TIDMINDV
RNS Number : 0548E
Indivior PLC
03 May 2017
'To view a printable PDF version of this announcement, please
click here.
http://www.rns-pdf.londonstockexchange.com/rns/0548E_-2017-5-3.pdf
May 3, 2017
Q1 Financial Results in line with plan. Full Year Guidance
Confirmed.
Quarter to March 2017 2016 % change % change
31 at actual at constant
FX FX
$m. $m.
----------------------- ----- ------ ----------- -------------
Net Revenue 265 258 +3% +4%
----------------------- ----- ------ ----------- -------------
Operating Profit 128 101 +27% +27%
----------------------- ----- ------ ----------- -------------
Net Income 80 50 +60% +61%
----------------------- ----- ------ ----------- -------------
EPS (cents per share) 11 7 +57% +57%
----------------------- ----- ------ ----------- -------------
Q1 Financial Highlights
-- Net revenue growth of 3% to $265m (Q1 2016: $258m) primarily
reflects strong market growth in the US.
-- Operating Profit of $128m (Q1 2016: $101m) primarily reflects
lower litigation and R&D expenditures, which due to planned
phasing of activity, are expected to increase over the remainder of
2017. In addition, planned incremental investments in 2017 of $40m
to $60m related to key pipeline assets are expected to accelerate
from Q2 onwards. Operating margin was 48% (Q1 2016: 39%).
-- Net income of $80m (Q1 2016: $50m) after tax rate of 32% (Q1
2016: 36% plus exceptional tax of $5m). On an adjusted basis, net
income increased 46% to $80m (Q1 2016: $55m adjusted).
-- Cash balance at quarter end increased to $729m (Year End
2016: $692m). Net cash at quarter end was $182m (Year End 2016:
$131m).
Q1 Operating Highlights
-- US market growth of low double-digit percentage levels is
in-line with expectations, and was modestly boosted by the impact
of the regulatory change to allow qualified physicians to treat up
to 275 patients from 100 patients.
-- SUBOXONE(R) Film market share on average for the quarter was
60% (Q1 2016: 60%). Market share at the end of the quarter,
however, was 59% primarily due to the loss of a Managed Medicaid
account to generic competition. Total volume sold in the US was up
despite significant destocking at wholesalers. SUBOXONE(R) Film
list price increased modestly in January 2017, but was offset by
tactical rebates as generic and branded discounting continues.
-- The NDA for RBP-6000, the monthly depot of buprenorphine for
the treatment of opioid use disorder, is on-track and expected to
be filed in Q2 2017. The NDA for RBP-7000, the monthly depot of
risperidone for the treatment of schizophrenia, is also on-track
and expected to be filed in Q4 2017.
-- Indivior continues to await the outcome of the trial against
Dr. Reddy's Laboratories (Dr. Reddy's) on US Patent Nos. 8,017,150,
8,603,514, and 8,900,497; and against Actavis and Par on US Patent
No. 8,900,497, which is expected sometime in Q2.
-- The Group continues in discussions with the Department of
Justice about a possible resolution to its investigation. The Group
cannot predict with any certainty whether it will reach ultimate
resolution with the Department of Justice or any or all of the
other parties, or the ultimate cost of resolving all of the
matters. Please see pages five to seven for a complete Litigation
Update.
Guidance
-- Full year preliminary guidance for 2017 is confirmed: net
revenue of $1,050m-$1,080m and net income of $200m-$220m (excluding
exceptional items and at constant exchange rates) and assuming no
material change to current US market conditions for SUBOXONE(R)
Film. The guidance also reflects planned incremental investments of
$40m-$60m related to key pipeline assets that are expected to
accelerate from Q2 onwards, as well as litigation and R&D
expenditures that are expected to increase over the remainder of
2017.
Commenting on the results, Shaun Thaxter, CEO of Indivior,
said:
"We are off to a good start to the year. Our Q1 results were
in-line with our plan, which assumed no material deterioration in
the market environment, and we made progress against key strategic
priorities. In the US, SUBOXONE(R) Film share remains resilient at
just under 60% despite ongoing intense competition, particularly in
Managed Medicaid. This is a testament to our market leading
presence combined with the growing awareness of opioid use disorder
as a disease state that is increasingly being helped by legislation
and funding at governmental levels. Meanwhile, we continue to turn
our energy and resources to Indivior's future - RBP-6000 (monthly
depot of buprenorphine) and RBP-7000 (monthly depot of
risperidone). We are on-track to file NDAs for both products with
FDA this year and we will invest appropriately to help ensure their
successful launch upon approval. Our finances continue to improve
with net cash having increased to $182m at the end of Q1, and we
are continuing to enhance our compliance capability to keep pace
with the expected market growth. We are pleased today to confirm
our financial guidance for the current year. Overall, we have made
good progress in the quarter and remain focused on our commitment
to empowering patients and striving to improve their quality of
life by pioneering innovative, quality, accessible and cost
effective treatments."
Operating Review
US Market Update
The market for buprenorphine products continued to grow strongly
in Q1 2017, showing volume growth of low double-digit percentage
levels, in-line with expectations. The recent regulatory change to
raise the patient cap for qualified physicians to 275 from 100,
have increased the provision of treatment, while the number of
nurse practitioners and physician assistants applying for training
as prescribers, as permitted under the CARA legislation, suggests
that this provision will also expand treatment access in due
course.
SUBOXONE(R) Film had an average market share of 60% in Q1 2017,
which was unchanged compared to Q1 2016, but ended the quarter at
59%. This was below the exit share at the end of Q1 2016 primarily
due to the loss of a Managed Medicaid account to generic
competition, although commercial formulary access remains solid.
The list price of SUBOXONE(R) Film in the US increased modestly in
January 2017.
Financial Performance in Q1 2017
Total net revenue grew 3% at actual exchange rates to $265m (Q1
2016: $258m), and was up 4% on a constant exchange rate basis.
US net revenue grew by 2% to $215m (Q1 2016: $211m). Volume was
ahead of last year, reflecting market growth that was somewhat
offset by wholesaler destocking resulting from a build-up of supply
in late 2016 and modest share decline due to the loss of a Managed
Medicaid account. List pricing was up reflecting a modest increase
in January, but was offset by continued tactical rebates in
connection with formulary access in both commercial managed care
and in particular Medicaid in response to continued discounting by
both branded and generic competitors.
Rest of World net revenue increased 6% to $50m (Q1 2016: $47m)
as reported in USD. At constant exchange rates, the increase was
13%. The increase was primarily driven by the timing of export
revenues in the quarter, mainly related to certain Middle East
customers. In Europe, market share was again resilient, but was
modestly affected by further generic substitution. Australasia saw
steady growth due to growing numbers of patients seeking treatment
resulting from ongoing marketing initiatives.
Gross margin was up slightly to 93% (Q1 2016: 92%) primarily due
to increased production in the quarter.
SD&A expenses decreased by 11% to $93m (Q1 2016: $105m)
principally reflecting lower litigation expenditures, which due to
planned phasing of activity, are expected to increase from Q2
onwards in 2017, plus lower amortization as the acquisition costs
for the Rest of World rights to SUBOXONE(R) that fully amortized at
the end of 2016. There were no exceptional costs included in
SD&A in either Q1 2016 or Q1 2017. Planned incremental
investments related to key pipeline assets - RBP-6000 buprenorphine
monthly depot and RBP-7000 risperidone monthly depot - are expected
to accelerate beginning in the current quarter.
R&D expenses decreased by 19% to $25m (Q1 2016: $31m),
reflecting planned phasing differences versus 2016 that are
expected to reverse from Q2 onwards in 2017, as well as the
completion of active Phase III trials on RBP-6000 and RBP-7000. The
costs of preparing the two NDAs will be incurred through the
balance of the year and are included in current FY 2017
guidance.
Operating profit was $128m, 27% ahead of prior year, primarily
reflecting the lower litigation and R&D expenses, which due to
planned phasing of activity, are expected to increase from Q2
onwards in 2017. Operating margin was 48% (Q1 2016: 39%).
EBITDA was $130m (Q1 2016: $107m). EBITDA margin was 49% (Q1
2016: 42%).
Finance expense in the quarter was $11m (2016 Q1: $15m). The
decrease was due to the impact of the buyback and paying down some
of the term loan facility during 2016.
The tax charge in Q1 was $37m, at a rate of 32% (Q1 2016: 36%
plus exceptional tax of $5m), reflecting the mix of profits between
countries in the period. Currently, we expect our full year
effective tax rate to be 25%, consistent with the guidance given in
February.
Net income for the quarter was $80m (Q1 2016: $50m, and on an
adjusted basis excluding the exceptional tax of $5m: $55m), an
increase of 60% compared to Q1 2016 as reported. At constant
exchange rates, the increase was 61%. On an adjusted basis, the
increase was 46%.
EPS were 11 cents (Q1 2016: 7 cents, or 8 cents on an adjusted
basis) on both a basic and diluted basis.
Balance Sheet & Cash Flow
Net working capital (inventory plus trade and other receivables,
less trade and other payables) was minus $327m at end Q1 2017
(minus $390m at end December 2016). The difference primarily
relates to the combination of lower accruals at quarter end due to
wholesaler destocking and the timing of payments.
Cash and cash equivalents at the period end were $729m,
reflecting a net cash increase of $37m in the quarter. Borrowings,
net of issuance costs, were $524m (Dec 2016: $535m) at the quarter
end after debt payback in the quarter of $11m.
Net cash was $182m (Dec 2016: $131m), the increase of $51m
reflecting cash inflow and debt repayment.
Cash generated from operating activities was $71m (Q1 2016:
$115m), a decrease of $44m due to higher levels of operating profit
of $128m (Q1 2016: $101m), offset by a change in net working
capital which was a use of cash of $63m in Q1 2017 (versus a source
of cash of $8m in Q1 2016).
Net cash inflow from operations decreased to $60m in the quarter
(Q1 2016: $97m) reflecting the lower cash from operating activities
offset by lower tax payments in the quarter of $1m (Q1 2016: $7m),
and after interest and transaction costs relating to the term loan
facility of $10m (Q1 2016: $11m). After investments of $8m (Q1
2016: $4m) and repayment of borrowings of $16m (Q1 2016: $17m), the
net increase in cash and cash equivalents was $36m (Q1 2016: $76m),
the lower level of net cash generation being the result of
short-term absorption of cash in working capital.
R&D / Pipeline Update
Treatment of Opioid Use Disorder
-- RBP-6000, Monthly Depot Buprenorphine: Phase III Efficacy
Study (RB-US-13-0001); top line results published on August 17th,
2016 showing RBP-6000 achieved both primary and secondary
endpoints. Final CSR signed off March 3rd, 2017. PK/PD/Receptor
Occupancy analysis and topline HEOR data released March 22nd,
2017.
Phase III Safety Extension Study (RB-US-13-0003) completed with
database lock achieved October 31st, 2016. Interim analysis signed
off March 23rd, 2017.
US Fast Track Designation granted May 23rd, 2016.
Pre-NDA meeting held December 2016. Target NDA submission to FDA
Q2-2017.
Meetings with Regulatory Agencies ex-USA held in Q4-2016: TGA
(Australia); HC (Canada); ANSM (France); MHRA (United Kingdom); MPA
(Sweden); BfArM (Germany).
Treatment of Schizophrenia
-- RBP-7000, Monthly Depot Risperidone: Topline data from
pivotal Phase III Efficacy Study were published on May 5th,
2015.
Phase III Long-term Safety Study (RB-US-13-0005) was completed
in September 2016 with database lock achieved October 2016. Final
CSR signed off March 31st, 2017.
Pre-NDA meeting held August 2016. Target NDA submission to FDA
Q4-2017.
Overdose Rescue Products
-- Intranasal Naloxone: NALSCUE(R) launched in France under
Temporary Authorisation for Use (ATU) in July 2016. MAA submitted
November 2016. ANSM recommended approval on March 16th, 2017.
-- RBP-8000 Cocaine Esterase: Second type B meeting with FDA
held March 2016. Per agreement with FDA, work has continued with
the development of a lyophilized product and first test batch was
manufactured in October 2016.
Treatment of Alcohol Use Disorder
-- Arbaclofen Placarbil: New Phase I Bioavailability Clinical
Study Protocol (INDV-AP-102) of a new formulation of Arbaclofen
Placarbil was completed. Results are under evaluation.
Key Pipeline Dates 2017
Q2 RBP-6000 NDA filing expected
June CPDD Conference - RBP-6000 Phase III clinical & safety data
Oct ACoP Conference - RBP-6000 Phase III Exposure/Response data
Nov AMERSA Conference - RBP-6000 Phase III health economics & outcomes research data
Q4 RBP-7000 NDA filing expected
Q4 PDUFA date for RBP-6000 assuming Priority Review is granted
Litigation Update
The Group carries a provision of $218m for the investigative and
antitrust litigation matters noted below. The Group continues in
discussions with the Department of Justice about a possible
resolution to its investigation. The Group cannot predict with any
certainty whether it will reach ultimate resolution with the
Department of Justice or any or all of the other parties, or the
ultimate cost of resolving all of the matters. The final cost may
be materially higher than this reserve.
Department of Justice Investigation
-- A U.S. federal criminal grand jury investigation of Indivior
initiated in December 2013 is continuing, and includes marketing
and promotion practices, pediatric safety claims, and
overprescribing of medication by certain physicians. The U.S.
Attorney's Office for the Western District of Virginia has served a
number of subpoenas relating to SUBOXONE(R) Film, SUBOXONE(R)
Tablet, SUBUTEX(R) Tablet, buprenorphine and our competitors, among
other issues. The Group continues in discussions with the
Department of Justice about a possible resolution to its
investigation. It is not possible at this time to predict with any
certainty the potential impact of this investigation on us or to
quantify the ultimate cost of a resolution. We are cooperating
fully with the relevant agencies and prosecutors and will continue
to do so.
State Subpoenas
-- On October 12th, 2016, Indivior was served with a subpoena
for records from the State of Connecticut Office of the Attorney
General under its Connecticut civil false claims act authority. The
subpoena requests documents related to the Group's marketing and
promotion of SUBOXONE(R) products and its interactions with a
non-profit third party organization. On November 16th, 2016,
Indivior was served with a subpoena for records from the State of
California Department of Insurance under its California insurance
code authority. The subpoena requests documents related to
SUBOXONE(R) Film, SUBOXONE(R) Tablet, and SUBUTEX(R) Tablet. The
Group is fully cooperating in these investigations.
FTC investigation and Antitrust Litigation
-- The U.S. Federal Trade Commission's investigation remains
pending. Litigation regarding privilege claims has now been
resolved. Indivior has produced certain documents that it had
previously withheld as privileged; other such documents have not
been produced.
-- Fact discovery is continuing in the antitrust class action
litigation. Plaintiffs allege, among other things, that Indivior
violated U.S. federal and state antitrust laws in attempting to
delay generic entry of alternatives to SUBOXONE(R) tablets, and
plaintiffs further allege that Indivior unlawfully acted to lower
the market share of these products.
-- Amneal Pharmaceuticals LLC (Amneal), a manufacturer of
generic buprenorphine / naloxone tablets, has alleged antitrust
violations similar in nature to those alleged in the class action
complaints, and Amneal has also alleged violations of the U.S.
Lanham Act. This case has been coordinated with the antitrust class
action litigation.
-- A group of states, now numbering 41, and the District of
Columbia filed suit against Indivior in the same district where the
antitrust class action litigation and Amneal cases are pending. The
States' complaint is similar to the other pending antitrust
complaints, and alleges violations of U.S. state and federal
antitrust and consumer protection laws. This lawsuit relates to the
investigation conducted by various states, as discussed in previous
filings. Discovery has been coordinated with the antitrust class
action litigation and Amneal cases, subject to certain stays.
ANDA Litigation and Inter Partes Review
-- The ruling after trial against Actavis and Par in the lawsuit
involving the Orange Book-listed patents for SUBOXONE(R) Film
issued on June 3rd, 2016. The ruling found the asserted claims of
the '514 patent valid and infringed; the asserted claims of the
'150 patent valid but not infringed; and the asserted claims of the
'832 patent invalid, but found that certain claims would be
infringed if they were valid.
-- Based on the ruling as to the '514 patent, Actavis and Par
are currently enjoined from launching a generic product. Par has
appealed and Actavis is expected to appeal this ruling. The
generics have also moved to reopen the judgment based on the claim
construction in the Dr. Reddy's case. In light of the motions to
reopen, Par's appeal has been deactivated until the District Court
rules on the motions, and the deadline for Actavis to file a notice
of appeal has been postponed.
-- Trial against Dr. Reddy's, Actavis and Par in the lawsuits
involving the process patent (U.S. Patent No. 8,900,497) took place
on November 16th and 21st-23rd, 2016.
-- Trial against Dr. Reddy's in the lawsuit involving two of the
Orange Book-listed patents for SUBOXONE(R) Film (U.S. Patent Nos.
8,017,150 and 8,603,514) took place on November 7th, 16th, and
21st(-) 23rd, 2016. Dr. Reddy's 30-month stay of FDA approval
expired on April 17th, 2017. So far as Indivior is aware, FDA to
date has not granted tentative or final marketing authorization to
Dr. Reddy's (or any other generic SUBOXONE(R) Film alternative). If
FDA were to grant final approval to Dr. Reddy's this would enable
them to market a generic film alternative to SUBOXONE(R) Film in
the U.S. However, any market launch by Dr. Reddy's before the
District Court renders its decision, or before the court of appeals
renders its decision even if Dr. Reddy's was to prevail before the
District Court, would be on an "at risk" basis because Indivior
would have a claim for damages against Dr. Reddy's if it ultimately
prevails after any appeal.
-- A stipulation and proposed order was filed with the District
Court on April 28th, 2017, seeking to consolidate the trial against
Alvogen in the lawsuit involving the '150 and '514 Orange
Book-listed patents and the '497 process patent for SUBOXONE(R)
Film with the trial against Mylan (discussed below). The District
Court approved the stipulation on May 1st, 2017. Accordingly, the
trial against Alvogen will be scheduled for September 25th-27th,
2017, and will be tried concurrently with the trial against Mylan.
The 30-month stay of FDA approval of Alvogen's Abbreviated New Drug
Application is presently set to expire October 29th, 2017.
-- By a Court order dated August 22nd, 2016, Indivior's
SUBOXONE(R) Film patent litigation against Sandoz has been
dismissed without prejudice because Sandoz is no longer pursuing
Paragraph IV certifications for its proposed generic formulations
of SUBOXONE(R) Film.
-- Trial against Mylan in the lawsuit involving the '150 and
'514 Orange Book-listed patents and the '497 process patent for
SUBOXONE(R) Film is scheduled for September 25th-27th, 2017, and
will be tried concurrently with the trial against Alvogen pursuant
to a stipulation filed with and approved by the District Court. The
30-month stay of FDA approval of Mylan's Abbreviated New Drug
Application is presently set to expire March 24th, 2018. On January
12th, 2017, the District Court issued a claim construction decision
in the Mylan action that clarified its earlier construction in the
Dr. Reddy's case of certain terms in the '514 patent.
-- Indivior received a Paragraph IV notification from Teva,
dated February 8th, 2016, indicating that Teva had filed a
505(b)(2) New Drug Application (NDA) for a 16mg/4mg strength of
buprenorphine/naloxone sublingual film. The parties have agreed
that infringement by Teva's 16 mg/4 mg dosage strength will be
governed by the infringement ruling on the accused 8 mg/2 mg dosage
strength in the ANDA now owned by Dr. Reddy's that was the subject
of the trial in November 2016.
-- On May 31st, 2016, Dr. Reddy's filed petitions seeking inter
parties review (IPR) of the three Orange Book-listed patents
covering SUBOXONE(R) Film. Indivior and Monsol Rx filed Patent
Owner Preliminary Responses opposing institution of the IPRs on
September 6th, 2016, arguing that institution of the IPRs should be
denied. On December 2nd, 2016, the US Patent Trial and Appeal Board
(PTAB) denied institution of the IPR as to the '832 Patent, and on
December 5th, 2016, the PTAB denied institution of the IPRs as to
the '514 and '150 Patents. On January 3rd, 2017, Dr. Reddy's filed
Requests for Rehearing of the three non-institution decisions. On
March 22nd, 2017, the PTAB denied Dr. Reddy's request for rehearing
of its decisions not to institute its petitions for IPRs of the
'150 and '514 patents. This denial by the PTAB resolves Dr. Reddy's
attempts to seek to invalidate the '150 and '514 patents through
IPR proceedings. A separate panel of the PTAB is handling the
proceeding on the '832 patent and has not yet issued its decision
on Dr. Reddy's Rehearing Request in that case.
-- Mylan has filed a petition seeking an IPR of the '514 patent.
A decision by the US Patent & Trademark Office on whether to
institute IPR proceedings is expected in May 2017.
-- In the event that one or more of the generic companies are
successful in their patent challenges, and should there be FDA
approval of one or more of the ANDAs and subsequent commercial
launch of generic SUBOXONE(R) Film, and the Group's pipeline
products fail to obtain regulatory approval, there is the
likelihood that revenues and operating profits of the Group will
significantly decline. In these circumstances the Directors believe
they would be able to take the required steps to reduce the cost
base, however, this would result in a significant change to the
structure of the business.
Rhodes Pharmaceuticals
-- On March 21st, 2017 Rhodes Pharmaceuticals filed a complaint
against Indivior in the District of Delaware, alleging that
Indivior's sale of SUBOXONE(R) Film in the U.S. infringes one or
more claims of a patent. The asserted patent, which was issued in
June 2016 traces back to an application filed in August 2007.
Indivior believes this claim is without merit and intends to
vigorously defend this action.
Estate of John Bradley Allen
-- On December 27th, 2016, the Estate of John Bradley Allen
filed a civil complaint against Indivior, among other parties, in
the Northern District of New York seeking relief under
Connecticut's products liability and unfair trade practices
statutes for damages allegedly caused by SUBOXONE(R). Indivior
believes this lawsuit is without merit and intends to vigorously
defend this action.
Risk Factors
The Directors have reviewed the principal risks and
uncertainties for the financial year 2017.
The assumptions in arriving at the Group's financial guidance
for the full year 2017 are described on page 2 of this
announcement. To the extent that actual market conditions differ
from these assumptions, alternative financial outcomes are
possible. However, the Group has issued this guidance based on
industry analogues and its own estimates at this time.
Therefore, other than in respect of guidance for the full year
2017, the Directors consider that the principal risks and
uncertainties which could have a material impact on the Group's
performance in 2017 include:
Business operations and business continuity
-- The Group's revenues are primarily derived from sales of
SUBOXONE(R) Film and any decrease in sales due to competition or
supply or quality issues could significantly affect the results of
operations and prospects.
-- The Group has a single source of supply for buprenorphine, an
active ingredient in the Group's products, including SUBOXONE(R)
Film, and any disruption to this source of supply could
significantly affect the results of operations and prospects.
-- Competition for qualified personnel in the biotechnology and
pharmaceutical industries is intense and high-performing talent in
key positions is a business-critical requirement.
-- Failures or disruptions to the Group's systems or the systems
of third parties on whom the Group relies, due to any number of
causes, particularly if prolonged, could result in a loss of key
data and/or affect operations.
-- The Group's computer systems, software and networks may be
vulnerable to unauthorized access, computer viruses or other
malicious code or cyber threats that could have a security impact.
All of these could be costly to remedy and we may be subject to
litigation.
Product liability, regulation and litigation
-- As an innovative pharmaceutical company, the Group seeks to
obtain appropriate intellectual property protection for its
products. Its ability to obtain and enforce patents and other
proprietary rights particularly for its products, drug formulation
and delivery technologies and associated manufacturing processes is
critical to business strategy and success. Specifically, see
disclosures under Litigation Update on pages {5-7} referring to the
current status of the Department of Justice and Federal Trade
Commission investigations, state subpoenas, antitrust litigation,
ANDA litigation and Inter Partes Reviews, as well as the contingent
liabilities disclosures on pages {18-20, note 7}.
-- The manufacture of the Group's products is highly exacting
and complex due in part to strict regulatory and manufacturing
requirements. Active Pharmaceutical Ingredients (API) in many of
the Group's products and product candidates are controlled
substances that are subject to extensive regulation in all the
countries in which the Group markets its products.
-- The testing, manufacturing, marketing, and sales of
pharmaceutical products entail a risk of product liability claims,
product recalls, litigation, and associated adverse publicity, each
of which could have a material adverse impact on the business,
prospects, results of operations and financial condition.
Product development
-- The regulatory approval process for new pharmaceutical
products and expansion of existing pharmaceutical products is
expensive, time-consuming and uncertain. Even if product candidates
are approved, there is no guarantee that they will be able to
achieve expected market acceptance.
Commercial and Governmental payor account, pricing and
reimbursement pressure
-- The Group's revenues are partly dependent on the availability
and level of coverage provided to the Group by private insurance
companies and governmental reimbursement schemes for pharmaceutical
products, such as Medicare and Medicaid in the US.
-- Changes to governmental policy or practices could adversely
affect the Group's revenues, financial condition and results of
operations. In addition, the reimbursement of treatment established
by healthcare providers, private health insurers and other
organizations may be reduced.
Compliance with law and ethical behaviour
-- Business practices in the pharmaceutical industry are subject
to increasing scrutiny by government authorities. Failure to comply
with applicable laws and rules and regulations in any jurisdiction
may result in fines, civil and/or criminal legal proceedings.
Specifically, see disclosures under Litigation Update on page {5-7}
referring to the current status of the investigative and litigation
matters involving the Group, as well as the contingent liabilities
disclosures on pages {18-20, note 7}. The Group has taken steps to
enhance its compliance capability to handle the expected growth in
the business, and will continue to monitor changing compliance
requirements due to growth, changes in the business, and changing
regulatory requirements.
Acquisitions and business development
-- The Group may seek to acquire businesses or products as part
of its strategy to enhance its current portfolio.
Product Safety
-- The Group's pharmacovigilance processes has been established
to monitor the safety of the Group's products in a comprehensive
and thorough manner. This includes capturing safety-related data
from multiple sources (e.g. MIU, Market Research, Literature Search
and Clinical trials) and entering all adverse events received into
a safety database. The Group reports to health authorities across
the globe within the required and mandatory time lines and
identifies safety signals with an assessment of changes to
benefit/risk profile, determines actions needed to optimize the
safe and effective use of our product, including communicating any
relevant changes to key stakeholders.
-- The Group's annual report for the 2016 financial year
contains additional detail on these principal business risks
together with a report on risk appetite.
Exchange Rates
The average and period end exchange rates used for the
translation of currencies into US dollars that have most
significant impact on the Group's results were:
3 Months to March 3 Months to March
31, 31,
2017 2016
------------------ ------------------ ------------------
GB GBP period
end 1.2434 1.4153
------------------ ------------------ ------------------
GB GBP average
rate 1.2390 1.4323
------------------ ------------------ ------------------
EUR Euro period
end 1.0766 1.1176
------------------ ------------------ ------------------
EUR Euro average 1.0653 1.1019
------------------ ------------------ ------------------
Webcast Details
There will be a conference call at 1pm UK time (8am Eastern in
the USA) hosted by Shaun Thaxter, CEO, and Mark Crossley, CFO. This
call will also be webcast live. The details are below and are
available on the Company's website at www.indivior.com
Webcast link: http://edge.media-server.com/m/p/cm2hr9w3
Confirmation Code: 7569891
Participants, Local - London,
United Kingdom: +44(0)20 3427 1914
Participants, Local - New York,
United States of America: +1 646 254 3364
For Further Information
Investor Jason Thompson VP Investor +1 804 423 8916 investorrelations@indivior.com
Enquiries Relations,
Indivior PLC
Media Enquiries Stephen Tulchan Communications +44 207 353 4200
Malthouse US Media Enquiries +1 804 594 0836 Indiviormediacontacts@indivior.com
Jonathan
Sibun
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 Company to any person in any jurisdiction
to whom it is unlawful to make such offer or solicitation.
Forward-Looking Statements
This announcement contains certain statements that are
forward-looking and which should be considered, amongst other
statutory provisions, in light of the safe harbour provisions of
the United States Private Securities Litigation Reform Act of 1995.
By their nature, forward-looking statements involve risk and
uncertainty as they relate to events or circumstances that may or
may not occur in the future. Actual results may differ materially
from those expressed or implied in such statements because they
relate to future events. Forward-looking statements include, among
other things, statements regarding the Indivior Group's financial
guidance for 2017 and its medium- and long-term growth outlook, its
operational goals, its product development pipeline and statements
regarding ongoing litigation.
Various factors may cause differences between Indivior's
expectations and actual results, including: factors affecting sales
of Indivior Group's products; the outcome of research and
development activities; decisions by regulatory authorities
regarding the Indivior Group's drug applications; the speed with
which regulatory authorizations, pricing approvals and product
launches may be achieved; the outcome of post-approval clinical
trials; competitive developments; difficulties or delays in
manufacturing; the impact of existing and future legislation and
regulatory provisions on product exclusivity; trends toward managed
care and healthcare cost containment; legislation or regulatory
action affecting pharmaceutical product pricing, reimbursement or
access; claims and concerns that may arise regarding the safety or
efficacy of the Indivior Group's products and product candidates;
risks related to legal proceedings; the Indivior Group's ability to
protect its patents and other intellectual property; the outcome of
patent infringement litigation relating to Indivior Group's
products, including the ongoing ANDA lawsuits; changes in
governmental laws and regulations; issues related to the
outsourcing of certain operational and staff functions to third
parties; uncertainties related to general economic, political,
business, industry, regulatory and market conditions; and the
impact of acquisitions, divestitures, restructurings, internal
reorganizations, product recalls and withdrawals and other unusual
items.
Indication
SUBOXONE(R) (buprenorphine and naloxone) Sublingual Film (CIII)
is a prescription medicine indicated for treatment of opioid
dependence and should be used as part of a complete treatment plan
to include counseling and psychosocial support.
Treatment should be initiated under the direction of healthcare
providers qualified under the Drug Addiction Treatment Act.
Important Safety Information
Do not take SUBOXONE(R) Film if you are allergic to
buprenorphine or naloxone as serious negative effects, including
anaphylactic shock, have been reported.
SUBOXONE(R) Film can be abused in a manner similar to other
opioids, legal or illicit.
SUBOXONE(R) Film contains buprenorphine, an opioid that can
cause physical dependence with chronic use. Physical dependence is
not the same as addiction. Your healthcare provider can tell you
more about the difference between physical dependence and drug
addiction. Do not stop taking SUBOXONE Film suddenly without
talking to your healthcare provider. You could become sick with
uncomfortable withdrawal symptoms because your body has become used
to this medicine.
SUBOXONE(R) Film can cause serious life-threatening breathing
problems, overdose and death, particularly when taken by the
intravenous (IV) route in combination with benzodiazepines or other
medications that act on the nervous system (ie, sedatives,
tranquilizers, or alcohol). It is extremely dangerous to take
nonprescribed benzodiazepines or other medications that act on the
nervous system while taking SUBOXONE(R) Film.
You should not drink alcohol while taking SUBOXONE(R) Film, as
this can lead to loss of consciousness or even death.
Death has been reported in those who are not opioid
dependent.
Your healthcare provider may monitor liver function before and
during treatment.
SUBOXONE(R) Film is not recommended in patients with severe
hepatic impairment and may not be appropriate for patients with
moderate hepatic impairment. However, SUBOXONE(R) Film may be used
with caution for maintenance treatment in patients with moderate
hepatic impairment who have initiated treatment on a buprenorphine
product without naloxone.
Keep SUBOXONE(R) Film out of the sight and reach of children.
Accidental or deliberate ingestion of SUBOXONE(R) Film by a child
can cause severe breathing problems and death.
Do not take SUBOXONE(R) Film before the effects of other opioids
(eg, heroin, hydrocodone, methadone, morphine, oxycodone) have
subsided as you may experience withdrawal symptoms.
Injecting the SUBOXONE(R) Film product may cause serious
withdrawal symptoms such as pain, cramps, vomiting, diarrhea,
anxiety, sleep problems, and cravings.
Before taking SUBOXONE(R) Film, tell your healthcare provider if
you are pregnant or plan to become pregnant. If you are pregnant,
tell your healthcare provider as withdrawal signs and symptoms
should be monitored closely and the dose adjusted as necessary. If
you are pregnant or become pregnant while taking SUBOXONE(R) Film,
alert your healthcare provider immediately and you should report it
using the contact information provided below. *
Opioid--dependent women on buprenorphine maintenance therapy may
require additional analgesia during labor.
Neonatal opioid withdrawal syndrome (NOWS) is an expected and
treatable outcome of prolonged use of opioids during pregnancy,
whether that use is medically-authorized or illicit. Unlike opioid
withdrawal syndrome in adults, NOWS may be life-threatening if not
recognized and treated in the neonate. Healthcare professionals
should observe newborns for signs of NOWS and manage
accordingly.
Before taking SUBOXONE(R) Film, talk to your healthcare provider
if you are breastfeeding or plan to breastfeed your baby. The
active ingredients of SUBOXONE(R) Film can pass into your breast
milk. You and your healthcare provider should consider the
development and health benefits of breastfeeding along with your
clinical need for SUBOXONE(R) Film and should also consider any
potential adverse effects on the breastfed child from the drug or
from the underlying maternal condition.
Do not drive, operate heavy machinery, or perform any other
dangerous activities until you know how SUBOXONE(R) Film affects
you. Buprenorphine in SUBOXONE(R) Film can cause drowsiness and
slow reaction times during dose-adjustment periods.
Common side effects of SUBOXONE(R) Film include nausea,
vomiting, drug withdrawal syndrome, headache, sweating, numb mouth,
constipation, painful tongue, redness of the mouth, intoxication
(feeling lightheaded or drunk), disturbance in attention, irregular
heartbeat, decrease in sleep, blurred vision, back pain, fainting,
dizziness, and sleepiness.
This is not a complete list of potential adverse events
associated with SUBOXONE(R) Film. Please see full Prescribing
Information for a complete list.
*To report pregnancy or side effects associated with taking
SUBOXONE(R) Film, please call 1-877-782-6966. You are encouraged to
report negative side effects of prescription drugs to the FDA.
Visit www.fda.gov/medwatch or call 1-800-FDA-1088.
For more information about SUBOXONE Film, SUBOXONE(R)
(buprenorphine and naloxone) Sublingual Tablets (CIII), or
SUBUTEX(R) (buprenorphine) Sublingual Tablets (CIII), please see
the respective full Prescribing Information and Medication Guide at
www.suboxoneREMS.com.
Condensed consolidated interim income statement
Unaudited Unaudited
2017 2016
For the three months ended Notes $m $m
March 31
----------------------------------- ------ ---------- ----------
Net Revenues 2 265 258
Cost of Sales (19) (21)
Gross Profit 246 237
Selling, distribution and
administrative expenses 3 (93) (105)
Research and development expenses 3 (25) (31)
----------------------------------- ------ ---------- ----------
Operating Profit 128 101
----------------------------------- ------ ---------- ----------
Finance expense (11) (15)
----------------------------------- ------ ---------- ----------
Profit before taxation 117 86
Taxation 4 (37) (31)
Exceptionals items within
taxation 4 - (5)
Net income 80 50
----------------------------------- ------ ---------- ----------
Earnings per ordinary share
(cents)
Basic earnings per share 5 11 7
Diluted earnings per share 5 11 7
Condensed consolidated interim statement of comprehensive
income
Unaudited Unaudited
2017 2016
For the three months ended $m $m
March 31
---------------------------------- ---------- ----------
Net income 80 50
Other comprehensive income
Items that may be reclassified
to profit or loss in subsequent
years
Net exchange adjustments on
foreign currency translation 2 (3)
Other comprehensive income 2 (3)
Total comprehensive income 82 47
----------------------------------- ---------- ----------
The notes are an integral part of these condensed consolidated
interim financial statements.
Condensed consolidated interim balance sheet
Unaudited Audited
Mar 31, Dec 31,
2017 2016
Notes $m $m
ASSETS
Non-current assets
Intangible assets 82 83
Property, plant and equipment 34 27
Deferred tax assets 74 109
Prepayments 1 -
191 219
Current assets
Inventories 47 41
Trade and other receivables 228 227
Current tax receivable 30 30
Cash and cash equivalents 6 729 692
1,034 990
Total assets 1,225 1,209
------------------------------- ------ ---------- --------
LIABILITIES
Current liabilities
Borrowings 6 (101) (101)
Provision for liabilities
and charge (218) (219)
Trade and other payables 8 (602) (658)
Current tax liabilities (52) (52)
------------------------------- ------ ---------- --------
(973) (1,030)
------------------------------- ------ ---------- --------
Non-current liabilities
Borrowings 6 (423) (434)
Provisions for liabilities
and charges (40) (40)
(463) (474)
Total liabilities (1,436) (1,504)
------------------------------- ------ ---------- --------
Net liabilities (211) (295)
------------------------------- ------ ---------- --------
EQUITY
Capital and reserves
Share capital 9 72 72
Other Reserves (1,295) (1,295)
Foreign currency translation
reserve (20) (22)
Retained Earnings 1,032 950
------------------------------- ------ ---------- --------
Total equity (211) (295)
------------------------------- ------ ---------- --------
The notes are an integral part of these condensed consolidated
interim financial statements.
Condensed consolidated interim statement of changes in
equity
Foreign
Currency
Share Share Other Translation Retained Total
Notes capital Premium reserve reserve earnings equity
Unaudited $m $m $m $m $m $m
---------------------------------- ------- --------- --------- --------- ------------- ---------- --------
Balance at January 1,
2016 72 - (1,295) (23) 967 (279)
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Comprehensive income
Net income - - - - 50 50
Other comprehensive income - - - (3) - (3)
Total comprehensive income - - - (3) 50 47
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Transactions recognised
directly in equity
Share-based plans - - - - 3 3
Deferred taxation on share-based
plans - - - - (1) (1)
Balance at March 31, 2016 72 - (1,295) (26) 1,019 (230)
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Balance at January 1,
2017 72 - (1,295) (22) 950 (295)
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Comprehensive income
Net income - - - - 80 80
Other comprehensive income - - - 2 - 2
Total comprehensive income - - - 2 80 82
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Transactions recognised
directly in equity
Share-based plans - - - - 2 2
Balance at March 31, 2017 72 - (1,295) (20) 1,032 (211)
------------------------------------------- --------- --------- --------- ------------- ---------- --------
The notes are an integral part of these condensed consolidated
interim financial statements.
Condensed consolidated interim cash flow statement
Unaudited Unaudited
2017 2016
For the three months ended March 31 $m $m
------------------------------------------------------ ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit 128 101
Depreciation and amortization 2 6
Share-based payments 2 2
Impact from foreign exchange movements 2 (2)
Increase in trade and other receivables (1) (35)
Increase in inventories (5) -
(Decrease)/increase in trade and other payables (56) 43
Decrease in provisions (1) -
Cash generated from operations 71 115
Net financing costs (10) (11)
Taxes paid (1) (7)
Net cash inflow from operating activities 60 97
------------------------------------------------------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (8) (4)
Net cash (outflow) from investing activities (8) (4)
------------------------------------------------------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash movements in borrowings (16) (17)
Net cash (outflow) from financing activities (16) (17)
------------------------------------------------------- ---------- ----------
Net increase in cash and cash equivalents 36 76
Cash and cash equivalents at beginning of the period 692 467
Exchange differences 1 -
------------------------------------------------------ ---------- ----------
Cash and cash equivalents at end of the period 729 543
------------------------------------------------------- ---------- ----------
The notes are an integral part of these condensed consolidated
interim financial statements.
Notes to the condensed consolidated interim financial
statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Indivior PLC (the 'Company') is a public limited company that
was incorporated and domiciled in the United Kingdom on September
26, 2014. In these condensed consolidated interim financial
statements ('Interim Financial Statements'), reference to the
'Group' means the Company and all its subsidiaries.
These Interim Financial Statements have been prepared in
conformity with IAS 34 Interim Financial Reporting. The financial
information herein has been prepared in the basis of the accounting
policies set out in the annual accounts of the Group for the year
ended December 31, 2016 and should be read in conjunction with
those annual accounts. The Group prepares its annual accounts in
accordance with International Financial Reporting Standards (IFRS)
and IFRS Interpretations Committee (IFRS IC) interpretations as
adopted by the European Union and the Companies Act 2006 (the Act)
applicable to companies reporting under IFRS. In preparing these
condensed interim 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, 2016, with the exception of changes in estimates
that are required in determining the provision for income
taxes.
The Interim Financial Statements do not include all the
information and disclosures required in the annual financial
statements, and should be read in conjunction with the Group's
annual financial statements as at December 31, 2016. These Interim
Financial Statements have been reviewed and not audited. These
Interim Financial Statements have been approved for issue as at May
2, 2017.
As disclosed in Note 7, the Group carries a provision of $218m
relating to the Department of Justice and Federal Trade Commission
investigations and antitrust litigation. The final amount may be
materially higher than this reserve. This could impact the Group's
ability to operate, which would be further adversely impacted
should revenues decline and pipeline products fail to obtain
regulatory approval, all of which could mean the Group could not
continue in business without taking necessary measures to reduce
its cost base and improve its cash flow. As such, this indicates a
material uncertainty that may cast significant doubt on the Group's
ability to continue as a going concern. However, the Directors
believe they have the ability to carry out the measures that would
be necessary and that the Group can continue as a going concern for
the foreseeable future. Accordingly, the Directors continue to
adopt the going concern basis for accounting in preparing these
financial statements, which do not include any adjustments that
might result from the outcome of this uncertainty.
The financial information contained in this document does not
constitute statutory accounts as defined in section 434 and 435 of
the Act. The auditors issued an unqualified opinion and did not
contain a statement under section 498 of the Act on the Group's
statutory financial statements for the year ended December 31,
2016. The Group's statutory financial statements for the year ended
December 31, 2016 were approved by the Board of Directors on March
7, 2017 and will be delivered to the Registrar of Companies subject
to the approval by shareholders at the Annual General Meeting to be
held on May 17, 2017.
2. SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
('CODM'). The CODM, who is responsible for allocating resources and
assessing performance of the operating segments, has been
identified as the Chief Executive Officer (CEO).
The Indivior Group is engaged in a single business activity,
which is the development, manufacture and sale of
buprenorphine-based prescription drugs for treatment of opioid
dependence. The CEO reviews financial information on a geographic
basis for evaluating financial performance and allocating
resources. The Group has a single reportable segment.
Revenues
Revenues are attributed to countries based on the country where
the sale originates. The following table represents revenue from
continuing operations attributed to countries based on the country
where the sale originates and non-current assets, net of
accumulated depreciation and amortization, by country. Non-current
assets for this purpose consist of property, plant and equipment
and intangible assets. Revenues and non-currents assets for the
three months to March 31, 2017 and 2016 were as follows:
Revenues from sale of goods:
2017 2016
For the three months ended March 31 $m $m
------------------------------------- ----- -----
United States 215 211
ROW 50 47
------------------------------------- ----- -----
Total 265 258
------------------------------------- ----- -----
Non-current assets:
Mar Dec
31 2017 31 2016
$m $m
--------------- --------- ---------
United States 65 64
ROW 51 46
--------------- --------- ---------
Total 116 110
--------------- --------- ---------
3. OPERATING COSTS AND EXPENSES
The table below sets out selected operating costs and expenses
information:
2017 2016
For the three months ended March $m $m
31
------------------------------------- --- ----- ------
Research and development expenses (25) (31)
------------------------------------------ ----- ------
Marketing, selling and distribution
expenses (33) (32)
Administrative expenses (56) (66)
Depreciation and amortization (2) (6)
Operating lease rentals (2) (1)
------------------------------------------ ----- ------
Total (93) (105)
------------------------------------------ ----- ------
4. 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. The resulting expense is
allocated between current and deferred taxes based upon the
forecasted full year ratio.
In the three months ended March 31, 2017, tax on total profits
amounted to $37m and represented a quarterly effective tax rate of
32% (Q1 2016: 36%, excluding exceptionals). The Group's balance
sheet at March 31, 2017 included a tax payable liability of $52m,
tax receivables of $30m, and deferred tax asset of $74m. The
reduction in deferred tax assets of $35m relates primarily to
temporary differences on unrealized profit on the sale of inventory
between Group entities. This reduction is expected to be
sustained.
The decrease in the effective tax rate to 32% was primarily
driven by the relative contribution to pre-tax income by taxing
jurisdiction in the quarter.
The United Kingdom ('UK') decision to withdraw from the European
Union ('EU') could have a material effect on our taxes. The impact
of the withdrawal will not be known until both the EU and the UK
develop the exit plan and the related changes in tax laws are
enacted. We will adjust our current and deferred income taxes when
tax law changes related to the UK withdrawal are substantively
enacted and/or when EU law ceases to apply in the UK.
5. EARNINGS PER SHARE
For the three months ended 2017 2016
March 31 cents cents
------------------------------- ------- -------
Basic earnings per share 11 7
Diluted earnings per share 11 7
Adjusted basic earnings per
share 11 8
Adjusted diluted earnings per
share 11 8
-------------------------------- ------- -------
Basic
Basic earnings per share ("EPS") is calculated by dividing
profit for the period attributable to owners of the Company by the
weighted average number of ordinary shares in issue during the
period.
Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company
has dilutive potential ordinary shares in the form of stock
options. The weighted average number of shares is adjusted for the
number of shares granted assuming the exercise of stock
options.
2017 2016
Average Average
number number
of shares of shares
---------------------------------- ------------ ------------
On a basic basis 720,064,760 718,577,618
Dilution for Long Term Incentive
Plan 27,263,710 12,692,955
Employee Sharesave Scheme 1,050,182 -
---------------------------------- ------------ ------------
On a diluted basis 748,378,653 731,270,573
----------------------------------- ------------ ------------
Adjusted Earnings
The Directors believe that diluted earnings per share, adjusted
for the impact of exceptional items after the appropriate tax
amount, provides additional useful information on underlying trends
to shareholders in respect of earnings per ordinary share.
A reconciliation of net income to adjusted net income is as
follows:
2017 2016
For the three months ended $m $m
March 31
----------------------------------- --- ----- -----
Net income 80 50
Exceptional items within taxation - 5
---------------------------------------- ----- -----
Adjusted net income 80 55
---------------------------------------- ----- -----
6. FINANCIAL LIABILITIES - BORROWINGS
Mar Dec
31 31
2017 2016
Current $m $m
------------ --- ------ ------
Bank loans (101) (101)
----------------- ------ ------
(101) (101)
---------------- ------ ------
Mar Dec
31 31
2017 2016
Non-current $m $m
------------- --- ------ ------
Bank loans (423) (434)
------------------ ------ ------
(423) (434)
----------------- ------ ------
Mar Dec
31 31
2017 2016
Analysis of net debt $m $m
--------------------------- --- ------ ------
Cash and cash equivalents 729 692
Borrowings* (547) (561)
182 131
------------------------------- ------ ------
*Borrowings reflects the principal amount drawn, before debt
issuance costs
Mar Dec
31 31
2017 2016
Reconciliation of net debt $m $m
--------------------------------- --- ------ ------
The movements in the period
were as follows:
Net debt at beginning of period 131 (174)
Increase in cash and cash
equivalents 37 225
Net repayment of borrowings
and overdraft 16 78
Exchange adjustments (2) 2
Net debt at end of period 182 131
-------------------------------------- ------ ------
The carrying value less provision of current borrowings and cash
at bank, as well as trade receivables and trade payables are
assumed to approximate their fair values. The terms of the loan in
effect at March 31, 2017 are as follows:
Nominal Required Maximum Minimum
interest annual leverage liquidity
Currency margin Maturity repayments ratio $m
-------------------- ---------- ----------- ---------- ------------ ---------- -----------
Libor
(1%) +
Term loan facility USD 6% 2019 10% 2.75 150
Libor
(1%) +
Term loan facility EUR 6% 2019 10% 2.75 150
-------------------- ---------- ----------- ---------- ------------ ---------- -----------
-- The maximum leverage ratio is a financial covenant to
maintain net secured leverage below a specified maximum (Adjusted
net debt to Adjusted EBITDA ratio) which will step down to 2.50x on
June 30, 2017.
-- The minimum liquidity covenant requires the Group to maintain
cash on hand plus the undrawn amount available under the Group's
$50 million revolving credit facility of at least $150 million.
7. CONTINGENT LIABILITIES
The Group is currently subject to other legal proceedings and
investigations, including through subpoenas and other information
requests, by various governmental authorities. It is not possible
at this time to predict with any certainty the potential impact of
these matters on the Group, or to quantify the ultimate cost of a
resolution of these matters. The Group carries a provision of $218m
for the investigative and antitrust litigation matters noted below.
The Group continues in discussions with the Department of Justice
about a possible resolution to its investigation. The Group cannot
predict with any certainty whether we will be able to reach
ultimate resolution with the Department of Justice or any or all of
the other parties, or the ultimate cost of resolving all of the
matters. The final cost may be materially higher than this
reserve.
Department of Justice Investigation
-- A U.S. federal criminal grand jury investigation of Indivior
initiated in December 2013 is continuing, and includes marketing
and promotion practices, pediatric safety claims, and
overprescribing of medication by certain physicians. The U.S.
Attorney's Office for the Western District of Virginia has served a
number of subpoenas relating to SUBOXONE(R) Film, SUBOXONE(R)
Tablet, SUBUTEX(R) Tablet, buprenorphine and our competitors, among
other issues. The Group continues in discussions with the
Department of Justice about a possible resolution to its
investigation. It is not possible at this time to predict with any
certainty the potential impact of this investigation on us or to
quantify the ultimate cost of a resolution. We are cooperating
fully with the relevant agencies and prosecutors and will continue
to do so.
State Subpoenas
-- On October 12th, 2016, Indivior was served with a subpoena
for records from the State of Connecticut Office of the Attorney
General under its Connecticut civil false claims act authority. The
subpoena requests documents related to the Group's marketing and
promotion of SUBOXONE(R) products and its interactions with a
non-profit third party organization. On November 16th, 2016,
Indivior was served with a subpoena for records from the State of
California Department of Insurance under its California insurance
code authority. The subpoena requests documents related to
SUBOXONE(R) Film, SUBOXONE(R) Tablet, and SUBUTEX(R) Tablet. The
Group is fully cooperating in these investigations.
FTC investigation and Antitrust Litigation
-- The U.S. Federal Trade Commission's investigation remains
pending. Litigation regarding privilege claims has now been
resolved. Indivior has produced certain documents that it had
previously withheld as privileged; other such documents have not
been produced.
-- Fact discovery is continuing in the antitrust class action
litigation. Plaintiffs allege, among other things, that Indivior
violated U.S. federal and state antitrust laws in attempting to
delay generic entry of alternatives to SUBOXONE(R) tablets, and
plaintiffs further allege that Indivior unlawfully acted to lower
the market share of these products.
-- Amneal Pharmaceuticals LLC (Amneal), a manufacturer of
generic buprenorphine / naloxone tablets, has alleged antitrust
violations similar in nature to those alleged in the class action
complaints, and Amneal has also alleged violations of the U.S.
Lanham Act. This case has been coordinated with the antitrust class
action litigation.
-- A group of states, now numbering 41, and the District of
Columbia filed suit against Indivior in the same district where the
antitrust class action litigation and Amneal cases are pending. The
States' complaint is similar to the other pending antitrust
complaints, and alleges violations of U.S. state and federal
antitrust and consumer protection laws. This lawsuit relates to the
investigation conducted by various states, as discussed in previous
filings. Discovery has been coordinated with the antitrust class
action litigation and Amneal cases, subject to certain stays.
ANDA Litigation and Inter Partes Review
-- The ruling after trial against Actavis and Par in the lawsuit
involving the Orange Book-listed patents for SUBOXONE(R) Film
issued on June 3rd, 2016. The ruling found the asserted claims of
the '514 patent valid and infringed; the asserted claims of the
'150 patent valid but not infringed; and the asserted claims of the
'832 patent invalid, but found that certain claims would be
infringed if they were valid.
-- Based on the ruling as to the '514 patent, Actavis and Par
are currently enjoined from launching a generic product. Par has
appealed and Actavis is expected to appeal this ruling. The
generics have also moved to reopen the judgment based on the claim
construction in the Dr. Reddy's case. In light of the motions to
reopen, Par's appeal has been deactivated until the District Court
rules on the motions, and the deadline for Actavis to file a notice
of appeal has been postponed.
-- Trial against Dr. Reddy's, Actavis and Par in the lawsuits
involving the process patent (U.S. Patent No. 8,900,497) took place
on November 16th and 21st-23rd, 2016.
-- Trial against Dr. Reddy's in the lawsuit involving two of the
Orange Book-listed patents for SUBOXONE(R) Film (U.S. Patent Nos.
8,017,150 and 8,603,514) took place on November 7th, 16th, and
21st(-) 23rd, 2016. Dr. Reddy's 30-month stay of FDA approval
expired on April 17th, 2017. So far as Indivior is aware, FDA to
date has not granted tentative or final marketing authorization to
Dr. Reddy's (or any other generic SUBOXONE(R) Film alternative). If
FDA were to grant final approval to Dr. Reddy's this would enable
them to market a generic film alternative to SUBOXONE(R) Film in
the U.S. However, any market launch by Dr. Reddy's before the
District Court renders its decision, or before the court of appeals
renders its decision even if Dr. Reddy's was to prevail before the
District Court, would be on an "at risk" basis because Indivior
would have a claim for damages against Dr. Reddy's if it ultimately
prevails after any appeal.
-- A stipulation and proposed order was filed with the District
Court on April 28th, 2017, seeking to consolidate the trial against
Alvogen in the lawsuit involving the '150 and '514 Orange
Book-listed patents and the '497 process patent for SUBOXONE(R)
Film with the trial against Mylan (discussed below). The District
Court approved the stipulation on May 1st, 2017. Accordingly, the
trial against Alvogen will be scheduled for September 25th-27th,
2017, and will be tried concurrently with the trial against Mylan.
The 30-month stay of FDA approval of Alvogen's Abbreviated New Drug
Application is presently set to expire October 29th, 2017.
-- By a Court order dated August 22nd, 2016, Indivior's
SUBOXONE(R) Film patent litigation against Sandoz has been
dismissed without prejudice because Sandoz is no longer pursuing
Paragraph IV certifications for its proposed generic formulations
of SUBOXONE(R) Film.
-- Trial against Mylan in the lawsuit involving the '150 and
'514 Orange Book-listed patents and the '497 process patent for
SUBOXONE(R) Film is scheduled for September 25th-27th, 2017, and
will be tried concurrently with the trial against Alvogen pursuant
to a stipulation filed with and approved by the District Court. The
30-month stay of FDA approval of Mylan's Abbreviated New Drug
Application is presently set to expire March 24th, 2018. On January
12th, 2017, the District Court issued a claim construction decision
in the Mylan action that clarified its earlier construction in the
Dr. Reddy's case of certain terms in the '514 patent.
-- Indivior received a Paragraph IV notification from Teva,
dated February 8th, 2016, indicating that Teva had filed a
505(b)(2) New Drug Application (NDA) for a 16mg/4mg strength of
buprenorphine/naloxone sublingual film. The parties have agreed
that infringement by Teva's 16 mg/4 mg dosage strength will be
governed by the infringement ruling on the accused 8 mg/2 mg dosage
strength in the ANDA now owned by Dr. Reddy's that was the subject
of the trial in November 2016.
-- On May 31st, 2016, Dr. Reddy's filed petitions seeking inter
parties review (IPR) of the three Orange Book-listed patents
covering SUBOXONE(R) Film. Indivior and Monsol Rx filed Patent
Owner Preliminary Responses opposing institution of the IPRs on
September 6th, 2016, arguing that institution of the IPRs should be
denied. On December 2nd, 2016, the US Patent Trial and Appeal Board
(PTAB) denied institution of the IPR as to the '832 Patent, and on
December 5th, 2016, the PTAB denied institution of the IPRs as to
the '514 and '150 Patents. On January 3rd, 2017, Dr. Reddy's filed
Requests for Rehearing of the three non-institution decisions. On
March 22nd, 2017, the PTAB denied Dr. Reddy's request for rehearing
of its decisions not to institute its petitions for IPRs of the
'150 and '514 patents. This denial by the PTAB resolves Dr. Reddy's
attempts to seek to invalidate the '150 and '514 patents through
IPR proceedings. A separate panel of the PTAB is handling the
proceeding on the '832 patent and has not yet issued its decision
on Dr. Reddy's Rehearing Request in that case.
-- Mylan has filed a petition seeking an IPR of the '514 patent.
A decision by the US Patent & Trademark Office on whether to
institute IPR proceedings is expected in May 2017.
-- In the event that one or more of the generic companies are
successful in their patent challenges, and should there be FDA
approval of one or more of the ANDAs and subsequent commercial
launch of generic SUBOXONE(R) Film, and the Group's pipeline
products fail to obtain regulatory approval, there is the
likelihood that revenues and operating profits of the Group will
significantly decline. In these circumstances the Directors believe
they would be able to take the required steps to reduce the cost
base, however, this would result in a significant change to the
structure of the business.
Rhodes Pharmaceuticals
-- On March 21st, 2017 Rhodes Pharmaceuticals filed a complaint
against Indivior in the District of Delaware, alleging that
Indivior's sale of SUBOXONE(R) Film in the U.S. infringes one or
more claims of a patent. The asserted patent, which was issued in
June 2016 traces back to an application filed in August 2007.
Indivior believes this claim is without merit and intends to
vigorously defend this action.
Estate of John Bradley Allen
-- On December 27th, 2016, the Estate of John Bradley Allen
filed a civil complaint against Indivior, among other parties, in
the Northern District of New York seeking relief under
Connecticut's products liability and unfair trade practices
statutes for damages allegedly caused by SUBOXONE(R). Indivior
believes this lawsuit is without merit and intends to vigorously
defend this action.
IRS Notice on Manufacturing Deductions
-- In August 2015, the IRS issued notices of a proposed
adjustment for the disallowance of certain manufacturing deductions
claimed by the Group following its audit of 2011 and 2012 income
tax years. During the 4th quarter of 2015, the Group was notified
by the IRS of their intention to disallow these claims as part of
the 2013 and 2014 audit cycle. The Group has appealed the proposed
disallowance. The Group has evaluated its positions with respect to
these claims and has provided $22m tax reserve for amounts claimed
on all open periods as its best estimate of its expected settlement
position for this issue.
8. TRADE AND OTHER PAYABLES
Mar Dec
31 31
2017 2016
$m $m
------------------------------- --- ------ ------
Sales returns and rebates (401) (402)
Trade payables (23) (33)
Accruals (168) (212)
Other tax and social security
payables (10) (11)
Total (602) (658)
------------------------------------ ------ ------
Customer return and rebate accruals, primarily in the US, are
provided for by the Group at the point of sale in respect of the
estimated rebates, discounts or allowances payable to direct and
indirect customers. Accruals are made at the time of sale but the
actual amounts to be paid are based on claims made some time after
the initial recognition of the sale. The estimated amounts may not
fully reflect the final outcome and are subject to change dependent
upon, amongst other things, the payor channel (e.g. Medicaid,
Medicare, Managed Care, etc) and product mix. Accrual balances are
reviewed and adjusted quarterly in the light of historical
experience of actual rebates, discounts or allowances given and
returns made and any changes in arrangements. Future events could
cause the assumptions on which the accruals are based to change,
which could affect the future results of the Group.
9. SHARE CAPITAL
Equity Nominal
Ordinary Issue value
Shares price $m
----------------------- ------------ ------- --------
Issued and fully paid
At January 1, 2017 720,597,566 $0.10 72
Allotments 180,198 $0.10 -
At March 31, 2017 720,777,764 $0.10 72
------------------------ ------------ ------- --------
Equity Nominal
Ordinary Issue value
Shares price $m
------------------------- ------------ ------- --------
Issued and fully paid
At January 1, 2016 718,577,618 $0.10 72
Nominal value reduction -
At March 31, 2016 718,577,618 $0.10 72
-------------------------- ------------ ------- --------
10. RELATED PARTIES
Indivior's former parent, Reckitt Benckiser Group PLC, was a
related party through 2016 as a result of certain transition
management agreements. During Q1 2016, Indivior purchased certain
services such as office space rental and other operational services
on commercial terms and on an arm's length basis. The amount
included within administrative expenses in respect of these
services was $2m.
11. POST BALANCE SHEET EVENTS
There have been no material post balance sheet events.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors declare that, to the best of their knowledge:
-- This condensed set of Interim Financial Statements, which
have been prepared in accordance with IAS 34 "Interim Financial
Reporting" as adopted by the European Union, gives a true and fair
view of the assets, liabilities, financial position, and profit or
loss of Indivior; and
-- The interim management report gives a fair review of the
information required pursuant to regulations 4.2.7 and 4.2.8 of the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority
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.
Indivior PLC's Directors are listed in the Annual Report and
Accounts for 2016.
Details of all current Directors are available on our website at
www.indivior.com
By order of the Board
Shaun Thaxter Mark Crossley
Chef Executive Officer Chief Financial Officer
May 2, 2017
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 Q1
Financial Results Release of Indivior PLC for the 3 month period
ended 31 March 2017. 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 International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Emphasis of matter - 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 note 1 to the interim financial statements
concerning the Group's ability to continue as a going concern. As
more fully stated in note 7 the Group is involved in investigations
by the Department of Justice and the Federal Trade Commission as
well as antitrust litigation. An amount of $218 million has been
established as a provision for potential settlement for all of
these matters. The amount accepted in the final agreed settlement
might be materially higher from this provision. This could impact
the Group's ability to operate, which would be further adversely
impacted should revenues decline and pipeline products fail to
obtain regulatory approval, all of which could mean the Group
cannot continue in business without taking necessary measures to
reduce its cost base and improve its cash flow. The directors
believe that they are able to carry out the necessary measures and
that the Group can continue as a going concern for the foreseeable
future. Accordingly, the directors continue to adopt the going
concern basis for accounting in preparing these interim financial
statements. These conditions, along with the other matters
explained in note 1 to the interim financial statements, indicate
the existence of a material uncertainty which may cast significant
doubt about the Group's ability to continue as a going concern. The
interim financial statements do not include the adjustments that
would result if the Group was unable to continue as a going
concern.
Emphasis of matter - Outcome of litigation
In forming our conclusion on the interim financial statements,
which is not modified, we draw your attention to note 1 that
describes the uncertain outcome of the ongoing ANDA patent
litigation over Suboxone(R) Film. In the event of a negative ruling
against the Group, and should there be a regulatory approval and
subsequent commercial launch of generic Suboxone(R) Film, and
pipeline products fail to obtain regulatory approval there is the
likelihood that revenues and operating profits may decline. In
these circumstances the directors believe they would be able to
take the required steps to reduce the cost base, however this would
result in a significant change to the structure of the business. As
a result of this decline and extent of its impact, the directors
would consider a change in the structure of the business and
methods to reduce its cost base, as also described in note 7.
What we have reviewed
The interim financial statements comprise:
-- the Condensed consolidated interim balance sheet as at 31 March 2017;
-- the Condensed consolidated interim income statement and
Condensed consolidated interim statement of comprehensive income
for the period then ended;
-- the Condensed consolidated interim cash flow statement for the period then ended;
-- the Condensed consolidated interim statement of changes in
equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Q1 Financial
Results Release have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Q1 Financial Results Release, including the interim
financial statements, is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the Q1 Financial Results Release in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Q1 Financial Results Release based on
our review. 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.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board 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
Ireland) 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 Q1 Financial
Results Release and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
03 May 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFUOSRRBRAVRAR
(END) Dow Jones Newswires
May 03, 2017 07:00 ET (11:00 GMT)
Indivior (LSE:INDV)
Historical Stock Chart
From Apr 2024 to May 2024
Indivior (LSE:INDV)
Historical Stock Chart
From May 2023 to May 2024