TIDMINDV
RNS Number : 5866U
Indivior PLC
30 July 2020
http://www.rns-pdf.londonstockexchange.com/rns/5866U_1-2020-7-30.pdf
July 30, 2020
Indivior Announces H1 2020 Results
Period to June Q2 Q2 % % H1 H1 % %
30th
2020 2019 Actual Constant 2020 2019 Actual Constant
$m $m FX FX $m $m FX FX
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Net Revenue 150 215 -30 -30 303 454 -33 -33
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Operating Profit/(Loss) 25 88 -72 -71 (165) 163 NM NM
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Net Income/(Loss) 18 75 -76 -75 (145) 141 NM NM
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
EPS (cents per
share) 2 10 -80 -75 (20) 19 NM NM
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Adj. Operating
Profit* 24 89 -73 -72 26 191 -86 -87
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Adj. Net Income* 17 76 -78 -77 14 165 -92 -92
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Adj. EPS* 2 10 -80 -77 2 23 -91 -92
========================= ====== ====== ======== ========== ====== ====== ======== ==========
(*) Adjusted (Adj.) basis excludes the impact of exceptional
items as referenced in Notes 3 and 4. NM: Not Meaningful.
Comment by Mark Crossley, CEO of Indivior PLC
"I am proud of the Group's resilient performance through this
unprecedented period brought about by the COVID-19 pandemic.
Considering this backdrop, our first-half results were solid. We
maintained a good cash buffer and we did so while helping to ensure
the safety and wellbeing of our employees. I am particularly
encouraged by the performance of SUBLOCADE(R) (buprenorphine
extended-release) Injection through this period, as Q2 net revenue
of $29m was unchanged versus Q1's level. Furthermore, we came to a
satisfactory agreement with the DOJ (subject to judicial approval)
that allows us to focus our resources on pursuing our Vision and
patient-focused growth strategy. In the short term, we continue to
be impacted by the industry-wide reduction in new patient starts in
the U.S. However, looking to the future, I am confident that our
novel depot technologies, SUBLOCADE(R) and PERSERIS(R)
(risperidone) extended release injection, have the power to
transform lives and to drive a new era of growth."
H1 2020 Financial Highlights
-- Total net revenue of $303m declined 33% (H1 2019: $454m).
U.S. net revenue declined 42% due to SUBOXONE(R) (buprenorphine and
naloxone) Film share loss (which was at lower rates than
analogues(1) ) and to the termination of the Group's authorized
buprenorphine/naloxone generic film program in Q4 2019. These
factors were partially offset by an increase in the underlying
growth rate in the U.S. oral medication-assisted treatment (MAT)
market due to the effects of the COVID-19 pandemic (see "U.S.
Market Update" on page 4) and by increased net revenue from
SUBLOCADE(R) (H1 2020: $58m vs. H1 2019: $28m). Rest of World net
revenue was unchanged.
-- Reported operating loss was $165m (H1 2019 operating profit:
$163m). On an adjusted basis, operating profit was $26m (Adj. H1
2019: $191m). The decline in adjusted operating profit reflects
lower overall net revenue and increased SG&A expense,
principally promotional expenses for SUBLOCADE in Q1 2020 and
increased legal expenses (related to the agreement on Department of
Justice (DOJ) matter) in Q2 2020 .
-- Reported net loss was $145m (H1 2019 net income: $141m). On
an adjusted basis, net income was $14m (Adj. H1 2019 net income:
$165m). The decline mainly reflects the reduction in operating
profit and net finance expense (versus finance income in H1
2019).
-- Cash balance at the end of H1 2020 was $908m (FY 2019:
$1,060m). Net cash was $671m (FY 2019: $821m). The lower cash
balances primarily reflect the negative net working capital impact
associated with the timing of payables related to Film share loss
in government programs and the collateralization of surety
bonds.
(1) IMS Institute Report, January 2016, "Price Declines after
Branded Medicines Lose Exclusivity in the U.S."
H1 2020 Operating Highlights
-- U.S. buprenorphine medication-assisted treatment (BMAT)
market continued to grow at a low teens rate, primarily led by
Government channels (see "U.S. Market Update" on page 4 for more
detail).
-- SUBLOCADE net revenue of $58m (H1 2019: $28m); total
SUBLOCADE units dispensed in H1 2020 were approximately 48,700
(+114% vs. H1 2019), including 25,300 units dispensed in Q2 2020
(+88% vs. Q2 2019); PERSERIS(R) net revenue of $7m.
-- COVID-19 pandemic resulted in sharp reduction beginning in
mid-March in patient enrollments for SUBLOCADE and PERSERIS;
patient enrollments through Q2 2020 were stable with Q1 2020 exit
rates.
-- SUBOXONE Film market share during H1 2020 averaged 22% (H1
2019: 38%) and exited at 21% (H1 2019: 27%). Share erosion
continues to be lower than historical industry analogues(1) .
-- SUBOXONE Film was approved for marketing in European Union
and Canada; listing discussions ongoing in target countries.
-- SUBLOCADE (buprenorphine extended-release injection)
available in Canada; SUBLOCADE (buprenorphine modified release
solution for injection) available in Australia.
-- SUBLOCADE / SUBUTEX(R) prolonged release solution for
injection was approved in Israel, Sweden and Finland.
FY 2020 Planning Assumptions
The impact of the COVID-19 pandemic on Indivior's operations
remains highly uncertain. The extent of any adverse impact on the
Group's operations will depend on the unforeseeable duration,
extent and severity of the pandemic, notably in the U.S.,
Indivior's largest market. The Group is, however, sharing the
following planning assumptions for the remainder of 2020, which are
based on the Group's current expectations:
-- U.S. BMAT market: continued low teens volume growth.
-- SUBLOCADE: modest growth in new patient enrollments compared with Q2 exit levels.
-- SUBOXONE Film: significant reduction in H2 2020 net revenue
compared with H1 2020 as a result of share loss reaching historical
industry analogues(1) and negative channel mix.
-- Rest of World: sustained competitive pressures, mainly in Western Europe.
-- Operating expenses: combined SG&A and R&D expenses in
H2 2020 to be slightly below H1 2020 level, despite expected
increases in compliance and R&D expenses.
-- Tax rate: mid-to-high teens.
Indivior will monitor closely the development of the pandemic
and anticipates providing an update with its Q3/nine-month 2020
results, currently scheduled for October 29, 2020.
To the extent the pandemic continues for an extended period,
Indivior expects it to have the effect of heightening many of the
risks described beginning on page 7 in the Risk Factors section. In
the current environment, the Directors have considered the impact
of a range of possible future COVID-19 related scenarios and
believe the Group retains sufficient liquidity to continue to
operate.
(1) IMS Institute Report, January 2016, "Price Declines after
Branded Medicines Lose Exclusivity in the U.S."
COVID-19 Response Update
Indivior continues to enact the carefully managed response to
COVID-19 detailed in its Q1 2020 results release. The Group's
overriding objectives in formulating its response were to maintain
the safety and wellbeing of its global employee base and help
ensure that patients around the world continue to have access to
treatment and to build a strong foundation for future growth. These
objectives remain unchanged. However, as population movement
restrictions have begun to ease, Indivior is adjusting its employee
response in the following respects:
-- Employees are being allowed to return to work on a carefully
phased basis where restrictions have either been lifted or eased in
accordance with guidelines by local government and health
organizations across the world.
-- To facilitate safe working practices, the Group is providing
personal protection equipment to all global employees.
-- Indivior at this time commits to respect individual requests
to maintain remote working status either due to the individual's
comfort level in returning to a group setting, or need to continue
to provide eldercare or childcare, or in consideration of
pre-existing medical conditions.
-- In all of the foregoing, Indivior will remain in compliance
with all regulatory and safety standards and the Group will work to
ensure that supply of all of its approved treatments remains
uninterrupted.
Agreement to Resolve Criminal Charges and Civil Complaints
Related to SUBOXONE Film
The Group has reached an agreement with the United States
Department of Justice (Justice Department), the Federal Trade
Commission ("FTC"), and U.S. state attorneys general to resolve the
Company's criminal and civil liability in connection with a
multi-count indictment brought in April 2019 by a grand jury in the
Western District of Virginia, a civil lawsuit joined by the Justice
Department in 2018, and an FTC investigation. Under the terms of
the agreement, Indivior Solutions Inc. ("Solutions Inc."), a wholly
owned subsidiary of Indivior PLC, has pleaded guilty to a single
count of making a false statement relating to health care matters
in 2012 in violation of 18 U.S.C. Section 1035. Indivior will make
payments to federal and state authorities totalling $600 million
(plus applicable interest of 1.25%) over a period of seven years,
has agreed to a stipulated injunction with the FTC, and entered
into a Corporate Integrity Agreement with the Office of Inspector
General of the Department of Health and Human Services (HHS). Under
the terms of the agreement, the Justice Department will move to
dismiss all other charges upon judicial approval of the agreements
and sentencing.
Under the terms of a related agreement with the HHS, Solutions
Inc. will be excluded from participating in government health
programs. This exclusion will not apply to any other entities
within the Group. The Company does not anticipate the exclusion of
Solutions Inc. will have any material impact on the Group's ability
to continue to participate in government health programs.
Under the terms of the agreement, the Company will make a
payment of $100 million the week the plea is finalized and approved
by a judge. Subsequently, there will be six annual instalments of
$50 million due every January 15 from 2022 to 2027. The final
instalment of $200 million will be due on December 15, 2027. The
Group carries a provision of $624 million (FY19: $438 million) for
Department of Justice and related matters.
Under the terms of the five-year Corporate Integrity Agreement
(CIA) with the HHS Office of the Inspector General (HHS-OIG), the
Group will continue its commitment to promote compliance with laws
and regulations and its ongoing evolution of an effective
compliance program, including written standards, training,
reporting, and monitoring procedures. The Group will be subject to
reporting and monitoring requirements, including annual reports and
compliance certifications from key management and the Board
Nominating & Governance Committee submitted to HHS-OIG and
annual Board and CEO certifications submitted to the U.S.
Attorney's Office. In addition, the Group will be subject to
monitoring by an Independent Review Organization, who will submit
audit findings to HHS-OIG, and review by a Board Compliance Expert,
who will prepare two compliance assessment reports in the first and
third reporting periods of the Corporate Integrity Agreement. See
Risk Factors section on page 7.
Operating Review
U.S. Market Update
In H1 2020, growth of the U.S. BMAT market was sustained at a
low teens rate. The acceleration in market growth compared with the
low double-digit growth observed in 2019 was primarily driven by an
increase in the underlying growth rate in the oral
medication-assisted treatment (MAT) market due to the effects of
the COVID-19 pandemic. The increase followed implementation of
several new federal and state government actions to facilitate
access to MAT, including counselling, for patients suffering from
opioid use disorder in light of the COVID-19 pandemic and social
distancing requirements. For example, the Drug Enforcement
Administration (DEA), jointly with the Substance Abuse and Mental
Health Services Administration (SAMHSA), has allowed healthcare
providers to initiate and continue buprenorphine treatment by
telemedicine and telephone. The Group is uncertain how long the
elevated underlying BMAT growth rate will continue but anticipates
the growth rate will revert to the previously observed low
double-digit growth rate.
Underlying market volume growth continues to benefit both from
increased overall public awareness of the opioid epidemic and
approved treatments, and from regulatory and legislative changes
that have expanded OUD treatment funding and treatment capacity.
States are also realizing that, while providing treatment brings
substantial value to both patients and society, BMAT remains
under-utilized(1) .
In response, both the number of physicians who have received a
waiver to administer MAT and those able to treat to the permitted
level of 275 patients continued to grow in the first half of 2020.
The number of nurse practitioners and physician assistants who have
received a waiver also continued to grow in the first half of 2020.
Indivior supports efforts to encourage more eligible healthcare
practitioners to provide treatment, and the Group continues to
resource its compliance capabilities for the growing number of BMAT
prescribers and patients.
On February 19, 2019, the market for generic
buprenorphine/naloxone film products began to form rapidly after
the Court of Appeals for the Federal Circuit (CAFC) vacated the
preliminary injunction (PI) granted to Indivior against Dr. Reddy's
Laboratories (DRL) and Alvogen Pine Brook LLC (Alvogen).
As a result of the launch of generic buprenorphine/naloxone film
products, branded SUBOXONE Film experienced significant market
share loss in 2019, albeit at a lower rate than suggested by
historical industry analogues(2) . SUBOXONE Film market share
exiting the first half of 2020 was 21% compared to first half of
2019 exit share of 27%. Overall formulary access for SUBOXONE Film
remains above expectations at this point in the lifecycle of the
treatment, although Indivior notes the loss of formulary coverage
at Express Scripts (ESI) with effect from July 1, 2020. Looking
forward, Indivior prudently assumes the pace of market share loss
will intensify for SUBOXONE Film, ultimately resulting in a branded
market share position in-line with industry analogues(2) . However,
the exact timing for reaching this level is uncertain at this
point.
In Q4 2019, the Group terminated its authorized generic (AGx)
buprenorphine/naloxone sublingual film program with Sandoz. Final
shipments of Indivior-produced AGx film were made in Q4 2019, which
Sandoz continued to market during H1 2020. The termination of the
AGx program has not affected availability of branded or generic
buprenorphine/naloxone sublingual film.
(1) JAMA Network Open. 2019;2(6):e196373.
Doi:10.1001/jamanetworkopen.2019.6373
(2) IMS Institute Report, January 2016, "Price Declines after
Branded Medicines Lose Exclusivity in the U.S."
Financial Performance in H1 and Q2 2020
Total net revenue in H1 2020 decreased 33% to $303m (H1 2019:
$454m) at actual exchange rates (-33% at constant exchange rates).
In Q2 2020, total net revenue decreased 30% at actual exchange
rates (-30% at constant exchange rates) to $150m (Q2 2019:
$215m).
U.S. net revenue decreased 42% in H1 2020 to $211m (H1 2019:
$362m) and by 34% in Q2 2020 to $107m (Q2 2019: $163m). Growth in
the overall U.S. BMAT market was sustained at a low-teens rate as
discussed above ("U.S. Market Update") , primarily due to strength
in government channels. Underlying market strength and
SUBLOCADE net revenue growth to $58m (H1 2019: $28m) were more
than offset by SUBOXONE Film share loss due to generic
buprenorphine/naloxone film alternatives (launched in Q1 2019) and
the absence of net revenue contribution from the AGx film program
that the Group terminated in October 2019. U.S. net revenue
dynamics in Q2 2020 were substantially the same as those for H1
2020, but with the additional impacts of lower new patient
enrollments for SUBLOCADE and PERSERIS due to the COVID-19 pandemic.
Rest of World (ROW) net revenue was unchanged at actual exchange
rates in H1 2020 to $92m (H1 2019: $92m) (+4% at constant exchange
rates). In Q2 2020, ROW net revenue decreased 17% at actual
exchange rates to $43m (Q2 2019: $52m) (-14% at constant exchange
rates). ROW net revenue performance in H1 2020 primarily reflects
the impact of a prior year one-time net revenue adjustment in
Canada that was offset by continued competitive pressure,
principally in Western Europe. The Q2 2020 decline in ROW net
revenue was primarily due to competitive pressure in Western
Europe.
Gross margin as reported in H1 2020 was 86% (H1 2019: 86%) and
88% in Q2 2020 (Q2 2019: 87%), respectively. Excluding $6m of net
exceptional costs of sales related to inventory provisions due to
the adverse impact of COVID-19 in Q1 2020 and an exceptional
benefit of $1m in Q2 2020 related to releases of inventory
provisions, adjusted gross margin in H1 2020 and Q2 2020 was 88%
(Adj. H1 2019: 86%) and 87% (Adj. Q2 2019: 87%), respectively. The
adjusted gross margin performance in both periods primarily
reflects a more favorable product mix primarily from the
discontinuation of the AGx film program.
SG&A expenses as reported in H1 2020 were $408m (H1 2019:
$202m) and $99m as reported in Q2 2020 (Q2 2019: $87m). H1 2020
reported SG&A included exceptional costs of $185m. The
exceptional costs comprised $183m related to the DOJ matter and $2m
for restructuring-related lease impairments. H1 2019 SG&A
expenses included exceptional costs of $28m, primarily related to
restructuring and redundancy costs.
On an adjusted basis, H1 2020 SG&A expenses increased 28% to
$223m (Adj. H1 2019: $174m). The increase largely reflects greater
SUBLOCADE marketing expenses primarily due to the national
direct-to-consumer (DTC) advertising campaign (Q1 2020), as well as
higher legal expenses related to the agreement on the DOJ matter
(Q2 2020). These items were partially offset by lower overall
administrative expenses from savings actions completed in 2019. In
Q2 2020 SG&A expenses on an adjusted basis increased 15% to
$99m (Adj. Q2 2019: $86m). The increase in the period largely
reflects the aforementioned Q2 2020 item.
H1 2020 and Q2 2020 R&D expenses decreased by 24% to $19m
and by 38% to $8m, respectively (H1 2019: $25m; Q2 2019: $13m). The
decrease in both periods primarily reflects lower clinical
activities due to COVID-19 population movement restrictions, as
well as ongoing prioritization of R&D activities on SUBLOCADE
Health Economics and Outcomes Research (HEOR) and post-marketing
study commitments for SUBLOCADE and PERSERIS.
H1 2020 operating loss as reported was $165m (H1 2019 op.
profit: $163m). Exceptional costs of $191m and $28m are included in
the H1 2020 and H1 2019 reported results, respectively. On an
adjusted basis, H1 2020 operating profit was $26m (H1 2019: $191m).
The decline on an adjusted basis primarily reflects lower net
revenue along with increased SG&A expenses as detailed above.
These items were partially offset by lower R&D expenses and
administrative expense savings from actions completed in H1
2019.
Q2 2020 operating profit as reported was $25m (Q2 2019: $88m).
An exceptional benefit of $1m and exceptional costs of $1m are
included in the Q2 2020 and Q2 2019 reported results, respectively.
On an adjusted basis, Q2 2020 operating profit was $24m (Adj. Q2
2019: $89m). The decline on an adjusted basis primarily reflects
lower net revenue and increased SG&A expenses partially offset
by lower R&D expenses.
H1 2020 net finance expense was $6m (H1 2019: $3m income). The
expense primarily reflects lower interest income on the Group's
cash balance due to lower short-term interest rates versus the
year-ago period and higher interest expense primarily related to
the Group's DOJ settlement amount.
H1 2020 reported tax benefit was $26m, or a rate of 15% (H1 2019
tax charge: $25m, 15%). Excluding the $32m tax benefit on
exceptional items in H1 2020, the effective tax rate was 27% (H1
2019 adj. tax charge: $29m; 15% rate). Q2 2020 reported tax charge
was $2m, or a rate of 10% (Q2 2019: $14m, 16%), with no exceptional
tax items for the quarter or prior year quarter .
H1 2020 reported net loss was $145m (H1 2019 net income: $141m).
On an adjusted basis, H1 2020 net income was $14m and excludes the
$159m after-tax impact from exceptional items (Adj. H1 2019:
$165m). The decline in net income on an adjusted basis primarily
reflects lower net revenue, increased operating expenses mainly due
to the SUBLOCADE DTC campaign in Q1 2020 and net finance expense
(versus H1 2019 finance income). Q2 2020 net income on a reported
basis was $18m (Q2 2019: $75m), and $17m on an adjusted basis
excluding the $1m after-tax impact from exceptional items (Adj. Q2
2019: $76m). Lower Q2 2020 net income on an adjusted basis was
primarily due to the decline in net revenue, increased SG&A
expense and net finance expense (versus Q2 2019 finance
income).
Loss per share was 20 cents in H1 2020 and earnings per share of
2 cents on an adjusted diluted basis (H1 2019: 19 cents on a
diluted and 22 cents adjusted diluted basis). In Q2 2020, EPS on a
diluted basis was 2 cents and 2 cents on an adjusted diluted basis
(Q2 2019: 10 cents on a diluted and adjusted diluted basis).
Balance Sheet & Cash Flow
Cash and cash equivalents at the end of H1 2020 were $908m, a
decrease of $152m versus the $1,060m position at FY 2019 primarily
due to rebates in the U.S. within payables. Borrowings, net of
issuance costs, were $237m at the end of H1 2020 (FY 2019: $239m).
As a result, net cash (as defined in Note 8) stood at $671m at H1
2020 (FY 2019: $821m), a $150m decrease over the half year.
Net working capital (inventory plus trade and other receivables,
less trade and other payables) was negative $212m at the end of H1
2020 versus negative $323m at the end of FY 2019. The $111m change
over the period was primarily driven by a decrease in sales returns
and rebates in the U.S. within payables and a reduction in accrual
levels partially offset by a decrease in trade and other receivable
balances.
Cash used by operating activities in H1 2020 was $132m (H1 2019
cash generated: $45m), representing an increased use of cash of
$177m primarily due to lower revenues and trade receivables in the
period exacerbated by timing of payments of sales rebates and other
payables. Net cash outflow from operating activities was $148m in
the half year (H1 2019 net cash inflow: $72m) reflecting the lower
cash from operating activities and net tax payments in the
quarter.
H1 2020 cash outflow from investing activities was nil (H1 2019:
$2m). The prior year outflow related to the purchase of property,
plant and equipment.
H1 2020 cash outflow from financing activities was $4m (H1 2019:
$6m), reflecting the principal portion of lease payments and the
quarterly repayment on the term loan facility partially offset by
proceeds from issuance of shares to satisfy the vesting of options
under an employee stock purchase plan.
R&D / Pipeline Update
Indivior's quarterly R&D and pipeline update may be found
at: http://www.indivior.com/research-and-development/ .
Risk Factors
The Group utilizes a formal process to identify, evaluate and
manage significant risks. The Directors have reviewed the principal
risks and uncertainties for the remainder of the 2020 financial
year. In addition to the principal risks and uncertainties
affecting the Group's business activities, detailed on pages 41 to
44 of the Indivior PLC Annual Report 2019, during the first half of
2020, changes to the Group's environment have occurred which are
impacting the Group's Principal Risks.
On July 24, 2020 the Group reached an agreement with the U.S.
Department of Justice (DOJ) to settle an investigation regarding
alleged charges of health care fraud, wire fraud, mail fraud, and
conspiracy in connection with the marketing and promotion
practices, pediatric safety claims, and overprescribing of SUBOXONE
Film and/or SUBOXONE Tablet by certain physicians (for more
details, refer to the section "Agreement to Resolve Criminal
Charges and Civil Complaints Related to SUBOXONE Film" on page 3 of
this press release). The DOJ agreement is still pending final
judicial approval in the Western District of Virginia scheduled for
October 2020 (for more details on legal proceedings, any related
provisions, and going concern refer to Notes 1, 9 and 11 to
consolidated interim financial statements). As part of this
agreement, the Group has also entered into a CIA with HHS-OIG. The
five-year CIA requires, among other things, that the Group
implement measures designed to ensure compliance with the statutes,
regulations, and written directives of US Medicare, US Medicaid,
and all other US Federal health care programs, as well as with the
statutes, regulations, and written directives of the US Food and
Drug Administration. In addition, the CIA requires reviews by an
independent review organization, compliance-related certifications
from the Group's executives and Board members, and the
implementation of a risk assessment and mitigation process. The CIA
sets forth specified monetary penalties that may be imposed on a
per day basis for failure to comply with the obligations specified
in the CIA. The CIA also includes specific procedures under which
the Group must notify HHS-OIG if it fails to meet the requirements
under the CIA. In the event that HHS-OIG determines the Group to be
in material breach of certain requirements of the CIA, the Group
may be subject to exclusion from participation in the U.S. Federal
health care programs, which would have a severe impact on the
Group's ability to comply with the financial covenants in the
Group's debt facility, maintain sufficient liquidity to fund its
operations, pay off its debt in 2022, generate future revenue and
ultimately impact the Group's viability.
The persistence of the COVID-19 pandemic and the ongoing
government measures to address the global pandemic continue to
create a very challenging business environment for companies across
industries worldwide; and therefore related risks to the Group's
business and operations. In response to COVID-19, the Group has
implemented a number of mitigation and contingency actions to help
maintain the supply of all products to our patients and the welfare
of our employees (for more details, refer to the section "COVID-19
Response Update" of this press release). Given the remote working
environment, the Group continues to closely monitor cybersecurity
threats and the overall operating effectiveness of controls.
The COVID-19 pandemic could restrict our operations and
adversely impact our broad supply chain (i.e., "supply to patient
delivery" process) if we experience a significant absence of our
employees and/or employees at our critical partners and vendors
because of the infection and/or the government containment
measures. Through on-going management and risk mitigation, the
Group has not experienced any material COVID-19 related disruptions
to its supply chain through the date of this report.
The Group had cash and cash equivalents of $908 million (net
cash of $671 million). COVID-19 has not significantly impacted the
Group's liquidity to date. The Group has, however, observed a
continued decline in patient enrollments for both SUBLOCADE and
PERSERIS injections since the end of the first quarter, though such
decline appears to be stabilizing. The pandemic has resulted in
overall fewer patient visits to healthcare provider offices for
non-COVID-19 reasons or essential treatments, as patients become
unable or unwilling to make visits due to overburdened healthcare
systems or elect to have remote consultations (telehealth) with
their providers. The pandemic has also resulted in safety concerns,
quarantines or other travel restrictions for patients. Furthermore,
even though the Group has developed remote (digital) meeting
capability with healthcare providers, the Group's commercial
organization has only been able to engage in-person with a limited
number of healthcare professionals (HCPs) and Organized Health
Systems (OHS) - an important element of the Group's growth
strategy. Therefore, a potential enduring and/or significant
decline in patient enrollments and the inability to effectively
engage
with HCPs and OHS would have a negative impact on the Group's
financial results in future periods.
Given the evolving and dynamic nature of the COVID-19 pandemic,
and uncertainty surrounding the duration of measures designed to
mitigate its spread, including the development of a vaccine or
attainment of herd immunity, the impact on the Group's operations
and financial position is highly uncertain and cannot be predicted
with confidence. The developments in relation to COVID-19 are under
constant review to ensure our mitigation and contingency actions
are appropriate, proportionate and as effective as possible.
However, despite the measures the Group has taken, if the pandemic
adversely affects Indivior's operations and/or performance, it will
have a heightened effect on many of the risks described beginning
on page 41 of the Annual Report 2019, specifically those relating
to business operations, the execution of the commercial strategy,
the manufacturing and supply of products, as well as the delivery
of and reliance on third-party products and services, including
those related to clinical studies.
In preparation for the UK's exit from the European Union
(Brexit), the Group continues to be proactive in taking necessary
actions should a hard Brexit/no-deal occur. We are continuing to
review our plans (e.g., increasing safety stocks) and potential
impacts on our operations as negotiations and regulations develop,
and to prepare for all foreseeable outcomes at the end of the
expected transition period on December 31, 2020.
Other than in respect to the above, the Directors consider the
principal risks and uncertainties which could have a material
impact on the Group's performance for the rest of the year to
remain the same as described on pages 41 to 44 of the Annual Report
2019. These include:
Business Operations
The Group's operations rely on complex processes and systems,
strategic partnerships, as well as specially-qualified and
high-performing personnel to develop, manufacture and sell our
products. Failure to continuously maintain operational processes
and systems as well as to recruit and/or retain qualified personnel
could adversely impact product availability and patient health, and
ultimately the Group's performance and financials. Additionally, an
ever-evolving regulatory, political and technological landscape
requires that we have the right priorities, capabilities and
structures in place to successfully execute on our business
strategy and adapt to this changing environment. The finishing of
our SUBOXONE and SUBUTEX tablets for all our European markets is
manufactured by a third-party contract manufacturer located in the
UK. The Group has been proactive in taking appropriate actions
since the referendum should a hard Brexit/no-deal occur, including
changes to logistics, shipping, and quality testing and release
processes, as well as transfer of regulatory licenses and
additional inventory builds. Uncertainties of the impact of Brexit
on our operations remain a risk closely monitored as it impacts
various areas of the Group, including Operations, Regulatory,
Supply Chain, and Quality.
Product Pipeline, Regulatory & Safety
The development and approval of the Group's products is an
inherently risky and lengthy process requiring significant
financial, research and development resources, and strategic
partnerships. Complex regulations with strict and high safety
standards govern the development, manufacturing, and distribution
of our products. In addition, strong competition exists for
strategic collaboration, licensing arrangements, and acquisition
targets. Patient safety depends on our ability to perform robust
safety assessment and interpretation to ensure that appropriate
decisions are made regarding the benefit/risk profiles of our
products. Deviations from these quality and safety practices can
impact patient safety and market access, which could have a
material effect on the Group's performance and prospects .
Commercialization
Successful commercialization of our products is a critical
factor for the Group's sustained growth and robust financial
position. Launch of a new product involves substantial investment
in marketing, market access and sales activities, product stocks,
and other investments. Certain factors, if different than
anticipated, can significantly impact the Group's performance and
position. These factors include: HCP/Patient adoption and
adherence; generic and brand competition; pricing pressures;
private and government reimbursement schemes and systems;
negotiations with payors; erosion and/or infringement of
intellectual property (IP) rights; and political and socioeconomic
factors.
Economic & Financial
The nature of the pharmaceutical business is inherently risky
and uncertain and requires that we make significant financial
investments to develop and support the success of our product
portfolio. Generating cash flow and external financing are key
factors in sustaining our financial position, developing our
product pipeline and, expanding our business growth. Our ability to
realize value on those investments is often dependent upon
regulatory approvals, market acceptance, strategic partnerships,
competition, and legal developments. Unfavorable outcome from
government resolutions and/or from legal proceedings (including the
Western District of Virginia Indictment), as well as potential
exclusion from participating in US Federal Health Care Programs may
negatively impact our financial position and therefore, our ability
to comply with our debt covenants. As a global business, we are
also subject to political, economic, and capital markets
changes.
Supply Chain
The manufacturing and supply of our products are highly complex
and rely on a combination of internal manufacturing capabilities
and third parties for the timely supply of our finished drug and
combination drug products. The Group has a single source of supply
for buprenorphine, an active pharmaceutical ingredient (API) in
most of the Group's products and uses contract manufacturing
organizations (CMOs) to manufacture, package and distribute our
products. The manufacturing of non-sterile pharmaceutical and
sterile filled, pharma/medical device combination drug products is
subject to stringent global regulatory quality and safety
standards, including Good Manufacturing Practice (GMP). Delays or
interruptions in our supply chain, and/or product quality failures
could significantly disrupt patient access, adversely impact the
Group's financial performance; and to lead to product recalls,
and/or potential regulatory actions against the Group, along with
potential reputational damages.
Legal & Intellectual Property
Our pharmaceutical operations, which include controlled
substances, are subject to a wide range of laws and regulations
from various governmental and non-governmental bodies. Perceived
noncompliance with these applicable laws and regulations may result
in investigations or proceedings leading the Group to become
subject to civil or criminal sanctions and/or pay fines and/or
damages, as well as reputational damages. Intellectual Property
(IP) rights protecting our products may be challenged by external
parties, including generic manufacturers. Although we have
developed robust patent protection for our products, we are exposed
to the risk that courts may decide that our IP rights are invalid
and/or that third parties do not infringe our asserted IP rights.
Unfavorable outcome from government investigations and/or
resolutions from legal proceedings (including the Western District
of Virginia Indictment), expiry and/or loss of IP rights could have
a material adverse impact on the Group's prospects, results of
operations and financial condition, including potential exclusion
from participating in US Federal health care programs. As
previously disclosed in the Prospectus dated November 17, 2014,
Indivior has indemnification obligations in favor of Reckitt
Benckiser (RB) (page 43). Some of these indemnities are unlimited
in terms of amount and duration and amounts potentially payable by
the Group pursuant to such indemnity obligations could be
significant and could have a material adverse effect on the Group's
business, financial condition and/or operating results. Requests
for indemnification may be subject to legal challenge.
Compliance
Our Group operates on a global basis and the pharmaceutical
industry is both highly competitive and regulated. Complying with
all applicable laws and regulations, including engaging in
activities that are consistent with legal and industry standards,
and our Group's Code of Conduct are core to the Group's mission,
culture, and practices. Failure to comply with applicable laws and
regulations may subject the Group to civil, criminal and
administrative liability, including the imposition of substantial
monetary penalties, fines, damages and restructuring the Group's
operations through the imposition of compliance or integrity
obligations and have a potential adverse impact on the Group's
prospects, reputation, results of operations and financial
condition.
The Group's Annual Report for the 2019 financial year contains
additional details on these principal business risks.
Exchange Rates
The average and period end exchange rates used for the
translation of currencies into U.S. dollars that have most
significant impact on the Group's results were:
6 Months to June 30, 6 Months to June 30,
2020 2019
GB GBP period end 1.2336 1.2698
--------------------- ---------------------
GB GBP average rate 1.2617 1.2940
--------------------- ---------------------
EUR Euro period end 1.1219 1.1382
--------------------- ---------------------
EUR Euro average 1.1014 1.1297
--------------------- ---------------------
Webcast Details
There will be a live webcast presentation at 12:00 BST (7:00 am
EDT) hosted by Mark Crossley, CEO. The details are below. All
materials will be available on the Group's website prior to the
event at www.indivior.com .
Webcast link: https://edge.media-server.com/mmc/p/ot3s33ij
Confirmation Code: 6735858
Participants, Local - London, United Kingdom: +44 (0) 207 1928000
Participants, Local - New York, United
States of America: +1 631 510 7495
For Further Information
Investor Enquiries Jason Thompson VP Investor Relations, +1 804 402 7123
Indivior PLC jason.thompson@indivior.com
Media Enquiries Jonathan Sibun Tulchan Communications +44 207 353 4200
US Media Inquiries +1 804 594 0836
Indiviormediacontacts@indivior.com
Corporate Website www.indivior.com
This announcement does not constitute an offer to sell, or the
solicitation of an offer to subscribe for or otherwise acquire or
dispose of shares in the Group to any person in any jurisdiction to
whom it is unlawful to make such offer or solicitation.
Forward-Looking Statements
This announcement contains certain statements that are
forward-looking. By their nature, forward-looking statements
involve risks and uncertainties as they relate to events or
circumstances that may or may not occur in the future. Actual
results may differ materially from those expressed or implied in
such statements because they relate to future events.
Forward-looking statements include, among other things, statements
regarding the Indivior Group's financial guidance for 2020, if any,
and its medium- and long-term growth outlook, its operational
goals, its product development pipeline and statements regarding
ongoing litigation and other statements containing the words
"subject to", "believe", "anticipate", "plan", "expect", "intend",
"estimate", "project", "may", "will", "should", "would", "could",
"can", the negatives thereof, variations thereon and similar
expressions.
Various factors may cause differences between Indivior's
expectations and actual results, including, among others (including
those described in the risk factors described in the most recent
Indivior PLC Annual Report and in subsequent releases): factors
affecting sales of Indivior Group's products and financial
position; the outcome of research and development activities;
decisions by regulatory authorities regarding the Indivior Group's
drug applications or authorizations; the speed with which
regulatory authorizations, pricing approvals and product launches
may be achieved, if at all; the outcome of post-approval clinical
trials; competitive developments; difficulties or delays in
manufacturing and in the supply chain; disruptions in or failure of
information technology systems; the impact of existing and future
legislation and regulatory provisions on product exclusivity;
trends toward managed care and healthcare cost containment;
legislation or regulatory action affecting pharmaceutical product
pricing, reimbursement or access; challenges in the commercial
execution; claims and concerns that may arise regarding the safety
or efficacy of the Indivior Group's products and product
candidates; risks related to legal proceedings, including
settlement with the U.S. Department of Justice, potential exclusion
from participating in U.S. Federal health care programs; the
ongoing investigative and antitrust litigation matters; the opioid
national multi-district litigation and securities class action
litigation; the Indivior Group's ability to protect its patents and
other intellectual property; the outcome of patent infringement
litigation relating to Indivior Group's products, including the
ongoing ANDA lawsuits; changes in governmental laws and
regulations; issues related to the outsourcing of certain
operational and staff functions to third parties; risks related to
the evolving COVID-19 pandemic and the potential impact of COVID-19
on the Indivior Group's operations and financial condition, which
cannot be predicted with confidence; uncertainties related to
general economic, political, business, industry, regulatory and
market conditions; and the impact of acquisitions, divestitures,
restructurings, internal reorganizations, product recalls and
withdrawals and other unusual items.
Consequently, forward-looking statements speak only as of the
date that they are made and should be regarded solely as our
current plans, estimates and beliefs. You should not place undue
reliance on forward-looking statements. We cannot guarantee future
results, events, levels of activity, performance or achievements.
Except as required by law, we do not undertake and specifically
decline any obligation to update, republish or revise
forward-looking statements to reflect future events or
circumstances or to reflect the occurrences of unanticipated
events.
SUBOXONE(R) (BUPRENORPHINE AND NALOXONE) SUBLINGUAL FILM
(CIII)
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
(e.g., 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 labour.
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 .
SUBLOCADE(TM) (BUPRENORPHINE EXTED-RELEASE) INJECTION FOR
SUBCUTANEOUS USE (CIII)
INDICATION AND HIGHLIGHTED SAFETY INFORMATION
INDICATION
SUBLOCADE 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 dose
adjustment for a minimum of 7 days.
SUBLOCADE should be used as part of a complete treatment plan
that includes counselling and psychosocial support.
WARNING: RISK OF SERIOUS HARM OR DEATH WITH INTRAVENOUS
ADMINISTRATION; SUBLOCADE RISK EVALUATION AND MITIGATION
STRATEGY
-- Serious harm or death could result if administered
intravenously. SUBLOCADE 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 is only
available through a restricted program called the SUBLOCADE REMS
Program. Healthcare settings and pharmacies that order and dispense
SUBLOCADE must be certified in this program and comply with the
REMS requirements.
HIGHLIGHTED SAFETY INFORMATION
Prescription use of this product is limited under the Drug
Addiction Treatment Act.
CONTRAINDICATIONS
SUBLOCADE 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 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 behaviours.
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.
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 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.
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 (in >=5%
of subjects) were constipation, headache, nausea, injection site
pruritus, vomiting, increased hepatic enzymes, fatigue, and
injection site pain.
For more information about SUBLOCADE, the full Prescribing
Information including BOXED WARNING, and Medication Guide visit
www.sublocade.com .
PERSERIS(TM) (risperidone) for extended-release injectable
suspension
INDICATION AND HIGHLIGHTED SAFETY INFORMATION
PERSERIS(TM) (risperidone) is indicated for the treatment of
schizophrenia in adults.
WARNING: INCREASED MORTALITY IN ELDERLY PATIENTS WITH
DEMENTIA-RELATED PSYCHOSIS
See full prescribing information for complete boxed warning.
-- Elderly patients with dementia-related psychosis treated with
antipsychotic drugs are at an increased risk of death.
-- PERSERIS is not approved for use in patients with dementia-related psychosis.
CONTRAINDICATIONS
PERSERIS should not be administered to patients with known
hypersensitivity to risperidone, paliperidone, or other components
of PERSERIS.
WARNINGS AND PRECAUTIONS
Cerebrovascular Adverse Reactions, Including Stroke in Elderly
Patients with Dementia-Related Psychosis: Increased risk of
cerebrovascular adverse reactions (e.g., stroke, transient ischemic
attack), including fatalities. PERSERIS is not approved for use in
patients with dementia-related psychosis.
Neuroleptic Malignant Syndrome (NMS): Manage with immediate
discontinuation and close monitoring.
Tardive Dyskinesia: Discontinue treatment if clinically
appropriate.
Metabolic Changes: Monitor for hyperglycemia, dyslipidemia and
weight gain.
Hyperprolactinemia: Prolactin elevations occur and persist
during chronic administration. Long-standing hyperprolactinemia,
when associated with hypogonadism, may lead to decreased bone
density in females and males.
Orthostatic Hypotension: Monitor heart rate and blood pressure
and warn patients with known cardiovascular disease or
cerebrovascular disease, and risk of dehydration or syncope.
Leukopenia, Neutropenia, and Agranulocytosis: Perform complete
blood counts (CBC) in patients with a history of a clinically
significant low white blood cell count (WBC) or history of
leukopenia or neutropenia. Consider discontinuing PERSERIS if a
clinically significant decline in WBC occurs in absence of other
causative factors.
Potential for Cognitive and Motor Impairment: Use caution when
operating machinery.
Seizures: Use caution in patients with a history of seizures or
with conditions that lower the seizure threshold.
ADVERSE REACTIONS
The most common adverse reactions in clinical trials (>= 5%
and greater than twice placebo) were increased weight,
sedation/somnolence and musculoskeletal pain. The most common
injection site reactions (>= 5%) were injection site pain and
erythema (reddening of the skin).
For more information about PERSERIS, the full Prescribing
Information including BOXED WARNING, and Medication Guide visit
www.perseris.com .
Condensed consolidated interim income statement
Unaudited Unaudited Unaudited Unaudited
Q2 Q2 H1 H1
2020 2019 2020 2019
For the three and six months
ended June 30 Notes $m $m $m $m
Net Revenues 2 150 215 303 454
Cost of Sales (18) (27) (41) (64)
Gross Profit 132 188 262 390
------------------------------------- ------ ---------- ---------- ---------- ----------
Gross profit before exceptional
items 4 131 188 268 390
Exceptional items 3 1 - (6) -
------------------------------------- ------ ---------- ---------- ---------- ----------
Selling, general and administrative
expenses 3 (99) (87) (408) (202)
Research and development
expenses 3 (8) (13) (19) (25)
------------------------------------- ------ ---------- ---------- ---------- ----------
Operating Profit/(Loss) 25 88 (165) 163
------------------------------------- ------ ---------- ---------- ---------- ----------
Operating profit before exceptional
items 4 24 89 26 191
Exceptional items 3 1 (1) (191) (28)
------------------------------------- ------ ---------- ---------- ---------- ----------
Finance income 2 6 6 13
Finance expense (7) (5) (12) (10)
------------------------------------- ------ ---------- ---------- ---------- ----------
Net finance (expense)/income (5) 1 (6) 3
------------------------------------- ------ ---------- ---------- ---------- ----------
Profit/(Loss) before Taxation 20 89 (171) 166
------------------------------------- ------ ---------- ---------- ---------- ----------
Income tax (expense)/benefit (2) (14) 26 (25)
------------------------------------- ------ ---------- ---------- ---------- ----------
Taxation before exceptional
items 5 (2) (14) (6) (29)
Exceptional items within
taxation 3,5 - - 32 4
------------------------------------- ------ ---------- ---------- ---------- ----------
Net Income/(Loss) 18 75 (145) 141
------------------------------------- ------ ---------- ---------- ---------- ----------
Earnings per ordinary share
(cents)
Basic earnings per share 6 2 10 (20) 19
Diluted earnings per share 6 2 10 (20) 19
Condensed consolidated interim statement of comprehensive
income
Unaudited Unaudited Unaudited Unaudited
Q2 Q2 H1 H1
2020 2019 2020 2019
For the three and six months ended
June 30 $m $m $m $m
------------------------------------- ---------- ---------- ---------- ----------
Net income/(loss) 18 75 (145) 141
Other comprehensive (loss)/income
Items that may be reclassified
to profit or loss in subsequent
years:
Net exchange adjustments on foreign
currency translation (3) (5) (13) 1
Other comprehensive (loss)/income (3) (5) (13) 1
Total comprehensive income/(loss) 15 70 (158) 142
------------------------------------- ---------- ---------- ---------- ----------
The notes are an integral part of these condensed consolidated
interim financial statements.
Condensed consolidated interim balance sheet
Unaudited Audited
Jun 30, Dec 31,
2020 2019
Notes $m $m
ASSETS
Non-current assets
Intangible assets 63 72
Property, plant and equipment 54 60
Right-of-use assets 41 47
Deferred tax assets 5 87 40
Other assets 7 128 73
373 292
Current assets
Inventories 90 73
Trade and other receivables 178 227
Current tax receivable 5 2 -
Cash and cash equivalents 8 908 1,060
1,178 1,360
Total assets 1,551 1,652
-------------------------------------- ------ ---------- ---------
LIABILITIES
Current liabilities
Borrowings 8 (4) (4)
Provisions 9 (139) (71)
Trade and other payables 12 (480) (623)
Lease liabilities (6) (5)
Current tax liabilities 5 (55) (39)
-------------------------------------- ------ ---------- ---------
(684) (742)
-------------------------------------- ------ ---------- ---------
Non-current liabilities
Borrowings 8 (232) (233)
Provisions 9 (535) (417)
Lease liabilities (42) (51)
(809) (701)
Total liabilities (1,493) (1,443)
-------------------------------------- ------ ---------- ---------
Net assets 58 209
-------------------------------------- ------ ---------- ---------
EQUITY
Capital and reserves
Share capital 13 73 73
Share premium 6 5
Other Reserves (1,295) (1,295)
Foreign currency translation reserve (36) (23)
Retained Earnings 1,310 1,449
-------------------------------------- ------ ---------- ---------
Total equity 58 209
-------------------------------------- ------ ---------- ---------
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, 2020 73 5 (1,295) (23) 1,449 209
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Comprehensive loss
Net loss - - - - (145) (145)
Other comprehensive loss - - - (13) - (13)
Total comprehensive loss - - - (13) (145) (158)
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Transactions recognised directly
in equity
Share-based payments - 1 - - 6 7
Balance at June 30, 2020 73 6 (1,295) (36) 1,310 58
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Balance at January 1, 2019 73 5 (1,295) (32) 1,315 66
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Comprehensive income
Net income - - - - 141 141
Other comprehensive income - - - 1 - 1
Total comprehensive income - - - 1 141 142
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Transactions recognised directly
in equity
IFRS 16 impact (adjustment
to opening balance) - - - - (2) (2)
Share-based payments - - - - 1 1
Deferred taxation on share-based
plans and IFRS 16 - - - - (2) (2)
Balance at June 30, 2019 73 5 (1,295) (31) 1,453 205
------------------------------------------- --------- --------- --------- ------------- ---------- --------
The notes are an integral part of these condensed consolidated
interim financial statements.
Condensed consolidated interim cash flow statement
Unaudited Unaudited
2020 2019
For the six months ended June 30 $m $m
-------------------------------------------------------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Operating (Loss)/Profit (165) 163
Depreciation and amortization 10 9
Gain on disposal of right-of-use assets (2) -
Depreciation and impairment of right-of-use assets 4 4
Share-based payments 6 1
Impact from foreign exchange movements 1 (1)
Decrease in trade and other receivables 46 75
Increase in other assets (57) (39)
(Increase)/Decrease in inventories (20) 8
Decrease in trade and other payables (139) (167)
Increase/(Decrease) in provisions 184 (8)
Cash (used in)/generated from operations (132) 45
Interest paid (9) (9)
Interest received 6 11
Taxes (paid)/refunded (13) 25
Net cash (outflow)/inflow from operating activities (148) 72
-------------------------------------------------------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment - (2)
Net cash outflow from investing activities - (2)
-------------------------------------------------------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings (2) (2)
Payment of lease liabilities (3) (4)
Proceeds from the issuance of ordinary shares 1 -
Net cash outflow from financing activities (4) (6)
-------------------------------------------------------- ---------- ----------
Net (decrease)/increase in cash and cash equivalents (152) 64
Cash and cash equivalents at beginning of the period 1,060 924
Cash and cash equivalents at end of the period 908 988
-------------------------------------------------------- ---------- ----------
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
incorporated and domiciled in the United Kingdom on September 26,
2014. In these condensed consolidated interim financial statements
('Condensed Financial Statements'), reference to the 'Group' means
the Company and all its subsidiaries.
These Condensed 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, 2019 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 Financial Statements, the significant judgments made by
management in applying the Group's accounting policies and the key
sources of estimation uncertainty were applied in a consistent
manner to the consolidated financial statements for the year ended
December 31, 2019, with the exception of changes in estimates that
are required in determining the provision for income taxes.
Additionally, the Group reviewed the impact of COVID-19 on key
business practices and further evaluated estimates used in
judgmental accounting positions as a result of the Pandemic. The
Group's review focused on disruptions to the supply chain,
inventory obsolescence, impact on cash flows (Going Concern),
impairment of finite-lived intangible assets, impairment of fixed
assets and expected credit loss provisions for trade
receivables.
The Group has adopted the following standards as of January 1,
2020, which had no material impact on the Condensed Financial
Statements. The IASB issued amendments to IFRS 9 Financial
Instruments, IAS 39 Financial Instruments: Recognition and
Measurement and IFRS 7 Financial Instruments: Disclosures. These
standards relate to interbank offered rates (IBORs) reform. The
replacement of benchmark interest rates such as LIBOR and other
IBORs is a priority of global regulators. The amendments provide
relief from applying specific hedge accounting requirements to
hedge relationships directly affected by IBOR reform and have the
effect that IBOR reform should generally not cause edge accounting
to terminate. As discussed in Note 8, the Group's term Loan matures
after publication of LIBOR is expected to end. The Group has
engaged with the administrative agent and expect to work with other
market participants in the transition to a reasonable substitute
base rate. Other standards were issued and adopted by the Group on
January 1, 2020 which had no impact on the Condensed Financial
Statements.
The Condensed 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, 2019. These
Condensed Financial Statements have been reviewed and not audited.
These Condensed Financial Statements were approved for issue on
July 29, 2020.
As disclosed in Notes 9 and 11, the Group carries a provision of
$624m (FY19: $438m) for Department of Justice (DOJ) and related
matters. Substantially all of this amount relates to the agreement
with the DOJ and the Federal Trade Commission to resolve the
Group's criminal and civil liability in connection with the
indictment and related matters, which is pending final judicial
approval in the Western District of Virginia scheduled for October
2020. In the very remote instance the agreement is not approved and
a trial ensues, the potential of an unfavorable outcome in
combination with potential exclusion from participating in US
federal healthcare programs, would negatively impact the financial
position and long-term viability of the Group including the ability
to comply with debt covenants. Therefore, this remains a risk to
the Group until the agreement is formally accepted by the Court in
October. Reasonably possible impacts on the Group from the COVID-19
pandemic, failure of SUBLOCADE(R) and PERSERIS(R) to meet revenue
growth expectations and/or lower than forecast revenue of
SUBOXONE(R) Film have also been considered as part of the Group's
adoption of the going concern basis. A combination of the above
risks, specifically the status of the DoJ agreement, indicate the
existence of a material uncertainty which may cast significant
doubt about the Group's ability to continue as a going concern.
However, the Directors believe the Group has sufficient liquidity
and the ability to carry out any further measures that may be
necessary for the Group to continue as a going concern for at least
the next twelve months. The Condensed Financial Statements do not
include the adjustments that would result if the Group were unable
to continue as a going concern.
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, 2019, the auditors issued (1) an emphasis of matter
dealing with the outcome of litigation matters, details of which
are included above and in Notes 9 and 11; and (2) a material
uncertainty related to going concern 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 litigation matters, which may be further adversely affected
by the failure of SUBLOCADE and PERSERIS to meet revenue growth
expectations and/or lower than forecast revenue of SUBOXONE Film.
The Group's statutory financial statements for the year ended
December 31, 2019 were approved by the Board of Directors on March
5, 2020 and delivered to the Registrar of Companies House on June
29, 2020.
2. SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
('CODM'). The CODM, who is responsible for allocating resources and
assessing performance of the operating segments, has been
identified as the Chief Executive Officer (CEO). The Group is
predominantly engaged in a single business activity, which is the
development, manufacture and sale of buprenorphine-based
prescription drugs for treatment of opioid dependence and related
disorders. The CEO reviews net revenues to third parties, operating
expenses by function, and financial results on a consolidated basis
for evaluating financial performance and allocating resources.
Accordingly, the Group operates in a single reportable segment.
Net revenues
Revenues are attributed to countries based on the country where
the sale originates. The following table represents net revenues
from continuing operations and non-current assets, net of
accumulated depreciation and amortization, by region. Non-current
assets for this purpose consist of intangible assets, property,
plant and equipment, right-of-use assets and other assets. Net
revenues and non-current assets for the three and six months to
June 30, 2020 and 2019 were as follows:
Net revenues from sale of goods:
Q2 Q2 H1 H1
2020 2019 2020 2019
For the three and six months ended $m $m $m $m
June 30
------------------------------------ ------ ------ ------ ------
United States 107 163 211 362
ROW 43 52 92 92
------------------------------------ ------ ------ ------ ------
Total 150 215 303 454
------------------------------------ ------ ------ ------ ------
On a disaggregated basis, the Group's net revenue by major
product line:
Q2 Q2 H1 H1
2020 2019 2020 2019
For the three and six months ended $m $m $m $m
June 30
------------------------------------ ------ ------ ------ ------
SUBLOCADE 29 17 58 28
Sublingual/Other 121 198 245 426
------------------------------------ ------ ------ ------ ------
Total 150 215 303 454
------------------------------------ ------ ------ ------ ------
Non-current assets:
Jun 30, Dec 31,
2020 2019 (restated)
$m $m
--------------- -------- -----------------
United States 168 118
ROW 118 134
--------------- -------- -----------------
Total 286 252
--------------- -------- -----------------
The prior year has been restated to reflect a $50m
reclassification between ROW and United States related to surety
bonds. The impact of the change was an increase to United States
non-current assets from $68m to $118m and a decrease in ROW from
$184m to $134m.
3. OPERATING EXPENSES
The table below sets out selected operating expenses
information:
Q2 Q2 H1 H1
2020 2019 2020 2019
For the three and six months ended $m $m $m $m
June 30
----------------------------------------- ------ ------ ------ ------
Research and development expenses (8) (13) (19) (25)
----------------------------------------- ------ ------ ------ ------
Marketing, selling and general expenses (36) (43) (110) (86)
Administrative expenses(1) (59) (41) (288) (107)
Depreciation and amortization (4) (3) (10) (9)
Total (99) (87) (408) (202)
----------------------------------------- ------ ------ ------ ------
(1) Administrative expenses include exceptional costs in the
current and prior year as outlined in table below.
Exceptional Items
Where significant expenses or income that do not reflect the
Groups, ongoing operations are incurred during the year, these
items are disclosed as exceptional items in the income statement.
Examples of such items could include restructuring and related
expenses for the reconfiguration of the Group's activities and/or
capital structure, impairment of current and non-current assets,
certain costs arising as a result of material and non-recurring
regulatory and litigation matters, and certain tax related
matters.
The table below sets out exceptional operating costs and
expenses information:
Q2 Q2 H1 H1
2020 2019 2020 2019
For the three and six months ended $m $m $m $m
June 30
-------------------------------------- ------ ------ ------ ------
Cost of sales(1) 1 - (6) -
Restructuring costs(2) - (1) (2) (20)
Legal Expenses/Provision(3) - - (183) (8)
Total exceptional items before taxes 1 (1) (191) (28)
-------------------------------------- ------ ------ ------ ------
Tax on exceptional items - - 32 4
Total exceptional items 1 (1) (159) (24)
-------------------------------------- ------ ------ ------ ------
(1) $6m of exceptional cost of sales relate to inventory
provisions due to the adverse impact of COVID-19 on the business in
H1 2020. $1m of exceptional benefit recorded in Q2 2020 relates to
the release of inventory provisions previously established in Q1
2020.
(2) Restructuring costs in H1 2020 and H1 2019 relate to the
cost saving initiatives to offset the financial impact of recent
adverse U.S. market developments. These consist primarily of lease
disposals and termination costs (in H1 2020) and supply chain
restructuring (in H1 2019). These are included in SG&A.
(3) $183m of legal provision recognized in H1 2020 relates
predominantly to the DOJ. $8m of legal expenses in the H1 2019
relate to potential redress for ongoing intellectual property
related litigation with DRL and Alvogen Pharmaceuticals. These 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 gross profit,
operating profit and net income for both Q2/H1 2020 and Q2/H1 2019.
Refer to Note 3 for more information on exceptional items.
Reconciliation of gross profit to adjusted gross profit
Q2 Q2 H1 H1
2020 2019 2020 2019
For the three and six months ended June $m $m $m $m
30
----------------------------------------- ------ ------ ------ ------
Gross profit 132 188 262 390
----------------------------------------- ------ ------ ------ ------
Exceptional cost of sales (1) - 6 -
Adjusted gross profit 131 188 268 390
----------------------------------------- ------ ------ ------ ------
Reconciliation of operating profit/(loss) to adjusted operating
profit
Q2 Q2 H1 H1
2020 2019 2020 2019
For the three and six months ended June $m $m $m $m
30
------------------------------------------------- ------ ------ ------ ------
Operating profit/(loss) 25 88 (165) 163
------------------------------------------------- ------ ------ ------ ------
Exceptional cost of sales (1) - 6 -
Exceptional selling, general and administrative
expenses - 1 185 28
Adjusted operating profit 24 89 26 191
------------------------------------------------- ------ ------ ------ ------
Reconciliation of profit/(loss) before taxation to adjusted
profit before taxation
Q2 Q2 H1 H1
2020 2019 2020 2019
For the three and six months ended June $m $m $m $m
30
------------------------------------------------- ------ ------ ------ ------
Profit/(loss) before taxation 20 89 (171) 166
------------------------------------------------- ------ ------ ------ ------
Exceptional cost of sales (1) - 6 -
Exceptional selling, general and administrative
expenses - 1 185 28
Adjusted profit before taxation 19 90 20 194
------------------------------------------------- ------ ------ ------ ------
Reconciliation of net profit/(loss) before taxation to adjusted
net (loss)/income
Q2 Q2 H1 H1
2020 2019 2020 2019
For the three and six months ended June $m $m $m $m
30
------------------------------------------------- ------ ------ ------ ------
Net income/(loss) 18 75 (145) 141
------------------------------------------------- ------ ------ ------ ------
Exceptional cost of sales (1) - 6 -
Exceptional selling, general and administrative
expenses - 1 185 28
Tax benefit on exceptional items - - (32) (4)
------------------------------------------------- ------ ------ ------ ------
Adjusted net income 17 76 14 165
------------------------------------------------- ------ ------ ------ ------
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. Where appropriate, permanent
items are not included in determining the annual effective tax
rate, but instead are dealt with in the interim periods in which
they arise. The resulting expense is allocated between current and
deferred taxes based upon the forecasted full year ratio.
In the six months ended June 30, 2020, the reported total tax
benefit was $26m, or a rate of 15% (H1 2019 tax charge: $25m, 15%).
The tax expense on adjusted profits amounted to $6m excluding
exceptionals (H1 2019: $29m) and represented a year to date
effective tax rate of 27% (H1 2019: 15%).
The current year tax benefit on exceptional items of $32m (H1
2019 $4m) reflects the portion of future provision payments that
are expected to be deductible, using the currently enacted income
tax rates for the jurisdiction. The amount of deductibility and
possible filing positions will be clarified upon sentencing and as
related matters are settled.
The increase in the adjusted effective tax rate was primarily
driven by the relative contribution to pre-tax income by taxing
jurisdiction in the quarter. The full year rate is expected to be
in line with guidance in the mid to upper teens.
The Group's balance sheet at June 30, 2020 included a current
tax receivable of $2m, current tax payable of $55m (FY 2019: $39m),
and deferred tax asset of $87m (FY 2019: $40m). The increase in the
current tax payable is partly due to deferral on timing of tax
payments due to US Government temporary stimulus measures. The
increase in the deferred tax asset is due to current year activity,
including the tax benefit on the exceptional provision.
Other tax matters
The European Commission issued a press release on April 2, 2019
announcing its conclusion that the United Kingdom ('UK') Finance
Company Partial Exemption Rules are partly justified. The UK
government has made an annulment application to the General Court
against this decision. The UK government is now required to
initiate recovery of the alleged State Aid irrespective of any
appeal against the decision. The Group continues to monitor its
position regarding the potential State Aid challenge and based upon
our fact pattern has determined that no provision is required at
this time. The Group has benefited from the UK controlled foreign
company financing exemption and the tax thereon is approximately
$25m including interest.
The UK decision to withdraw from the European Union ('EU') may
have a material effect on our taxes. Whilst the UK left the EU on
January 31, 2020, 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. The UK has entered into a
transition period and has until December 31, 2020 to negotiate and
conclude additional arrangements. 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.
The main rate of UK corporation tax was reduced to 19% from 1
April 2017. Further reductions were enacted by Finance Act 2016 to
reduce the corporation tax rate to 17% from 1 April 2020. On 11
March 2020, the Chancellor announced that from 1 April 2020 the
corporation tax rate will remain at 19%. This new law was
substantively enacted on 17 March 2020.
6. EARNINGS PER SHARE
Q2 Q2 H1 H1
2020 2019 2020 2019
For the three and six months ended June cents cents cents cents
30
----------------------------------------- ------- ------- ------- -------
Basic earnings per share 2 10 (20) 19
Diluted earnings per share 2 10 (20) 19
Adjusted basic earnings per share 2 10 2 23
Adjusted diluted earnings per share 2 10 2 22
----------------------------------------- ------- ------- ------- -------
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.
2020 2019
Weighted average number of shares thousands thousands
---------------------------------------- ----------- -----------
On a basic basis 732,208 729,724
Dilution from share awards and options 40,968 26,504
On a diluted basis 773,176 756,228
----------------------------------------- ----------- -----------
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. OTHER ASSETS
Jun 30 Dec 31
2020 2019
$m $m
---------------------------- ---- ------- -------
Long-term prepaid expenses 20 23
Other non-current assets 108 50
Total 128 73
---------------------------------- ------- -------
Long-term prepaid expenses relate primarily to payments for
contract manufacturing capacity and other non-current assets relate
to surety bonds. The increase in other non-current assets relates
to surety bond underwriting (see Note 11).
8. FINANCIAL LIABILITIES - BORROWINGS
Jun 30 Dec 31
2020 2019
Current $m $m
------------ ---- ------- -------
Bank loans (4) (4)
------------------ ------- -------
(4) (4)
----------------- ------- -------
Jun Dec 31
30
2020 2019
Non-current $m $m
------------- ---- ------ -------
Bank loans (232) (233)
------------------- ------ -------
(232) (233)
------------------ ------ -------
Jun Dec 31
30
2020 2019
Analysis of net cash $m $m
--------------------------- ---- ------ -------
Cash and cash equivalents 908 1,060
Borrowings* (237) (239)
671 821
-------------------------------- ------ -------
*Borrowings reflect the principal amount drawn before debt
issuance costs of $1m (FY 2019: $2m). These do not include lease
liabilities.
Jun Dec 31
30
2020 2019
Reconciliation of net cash $m $m
------------------------------------- ---- ------ -------
The movements in the period were as
follows:
Net cash at beginning of period 821 681
Net (decrease)/increase in cash and
cash equivalents (152) 136
Net repayment of borrowings 2 4
Net cash at end of period 671 821
------------------------------------------- ------ -------
Net cash is presented as it is relevant to our Term Loan maximum
leverage ratio. These do not include lease liabilities of $48m (FY
2019: $56m).
At June 30, 2020, the term loan was trading at approximately 87%
of par value. Cash at bank, trade receivables, and trade payables
are assumed to approximate their fair values. The terms of the loan
in effect at June 30, 2020 are as follows:
Nominal Required Maximum
interest annual leverage
Currency margin Maturity repayments ratio
-------------------- ---------- ----------- ---------- ------------ ----------
Libor*
(1%) +
Term loan facility USD 4.5% 2022 $4m 3.0
--------------------- ---------- ----------- --------- ------------ ----------
*The Term Loan matures after publication of LIBOR is expected to
end. We have engaged with the administrative agent and expect to
work with other market participants in the transition to a
reasonable substitute base rate. No financial impact is expected in
2020.
-- Nominal interest margin is calculated over three-month LIBOR
subject to the LIBOR floor of 1%.
-- The maximum leverage ratio (adjusted aggregated net debt
divided by Adjusted EBITDA) is a financial covenant to maintain net
secured leverage below 3.0x.
-- A $50m revolving credit facility is available to the Group
which remained undrawn at the balance sheet date.
9. PROVISIONS
Jun Dec
30 31
2020 2019
$m $m
--------------------------------------- ---- ------ ------
DOJ and related matters (624) (438)
Intellectual property related matters (46) (45)
Restructuring costs (1) (2)
Other (3) (3)
Total (674) (488)
--------------------------------------------- ------ ------
The Group is involved in legal and intellectual property
disputes as described in Note 11, "Legal Proceedings."
On July 24, 2020, the Group reached an agreement with the DOJ
and other litigants, subject to approval by a federal judge,
described in Note 11 under "DOJ and Related Matters" to resolve the
investigation of alleged charges of health care fraud, wire fraud,
mail fraud, and conspiracy, in connection with the marketing and
promotion practices, pediatric safety claims, and overprescribing
of SUBOXONE Film and/or SUBOXONE Tablet by certain physicians.
Under the agreement, the Group will make a payment of $100 million
the week the plea is finalized and approved by a judge.
Subsequently, six annual instalments of $50 million will be due
every January 15 from 2022 to 2027. The final instalment of $200
million will be due on December 15, 2027. Provisions have also been
made for other related matters. The provision has been recorded at
the net present value of the estimated payments.
The Group also carries provisions totaling $46m (FY19: $45m) for
intellectual property related matters, all of which relate to
potential redress for ongoing intellectual property litigation with
DRL and Alvogen.
10. CONTINGENT LIABILITIES
Except as described in Note 11 under "DOJ and Related Matters"
and "Intellectual Property Related Matters", for which provisions
have been taken, descriptions of the contingent liabilities for
State Aid risk as set out in Note 5 and legal and other disputes to
which the Group is party as set out in Note 11.
11. LEGAL PROCEEDINGS
DOJ and Related Matters
Agreement to Resolve Criminal Charges and Civil Complaints
Related to SUBOXONE Film
-- The Group has reached an agreement with the United States
Department of Justice (Justice Department), the Federal Trade
Commission ("FTC"), and U.S. state attorneys general to resolve the
criminal and civil liability in connection with a multi-count
indictment brought in April 2019 by a grand jury in the Western
District of Virginia, a civil lawsuit joined by the Justice
Department in 2018, and an FTC investigation. Under the terms of
the agreement, Indivior Solutions Inc. ("Solutions Inc."), a wholly
owned subsidiary of Indivior PLC, has pleaded guilty to a single
count of making a false statement relating to health care matters
in 2012 in violation of 18 U.S.C. Section 1035. Indivior will make
payments to federal and state authorities totalling $600 million
(plus applicable interest of 1.25 %) over a period of seven years,
has agreed to a stipulated injunction with the FTC, and entered
into a Corporate Integrity Agreement with the Office of Inspector
General of the Department of Health and Human Services (HHS). Under
the terms of the agreement, the Justice Department will move to
dismiss all other charges upon judicial approval of the agreements
and sentencing.
-- Under the terms of a related agreement with the HHS,
Solutions Inc. will be excluded from participating in government
health programs. This exclusion will not apply to any other
entities within the Group. The Group does not anticipate the
exclusion of Solutions Inc. will have any material impact on the
Group's ability to continue to participate in government health
programs.
-- Under the agreement, the Group will make a payment of $100
million the week the plea is finalized and approved by a judge.
Subsequently, six annual instalments of $50 million will be due
every January 15 from 2022 to 2027. The final instalment of $200
million will be due on December 15, 2027. The Group carries a
provision of $624 million ( FY19: $438 million) for Department of
Justice and related matters.
-- Under the terms of the five-year Corporate Integrity
Agreement with the HHS Office of the Inspector General (HHS-OIG),
the Group will continue its commitment to promote compliance with
laws and regulations and its ongoing evolution of an effective
compliance program, including written standards, training,
reporting, and monitoring procedures. The Group will be subject to
reporting and monitoring requirements, including annual reports and
compliance certifications from key management and the Board
Nominating & Governance Committee submitted to HHS-OIG and
annual Board and CEO certifications submitted to the U.S.
Attorney's Office. In addition, the Group will be subject to
monitoring by an Independent Review Organization, who will submit
audit findings to HHS-OIG, and review by a Board Compliance Expert,
who will prepare two compliance assessment reports in the first and
third reporting periods of the Corporate Integrity Agreement. See
Risk Factors on page 7.
-- The agreement is subject to approval by a federal judge.
-- Prior to the settlement, the parties reached agreement on an
Agreed First Protective Order, which was entered by the court on
February 26, 2020. The Agreed First Protective Order requires
Indivior to seek court approval prior to engaging in various
transactions outside in the ordinary course of business with a
value of more than $5m or that would reduce cash and cash
equivalents below $600m, as well as other relief. Indivior is
authorized to continue engaging in ordinary course transactions
related to intercompany obligations, payments made in accordance
with its secured credit obligations, payments to goods and service
vendors, payments of employee and related costs, and other similar
transactions consistent with Indivior's ordinary past practices.
The Agreed First Protective Order is expected to be in place until
judicial approval of the agreements and sentencing.
Federal FCA Qui Tam Suits
-- On August 2, 2018, the United States unsealed three qui tam
suits pending in the Western District of Virginia that made a
variety of allegations under state and federal False Claims Act
statutes regarding marketing and promotion practices related to
SUBOXONE, and in some instances claiming unlawful retaliation. The
suits also seek reasonable attorney's fees and costs. Many of the
civil claims concern the same conduct at issue in the Superseding
Indictment filed by the Justice Department, with some of the cases
also alleging retaliation claims. Indivior believes it has strong
defenses to the government's charges and will vigorously defend
itself. Indivior is aware of additional claims regarding similar
allegations.
State and Local Matters
-- On October 12, 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 products and its interactions with a
non-profit third-party organization. The Group has fully cooperated
in this civil investigation.
-- On November 16, 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 of California served
additional deposition subpoenas on Indivior in 2017 and served a
subpoena in 2018 requesting documents relating to the
bioavailability / bioequivalency of SUBOXONE Film, manufacturing
records for the product and its components, and the potential to
develop dependency on SUBOXONE Film. The Group has fully cooperated
in this civil investigation and is in discussions aimed toward
resolving the matter.
-- In June 2019, the Group learned that the State of Illinois
Insurance Department is investigating potential violations of its
civil Insurance Claims Fraud Prevention Act with respect to sales
and marketing activity by the Company. The Group is in discussions
aimed toward resolving this matter.
-- In addition to the federal and state health program claims,
claims have been asserted under the city false claims acts of
Chicago and New York City regarding the promotion of Suboxone
film.
FTC investigation
-- Indivior Inc. and the U.S. Federal Trade Commission (FTC)
have agreed to resolve the FTC's pending investigation, contingent
upon judicial approval by the U.S. District Court for the Western
District of Virginia of the agreements to resolve the criminal and
civil liability in connection with a multi-count indictment brought
in April 2019 by a grand jury in the Western District of Virginia,
a civil lawsuit joined by the Justice Department in 2018, and the
FTC investigation . The FTC has filed a complaint against Indivior
Inc. alleging monopolization in violation of 15 U.S.C. -- 45(a).
FTC and Indivior Inc. then filed a joint motion asking the Court
(subject to the above contingency) to enter a stipulated
injunction. Under the injunction, if entered by the Court, among
other terms (as detailed in the text of the proposed injunction on
file with the U.S. District Court for the Western District of
Virginia): (a) Indivior Inc. will be required to make specified
disclosures to the FTC and will be prohibited from certain conduct,
(b) the FTC will receive $10 million from the payments required by
the agreement with the Department of Justice, and (c) the FTC's
complaint will be dismissed with prejudice. The joint motion also
asks - if the Court does not accept and implement the agreement
with the Department of Justice - that the Court reject the
injunction and dismiss the FTC's complaint without prejudice.
False Claims Act Allegations
-- On August 2, 2018, the United States District Court for the
Western District of Virginia unsealed a declined qui tam complaint
alleging causes of action under the Federal and state False Claims
Acts against the Company, and other entities, predicated on best
price issues and claims of retaliation (United States ex rel.
Miller v. Reckitt Benckiser Group PLC et al., Case No.
1:15-cv-00017 (W.D. Va.). The suit also seeks reasonable attorneys'
fees and costs. We understand that all government plaintiffs have
declined to intervene. The Company has not been served with the
complaint. We are in discussions regarding this matter with the
plaintiff-relator.
Securities Class Action Litigation
-- On April 23, 2019, Michael Van Dorp filed a putative class
action lawsuit in the United States District Court for the District
of New Jersey on behalf of holders of publicly traded Indivior
securities alleging violations of U.S. federal securities laws
under the Securities Exchange Act of 1934. The complaint names
Indivior PLC, Shaun Thaxter, Mark Crossley and Cary J. Claiborne as
defendants. On July 30, 2019, the Court granted Mr. Van Dorp's
motion for appointment as lead plaintiff on behalf of the putative
class. On September 30, 2019, following his appointment as lead
plaintiff on behalf of the putative class, Mr. Van Dorp filed an
amended complaint on behalf of the putative class. On November 29,
2019, the Defendants filed a motion to dismiss the amended
complaint. Plaintiff filed its opposition to the motion on January
28, 2020, and Defendants' filed their reply on February 27, 2020. A
decision on the motion is still pending.
The Group carries a provision for DOJ and related matters of
$624m (FY19: $438m). This provision was determined based upon the
terms of the agreement and the Group's best estimate related to
others matters in accordance with IFRS. The Group cannot predict
with any certainty whether it will reach an ultimate resolution
with all of the parties to the other matters discussed above.
Intellectual Property Related Matters
ANDA Litigation
-- On August 31, 2017, the United States District Court for the
District of Delaware found that asserted claims of the '150 Patent,
U.S. Patent No. 8,900,497 ("the '497 Patent") and the '514 Patent
are valid but not infringed by Dr. Reddy's Laboratories, S.A. and
Dr. Reddy's Laboratories Inc. (collectively, "DRL"). Indivior
appealed the rulings as to the '514 and '150 patents, and on July
12, 2019, the CAFC upheld the District Court ruling, finding the
patents not invalid but also not infringed by DRL. DRL requested
that the District of Delaware award its attorneys' fees and costs,
and Indivior opposed that request. A hearing on DRL's request took
place on February 12, 2020. On April 23, 2020, the court issued an
opinion denying DRL's motion for attorneys' fees, and on April 27,
2020, the clerk of court denied DRL's request for costs.
-- Litigation against DRL is currently pending in the District
of New Jersey regarding the '454 and '305 Patents. DRL received
final FDA approval for all four strengths of its generic
buprenorphine/naloxone film product on June 14, 2018, and
immediately launched its generic buprenorphine/naloxone film
product "at-risk." On July 13, 2018, the District Court issued a
ruling granting Indivior a Preliminary Injunction (PI) pending the
outcome of a trial on the merits of the '305 Patent. Indivior was
required to post a surety bond for $72 million in connection with
the PI. On November 20, 2018, the CAFC issued a decision vacating
the PI against DRL. Indivior's motion for rehearing and rehearing
en banc was denied on February 4, 2019, and the mandate issued on
February 19, 2019. DRL is no longer prevented from selling,
offering to sell, or importing their generic buprenorphine/naloxone
sublingual film products. DRL has re-launched its generic product,
and any sales in the U.S. are on an "at-risk" basis, subject to the
outcome of the ongoing litigation in the District of New Jersey. On
June 18, 2019, DRL filed a motion for leave to file their first
amended Answer, Affirmative Defenses, and Counterclaims to add
counterclaims for anticompetitive conduct by Indivior in violation
of federal antitrust laws and for recovery against Indivior'
sureties for damages resulting from the injunction that was issued
against DRL. The motion was granted by the Magistrate Judge on
November 20, 2019. Indivior appealed that ruling to the District
Court Judge on December 4, 2019 and a decision is pending with the
court. On July 24, 2020, Indivior submitted a letter to the
District Court seeking leave to file a motion for summary judgment
on the antitrust counterclaims, which if granted, would moot the
appeal. The Court held a claim construction hearing on October 17,
2019, and entered its ruling on November 5, 2019. In light of the
claim construction, the parties filed a Stipulated Order and
Judgment of non-infringement on the '305 Patent, which was entered
by the Court on January 7, 2020. On January 21, 2020, DRL filed a
motion requesting the entry of final partial judgment of
noninfringement of the '305 Patent pursuant to Federal Rule of
Civil Procedure 54(b), which Indivior opposed. That motion is
pending with the court.
-- On November 13, 2018, DRL filed two separate petitions for
inter partes review ("IPR") of the '454 Patent with the USPTO. The
USPTO denied institution of one of the IPR petitions but granted
institution for the second IPR petition. Oral argument took place
on March 3, 2020. The Patent Trial and Appeal Board (USPTO) issued
a decision on June 2, 2020, holding that claims 1-5, 7, and 9-14
were unpatentable, but that DRL had not shown that claim 8 is
unpatentable. Claim 6 was not challenged and therefore was not
addressed in the PTAB decision. Indivior filed a Notice of Appeal
to the Court of Appeals for the Federal Circuit on July 24,
2020.
-- Teva Pharmaceuticals USA, Inc. ("Teva") filed a 505(b)(2) New
Drug Application (NDA) for a 16mg/4mg strength of
buprenorphine/naloxone film (CASSIPA(TM)). Indivior, Aquestive
Pharmaceuticals (formerly known as MonoSol Rx) and Teva agreed that
infringement of the '514, '497, and '150 patents by Teva's 16mg/4mg
dosage strength would be governed by the infringement ruling as to
DRL's 8mg/2mg dosage strength that was the subject of the trial in
November 2016. Accordingly, the non-infringement ruling by the
District of Delaware in the DRL case means that the Teva 16mg/4mg
dosage strength has been found not to infringe those patents.
Indivior appealed the November 2016 DRL ruling as to the '514 and
'150 patents, and on July 12, 2019, the CAFC upheld the District
Court finding of noninfringement. Teva received final approval from
the FDA for CASSIPA on September 7, 2018 and has agreed to be bound
by the decision in the District of New Jersey DRL case for the '454
and '305 Patents. Teva was therefore able to launch CASSIPA at-risk
as of February 19, 2019, when the CAFC issued a mandate vacating
the PI against DRL. Any sales of CASSIPA in the U.S. would be on an
"at-risk" basis, subject to the outcome of the ongoing litigation
against Teva and DRL in the District of New Jersey.
-- Trial against Alvogen Pine Brook, Inc. ("Alvogen") in the
lawsuit involving the '514 and '497 Patents took place in September
2017. The trial was limited to the issue of infringement because
Alvogen did not challenge the validity of either patent. On March
22, 2018, the United States District Court for the District of
Delaware ruled both patents were not infringed by Alvogen. Indivior
appealed this ruling, and on July 12, 2019, the CAFC upheld the
noninfringement judgments. Alvogen requested that the District of
Delaware award it attorneys' fees and costs. Indivior opposed
Alvogen's request for fees but agreed to pay a portion of Alvogen's
costs. A hearing on Alvogen's request for fees took place on
February 12, 2020. On April 23, 2020, the court issued an opinion
denying Alvogen's motion for attorneys' fees.
-- Litigation against Alvogen is pending in the United States
District Court for the District of New Jersey regarding the '454
and '305 Patents. On January 22, 2019, Indivior filed a motion for
a temporary restraining order ("TRO") and preliminary injunction in
the District of New Jersey, requesting that the Court restrain the
launch of Alvogen's generic buprenorphine/naloxone film product
until a trial on the merits of the '305 Patent. Alvogen received
approval for its generic product on January 24, 2019. The same day,
the District of New Jersey granted a TRO until February 7, 2019. On
January 31, 2019, Indivior and Alvogen entered in to an agreement
whereby Alvogen was enjoined from the use, offer to sell, or sale
within the United Sates, or importation into the United States, of
its generic buprenorphine and naloxone sublingual film product
unless and until the CAFC issued a mandate vacating the PI against
DRL. The mandate vacating the DRL PI issued on February 19, 2019,
and Alvogen launched its generic product. Any sales in the US are
on an "at-risk" basis, subject to the ongoing litigation against
Alvogen in the District of New Jersey. On June 21, 2019, Alvogen
filed a motion for recovery on the bond for improper restraints and
asked that the court set a schedule for an accounting of damages.
This motion was denied on November 5, 2019. On August 9, 2019,
Alvogen filed a motion for leave to file an amended Answer to
Complaint and Separate Defenses and Counterclaims to add counter
claims alleging anticompetitive conduct by Indivior in violation of
federal and state antitrust laws. The motion was granted by the
Magistrate Judge on November 20, 2019. Indivior appealed that
ruling to the District Court Judge on December 4, 2019, and a
decision is pending with the court. The Court held a claim
construction hearing on October 17, 2019, and the Court entered its
ruling on November 5, 2019. In light of the claim construction, the
parties filed a Stipulated Order and Judgment of non-infringement
on the '305 Patent, which was signed by the Court on January 9,
2020. On January 24, 2020, Alvogen filed a motion requesting the
entry of final partial judgment of noninfringement of the '305
Patent pursuant to Federal Rule of Civil Procedure 54(b). Indivior
and Alvogen subsequently agreed that they would be bound by the
ruling on DRL's similar motion, which Indivior opposed. That motion
is pending with the court.
Teva Opposition to SUBLOCADE European Patent
-- On October 10, 2018, Teva Pharmaceutical Industries Ltd.
("Teva") filed a Notice of Opposition with the European Patent
Office seeking to revoke European Patent No. EP 2579874 ("EP 874"),
which relates to the formulation for SUBLOCADE. Teva alleges the
claims of EP 874 lack novelty and inventive step, and extend beyond
the content of the application as originally filed. Oral hearings
originally scheduled for March 2020 were postponed due to the
coronavirus pandemic. A new hearing date has now been set for
November 2, 2020.
Antitrust Litigation and Consumer Protection
-- Civil antitrust claims have been filed by (a) a class of
direct purchasers, (b) a class of end payor plaintiffs, and (c) a
group of states, now numbering 41, and the District of Columbia.
Each set of plaintiffs filed generally similar claims alleging,
among other things, that Indivior violated U.S. federal and/or
state antitrust and consumer protection laws in attempting to delay
generic entry of alternatives to SUBOXONE Tablets. Plaintiffs
further allege that Indivior unlawfully acted to lower the market
share of these products. These antitrust cases are pending in
federal court in the Eastern District of Pennsylvania. Pre-trial
proceedings were coordinated. The fact and expert discovery periods
have closed. On September 27, 2019, the court certified a class of
direct purchasers of branded SUBOXONE Tablets. The same day, the
court also certified, with respect to specified issues, a class of
end-payor plaintiffs. The court denied certification of a putative
"nationwide injunctive class" of end-payor plaintiffs. On November
4, 2019, the Court of Appeals for the Third Circuit granted
Indivior's petition for permission to appeal the certification of
the direct purchaser class, but affirmed the certification of the
direct purchaser class on July 28, 2020. Scheduling for submissions
of summary judgment motions and for trial have not yet been
set.
-- In 2013, Reckitt Benckiser Pharmaceuticals, Inc. (now known
as Indivior Inc.) received notice that it and other companies were
defendants in a lawsuit initiated by writ in the Philadelphia
County (Pennsylvania) Court of Common Pleas. See Carefirst of
Maryland, Inc. el al. v. Reckitt Benckiser Inc., et al., Case. No.
2875, December Term 2013. The plaintiffs include approximately 79
entities, most of which appear to be insurance companies or other
providers of health benefits plans. The Carefirst Plaintiffs have
not served a complaint, but they have indicated that their claims
are related to those asserted by the plaintiffs in In re Suboxone,
MDL No. 2445 (E.D. Pa.). The Carefirst case remains pending.
-- On May 29, 2018, the Company received an informal request
from the Office of the United States Attorney for the Southern
District of New York, seeking records relating to the Suboxone
manufacturing process. We are in discussions with the government
regarding the matter.
-- On July 1, 2019, the Indiana Attorney General issued a Civil
Investigative Demand investigating potential violations of
Indiana's Civil Deceptive Consumer Sales Act with respect to sales
and marketing activity by the Company. The Group is cooperating
fully in this civil investigation .
-- On June 30, 2020, Blue Cross and Blue Shield of
Massachusetts, Inc., and Blue Cross and Blue Shield of
Massachusetts HMO Blue, Inc. ("BCBSMA") sent a demand letter to
Indivior Inc. and Indivior PLC. The demand letter alleges that
Indivior violated M.G.L. ch93A, -- 9 by, among other things,
initiating a "product hop" from Suboxone Tablets to Suboxone Film,
engaging in illegal marketing tactics, causing a delay in the
approval of generic alternatives to Suboxone, illegally marketing
off-label doses and uses of Suboxone, and engaging in unlawful
kickbacks with physicians. BCBSMA has threatened to file a lawsuit
if its demand is not met.
The Group has re-evaluated the antitrust and consumer protection
claims in light of the DOJ settlement under which a Group
subsidiary plead guilty to one count of making a false statement
relating to health care matters in one state in 2012. The Group
continues to believe in its defenses and continues to vigorously
defend itself. Select plaintiffs in these matters have previously
made settlement demands (which were not accepted and most of which
are not current offers), totaling approximately $290m, which was
used for contingency planning only to model possible downside
financial effects. The final aggregate cost of these matters,
whether resolved by litigation or by settlement, may be materially
different. If the Group were to entertain further settlement
discussions, we make no representations as to what amounts, if any,
it may agree to pay, nor regarding what amounts the plaintiffs will
demand.
Opioid Class Action Litigation
-- As of July 15, 2020, Indivior has been named as a defendant
in 333 civil lawsuits brought by state and local governments,
public health agencies, and individuals against manufacturers,
distributors and retailers of opioids alleging that they engaged in
a longstanding practice to market opioids as safe and effective for
the treatment of long term chronic pain in order to increase the
market for opioids and their own market share. The vast majority of
these cases (321) have been consolidated and are pending in a
federal multi-district litigation ("MDL") in U.S. District Court
for the Northern District of Ohio. Six (6) cases are pending before
the Joint Panel on Multidistrict Litigation for anticipated
transfer to the MDL. At the present time, litigation against
Indivior in the MDL is stayed. There remain six (6) cases against
Indivior pending in state courts located in Arizona, Missouri,
Pennsylvania and Virginia. As it concerns these state court cases,
litigation is currently proceeding against Indivior only in the
Arizona and Virginia state courts. The Group is vigorously
defending against these cases and has already filed Motions to
Dismiss the complaints in both Arizona and Virginia. Oral arguments
on the Motions to Dismiss are expected to take place sometime in
late August-early September 2020. Given the status and preliminary
stage of litigation in both the MDL and state courts, no estimate
of a possible loss in these cases can be made at this time.
12. TRADE AND OTHER PAYABLES
Jun 30 Dec
31
2020 2019
$m $m
---------------------------------------- ---- ------- ------
Sales returns and rebates (365) (460)
Trade payables (23) (39)
Accruals (83) (113)
Other tax and social security payables (9) (11)
Total (480) (623)
---------------------------------------------- ------- ------
Sales return and rebate accruals, primarily in the U.S., are
provided in respect of the estimated rebates, discounts or
allowances payable to direct and indirect customers. Accruals are
made at the time of sale while the actual amounts to be paid are
based on claims made some time after the initial recognition of the
sale. The estimated amounts may not reflect the final outcome and
are subject to change dependent upon, amongst other things, the
payor channel (e.g. Medicaid, Medicare, Managed Care, etc.) and
product mix. Accrual balances are reviewed and adjusted quarterly
in the light of actual experience of rebates, discounts or
allowances given and returns made and any changes in arrangements.
Future events may cause the assumptions on which the accruals are
based to change, which could affect the future results of the
Group.
13. SHARE CAPITAL
Nominal Aggregate
value nominal
Equity paid value
Ordinary per $m
Shares share
----------------------- ------------ -------- ----------
Issued and fully paid
At January 1, 2020 730,787,719 $0.10 73
Allotments 1,648,454 $0.10 -
At June 30, 2020 732,436,173 73
------------------------ ------------ -------- ----------
Nominal Aggregate
value nominal
Equity paid value
Ordinary per $m
Shares share
----------------------- ------------ -------- ----------
Issued and fully paid
At January 1, 2019 728,441,653 $0.10 73
Allotments 1,601,495 $0.10 -
At June 30, 2019 730,043,148 73
------------------------ ------------ -------- ----------
Allotment of ordinary shares
During the period, 1,648,454 ordinary shares (2019: 1,601,495)
were allotted to satisfy vestings/exercises under the Group's
Long-Term Incentive Plan and U.S. Employee Stock Purchase Plan.
14. POST BALANCE SHEET EVENTS
On July 24, 2020, the Group announced it had reached an
agreement with the DOJ and the FTC, and U.S. state attorneys
general to resolve the Company's liability in connection with the
Western District of Virginia indictment. The Group will make
payments totaling $600m over a period of seven years and entered
into a Corporate Integrity Agreement with the Office of Inspector
General of the Department of Health and Human Services (HHS). Under
the terms of the agreement, the Justice Department will move to
dismiss all charges returned by a grand jury in April 2019. Under
the agreement, the Group will make a payment of $100 million the
week the plea is finalized and approved by a judge. Subsequently,
six annual instalments of $50 million will be due every January 15
from 2022 to 2027. The final instalment of $200 million will be due
on December 15, 2027. The Group carries a provision of $624m (FY19:
$438m) for Department of Justice and related matters (see Notes 9
and 11).
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.
Details of all current Directors are available on our website at
www.indivior.com
By order of the Board
Mark Crossley
Chief Executive Officer
July 29, 2020
Independent review report to Indivior PLC
Report on the Condensed consolidated interim financial
statements
Our conclusion
We have reviewed Indivior PLC's Condensed consolidated interim
financial statements (the "interim financial statements") in the H1
2020 Results of Indivior PLC for the three and six month periods
ended 30 June 2020. 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 Notes 9 and 11 that describe
the litigation status with the U.S. Department of Justice (DoJ),
Federal Trade Commission (FTC), and U.S. state attorneys general.
On 24 July 2020, management reached a settlement agreement with
these parties to resolve the Group's criminal and civil liability
in connection with the indictment and related matters, which is
subject to final judicial approval in the Western District of
Virginia scheduled for October 2020. The Group carries a provision
of $624 million, substantially all of which relates to these
matters. Until final approval is obtained, there remains a risk
that, in the instance the agreement is not approved, and a trial
ensues, the Group could face potential exclusion from participating
in US federal healthcare programs or the final outcome of the
settlement amount may be materially higher.
Emphasis of matter - Going Concern
In forming our conclusion on the interim financial statements,
which is not modified, we have also considered the adequacy of the
disclosure made in Notes 1, 9 and 11 that describe the litigation
status of the ongoing negotiations with the DoJ, FTC and U.S. state
attorneys general and other matters. The agreement with the DoJ,
the FTC and U.S. state attorneys general to resolve the Group's
criminal and civil liability in connection with the indictment and
related matters is pending final judicial approval in the Western
District of Virginia scheduled for October 2020.
In the instance the agreement is not approved, and a trial
ensues, the outcome from the DoJ indictment is not expected to
impact the Group during the going concern period over the next 12
months. However, the potential of an unfavourable outcome in
combination with potential exclusion from participating in US
federal healthcare programs would negatively impact the financial
position and long-term viability of the Group including the ability
to comply with debt covenants. Therefore, this remains a risk to
the Group until the agreement is formally accepted by the Court in
October 2020.
Reasonably possible impacts on the Group from the COVID-19
pandemic, failure of SUBLOCADE and PERSERIS to meet revenue growth
expectations and/or lower than forecast revenue of SUBOXONE Film
have also been considered as part of the Group's adoption of the
going concern basis.
As explained in Note 1 to the interim financial statements, a
combination of the above risks, specifically the status of the DoJ
agreement, indicate the existence of a material uncertainty which
may cast significant doubt about the Group's ability to continue as
a going concern. However, the Directors believe the Group has
sufficient liquidity and the ability to carry out any further
measures that may be necessary for the Group to continue as a going
concern for at least the next 12 months. 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 30 June 2020;
-- the Condensed consolidated interim income statement and
Condensed consolidated interim statement of comprehensive income
for the three and six month periods then ended;
-- the Condensed consolidated interim cash flow statement for the six month period then ended;
-- the Condensed consolidated interim statement of changes in
equity for the six month period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the H1 2020 Results
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 H1 2020 Results, including the interim financial statements,
is the responsibility of, and has been approved by, the Directors.
The Directors are responsible for preparing the H1 2020 Results 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 H1 2020 Results 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 H1 2020
Results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
29 July 2020
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR WPUMWMUPUUAU
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