TIDMINDV
RNS Number : 8568M
Indivior PLC
02 May 2018
May 2, 2018
Q1 2018 results on track. FY 2018 guidance reconfirmed.
Encouraging SUBLOCADE(TM) launch.
Quarter to March 2018 2017 % change % change
31 at actual at constant
FX FX
$m $m
------------------------ ----- ----- ----------- -------------
Net Revenue 255 265 -4% -6%
------------------------ ----- ----- ----------- -------------
Operating Profit 116 128 -9% -11%
------------------------ ----- ----- ----------- -------------
Net Income 93 80 +16% +15%
------------------------ ----- ----- ----------- -------------
EPS (cents per share) 13 11 +18% +18%
------------------------ ----- ----- ----------- -------------
Adjusted Operating
Profit(1) 99 128 -23% -24%
------------------------ ----- ----- ----------- -------------
Adjusted Net Income(1) 78 80 -3% -5%
------------------------ ----- ----- ----------- -------------
Adjusted EPS(1) (cents
per share) 11 11 * *
------------------------ ----- ----- ----------- -------------
(1) Adjusted basis excludes the impact of exceptional item as
referenced in Notes 3 and 4.
* Not meaningful.
Q1 Financial Highlights
-- Net revenue declined 4% (minus 6% at constant currency) to
$255m (Q1 2017: $265m). Net revenue reflects a continuation of US
market dynamics for SUBOXONE(R) Film (solid market growth and price
improvement more than offset by generic tablet competition and
unfavorable channel mix) and trade destocking.
-- Operating Profit was $116m (Q1 2017: $128m). On an adjusted
basis, excluding an exceptional gain of $17m from out-licensing US
patents related to nasal naloxone, operating profit was $99m (Q1
2017: $128m). The decline primarily reflects lower net revenue and
the planned increase in investments for the launch of SUBLOCADE(TM)
and the anticipated launch of RBP-7000. These items were partly
offset by lower administrative expenses and the phasing of R&D
expenditures to the second half of 2018.
-- Net income was $93m (Q1 2017: $80m). On an adjusted basis,
net income declined 3% to $78m in Q1 2018 (Q1 2017: $80m),
primarily reflecting a decline in operating income offset by lower
financing costs and a reduced overall effective tax rate.
-- Cash balance at period end increased to $895m (FY 2017:
$863m). Net cash at period end was $407m (FY 2017: $376m).
Q1 Operating Highlights
-- SUBLOCADE(TM), the first once-monthly buprenorphine extended
release injection delivery system for the treatment of moderate to
severe opioid use disorder (OUD), was launched in the US during the
final week of February 2018; the launch to date is progressing
well, with positive patient and physician feedback and strong
initial payor coverage.
-- SUBLOCADE(TM) New Drug Submission made to Health Canada; Priority Review granted.
-- Behavioral Health business unit established, preparing for
launch of RBP-7000 (if approved), a once-monthly risperidone
long-acting injection for the treatment of schizophrenia, in
advance of July 28, 2018 PDUFA date.
-- US buprenorphine market growth rate in Q1 2018 continued at solid low double-digit levels.
-- SUBOXONE(R) Film market share averaged 55% (Q1 2017: 60%; Q4
2017: 56%), primarily due to ongoing generic tablet competition in
the most price sensitive US payors (Managed Medicaid).
-- Indivior entered into a strategic collaboration with C4X
Discovery Holdings PLC, gaining exclusive global license rights to
their orexin-1 antagonists, including lead candidate C4X3256.
-- Indivior plans to initiate an appeals process against Alvogen
after the US District Court for the District of Delaware found that
the asserted claims of the '514 and '497 Patents are not infringed
by Alvogen's proposed generic buprenorphine/naloxone film. The
parties stipulated that Alvogen does not infringe the asserted
claims of '150 Patent as those claims were construed by the Court.
Alvogen did not present an invalidity case.
-- The appeal against Dr. Reddy's US District Court verdict of
non-infringement of Patent Nos. '150, '514 and '497 is progressing
in the Federal Circuit Court of Appeals, where it has been
consolidated with the appeals involving Watson and Par. Indivior's
first brief is currently due June 4, 2018.
-- Indivior took additional actions to secure its intellectual
property position and asserted its new Orange Book-listed patent,
US Patent No. 9,931,305 (the '305 patent), covering SUBOXONE(R)
Film against all outstanding abbreviated new drug application
(ANDA) filers; Orange Book-listed patents US Patent Nos. 9,687,454
(the `454 patent) and 9,855,221 (the `221 patent) have previously
been asserted.
-- The Group continues in active discussions with the various
governmental and other entities about possible resolutions to their
investigative and antitrust litigation matters. Please see pages 6
to 8 for a complete Litigation Update.
Guidance
-- Full year 2018 guidance reconfirmed: net revenue expected in
the range of $1,130m-$1,170m and net income of $290m-$320m
(excluding exceptional items and at constant exchange rates).
Guidance assumes no material changes in market conditions in the
US, chiefly that an "at risk" launch of a generic
buprenorphine/naloxone film product will not take place during the
year.
Comment by Shaun Thaxter, CEO of Indivior PLC
"Indivior's performance in the first quarter of 2018 was in-line
with our expectations and puts us on track to deliver our full year
financial guidance. As we highlighted in February, this year's
performance is likely to be weighted towards the second half as a
result of prior year comparisons and the expected timing of uptake
of SUBLOCADE(TM), our novel monthly buprenorphine extended-release
injection for moderate to severe opioid use disorder.
It's still early days in the SUBLOCADE(TM) launch and, while we
have had to manage some expected logistical complexities, we have
been very encouraged by initial patient and physician enthusiasm,
as well as by the pace of payor coverage. Feedback from the OUD
community supports our view that SUBLOCADE(TM) represents a
transformational tool in the fight against the opioid epidemic.
While it would be premature to provide SUBLOCADE(TM) sales
information this early in the launch, we aim to begin sharing data,
including net revenue, at the half year. We expect the early
promise of the launch to translate into accelerating prescription
trends in the coming quarters and our confidence that SUBLOCADE(TM)
will achieve at least $1bn in peak annual net revenue has been
further strengthened.
Although the District Court ruling in March in the Alvogen ANDA
case was disappointing, we believe our patents are being infringed
and are appealing the decision. Furthermore, we have asserted our
three recently-granted Orange Book patents against all remaining
outstanding challengers. We cannot rule out the possibility of an
"at risk" launch of generic SUBOXONE(R) Film this year, but this is
not our current expectation.
With the launch of SUBLOCADE(TM) and, if approved, our novel
once monthly risperidone long-acting injection for the treatment of
schizophrenia (RBP-7000), the potential impact of any generic film
entry will become progressively less relevant to our long-term
prospects."
Operating Review
US Market Update
The market for buprenorphine products continued to grow strongly
in Q1 2018 versus the comparable quarter in 2017, showing volume
growth of low double-digit percentage levels, in-line with
expectations. Market growth continues to benefit from legislative
changes that have expanded OUD treatment capacity as well as
increased overall public awareness of the opioid epidemic. As a
result, growth in both the number of physicians waivered to
administer medication-assisted treatment and those able to treat to
the new permitted level of 275 patients (from 100 patients)
continued in Q1 2018. In addition, the number of waivered nurse
practitioners and physician assistants continued to grow in Q1
2018.
SUBOXONE(R) Film had an average market share of 55% in Q1 2018,
compared to 60% in Q1 2017, and Q1 2018 exit share was 54%,
compared to 59% exiting Q1 2017. The decline in share in 2018 was
largely due to continued competition in the most price sensitive
payors that have prioritized lower priced generic tablet options.
Overall commercial formulary access remains solid for SUBOXONE(R)
Film. The list price of SUBOXONE(R) Film in the US increased
modestly in January 2018, but this continues to be more than offset
by tactical rebating in connection with maintaining formulary
access and the mix impact from more US Medicaid patients seeking
treatment.
Financial Performance in Q1 2018
Total net revenue was $255m at actual exchange rates (Q1 2017:
$265m).
US net revenue decreased by 8% to $197m (Q1 2017: $215m). Volume
was ahead of last year, reflecting low double-digit market growth
that was essentially offset by a decline in market share from
continued competition in the most price sensitive accounts and
wholesaler destocking resulting from a build-up of supply in late
2017. List pricing was up reflecting a modest increase in January,
but was more than offset by unfavorable channel mix from increased
US Medicaid business and continued tactical rebates in connection
with formulary access in both commercial managed care and in
certain Medicaid accounts, in response to continued discounting by
both branded and generic competitors.
Rest of World net revenue increased 16% to $58m (Q1 2017: $50m).
The increase was primarily driven by continued growth in Canada and
Australasia and by foreign exchange benefits. At constant exchange
rates, the increase was 4%. European market share remained
resilient, but pricing was negatively impacted by further generic
competition.
Gross margin was 91% (Q1 2017: 93%) and was in-line with the
rate in FY 2017.
SG&A expenses increased to $99m (Q1 2017: $93m). Excluding
the $17m gain from the out-licensing of the intranasal naloxone
opioid overdose patents, SG&A expenses were $116m. The increase
mainly reflects planned investments for launching and supporting
the growth of SUBLOCADE(TM), as well as planned investments for the
new Behavioural Health unit that is being formed to launch and grow
RBP-7000, if approved. These investments were partially offset by
lower administrative expenses due to phasing differences versus
2017. Planned incremental growth and support investments related to
SUBLOCADE(TM) and RBP-7000 are expected to continue in FY 2018.
R&D expenses decreased by 36% to $16m (Q1 2017: $25m). The
decrease reflects anticipated phasing differences versus 2017 that
are not expected to continue as regulatory submissions for
SUBLOCADE(TM) in Canada, Australia and Europe are prepared and
submitted. In addition, ongoing Post Marketing Requirement (PMR)
and Commitment (PMC) studies for SUBLOCADE(TM) are underway (see
R&D update on pages 4 and 5).
Operating profit was $116m, 9% lower compared to the prior year
(Q1 2017: $128m). On an adjusted basis, excluding the $17m gain
from the out-licensing of the intranasal naloxone opioid overdose
patents, operating profit was $99m, 23% lower compared to the prior
year (Q1 2017: $128m). The decline primarily reflects lower net
revenue and increased investments for SUBLOCADE(TM) and RBP-7000
that were partially offset by lower R&D expenses. Operating
margin was 45% (Q1 2017: 48%). Adjusted operating margin was 39%
(Q1 2017: 48%).
EBITDA (operating profit plus depreciation and amortization) was
$119m (Q1 2017: $130m). EBITDA margin was 47% (Q1 2017: 49%). On an
adjusted basis, EBITDA was $102m (Q1 2017: $130m). Adjusted EBITDA
margin was 40% (Q1 2017: 49%).
Net finance expense in the quarter was $5m (Q1 2017: $11m). The
decrease was due to the impact of replacing the US- and
Euro-denominated term loan facilities in December 2017.
The tax charge in Q1 2018 was $18m at a rate of 16% (Q1 2017:
$37m, 32%), and $16m at a rate of 17% on an adjusted basis which
excludes the $17m exceptional item (Q1 2017: $37m, 32%). The tax
rate on an adjusted basis is within the expected full year 2018
rate range. The rate decreased in the current year due to lower US
tax rates and increased UK Patent Box benefits, over higher prior
year base rate.
Net income for the quarter was $93m (Q1 2017: $80m), and $78m on
an adjusted basis excluding $15m after-tax impact from exceptional
item (Q1 2017: $80m). Lower net revenue and increased new product
investments were partially offset by lower administrative, R&D
and financing expenses, as well as a lower tax rate.
EPS on a diluted basis were 12 cents, and 10 cents on an
adjusted diluted basis (Q1 2017: 11 cents on both a diluted and
adjusted diluted basis).
Balance Sheet & Cash Flow
Net working capital (inventory plus trade and other receivables,
less trade and other payables) was minus $290m at end Q1 2018
(minus $335m at end December 2017). The difference primarily
relates to the impact of lower accruals due to wholesaler
destocking as well as higher inventory levels due in part to the
SUBLOCADE(TM) launch. Further investment in working capital is
anticipated through 2018 to support anticipated volumes of
SUBLOCADE(TM) .
Cash and cash equivalents at the period end were $895m,
reflecting a net cash increase of $32m in the quarter. Borrowings,
net of issuance costs, were $483m (Dec 2017: $482m) at the quarter
end. Net cash was $407m (Dec 2017: $376m).
Cash generated from operating activities was $41m (Q1 2017:
$71m), a decrease of $30m due to the decline in operating profit,
along with increased investment in working capital. Net cash flow
from operations was $25m in the quarter (Q1 2017: $60m) primarily
reflecting the lower cash from operating activities and increased
tax payments in the quarter.
R&D / Pipeline Update
Treatment of Opioid Use Disorder (OUD)
-- SUBLOCADE(TM) (BUPRENORPHINE EXTED-RELEASE INJECTION) FOR SUBCUTANEOUS USE CIII:
- FDA approval November 30, 2017.
- Commercial launch initiated week of February 26, 2018.
- RECOVER Study (REmission from Chronic Opioid Use: Studying
EnVironmental and socioEconomic factors on Recovery): Topline
12-month longitudinal analysis findings will be available by
December 31, 2018.
- Post Marketing Requirement (PMR) and Commitment (PMC) studies
undergoing planning and draft/final protocol phases.
- SUBLOCADE(TM) addition to the List of Drugs for an Urgent
Public Need for the Canadian correctional service facilities on
December 28, 2017.
- SUBLOCADE(TM) New Drug Submission (NDS) made to Health Canada;
Priority Review status granted by Health Canada.
- Regulatory submissions for Australia and Europe currently being prepared.
-- SUBOXONE(R) Film: SUBOXONE(R) Film addition to the List of
Drugs for an Urgent Public Health Need in British Columbia on June
28, 2017 and for the Canadian correctional service facilities on
December 28, 2017. Regulatory submission currently being
prepared.
-- SUBOXONE(R) Tablet China: Submission of NDA to Chinese FDA
(CFDA) on December 27, 2016. Priority Review granted by CFDA June
6, 2017. NDA review ongoing.
Treatment of Schizophrenia
-- RBP-7000, Monthly Long-Acting Risperidone: NDA filing
accepted by FDA on December 12, 2017. PDUFA date of July 28, 2018.
On track for Q4 2018 launch, if approved.
Treatment of Alcohol Use Disorder (AUD)
-- Arbaclofen Placarbil: Preparation for Type C meeting with the
FDA to discuss next steps for the development of Arbaclofen
Placarbil for AUD-induced liver disease with cirrhosis.
Early Stage Asset Development (ESAD)
-- License of ADX71441 from Addex Therapeutics and creation of
Joint Research Committee to drive activities for lead
identification of additional new positive allosteric modulators at
the GABA(B) receptor.
-- Completed an agreement with C4X Discovery Holdings PLC with
exclusive global rights to develop and commercialize C4X's oral
orexin-1 receptor antagonist program including lead candidate
C4X3256.
Other Key Events
-- SUBLOCADE(TM) Phase 3 data presented at the Nevada Psychiatric Association 23rd National Psychopharmacology Update, February 14-17, Las Vegas, NV.
-- Top Blue-Ribbon Award received for Poster at the American
Society of Clinical Pharmacology and Therapeutics (ASCPT), March
21-24, Orlando, FL: "Evaluation of RBP-6000 Effects on QT Interval
during Treatment for Opioid Use Disorder."
-- SUBLOCADE(TM) Phase 3 data presented at the Fifth
International Congress of the Spanish Society of Dual Disorders
(SEPD), March 23-26, Madrid, Spain.
-- Patient-Reported Outcomes data on SUBLOCADE(TM) were
presented as a late-breaker at the 49th Annual Conference of the
American Society of Addiction Medicine (ASAM) April 12-15, San
Diego, CA.
-- Completed the out-licensing of intranasal naloxone opioid
overdose patents for total consideration of $17.5 million and
additional possible future milestone payments.
-- Three peer-reviewed publications submitted and nine in
preparation. Twelve Conference abstracts (posters and oral
presentations) submitted and either approved or being reviewed.
Dates for Upcoming Key Scientific Congresses
-- 5th Annual Western Canada Addiction Forum (WCAF): May 4-5, Kelowna, BC, Canada
-- American Psychiatry Association (APA): May 5-9, New York, NY
-- American College of Preventive Medicine (ACPM): May 23-26, Chicago, IL
-- 12e Congrès International d'Addictologie de l'Albatros: June 6-8, Paris, France
-- College on Problems of Drug Dependence (CPDD): June 9-14, San Diego, CA
-- Nordic Congress of Psychiatry (NCP): June 13-16, Reykjavik, Iceland
-- The Royal College of Psychiatrists (RCP) International
Congress: June 24-27, Birmingham, England
-- American Association of Nurse Practitioners (AANP): June 26-July 1, Denver, CO
-- Deutscher Suchtkongress: September 17-19, Hamburg, Germany
-- American College of Emergency Physicians (ACEP): October 1-4, San Diego, CA
-- American Academy of Family Physicians (AAFP FMX): October 9-13, New Orleans, LA
-- American Psychiatric Nurses Association (APNA): October 24-27, Columbus, OH
-- Canadian Society of Addiction Medicine (CSAM): October 25-27, Vancouver, BC, Canada
-- American College of Neuropsychopharmacology (ACNP): December 3-7, Hollywood, FL
-- American Academy of Addiction Psychiatry (AAAP): December 6-9, Bonita Springs, FL
-- Third Indivior-hosted R&D / Capital Markets Day: New York, NY, December 5th (TBC)
Litigation Update
The Group maintained its provision for investigative and
antitrust litigation matters of $438m. Because these matters are in
various stages, Indivior cannot predict with any certainty the
ultimate resolutions, costs or timing of the resolutions of any of
the matters. The final aggregate settlement amount may be
materially different from this provision. 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 an ultimate resolution with the
Department of Justice or any or all of the parties to the other
matters noted below under State Subpoenas and FTC Investigation and
Antitrust Litigation.
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 civil California
insurance code authority. The subpoena requests documents related
to SUBOXONE(R) Film, SUBOXONE(R) Tablet, and SUBUTEX(R) Tablet. The
State has served additional deposition subpoenas on Indivior in
2017. The Group is fully cooperating in these civil
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, alleged antitrust
violations similar in nature to those alleged in the class action
complaints, and Amneal also alleged violations of the U.S. Lanham
Act. The Company has settled the dispute with Amneal, and Amneal
has dismissed its claims against the Company with prejudice.
-- 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 is pending. The States' complaint
is similar to the other antitrust complaints, and alleges
violations of U.S. state and federal antitrust and consumer
protection laws. This lawsuit relates to the antitrust
investigation conducted by various states, as discussed in previous
filings. Discovery has been coordinated with the antitrust class
action litigation.
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
US Patent No. 8,603,514 (the '514 patent) valid and infringed; the
asserted claims of US Patent No. 8,017,150 (the '150 patent) valid
but not infringed; and the asserted claims of US Patent No.
8,475,832 (the '832 patent) invalid, but found that certain claims
would be infringed if they were valid. In an August 31st, 2017
ruling, the Court denied motions of Actavis and Par to reopen the
June 2016 judgment.
-- Based on the ruling as to the '514 patent, Actavis and Par
are currently enjoined from launching a generic product until April
2024. Actavis and Par have appealed this ruling, and Indivior has
filed notices of cross-appeal. On October 24th, 2017 Actavis
received tentative approval from FDA for at least its 8 mg/2 mg
generic product under its Abbreviated New Drug Application (ANDA)
No. 204383 and on November 15th, 2017 it received tentative
approval for its 12 mg/3 mg generic product under ANDA No. 207087.
A "tentative" approval does not allow the applicant to market the
generic drug product; in order to launch and market the product,
the applicant must receive "final" approval. Actavis therefore
remains enjoined from launching a generic product by the Delaware
court ruling, until and unless such time as the ruling is
overturned on appeal.
-- Trial against Dr. Reddy's, Actavis and Par in the lawsuits
involving the process patent, US Patent No. 8,900,497 (the '497
patent), 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 (the '150 patent and the
'514 patent) took place on November 7th, 16th, and 21st - 23rd,
2016. The rulings in these trials issued on August 31st, 2017. The
rulings found the asserted claims of the '497, '514, and '150
patents valid but not infringed. Teva had filed a 505(b)(2) New
Drug Application (NDA) for a 16 mg/4 mg strength of
buprenorphine/naloxone film. The parties had agreed that
infringement by Teva's 16 mg/4 mg dosage strength would be governed
by the infringement ruling as to Dr. Reddy's 8 mg/2 mg dosage
strength that was the subject of the trial in November 2016;
therefore, the non-infringement ruling in the Dr. Reddy's case
means that the Teva 16 mg/4 mg dosage strength has been found not
to infringe. Indivior has appealed the Dr. Reddy's and Teva
rulings.
-- 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
generic SUBOXONE(R) Film alternative.
-- If FDA were to grant final approval to Dr. Reddy's (or Teva
for the 16 mg / 4 mg strength of buprenorphine/naloxone film), 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 (or by Teva) before the court of appeals renders its
decision would be on an "at risk" basis because Indivior would have
a claim for damages against Dr. Reddy's (or Teva) if Indivior
ultimately prevails after any appeal.
-- Trial against Alvogen in the lawsuit involving the '514
Orange Book-listed patent and the '497 process patent for
SUBOXONE(R) Film took place on September 26th - 27th, 2017. Trial
was limited to the issue of infringement because Alvogen did not
challenge the validity of either patent. On March 22, 2018, the
District Court issued its ruling finding both patents valid but not
infringed by Alvogen. Indivior intends to appeal the judgment.
-- Alvogen's 30-month stay of FDA approval expired on October
29th, 2017. So far as Indivior is aware, FDA to date has not
granted tentative or final marketing authorization to Alvogen's
generic SUBOXONE(R) Film alternative.
-- If FDA were to grant final approval to Alvogen, this would
enable them to market a generic film alternative to SUBOXONE(R)
Film in the U.S. However, any market launch by Alvogen before the
court of appeals renders its decision would be on an "at risk"
basis because Indivior would have a claim for damages against
Alvogen if Indivior ultimately prevails after any appeal.
-- 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.
-- On September 25th, 2017, Indivior settled its SUBOXONE(R)
Film patent litigation in District Court against Mylan.
-- Mylan filed a petition seeking an inter partes review (IPR)
of the '514 and '497 patents. On May 12th, 2017, the US Patent
& Trademark Office decided to institute the '514 patent IPR
proceedings. On September 29th, 2017, Mylan and MonoSol submitted
joint motions to terminate the '514 patent and '497 patent IPRs in
light of the parties' settlement of their disputes in the District
Court litigation. On October 6th, 2017 the Patent Board terminated
both the '514 patent and '497 patent IPR proceedings as to MonoSol
and Mylan. Dr. Reddy's and Par had filed petitions and motions in
June 2017 to join the Mylan '514 patent IPR proceeding. On October
20th, 2017 the Patent Board refused to institute IPR proceedings
and dismissed the Dr. Reddy's and Par's petitions.
-- Indivior has filed suit against Alvogen, Dr. Reddy's, Par,
and Teva in the District of New Jersey; and against Actavis in the
District of Utah for infringement of US Patent No. 9,687,454 (the
'454 patent). The Actavis suit has been transferred to the District
of Delaware. Par has filed a corresponding declaratory judgment
action in the Eastern District of Virginia, which is stayed pending
the outcome of Par's motion to transfer the New Jersey case.
Motions to transfer to another District are pending in all the
cases. Although a complaint against Mylan was filed in the District
of West Virginia, it was dismissed in light of the parties'
settlement of their disputes in the Delaware District Court
litigation.
-- Indivior has also filed suit in February 2018 against Dr.
Reddy's, Actavis, Par, Alvogen and Teva for infringement of US
Patent No. 9,855,221 (the '221 patent) and in April 2018 against
the same defendants for infringement of US Patent No. 9,931,305
(the '305 patent). The patents are listed in the FDA's Orange Book
and relate to certain polymer film compositions having a
substantially uniform distribution of active drug.
-- In the event that one or more of the generic companies are
successful in their patent challenges on a final non-appealable
basis, and should there be FDA approval of one or more of the ANDAs
and subsequent commercial launch of generic SUBOXONE(R) Film,
including the potential of an 'at-risk' basis, and the Group's
pipeline products, including SUBLOCADE(TM), fail to launch
successfully or 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 December 23rd, 2016 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 US Patent No. 9,370,512 (the '512 patent). The
asserted patent, which was issued in June 2016, claims priority to
an application filed in August 2007. Indivior believes this claim
is without merit and will continue to vigorously defend this
action. On March 16, 2018, Indivior filed a petition for inter
partes review with the United States Patent and Trademark Office
(USPTO) asserting that all claims of the '512 patent are invalid.
The USPTO will decide whether to institute Indivior's petition on
or about October 6th, 2018.
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 will continue to
vigorously defend this action.
Risk Factors
The Directors have reviewed the principal risks and
uncertainties for the financial year 2018.
The assumptions in arriving at the Group's financial guidance
for the full year 2018 are described in 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 the guidance based on the
industry analogues and its own estimates at this time.
Therefore, other than in respect of guidance for the full year
2018, the Directors consider the principal risks and uncertainties
which could have a material impact on the Group's performance in
2018 remain the same as described on pages 50 to 56 of the 2017
Annual Report.
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:
Source: Bloomberg Q1 2018 Q1 2017
------------------- -------- --------
GB GBP period
end 1.4157 1.2434
------------------- -------- --------
GB GBP average
rate 1.3910 1.2390
------------------- -------- --------
EUR Euro period
end 1.2403 1.0766
------------------- -------- --------
EUR Euro average
rate 1.2288 1.0653
------------------- -------- --------
Webcast Details
There will be a conference call at 1pm UK time (8am Eastern in
the USA) hosted by Shaun Thaxter, CEO. This call will also be
webcast live. The details are below and are available on the
Indivior website at www.indivior.com.
Webcast link: https://edge.media-server.com/m6/p/dq3mbvwq
Confirmation Code: 1140953
Participants, Local - United
Kingdom: +44(0) 330-336-9411
Participants, Local - United
States of America: +1 323-794-2149
For Further Information
Investor Jason Thompson VP Investor +1 804 423 8916
Enquiries Relations, jason.thompson@indivior.com
Indivior PLC
Media Enquiries Jonathan Tulchan Communications +44 207 353 4200
Sibun
US Media Inquiries
+1 804 594 0836
Indiviormediacontacts@indivior.com
Corporate Website www.indivior.com
This announcement does not constitute an offer to sell, or the
solicitation of an offer to subscribe for or otherwise acquire or
dispose of shares in the Group to any person in any jurisdiction to
whom it is unlawful to make such offer or solicitation.
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 harbor 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 2018 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, including the ongoing
investigative and antitrust litigation matters; 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(R) 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 (i.e., sedatives,
tranquilizers, or alcohol). It is extremely dangerous to take
nonprescribed benzodiazepines or other medications that act on the
nervous system while taking SUBOXONE(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 www.suboxoneREMS.com.
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(R) 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.
INDICATION AND USAGE
SUBLOCADE(TM) is indicated for the treatment of moderate to
severe opioid use disorder in patients who have initiated treatment
with a transmucosal buprenorphine-containing product followed by a
dose adjustment period for a minimum of seven days.
SUBLOCADE(TM) should be used as part of a complete treatment
program that includes counseling and psychosocial support.
WARNING: RISK OF SERIOUS HARM OR DEATH WITH INTRAVENOUS
ADMINISTRATION; SUBLOCADE(TM) RISK EVALUATION
AND MITIGATION STRATEGY
* Serious harm or death could result if administered
intravenously. SUBLOCADE(TM) forms a solid mass upon
contact with body fluids and may cause occlusion,
local tissue damage, and thrombo-embolic events,
including life threatening pulmonary emboli, if
administered intravenously.
* Because of the risk of serious harm or death that
could result from intravenous self-administration,
SUBLOCADE(TM) is only available through a restricted
program called the SUBLOCADE(TM) REMS Program.
Healthcare settings and pharmacies that order and
dispense SUBLOCADE(TM) must be certified in this
program and comply with the REMS requirements.
-----------------------------------------------------------------
IMPORTANT SAFETY INFORMATION
Prescription use of this product is limited under the Drug
Addiction Treatment Act.
CONTRAINDICATIONS
SUBLOCADE(TM) should not be administered to patients who have
been shown to be hypersensitive to buprenorphine or any component
of the ATRIGEL(R) delivery system
WARNINGS AND PRECAUTIONS
Addiction, Abuse, and Misuse: SUBLOCADE(TM) contains
buprenorphine, a Schedule III controlled substance that can be
abused in a manner similar to other opioids. Monitor patients for
conditions indicative of diversion or progression of opioid
dependence and addictive behaviors.
Respiratory Depression: Life threatening respiratory depression
and death have occurred in association with buprenorphine. Warn
patients of the potential danger of self-administration of
benzodiazepines or other CNS depressants while under treatment with
SUBLOCADE(TM).
Neonatal Opioid Withdrawal Syndrome: Neonatal opioid withdrawal
syndrome is an expected and treatable outcome of prolonged use of
opioids during pregnancy.
Adrenal Insufficiency: If diagnosed, treat with physiologic
replacement of corticosteroids, and wean patient off of the
opioid.
Risk of Opioid Withdrawal With Abrupt Discontinuation: If
treatment with SUBLOCADE(TM) is discontinued, monitor patients for
several months for withdrawal and treat appropriately.
Risk of Hepatitis, Hepatic Events: Monitor liver function tests
prior to and during treatment.
Risk of Withdrawal in Patients Dependent on Full Agonist
Opioids: Verify that patient is clinically stable on transmucosal
buprenorphine before injecting SUBLOCADE(TM).
Treatment of Emergent Acute Pain: Treat pain with a non-opioid
analgesic whenever possible. If opioid therapy is required, monitor
patients closely because higher doses may be required for analgesic
effect.
ADVERSE REACTIONS
Adverse reactions commonly associated with SUBLOCADE(TM) (in
>=5% of subjects) were constipation, headache, nausea, injection
site pruritus, vomiting, increased hepatic enzymes, fatigue, and
injection site pain.
The full prescribing information, including BOXED WARNING, for
SUBLOCADE(TM) can be found here:
For further product information, see full Prescribing
Information including BOXED WARNING and Medication Guide at
www.SUBLOCADE.com
Condensed consolidated interim income statement
Unaudited Unaudited
2018 2017
For the three months ended Notes $m $m
March 31
------------------------------------- ------ ---------- ----------
Net Revenues 2 255 265
Cost of Sales (24) (19)
Gross Profit 231 246
Selling, general and administrative
expenses 3 (99) (93)
Research and development expenses 3 (16) (25)
------------------------------------- ------ ---------- ----------
Operating Profit 116 128
------------------------------------- ------ ---------- ----------
Operating profit before exceptional
items 4 99 128
Exceptional items 3,4 17 -
------------------------------------- ------ ---------- ----------
Finance income 2 1
Finance expense (7) (12)
------------------------------------- ------ ---------- ----------
Profit before taxation 111 117
Income tax expense 5 (18) (37)
------------------------------------- ------ ---------- ----------
Taxation before exceptional
items (16) (37)
Exceptionals items within
taxation 4,5 (2) -
------------------------------------- ------ ---------- ----------
Net income 93 80
------------------------------------- ------ ---------- ----------
Earnings per ordinary share
(cents)
Basic earnings per share 6 13 11
Diluted earnings per share 6 12 11
Condensed consolidated interim statement of comprehensive
income
Unaudited Unaudited
2018 2017
For the three months ended $m $m
March 31
---------------------------------- ---------- ----------
Net income 93 80
Other comprehensive income
Items that may be reclassified
to profit or loss in subsequent
years
Net exchange adjustments on
foreign currency translation 6 2
Other comprehensive income 6 2
Total comprehensive income 99 82
----------------------------------- ---------- ----------
The notes are an integral part of these condensed consolidated
interim financial statements.
Condensed consolidated interim balance sheet
Unaudited Audited
Mar 31, Dec 31,
2018 2017
Notes $m $m
ASSETS
Non-current assets
Intangible assets 107 92
Property, plant and equipment
and other assets 57 54
Deferred tax assets 5 57 58
Other receivables 22 15
243 219
Current assets
Inventories 69 52
Trade and other receivables 261 278
Current tax receivable 31 32
Cash and cash equivalents 7 895 863
1,256 1,225
Total assets 1,499 1,444
------------------------------- ------ ---------- --------
LIABILITIES
Current liabilities
Borrowings 7 (5) (5)
Provisions (138) (143)
Trade and other payables 9 (620) (665)
Current tax liabilities 5 (43) (41)
------------------------------- ------ ---------- --------
(806) (854)
------------------------------- ------ ---------- --------
Non-current liabilities
Borrowings 7 (478) (477)
Provisions (316) (316)
(794) (793)
Total liabilities (1,600) (1,647)
------------------------------- ------ ---------- --------
Net liabilities (101) (203)
------------------------------- ------ ---------- --------
EQUITY
Capital and reserves
Share capital 10 73 72
Share premium 3 2
Other Reserves (1,295) (1,295)
Foreign currency translation
reserve (8) (14)
Retained Earnings 1,126 1,032
------------------------------- ------ ---------- --------
Total equity (101) (203)
------------------------------- ------ ---------- --------
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,
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 - - - - 3 3
Deferred taxation on
share-based plans - - - - (1) (1)
Balance at March 31,
2017 72 - (1,295) (20) 1,032 (211)
---------------------------------- --------- --------- --------- ------------- ---------- --------
Balance at January 1,
2018 72 2 (1,295) (14) 1,032 (203)
---------------------------------- --------- --------- --------- ------------- ---------- --------
Comprehensive income
Net income - - - - 93 93
Other comprehensive
income - - - 6 - 6
Total comprehensive
income - - - 6 93 99
---------------------------------- --------- --------- --------- ------------- ---------- --------
Transactions recognised
directly in equity
Share-based plans 1 1 - - 2 4
Deferred taxation on
share-based plans - - - - (1) (1)
Balance at March 31,
2018 73 3 (1,295) (8) 1,126 (101)
---------------------------------- --------- --------- --------- ------------- ---------- --------
The notes are an integral part of these condensed consolidated
interim financial statements.
Condensed consolidated interim cash flow statement
Unaudited Unaudited
2018 2017
For the three months ended March 31 $m $m
-------------------------------------------------------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit 116 128
Depreciation and amortization 3 2
Gain on disposal of intangible asset (17) -
Share-based payments 1 2
Impact from foreign exchange movements 1 2
Decrease/(Increase) in trade and other receivables 17 (1)
Increase in inventories (15) (5)
Decrease in trade and other payables (59) (56)
Decrease in provisions (6) (1)
Cash generated from operations 41 71
Interest paid (7) (11)
Interest received 2 1
Taxes paid (11) (1)
Net cash inflow from operating activities 25 60
--------------------------------------------------------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (2) (8)
Purchase of intangible assets (5) -
Proceeds from disposal of intangible assets 13 -
Net cash inflow/(outflow) from investing activities 6 (8)
--------------------------------------------------------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings (1) (16)
Proceeds from the issuance of ordinary shares 1 -
Net cash (outflow) from financing activities - (16)
--------------------------------------------------------- ---------- ----------
Net increase in cash and cash equivalents 31 36
Cash and cash equivalents at beginning of the period 863 692
Exchange differences 1 1
--------------------------------------------------------- ---------- ----------
Cash and cash equivalents at end of the period 895 729
--------------------------------------------------------- ---------- ----------
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, 2017 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 (IFRIC) interpretations as
adopted by the European Union and the Companies Act 2006 (the Act)
applicable to companies reporting under IFRS. In preparing these
condensed 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, 2017, with the exception of changes in estimates
that are required in determining the interim provision for income
taxes.
This is the first set of the Group's financial statements where
IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial
Instruments have been applied. There have been no adjustments made
in the current period or prior year comparative as a result of the
adoption of these new standards.
IFRS 16 "Leases", which is effective 1 January 2019, introduces
a single, on-balance sheet accounting model for lessees. We will
recognize a right-of-use asset and a lease liability for our
obligation to make lease payments. There are recognition exemptions
for short-term leases and leases of low-value items. The nature of
expenses related to those leases will also change because IFRS 16
replaces the straight-line operating lease expense with a
depreciation charge for right-of-use assets and interest expense on
lease liabilities.
The Group has completed an initial assessment of the potential
impact on its consolidated financial statements but has not yet
completed its detailed assessment. The actual impact of applying
IFRS 16 on the financial statements in the period of initial
application will depend on the composition of the Group's lease
portfolio at that date, our assessment of whether lease renewal
options will be exercised and our use of practical expedients and
recognition exemptions. Thus far, the most significant impact
identified is that the Group will recognize new assets and
liabilities for its operating leases of office facilities.
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, 2017. These Interim
Financial Statements have been reviewed and not audited. These
Interim Financial Statements were approved for issue as at May 1,
2018.
As disclosed in Note 8, the Group carries a provision of $438m
relating to the Department of Justice and Federal Trade Commission
investigations and antitrust litigation. The final settlement
amount may be materially different than this provision. This could
impact the Group's ability to operate, which would be further
adversely impacted should revenues decline, new product launches
fail to meet expectations, and pipeline products fail to obtain
regulatory approval, all of which could mean the Group would 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 for the Group to 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. For the Group's financial statements for the year ended
December 31, 2017, the auditors issued (1) an emphasis of matter
dealing with the outcome of the Department of Justice and Federal
Trade Commission investigations and antitrust litigation details of
which are included above and in note 8; and (2) a material
uncertainty related to going concern section dealing with the
existence of a material uncertainty which may cast significant
doubt about the Group's ability to continue as a going concern in
relation to the Group's involvement in investigations by the
Department of Justice and the Federal Trade Commissions as well as
antitrust litigation, which would be further adversely impacted
should revenues decline, if the uptake of SUBLOCADE(TM) is slower
than expected, and pipeline products fail to obtain regulatory
approval. The Group's statutory financial statements for the year
ended December 31, 2017 were approved by the Board of Directors on
March 6, 2018 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 16, 2018.
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,
intangible assets, and other receivables. Revenues and non-currents
assets for the three months to March 31, 2018 and 2017 were as
follows:
Revenues from sale of goods:
2018 2017
For the three months ended March 31 $m $m
------------------------------------- ----- -----
United States 197 215
ROW 58 50
------------------------------------- ----- -----
Total 255 265
------------------------------------- ----- -----
Non-current assets:
Mar Dec
31, 31,
2018 2017
$m $m
--------------- ------ ------
United States 66 68
ROW 120 93
--------------- ------ ------
Total 186 161
--------------- ------ ------
3. OPERATING COSTS AND EXPENSES
The table below sets out selected operating costs and expenses
information:
2018 2017
For the three months ended March $m $m
31
----------------------------------- --- ----- -----
Research and development expenses (16) (25)
---------------------------------------- ----- -----
Marketing and selling expenses* (45) (33)
Administrative expenses (50) (56)
Depreciation and amortization (3) (2)
Operating lease rentals (1) (2)
---------------------------------------- ----- -----
Total (99) (93)
---------------------------------------- ----- -----
* In 2018, distribution costs, which were less than $1m have
been reclassified from Operating expenses to Cost of Sales to
better reflect the nature of the costs with Sublocade launch. The
prior year has not been adjusted as the total amount, which was
also less than $1m, is not material.
Exceptional Items
2018 2017
For the three months ended March 31 $m $m
------------------------------------- ----- -----
Other operating income 17 -
Total exceptional items before taxes 17 -
------------------------------------- ----- -----
Tax on exceptional items (2) -
------------------------------------- ----- -----
Total exceptional items 15 -
------------------------------------- ----- -----
$17m of exceptional items in the year relates to the proceeds
received from the out-licensing of nasal naloxone opioid overdose
patents to Adapt Pharma Inc which are included within SG&A.
4. ADJUSTED RESULTS
The board and management team use adjusted results and measures
to give greater insight to the financial results of the Group and
the way it is managed. The tables below show the list of
adjustments between the reported and adjusted operating profit and
net income for both Q1 2018 and Q1 2017.
Reconciliation of operating profit to adjusted operating
profit
2018 2017
For the three months ended March 31 $m $m
------------------------------------- ----- -----
Operating profit 116 128
Exceptional operating Income (17) -
Adjusted operating profit 99 128
------------------------------------- ----- -----
Reconciliation of net income to adjusted net income
2018 2017
For the three months ended March $m $m
31
---------------------------------- --- ----- -----
Net income 93 80
--------------------------------------- ----- -----
Exceptional operating income (17) -
Tax on exceptional items 2 -
Adjusted net income 78 80
--------------------------------------- ----- -----
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. The resulting expense is
allocated between current and deferred taxes based upon the
forecasted full year ratio.
In the three months ended March 31, 2018, tax on total profits
amounted to $16m excluding the tax effect on exceptionals and
represented a quarterly effective tax rate of 17% (Q1 2017: 32%
excluding exceptionals). The Group's balance sheet at March 31,
2018 included a current tax payable of $43m (FY 2017: $41m),
current tax receivable of $31m (FY 2017: $32m), and deferred tax
asset of $57m (FY 2017: $58m).
The decrease in the effective tax rate to 16% was primarily
driven by the relative contribution to pre-tax income by taxing
jurisdiction in the quarter, along with the impacts of US Tax
Reform rate reduction, and UK reduced rate due to patent box
benefit. While there may be fluctuations in the rate from quarter
to quarter, this rate reduction is expected to be materially
sustained for the full year.
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.
6. EARNINGS PER SHARE
For the three months ended 2018 2017
March 31 cents cents
------------------------------- ------- -------
Basic earnings per share 13 11
Diluted earnings per share 12 11
Adjusted basic earnings per
share 11 11
Adjusted diluted earnings per
share 10 11
-------------------------------- ------- -------
Basic
Basic earnings per share ("EPS") is calculated by dividing
profit for the period attributable to owners of the Company by the
weighted average number of ordinary shares in issue during the
period.
Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company
has dilutive potential ordinary shares in the form of stock options
and awards. The weighted average number of shares is adjusted for
the number of shares granted assuming the exercise of stock
options.
Weighted average number of 2018 2017
shares thousands thousands
---------------------------- ----------- -----------
On a basic basis 723,933 720,065
Dilution share awards and
options 24,779 28,314
On a diluted basis 748,712 748,379
----------------------------- ----------- -----------
Adjusted Earnings
The Directors believe that diluted earnings per share, adjusted
for the impact of exceptional items after the appropriate tax
amount, provides more meaningful information on underlying trends
to shareholders in respect of earnings per ordinary share. A
reconciliation of net income to adjusted net income is included in
Note 4.
7. FINANCIAL LIABILITIES - BORROWINGS
Mar Dec
31 31
2018 2017
Current $m $m
------------ --- ------ ------
Bank loans (5) (5)
----------------- ------ ------
(5) (5)
---------------- ------ ------
Mar Dec
31 31
2018 2017
Non-current $m $m
------------- --- ------ ------
Bank loans (478) (477)
------------------ ------ ------
(478) (477)
----------------- ------ ------
Mar Dec
31 31
2018 2017
Analysis of net debt $m $m
--------------------------- --- ------ ------
Cash and cash equivalents 895 863
Borrowings* (488) (487)
407 376
------------------------------- ------ ------
*Borrowings reflects the principal amount drawn, before debt
issuance costs of $5m (FY 2017: $5m).
Mar Dec
31 31
2018 2017
Reconciliation of net debt $m $m
--------------------------------- --- ------ ------
The movements in the period
were as follows:
Net cash at beginning of period 376 131
Increase in cash and cash
equivalents 32 171
Net repayment of borrowings 1 86
Exchange adjustments (2) (12)
Net cash at end of period 407 376
-------------------------------------- ------ ------
The net carrying value of current borrowings before issuance
costs 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, 2018 are as follows:
Nominal Required Maximum
interest annual leverage
Currency margin Maturity repayments ratio
-------------------- ---------- ----------- ---------- ------------ ----------
Libor
(1%)
Term loan facility USD + 4.5% 2022 1% 3.0*
Libor
(0%)
Term loan facility EUR + 4.5% 2022 1% 3.0*
--------------------- ---------- ----------- --------- ------------ ----------
-- Nominal interest margin is calculated over 3m LIBOR subject
to the LIBOR floor.
-- The maximum leverage ratio is a financial covenant to
maintain net secured leverage below a specified maximum (*Adjusted
aggregated net debt to Adjusted EBITDA ratio) which stands at 3.0x,
following the debt restructuring.
8. CONTINGENT LIABILITIES
The Group maintained its provision for investigative and
antitrust litigation matters of $438m. Because these matters are in
various stages, Indivior cannot predict with any certainty the
ultimate resolutions, costs or timing of the resolutions of any of
the matters. The final aggregate settlement amount may be
materially different from this provision. 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 an ultimate resolution with the
Department of Justice or any or all of the parties to the other
matters noted below under State Subpoenas and FTC Investigation and
Antitrust Litigation.
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 civil California
insurance code authority. The subpoena requests documents related
to SUBOXONE(R) Film, SUBOXONE(R) Tablet, and SUBUTEX(R) Tablet. The
State has served additional deposition subpoenas on Indivior in
2017. The Group is fully cooperating in these civil
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, alleged antitrust
violations similar in nature to those alleged in the class action
complaints, and Amneal also alleged violations of the U.S. Lanham
Act. The Company has settled the dispute with Amneal, and Amneal
has dismissed its claims against the Company with prejudice.
-- 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 is pending. The States' complaint
is similar to the other antitrust complaints, and alleges
violations of U.S. state and federal antitrust and consumer
protection laws. This lawsuit relates to the antitrust
investigation conducted by various states, as discussed in previous
filings. Discovery has been coordinated with the antitrust class
action litigation.
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
US Patent No. 8,603,514 (the '514 patent) valid and infringed; the
asserted claims of US Patent No. 8,017,150 (the '150 patent) valid
but not infringed; and the asserted claims of US Patent No.
8,475,832 (the '832 patent) invalid, but found that certain claims
would be infringed if they were valid. In an August 31st, 2017
ruling, the Court denied motions of Actavis and Par to reopen the
June 2016 judgment.
-- Based on the ruling as to the '514 patent, Actavis and Par
are currently enjoined from launching a generic product until April
2024. Actavis and Par have appealed this ruling, and Indivior has
filed notices of cross-appeal. On October 24th, 2017 Actavis
received tentative approval from FDA for at least its 8 mg/2 mg
generic product under its Abbreviated New Drug Application (ANDA)
No. 204383 and on November 15th, 2017 it received tentative
approval for its 12 mg/3 mg generic product under ANDA No. 207087.
A "tentative" approval does not allow the applicant to market the
generic drug product; in order to launch and market the product,
the applicant must receive "final" approval. Actavis therefore
remains enjoined from launching a generic product by the Delaware
court ruling, until and unless such time as the ruling is
overturned on appeal.
-- Trial against Dr. Reddy's, Actavis and Par in the lawsuits
involving the process patent, US Patent No. 8,900,497 (the '497
patent), 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 (the '150 patent and the
'514 patent) took place on November 7th, 16th, and 21st - 23rd,
2016. The rulings in these trials issued on August 31st, 2017. The
rulings found the asserted claims of the '497, '514, and '150
patents valid but not infringed. Teva had filed a 505(b)(2) New
Drug Application (NDA) for a 16 mg/4 mg strength of
buprenorphine/naloxone film. The parties had agreed that
infringement by Teva's 16 mg/4 mg dosage strength would be governed
by the infringement ruling as to Dr. Reddy's 8 mg/2 mg dosage
strength that was the subject of the trial in November 2016;
therefore, the non-infringement ruling in the Dr. Reddy's case
means that the Teva 16 mg/4 mg dosage strength has been found not
to infringe. Indivior has appealed the Dr. Reddy's and Teva
rulings.
-- 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
generic SUBOXONE(R) Film alternative.
-- If FDA were to grant final approval to Dr. Reddy's (or Teva
for the 16 mg / 4 mg strength of buprenorphine/naloxone film), 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 (or by Teva) before the court of appeals renders its
decision would be on an "at risk" basis because Indivior would have
a claim for damages against Dr. Reddy's (or Teva) if Indivior
ultimately prevails after any appeal.
-- Trial against Alvogen in the lawsuit involving the '514
Orange Book-listed patent and the '497 process patent for
SUBOXONE(R) Film took place on September 26th - 27th, 2017. Trial
was limited to the issue of infringement because Alvogen did not
challenge the validity of either patent. On March 22, 2018, the
District Court issued its ruling finding both patents valid but not
infringed by Alvogen. Indivior intends to appeal the judgment.
-- Alvogen's 30-month stay of FDA approval expired on October
29th, 2017. So far as Indivior is aware, FDA to date has not
granted tentative or final marketing authorization to Alvogen's
generic SUBOXONE(R) Film alternative.
-- If FDA were to grant final approval to Alvogen, this would
enable them to market a generic film alternative to SUBOXONE(R)
Film in the U.S. However, any market launch by Alvogen before the
court of appeals renders its decision would be on an "at risk"
basis because Indivior would have a claim for damages against
Alvogen if Indivior ultimately prevails after any appeal.
-- 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.
-- On September 25th, 2017, Indivior settled its SUBOXONE(R)
Film patent litigation in District Court against Mylan.
-- Mylan filed a petition seeking an inter partes review (IPR)
of the '514 and '497 patents. On May 12th, 2017, the US Patent
& Trademark Office decided to institute the '514 patent IPR
proceedings. On September 29th, 2017, Mylan and MonoSol submitted
joint motions to terminate the '514 patent and '497 patent IPRs in
light of the parties' settlement of their disputes in the District
Court litigation. On October 6th, 2017 the Patent Board terminated
both the '514 patent and '497 patent IPR proceedings as to MonoSol
and Mylan. Dr. Reddy's and Par had filed petitions and motions in
June 2017 to join the Mylan '514 patent IPR proceeding. On October
20th, 2017 the Patent Board refused to institute IPR proceedings
and dismissed the Dr. Reddy's and Par's petitions.
-- Indivior has filed suit against Alvogen, Dr. Reddy's, Par,
and Teva in the District of New Jersey; and against Actavis in the
District of Utah for infringement of US Patent No. 9,687,454 (the
'454 patent). The Actavis suit has been transferred to the District
of Delaware. Par has filed a corresponding declaratory judgment
action in the Eastern District of Virginia, which is stayed pending
the outcome of Par's motion to transfer the New Jersey case.
Motions to transfer to another District are pending in all the
cases. Although a complaint against Mylan was filed in the District
of West Virginia, it was dismissed in light of the parties'
settlement of their disputes in the Delaware District Court
litigation.
-- Indivior has also filed suit in February 2018 against Dr.
Reddy's, Actavis, Par, Alvogen and Teva for infringement of US
Patent No. 9,855,221 (the '221 patent) and in April 2018 against
the same defendants for infringement of US Patent No. 9,931,305
(the '305 patent). The patents are listed in the FDA's Orange Book
and relate to certain polymer film compositions having a
substantially uniform distribution of active drug.
-- In the event that one or more of the generic companies are
successful in their patent challenges on a final non-appealable
basis, and should there be FDA approval of one or more of the ANDAs
and subsequent commercial launch of generic SUBOXONE(R) Film,
including the potential of an 'at-risk' basis, and the Group's
pipeline products, including SUBLOCADE(TM), fail to launch
successfully or 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 December 23rd, 2016 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 US Patent No. 9,370,512 (the '512 patent). The
asserted patent, which was issued in June 2016, claims priority to
an application filed in August 2007. Indivior believes this claim
is without merit and will continue to vigorously defend this
action. On March 16, 2018, Indivior filed a petition for inter
partes review with the United States Patent and Trademark Office
(USPTO) asserting that all claims of the '512 patent are invalid.
The USPTO will decide whether to institute Indivior's petition on
or about October 6th, 2018.
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 will continue to
vigorously defend this action.
EU State Aid
-- The European Commission has announced their intention to open
a State Aid investigation into the UK's controlled foreign company
("CFC") financing exemption. Management does not believe that there
is sufficient certainty at this stage to quantify any potential
future liability that may arise following the conclusion of this
investigation and so no provision has been made at this time. We
will continue to monitor developments in this area.
9. TRADE AND OTHER PAYABLES
Mar Dec
31 31
2018 2017
$m $m
------------------------------- --- ------ ------
Sales returns and rebates (404) (433)
Trade payables (40) (40)
Accruals (161) (179)
Other tax and social security
payables (15) (13)
Total (620) (665)
------------------------------------ ------ ------
Sales 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 while the
actual amounts to be paid are based on claims made some time after
the initial recognition of the sale. The estimated amounts may not
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 actual experience
of 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.
10. SHARE CAPITAL
Equity Nominal
Ordinary Issue value
Shares price $m
----------------------- ------------ ------- --------
Issued and fully paid
At January 1, 2018 721,462,733 $0.10 72
Allotments 5,999,688 $0.10 1
At March 31, 2018 727,462,421 $0.10 73
------------------------ ------------ ------- --------
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
------------------------ ------------ ------- --------
Allotment of ordinary shares
During the period, 5,999,688 ordinary shares (2017: 180,198)
were allotted to satisfy vestings/exercises under the Group's Long
Term Incentive Plan and US Employee Stock Purchase Plan.
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.
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's PLC's Directors are listed in the Annual Report and
Accounts for 2017.
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 1, 2018
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 2018. 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 - Outcome of litigation
Without modifying our conclusion on the interim financial
statements, we draw your attention to Note 8 that describes the
uncertain outcome of the ongoing investigations by the Department
of Justice and the Federal Trade Commission as well as antitrust
litigation. An amount of $438 million has been established as a
provision for potential settlement for all of these matters. The
final aggregate settlement amount may be materially different to
this provision.
Material uncertainty relating to Going Concern
Without modifying our conclusion on the interim financial
statements, we have considered the adequacy of the disclosure made
in Note 8 that describes the uncertain outcome of the ongoing
investigations by the Department of Justice and Federal Trade
Commission and antitrust litigation. This could impact the Group's
ability to operate, which would be further adversely impacted in
the event that one or more of the generic companies are successful
in their patent challenges on a final non-appealable basis, should
there be FDA approval of one or more of the ANDAs and subsequent
commercial launch of generic Suboxone(R) Film, if the Group's
pipeline products fail to obtain regulatory approval, together with
the market acceptance of SUBLOCADE(TM) being slower than expected.
As explained in Note 1 to the interim financial statements, the
above factors indicate the existence of a material uncertainty
which may cast significant doubt about the Group's ability to
continue as a going concern. 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 potential
decline and the extent of its potential impact, the Directors are
prepared to change the structure of the business and to reduce its
cost base, as also described in Note 1 to the interim financial
statements. The interim financial statements do not include the
adjustments that would result if the Group were unable to continue
as a going concern.
What we have reviewed
The interim financial statements comprise:
-- the Condensed consolidated interim balance sheet as at 31 March 2018;
-- the Condensed consolidated interim income statement and Condensed consolidated 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,
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
1 May 2018
This information is provided by RNS
The company news service from the London Stock Exchange
END
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