Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Mention made by a poster yesterday that ADNOC accounted for less than 10% of PFC's order intake. Again high-lights the massive over-reaction to the RNS. PFC trading at about £1.30 before the news broke should have seen maybe up to 10-15p price reduction not a current 32p hit or 25% reduction on the SP. Strong buy & ready to fly.
Other posters have already shared the enormous disparity between PFC's net value per share & its current SP. Once the current hysteria has subsided PFC will gravitate upwards to a SP that correctly reflects its MV. When the SFO closes its enquiry this should eventually be well North of £4 IMO.
A strategic position in the company at this stage & at this price for a wide range of organisations is compelling. Yesterday's RNS high-lighted the short-term nature of ADNOC's decision (ADNOC confirmed that its decision will be reviewed on a periodic basis) & reflects frustration with the SFO's long-running enquiry. PFC again confirmed that "no charges have been brought against any Petrofac Group company or any current officer or employee." IMO the upside far outweighs the down.
I'm looking for news of further good sales advances in SUBLOCADE (in particular) and PERSERIS with SUBOXONE still maintaining relatively good volume given generics competition. Re-instatement of dividend would be nice as a thank you to LTH's after all the turmoil of previous 2 years. A combo of these would propel the SP towards the £2 SP but even without a small dividend if sales are advancing strongly & with (almost certainly IMO) large PHARMA having INDV in their sights the SP will motor.
In the January 15th RNS issued by INDV the following information was disclosed "Admiral Brett Giroir, M.D., Assistant Secretary for Health, U.S. Department of Health and Human Services reinforced the role of MAT (Medical Assisted Treatment) in helping people in recovery noting, “The medical evidence is clear: access to medication-assisted treatment, including buprenorphine that can be prescribed in office-based settings, is the gold standard for treating individuals
suffering from opioid use disorder.” The patient need for greater access to providers and evidence-based treatment, including counseling, has never been more urgent. According to recent data released by the Centers for Disease Prevention and Control (CDC), drug overdose deaths reached a record high in 2020 for the 12-month period ending in June 2020. More than 83,000 drug overdose deaths were recorded, a 21% increase over the previous year.
The use of "Gold Standard" will not have been missed by large PHARMA & buying INDV represents an easy & cheap way to becoming market leader in this increasingly important heath care sector. Now that the DoJ and Reckitt claims have been put to bed it may be that following the release of final results on 18th February large PHARMA interest will begin to make itself known. IF it does, INDV will motor & £1.85 will only be seen a long way back in the rear view mirror. If it doesn't INDV's SP will continue to appreciate towards its "true" MV which IMO is well north of £3. Obviously DYOR
The removal of the Reckitt Benckiser overhang should allow operational strength to drive the story at opioid addiction treatment maker Indivior, Citi said on Tuesday.
Indivior shares were sharply higher after Reckitt Benckiser said late on Monday that it will withdraw a $1.4bn claim against the company. Indivior has agreed to pay the consumer goods giant $50m to end the legal battle related to a US probe into opioid addition.
Citi said that after a long period of litigation dominating the debate, firstly with Department of Justice indictment and more recently with a claim from Reckitt, the stock should now benefit from "the demonstrated progress in the last year".
The bank said the rollout of Sublocade is regaining momentum after a Covid-related stall, while Suboxone film continues its "resilient" performance against branded and generic competitors.
In addition, Perseris has similarly staged a recovery from Covid-related rollout issues, Citi said.
It also expects the recent UK Supreme Court ruling on buprenorphine prescribing to provide a further tailwind to market volumes in 2021.
The bank reiterated its 'buy' rating on the shares and lifted the price target to 185p.
"Given the recent operational progress, we expect the shares to recover today to at least the highest level after the DoJ settlement and before the RB claim was announced in November," it said.
INDV SP now gaining momentum on back of its core products SUBLOCADE, SUBOXONE & PERSERIS doing much better than previously expected. Removal of legal overhangs is now allowing Brokers to value on trading performance with consequent higher price targets.
Further good news which will help propel INDV back to a SP that properly reflects its true value. It also removes the last major hurdle to a predator taking out INDV with its market leading products. I expect there to be more than 1 major pharma to be interested in taking over INDV. Interesting times.
This Report is excellent, very comprehensive & well worth the read. Some of the points it makes are as follows:
"Suboxone sales have remained resilient in the face of generic competition (and even saw modest growth in the most recent quarter, Q3 2020)
Sublocade unit growth is accelerating (growing 15% in Q3 2020 over Q2 2020)
Sublocade sales should easily exceed management guidance
A competitive entrant, Brixadi, has been delayed (likely, >12 months) as Braeburn (Brixadi's license holder in the U.S.) received a complete response letter from the FDA.
Based on our projections for Sublocade sales growth it is easy to see a near term value for Indivior ordinary shares of 200p."
It also states that the Reckitt claim is a " baseless preliminary claim filed by Indivior’s former parent company" that is "procedurally defective and substantively precluded due to Reckitt’s alleged acts of fraud or dishonesty." I agree with the Report and believe that the Reckitt claim was a crude attempt to try & stifle a much stronger claim by INDV on Reckitt. This is also the view taken by the Report. It goes on to forecast an SP of £5 for INDV by 2025 based on INDV's market leading position and on the growth of SUBLOCADE as well as other products supplied by INDV using their monthly injectable technology such as PERSERIS designed to combat Schizophrenia.
INDV's SP should continue to firm from here on the run-up to releasing its full year results on 18th February.
Within context of broad market conditions this update is reasonable. The big overhang for PFC is the SFO enquiry. Iskander taking over from Asfari may be a precursor to the long-awaited completion of that enquiry. Once the enquiry is completed and uncertainty removed together with the oil market strengthening PFC will fly.
So when INDV's claim against Reckitt's is made the damage to Reckitt's SP will be limited given that shareholders know they already have their claim in. These tactics will have been initiated to protect Reckitt's SP irrespective of the true merit of their claim.
I should also have mentioned that one side's legal position always looks shocking until the other side is able to respond. There are always 2 sides to the coin and what would have happened to Reckitt's SP if INDV had got their Claim in first? I don't think that Reckitt would have liked having their SP hit by INDV's claim coming in first and knocking 10-15% or more off their SP.
Commercial law firms will always talk up a client's case in order to generate fees. Its what they do best as anybody who has had the misfortune of having to deal with them will testify. I have not had chance to research the legalities but there will undoubtedly be indemnities on both sides of the deal. Also, this matter is nowhere near the DoJ case in terms of potential damage to INDV. This is company to company and in my opinion & that of a commercial lawyer I have just contacted (see his quote below) may well be RB just getting in early to forestall/limit an INDV claim. He also makes mention of there being significant insurance coverage to cover any claim:
"And yes - it may very well go both ways (in terms of indemnity claims) here and perhaps (the RB action is to) offset damages or be a defense to the claims. It is highly likely that there is significant insurance coverage as well. " (parentheses mine)
If you do take the view that the claim & INDV's potential counter claim basically cancel themselves out then there is the legal cost to factor in to the SP. But this will drag on for years (as all these issues invariably do) and the relative hit of legal costs will be insignificant & swamped by the further good news emanating from INDV in terms of increased sales, profit, new product releases, takeover talk etc. INDV also has $700m cash on its Balance Sheet at end September 2020. Obviously DYOR but the decrease in SP today is a massive over-reaction & affords a very cheap buy-in price.
Graham Hetherington formerly of BTG (recently taken over by Boston Scientific) makes following comment:
"Indivior is at an important stage of its development. I am honoured to be appointed Chair of the Board at this time. Indivior is a pioneer in its field and I look forward to working with the Board and leadership team to realize SUBLOCADE®'s (buprenorphine extended-release) full potential and more broadly its important Vision on behalf of all stakeholders."
Comment by Daniel Tassé, Senior Independent Director:
"We are pleased to announce that Graham Hetherington has been appointed Chair of the Board. Graham has a strong record of value creation including in specialty pharma. We look forward to his continued active participation and leveraging his deep strategic, operational and financial experience to achieve the Group's strategic priorities."
Hetherington's experience with BTG (developer of new health care products) is obviously beneficial for INDV and his experience of BTG's take-over by Boston Scientific may also prove to be very useful.
Attempting to calculate "fair" SP for any share is extremely difficult but I have just calculated a current "fair" SP for INDV of approx. £2.50. This is based on recent 3rd quarter figures and update given which is set against the COVID backdrop so should be viewed as low. Once things start returning to something akin to normal and assuming continued reasonable growth in SUBLOCADE and increasing take-up of PERSERIS the SP should be in the top half of £3-£4. These figures do not take account of any financial contribution of the new products for treating other chronic conditions such as alcohol abuse nor do they include any potential take-over interest/premium. With respect to these figures please note they are my approximations/forecasts only and based on my own research. So (as ever) DYOR.
Given the price rise today this must be Institutional buying. Hardly surprising given the SP is still very, very low and after DoJ issue put to bed, excellent 3rd Quarter results and notification of new products pipeline including INDV's developing of products for other chronic conditions including alcohol use disorder. Developing new products for other chronic conditions obviously serves to widen INDV's reach in the health care industry and the new product for alcohol abuse will propel INDV into a market dealing with a massive global problem. This alone represents a huge opportunity for INDV. Additionally, take-over interest from large Pharma for this market leader in opioid addiction treatment with a large emphasis on new product research has to be a very real possibility.
Apart from removing the uncertainty, the deal with DoJ allows INDV to pay the USD 600 million fine over 7 years. INDV have already instigated annual cost savings of USD 60-70m per year which substantially covers the annual cost of the fine. INDV has approx. USD 700 million in net cash at end Sept 2020. Now that the deal has been approved by the Court the company is in play for any big PHARMA companies who could well be attracted to this market leader whilst its SP still languishes at the current low price.
Now that DoJ deal rubber-stamped and uncertainty removed, INDV should finally start to get back to an SP that properly reflects the company's position as the market leader in opioid addiction treatment with a pipeline of new products for both opioid & other chronic addictive disorders.
INDV beginning to give a glimpse of what's to come. Following is taken from yesterday's RNS and refers to a "pipeline" of product candidates expanding on opioid addiction treatment but also on other chronic conditions including alcohol use disorder: "Building on its global portfolio of opioid dependence 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 addiction, including alcohol use disorder." As we all know, alcohol abuse is a massive global problem and represents a huge opportunity for INDV.