OF OPIANT
On March 2, 2023, the Group acquired 100% of the share capital of Opiant,
which at the time was a publicly traded company in the United States, for
upfront cash consideration of $146m and an additional amount to be potentially
paid upon achievement of net sales milestones. Opiant was a specialty
pharmaceutical company focusing on developing drugs for addictions and drug
overdose. As a result of the acquisition, the Group added OPVEE (nalmefene
nasal spray), formerly the pipeline product OPNT003, an opioid overdose
treatment well-suited to confront illicit synthetic opioids like fentanyl, to
its addiction and science portfolio. In May 2023, OPVEE was approved by the
FDA.
Management elected to apply the optional concentration test under IFRS 3. For
the acquisition of Opiant, substantially all of the fair value of the gross
assets acquired was concentrated in the in-process research and development
associated with OPVEE. As substantially all of the fair value of the gross
assets acquired (excluding cash and cash equivalents, deferred tax assets, and
goodwill resulting from the effects of deferred tax liabilities) were
concentrated in a single asset, the Group accounted for the transaction as an
asset acquisition. With the closing of this transaction, a relative fair value
approach was taken for allocating the purchase consideration to the acquired
assets and liabilities with no goodwill recognized. The Group recorded an
intangible asset associated with OPVEE for $126m (refer to Note 7). The Group
used a multi-period excess earnings method, a form of the income approach, to
determine the fair value of the intangible asset.
As part of the acquisition of Opiant, the Group agreed to provide a maximum of
$8.00 per share in Contingent Value Rights (CVR) post-acquisition. The Group
will pay $2.00 per CVR for each of the following net revenue thresholds
achieved by OPNT003, during any period of four consecutive quarters prior to
the seventh anniversary of the U.S. commercial launch: (i) $225m, (ii) $300m
and (iii) $325m. The remaining (iv) $2.00 per CVR would be paid if OPNT003
achieves net revenue of $250m during any period of four consecutive quarters
prior to the third anniversary of the U.S. commercial launch. The potential
undiscounted payout of contingent consideration ranges from nil to $68 million
based on the achievement of the milestones. The Group accounts for contingent
consideration associated with asset acquisitions using a cost accumulation
model. No liabilities are initially recognized at the date of acquisition.
When an obligation associated with a variable payment is no longer uncertain,
it is capitalized as part of the cost of the asset, as it represents a direct
cost of the acquisition.
An initial recognition exception applies to the tax attributes acquired
whereby only certain items are recognized with the transaction, such as net
operating loss carryforwards, other tax carryforwards, and tax credits. Such
attributes totaled $9m, recorded as deferred tax assets.
The cash outflow for the acquisition was $124m, net of cash acquired. Direct
transaction costs of $10m are included in this cash outflow and capitalized as
a component of the total cost of the asset acquisition. Of the $146m upfront
consideration, $2m represents acceleration of vesting of employee share
compensation and has been recognized as a post-combination expense. As part of
the acquisition, the Group assumed outstanding debt of $10m which was settled
and included as a cash outflow from financing activities.
Additional acquisition-related costs of $16m were incurred in H1 2023 and
included in selling, general, and administrative expenses, primarily relating
to severance, acceleration of vesting of Opiant employee share compensation,
and short-term retention accruals.
The following table summarizes the net assets acquired:
Net assets acquired $m
Cash and cash equivalents 30
Inventories 3
Right-of-use assets 2
Intangible assets 126
Deferred tax assets 9
Other assets 6
Trade and other payables (10)
Lease liabilities (2)
Borrowings (10)
Total net assets acquired 154
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm that these condensed consolidated interim financial
statements have been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting" and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority ("DTR") and that the interim management report includes a
fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
• an indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
• material related-party transactions in the first six months and
any material changes in the related-party transactions described in the last
annual report.
The Directors are responsible for the maintenance and integrity of the Group's
website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
Details of Indivior PLC's Directors are available on our website at
www.indivior.com
By order of the Board
Mark Crossley Ryan Preblick
Chief Executive Officer Chief Financial Officer
July 26, 2023
Independent review report to Indivior PLC
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Indivior PLC's condensed consolidated interim financial
statements (the "interim financial statements") in the H1 and Q2 2023
Financial Results of Indivior PLC for the three and six month periods ended 30
June 2023.
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
• the Condensed consolidated interim balance sheet as at 30 June
2023;
• the Condensed consolidated interim income statement and
Condensed consolidated interim statement of comprehensive income for the three
and six month periods then ended;
• the Condensed consolidated interim cash flow statement for the
six month period then ended;
• the Condensed consolidated interim statement of changes in
equity for the six month period then ended; and
• the explanatory notes to the interim financial statements.
The interim financial statements included in the H1 and Q2 2023 Financial
Results of Indivior PLC have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the H1 and Q2 2023 Financial
Results and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the interim financial
statements.
Material uncertainty relating to going concern
In forming our conclusion on the interim financial statements, which is not
modified, we have considered the adequacy of the disclosure made in notes 1,
12 and 13 to the interim financial statements that describes the status of the
ongoing Multidistrict Antitrust Class and State Claims (Antitrust MDL).
The Directors consider that if Indivior Inc. were found liable in a trial to
the remaining Antitrust MDL Plaintiffs, the Plaintiffs were awarded damages
and if the Group were to be unable to reduce the claimed damages at trial or
in any subsequent proceeding (and considering treble damages to be awarded
under US antitrust laws), then its financial position, results and future cash
flows would be materially adversely affected and would exceed the Group's
resources to pay. There is a reasonable prospect the timing of any appeal (or
any subsequent proceeding) and/or required payment of the damages could now
fall within the going concern assessment period.
As explained in Note 1 to the interim financial statements, the matter noted
above indicates the existence of a material uncertainty which may cast
significant doubt over the Group's ability to continue as a going concern.
However, the Directors have concluded the going concern basis of accounting
remains appropriate for the accounting and preparation of the interim
financial statements, with the addition of the material uncertainty over going
concern as described in Note 1. The interim financial statements do not
include the adjustments that would result if the group were unable to continue
as a going concern.
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately applied the going concern basis of accounting in the
preparation of the interim financial statements.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The H1 and Q2 2023 Financial Results, including the interim financial
statements, is the responsibility of, and has been approved by the directors.
The directors are responsible for preparing the H1 and Q2 2023 Financial
Results in accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority. In preparing
the H1 and Q2 2023 Financial Results, including the interim financial
statements, the directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or to cease operations, or have
no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the H1 and Q2 2023 Financial Results based on our review. Our
conclusion is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of this report.
This report, including the conclusion, has been prepared for and only for the
company for the purpose of complying with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purpose. We do not, in giving this conclusion,
accept or assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
26 July 2023
APPENDIX: ADJUSTED RESULTS
Exceptional items and other adjustments
Exceptional items and other adjustments represent significant expenses or
income that do not reflect the Group's ongoing operations or the adjustment of
which may help with the comparison to prior periods. Exceptional items and
other adjustments are excluded from adjusted results consistent with the
internal reporting provided to management and the Directors. Examples of such
items could include income or restructuring and related expenses from the
reconfiguration of the Group's activities and/or capital structure,
amortization of acquired intangible assets, impairment of current and
non-current assets, gains and losses from the sale of intangible assets,
certain costs arising as a result of significant and non-recurring regulatory
and litigation matters, and certain tax related matters.
Adjusted results are not measures defined by IFRS and are not a substitute
for, or superior to, reported results presented in accordance with IFRS.
Adjusted results as presented by the Group are not necessarily comparable to
similarly titled measures used by other companies. As a result, these
performance measures should not be considered in isolation from, or as a
substitute analysis for, the Group's reported results presented in accordance
with IFRS. Management performs a quantitative and qualitative assessment to
determine if an item should be considered for adjustment. The table below sets
out exceptional items and other adjustments recorded in each period:
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $m $m $m $m
Exceptional items and other adjustments within cost of sales
Amortization of acquired intangible assets(1) (2) - (2) -
Total exceptional items and other adjustments within cost of sales (2) - (2) -
Exceptional items and other adjustments within SG&A
Acquisition-related costs(2) (4) - (16) -
U.S. listing costs(3) (4) (2) (6) (2)
Total exceptional items and other adjustments within SG&A (8) (2) (22) (2)
Exceptional items and other adjustments within net other operating income
Insurance reimbursement(4) - 5 - 5
Total exceptional items and other adjustments within net other operating - 5 - 5
income
Total exceptional items and other adjustments before taxes (10) 3 (24) 3
Tax on exceptional items and other adjustments 1 - 3 -
Exceptional tax items(5) (8) - (8) -
Total exceptional items and other adjustments (17) 3 (29) 3
1. With the acquisition of Opiant and approval of OPVEE, the
Group reported adjusted cost of sales to exclude amortization of acquired
intangible assets on a prospective basis from Q2 2023. Prior period adjusted
results have not been restated as the impact is not material.
2. In H1 2023 and Q2 2023, the Group recognized $16m and $4m of
exceptional costs related to the acquisition of Opiant (refer to Note 16).
3. In H1 2023 and Q2 2023, the Group recognized $6m and $4m of
exceptional costs in preparation for a potential additional listing of
Indivior shares on a major U.S. exchange (H1 2023 and Q2 2023: $2m).
4. The Group recognized $5m of exceptional income in Q2 2022
related to the proceeds received from a Directors' & Officers' insurance
reimbursement claim.
5. Exceptional tax items are comprised of $5m write off of
deferred tax assets and tax expense due to limitation on the deduction of
executive compensation by U.S. publicly traded companies and $3m change in
estimate as to the tax benefit of legal provisions booked in the prior year.
Adjusted results
Management provides certain adjusted financial measures which may be useful to
investors. These adjusted financial measures exclude items which do not
reflect the Group's day-to-day operations and therefore may help with
comparisons to prior periods or among companies. Occasionally, management may
use these financial measures to better understand trends in the business.
The tables below show the list of adjustments between the reported and
adjusted results for both Q2/H1 2023 and Q2/H1 2022.
Reconciliation of gross profit to adjusted gross profit
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $m $m $m $m
Gross profit 226 183 440 353
Exceptional items and other adjustments in cost of sales 2 - 2 -
Adjusted gross profit 228 183 442 353
Reconciliation of selling, general and administrative expenses to adjusted
selling, general and administrative expenses
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $m $m $m $m
Selling, general and administrative expenses (133) (109) (264) (217)
Exceptional items and other adjustments in selling, general and administrative 8 2 22 2
expenses
Adjusted selling, general and administrative expenses (125) (107) (242) (215)
Reconciliation of operating profit to adjusted operating profit
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $m $m $m $m
Operating profit 61 63 118 117
Exceptional items and other adjustments in cost of sales 2 - 2 -
Exceptional items and other adjustments in selling, general and administrative 8 2 22 2
expenses
Exceptional items and other adjustments in net other operating income - (5) - (5)
Adjusted operating profit 71 60 142 114
Reconciliation of profit before taxation to adjusted profit before taxation
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $m $m $m $m
Profit before taxation 62 58 120 106
Exceptional items and other adjustments in cost of sales 2 - 2 -
Exceptional items and other adjustments in selling, general and administrative 8 2 22 2
expenses
Exceptional items and other adjustments in net other operating income - (5) - (5)
Adjusted profit before taxation 72 55 144 103
Reconciliation of tax expense to adjusted tax expense
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $m $m $m $m
Tax expense (23) (10) (37) (17)
Tax on exceptional items and other adjustments (1) - (3) -
Exceptional tax items 8 - 8 -
Adjusted tax expense (16) (10) (32) (17)
Reconciliation of net income to adjusted net income
Q2 Q2 H1 H1
2023 2022 2023 2022
For the three and six months ended June 30 $m $m $m $m
Net income 39 48 83 89
Exceptional items and other adjustments in cost of sales 2 - 2 -
Exceptional items and other adjustments in selling, general and administrative 8 2 22 2
expenses
Exceptional items and other adjustments in net other operating income - (5) - (5)
Tax on exceptional items and other adjustments (1) - (3) -
Exceptional tax items 8 - 8 -
Adjusted net income 56 45 112 86
Adjusted diluted earnings per share
Management believes that diluted earnings per share, adjusted for the impact
of exceptional items and other adjustments after the appropriate tax amount,
may provide meaningful information on underlying trends to shareholders in
respect of earnings per ordinary share. A reconciliation of net income to
adjusted net income is included above.
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