TIDMINDV
RNS Number : 3199E
Indivior PLC
27 October 2022
October 27,
2022
Strong Q3 and YTD 2022 results; Raised guidance for
FY net revenue, adjusted operating profit and mid-point
of SUBLOCADE net revenue
Period to September Q3 Q3 % Change YTD YTD % Change
30th
2022 2021 2022 2021
$m $m $m $m
Net Revenue 232 187 24% 659 568 16%
------------------------- ------ ------ --------- ------ ------
Operating Profit 56 38 47% 173 168 3%
------------------------- ------ ------ --------- ------ ------
Net Income 41 27 52% 130 169 -23%
------------------------- ------ ------ --------- ------ ------
Diluted EPS(1) ($) $0.28 $0.18 56% $0.89 $1.11 -20%
------------------------- ------ ------ --------- ------ ------
Adjusted Basis
------------------------- ------ ------ --------- ------ ------
Adj. Operating Profit(2) 58 38 53% 172 155 11%
------------------------- ------ ------ --------- ------ ------
Adj. Net Income(2) 43 27 59% 130 114 14%
------------------------- ------ ------ --------- ------ ------
Adj. Diluted EPS(1)
(2) ($) $0.29 $0.18 61% $0.89 $0.75 19%
------------------------- ------ ------ --------- ------ ------
(1) On October 10th, 2022, Indivior PLC (the 'Company')
completed a 5:1 share consolidation. The Company's basic and
diluted weighted average number of shares outstanding, basic
earnings per share, diluted earnings per share and adjusted
earnings per share (basic and diluted) have been retrospectively
adjusted to reflect the share consolidation in all the periods
presented. See Note 6 for further discussion. The 'Group' refers to
Indivior PLC and its consolidated subsidiaries.
(2) Adjusted Basis excludes the impact of exceptional items as
referenced and reconciled in Notes 4 and 6. Adjusted results are
not a substitute for, or superior to, reported results presented in
accordance with International Financial Reporting Standards.
Comment by Mark Crossley, CEO of Indivior PLC
"I am pleased to report another strong quarter of top- a nd
bottom-line performance, led by our long-acting injectable
medicines (LAIs), SUBLOCADE(R) (buprenorphine extended-release) and
PERSERIS(R) (risperidone), which are benefiting from the strategic
investments we have made over the past year. SUBLOCADE, our
paradigm shift in the treatment of opioid use disorder (OUD),
exceeded the $100m milestone in quarterly net revenue for the first
time from continued strong execution against our Organized Health
Systems (OHS) strategy. Additionally in the quarter, we took an
important strategic step to elevate the Group's profile in its
highest value market and attract a broader group of
biopharma-focused investors with shareholder approval of an
additional listing, which will be in the US.
"Looking to the balance of FY 2022, based on our overall
performance to date and our strong outlook for SUBLOCADE, we are
raising total net revenue and adjusted operating profit guidance.
We look forward to sharing our roadmap for delivering long-term
shareholder value at our Capital Markets Day in New York City on
December 7(th) ."
YTD / Q3 2022 Financial Highlights
-- YTD 2022 total net revenue (NR) of $659m increased 16% (YTD
2021: $568m); Q3 2022 total NR of $232m increased 24% (Q3 2021:
$187m). Net revenue growth in each period was primarily driven by
SUBLOCADE.
-- YTD 2022 reported operating profit of $173m increased 3% (YTD
2021: $168m); Q3 2022 reported operating profit of $56m increased
47% (Q3 2021: $38m). On an adjusted basis, YTD 2022 operating
profit of $172m increased 11% (Adj. YTD 2021: $155m) reflecting
strong net revenue growth partially offset by an increase in
operating expenses, mainly SG&A investment to grow SUBLOCADE
and PERSERIS. Adj. Q3 2022 operating profit of $58m increased 53%
(Adj. Q3 2021: $38m) reflecting strong net revenue growth.
-- YTD 2022 reported net income of $130m decreased 23% (YTD
2021: $169m); Q3 2022 reported net income of $41m increased 52% (Q3
2021: $27m). On an adjusted basis, YTD 2022 net income of $130m
increased 14% (Adj. YTD 2021 net income: $114m). Adj. Q3 2022 net
income of $43m increased 59% (Adj. Q3 2021: $27m).
-- Cash and investments totaled $1,035m at the end of Q3 2022
(including $26m restricted for self-insurance) (FY 2021: $1,102m).
Refer to Note 7 for investments and Notes 9 & 10 for
obligations.
-- Cash generated from operations in YTD 2022 was $63m which
includes exceptional cash litigation settlement payments of $108m
and surety bond cash collateral returned of $64m. Excluding these
items, cash generated from operations reflects strong operating
profit which was partially offset by the expected unwind of trade
payables.
YTD / Q3 2022 Operating Highlights
-- YTD 2022 SUBLOCADE NR of $290m (+72% vs. YTD 2021); Q3 2022
SUBLOCADE NR of $108m (+66% vs. Q3 2021 and +10% vs. Q2 2022). The
strong growth reflects further OHS channel penetration and
increased new US patient enrollments. Q3 2022 US dispenses were
approx. 83,800 units (+73% vs. Q3 2021 and +11% vs. Q2 2022). Total
SUBLOCADE patients on a 12-month rolling basis at the end of Q3
2022 were approximately 73,800 (+72% vs. Q3 2021 and +14% vs. Q2
2022).
-- YTD 2022 PERSERIS NR of $20m (+67% vs. YTD 2021); Q3 2022
PERSERIS NR of $8m (+60% vs. Q3 2021 and +14% vs. Q2 2022) reflects
investment in national field force coverage and improving
commercial access in the US healthcare system.
-- SUBOXONE (buprenorphine/naloxone) Film share in Q3 2022
averaged 19% (Q3 2021: 20%) and exited the quarter at 19% (Q3 2021:
20%).
-- Aelis Farma Phase 2b study of AEF0117 in the treatment of
moderate to severe cannabis use disorder (ClinicalTrial.gov
identifier: NCT05322941) is ongoing. Results of the study are
expected in 2024.
Optimal Listing Structure for Indivior Shares
In September 2022, the Company received shareholder approval to
facilitate an additional listing in the US, which is expected to
take place in Spring 2023. In addition, due to US exchange
requirements for share price minimums and norms, the Company also
received shareholder approval to complete a 5:1 share consolidation
as part of this process that became effective October 10, 2022. See
Note 6 for further discussion.
The Group expects to incur pre-tax costs of $10m to $15m in FY
2022 as it prepares for an additional US listing. Approximately 50%
of the total costs for this are expected to be recorded as
exceptional given the non-recurring nature of these costs. An
amount of $4m has been incurred as exceptional costs in the YTD
period.
Share Repurchase Program
On May 3, 2022, Indivior announced a share repurchase program of
up to $100m. Through September 30, 2022, the Group repurchased and
cancelled 17,815,033 of the Company's ordinary shares at a daily
weighted average purchase price of 301.27p at a cost of
approximately $66m, which includes directly attributable
transaction costs. Considering the 5:1 share consolidation was
completed on October 10, 2022, equivalent ordinary shares
repurchased and cancelled would have been 3,563,007 at an
equivalent weighted average purchase price of 1,506.33p. See Note
14 for further discussion.
FY 2022 Guidance
Based on continued strong momentum of the business, the Group is
increasing its net revenue (NR) guidance for FY 2022 to $890m to
$915m (previously $840m to $900m) and expects adjusted operating
profit to be modestly higher than 2021. A key component of this
increase is driven by the continued strong SUBLOCADE growth in the
OHS channel leading to narrower guidance of $405m-$420m
representing the upper half of updated guidance provided at the
half year.
The Group's FY 2022 expectations are:
-- Total FY 2022 expected NR range of $890m to $915m (previously
$840m to $900m, now +14% vs. FY 2021 at the midpoint).
-- SUBLOCADE FY 2022 expected NR in the range of $405m to $420m
(previously $390m to $420m, now +69% vs. FY 2021 at the
mid-point).
-- PERSERIS FY 2022 NR expected to be in the range of $27m to
$32m (unchanged vs. prior guidance, +74% vs. FY 2021 at the
mid-point).
-- US SUBOXONE Film - While the risk of entry by a fourth
generic remains, the Group has no visibility on the timing of
commercial availability of the approved fourth generic
buprenorphine/naloxone sublingual film product. However, with no
evidence of launch having occurred as of the date of this release,
the Group expects any potential impact on Q4 and FY 2022 Film NR to
be covered by the current Group NR guidance range. The Group will
continue to monitor the competitive environment and update the
market accordingly.
-- Adjusted gross margin expected to be in the low- to mid-80%
range (unchanged vs. prior guidance), reflecting modestly higher
cost inflation and the relative share resilience of SUBOXONE
Film.
-- Total OPEX (SG&A and R&D combined) expected to be in
the range of $520m to $540m (unchanged vs. prior guidance); the
Group anticipates shifting resources to SG&A from R&D in
the 4th quarter to continue to fuel the growth of SUBLOCADE.
Adjusted SG&A expected to be in the range of $445m to $460m
(increased from $440m to $455m).
R&D expected to be in the range of $75m to $80m (lowered
from $80m to $85m), primarily reflecting phasing of components of
SUBLOCADE Post Marketing Requirement (PMR) studies into 2023.
-- Adjusted operating profit expected to be modestly higher than
FY 2021's adjusted operating profit of $187m (previously "broadly
similar" to FY 2021 adjusted operating profit of $187m).
-- Guidance assumes no material change in exchange rates for key
currencies compared with average year to date rates, notably
USD/GBP and USD/EUR; the impact of unfavorable translations on
total NR guidance is now anticipated to be higher than previously
expected due to further strengthening of the USD.
US OUD Market Update
In Q3 2022, the US buprenorphine medication-assisted treatment
(BMAT) market grew in mid-single digits. The Group continues to
expect long-term US market growth to be sustained in the mid- to
high-single digit percentage range due to increased severity and
overall public awareness of the opioid epidemic and approved
treatments, together with regulatory and legislative actions that
have expanded OUD treatment funding and treatment capacity. The
number of physicians, nurse practitioners and physician assistants
who have received a waiver to administer medication-assisted
treatment and those able to treat up to the permitted level of 275
patients continued to grow in Q3 2022.
As a result, there is increasing patient access to BMAT. The
Group supports efforts to encourage more eligible healthcare
practitioners (HCPs) to provide BMAT, and the Group continues to
expand its compliance capabilities for the growing number of BMAT
prescribers and patients.
The Group's focus is to continue to expand access to SUBLOCADE
amongst OHS and core HCPs to ensure availability of this
potentially important treatment option to the estimated 1 million+
patients per month in the US who are prescribed BMAT by HCPs.
Financial Performance YTD and Q3 2022
Total net revenue in YTD 2022 increased 16% to $659m (YTD 2021:
$568m) at actual exchange rates (+18% at constant exchange rates).
In Q3 2022, total net revenue increased 24% at actual exchange
rates (+27% at constant exchange rates) to $232m (Q3 2021:
$187m).
US net revenue increased 25% in YTD 2022 to $533m (YTD 2021:
$428m) and by 32% in Q3 2022 to $189m (Q3 2021: $143m). Strong
year-over-year SUBLOCADE net revenue growth, along with underlying
BMAT market growth were the principal drivers of the net revenue
increase in both periods.
Rest of World (ROW) net revenue decreased 10% at actual exchange
rates in YTD 2022 to $126m (YTD 2021: $140m) (-1% at constant
exchange rates). In Q3 2022, ROW net revenue decreased 2% a t
actual exchange rates to $43m (Q3 2021: $44m) (+9% at constant
exchange rates). In the quarter, positive contributions from new
products (SUBLOCADE / SUBUTEX Prolonged Release and SUBOXONE Film)
were more than offset by unfavorable foreign currency translation
and ongoing competitive pressure on legacy tablet products. YTD
2022 and Q3 2022 SUBLOCADE / SUBUTEX Prolonged Release net revenue
in ROW were $19m and $7m (at actual exchange rates), respectively.
Net revenue at a constant exchange rate is an alternative
performance measure used by Management to evaluate underlying
performance of the business and is calculated by applying the prior
year ago exchange rate to net revenue in the currency of the
foreign entity.
Gross margin as reported in YTD 2022 was 83% (YTD 2021: 85%) and
83% in Q3 2022 (Q3 2021: 86%), respectively. The gross margin
declined as expected for YTD 2022 and Q3 2022 and mainly reflects a
greater mix of net revenue in certain government channels, which
are less profitable, and increased manufacturing costs.
SG&A expenses as reported in YTD 2022 were $331m (YTD 2021:
$299m) and $115m as reported in Q3 2022 (Q3 2021: $131m). YTD 2022
and Q3 2022 included $4m and $2m, respectively, of exceptional
consulting costs incurred in preparation for the planned additional
listing of Indivior shares on a major US exchange. YTD 2021 and Q3
2021 included $7m and $19m, respectively, of exceptional costs due
to a non cash adjustment to the provision for ANDA litigation
offset by releases of the provisions for False Claims Act
Allegations.
Excluding exceptional items, YTD 2022 SG&A expense increased
12% to $327m (Adj. YTD 2021: $292m); Q3 2022 SG&A expense
increased 1% to $113m (Adj. Q3 2021: $112m). The increases in YTD
2022 and Q3 2022 primarily reflect sales and marketing investments
to grow the Group's long-acting injectable products, SUBLOCADE and
PERSERIS, along with increased travel and entertainment
expenses.
YTD 2022 and Q3 2022 R&D expenses were $43m and $20m,
respectively (YTD 2021: $33m; Q3 2021: $11m). The increases over
the year-ago periods reflect higher R&D activity generally, as
certain projects and PMR studies were delayed in 2021 due to the
COVID-19 pandemic.
YTD 2022 and Q3 2022 net other operating income was $3m and net
other operating loss of $1m, respectively, (YTD 2021: $20m income;
Q3 2021: $19m income). YTD 2022 included a fair value loss on
equity investments, which were more than offset by the net proceeds
received from the out-licensing of nasal naloxone opioid overdose
patents and a Directors' & Officers' insurance claim settlement
which were recorded as exceptional other operating income. YTD 2021
and Q3 2021 included $20m and $19m, respectively, of net
exceptional benefits primarily due to the net proceeds received
from the sale of the legacy TEMGESIC(R)/ BUPREX(R) / BUPREXX(R)
(buprenorphine) franchise outside of North America.
YTD 2022 operating profit as reported was $173m (YTD 2021:
$168m). Exceptional benefits of $1m are included in the current
period. Net exceptional benefits of $13m were included in YTD 2021.
On an adjusted basis, YTD 2022 operating profit was $172m (YTD
2021: $155m). The increases on a reported and adjusted basis
primarily reflects strong net revenue growth, partially offset by
higher operating expenses, mainly related to increased sales and
marketing investments to grow the Group's long-acting injectable
technologies, SUBLOCADE and PERSERIS, along with higher research
and development expenses.
Q3 2022 operating profit as reported was $56m (Q3 2021: $38m).
Exceptional costs of $2m are included in the current period while
exceptional costs items of $nil are included in the year-ago
period. On an adjusted basis, Q3 2022 operating profit was $58m
(Adj. Q3 2021: $38m). The increases on a reported and adjusted
basis primarily reflect strong net revenue growth.
YTD 2022 net finance expense as reported was $13m (YTD 2021:
$18m expense). An exceptional expense of $1m is included in the
year-ago period for the write-off of deferred financing costs
related to the previous term loan. On an adjusted basis, YTD 2022
net finance expense was $13m (Adj. YTD 2021: $17m expense). The
modest reduction in net finance expense reflects higher interest
income earned on the Group's investments.
YTD 2022 reported tax expense was $30m, or a rate of 19% (YTD
2021 tax benefit: $19m, -13%). Adjusted YTD 2022 tax expense was
$29m, excluding the $1m tax expense on exceptional items, an
effective tax rate of 18%. Adjusted YTD 2021 tax expense amounted
to $24m, excluding the $43m tax benefit on exceptional items, an
effective tax rate of 17%. The Q3 2022 reported tax charge was
$13m, or a rate of 24% (Q3 2021: $4m, 13%). There were no
exceptional tax items recorded in Q3 2022. The Q3 2022 tax rate was
negatively impacted by the mix of income between territories and
restrictions on interest deductibility as interest rates
increase.
YTD 2022 reported and adjusted net income was $130m (YTD 2021
reported net income: $169m; YTD 2021 Adj. net income: $114m). The
increase in net income on an adjusted basis primarily reflects
higher net revenue partially offset by the increase in operating
expense, primarily SG&A investments behind SUBLOCADE and
PERSERIS. Q3 2022 net income on a reported basis was $41m (Q3 2021:
$27m), and $43m on an adjusted basis excluding the net after-tax
impact from exceptional items (Adj. Q3 2021: $27m). Higher Q3 2022
net income on an adjusted basis was primarily due to strong revenue
growth.
Diluted earnings per share on a reported and adjusted basis were
$0.89 in YTD 2022 (YTD 2021: $1.11 earnings per share on a diluted
basis and $0.75 earnings per share adjusted diluted basis). In Q3
2022, diluted earnings per share and adjusted diluted earnings per
share were $0.28 and $0.29, respectively (Q3 2021: $0.18 earnings
per share on a diluted and adjusted diluted basis).
Balance Sheet & Cash Flow
Cash and investments, totaled $1,035m at the end of Q3 2022
(including $26m restricted for self-insurance) (FY 2021: $1,102m).
Cash generated from operations in YTD 2022 was $63m which includes
exceptional cash litigation settlement payments of $108m and surety
bond cash collateral returned of $64m. Excluding these items, cash
generated from operations reflects strong operating profit which
was partially offset by the expected unwind of trade payables.
Gross borrowings, before issuance costs, were $247m at September
30, 2022 (ending FY 2021: $249m).
Net working capital (inventory plus trade receivables, less
trade and other payables) was negative $332m on September 30, 2022,
versus negative $423m at the end of FY 2021. The change in the
period was primarily from the expected unwind of trade
payables.
Net cash inflow from operating activities was $14m in YTD 2022
(YTD 2021 cash inflow: $186m) reflecting higher interest paid on
the Group's term loan facility, interest paid on settlement
payments and income taxes paid in YTD 2022 vs. income tax refunds
received in YTD 2021.
YTD 2022 cash outflow from investing activities was $221m (YTD
2021 cash outflow: $12m) which reflects the net investment in a
portfolio of investment-grade debt and treasury securities. See
Note 7 for further discussion on investments.
YTD 2022 cash outflow from financing activities was $72m (YTD
2021 cash outflow: $26m) which primarily reflects an increase in
payments made for the Group's share repurchase program.
R&D / Pipeline Update
Indivior's quarterly R&D and pipeline update may be found
here .
Risk Factors
The Group utilizes a formal process to identify, evaluate and
manage significant risks. The Directors have reviewed the principal
risks and uncertainties for the remainder of the 2022 financial
year. The principal risks and uncertainties affecting the Group's
business activities are detailed on pages 47 to 56 of the Indivior
PLC Annual Report and Accounts 2021. The principal risks and
uncertainties include:
-- Business Operations
-- Product Pipeline, Regulatory and Safety
-- Commercialization
-- Economic and Financial
-- Supply
-- Legal and Intellectual Property
-- Compliance
As reported with our half-year results, the nature and potential
impact of the principal risks, uncertainties, and emerging risks
facing the Group did not change, and are not expected to change for
the remainder of 2022, except for supply:
The global supply chain has continued to experience significant
challenges disrupting all industries. The Ukraine/Russia war
compounded supply chain troubles caused by the COVID-19 pandemic
which include: shortages of materials and labor; unprecedented
demand for goods and services; constricted logistics capacity; and
raising commodity and energy prices. The Group has noted lead time
extension, constricted capacity and minor disruption in some supply
components. Through ongoing management and proactive mitigation, as
described in our Annual Report and Accounts on page 53, the Group
has not experienced any significant disruption to its
supply-to-patient delivery process to date. However, despite these
mitigating measures, if major delays or shortages occur, the
delivery of products to our patients could be disrupted and impact
the short-term Group's financial performance.
Exchange Rates
The average and period end exchange rates used for the
translation of currencies into US dollars that have most
significant impact on the Group's results were:
9 Months to September 9 Months to September
30, 30,
2022 2021
GB GBP period end 1.1170 1.3530
-------------------- ----------------------
GB GBP average rate 1.2609 1.3853
-------------------- ----------------------
EUR Euro period end 0.9807 1.1682
-------------------- ----------------------
EUR Euro average 1.0664 1.1971
-------------------- ----------------------
Webcast Details
There will be a live webcast presentation on October 27, 2022 at
13:00 BST (8:00 am EDT) hosted by Mark Crossley, CEO. The details
are below. All materials will be available on the Group's website
prior to the event at www.indivior.com .
Webcast link: https://edge. media-server .com/mmc/p/23i6t2wv i
Participants may access the presentation telephonically by
registering with the following link:
https://register.vevent.com/register/BI7788b990aaff4a54b5aafc49c52d2ad2
Registrants will have an option to be called back immediately
prior to the call or be provided a call-in # with a unique pin code
following their registration).
For Further Information
Investor Jason Thompson VP, Investor Relations +1 804 402 7123
Enquiries Indivior PLC jason.thompson@indivior.com
Tim Owens Director, Investor
Relations Indivior +1 804 263 3978
PLC timothy.owens@indivior.com
Media Enquiries Jonathan Sibun Tulchan Communications +44 (0)20 7353 4200
+1 804 594 0836
US Media Inquiries 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.
About Indivior
Indivior is a global pharmaceutical company working to help
change patients' lives by developing medicines to treat substance
use disorders (SUD) and serious mental illnesses. Our vision is
that all patients around the world will have access to
evidence-based treatment for the chronic conditions and
co-occurring disorders of SUD. Indivior is dedicated to
transforming SUD from a global human crisis to a recognized and
treated chronic disease. Building on its global portfolio of OUD
treatments, Indivior has a pipeline of product candidates designed
to both expand on its heritage in this category and potentially
address other chronic conditions and co-occurring disorders of SUD,
including alcohol use disorder and cannabis use disorder.
Headquartered in the United States in Richmond, VA, Indivior
employs more than 900 individuals globally and its portfolio of
products is available in over 40 countries worldwide. Visit
www.indivior.com to learn more. Connect with Indivior on LinkedIn
by visiting www.linkedin.com/company/indivior .
Forward-Looking Statements
This announcement contains certain statements that are
forward-looking. Forward-looking statements include, among other
things, statements regarding the Indivior Group's financial
guidance for 2022 and its medium- and long-term growth outlook;
expectations for profitable growth and for particular products; the
planned additional US stock exchange listing; expected exceptional
and recurring costs related to a US stock exchange listing;
expected market growth rates; expected changes in market share;
future exchange rates; operational goals; its product development
pipeline; ongoing litigation; and other statements containing the
words "believe", "anticipate", "plan", "expect", "intend",
"estimate", "potential", "project", "may", "will", "should",
"would", "could", "can", "guidance", the negatives thereof, and
variations thereon and similar expressions.
By their nature, forward-looking statements involve risks and
uncertainties as they relate to events or circumstances that may or
may not occur in the future. Actual results may differ materially
from those expressed or implied in such statements because they
relate to future events.
Forward-looking statements speak only as of the date that they
are made and should be regarded solely as our current plans,
estimates and beliefs. Except as required by law, we do not
undertake and specifically decline any obligation to update,
republish or revise forward-looking statements to reflect future
events or circumstances or to reflect the occurrences of
unanticipated events. Various factors may cause differences between
Indivior's expectations and actual results, including, among
others, the material risks described in the most recent Indivior
PLC Annual Report and in subsequent releases, and: our reliance on
third parties to manufacture commercial supplies of most of our
products, conduct our clinical trials and at times to collaborate
on products in our pipeline; our ability to comply with legal and
regulatory settlements, healthcare laws and regulations,
requirements imposed by regulatory agencies and payment and
reporting obligations under government pricing programs; the
substantial litigation and ongoing investigations to which we are
or may become a party; risks related to the manufacture and
distribution of our products, some of which are controlled
substances; market acceptance of our products as well as our
ability to commercialize our products and compete with other market
participants; the uncertainties related to the development of new
products, including through acquisitions, and the related
regulatory approval process; our dependence on a small number of
significant customers; our ability to retain key personnel or
attract new personnel; our dependence on third-party payors for the
reimbursement of our products and the increasing focus on pricing
and competition in our industry; unintended side effects caused by
the clinical study or commercial use of our products; our use of
hazardous materials in our manufacturing facilities; our import,
manufacturing and distribution of controlled substances; our
ability to successfully execute acquisitions, partnerships, joint
ventures, dispositions or other strategic acquisitions; our ability
to protect our intellectual property rights and the substantial
cost of litigation or other proceedings related to intellectual
property rights; the risks related to product liability claims or
product recalls; the significant amount of laws and regulations
that we are subject to, including due to the international nature
of our business; macroeconomic trends and other global developments
such as the COVID-19 pandemic; the terms of our debt instruments,
changes in our credit ratings and our ability to service our
indebtedness and other obligations as they come due; changes in
applicable tax rate or tax rules, regulations or interpretations
and our ability to realize our deferred tax assets; and such other
factors as set out in this press release or our Annual Report and
Accounts
Condensed consolidated interim income statement
Unaudited Unaudited Unaudited Unaudited
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended
September 30 Notes $m $m $m $m
--------------------------------------- ----- ---------- --------- ---------- ---------
Net Revenue 2 232 187 659 568
Cost of sales (40) (26) (115) (88)
--------------------------------------- ----- ---------- --------- ---------- ---------
Gross Profit 192 161 544 480
--------------------------------------- ----- ---------- --------- ---------- ---------
Selling, general and administrative
expenses 3 (115) (131) (331) (299)
Research and development expenses 3 (20) (11) (43) (33)
Net other operating (loss)/income 3 (1) 19 3 20
--------------------------------------- ----- ---------- --------- ---------- ---------
Operating Profit 56 38 173 168
--------------------------------------- ----- ---------- --------- ---------- ---------
Operating profit before exceptional
items 58 38 172 155
Exceptional items 4 (2) - 1 13
--------------------------------------- ----- ---------- --------- ---------- ---------
Finance income 6 - 8 3
Finance expense (8) (7) (21) (21)
--------------------------------------- ----- ---------- --------- ---------- ---------
Net Finance Expense (2) (7) (13) (18)
--------------------------------------- ----- ---------- --------- ---------- ---------
Net finance expense before exceptional
items (2) (7) (13) (17)
Exceptional items within finance
expense 4 - - - (1)
--------------------------------------- ----- ---------- --------- ---------- ---------
Profit Before Taxation 54 31 160 150
--------------------------------------- ----- ---------- --------- ---------- ---------
Income tax (expense)/benefit 5 (13) (4) (30) 19
--------------------------------------- ----- ---------- --------- ---------- ---------
Taxation before exceptional items (13) (4) (29) (24)
Exceptional items within taxation 4 - - (1) 43
--------------------------------------- ----- ---------- --------- ---------- ---------
Net Income 41 27 130 169
--------------------------------------- ----- ---------- --------- ---------- ---------
Earnings per ordinary share (in
dollars)*
Basic earnings per share 6 $0.29 $0.18 $0.93 $1.15
Diluted earnings per share 6 $0.28 $0.18 $0.89 $1.11
* Basic and diluted earnings per share have been retrospectively
adjusted to reflect the impact of the Company's share
consolidation. Refer to Note 6 for further details.
Condensed consolidated interim statement of comprehensive
income
Unaudited Unaudited Unaudited Unaudited
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months
ended September 30 $m $m $m $m
------------------------------------ ---------- --------- ---------- ---------
Net income 41 27 130 169
Other comprehensive loss
Items that may be reclassified
to profit or loss in subsequent
years:
Net exchange adjustments on foreign
currency translation (16) (8) (36) (6)
------------------------------------ ---------- --------- ---------- ---------
Other comprehensive loss (16) (8) (36) (6)
------------------------------------ ---------- --------- ---------- ---------
Total comprehensive income 25 19 94 163
------------------------------------ ---------- --------- ---------- ---------
The notes are an integral part of these condensed consolidated
interim financial statements.
Condensed consolidated interim balance sheet
Unaudited
Sep 30, Audited
2022 Dec 31, 2021
Notes $m $m
------------------------------------- ----- --------- -------------
ASSETS
Non-current assets
Intangible assets 67 82
Property, plant and equipment 50 58
Right-of-use assets 30 37
Deferred tax assets 5 106 105
Investments 7 117 -
Other assets 8 37 106
------------------------------------- ----- --------- -------------
407 388
------------------------------------- ----- --------- -------------
Current assets
Inventories 106 95
Trade receivables 195 202
Other assets 8 25 32
Current tax receivable 5 20 13
Investments 7 97 -
Cash and cash equivalents 821 1,102
------------------------------------- ----- --------- -------------
1,264 1,444
------------------------------------- ----- --------- -------------
Total assets 1,671 1,832
------------------------------------- ----- --------- -------------
LIABILITIES
Current liabilities
Borrowings 9 (3) (3)
Provisions 10 (5) (5)
Other liabilities 10 (77) (61)
Trade and other payables 13 (633) (720)
Lease liabilities (7) (8)
Current tax liabilities 5 (19) (7)
------------------------------------- ----- --------- -------------
(744) (804)
------------------------------------- ----- --------- -------------
Non-current liabilities
Borrowings 9 (237) (239)
Provisions 10 (6) (76)
Other liabilities 10 (428) (474)
Lease liabilities (29) (36)
------------------------------------- ----- --------- -------------
(700) (825)
------------------------------------- ----- --------- -------------
Total liabilities (1,444) (1,629)
------------------------------------- ----- --------- -------------
Net assets 227 203
------------------------------------- ----- --------- -------------
EQUITY
Capital and reserves
Share capital 14 69 70
Share premium 8 7
Capital redemption reserve 5 3
Other reserve (1,295) (1,295)
Foreign currency translation reserve (56) (20)
Retained earnings 1,496 1,438
------------------------------------- ----- --------- -------------
Total equity 227 203
------------------------------------- ----- --------- -------------
The notes are an integral part of these condensed consolidated
interim financial statements.
Condensed consolidated interim statement of changes in
equity
Foreign
Capital currency
Share Share redemption Other translation Retained Total
Notes capital premium reserve reserve reserve earnings equity
Unaudited $m $m $m $m $m $m $m
--------------------------------- ------ -------- -------- ----------- -------- ------------ --------- -------
Balance at January 1, 2022 70 7 3 (1,295) (20) 1,438 203
----------------------------------------- -------- -------- ----------- -------- ------------ --------- -------
Comprehensive income
Net income - - - - - 130 130
Other comprehensive loss - - - - (36) - (36)
----------------------------------------- -------- -------- ----------- -------- ------------ --------- -------
Total comprehensive income - - - - (36) 130 94
----------------------------------------- -------- -------- ----------- -------- ------------ --------- -------
Transactions recognized
directly in equity
Shares issued 1 1 - - - - 2
Share-based plans - - - - - 12 12
Settlement of equity awards - - - - - (10) (10)
Shares repurchased and cancelled (2) - 2 - - (66) (66)
Transfer to share repurchase
liability - - - - - (8) (8)
Balance at September 30,
2022 69 8 5 (1,295) (56) 1,496 227
----------------------------------------- -------- -------- ----------- -------- ------------ --------- -------
Balance at January 1, 2021 73 6 - (1,295) (13) 1,311 82
----------------------------------------- -------- -------- ----------- -------- ------------ --------- -------
Comprehensive income
Net income - - - - - 169 169
Other comprehensive loss - - - - (6) - (6)
----------------------------------------- -------- -------- ----------- -------- ------------ --------- -------
Total comprehensive income - - - - (6) 169 163
----------------------------------------- -------- -------- ----------- -------- ------------ --------- -------
Transactions recognized
directly in equity
Shares issued - 1 - - - - 1
Share-based plans - - - - - 7 7
Deferred taxation on share-based
plans - - - - - 8 8
Transfer to share repurchase
liability - - - - - (100) (100)
Transfer to capital redemption
reserve for shares repurchased
and cancelled (1) - 1 - - - -
----------------------------------------- -------- -------- ----------- -------- ------------ --------- -------
Balance at September 30,
2021 72 7 1 (1,295) (19) 1,395 161
----------------------------------------- -------- -------- ----------- -------- ------------ --------- -------
The notes are an integral part of these condensed consolidated
interim financial statements.
Condensed consolidated interim cash flow statement
Unaudited Unaudited
2022 2021
For the nine months ended September 30 $m $m
------------------------------------------------------ --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit 173 168
Depreciation and amortization of property, plant
and equipment and intangible assets 11 12
Depreciation of right-of-use assets 6 6
Gain on disposal of intangible assets (1) (20)
Share-based payments 12 7
Impact from foreign exchange movements (9) (3)
Unrealized loss on equity investment 3 -
Settlement of tax on employee awards (10) -
Decrease in trade receivables 2 3
Decrease in current and non-current other assets 73 12
Increase in inventories (22) (5)
(Decrease)/increase in trade and other payables (75) 30
Decrease in provisions and other liabilities(1) (100) (10)
------------------------------------------------------ --------- ---------
Cash generated from operations 63 200
Interest paid (18) (14)
Interest received 5 1
Exceptional tax refund - 31
Taxes paid (35) (24)
Transaction costs related to debt refinancing (1) (8)
------------------------------------------------------ --------- ---------
Net cash inflow from operating activities 14 186
------------------------------------------------------ --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (4) (2)
Purchase of investments (233) -
Maturity of investments 15 -
Purchase of intangible asset - (30)
Proceeds from disposal of intangible assets 1 20
------------------------------------------------------ --------- ---------
Net cash outflow from investing activities (221) (12)
------------------------------------------------------ --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings - 250
Repayment of borrowings (2) (236)
Payment of lease liabilities (6) (6)
Shares repurchased and cancelled (66) (34)
Proceeds from the issuance of ordinary shares 2 -
------------------------------------------------------ --------- ---------
Net cash outflow from financing activities (72) (26)
------------------------------------------------------ --------- ---------
Exchange difference on cash and cash equivalents (2) (1)
Net (decrease)/increase in cash and cash equivalents (281) 147
Cash and cash equivalents at beginning of the
period 1,102 858
------------------------------------------------------ --------- ---------
Cash and cash equivalents at end of the period 821 1,005
------------------------------------------------------ --------- ---------
(1) Changes in the line item provisions and other liabilities
for YTD 2022 include exceptional litigation settlement payments
totaling $108m to the DOJ, DRL and RB (YTD 2021: $10m to RB, $6m
for DOJ related matters). $4m of interest paid on the DOJ
Resolution in YTD 2022 has been recorded in the interest paid line
item.
The notes are an integral part of these condensed consolidated
interim financial statements.
Notes to the condensed consolidated interim financial
statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Indivior PLC (the 'Company') is a public limited company
incorporated on September 26, 2014 and domiciled in the United
Kingdom. In these condensed consolidated interim financial
statements ('Condensed Financial Statements'), reference to the
'Group' means the Company and all its subsidiaries.
The Condensed Financial Statements have been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting" ("IAS 34"). The Condensed Financial
Statements should be read in conjunction with the Annual Report and
Accounts for the year ended December 31, 2021, which have been
prepared in accordance with UK-adopted International Accounting
Standards and in conformity with the Companies Act 2006 as
applicable to companies reporting under those standards. In
preparing these Condensed Financial Statements, the significant
judgments made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements
for the year ended December 31, 2021, except for changes in
estimates that are required in determining the provision for income
taxes. In 2022, the Group purchased ordinary shares of a listed
company and invested in a portfolio of investment-grade corporate
debt and U.S. Treasury securities and has therefore adopted new
accounting policies as disclosed in Note 7. The three and nine
months ended September 30, 2021 condensed consolidated income
statement and Note 3 have been expanded to present net other
operating (loss)/income as a separate line item to provide a
consistent comparative presentation.
The Condensed Financial Statements have been reviewed but are
unaudited and do not include all the information and disclosures
required in the annual financial statements and therefore should be
read in conjunction with the Group's Annual Report and Accounts as
at December 31, 2021. These Condensed Financial Statements were
approved for issue on October 26, 2022.
As disclosed in Note 10, the Group has liabilities and
provisions tot aling $479m (FY 2021: $537m) for the Department of
Justice (DOJ) Resolution, False Claims Act Allegations, and the
Reckitt Benckiser (RB) settlement. The Directors have assessed the
Group's ability to comply with the minimum liquidity covenant in
the Group's debt facility, maintain sufficient liquidity to fund
its operations and fulfill obligations under the DOJ resolution and
RB agreement. The Directors have also modeled the risk that
SUBLOCADE will not meet revenue growth expectations (considering a
15% decline on forecasts), an accelerated reversion to generic
analogues for SUBOXONE Film, and the risk the ongoing legal
proceedings may result in reasonably possible payments in a severe
but plausible downside scenario as part of the Group's going
concern assessment. These risks were balanced against the Group's
current and forecast working capital position. As a result of the
factors set out above, the Directors have a reasonable expectation
the Group has adequate resources to continue in operational
existence for at least one year from the approval of these
Condensed Financial Statements and therefore consider the going
concern basis to be appropriate for the accounting and preparation
of these Condensed Financial Statements.
The financial information contained in this document does not
constitute statutory accounts as defined in section 434 and 435 of
the Companies Act 2006. The Group's statutory financial statements
for the year ended December 31, 2021, were approved by the Board of
Directors on March 17, 2022, and delivered to the Registrar of
Companies. The report of the auditors on those accounts was
unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement under section 498 of the Companies
Act 2006.
2. SEGMENT INFORMATION
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 on a
geographical and product basis. Financial results are reviewed on a
consolidated basis for evaluating financial performance and
allocating resources. Accordingly, the Group operates in a single
reportable segment.
Net revenue and non-current assets
Revenues are attributed to countries based on the country where
the sale originates. The following tables represent net revenues
from continuing operations and non-current assets, net of
accumulated depreciation and amortization, by country. 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 nine months to
September 30, 2022 and 2021 were as follows:
Net revenue:
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended
September 30 $m $m $m $m
------------------------------------ ------ ----- ------ -----
United States 189 143 533 428
Rest of World 43 44 126 140
------------------------------------ ------ ----- ------ -----
Total 232 187 659 568
------------------------------------ ------ ----- ------ -----
On a disaggregated basis, the Group's net revenue by major
product line:
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended
September 30 $m $m $m $m
------------------------------------ ------ ----- ------ -----
Sublingual/other 116 117 349 387
SUBLOCADE 108 65 290 169
PERSERIS 8 5 20 12
------------------------------------ ------ ----- ------ -----
Total 232 187 659 568
------------------------------------ ------ ----- ------ -----
Non-current assets:
Sep 30, Dec 31,
2022 2021
$m $m
-------------- -------- -------
United States 66 133
Rest of World 235 150
-------------- -------- -------
Total 301 283
-------------- -------- -------
3. OPERATING EXPENSES AND NET OTHER OPERATING (LOSS)/INCOME
The table below sets out selected operating costs and expense
information:
Operating expenses
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended
September 30 $m $m $m $m
---------------------------------------------- ------ ----- ------ -----
Research and development expenses (20) (11) (43) (33)
---------------------------------------------- ------ ----- ------ -----
Selling and marketing expenses (53) (51) (160) (128)
Administrative and general expenses (62) (80) (171) (171)
---------------------------------------------- ------ ----- ------ -----
Selling, general, and administrative
expenses (115) (131) (331) (299)
---------------------------------------------- ------ ----- ------ -----
Depreciation, amortization, and impairment(1) (3) (3) (10) (10)
---------------------------------------------- ------ ----- ------ -----
(1) Depreciation and amortization expense is included in
research and development and selling, general and administrative
expenses. Additionally, depreciation and amortization expense in
YTD 2022 of $7m (YTD 2021: $8m) for intangibles and ROU assets is
included within cost of sales.
Medical affairs functional costs are included in administrative
and general expenses. Administrative and general expenses include
exceptional items in the current and prior period as outlined in
Note 4.
Net other operating (loss)/income
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended
September 30 $m $m $m $m
------------------------------------ ---- ---- ---- ----
Net other operating (loss)/ income (1) 19 3 20
------------------------------------ ---- ---- ---- ----
Net other operating income is credited to the income statement
as earned. YTD 2022 included fair value losses on equity
investments ($3m), net proceeds received from the out-licensing of
nasal naloxone opioid overdose patents ($1m), and a Directors'
& Officers' insurance claim settlement ($5m), which was
recorded as exceptional other operating income as outlined in Note
4. YTD 2021 includes the net proceeds received from the sale of the
TEMGESIC / BUPREX / BUPREXX (buprenorphine) franchise outside of
North America to Eumedica Pharmaceuticals AG for $19m and the
proceeds received from the out-licensing of nasal naloxone opioid
overdose patents for $1m.
4. EXCEPTIONAL ITEMS AND ADJUSTED RESULTS
Exceptional items
Where significant expenses or income occur 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 income or restructuring and related expenses from the
reconfiguration of the Group's activities and/or capital structure,
impairment of current and non-current assets, gains and losses from
the sale of intangible assets, certain costs arising as a result of
material and non-recurring regulatory and litigation matters, and
certain tax related matters. Exceptional items are excluded from
adjusted results consistent with the internal reporting provided to
Management and the Directors. Adjusted results are not a substitute
for, or superior to, reported results presented in accordance with
IFRS. Management performs a quantitative and qualitative assessment
to determine if an item should be considered for exceptional
treatment.
The table below sets out exceptional income/(expense) recorded
in each period:
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended
September 30 $m $m $m $m
--------------------------------------- ------ ----- ------ -----
Exceptional items within SG&A
Legal expenses/provision(1) - 5 - 18
ANDA litigation(2) - (24) - (24)
Debt refinancing(3) - - - (1)
US listing costs(4) (2) - (4) -
--------------------------------------- ------ ----- ------ -----
Total exceptional items within SG&A (2) (19) (4) (7)
Exceptional items within net other
operating income
Other operating income(5) - 19 5 20
--------------------------------------- ------ ----- ------ -----
Total exceptional items within other
operating income - 19 5 20
Exceptional items within net finance
expense
--------------------------------------- ------ ----- ------ -----
Finance expense(3) - - - (1)
--------------------------------------- ------ ----- ------ -----
Total exceptional items within finance
expense - - - (1)
--------------------------------------- ------ ----- ------ -----
Total exceptional items before taxes (2) - 1 12
Tax on exceptional items - - (1) -
Exceptional tax item(6) - - - 43
--------------------------------------- ------ ----- ------ -----
Total exceptional items (2) - - 55
--------------------------------------- ------ ----- ------ -----
1. Negotiation with DOJ related qui tams in Q3 2021 and YTD 2021
led to a change in the Group's provision for these matters and a
release of $5m and $18m, respectively.
2. In Q3 2021, upon conclusion of expert discovery, the Group
increased the provision for intellectual property related matters -
ANDA Litigation, to $73m, resulting in an exceptional charge for
$24m. See Note 10 and 11 for further discussion.
3. Debt refinancing costs in YTD 2021 consist of advisory and
legal fees incurred related to the Group's June 2021 debt
refinancing. These costs are included in SG&A. Additionally, in
Q2 2021 the Group wrote-off $1m of unamortized deferred financing
costs due to extinguishment and settlement of the previous term
loan. These costs are included within finance expense.
4. In YTD 2022 and Q3 2022, the Group recognized $4m and $2m,
respectively, of exceptional consulting costs in preparation for a
potential additional listing of Indivior shares on a major US
exchange. The Group expects to incur pre-tax costs of $10m to $15m
in FY 2022 as it prepares for an additional US listing, of which
approximately 50% are expected to be recorded as exceptional.
5. The Group recognized $5m of exceptional income in Q2 2022
related to the proceeds received from a Directors' & Officers'
insurance reimbursement claim. Exceptional other operating income
in Q3 2021 relates to the net proceeds received from the sale of
the TEMGESIC / BUPREX / BUPREXX (buprenorphine) franchise outside
of North America to Eumedica Pharmaceuticals AG for $19m. Remaining
exceptional income in YTD 2021 relates to the proceeds received
from the out-licensing of nasal naloxone opioid overdose patents
for $1m.
6. Exceptional tax benefit recorded YTD 2021 relates to the
approval of tax credits by the Internal Revenue Service in relation
to development credits for SUBLOCADE claimed for years 2014 to
2017, the tax impact of settlement costs incurred with RB which
were recorded in the prior year, reactivation of prior year
interest expense restriction, impact of the ANDA accrual and a tax
expense in relation to exceptional other operating income
Adjusted results
The Board and management team use adjusted results and measures
to provide incremental 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 results for both
Q3/YTD 2022 and Q3/YTD 2021.
Reconciliation of operating profit to adjusted operating
profit
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended
September 30 $m $m $m $m
------------------------------------------------ ------ ----- ------ -----
Operating profit 56 38 173 168
------------------------------------------------ ------ ----- ------ -----
Exceptional selling, general and administrative
expenses 2 19 4 7
Exceptional other operating income - (19) (5) (20)
------------------------------------------------ ------ ----- ------ -----
Adjusted operating profit 58 38 172 155
------------------------------------------------ ------ ----- ------ -----
Reconciliation of profit before taxation to adjusted profit
before taxation
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended
September 30 $m $m $m $m
------------------------------------------------ ------ ----- ------ -----
Profit before taxation 54 31 160 150
------------------------------------------------ ------ ----- ------ -----
Exceptional selling, general and administrative
expenses 2 19 4 7
Exceptional other operating income - (19) (5) (20)
Exceptional finance expense - - - 1
------------------------------------------------ ------ ----- ------ -----
Adjusted profit before taxation 56 31 159 138
------------------------------------------------ ------ ----- ------ -----
Reconciliation of net income to adjusted net income
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended
September 30 $m $m $m $m
------------------------------------------------ ------ ----- ------ -----
Net income 41 27 130 169
------------------------------------------------ ------ ----- ------ -----
Exceptional selling, general and administrative
expenses 2 19 4 7
Exceptional other operating income - (19) (5) (20)
Exceptional finance expense - - - 1
Tax exceptional - - 1 (43)
------------------------------------------------ ------ ----- ------ -----
Adjusted net income 43 27 130 114
------------------------------------------------ ------ ----- ------ -----
5. TAXATION
The Group calculates tax expense for interim periods using the
expected full year rates, considering the pre-tax income and
statutory rates for each jurisdiction. To the extent practicable, a
separate estimated average annual effective income tax rate is
determined for each taxing jurisdiction and applied individually to
the interim period pre-tax income of each jurisdiction. Similarly,
if different income tax rates apply to different categories of
income (such as capital gains or income earned in particular
industries), to the extent practicable a separate rate is applied
to each individual category of interim period pre-tax income. The
resulting expense is allocated between current and deferred taxes
based upon the forecasted full year ratio.
In the nine months ended September 30, 2022, the reported total
tax expense was $30m, or a rate of 19% (YTD 2021 tax benefit: $19m,
-13%). The tax expense on YTD 2022 adjusted profits amounted to
$29m, excluding the $1m tax expense on exceptional items, which
represented an effective tax rate of 18%. The tax expense on YTD
2021 adjusted profits amounted to $24m, excluding the $43m tax
benefit on exceptional items, which represented an effective tax
rate of 17%. The change in the effective tax rate on adjusted
profits was primarily driven by the relative contribution to
pre-tax income by taxing jurisdiction in the period and remains
lower than the statutory tax rate in the UK due to permanent items
such as the availability of tax incentives for innovation.
The Gr oup's balance sheet at September 30, 2022 includes a
current tax receivable of $20m (FY 2021: $13m), a current tax
payable of $19m (FY 2021: $7m), and deferred tax asset of $106m (FY
2021: $105m).
The Group recognizes deferred tax assets to the extent that
sufficient future taxable profits are probable against which these
future tax deductions can be utilized. At September 30, 2022, the
Group's net deferred tax assets of $106m relate primarily to
inventory costs capitalized for tax purposes, litigation
liabilities (including exceptional items that are not expected to
recur), share-based compensation, and other short term timing
differences. Recognition of deferred tax assets is driven by the
Group's ability to utilize the deferred tax asset which is reliant
on forecast taxable profits arising in the jurisdiction in which
the deferred tax asset is recognized. The Group has assessed
recoverability of deferred tax assets using Group-level budgets and
forecasts consistent with those used for the assessment of
viability and asset impairments, particularly in relation to levels
of future sales. These forecasts are therefore subject to similar
uncertainties to those assessments. This exercise is reviewed each
quarter and, to the extent required, an adjustment to the
recognized deferred tax asset may be made. With the exception of
specific assets that are not currently considered accessible,
Management have concluded full recognition of deferred tax assets
to be appropriate and do not consider there a significant risk of a
material change in their assessment in the next 12 months.
Other tax matters
In September 2022, the Company's shareholders approved an
additional listing in the US, which is expected to take place in
Spring 2023. Once listed in the US, US tax laws limit deductibility
of compensation for certain management roles. The Group currently
carries approximately $8m of deferred tax assets that are not
expected to be realized once the listing is complete. Approximately
one half of this amount will be charged to equity and one half will
be presented as an exceptional tax charge in the period the listing
takes place.
The enacted United Kingdom Statutory Corporation Tax rate is 19%
for the year ended December 31, 2022. On March 3, 2021, the UK
Chancellor announced an increase in the corporation tax rate from
19% to 25% with effect from April 1, 2023. The increase to the
corporation tax rate was substantively enacted on May 24, 2021. The
effect of the rate change on these financial statements is
immaterial. During 2021, the OECD published a framework for the
introduction of a global minimum effective tax rate of 15%,
applicable to large multinational groups. On 20 July 2022, HM
Treasury released draft legislation to implement these 'Pillar 2'
rules with effect from April 1, 2024 in the UK. The Group will
review these draft rules to understand any potential impacts.
As a multinational group, tax uncertainties remain in relation
to Group financing, intercompany pricing, the location of taxable
operations and the tax treatment of exceptional items. Management
have concluded tax provisions made to be appropriate and do not
believe a significant risk of material change to uncertain tax
positions exists in the next 12 months.
6. EARNINGS PER SHARE
Q3 Q3 YTD YTD
2022 2021 2022 2021
For the three and nine months ended
September 30 $ $ $ $
------------------------------------ ------ ----- ------ -----
Basic earnings per share $0.29 $0.18 $0.93 $1.15
Diluted earnings per share $0.28 $0.18 $0.89 $1.11
Adjusted basic earnings per share $0.31 $0.18 $0.93 $0.78
Adjusted diluted earnings per share $0.29 $0.18 $0.89 $0.75
------------------------------------ ------ ----- ------ -----
Share consolidation
In September 2022, the Company's shareholders approved an
additional listing in the US, which is expected to take place in
Spring 2023. Additionally, to fulfill US exchange requirements for
share price minimums and norms, the Company's shareholders also
approved a 5-for-1 share consolidation. On October 10th, 2022, the
Company completed this share consolidation. Shareholders received 1
new Ordinary share with a nominal value of $0.50 each for every 5
previously existing Ordinary shares which had a nominal value of
$0.10 each. The Company's basic and diluted weighted average number
of shares outstanding, basic earnings per share, diluted earnings
per share and adjusted earnings per share (basic and diluted) have
been retrospectively adjusted to reflect the share consolidation in
all the periods presented.
Basic
Basic earnings per share ("EPS") is calculated by dividing
profit for the period attributable to owners of the Company by the
weighted average number of ordinary shares in issue during the
period.
Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The Company
has dilutive potential ordinary shares in the form of stock options
and awards. These options and awards have been adjusted to reflect
the share consolidation, referred to above. The weighted average
number of shares is adjusted for the number of shares granted
assuming the exercise of stock options performance conditions have
been met at the balance sheet date and as determined per the
treasury stock method.
Weighted average number of shares
The weighted average number of ordinary shares outstanding for
Q3 2022 includes the favorable impact of 33,763,488 ordinary shares
repurchased in FY 2021 (equivalent shares post consolidation:
6,752,697) and 17,815,033 ordinary shares repurchased through YTD
2022 (equivalent share post consolidation: 3,563,007). See Note 14
for further discussion. In 2022, conditional awards of 7,839k
(2021: 14,175k) were granted under the Group's Long-Term Incentive
Plan.
2022 2021
Weighted average number of shares thousands thousands
--------------------------------------- --------- ---------
On a basic basis 140,034 146,665
Dilution from share awards and options 6,594 5,941
---------------------------------------- --------- ---------
On a diluted basis 146,628 152,606
---------------------------------------- --------- ---------
Adjusted Earnings
The Directors believe that diluted earnings per share, adjusted
for the impact of exceptional items after the appropriate tax
amount, provides more meaningful information on underlying trends
to shareholders in respect of earnings per ordinary share. A
reconciliation of net income to adjusted net income is included in
Note 4.
7. INVESTMENTS
Investments comprise holdings in equity and debt securities.
Investments in equity securities held for trading or for which the
Group has not elected to recognize fair value gains and losses
through other comprehensive income are initially recorded and
subsequently measured at fair value through profit or loss (FVPL).
Investments in debt securities are initially recorded at fair value
plus or minus directly attributable transaction costs and
remeasured on the basis of the Group's business model and the
contractual cash flow characteristics. Interest income from debt
securities are included in finance income using the effective
interest method.
Sep
30, Dec 31,
2022 2021
Current and non-current investments $m $m
--------------------------------------- ------ -------
Equity securities at FVPL 7 -
Debt securities held at amortized cost 90 -
--------------------------------------- ------ -------
Total investments, current 97 -
--------------------------------------- ------ -------
Debt securities held at amortized cost 117 -
--------------------------------------- ------ -------
Total investments, non-current 117 -
--------------------------------------- ------ -------
Total 214 -
--------------------------------------- ------ -------
Equity securities at FVPL
In February 2022, the Group purchased ordinary shares of Aelis
Farma. The shares are subject to a holding period of 365 days from
the acquisition. The investment is classified as a current
investment at September 30, 2022 as the holding period expires in
less than 12 months. Unrealized loss recorded in YTD 2022 was $3m
and included within net other operating (loss)/income.
Debt securities held at amortized cost
In Q1 2022 and Q3 2022, the Group initiated purchases of
investment-grade corporate debt and U.S. Treasury securities. The
Group's investments in debt securities are held at amortized cost
based on the Group's intention to hold these investments to
maturity and collect contractual cash flows that are solely
payments of principal and interest. A portion of the investments in
debt securities are held in a separate account to provide for
self-insurance. This investment has been classified as non-current
as access to the funds is restricted for a 12 month period after
the term of the insurance. All other debt securities held at
amortized cost are classified as non-current investments, except
for those with maturities less than 12 months from the end of the
reporting period, which are classified as current investments.
The Group's investments in debt securities do not result in
significant changes to the Group's credit risk, liquidity risk, or
interest rate risk. All the Group's corporate debt securities held
at amortized cost are considered to be of low credit risk based on
investment-grade credit ratings from Standard and Poor's or Moody's
(BBB-/Baa3 or higher). The Group's U.S. Treasury securities have no
default risk since they're guaranteed by the U.S. government. The
majority of the Group's investments held at amortized cost are
issued at fixed interest rates and changes in floating rates would
not have a significant impact on interest rate risk.
The Group applies an expected credit loss impairment model to
financial instruments held at amortized cost. The recognition of a
loss allowance is limited to 12-month expected credit losses unless
credit risk increases significantly, which would require lifetime
expected credit losses to be applied. When measuring expected
credit losses, investments are grouped based on similar credit risk
characteristics. The Group uses judgment in selecting the inputs to
the impairment model based on historical loss rates for similar
instruments, current conditions, and forecasts of future economic
conditions. As of September 30, 2022, expected credit losses for
the Group's investments held at amortized cost are deemed to be
immaterial.
Fair value hierarchy
Fair value is the price that would be received to sell an asset
or transfer a liability in an orderly transaction between market
participants at the measurement date. The different levels have
been defined as follows:
-- Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities
-- Level 2: Inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly or indirectly
-- Level 3: Unobservable inputs for the asset or liability
The Group's only financial instruments which are measured at
fair value are equity securities at FVPL. The fair value of equity
securities at FVPL is based on quoted market prices on the
measurement date.
The following table categorizes the Group's financial assets
measured at fair value by valuation methodology used in determining
their fair value at September 30, 2022.
Level Level Level
1 2 3 Total
Financial assets at fair value $m $m $m $m
-------------------------------- ----- ----- ----- -----
Equity securities at FVPL 7 - - 7
The Group also has certain financial instruments which are not
measured at fair value. The carrying value of cash and cash
equivalents, trade receivables, other assets, and trade and other
payables is assumed to approximate fair value due to their
short-term nature. At September 30, 2022, the carrying value of
investments held at amortized cost was above the fair value by $3m,
due to rising interest rates. The fair value of investments held at
amortized cost was calculated based on quoted market prices which
would be classified as Level 1 in the fair value hierarchy
above.
8. CURRENT AND NON-CURRENT OTHER ASSETS
Sep 30, Dec 31,
2022 2021
Current and non-current investments $m $m
------------------------------------ -------- -------
Short-term prepaid expenses 15 18
Other current assets 10 14
------------------------------------ -------- -------
Total other current assets 25 32
------------------------------------ -------- -------
Long-term prepaid expenses 19 22
Other non-current assets 18 84
------------------------------------ -------- -------
Total other non-current assets 37 106
------------------------------------ -------- -------
Total 62 138
------------------------------------ -------- -------
Other current and non-current assets primarily represent the
funding of surety bonds in relation to intellectual property
related matters (see Note 12 for further discussion). As a result
of the settlement agreement with Dr. Reddy's Laboratories S.A. and
Dr. Reddy's Laboratories, Inc. (together, "DRL"), the surety bond
holders have returned $64m of collateral in July 2022, causing
majority of the decrease in the other non-current balance as of
September 30, 2022. Long-term prepaid expenses relate primarily to
payments for contract manufacturing capacity.
9. FINANCIAL LIABILITIES - BORROWINGS
In April 2022, the Group completed an amendment to its existing
term loan which provides the Group greater flexibility in the use
of cash being generated and changes the variable interest rate base
from USD LIBOR to USD SOFR plus a credit spread adjustment of 26
bps. As part of the modification, the Group incurred $1m of
issuance costs, banking fees and legal fees which are deemed to be
incremental and directly attributable to the amendment.
Accordingly, the Group capitalized these costs, which were netted
against the total amount borrowed and are amortized over the
maturity period using the effective interest method.
The table below sets out the current and non-current portion
obligation of the Group's term loan:
Sep
30, Dec 31,
2022 2021
Term loan $m $m
------------------------ ------ -------
Term loan - current (3) (3)
Term loan - non-current (237) (239)
------------------------ ------ -------
Total term loan (240) (242)
------------------------ ------ -------
*Total term loan borrowings reflect the principal amount drawn
including debt issuance costs of $7m (FY 2021: $7m).
At September 30, 2022, the term loan fair value was
approximately 99% (FY 2021: 99%) of par value. The key terms of the
term loan in effect at September 30, 2022, are as follows:
Required
Nominal interest annual Minimum
Currency margin Maturity repayments liquidity
--------- -------- ---------------- -------- ----------- --------------------
Term Loan USD SOFR + 26bps 2026 1% Larger of $100m or
facility + 5.25% 50% of Loan Balance
--------- -------- ---------------- -------- ----------- --------------------
-- Nominal interest margin is calculated USD SOFR plus a credit
spread adjustment of 26 bps, subject to a floor of 0.75%.
-- There are no revolving credit commitments.
10. PROVISIONS AND OTHER LIABILITIES
Provisions
Total Total
Sep Dec 31,
Current Non-Current 30, 2022 Current Non-Current 2021
Current and non-current
provisions $m $m $m $m $m $m
------------------------ ------- ----------- --------- ------- ----------- -------
Federal false claims
allegations (5) - (5) (5) - (5)
Intellectual property
related matters - (3) (3) - (73) (73)
========= =======
Other - (3) (3) - (3) (3)
------------------------ ------- ----------- --------- ------- ----------- -------
Total provisions (5) (6) (11) (5) (76) (81)
------------------------ ------- ----------- --------- ------- ----------- -------
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 probable, 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. Litigation costs are
expensed as incurred.
The Group carries a provision of $5m (FY 2021: $5m) pertaining
to all outstanding False Claims Act Allegations as discussed in
Note 12. These matters are expected to be settled within the next
12 months.
The provision for intellectual property related matters has been
substantially transferred to other liabilities as a result of the
settlement with DRL. See Note 12, Intellectual property related
matters - ANDA litigation.
Other provisions totaling $3m (FY 2021: $3m) primarily represent
retirement benefit costs which are not expected to be settled
within one year.
Other liabilities
Total Total
Sep Dec 31,
Current Non-Current 30, 2022 Current Non-Current 2021
Current and non-current
other liabilities $m $m $m $m $m $m
------------------------ ------- ----------- --------- ------- ----------- -------
DOJ resolution (51) (391) (442) (53) (439) (492)
Intellectual property
related matters (10) (11) (21) - - -
RB indemnity settlement (8) (24) (32) (8) (32) (40)
Share repurchase (8) - (8) - - -
Other - (2) (2) - (3) (3)
------------------------ ------- ----------- --------- ------- ----------- -------
Total other liabilities (77) (428) (505) (61) (474) (535)
------------------------ ------- ----------- --------- ------- ----------- -------
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 a risk-free rate.
DOJ Resolution Agreement
On July 24, 2020, the Group settled criminal and civil liability
with the United States Department of Justice (DOJ), the US Federal
Trade Commission (FTC), and US state attorneys general in
connection with a multi-count indictment brought in April 2019 by a
grand jury in the Western District of Virginia, a civil lawsuit
joined by the DOJ in 2018, and an FTC investigation. In November
2020, the first payment of $103m (including interest) was made. In
January 2022, an additional payment of $54m (including interest)
was made pursuant to the resolution agreement. Subsequently, five
annual installments of $50m will be due every January 15 from 2023
to 2027 with the final installment of $200m due in December 2027.
Interest accrues on certain portions of the resolution which will
be paid together with the annual installment payments. For
non-interest-bearing portions, the liability has been recorded at
the net present value based on timing of the estimated payments.
The discount rate and interest rate are 1.25%. In YTD 2022, the
Group recorded interest expense totaling $4m (YTD 2021: $5m).
-- Under the terms of the resolution agreement with the DOJ, the
Group has agreed to compliance terms regarding its sales and
marketing practices. Compliance with these terms is subject to
annual Board and CEO certifications submitted to the US Attorney's
Office.
-- As part of the resolution with the FTC and as detailed in the
text of the stipulated order, for a ten-year period Indivior Inc.
is required to make specified disclosures to the FTC and is
prohibited from certain conduct.
-- In addition to the resolution agreement, the Group entered
into a five-year Corporate Integrity Agreement with the HHS Office
of the Inspector General (HHS-OIG), pursuant to which the Group
committed to promote compliance with laws and regulations and
committed to the ongoing evolution of an effective compliance
program, including written standards, training, reporting, and
monitoring procedures. The Group is subject to reporting and
monitoring requirements, including annual reports and compliance
certifications from key management and the Board's Nominating &
Governance Committee, which is submitted to HHS-OIG. In addition,
the Group is subject to monitoring by an Independent Review
Organization, which submits audit findings to HHS-OIG, and review
by a Board Compliance Expert, who prepared a compliance assessment
report in the first reporting period and will prepare a compliance
assessment report in the third reporting period.
-- To date, the Group reasonably believes it has met all of the
requirements specified in these three agreements.
The Group has other liabilities for intellectual property
related matters totaling $21m (FY 2021: $73m; previously classified
as a provision), w hich relates to a settlement in intellectual
property litigation with DRL as outlined in Note 12, Intellectual
property related matters - ANDA litigation. As announced in June
2022, the Group, together with Aquestive Therapeutics, Inc. entered
into a settlement agreement with DRL resolving intellectual
property litigation. Under the settlement agreement, the Group made
a settlement payment to DRL in June 2022 with final payments due in
2023 and 2024. This liability has been recorded at the net present
value, using a risk-free rate, considering the timing of payments.
In YTD 2022, the Group recorded $1m of finance expense (YTD 2021:
$2m) for time value of money on the liability.
On January 25, 2021, the Group reached a settlement with RB to
resolve claims which RB issued in the Commercial Court in London on
November 13, 2020, seeking indemnity under the Demerger Agreement
between amongst others, RB and the Group (Demerger Agreement).
Pursuant to the settlement, RB withdrew the US $1.4b claim to
release the Group from any claim for indemnity under the Demerger
Agreement relating to the DOJ and FTC settlements which RB entered
into in July 2019, as well as other claims for indemnity arising
from those matters. The Group 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
an initial payment of $10m in February 2021, followed by an
installment payment of $8m in January 2022. Subsequently, annual
installment payments of $8m will be due every January from 2023 to
2026. The Group carries a liability totaling $32m (FY 2021: $40m)
related to this settlement. The effect of discounting was not
material.
On May 3, 2022, the Group commenced a share repurchase program
of up to $100m. As of September 30, 2022, the Group recorded a
liability for $8m, which represents the amount to be spent under
the program for the month of October 2022, the period closed for
modification or termination of the program. This liability has been
classified as current as the Group expects the remaining shares
will be purchased within one year. Refer to Note 14 for further
discussion.
Other liabilities primarily represent deferred revenue related
to a supply agreement.
11. CONTINGENT LIABILITIES
The Group has assessed certain legal and other matters to be not
probable based upon current facts and circumstances, including any
potential impact the DOJ resolution could have on these matters.
Where these matters are determined to be possible, they represent
contingent liabilities. Except for those matters discussed in Note
12 under "False Claims Act Allegations" and "Intellectual Property
Related Matters - ANDA Litigation", for which liabilities or
provisions have been recognized, Note 12 sets out the contingent
liabilities for legal and other disputes for which the Group has
assessed as contingent liabilities. Where the company believes that
it is possible to reasonably estimate a range for the contingent
liability this has been disclosed.
12. LEGAL PROCEEDINGS
There are certain ongoing legal proceedings or threats of legal
proceedings in which the Group is a party, but in which the Group
believes the possibility of an adverse impact is remote and they
are not discussed in this Note 12.
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
(Antitrust MDL). The various plaintiffs generally allege, among
other things, that Indivior violated US 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 deadline
for the class exclusion or "opt out" was June 5, 2022. The court
denied the Group's motion for summary judgment by order dated
August 22, 2022.
-- 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 the Antitrust
MDL. The Carefirst case remains pending.
-- The Group has evaluated the antitrust class and state claims
in light of the DOJ settlement, which included that a Group
subsidiary pled guilty to one count of making a false statement
relating to health care matters in one state in 2012 (as discussed
above under DOJ Resolution Agreement). The Group believes it has
valid defenses and continues to vigorously defend itself. Select
plaintiffs in these matters previously made settlement demands,
which were not accepted and are not current offers, totaling
approximately $290 million, 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 2020, the Group was served with lawsuits filed by several
insurance companies, some of whom are proceeding both on their own
claims and through the assignment of claims from affiliated
companies. Cases filed by (1) Humana Inc. and (2) Centene
Corporation, Wellcare Healthcare Plans, Inc., New York Quality
Healthcare Corp. (d/b/a Fidelis Care), and Health Net, LLC were
pending in the Eastern District of Pennsylvania. The complaints
were dismissed in July 2021. Plaintiffs filed Notices of Appeal in
August 2021 to the United States Court of Appeals for the Third
Circuit ("Third Circuit"). The Third Circuit heard oral arguments
on this appeal on March 31, 2022. Humana also filed a Complaint in
state court in Kentucky with substantially the same claims as were
raised in the Federal Court case. That case has been stayed pending
a decision in the Third Circuit appeal. Cases filed by (1) Blue
Cross and Blue Shield of Massachusetts, Inc., Blue Cross and Blue
Shield of Massachusetts HMO Blue, Inc., (2) Health Care Service
Corp., (3) Blue Cross and Blue Shield of Florida, Inc., Health
Options, Inc., (4) BCBSM, Inc. (d/b/a Blue Cross and Blue Shield of
Minnesota) and HMO Minnesota (d/b/a Blue Plus), (5) Molina
Healthcare, Inc., and (6) Aetna Inc. (collectively, the "Roanoke
Plaintiffs") are pending in the Circuit Court for the County of
Roanoke, Virginia. These plaintiffs have asserted claims under
federal and state RICO statutes, state antitrust statutes, state
statutes prohibiting unfair and deceptive practices, state statutes
prohibiting insurance fraud, and common law fraud, negligent
misrepresentation, and unjust enrichment. In June 2021, defendants'
motion to stay was denied and certain claims were dismissed without
prejudice. The Roanoke Plaintiffs filed amended complaints, and the
Group filed demurrers, seeking dismissal of some of the asserted
claims. The court heard oral argument on the demurrers on September
1, 2022, and issued a letter opinion on October 14, 2022 sustaining
in part and overruling in part the Group's demurrers. A jury trial
on the Group's pleas in bar has been set for October 16-20, 2023. A
jury trial on the merits has been set for July 15, 2024-August 8,
2024.
-- The Group is still in the process of evaluating the claims,
believes it has meritorious defenses, and intends to vigorously
defend itself. Engagement with the claimants has been minimal.
Accordingly, no estimate of the range of potential loss can be made
at this time.
Civil Opioid Litigation
-- The Group has been named as a defendant in more than 400
civil lawsuits brought by state and local governments, public
health agencies 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 to increase the market for opioids and their own
market share, as well as individuals alleging personal injury
claims. Most of these cases have been consolidated and are pending
in a federal multi-district litigation (MDL) in US District Court
for the Northern District of Ohio. Litigation against the Group in
the MDL is stayed. Motions to remand are currently being considered
by the court in over 50 cases to which the Group is a party (among
numerous other defendants).
-- The Court in the MDL held a status conference on June 22,
2022, with county and municipality plaintiffs and certain
manufacturer defendants (including the Group) and distributor
defendants to discuss what information the parties needed to
proceed, whether the parties would entertain settlement and whether
there should be any bellwether trials from this subset of
plaintiffs and defendants. The court agreed no additional
bellwether trials are needed, provided that all of the parties were
progressing on a settlement track. The court held a status
conference with this same group of plaintiff and defendants on
September 23, 2022. Certain defendants filed supplemental briefing
in opposition to pending motions to remand on September 30, 2022.
The plaintiffs' responsive briefing is due by October 28, 2022.
-- Separately, the Group's response to five individual
complaints filed in West Virginia state court that have not been
transferred to the MDL is due by January 30, 2023.
-- Given the status and preliminary stage of litigation in both
the MDL and state courts, no estimate of possible loss in the
opioid litigation can be made at this time.
False Claims Act Allegations
-- In August 2018, the United States District Court for the
Western District of Virginia unsealed a declined qui tam complaint
alleging causes of action under the Federal and state False Claims
Acts against certain entities within the Group predicated on best
price issues and claims of retaliation. See United States ex rel.
Miller v. Reckitt Benckiser Group PLC et al., Case No.
1:15-cv-00017 (W.D. Va.). The suit also seeks reasonable attorneys'
fees and costs. The Group was served with the complaint in January
2021. The Group filed a Motion to Dismiss in June 2021. The case
was stayed for mediation in September 2021, but the parties did not
reach agreement. In March 2022, Relator submitted a request for
oral argument on the Motion to Dismiss. On July 21, 2022, the court
entered an order staying the action and reserving a decision on the
Group's Motion to Dismiss pending rehearing en banc by the U.S.
Court of Appeals for the Fourth Circuit in U.S. ex rel. Sheldon v.
Allergan Sales, LLC. On rehearing en banc, the Fourth Circuit
affirmed the district court's opinion in U.S. ex rel. Sheldon v.
Allergan Sales, LLC by order dated September 23, 2022. The United
States District Court for the Western District of Virginia has not
yet ruled on the Group's Motion to Dismiss.
-- In May 2018, Indivior Inc. received an informal request from
the United States Attorney's Office ("USAO") for the Southern
District of New York, seeking records relating to the SUBOXONE Film
manufacturing process. The Group is discussing with the USAO
certain information and allegations that the government received
regarding SUBOXONE Film.
UK Shareholder Claims
-- On September 21, 2022, certain shareholders issued
representative and multiparty claims against Indivior PLC in the
High Court of Justice for the Business and Property Courts of
England and Wales, King's Bench Division. The claims generally
allege that Company violated the UK Financial Services and Markets
Act 2000 ("FSMA 2000") by making false or misleading statements or
material omissions in public disclosures, including the 2014
Demerger Prospectus, regarding an alleged product-hopping scheme
regarding the switch from SUBOXONE(R) tablets to SUBOXONE(R) film.
The Group has not yet been served with either claim.
-- The Group has begun its evaluation of the claims, believes in
has meritorious defenses, and intends to vigorously defend itself.
Given the status and preliminary stage of the litigation, no
estimate of possible loss can be made at this time.
I ntellectual Property Related Matters
-- The Group filed actions against DRL in the United States
District Court for the District of New Jersey ("NJ District Court")
alleging that DRL's generic buprenorphine/naloxone film product
infringes US Patent Nos. 9,687,454 and 9,931,305 ("the '454 and
'305 Patents") in 2017 and 2018, respectively. The cases were
consolidated in May 2018. In July 2018, the NJ District Court
granted the Group a Preliminary Injunction (PI) pending the outcome
of a trial on the merits of the '305 Patent and required the Group
to post a surety bond for $72m in connection with the PI. In
November 2018, the Court of Appeals for the Federal Circuit (CAFC)
issued a decision vacating the PI against DRL. Separately, DRL
filed an amended answer alleging various antitrust counterclaims.
The parties reached a settlement following mediation in June 2022,
and the case accordingly was dismissed on June 27, 2022. See Note
10 for further discussion regarding settlement payments and timing
of those payments.
-- The Group filed actions against Alvogen Pine Brook LLC and
Alvogen Inc. (together, "Alvogen") in the NJ District Court
alleging that Alvogen's generic buprenorphine/naloxone film product
infringes the '454 and '305 Patents in 2017 and 2018, respectively.
The cases were consolidated in May 2018. In January 2019, the NJ
District Court granted Indivior a temporary restraining order
("TRO") to restrain the launch of Alvogen's generic
buprenorphine/naloxone film product pending a trial on the merits
of the '305 Patent and Indivior was required to post a surety bond
of $36m. Indivior and Alvogen entered into an agreement whereby
Alvogen was enjoined from selling in the US its generic
buprenorphine/naloxone film product unless and until the CAFC
issued a mandate vacating Indivior's separate PI against DRL. The
CAFC's mandate vacating Indivior's PI as to DRL issued in February
2019 and Alvogen launched its generic product. Any sales in the US
by Alvogen are on an "at-risk" basis, subject to the ongoing
litigation against Alvogen in the NJ District Court. In November
2019, Alvogen filed an amended answer alleging various antitrust
counterclaims. In January 2020, Indivior and Alvogen stipulated to
noninfringement of the '305 Patent under the court's claim
construction, but Indivior retained its rights to appeal the
construction and pursue its infringement claims pending appeal.
Indivior's infringement claims concerning the '454 patent and
Alvogen's antitrust counterclaims remain pending in the NJ District
Court. In June 2022, the parties participated in court-ordered
mediation. The parties did not reach settlement. Summary judgment
motions have been fully briefed, and the court heard arguments on
those motions on August 29, 2022. The NJ District Court has not yet
ruled on those motions, and no trial date has been set.
13. TRADE AND OTHER PAYABLES
Sep 30, Dec 31,
2022 2021
$m $m
--------------------------------------- --- -------- -------
Accrual for rebates, discounts and
returns (423) (436)
Trade payables (76) (137)
Accruals (123) (136)
Other tax and social security payables (11) (11)
-------------------------------------------- -------- -------
Total (633) (720)
-------------------------------------------- -------- -------
Accruals for rebates, discounts and returns, primarily in the
US, 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.
14. SHARE CAPITAL
Nominal Aggregate
Equity value nominal
ordinary paid value
shares per share $m
--------------------------------- ------------ ---------- ---------
Issued and fully paid
At January 1, 2022 702,439,638 $0.10 70
Ordinary shares issued 4,184,940 $0.10 1
Shares repurchased and cancelled (17,815,033) $0.10 (2)
---------------------------------- ------------ ---------- ---------
At September 30, 2022 688,809,545 69
---------------------------------- ------------ ---------- ---------
Nominal Aggregate
Equity value nominal
ordinary paid value
shares per share $m
--------------------------------- ------------ ---------- ---------
Issued and fully paid
At January 1, 2021 733,635,511 $0.10 73
Ordinary shares issued 1,679,825 $0.10 -
Shares repurchased and cancelled (11,730,087) $0.10 (1)
---------------------------------- ------------ ---------- ---------
At September 30, 2021 723,585,249 72
---------------------------------- ------------ ---------- ---------
Share consolidation
On October 10, 2022, the Company completed a share
consolidation. Shareholders received 1 new Ordinary share with a
nominal value of $0.50 each for every 5 previously existing
Ordinary shares which had a nominal value of $0.10 each. As a
result of the consolidation, as at October 10th, 2022 the Company's
issued share capital consisted of 137,761,909 ordinary shares at
$0.50 each.
Ordinary shares issued
During the period 4,184,940 ordinary shares (YTD 2021:
1,679,825) were issued to satisfy vesting/exercises under the
Group's Long-Term Incentive Plan and US Employee Stock Purchase
Plan.
Shares repurchased and cancelled
On May 3, 2022, the Group commenced a share repurchase program
for an aggregate purchase price up to no more than $100m or
39,698,610 of ordinary shares, which is expected to end no later
than March 31, 2023.
During the period, the Group repurchased and cancelled
17,815,033 of the Company's ordinary shares (YTD 2021: 11,730,087)
for an aggregate nominal value of $2m ($0.10 per share), including
256,055 ordinary shares purchased as part of the Group's share
repurchase program executed in 2021 and cancelled in January 2022
(YTD 2021: $1m). All ordinary shares repurchased under share
repurchase programs were cancelled resulting in a transfer of the
aggregate nominal value to a capital redemption reserve. The total
cost of the purchases made under the share repurchase program
during the period, including directly attributable transaction
costs, was $66m (YTD 2021: $31m). A net repurchase amount of $8m
has been recorded as a financial liability and reduction in
retained earnings which represents the amount to be spent under the
program for the month of October 2022, the period closed for
modification or termination of the program. The effect of
discounting is not material. Total purchases under the share
repurchase program will be made out of distributable profits. On
October 10, 2022 the Company completed a share consolidation. See
Note 16 for further details.
15. RELATED PARTIES
On July 7, 2022 the Group announced that it has amended the
existing relationship agreement with Scopia. Under the original
terms, the Relationship Agreement terminated in the event that
Scopia (and its affiliates) ceased to have interests in at least
10% of the Company's issued share capital. As announced on July 1,
2022, Scopia has sold interests in the Company representing 2.28%
which has taken the total holding of Scopia (and its affiliates) to
9.71%, below this 10% threshold, and down from 16.9% at origination
of the agreement.
The Group has agreed not to exercise its right to terminate the
Relationship Agreement immediately, and instead has agreed:
-- To continue with the agreement until the expiration of its
original term of December 31, 2023, unless the Relationship
Agreement is otherwise extended by mutual agreement or terminated
earlier in accordance with its terms; and
-- The threshold for automatic termination will be amended, such
that the Relationship Agreement will terminate in the event that
Scopia (and its affiliates) cease to have interests in at least 5%
of the Company's issued share capital (reduced from 10% under the
original terms).
16. POST BALANCE SHEET EVENTS
In September 2022, the Company's shareholders approved an
additional listing in the US, which is expected to take place in
Spring 2023. Additionally, to fulfill US exchange requirements for
share price minimums and norms, the Company's shareholders also
approved a 5-for-1 share consolidation. On October 10th, 2022, the
Company completed this share consolidation. Shareholders received 1
new Ordinary share with a nominal value of $0.50 each for every 5
previously existing Ordinary shares which had a nominal value of
$0.10 each. The Company's basic and diluted weighted average number
of shares outstanding, basic earnings per share, diluted earnings
per share and adjusted earnings per share (basic and diluted) have
been retrospectively adjusted to reflect the share consolidation in
all the periods presented. As a result of the consolidation, as at
October 10th, 2022 the Company's issued share capital consisted of
137,761,909 ordinary shares at $0.50 each.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors declare that, to the best of their knowledge:
-- This set of condensed consolidated interim financial
statements, which have been prepared in accordance with UK adopted
International Accounting Standard 34, "Interim Financial Reporting"
("IAS 34"), gives a true and fair view of the assets, liabilities,
financial position, and profit or loss of Indivior; and
-- The interim management report gives a fair review of the
information in line with regulations 4.2.7 and 4.2.8 of the
Disclosure Guidance and Transparency Rules.
The Directors are responsible for the maintenance and integrity
of the Group's website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Details of Indivior PLC's Directors are available on our website
at www.indivior.com
By order of the Board
Mark Crossley Ryan Preblick
Chief Executive Officer Chief Financial Officer
-----------------------
October 26, 2022
Independent review report to Indivior PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Indivior PLC's condensed consolidated interim
financial statements (the "interim financial statements") in the Q3
and YTD 2022 results of Indivior PLC for the three and nine month
periods ended 30 September 2022.
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
(IAS 34).
The interim financial statements comprise:
-- the Condensed consolidated interim balance sheet as at 30 September 2022;
-- the Condensed consolidated interim income statement and
Condensed consolidated interim statement of comprehensive income
for the three and nine month periods then ended;
-- the Condensed consolidated interim statement of changes in
equity for the nine month period then ended;
-- the Condensed consolidated interim cash flow statement for
the nine month period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Q3 and YTD 2022
results of Indivior PLC have been prepared in accordance with IAS
34.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom (ISRE 2410). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Q3 and YTD
2022 results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with ISRE 2410.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and
the review
---------------------------------------------------------
Our responsibilities and those of the directors
The Q3 and YTD 2022 results, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the Q3 and
YTD 2022 results in accordance with IAS 34. In preparing the Q3 and
YTD 2022 results, including the interim financial statements, the
directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Q3 and YTD 2022 results based on our
review. Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report.. We do not, in giving this conclusion, accept or
assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
26 October 2022
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END
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October 27, 2022 03:07 ET (07:07 GMT)
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