TIDMINDV
RNS Number : 5494P
Indivior PLC
18 February 2021
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February 18, 2021
FY 2020 Financial Results Announced. FY 2021 Guidance
Introduced.
Period to Dec. 31st Q4 Q4 FY FY
2020 2019 % 2020 2019 %
$m $m Change $m $m Change
------------------------------- ------ ------ --------- --- ------ ------ ---------
Net Revenue 185 133 39 647 785 -18
------------------------------- ------ ------ --------- --- ------ ------ ---------
Operating (Loss)/Profit (9) (42) -79 (156) 178 NM
------------------------------- ------ ------ --------- --- ------ ------ ---------
Net (Loss)/Income (13) (55) -76 (148) 134 NM
------------------------------- ------ ------ --------- --- ------ ------ ---------
Basic (LPS)/EPS (cents/share) (2) (8) -75 (20) 18 NM
------------------------------- ------ ------ --------- --- ------ ------ ---------
Adj. Basis
------------------------------- ------ ------ --------- --- ------ ------ ---------
Adj. Operating Profit/(Loss)* 32 (46) NM 88 202 -56
------------------------------- ------ ------ --------- --- ------ ------ ---------
Adj. Net Income/(Loss)* 26 (37) NM 59 176 -66
------------------------------- ------ ------ --------- --- ------ ------ ---------
Adj. Basic EPS/(LPS)* 4 (5) NM 8 24 -67
=============================== ====== ====== ========= === ====== ====== =========
(*) Adjusted (Adj.) basis excludes the impact of exceptional
items as referenced in Notes 3 and 4. NM: Not Meaningful.
FY 2020 Highlights
-- Net revenue (NR) of $647m (-18% vs. FY 2019) mainly reflected
SUBOXONE (R) (buprenorphine and naloxone) Film share loss, partly
offset by higher NR from SUBLOCADE(R) (buprenorphine
extended-release) injection .
-- Reported operating loss of $156m. Exceptional costs of $244m
primarily relate to litigation settlements - see Notes 3 and 4.
Adj. operating profit of $88m (-56% vs. adj. FY 2019) mainly due to
lower NR and higher SG&A expense from growth investments in
SUBLOCADE and legal defense costs primarily due to resolving the
Department of Justice (DOJ) matter.
-- Reported net loss of $148m. Adj. net income of $59m (-66% vs.
adj. FY 2019), reflecting lower operating profit and net finance
expense (versus net finance income in FY 2019).
-- Cash of $858m (-$202m vs. FY 2019), following $103m payment,
including interest, related to DOJ resolution. Net cash of
$623m
(-$198m vs. FY 2019).
Operating Highlights
-- FY 2020 SUBLOCADE NR of $130m (+81% vs. FY 2019) and Q4 2020
NR of $39m (+18% vs. Q3 2020); strong growth from the Organized
Health Systems (OHS) channel, despite COVID-19 impact on new
patient enrolments. FY 2020 units dispensed were approx. 127,000*
(+115% vs. FY 2019); Q4 2020 units dispensed were approx. 40,100*
(+14% vs. Q3 2020).
-- PERSERIS(R) (risperidone) extended-release injection NR of $14m (+133% vs. FY 2019).
-- SUBOXONE(R) Film share averaged 21% in FY 2020 (FY 2019: 32%)
and exited FY 2020 at 21% (FY 2019 exit share: 24%).
-- Completed strategic alignment which is expected to reduce the
Group's underlying operating expense base (SG&A + R&D) by
$60m to $70m (before reinvestment), while accelerating its growth
strategy for SUBLOCADE with increased investment behind further
penetrating Organized Health Systems (OHS) and supporting its
strong commitment to integrity and compliance.
FY 2021 Guidance Highlights
Base case NR guidance assumes the operating backdrop will
improve in H2 2021, as COVID-19 pandemic restrictions impacting
in-person healthcare practitioner access subside and healthcare
systems approach normality. Detailed guidance, including potential
risks are provided on Page 2.
-- Total base case FY 2021 NR up to $625m; SUBLOCADE NR of $185m
to $210m; PERSERIS NR of $17m to $20m.
-- Downside case if COVID-19 pandemic restrictions persist in H2
2021: Total NR of $565m; SUBLOCADE NR of $170m; PERSERIS NR of
$15m.
-- Mid- to high-single digit percentage point decline in FY 2021
adj. gross margin; recovery to mid-80's rate in 2022.
-- Adj. OPEX (SG&A+R&D) of $420m to $440m, mainly
reflecting incremental investment in US long-acting
injectables.
-- Positive adj. pre-tax income.
Comment by Mark Crossley, CEO of Indivior PLC
"Given the challenges of the COVID-19 pandemic, I am delighted
both with the solid results that Indivior delivered in FY 2020 and
with the dedication to patients displayed by each and every one of
our employees. Critically, we materially de-risked the business
with resolution of the DOJ and RB matters and we took decisive
strategic alignment actions which place Indivior on a clear path
towards realizing the transformational potential of SUBLOCADE. We
are convinced this important new treatment paradigm represents a
significant untapped asset to help patients and society address the
desperate condition and widespread epidemic of OUD. Accelerating
the growth of SUBLOCADE remains the biggest potential driver of
value creation. We are committed to delivering clear, measurable
progress in FY 2021 against our SUBLOCADE peak annual net revenue
goal of $1 billion+ and organic revenue diversification
strategies."
*Includes shipments in ROW geographies
Detailed FY 2021 Guidance
Guidance assumes the operating backdrop, chiefly the ability to
accelerate in-person promotion and seek in-patient care, will
improve in H2 2021 as COVID-19 pandemic restrictions subside and
healthcare systems approach normality.
-- Total base case FY 2021 NR up to $625m; SUBLOCADE NR of $185m
to $210m; PERSERIS NR of $17m to $20m
-- In a downside scenario in which the operating backdrop
continues to be adversely impacted by pandemic restrictions through
H2 2021, Indivior believes total net revenue for FY 2021 could be
adversely impacted by up to $60m. On this basis, total net revenue
could be approximately $565m with SUBLOCADE and PERSERIS net
revenue of approximately $170m and $15m, respectively.
-- Mid- to high-single digit decline in FY 2021 adj. gross
margin primarily due to current product and regional mix; adj. GM
expected to return to mid-80's in 2022 as more profitable SUBLOCADE
is expected to grow as a proportion of total NR.
-- Adj. OPEX (SG&A+R&D) of $420m to $440m reflecting
benefits from completed strategic alignment, partially offset
by:
-- incremental investments for US long-acting injectables
(LAIs), fueled by the relative strength in US SUBOXONE Film (the
Group may make further LAI growth investments based on continued
relative US Film strength); and,
-- COVID-delayed supply-related projects.
-- Positive adj. pre-tax income.
Operating Review
U.S. Opioid Use Disorder (OUD) Market Update
In FY 2020, growth of the U.S. buprenorphine medication-assisted
treatment (BMAT) market was sustained at a low teens percentage
rate, underpinned by continued growth in the number of patients
receiving treatment and by increased access to treatment. The
increased market growth followed implementation of new federal and
state government actions in light of the COVID-19 pandemic to
facilitate access to medication-assisted treatment (MAT), including
counselling, for patients suffering from OUD. For example, the Drug
Enforcement Administration (DEA), jointly with the Substance Abuse
and Mental Health Services Administration (SAMHSA), is continuing
to allow healthcare providers to initiate and continue
buprenorphine treatment by telemedicine.
Underlying market growth has also benefited from increased
overall public awareness of the opioid epidemic and approved
treatments, as well as from regulatory and legislative changes
introduced prior to the COVID-19 pandemic that have expanded OUD
treatment funding and treatment capacity. States increasingly
acknowledge that providing treatment brings substantial value to
both patients and society and that BMAT is under-utilized.(1)
In response, the number of physicians, nurse practitioners and
physician assistants who have received a waiver to administer MAT
and those able to treat up to the permitted level of 275 patients
continued to grow in FY 2020. As a result, there is increasing
patient access to treatment. Indivior supports efforts to encourage
more eligible HCPs to provide treatment, and the Group continues to
resource its compliance capabilities for the growing number of BMAT
prescribers and patients.
The Group is uncertain how long the elevated underlying BMAT
growth rate will continue, but longer term it believes the growth
rate will revert to the previously observed high single-digit to
low double-digit percentage growth rate. The Group's focus is to
continue to expand access of SUBLOCADE amongst core healthcare
practitioners (HCPs) and Organized Health Systems (OHS), in order
to ensure availability of this potentially important new treatment
option to the estimated 1 million+ patients per month who are
prescribed BMAT by HCPs.
(1) JAMA Network Open. 2019;2(6):e196373.
Doi:10.1001/jamanetworkopen.2019.6373
Financial Performance: FY 2020 & Q4 2020
Total net revenue in FY 2020 decreased 18% to $647m (FY 2019:
$785m). In Q4 2020, total net revenue increased 39% to $185m (Q4
2019: $133m).
FY 2020 U.S. net revenue decreased 23% to $456m (FY 2019:
$589m). Growth in the overall U.S. BMAT market was sustained at a
low teens percentage rate as discussed above ("U.S. Opioid Use
Disorder (OUD) Market Update") , primarily due to strength in
government channels. Underlying market strength and SUBLOCADE net
revenue growth of 75% to $126m (FY 2019: $72m) were more than
offset by SUBOXONE Film share loss and the absence of net revenue
contribution from the AGx film program, which was terminated at the
end of FY 2019.
In Q4 2020, U.S. net revenue increased 68 % to $134m (Q4 2019:
$80m). While Q4 2020 net revenue dynamics were substantially the
same as those for FY 2020, the comparable year-ago quarter had
one-time items that impacted net revenue, chiefly the negative
effect of the federal law change enacted October 2019 (HR 4378),
which modified the impact of authorized generics (AGx) in
determining the mandated rebate amount in government channels for
branded SUBOXONE Film. This negatively impacted Q4 2019 net revenue
by approximately $47m and the Group subsequently terminated its AGx
buprenorphine/naloxone sublingual film program at the end of
2019.
FY 2020 Rest of World (ROW) net revenue decreased 3% to $191m
(FY 2019: $196m). In Q4 2020, ROW net revenue decreased 4% to $51m
(Q4 2019: $53m). Contribution from SUBLOCADE to ROW net revenue of
$4m and $2m are included in the FY 2020 and Q4 2020 periods,
respectively. These benefits were more than offset primarily by
continued austerity measures in Western European markets.
FY 2020 and Q4 2020 gross margin as reported was 85% and 88%,
respectively (FY 2019: 82%; Q4 2019: 68%). Excluding $5m of net
exceptional costs of sales related to inventory provisions due to
the adverse impact of COVID-19, FY 2020 adjusted gross margin was
86%. The FY 2020 gross margin improvement was primarily due to
improved revenue mix from the absence of net revenue from the AGx
buprenorphine/naloxone sublingual film program in 2020. The Q4 2020
gross margin increase reflects the impact of federal legislation
(HR 4378) discussed above that adversely impacted Q4 2019 gross
margin.
FY 2020 SG&A expense as reported were $666m (FY 2019:
$414m). FY 2020 SG&A expenses included exceptional costs of
$239m, primarily related to resolution of litigation matters. Q4
2020 SG&A expenses as reported were $158m (Q4 2019: $115m). The
exceptional costs recorded in Q4 2020 totalled $47m (Q4 2019:
exceptional benefit $4m). See Notes 3 and 4 for details on
exceptional costs.
On an adjusted basis, FY 2020 SG&A expenses increased 10% to
$427m (Adj. FY 2019: $390m). The increase reflects stepped up
SUBLOCADE marketing expenses, principally the direct-to-consumer
(DTC) campaign, higher legal expenses related to DOJ resolution,
partially offset by reduced travel and entertainment due to
COVID-19 restrictions. On an adjusted basis, Q4 2020 SG&A
expenses declined 7% to $111m (Q4 2019: $119m). The decline in the
quarter largely reflects lower marketing expenses, reduced travel
and entertainment and impact from completed strategic alignment
actions.
FY 2020 and Q4 2020 R&D expenses were $40m and $13m,
respectively (FY 2019: $53m; Q4 2019: $17m). The decreases in both
periods primarily reflect lower clinical activity and the
reprioritization of R&D activities as part of the completed
strategic alignment to principally support SUBLOCADE Health
Economics and Outcomes Research (HEOR) and post-marketing study
commitments for SUBLOCADE and PERSERIS, as well as lower than
expected investments for supply-related projects.
FY 2020 operating loss as reported was $156m (FY 2019 op.
profit: $178m). Exceptional costs of $244m and $24m are included in
the FY 2020 and FY 2019 reported results, respectively. On an
adjusted basis, FY 2020 operating profit was $88m (FY 2019 adj. op.
profit: $202m). The decline on an adjusted basis primarily reflects
lower net revenue and increases in marketing and legal defense
costs as detailed above. These items were partially offset by lower
R&D and general and administrative expenses.
Q4 2020 operating loss as reported was $9m (Q4 2019 op. loss:
$42m). Exceptional costs of $41m and a $4m benefit are included in
the Q4 2020 and Q4 2019 reported results, respectively. On an
adjusted basis, Q4 2020 operating profit was $32m (Q4 2019: adj.
op. loss: $46m). The increase on an unadjusted and adjusted basis
primarily reflects the gross profit impact in the year-ago quarter
related to legislation that modified the calculation for
determining the rebate amount in government channels for SUBOXONE
Film.
FY 2020 net finance expense was $17m (FY 2019 income: $2m). The
net expense primarily reflects lower interest income on the Group's
cash balance due to lower interest rates versus the year-ago period
and increased finance expense incurred related to the DOJ
liability.
FY 2020 reported total tax benefit was $25m, an effective tax
rate of 14% (FY 2019 tax charge: $46m, 26% rate). Excluding the
$37m tax benefit on exceptional items in FY 2020, total tax expense
was $12m, an effective tax rate of 17% (FY 2019: $28m, 14% rate).
Q4 2020 reported total tax benefit was $1m, representing an
effective tax rate of 7% (Q4 2019 tax charge: $13m, 31% rate).
Excluding the $2m tax benefit on exceptional items in Q4 2020, the
effective tax rate was 4% (Q4 2019 tax benefit $9m, 20%).
FY 2020 reported net loss was $148m (FY 2019 net income: $134m).
Excluding the $207m after-tax impact from exceptional items, FY
2020 adjusted net income was $59m (Adj. FY 2019: $176m). The
decline in net income on an adjusted basis primarily reflects lower
net revenue, increased operating expenses (primarily marketing and
legal defense costs) and net finance expense (versus FY 2019 net
finance income).
Reported Q4 2020 net loss on a reported basis was $13m. (Q4 2019
reported net loss: $55m). Excluding the $39m after-tax benefit from
exceptional items, Q4 2020 adjusted net income was $26m. Q4 2019
net loss was $55m and adjusted net loss was $37m, reflecting the
increased gross profit versus the year-ago quarter related to
legislation that modified the calculation for determining the
rebate amount in government channels for SUBOXONE Film.
Loss per share on a diluted basis was 20 cents in FY 2020 and
earnings per share of 8 cents on an adjusted diluted basis (FY
2019: earnings per share of 18 cents on a diluted and 23 cents on
adjusted diluted basis). In Q4 2020, loss per share on a diluted
basis was 2 cent and earnings per share of 3 cents on an adjusted
diluted basis (Q4 2019: loss per share of 8 cents on a diluted and
5 cents on an adjusted diluted basis).
Balance Sheet & Cash Flow
FY 2020 December 31, 2020 cash and cash equivalents were $858m,
a decrease of $202m versus the $1,060m at year-end 2019.
Borrowings, including issuance costs, were $235m at December 31,
2020 (FY 2019: $239m). As a result, net cash was $623m at the end
of Q4 2020 (FY 2019: $821m), a $198m decrease over the twelve-month
period. The change was primarily driven by a payment to the DOJ for
$103m (including interest) and the change in net working
capital.
Net working capital (inventory, trade receivables and other
current assets, less trade and other payables) was negative $202m
at the end of 2020 versus negative $323m at the end of 2019. The
$121m 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.
Cash used by operating activities in FY 2020 was $148m (FY 2019
cash generated: $128m), representing an increased use of cash of
$276m primarily due to lower revenues, timing of payments of sales
rebates/other payables and payment to the DOJ for $103m (including
interest). Net cash outflow from operating activities was $193m in
FY 2020 (FY 2019 net cash inflow: $151m) reflecting the lower cash
from operating activities and cash tax payments in FY 2020 versus
cash tax received in FY 2019.
FY 2020 cash outflow from investing activities was $4m (FY 2019:
$2m). The current year outflows related to the purchase of
property, plant and equipment and the prior year outflows relate to
the purchase of property, plant and equipment offset by proceeds
from the disposal of intangible assets.
FY 2020 cash outflow from financing activities was $10m (FY
2019: $13m), 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 Update
The Board of Directors oversees the approach to risk management
and ensures that the principal risks, including those that would
threaten the Group's business model, future performance or
viability, are effectively managed and/or mitigated. While the
Group aims to identify and manage such risks, no risk management
strategy can provide absolute assurance against loss.
Set out below are what the Group considers to be the principal
risks that could cause the Group's business model, future
performance, and solvency or liquidity to differ materially from
expected and historical results. Additional risks, not listed here,
that the Group cannot presently predict or does not believe to be
equally significant, may also materially and adversely affect the
Group's business, results of operations and financial position. The
principal risks and uncertainties are not listed in order of
significance.
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 and compliance
processes and systems as well as to retain and/or recruit qualified
personnel could adversely impact products 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.
COVID-19 Pandemic - 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 established an agile cross-functional response
structure; and implemented a number of mitigation and contingency
actions to help maintain the functioning of operations across the
organization, supply of all products to our patients, and the
welfare of our employees. The Group continuously monitors the
potential impact on the health and well-being of our employees as
well as the workforce of our key third parties, which ultimately
may impact our operations. Furthermore, given the remote working
environment, the Group continues to closely monitor cybersecurity
threats and the overall operating effectiveness of the monitoring
and control activities. 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 vaccination
of the population or attainment of herd immunity, the impact on the
Group's operations and financial position is highly uncertain and
cannot be predicted with confidence. COVID-19 related developments
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
impacting the Group, including its business operations.
The manufacturing of our SUBOXONE and SUBUTEX tablets for all of
our European markets is performed by a third-party contract
manufacturer located in the UK. The Group has been proactive in
taking appropriate actions since the Brexit referendum, including
changes to logistics, shipping, and quality testing and release
processes, as well as transfer of regulatory licenses and
additional inventory builds. Uncertainties due to the operational
impact of the recently signed Trade and Cooperation Agreement
between the UK and the European Union (EU) remain a risk closely
monitored as it impacts various areas of the Group, including
Operations, Regulatory, Supply Chain, and Quality.
Product Pipeline, Regulatory and 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 could
impact patient safety and market access, which can have a material
effect on the Group's performance and prospects.
COVID-19 Pandemic - The COVID-19 pandemic has negatively
impacted our R&D operations, specifically trial patient
enrolments and limited chemistry, manufacturing & controls
(CMC) operations, and therefore caused certain delays in conducting
clinical and/or CMC studies internally and/or at our third-party
partners.
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.
COVID-19 Pandemic - 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. As a result, in Q2 2020, the Group observed a rapid
decline in new US patient enrolments followed by a modest
improvement in Q3 compared to Q2, and continued growth in Q4
compared to Q3. 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 is still only able to engage in-person with
a limited number of healthcare professionals (HCPs) and Organized
Health Systems (OHS). Although COVID-19 has not significantly
impacted the Group's overall operating results and financial
position to date, a potential enduring and/or significant decline
in patient enrolments and on the patient journey, and the inability
to effectively engage with HCPs and OHS would have a negative
impact on the Group's financial results in future periods.
Governments across the world are considering and taking actions
to lower drug prices. In the US, there is bi-partisan support for
drug pricing reforms at both federal and state levels, which
include potential legislative and regulatory actions to encourage
the import of drugs, to price drugs according to a defined
international pricing reference, to encourage more competition, and
to undertake other initiatives. These, together with federal and
state government fiscal constraints resulting from the COVID-19
pandemic which constrain public benefit health programs, pose
direct and indirect downward pressure risk on drug prices. The
Group continues to monitor potential legislative and regulatory
changes and their impacts, advocating for the Group's products
based on scientific studies and patient-centered outcomes. However,
certain potential legislative and regulatory drug pricing changes
could have an adverse impact on the Group's financial performance
and results in the future.
Economic and Financial
The pharmaceutical business includes inherent risks and
uncertainties, requiring the Group to make significant financial
investments to develop and support the success of our product
portfolio. Generating cash flow from our approved products,
together with external financing, sustains our financial position,
allows development of new products, and funds business growth.
Realizing value on those investments is dependent upon regulatory
approvals, market acceptance (including pricing reimbursement
levels), strategic partnerships, competition, and legal
developments. Unfavorable outcome from resolutions of legal
proceedings, impacts from the COVID-19 pandemic, and/or changes in
government pricing regulations could negatively impact our
operating results and financial position. Together with potential
pressure on our level of net working capital, our ability to comply
with our debt covenants could be negatively impacted. As a global
business, we are also subject to political, economic, and capital
markets changes.
Supply
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 uses third parties, including
contract manufacturing organizations (CMOs), to manufacture,
package and distribute our products. The manufacturing of oral
solid dose, film products and aseptically filled injectables 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 lead to product recalls and/or
potential regulatory actions against the Group along with potential
reputational damages.
COVID-19 Pandemic - The pandemic could 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 CMOs and vendors due to infection and/or
government containment measures. Through on-going management and
risk mitigation, internally and with CMOs, the Group has not
experienced any significant COVID-19 related disruptions to its
supply to patient delivery process through this date.
Legal and Intellectual Property
Our pharmaceutical operations, which include controlled
substances, are subject to a wide range of laws and regulations.
Perceived or actual noncompliance with these applicable laws and
regulations by a pharmaceutical company can result in
investigations or proceedings leading to civil or criminal
sanctions, 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.
In connection with the agreements to resolve criminal charges
and civil complaints related to SUBOXONE Film (see Note 11, Legal
Proceedings, to the condensed consolidated financial statements),
the Group has specific requirements that are in addition to the
Group's pre-existing obligations to comply with applicable laws and
regulations associated with its US pharmaceutical operations. The
Group is subject to penalties if it fails to fulfill the
requirements within the agreements.
The Group is also a party to several civil lawsuits, including
ongoing litigation in the Federal FCA Qui Tam suits, and civil
antitrust and state claims filed by various plaintiffs. Many of the
civil claims concern the same conduct at issue in the Superseding
Indictment filed by the DOJ.
The Group is also a defendant in fewer than 400 civil lawsuits
brought by various plaintiffs as part of the opioid class action
litigation. These cases are at an early stage and are currently
stayed.
Unfavorable outcomes from resolutions of these legal proceedings
could have a material adverse impact on the Group's business,
financial condition and/or operating results.
See Note 11, Legal Proceedings, to the condensed consolidated
financial statements for additional information.
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.
As part of the Group's resolution of federal criminal and civil
charges related to its legacy products (see Note 11, Legal
Proceedings, to the condensed consolidated financial statements for
additional information.), the Group has also entered into a
Corporate Integrity Agreement (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 U.S. Medicare, U.S. Medicaid, and all other
U.S. Federal health care programs, as well as with the statutes,
regulations, and written directives of the U.S. Food and Drug
Administration. Furthermore, the Group is subject to additional
periodic reporting and monitoring requirements related to the
Agreements. In addition, the CIA requires reviews by an independent
review organization, compliance-related certifications from the
Group's executives and certain 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 (including,
repeated violations or any flagrant obligations under the CIA, a
failure by the Group to report a reportable event and/or take
corrective action, a failure to engage and use an independent
review organization, a failure to respond to certain requests from
HHS-OIG),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 Resolution Agreement with the United States Attorney's
Office for the Western District of Virginia and Consumer Protection
Branch contains certain requirements, such as reporting obligations
and that the Group's CEO (a) certify on an annual basis that, to
the best of the CEO's knowledge, after a reasonable inquiry, the
Group was in compliance with the Federal Food, Drug and Cosmetic
Act and has not committed health care fraud, or (b) provide a list
of all non-compliant activities and steps taken to remedy the
activity. The FTC Stipulated Order contains specific notice and
reporting requirements over a ten-year period related to certain
activities (e.g., product switching conduct, filing of a Citizen
Petition). The Group is subject to contempt prosecution if it fails
to comply with any terms of the Resolution Agreement.
The Group's Annual Report for the 2020 financial year will
contain 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:
Full Year to December Full Year to December
31, 31,
2020 2019
GB GBP period end 1.3651 1.3263
---------------------- ----------------------
GB GBP average rate 1.2833 1.2768
---------------------- ----------------------
EUR Euro period end 1.2226 1.1228
---------------------- ----------------------
EUR Euro average 1.1403 1.1198
---------------------- ----------------------
Webcast Details
There will be a live webcast presentation at 12:00 GMT (7:00 am
EST) 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/23dggtiy
Confirmation Code: 3290938
Participants, Local - London, United Kingdom: +44 (0) 2071 928338
Participants, Local - New York, United
States of America: +1 646 741 3167
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
compliance with the Indivior Group's agreements with the U.S.
Department of Justice and with the Office of Inspector General of
the Department of Health and Human Services, noncompliance with
which could result in potential exclusion from 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 Film if you are allergic to buprenorphine
or naloxone as serious negative effects, including anaphylactic
shock, have been reported.
SUBOXONE Film can be abused in a manner similar to other
opioids, legal or illicit.
SUBOXONE Film contains buprenorphine, an opioid that can cause
physical dependence with chronic use. Physical dependence is not
the same as addiction. Your healthcare provider can tell you more
about the difference between physical dependence and drug
addiction. Do not stop taking SUBOXONE Film suddenly without
talking to your healthcare provider. You could become sick with
uncomfortable withdrawal symptoms because your body has become used
to this medicine.
SUBOXONE 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 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 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 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 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 Film product may cause serious withdrawal
symptoms such as pain, cramps, vomiting, diarrhea, anxiety, sleep
problems, and cravings.
Before taking SUBOXONE 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 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 Film, talk to your healthcare provider if
you are breastfeeding or plan to breastfeed your baby. The active
ingredients of SUBOXONE 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 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 Film affects you.
Buprenorphine in SUBOXONE(R) Film can cause drowsiness and slow
reaction times during dose-adjustment periods.
Common side effects of SUBOXONE 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 Film. Please see full Prescribing
Information www.suboxoneREMS.com .
for a complete list.
To report pregnancy or side effects associated with taking
SUBOXONE Film, please call 1-877-782-6966. You are encouraged to
report negative side effects of prescription drugs to the FDA.
Visit www.fda.gov/medwatch or call 1-800-FDA-1088.
For more information about SUBOXONE Film, SUBOXONE
(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(R) (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(R) (risperidone) for extended-release injectable
suspension
INDICATION AND HIGHLIGHTED SAFETY INFORMATION
PERSERIS (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 income statement
Unaudited Unaudited Unaudited Audited
Q4 Q4 FY FY
2020 2019 2020 2019
For the three and twelve
months ended December Notes $m $m $m $m
Net Revenues 2 185 133 647 785
Cost of Sales (23) (43) (97) (140)
Gross Profit 162 90 550 645
------------------------------------- ------ ---------- ---------- ---------- --------
Gross profit before exceptional
items 4 156 90 555 645
Exceptional items 3 6 - (5) -
------------------------------------- ------ ---------- ---------- ---------- --------
Selling, general and administrative
expenses 3 (158) (115) (666) (414)
Research and development
expenses 3 (13) (17) (40) (53)
------------------------------------- ------ ---------- ---------- ---------- --------
Operating (Loss)/Profit (9) (42) (156) 178
------------------------------------- ------ ---------- ---------- ---------- --------
Operating profit/(loss) before
exceptional items 4 32 (46) 88 202
Exceptional items 3 (41) 4 (244) (24)
------------------------------------- ------ ---------- ---------- ---------- --------
Finance income 3 5 9 24
Finance expense (8) (5) (26) (22)
------------------------------------- ------ ---------- ---------- ---------- --------
Net finance (expense)/income (5) - (17) 2
------------------------------------- ------ ---------- ---------- ---------- --------
(Loss)/Profit before Taxation (14) (42) (173) 180
------------------------------------- ------ ---------- ---------- ---------- --------
Income tax benefit/(expense) 1 (13) 25 (46)
------------------------------------- ------ ---------- ---------- ---------- --------
Taxation before exceptional
items 5 (1) 9 (12) (28)
Exceptional items within
taxation 3,5 2 (22) 37 (18)
------------------------------------- ------ ---------- ---------- ---------- --------
Net (Loss)/Income (13) (55) (148) 134
------------------------------------- ------ ---------- ---------- ---------- --------
(Loss)/Earnings per ordinary
share (cents)
Basic (loss)/earnings per
share 6 (2) (8) (20) 18
Diluted (loss)/earnings per
share 6 (2) (8) (20) 18
Condensed consolidated statement of comprehensive
income/(loss)
Unaudited Unaudited Unaudited Audited
Q4 Q4 FY FY
2020 2019 2020 2019
For the three and twelve months
ended December $m $m $m $m
----------------------------------- ---- ---------- ---------- ---------- --------
Net (loss)/income (13) (55) (148) 134
Other comprehensive income
Items that may be reclassified
to profit or loss in subsequent
years:
Net exchange adjustments on
foreign currency translation 15 14 10 9
Other comprehensive income 15 14 10 9
Total comprehensive income/(loss) 2 (41) (138) 143
----------------------------------------- ---------- ---------- ---------- --------
The notes are an integral part of these condensed consolidated
financial statements.
Condensed consolidated balance sheet
Unaudited Audited
Dec 31, Dec 31,
2020 2019
Notes $m $m
ASSETS
Non-current assets
Intangible assets 62 72
Property, plant, and equipment 60 60
Right-of-use assets 43 47
Deferred tax assets 5 75 40
Other assets 7 104 73
344 292
Current assets
Inventories 93 73
Trade receivables 179 192
Other assets 7 50 35
Current tax receivable 5 7 -
Cash and cash equivalents 8 858 1,060
1,187 1,360
Total assets 1,531 1,652
-------------------------------------- ------ ---------- ---------
LIABILITIES
Current liabilities
Borrowings 8 (4) (4)
Provisions and other liabilities 9 (48) (71)
Trade and other payables 12 (524) (623)
Lease liabilities (8) (5)
Current tax liabilities 5 (15) (39)
-------------------------------------- ------ ---------- ---------
(599) (742)
-------------------------------------- ------ ---------- ---------
Non-current liabilities
Borrowings 8 (230) (233)
Provisions and other liabilities 9 (577) (417)
Lease liabilities (43) (51)
(850) (701)
Total liabilities (1,449) (1,443)
-------------------------------------- ------ ---------- ---------
Net assets 82 209
-------------------------------------- ------ ---------- ---------
EQUITY
Capital and reserves
Share capital 13 73 73
Share premium 6 5
Other Reserves (1,295) (1,295)
Foreign currency translation reserve (13) (23)
Retained Earnings 1,311 1,449
-------------------------------------- ------ ---------- ---------
Total equity 82 209
-------------------------------------- ------ ---------- ---------
The notes are an integral part of these condensed consolidated
financial statements.
Condensed consolidated statement of changes in equity
Foreign
currency
Share Share Other translation Retained Total
Notes capital Premium reserve reserve earnings equity
Audited $m $m $m $m $m $m
---------------------------------- ------- --------- --------- --------- ------------- ---------- --------
Balance at January 1, 2019 73 5 (1,295) (32) 1,315 66
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Comprehensive income
Net income - - - - 134 134
Other comprehensive income - - - 9 - 9
Total comprehensive income - - - 9 134 143
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Transactions recognised directly
in equity
IFRS 16 impact (adjustment
to opening balance) - - - - (2) (2)
Share-based payments - - - - 3 3
Deferred taxation on share-based
plans and IFRS 16 - - - - (1) (1)
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Balance at December 31, 2019 73 5 (1,295) (23) 1,449 209
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Unaudited
---------------------------------- ------- --------- --------- --------- ------------- ---------- --------
Balance at January 1, 2020 73 5 (1,295) (23) 1,449 209
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Comprehensive loss
Net (loss) - - - - (148) (148)
Other comprehensive income - - - 10 - 10
Total comprehensive loss - - - 10 (148) (138)
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Transactions recognised directly
in equity
Shares issued - 1 - - - 1
Share-based payments - - - - 8 8
Deferred taxation on share-based
plans 2 2
------------------------------------------- --------- --------- --------- ------------- ---------- --------
Balance at December 31, 2020 73 6 (1,295) (13) 1,311 82
------------------------------------------- --------- --------- --------- ------------- ---------- --------
The notes are an integral part of these condensed consolidated
financial statements.
Condensed consolidated cash flow statement
Unaudited Audited
2020 2019
For the twelve months ended December 31 $m $m
---------------------------------------------------------------- ---------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Operating (Loss)/Profit (156) 178
Depreciation and amortization 18 20
Gain on disposal of right-of-use assets (2) -
Gain on disposal of intangible asset - (4)
Depreciation and impairment of right-of-use assets 8 8
Share-based payments 8 3
Impact from foreign exchange movements (5) 2
Decrease in trade receivables 15 79
Increase in other assets (44) (56)
(Increase)/Decrease in inventories (16) 7
Decrease in trade and other payables (103) (101)
Increase/(Decrease) in provisions and other liabilities(1) 129 (8)
Cash (used in)/generated from operations (148) 128
Interest paid (20) (17)
Interest received 9 22
Taxes (paid)/refunded (34) 18
Net cash (outflow)/inflow from operating activities (193) 151
---------------------------------------------------------------- ---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment (4) (7)
Proceeds from lease incentives - 1
Proceeds from disposal of intangible assets - 4
Net cash outflow from investing activities (4) (2)
---------------------------------------------------------------- ---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings (4) (4)
Payment of lease liabilities (7) (9)
Proceeds from the issuance of ordinary shares 1 -
Net cash outflow from financing activities (10) (13)
---------------------------------------------------------------- ---------- --------
Net (decrease)/increase in cash and cash equivalents (207) 136
Cash and cash equivalents at beginning of the period 1,060 924
Exchange difference 5 -
Cash and cash equivalents at end of the period 858 1,060
---------------------------------------------------------------- ---------- --------
(1) Changes in provisions and other liabilities line include
$228m of exceptional charges relating to litigation matters offset
by the $100m initial payment under the DOJ resolution in 2020. $3m
of interest on the DOJ resolution has been recorded in the interest
paid line item.
The notes are an integral part of these condensed consolidated
financial statements.
Notes to the condensed consolidated 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 financial statements
('Condensed Financial Statements'), reference to the 'Group' means
the Company and all its subsidiaries.
The Group prepared its annual accounts for December 31, 2019 in
accordance with International Financial Reporting Standards (IFRS)
and IFRS Interpretations Committee (IFRIC) interpretations as
adopted by the European Union (EU) and the Companies Act 2006 (the
Act) applicable to the companies reporting under IFRS. As a result
of the United Kingdom leaving the EU, the Group will be preparing
the financial statements for December 31, 2020 in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006, and in accordance with
International Financial Reporting Standards adopted pursuant to
Regulation (EC) No.1606/2002 as it applies in the European Union
(adopted IFRSs). There is no change in the underlying reporting
framework applicable for December 31, 2020 and has had no impact on
the financial information included herein and therefore the
accounting policies set out in the annual accounts of the Group for
the year ended December 31, 2019 are applied in preparing this
financial information and should be read in conjunction with
those
annual accounts. 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. 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 2019 balance sheet and statement of cash flow have been
expanded to present trade receivables and other assets (current) on
separate line items to improve presentation and transparency.
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 the replacement of benchmark interest rates
such as LIBOR. The IASB identified two phases of the reform; Phase
1 amendments primarily deal with pre-LIBOR reform where uncertainty
could arise in the lead up to transition and Phase 2 amendments
relate to post-LIBOR reform, when uncertainty is removed, and new
rates adopted. Phase 1 amendments provide relief from applying
specific hedge accounting requirements. The Group's adoption of
these amendments had no impact on the consolidated financial
statements. Phase 2 amendments primarily address potential
financial reporting issues that may arise when LIBOR is replaced.
For contractual changes or changes to cash flows directly required
by LIBOR reform, the effective interest rate (EIR) may be updated
without adjusting the carrying amount of the financial
asset/liability or the EIR may be used to recalculate the carrying
amount, with any modification gain or loss recognized in profit or
loss. Phase 2 amendments apply retrospectively from January 1, 2021
with earlier application permitted. As the Group's term loan
matures after publication of LIBOR is expected to end, it has
engaged with an administrative agent and expects to transition to a
reasonable substitute base rate. The Group does not expect the
adoption of this standard to have a significant impact on the
future consolidated financial statements. 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
February 17, 2021.
As disclosed in Notes 9, 10 and 11, the Group has liabilities
and provisions totaling $568m (FY 2019: $438m) for Department of
Justice (DOJ) and related matters and the Reckitt Benckiser (RB)
resolution. Although the Group has addressed these risks, various
other legal proceedings (as discussed in Note 11) have not been
settled and therefore create future financial risk and uncertainty.
Ongoing legal proceedings, 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 all been considered as part of the
Group's adoption of the going concern basis. Directors of the Group
have a reasonable expectation the Group has adequate resources to
continue in operational existence for at least one year from the
approval of these financial statements. In coming to this
conclusion, the Directors considered reasonably possible risks
relating to the uptake of SUBLOCADE and PERSERIS, ongoing
litigation, and continued competitive pressures on legacy products.
These risks were balanced against the Group's working capital
position, cost savings actions taken, and timing of the final
balloon payment on the Term Loan. The previous material uncertainty
relating to the Group's ability to continue as a going concern has
been removed in Q4 2020 as a result of the DOJ resolution.
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; and (2) a material
uncertainty related to going concern due to the Group's litigation
matters, which could have been 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 disaggregated net revenue and financial
results on a consolidated basis for evaluating financial
performance and allocating resources. Accordingly, the Group
operates in a single reportable segment.
NET REVENUE & NON-CURRENT ASSETS
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 twelve months to
December 31, 2020 and 2019 were as follows:
Net revenues from sale of goods:
Q4 Q4 FY FY
2020 2019 2020 2019
For the three and twelve months ended $m $m $m $m
December 31
--------------------------------------- ------ ------ ------ ------
United States 134 80 456 589
Rest of World (ROW) 51 53 191 196
--------------------------------------- ------ ------ ------ ------
Total 185 133 647 785
--------------------------------------- ------ ------ ------ ------
On a disaggregated basis, the Group's net revenue by major
product line:
Q4 Q4 FY FY
2020 2019 2020 2019
For the three and twelve months ended $m $m $m $m
December 31
--------------------------------------- ------ ------ ------ ------
SUBLOCADE 39 24 130 72
PERSERIS 4 3 14 6
Sublingual/Other 142 106 503 707
--------------------------------------- ------ ------ ------ ------
Total 185 133 647 785
--------------------------------------- ------ ------ ------ ------
Non-current assets:
Dec 31, Dec 31,
2020 2019
$m $m
(restated)
--------------- -------- ------------
United States 141 118
ROW 128 134
--------------- -------- ------------
Total 269 252
--------------- -------- ------------
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:
Q4 Q4 FY FY
2020 2019 2020 2019
For the three and twelve months ended $m $m $m $m
December 31
----------------------------------------- ------ ------ ------ ------
Research and development expenses (13) (17) (40) (53)
----------------------------------------- ------ ------ ------ ------
Marketing, selling and general expenses (53) (70) (202) (199)
Administrative expenses(1) (102) (40) (447) (196)
Depreciation and amortization (3) (5) (17) (19)
Total (158) (115) (666) (414)
----------------------------------------- ------ ------ ------ ------
(1) Administrative expenses include exceptional costs in the
current and prior year as outlined in table below.
Exceptional Items
Where significant expenses or income are incurred that do not
reflect the Group's ongoing operations, 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 regulatory and litigation matters/settlements, and
certain tax related matters.
The table below sets out exceptional items recorded in the
quarter and full year:
Q4 Q4 FY FY
2020 2019 2020 2019
For the three and twelve months ended $m $m $m $m
December 31
--------------------------------------- ------ ------ ------ ------
Cost of sales credit/(charge)(1) 6 - (5) -
Restructuring costs(2) (2) - (11) (20)
Legal settlements/provisions(3) (45) - (228) (8)
Other operating income(4) - 4 - 4
Total exceptional items before taxes (41) 4 (244) (24)
--------------------------------------- ------ ------ ------ ------
Tax on exceptional items 2 - 37 4
Exceptional items within taxation(5) - (22) - (22)
--------------------------------------- ------ ------ ------ ------
Total exceptional items (39) (18) (207) (42)
--------------------------------------- ------ ------ ------ ------
1. FY 2020 exceptional cost of sales, net, relate to changes in
inventory provision estimates due to the adverse impact of COVID-19
on the business. These changes in inventory provision estimates
have been considered as exceptional as they are one-off and do not
reflect the underlying performance of the business. In Q4 2020 the
Group corrected its estimation of inventory consumed from Q3 with
the resulting exceptional provision release of $6m offset the
exceptional charge taken in Q3 2020.
2. Restructuring costs incurred in Q4 2020 and YTD 2020 relate
to cost saving actions taken by the Group to protect the financial
and operational flexibility in response to ongoing challenges posed
by COVID-19. Restructuring costs incurred in YTD 2019 were a result
of adverse U.S. market developments, more specifically the launch
of generic buprenorphine/naloxone film in the U.S. Each of these
charges are a result of one-off factors and are therefore
non-recurring. Restructuring costs in YTD 2020 consist of
termination costs and lease early termination costs. Restructuring
costs in YTD 2019 consist of supply chain restructuring and
termination costs. These costs are included in SG&A.
3. In January 2021, the Group reached a resolution with RB for
$50m which was recognized in Q4 2020, offset by a reduction in
provision for DOJ related matters for $5m. $228m of legal
settlement related expenses in YTD 2020 relate to resolution with
RB and DOJ, $50m and $178m, respectively. $8m of legal expenses in
YTD 2019 relate to potential redress for ongoing intellectual
property related litigation with Dr. Reddy's Laboratories, S.A. and
Dr. Reddy's Laboratories Inc. (collectively, "DRL") and Alvogen
Pharmaceuticals (Alvogen). These costs are included in SG&A.
Refer to Note 9 for more information on legal provisions and other
liabilities.
4. Exceptional income in 2019 related to the proceeds received
from out-licensing of nasal naloxone opioid overdose patents which
are included in SG&A.
5. Exceptional items within taxation of $22m in 2019 primarily
consists of $34m of tax expense relating to a reversal of
development credits (relating to orphan drug designation) claimed
and reported as exceptional in prior years, offset by a tax benefit
of $12m due to regulation changes stemming from US tax reform.
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 Q4/FY 2020 and Q4/FY 2019.
Refer to Note 3 for more information on exceptional items.
Reconciliation of gross profit to adjusted gross profit
Q4 Q4 FY FY
2020 2019 2020 2019
For the three and twelve months ended $m $m $m $m
December 31
------------------------------------------- ------ ------ ------ ------
Gross profit 162 90 550 645
------------------------------------------- ------ ------ ------ ------
Exceptional cost of sales (credit)/charge (6) - 5 -
Adjusted gross profit 156 90 555 645
------------------------------------------- ------ ------ ------ ------
Reconciliation of operating (loss)/profit to adjusted operating
profit/(loss)
Q4 Q4 FY FY
2020 2019 2020 2019
For the three and twelve months ended $m $m $m $m
December 31
------------------------------------------------- ------ ------ ------ ------
Operating (loss)/profit (9) (42) (156) 178
------------------------------------------------- ------ ------ ------ ------
Exceptional cost of sales (credit)/charge (6) - 5 -
Exceptional selling, general and administrative
expenses 47 - 239 28
Exceptional operating income - (4) - (4)
------------------------------------------------- ------ ------ ------ ------
Adjusted operating profit/(loss) 32 (46) 88 202
------------------------------------------------- ------ ------ ------ ------
Reconciliation of (loss)/profit before taxation to adjusted
profit/(loss) before taxation
Q4 Q4 FY FY
2020 2019 2020 2019
For the three and twelve months ended $m $m $m $m
December 31
------------------------------------------------- ------ ------ ------ ------
(Loss)/profit before taxation (14) (42) (173) 180
------------------------------------------------- ------ ------ ------ ------
Exceptional cost of sales (credit)/charge (6) - 5 -
Exceptional selling, general and administrative
expenses 47 - 239 28
Exceptional operating income - (4) - (4)
------------------------------------------------- ------ ------ ------ ------
Adjusted profit/(loss) before taxation 27 (46) 71 204
------------------------------------------------- ------ ------ ------ ------
Reconciliation of net (loss)/income to adjusted net
income/(loss)
Q4 Q4 FY FY
2020 2019 2020 2019
For the three and twelve months ended $m $m $m $m
December 31
------------------------------------------------- ------ ------ ------ ------
Net (loss)/income (13) (55) (148) 134
------------------------------------------------- ------ ------ ------ ------
Exceptional cost of sales (credit)/charge (6) - 5 -
Exceptional selling, general and administrative
expenses 47 - 239 28
Exceptional operating income - (4) - (4)
Tax on exceptional items (2) - (37) (4)
Exceptional items within taxation - 22 - 22
------------------------------------------------- ------ ------ ------ ------
Adjusted net income/(loss) 26 (37) 59 176
------------------------------------------------- ------ ------ ------ ------
5. TAXATION
In the twelve months ended December 31, 2020, the reported total
tax benefit was $25m, or a rate of 14% (FY2019 tax charge: $46m,
26%). The tax expense on adjusted profits amounted to $12m (FY2019:
$28m) and represented a year to date effective tax rate of 17%
(FY2019: 14%).
The current year tax benefit on exceptional items of $37m
includes the portion of future provision payments that are expected
to be deductible ($27m), along with the tax benefit of other
exceptional items, using the currently enacted income tax rates for
each jurisdiction. The amount of deductibility and possible filing
positions for the legal provisions will be clarified 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 Group's balance sheet at December 31, 2020 included a
current tax receivable of $7m (FY 2019: $nil), current tax payable
of $15m (FY 2019: $39m), and deferred tax asset of $75m (FY 2019:
$40m). The increase in the current tax receivable are due to
advance payments and decrease in the current tax payable are mainly
due to the reduction in the overall profits for the period. The
increase in the deferred tax asset is due to current year activity,
including the tax benefit on the exceptional provisions.
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.
6. (LOSS)/EARNINGS PER SHARE
Q4 Q4 FY FY
2020 2019 2020 2019
For the three and twelve months ended cents cents Cents cents
December 31
------------------------------------------ ------- ------- ------- -------
Basic (loss)/earnings per share (2) (8) (20) 18
Diluted (loss)/earnings per share (2) (8) (20) 18
Adjusted basic earnings/(loss) per share 4 (5) 8 24
Adjusted diluted earnings/(loss) per
share 3 (5) 8 23
------------------------------------------ ------- ------- ------- -------
Basic
Basic (loss)/earnings per share ("LPS/EPS") is calculated by
dividing (loss)/profit for the period attributable to owners of the
Company by the weighted average number of ordinary shares in issue
during the period.
Diluted
Diluted (loss)/earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company
has dilutive potential ordinary shares in the form of stock options
and awards. 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 732,863 730,235
Dilution from share awards and options 37,132 25,123
On a diluted basis 769,995 755,358
----------------------------------------- ----------- -----------
Adjusted Earnings/(Loss)
The Directors believe that diluted earnings/(loss) 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 (loss)/income to adjusted net income is
included in Note 4.
7. CURRENT AND NON-CURRENT OTHER ASSETS
Dec 31 Dec
31
2020 2019
Current and non-current other assets $m $m
-------------------------------------- ---- ------- ------
Short-term prepaid expenses 17 23
Other current assets 33 12
-------------------------------------------- ------- ------
Total other current assets 50 35
-------------------------------------------- ------- ------
Long-term prepaid expenses 22 23
Other non-current assets 82 50
-------------------------------------------- ------- ------
Total other non-current assets 104 73
-------------------------------------------- ------- ------
Total 154 108
-------------------------------------------- ------- ------
Other current assets and other non-current assets primarily
relate to surety bonds. The increase in current and non-current
assets is due to additional funding provided to the surety bond
holders in FY 2020 (see Note 11). $26m was returned by one of the
surety bond holders in January 2021 and therefore classified as
current.
Long-term prepaid expenses relate primarily to payments for
contract manufacturing capacity.
8. FINANCIAL LIABILITIES - BORROWINGS
Dec Dec
31 31
2020 2019
Bank loans $m $m
-------------------------- ---- ------ ------
Bank loans - current (4) (4)
Bank loans - non-current (230) (233)
-------------------------------- ------ ------
Total bank loans (234) (237)
-------------------------------- ------ ------
Dec Dec
31 31
2020 2019
Analysis of net cash $m $m
--------------------------- ---- ------ ------
Cash and cash equivalents 858 1,060
Borrowings* (235) (239)
Total net cash 623 821
--------------------------------- ------ ------
*Borrowings reflect the principal amount drawn before debt
issuance costs of $1m (FY 2019: $2m). These do not include lease
liabilities of $51m (FY 2019: $56m).
Dec Dec
31 31
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 (202) 136
Net repayment of borrowings 4 4
Net cash at end of period 623 821
------------------------------------------- ------ ------
Net cash is presented as it is relevant to our term loan maximum
leverage ratio. Net cash is not reduced for lease liabilities of
$51m (FY 2019: $56m), which is in accordance with the term loan
ratio calculations.
At December 31, 2020, the term loan was trading at approximately
98% (FY 2019: 93%) 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 December 31, 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. There was no financial impact 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 AND OTHER LIABILITIES
Dec Dec
31 31
2020 2019
Provisions & other liabilities $m $m
---------------------------------------- ---- ------ ------
Provisions
DOJ related matters (32) (438)
Intellectual property related matters (47) (45)
Restructuring costs (6) (2)
Other (4) (3)
---------------------------------------------- ------ ------
Total provisions (89) (488)
---------------------------------------------- ------ ------
Other liabilities
DOJ resolution (486) -
RB indemnity settlement (50) -
---------------------------------------- ---- ------ ------
Total other liabilities (536) -
---------------------------------------- ---- ------ ------
Total provisions and other liabilities (625) (488)
---------------------------------------------- ------ ------
The Group is involved in legal and intellectual property
disputes as described in Note 11, "Legal Proceedings."
Provisions
Provisions are recognized when the Group has a present legal or
constructive obligation as a result of past events, an outflow of
resources to settle that obligation is more likely than not, and
the amount can be reliably estimated. Provisions are measured at
the present value of management's best estimate of the expenditure
required to settle the present obligation at the reporting
date.
The Group carries a provision of $32m (FY 2019: $438m)
pertaining to DOJ related matters as discussed in Note 11. The
opening balance of $438m was increased by exceptional charges of
$183m and non-exceptional interest of $2m. $586m was reclassified
to other liabilities with the DOJ resolution. Negotiations with DOJ
related plaintiffs resulted in an exceptional provision release of
$5m in Q4 2020 (see Note 3). The remaining DOJ related matters of
$32m are expected to be settled within the year.
The Group carries provisions totaling $47m (FY 2019: $45m) for
intellectual property related matters, all of which relate to
potential redress for ongoing intellectual property litigation with
DRL and Alvogen.
Other liabilities
Other liabilities represent contractual obligations to third
parties where the amount and timing of payments is fixed. Where
other liabilities are not interest-bearing and the impact of
discounting is significant, other liabilities are recorded at their
present value, generally using rate approximating the risk-free
rate at the time the Group entered into the obligation.
On July 24, 2020, the Group reached a resolution with the DOJ
and other litigants 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. In November 2020, the Group made a payment
of $103m (including interest) when resolution was approved by a
judge. Subsequently, six annual instalments of $50m will be due
every January 15 from 2022 to 2027. A final instalment of $200m
will be due on December 15, 2027. Interest accrues on certain
portions of the resolution which will be paid together with the
annual instalment payments. For non-interest-bearing portions, the
liability has been recorded at the net present value based on
timing of the estimated payments. The discount rate and interest
rate are 1.25%. In FY 2020, the Group recorded interest expense
totalling $3m (FY 2019: nil).
On January 25, 2021, the Group reached a resolution with Reckitt
Benckiser (RB) to resolve claims which RB issued in the Commercial
Court in London on November 13, 2020, seeking indemnity under the
2014 Demerger Agreement. Pursuant to the settlement, RB withdrew
the US $1.4b claim to release Indivior from any claim for indemnity
under the Demerger Agreement relating to the DOJ and FTC
settlements which RB entered into in July 2019, as well as other
claims for indemnity arising from those matters. The Group has
agreed to pay RB a total of $50m and has agreed to release RB from
any claims to seek damages relating to its settlement with the DOJ
and the FTC. The Group made a $10m payment in February 2021,
following the resolution. Subsequently, annual instalment payments
of $8m will be due every January from 2022 to 2026. The Group
carries a liability totaling $50m (FY 2019: $0m) related to this
settlement. The effect of discounting was not material.
10. CONTINGENT LIABILITIES
Except as described in Note 11 under "DOJ and Related Matters"
and "Intellectual Property Related Matters", for which provisions
and other liabilities have been recognized, descriptions of the
contingent liabilities for State Aid risk are set out in Note 5 and
legal and other disputes to which the Group is party are set out in
Note 11.
11. LEGAL PROCEEDINGS
DOJ Resolution
Agreement to Resolve Criminal Charges and Civil Complaints
Related to SUBOXONE Film
-- The Group settled with the United States Department of
Justice (Justice Department or DOJ), the U.S. Federal Trade
Commission (FTC), and U.S. state attorneys general 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 totaling $600 million (plus
applicable interest of 1.25% on a portion of that total amount),
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). In
November 2020, the Court approved the settlement and dismissed all
charges returned by the grand jury in April 2019.
-- 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 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. 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
Update Section for further discussion.
-- Under the terms of the resolution agreement with the Justice
Department, the Group has agreed to compliance terms regarding its
sales and marketing practices. Compliance with these terms is
subject to annual Board and CEO certifications submitted to the
U.S. Attorney's Office.
In November 2020, the Group made a payment of $103m (including
interest) when the resolution was approved by a judge.
Subsequently, six annual instalments of $50 million will be due
every January 15 from 2022 through 2027. The final instalment of
$200 million will be due in December 2027. The Group carries a
liability totaling of $486 million ( FY 2019: nil) pertaining to
the DOJ resolution.
DOJ Related Matters
Federal FCA Qui Tam Suits
-- In August 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. Indivior is aware of
additional claims regarding similar allegations about marketing and
promotion practices which were resolved along with the three
Western District of Virginia qui tam suits in the federal civil
settlement agreement with the Justice Department; and resolved in
principle with the state Attorney Generals and are being formalized
in civil settlement agreements with the fifty states. The Group is
in discussions with certain relators aimed toward resolving the
retaliation claims and claims for attorney's fees and costs.
State and Local Matters
-- In October 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.
-- In November 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. Certain of the qui tam suits filed in the Western District
of Virginia and the District of New Jersey assert claims under the
civil California insurance code. The Group is in discussions toward
resolving these claims and claims for associated attorney's fees
and costs.
-- 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 its
sales and marketing activity. Certain of the qui tam suits filed in
the Western District of Virginia and the District of New Jersey
assert claims under this statute, including claims for associated
attorney's fees and costs. 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.
The Group has resolved the matter with the City of Chicago.
FTC investigation
-- Indivior Inc. and the FTC have agreed to resolve the FTC's
pending investigation. In July 2020, the government simultaneously
filed a complaint alleging a violation of 15 U.S.C. --45(a), and a
joint motion seeking entry of a stipulated order. The US District
Court for the Western District of Virginia entered this stipulated
order in November 2020 and dismissed the case with prejudice.
Pursuant to the stipulated order, the FTC received $10 million.
Furthermore, as detailed in the text of the stipulated order, for a
ten-year period Indivior Inc. is required to make specified
disclosures to the FTC and is prohibited from certain conduct.
False Claims Act Allegations
-- In August 2018, the United States District Court for the
Western District of Virginia unsealed a declined qui tam complaint
alleging causes of action under the Federal and state False Claims
Acts against certain entities within the Group predicated on best
price issues and claims of retaliation (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 Group was served with
the complaint in January 2021. We are in discussions regarding this
matter with the plaintiff-relator.
-- In May 2018, Indivior Inc. 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.
Securities Class Action Litigation
-- In April 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.
In February 2021, the parties reached a settlement agreement. A
Motion for Entry of Order Preliminarily Approving Settlement is
pending with the court.
Intellectual Property Related Matters
ANDA Litigation
-- Litigation against DRL is currently pending in the District
of New Jersey regarding U.S. Patent No. 9,687,454 and 9,931,305
("the '454 and '305 Patents"). DRL received final FDA approval for
all four strengths of its generic buprenorphine/naloxone film
product in June 2018, and immediately launched its generic
buprenorphine/naloxone film product "at-risk." In July 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. In November 2018, the CAFC
issued a decision vacating the PI against DRL. DRL launched its
product at-risk in February 2019. In June 2019, DRL filed a motion
for leave to file their first amended Answer, Affirmative Defenses,
and Counterclaims to add various antitrust counterclaims resulting
from the injunction that was issued against DRL. The motion was
granted in November 2019. No trial date has been set for either the
patent claims or the antitrust counterclaims.
-- In November 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. The Patent Trial and
Appeal Board (USPTO) issued a decision in June 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 appealed
to the Court of Appeals for the Federal Circuit in July 2020. No
court date has been set yet.
-- 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 States, 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. In August 2019, Alvogen
filed a motion for leave to file an amended Answer to Complaint and
Separate Defenses and Counterclaims to add various antitrust
counter claims. The motion was granted in November 2019. No trial
date has been set for either the patent claims or the antitrust
counterclaims.
Teva Opposition to SUBLOCADE European Patent
-- In October 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. Due to the ongoing
disruptions caused by COVID-19, the European Patent Office has not
yet set a hearing date.
Antitrust Litigation and Consumer Protection
Antitrust Class and State Claims
-- Civil antitrust claims have been filed by (a) a class of
direct purchasers, (b) a class of end payor plaintiffs, and (c) a
group of states, now numbering 41, and the District of Columbia.
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. The court
has not set a trial date.
-- In 2013, Reckitt Benckiser Pharmaceuticals, Inc. (now known
as Indivior Inc.) received notice that it and other companies were
defendants in a lawsuit initiated by writ in the Philadelphia
County (Pennsylvania) Court of Common Pleas. See Carefirst of
Maryland, Inc. et al. v. Reckitt Benckiser Inc., et al., Case. No.
2875, December Term 2013. The plaintiffs include approximately 79
entities, most of which appear to be insurance companies or other
providers of health benefits plans. The Carefirst Plaintiffs have
not served a complaint, but they have indicated that their claims
are related to those asserted by the plaintiffs in re Suboxone, MDL
No. 2445 (E.D. Pa.). The Carefirst case remains pending.
The Group has evaluated the antitrust class and state 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.
Other Antitrust and Consumer Protection Claims
-- In July 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.
-- In 2020 Group was served with lawsuits from a number of
insurance companies, some of whom are proceeding both on their own
claims and through the assignment of claims from affiliated
companies. Cases filed by (1) Humana Inc. and (2) Centene
Corporation, Wellcare Healthcare Plans, Inc., New York Quality
Healthcare Corp. (d/b/a Fidelis Care), and Health Net, LLC are
pending in the Eastern District of Pennsylvania. Cases filed by (1)
Blue Cross and Blue Shield of Massachusetts, Inc., Blue Cross and
Blue Shield of Massachusetts HMO Blue, Inc., (2) Health Care
Service Corp., (3) Blue Cross and Blue Shield of Florida, Inc.,
Health Options, Inc., (4) BCBSM, Inc. (d/b/a Blue Cross and Blue
Shield of Minnesota) and HMO Minnesota (d/b/a Blue Plus), and (5)
Molina Healthcare, Inc. are pending in the Circuit Court for the
County of Roanoke, Virginia. The allegations in these cases include
many allegations made in other litigations, including prior
antitrust complaints, indictments, and qui tam complaints. These
plaintiffs have asserted claims under federal and state RICO
statutes, state antitrust statutes, state statutes prohibiting
unfair and deceptive practices, state statutes prohibiting
insurance fraud, and common law fraud, negligent misrepresentation,
and unjust enrichment. Each of these cases is in its initial
stages.
The Group has begun its preliminary evaluation of the claims,
believes in its defenses, and intends to vigorously defend itself.
Currently, engagement with the claimants has been minimal and the
Group's evaluation of the various claims is in preliminary stages.
Accordingly, no estimate of the range of potential loss can be made
at this time.
Civil Opioid Litigation
-- As of February 16, 2021, Indivior has been named as a
defendant in fewer than 400 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 have been consolidated and are pending
in a federal multi-district litigation (MDL) in U.S. District Court
for the Northern District of Ohio, or 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. Other cases of which the Group has been notified but not
yet served are expected may also be consolidated with the MDL.
There remain three (3) cases against Indivior pending in state
courts located in Arizona, Pennsylvania and Virginia. The Group has
already filed Motions to Dismiss the complaints in both Arizona and
Virginia. The Motions to Dismiss were argued in August and
September 2020 and were under advisement until both courts issued
stay orders in November 2020 (Arizona) and January 2021 (Virginia).
Litigation against Indivior is currently stayed in all three
jurisdictions.
Given the status and preliminary stage of litigation in both the
MDL and state courts, no estimate of a possible loss in the opioid
litigation can be made at this time.
12. TRADE AND OTHER PAYABLES
Dec 31 Dec
31
2020 2019
Trade and other payables $m $m
---------------------------------------- ---- ------- ------
Sales returns and rebates (396) (460)
Trade payables (20) (39)
Accruals (99) (113)
Other tax and social security payables (9) (11)
Total (524) (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 2,847,792 $0.10 -
At December 31, 2020 733,635,511 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 2,346,066 $0.10 -
At December 31, 2019 730,787,719 73
------------------------ ------------ -------- ----------
Allotment of ordinary shares
During the period, 2,847,792 ordinary shares (2019: 2,346,066)
were allotted to satisfy vesting/exercises under the Group's
Long-Term Incentive Plan and U.S. Employee Stock Purchase Plan.
14. POST BALANCE SHEET EVENTS
On January 25, 2021, the Group reached an agreement with Reckitt
Benckiser (RB) to resolve claims which RB issued in the Commercial
Court in London on November 13, 2020, seeking indemnity under the
2014 Demerger Agreement. Pursuant to the settlement, RB withdrew
the US $1.4b claim and to release Indivior from any claim for
indemnity under the Demerger Agreement relating to the DOJ and FTC
settlements which RB entered into in July 2019, as well as other
claims for indemnity arising from those matters. Indivior agreed to
pay RB a total of $50m and has agreed to release RB from any claims
to seek damages relating to its settlement with the DOJ and the
FTC. The Group made a $10m payment, in February 2021 following the
settlement. Subsequently, annual instalment payments of $8m will be
due every January from 2022 to 2026. The Group carries a liability
totaling $50m (FY 2019: $0m) related to this settlement (see Note
9).
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END
FR QVLBFFLLZBBB
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