Last checked at 27 Apr 2023 12:00
http://www.rns-pdf.londonstockexchange.com/rns/6182X_1-2023-4-26.pdf
April 27, 2023 |
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Strong Q1 2023 Financial Results and Integration of Opiant • SUBLOCADE Net Revenue of $132m, +55% versus Q1 2022 • Opiant Acquisition Completed; May 22nd Prescription Drug User Fee Act (PDUFA) Date for OPNT003 (emergency treatment of known or suspected opioid overdose) • Additional U.S. Listing of Indivior Ordinary Shares Planned for June | |||
Quarter to March 31 (Unaudited) | 2023 $m | 2022 $m | % Change |
Net Revenue (NR) | 253 | 207 | 22% |
Operating Profit | 57 | 54 | 6% |
Net Income | 44 | 41 | 7% |
Diluted EPS1 ($) | $0.31 | $0.28 | 11% |
Adjusted Basis |
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Adj. Operating Profit2 | 71 | 54 | 31% |
Adj. Net Income2 | 56 | 41 | 37% |
Adj. Diluted EPS1 2 ($) | $0.40 | $0.28 | 43% |
1 On October 10, 2022, Indivior PLC 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 7 for further discussion.
2 Adjusted Basis excludes the impact of exceptional items as referenced and reconciled in Notes 4 and 7. Adjusted results are not a substitute for, or superior to, reported results presented in accordance with International Financial Reporting Standards.
The 'Company' refers to Indivior PLC and the 'Group' refers to the Company and its consolidated subsidiaries.
Comment by Mark Crossley, CEO of Indivior PLC
"Our first quarter results reflect strong momentum across the business and continued dedication of the entire Indivior team to our patients. SUBLOCADE® (buprenorphine extended-release) injection continues to power our growth as we drive greater depth of prescribing across Organized Health Systems (OHS) in the treatment of moderate-to-severe opioid use disorder (OUD). Within the quarter, we also completed the acquisition of Opiant Pharmaceuticals, Inc. This important strategic step strengthens our addiction portfolio through the addition of OPNT003 (nalmefene nasal spray), a new potential option for opioid overdose reversal which we expect to launch in the U.S. in the fourth quarter, subject to regulatory approval. We have updated our 2023 guidance to include the financial impact of this acquisition as well as the continued resilient U.S. share performance of SUBOXONE® (buprenorphine/naloxone) Film. Finally, we look forward to the additional U.S. listing of our shares on NASDAQ in June."
Q1 2023 Financial Highlights
• Net revenue (NR) of $253m (+22% versus Q1 2022 NR of $207m).
• Reported operating profit of $57m (+6% vs. Q1 2022 op. profit of $54m). On an adjusted basis, Q1 2023 operating profit was $71m, a 31% increase versus the prior year's quarter, when there were no adjustments to operating profit.
• Reported net income was $44m (+7% vs. Q1 2022 net income of $41m). Adjusted net income of $56m (+37% vs. Q1 2022 adj net income of $41m).
• Cash and investments of $803m at the end of Q1 2023 (including $26m restricted for self-insurance) (FY 2022 cash and investments balance of $991m including $26m for self-insurance).
Q1 2023 Operating Highlights
• Q1 2023 SUBLOCADE NR of $132m (+55% vs. Q1 2022; +12% vs. Q4 2022) reflects strong growth in the OHS channel and continued new U.S. patient enrollments. Q1 2023 U.S. dispenses were approximately 107,900 units (+69% vs. Q1 2022 and +16% vs. Q4 2022). Total SUBLOCADE patients on a 12-month rolling basis at the end of Q1 2023 were approximately 94,800 (82,500 at the end of FY 2022).
• Q1 2023 PERSERIS® (risperidone) extended-release injection delivered NR of $8m (+60% vs. Q1 2022).
• Q1 2023 SUBOXONE® (buprenorphine and naloxone) Film share averaged 19% in Q1 2023 (Q1 2022: 22%) and exited Q1 2023 at 19% (Q1 2022: 20%). The Group does not promote SUBOXONE Film in the U.S.
U.S. Listing
In September 2022, the Company's shareholders approved an additional listing of its shares in the U.S. The Company has chosen NASDAQ as its trading venue under the symbol "INDV". The listing is expected to take place in June 2023.
Share Repurchase Program
During the quarter, Indivior completed its second share repurchase program of $100m which was initiated in 2022. Reflecting the 5:1 share consolidation (completed on October 10, 2022), the Group repurchased and cancelled a total of 5,277,072 Indivior ordinary shares, equivalent to approximately 4% of diluted shares outstanding at a daily weighted average purchase price of 1,567p. Aggregating both the first and second programs which were initiated in 2021 and 2022, the Group repurchased 12,029,769 Indivior ordinary shares, equivalent to approximately 9% of diluted shares outstanding at a daily weighted average purchase price of 1,302p. Refer to Note 16 for further discussion.
Updated FY 2023 Guidance Includes Opiant Acquisition
The Group is updating its FY 2023 guidance to reflect 1) the inclusion of the Opiant Pharmaceuticals, Inc. business and 2) increased NR expectations primarily for SUBOXONE due to anticipated delayed timing of a fourth generic buprenorphine/naloxone sublingual film entrant to the U.S. market. Guidance for SUBLOCADE NR, PERSERIS NR and adjusted gross margin is unchanged. Guidance assumes 1) regulatory approval of OPNT003 by the U.S. Food & Drug Administration (FDA) on or before the PDUFA date of May 22, 2023 and 2) no material change in exchange rates for key currencies compared with FY 2022 average rates, notably USD/GBP and USD/EUR. The Group continues to expect the successful commercialization of OPNT003 to be accretive to the Group's earnings after the second full year of launch.
| Updated (April 27, 2023) | Previous (February 16, 2023) |
Net Revenue (NR)1 | $970m to $1,040m(+12% vs. FY 2022 at the mid-point) | $950m to $1,020m |
SUBLOCADE NR | No change | $550m to $600m(+41% vs. FY 2022 at the mid-point) |
PERSERIS NR | No change | $45m to $55m(+82% vs. FY 2022 at the mid-point) |
SUBOXONE Film Market Share | Accelerated rate of market share decline in the H2 20232, along with the assumed impact from the launch of a fourth buprenorphine/naloxone sublingual film generic entering the U.S. market in H2 2023 | Accelerated rate of market share decline in the H2 20232, along with the assumed impact from the launch of a fourth buprenorphine/naloxone sublingual film generic entering the U.S. market in Q2 2023 |
Adjusted Gross Margin | No change | Low to mid 80% range |
Adjusted SG&A | $530m to $540m, reflecting the addition of Opiant commercial and key support personnel, as well as planned launch expenses for OPNT003 | $490m to $500m |
R&D | $90m to $100m, reflecting the addition of Opiant's R&D personnel and pipeline activities | $80m to $90m |
Adjusted Operating Profit | Slightly below FY 2022's adjusted operating income of $212m, as a result of the additional operating expenses associated with the Opiant acquisition, partially offset by higher NR guidance | Higher than 2022's adjusted operating income of $212m |
1 FY 2023 NR from OPNT003 is expected to be immaterial given the Q4 2023 launch timing, if approved.
2 Reflecting underlying share erosion at a similar rate to the last two years (approximately 2 share points p.a.)
Legacy Civil Antitrust Matter
Mediation and discussions in the legacy civil antitrust multidistrict litigation are ongoing, but there has been no new information that would change the previously disclosed provision from Q4 2022. Because this litigation is in various stages, Indivior cannot predict with any certainty how these matters will ultimately be resolved, or the costs, or timing of such resolution. In particular, any final aggregate costs of these matters, whether resolved by settlement or trial, may be materially different from the previously recorded provision. The Group cannot predict with any certainty whether it will reach settlement with the antitrust claimants (refer to Note 14 for further information).
U.S. OUD Market Update
In Q1 2023, the U.S. buprenorphine medication-assisted treatment (BMAT) market grew in mid-single digits. The Group continues to expect long-term U.S. market growth to be sustained in the mid- to high-single digit percentage range due to increased overall public awareness of the opioid epidemic and approved treatments, together with regulatory and legislative actions, such as the late 2022 enactment of the Mainstreaming Addiction Treatment Act, that have expanded OUD treatment funding and treatment capacity. The Group believes these regulatory and legislative actions will help to normalize the chronic disease of addiction and expand access to evidence-based buprenorphine treatment in the U.S. and supports these actions.
Financial Performance in Q1 2023
Total net revenue in Q1 2023 increased 22% to $253m (Q1 2022: $207m) at actual exchange rates and by 24% at constant exchange rates.
Q1 2023 U.S. net revenue increased 27% to $209m (Q1 2022 $165m). Growth in the overall U.S. BMAT market was in-line with Group expectations discussed above ("U.S. OUD Market Update"). Underlying market growth, together with strong year-over-year unit volume growth for SUBLOCADE and PERSERIS drove the net revenue increase. SUBOXONE Film share declined modestly as expected with Q1 2023 average share of 19% versus FY 2022 average share of 20%.
Q1 2023 Rest of World (ROW) net revenue increased 5% at actual exchange rates to $44m (Q1 2022: $42m) and 13% at constant exchange rates. Q1 2023 ROW net revenue from SUBLOCADE (also under the brand name SUBUTEX XR®) was $9m (Q1 2022: $6m). NR increased mainly due to higher unit volume growth of SUBLOCADE in existing and new markets, including Finland and Sweden. Growth from SUBLOCADE and SUBOXONE Film was partially offset by ongoing competitive pressure in the legacy tablet business in Western Europe.
Q1 2023 gross margin was 85% (Q1 2022: 82%). Q1 2023 gross margin improvement over the prior year's period primarily reflects an improved product mix from continued growth of SUBLOCADE, partially offset by cost inflation. Q1 2023 gross margin was also impacted favorably by FX and lower manufacturing write-offs.
Q1 2023 SG&A expenses as reported were $131m (Q1 2022: $109m). Q1 2023 SG&A expenses included exceptional items of $14m related to non-recurring costs associated with the acquisition of Opiant ($12m) and the additional U.S. listing ($2m). On an adjusted basis, Q1 2023 SG&A expenses increased 7% to $117m (Q1 2022: $109m). The increase primarily reflects investments to grow the Group's long-acting injectable (LAI) technologies (SUBLOCADE and PERSERIS), including further investments to grow SUBLOCADE in the U.S. Justice System, and cost inflation.
Q1 2023 R&D expenses were $27m (Q1 2022: $8m). The increase over the prior year's period is primarily due to increased activities related to certain post-marketing studies for SUBLOCADE and PERSERIS, process validation testing related to LAI capacity expansion and ongoing early-stage pipeline activities.
Q1 2023 operating profit as reported was $57m (Q1 2021: $54m). Exceptional items of $14m are included in the current period. On an adjusted basis, Q1 2023 operating profit increased 31% to $71m versus $54m in Q1 2022. There were no exceptional items in the comparable year-ago period. The increase primarily reflects higher NR partially offset by increased SG&A and R&D expenses.
Q1 2023 net finance income in the quarter was $1m (Q1 2022 net finance expense: $6m). The current period includes interest income of $11m versus nil in the year-ago period. The increases to finance income and finance expense were due to rising interest rates from the prior year period.
Q1 2023 tax expense was $14m giving an effective tax rate of 24% (Q1 2022 tax expense: $7m or 15%). On an adjusted basis, Q1 2023 tax expense was $16m (adjusted effective tax rate: 22%), excluding a $2m tax benefit related to permanent differences on exceptional items. The increase in the effective tax rate on adjusted profits was primarily driven by the increase in the UK tax rate from 19% to 23.5%, and the temporary reduction in innovation incentives due to 2022 losses.
Q1 2023 reported net income was $44m (Q1 2022: $41m). On an adjusted basis, Q1 2023 net income was $56m versus $41m in Q1 2022. There were no exceptional items in the year-ago quarter.
Q1 2023 basic earnings per share was $0.32 on a reported basis and $0.41 cents on an adjusted basis (Q1 2022 basic earnings per share of $0.29 on both a reported and adjusted basis).
Balance Sheet & Cash Flow
Cash and investments totaled $803m at the end of Q1 2023, a decrease of $188m versus the $991m position at year-end 2022. The decrease in cash and investments in the quarter primarily reflects the net cash outflow of $124m for the Opiant acquisition, including the transferred cash balance, in addition to the Group's scheduled litigation settlement payments primarily for the Department of Justice (DOJ), Reckitt Benckiser (RB) and Dr. Reddy's Laboratories (DRL) matters totaling $74m.
Net working capital, defined by management as inventory plus trade receivables, less trade and other payables, was negative $321m on March 31, 2023, versus negative $283m at the end of FY 2022. The change in the period was primarily a result of timing of payments made on government rebate and trade payables.
Cash used by operating activities in Q1 2023 was $16m (Q1 2022 cash used: $64m), primarily due to settlement payments for the DOJ Resolution, DRL settlement, RB settlement and timing of payments made on government rebates payables. Before these litigation related items, cash generated from operations in the current period was $58m. Net cash outflow from operating activities was $36m in Q1 2023 (Q1 2022 cash outflow: $75m) reflecting tax payments and interest paid on the Group's term loan facility and settlement payments, partially offset by interest received on investments.
Q1 2023 cash outflow from investing activities was $127m (Q1 2022 cash outflow: $149m) which reflects $124m for the Opiant acquisition, net of cash assumed. In the prior year period, the outflow from investing activities primarily included $150m in a portfolio of investment-grade debt securities and ordinary shares of Aelis Farma.
Q1 2023 cash outflow from financing activities was $22m (Q1 2022 cash outflow: $2m) reflecting the extinguishment of debt assumed in the Opiant acquisition, as well as shares repurchased and cancelled, principal portion of lease payments and quarterly amortization of the Group's term loan facility partially offset by proceeds received from the issuance of shares.
R&D / Pipeline Update
Indivior's quarterly R&D and pipeline update may be found here.
Risk Factors Update
The Board of Directors oversees the approach to risk management so that the principal risks, including those that would threaten the Group's business model, future performance or viability, are effectively managed and/or mitigated. While the Group aims to identify and manage such risks, no risk management strategy can provide absolute assurance against loss.
The principal risks facing the Group have not significantly changed over the year and are set out in the Group's Annual Report for the 2022 financial year. However, as mentioned in Note 1, "Basis of Preparation and Accounting Policies", and Note 14, "Legal Proceedings", if the Group was found liable in the currently scheduled September 18, 2023 multidistrict litigation trial to any of the Plaintiffs and was unable to reduce the claimed damages of such Plaintiffs group or groups during such trial (or in any subsequent proceeding), which the Directors believe is beyond 'severe but plausible' (and therefore remote) within the going concern period, then its financial position, results and future cash flows could be materially adversely impacted. If the Group continues with mediation or other settlement discussions, it makes no guarantee as to whether any settlement can be reached and if so, what amounts, if any, it may agree to pay, or what amounts the Plaintiffs will demand. The set of principal risks should not be considered as an exhaustive list of all risks the Group faces.
Exchange RatesThe average and period end exchange rates used for the translation of currencies into U.S. dollars that have most significant impact on the Group's results were:
| Q1 2023 | Q1 2022 |
GB £ period end | 1.2309 | 1.3086 |
GB £ average rate | 1.2149 | 1.3433 |
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€ Euro period end | 1.0828 | 1.1080 |
€ Euro average | 1.0726 | 1.1234 |
Webcast Details
A live webcast presentation will be held on April 27, 2023, 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.
The webcast link: https://edge.media-server.com/mmc/p/qjdd6559
Participants may access the presentation telephonically by registering with the following link:
https://register.vevent.com/register/BIa24873f5a1524c73b34c473b7761725f
(Registrants will have an option to be called back directly immediately prior to the call or be provided a call-in # with a unique pin code following their registration)
For Further Information
Investor Enquiries | Jason Thompson | VP, Investor Relations Indivior PLC | +1 804 402 7123 jason.thompson@indivior.com |
| Tim Owens | Director, Investor Relations Indivior PLC | +1 804 263 3978 timothy.owens@indivior.com |
Media Enquiries | Jonathan Sibun
| Tulchan Communications
U.S. Media Inquiries | +44 (0)20 7353 4200
+1 804 594 0836 Indiviormediacontacts@indivior.com |
Corporate Website www.indivior.com
This announcement does not constitute an offer to sell, or the solicitation of an offer to subscribe for or otherwise acquire or dispose of shares in the Group to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation.
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 1,000 individuals globally and its portfolio of products is available in 39 countries worldwide. Visit www.indivior.com to learn more. Connect with Indivior on LinkedIn by visiting www.linkedin.com/company/indivior.
Important Cautionary Note Regarding 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 2023 and its medium- and long-term growth outlook; strategies for value creation; expectations for sales levels for particular products; expectations regarding the cost to resolve the Group's legal proceedings and regulatory matters; the timing of our planned additional U.S. stock exchange listing; expected exceptional and recurring costs related to a U.S. stock exchange listing; expected market growth rates; expected changes in market share; future exchange rates; operational goals; our product development pipeline and potential future products; expectations regarding regulatory approval of such product candidates, the timing of such approvals, and the timing of commercial launch of such product candidates, and eventual annual revenues of such future products; expectations regarding the extent and impact of competition, and other statements containing the words "believe", "anticipate", "plan", "expect", "intend", "estimate", "forecast," "strategy," "target," "guidance," "outlook," "potential", "project", "priority," "may", "will", "should", "would", "could", "can", "outlook," "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. 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; 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.
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.
Unaudited condensed consolidated interim income statement
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2023 |
2022 |
For the three months ended March 31 | Notes | $m | $m |
Net Revenue | 2 | 253 | 207 |
Cost of sales |
| (39) | (37) |
Gross Profit |
| 214 | 170 |
Selling, general and administrative expenses | 3 | (131) | (109) |
Research and development expenses | 3 | (27) | (8) |
Net other operating income | 3 | 1 | 1 |
Operating Profit |
| 57 | 54 |
Operating profit before exceptional items |
| 71 | 54 |
Exceptional items | 4 | (14) | - |
Finance income | 5 | 11 | - |
Finance expense | 5 | (10) | (6) |
Net Finance Income/(Expense) |
| 1 | (6) |
Profit Before Taxation |
| 58 | 48 |
Income tax expense | 6 | (14) | (7) |
Taxation before exceptional items |
| (16) | (7) |
Exceptional items within taxation | 4 | 2 | - |
Net Income |
| 44 | 41 |
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Earnings per ordinary share (in dollars)* |
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Basic earnings per share | 7 | $0.32 | $0.29 |
Diluted earnings per share | 7 | $0.31 | $0.28 |
* Basic and diluted earnings per share reflect the impact of the Company's share consolidation for all periods presented. Refer to Note 7 for further details.
Unaudited condensed consolidated interim statement of comprehensive income
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2023 |
2022 |
For the three months ended March 31 | $m | $m |
Net income | 44 | 41 |
Other comprehensive loss |
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Items that may be reclassified to profit or loss in subsequent years: |
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Foreign currency translation adjustment, net | - | (6) |
Other comprehensive loss | - | (6) |
Total comprehensive income | 44 | 35 |
The notes are an integral part of these condensed consolidated interim financial statements.
Unaudited condensed consolidated interim balance sheet
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| Mar 31, 2023 | Dec 31, 2022 |
| Notes | $m | $m |
ASSETS |
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Non-current assets |
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Intangible assets | 8 | 200 | 70 |
Property, plant and equipment |
| 54 | 54 |
Right-of-use assets |
| 34 | 31 |
Deferred tax assets | 6 | 201 | 219 |
Investments | 9 | 98 | 98 |
Other assets | 10 | 46 | 38 |
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| 633 | 510 |
Current assets |
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Inventories |
| 123 | 114 |
Trade receivables |
| 213 | 220 |
Other assets | 10 | 48 | 27 |
Current tax receivable | 6 | 33 | 5 |
Investments | 9 | 117 | 119 |
Cash and cash equivalents |
| 588 | 774 |
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| 1,122 | 1,259 |
Total assets |
| 1,755 | 1,769 |
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LIABILITIES |
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Current liabilities |
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Borrowings | 11 | (3) | (3) |
Provisions | 12 | (298) | (303) |
Other liabilities | 12 | (70) | (79) |
Trade and other payables | 15 | (657) | (617) |
Lease liabilities |
| (8) | (8) |
Current tax liabilities | 6 | (7) | (9) |
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| (1,043) | (1,019) |
Non-current liabilities |
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Borrowings | 11 | (236) | (237) |
Provisions | 12 | (5) | (5) |
Other liabilities | 12 | (367) | (428) |
Lease liabilities |
| (32) | (29) |
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| (640) | (699) |
Total liabilities |
| (1,683) | (1,718) |
Net assets |
| 72 | 51 |
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EQUITY |
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Capital and reserves |
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Share capital | 16 | 69 | 68 |
Share premium |
| 9 | 8 |
Capital redemption reserve |
| 6 | 6 |
Other reserve |
| (1,295) | (1,295) |
Foreign currency translation reserve |
| (39) | (39) |
Retained earnings |
| 1,322 | 1,303 |
Total equity |
| 72 | 51 |
The notes are an integral part of these unaudited condensed consolidated interim financial statements.
Unaudited condensed consolidated interim statement of changes in equity
Notes | Share capital | Share premium | Capital redemption reserve | Other reserve | Foreign currency translation reserve | Retained earnings | Total equity |
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| $m | $m | $m | $m | $m | $m | $m |
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Balance at January 1, 2022 |
| 70 | 7 | 3 | (1,295) | (20) | 1,438 | 203 |
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Comprehensive income |
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Net income |
| - | - | - | - | - | 41 | 41 |
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Other comprehensive loss |
| - | - | - | - | (6) | - | (6) |
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Total comprehensive income |
| - | - | - | - | (6) | 41 | 35 |
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Transactions recognized directly in equity |
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Shares issued |
| 1 | - | - | - | - | - | 1 |
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Share-based plans |
| - | - | - | - | - | 3 | 3 |
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Settlement of tax on equity awards |
| - | - | - | - | - | (10) | (10) |
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Balance at March 31, 2022 |
| 71 | 7 | 3 | (1,295) | (26) | 1,472 | 232 |
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Balance at January 1, 2023 |
| 68 | 8 | 6 | (1,295) | (39) | 1,303 | 51 |
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Comprehensive income |
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Net income |
| - | - | - | - | - | 44 | 44 |
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Other comprehensive loss |
| - | - | - | - | - | - | - |
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Total comprehensive income |
| - | - | - | - | - | 44 | 44 |
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Transactions recognized directly in equity |
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Shares issued |
| 1 | 1 | - | - | - | - | 2 |
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Share-based plans |
| - | - | - | - | - | 5 | 5 |
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Settlement of tax on equity awards |
| - | - | - | - | - | (21) | (21) |
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Shares repurchased and cancelled | 16 | - | - | - | - | - | (11) | (11) |
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Transfer from share repurchase liability |
| - | - | - | - | - | 9 | 9 |
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Taxation on share-based plans |
| - | - | - | - | - | (7) | (7) |
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|
|
Balance at March 31, 2023 |
| 69 | 9 | 6 | (1,295) | (39) | 1,322 | 72 |
|
|
|
|
|
|
The notes are an integral part of these unaudited condensed consolidated interim financial statements.
Unaudited condensed consolidated interim cash flow statement
|
2023 |
2022 |
For the three months ended March 31 | $m | $m |
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
Operating Profit | 57 | 54 |
Depreciation and amortization of property, plant and equipment and intangible assets | 4 | 3 |
Depreciation of right-of-use assets | 2 | 2 |
Gain on disposal of intangible assets | - | (1) |
Share-based payments | 5 | 3 |
Unrealized gain on equity investment | (1) | - |
Settlement of tax on employee awards | (21) | (10) |
Decrease in trade receivables | 7 | 6 |
(Increase)/Decrease in current and non-current other assets | (23) | 7 |
(Increase)/Decrease in inventories | (5) | 2 |
Increase/(Decrease) in trade and other payables | 30 | (75) |
Decrease in provisions and other liabilities1 | (71) | (55) |
Cash used in operations | (16) | (64) |
Interest paid | (10) | (9) |
Interest received | 11 | - |
Taxes paid | (21) | (2) |
Net cash outflow from operating activities | (36) | (75) |
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
Acquisition of assets, net of cash acquired (refer to Note 17) | (124) | - |
Purchase of property, plant and equipment | (1) | - |
Purchase of investments | (33) | (150) |
Maturity of investments | 36 | - |
Purchase of intangible asset | (5) | - |
Proceeds from disposal of intangible assets | - | 1 |
Net cash outflow from investing activities | (127) | (149) |
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
Repayment of borrowings | (11) | (1) |
Principal elements of lease payments | (2) | (2) |
Shares repurchased and cancelled | (11) | - |
Proceeds from the issuance of ordinary shares | 2 | 1 |
Net cash outflow from financing activities | (22) | (2) |
|
|
|
Exchange difference on cash and cash equivalents | (1) | (2) |
|
|
|
Net decrease in cash and cash equivalents | (186) | (228) |
Cash and cash equivalents at beginning of the period | 774 | 1,102 |
Cash and cash equivalents at end of the period | 588 | 874 |
1Changes in the line item provisions and other liabilities for Q1 2023 include exceptional litigation settlement payments totaling $74m (Q1 2022: $58m). $3m of interest paid on the DOJ Resolution in Q1 2023 has been recorded in the interest paid line item (Q1 2022: $4m).
The notes are an integral part of these unaudited condensed consolidated interim financial statements.
Notes to the unaudited condensed consolidated interim financial statements1. 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 unaudited 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 have been reviewed and are unaudited and do not include all the information and disclosures required in the annual financial statements. Therefore the Condensed Financial Statements should be read in conjunction with the Group's Annual Report and Accounts for the year ended December 31, 2022, which were 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. These Condensed Financial Statements were approved for issue on April 26, 2023.
In 2023, the Group acquired 100% of the share capital of Opiant Pharmaceuticals, Inc. ("Opiant") which has been accounted for as an asset acquisition as substantially all of the fair value of the gross assets acquired is concentrated in the value of the in-process research and development. The Group has disclosed new accounting policies in Note 17 regarding the policy elected for treatment of contingent consideration and the method used to evaluate whether an acquisition is a business. 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, 2022, except for estimates used in determining the valuation of the in-process research and development associated with the acquisition of Opiant and changes in estimates that are required in determining the provision for income taxes.
The Directors have assessed the Group's ability to maintain sufficient liquidity to fund its operations, fulfill financial and compliance obligations as set out in Note 12, and comply with the minimum liquidity covenant in the Group's debt facility for the period to September 2024 (the going concern period). A base case model was produced reflecting:
• Board approved forecasts and financial plans for the period;
• the acquisition of Opiant completed in Q1 2023; and
• settlement of liabilities and provisions in line with contractual or expected terms.
The Directors also assessed a 'severe but plausible' downside scenario which included the following key changes to the base case within the going concern period:
• the risk that SUBLOCADE will not meet revenue growth expectations by modelling a 15% decline on forecasts;
• an accelerated decline in sublingual product sales including reversion to generic analogues for SUBOXONE Film in the U.S.; and
• stress testing of payments from ongoing legal proceedings.
Under both the base case and the downside scenario, sufficient liquidity exists and is generated by the business such that all operational and covenant requirements are met for the going concern period. The Directors believe the near-term litigation outcomes can be appropriately managed; should this not be the case, the Group would take the cases to trial where it believes it has a strong case that would not merit material additional payments in the going concern periods. These risks were balanced against the Group's current and forecast liquidity position as well as other mitigating measures available to the Group. As a result of the analysis described above, the Directors reasonably expect the Group to have 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, 2022, were approved by the Board of Directors on March 7, 2023, and delivered to the Registrar of Companies. The auditor's report 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
The Group is engaged in a single business activity, which is predominantly 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 and allocates resources on a functional basis between Commercial, Supply, Research, and Development, and other Group functions. 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 geographically based on the country where the sale originates. The following tables represent net revenues and non-current assets, net of accumulated depreciation, amortization and impairment, by country. Non-current assets for this purpose consist of intangible assets, property, plant and equipment, right-of-use assets, investments, and other assets.
Net revenue:
|
|
|
2023 |
2022 |
For the three months ended March 31 |
|
| $m | $m |
United States |
|
| 209 | 165 |
Rest of World |
|
| 44 | 42 |
Total |
|
| 253 | 207 |
On a disaggregated basis, the Group's net revenue by major product line:
|
|
|
2023 |
2022 |
For the three months ended March 31 |
|
| $m | $m |
Sublingual/other |
|
| 113 | 117 |
SUBLOCADE |
|
| 132 | 85 |
PERSERIS |
|
| 8 | 5 |
Total |
|
| 253 | 207 |
Non-current assets:
| Mar 31,2023 | Dec 31,2022 |
| $m | $m |
United States | 201 | 65 |
Rest of World | 231 | 226 |
Total | 432 | 291 |
3. OPERATING EXPENSES AND NET OTHER OPERATING INCOME
The table below sets out selected operating costs and expense information:
Operating expenses
|
|
|
2023 |
2022 |
For the three months ended March 31 |
|
| $m | $m |
Research and development expenses |
|
| (27) | (8) |
|
|
|
|
|
Selling and general expenses |
|
| (53) | (53) |
Administrative and general expenses1 |
|
| (78) | (56) |
Selling, general, and administrative expenses |
|
| (131) | (109) |
|
|
|
|
|
Depreciation, amortization, and impairment2 |
|
| (4) | (3) |
1 Administrative and general expenses include exceptional costs in the current period as outlined in Note 4.
2 Depreciation and amortization expense is included in research and development and selling, general and administrative expenses. Additionally, depreciation and amortization expense in Q1 2023 of $2m (Q1 2022: $2m) for ROU assets and intangibles is included within cost of sales.
The increase in research and development expenses is primarily due to increased activities related to certain post-marketing studies for SUBLOCADE and PERSERIS, process validation testing related to LAI capacity expansion and ongoing early-stage pipeline activities.
Net other operating income
|
|
|
2023 |
2022 |
For the three months ended March 31 |
|
| $m | $m |
Net proceeds from the sale of intangible assets |
|
| - | 1 |
Fair value gain on equity investment |
|
| 1 | - |
Net other operating income |
|
| 1 | 1 |
4. EXCEPTIONAL ITEMS AND ADJUSTED RESULTS
Exceptional items
Where significant expenses or income occur that do not reflect the Group's ongoing operations or the adjustment of which may help with the comparison to prior periods, 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 significant 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 measures defined by IFRS and 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 expense recorded in each period:
|
|
|
2023 |
2022 |
For the three months ended March 31 |
|
| $m | $m |
Exceptional items within SG&A |
|
|
|
|
Acquisition-related costs1 |
|
| (12) | - |
US listing costs2 |
|
| (2) | - |
Total exceptional items within SG&A |
|
| (14) | - |
Total exceptional items before taxes |
|
| (14) | - |
Tax on exceptional items |
|
| 2 | - |
Total exceptional items |
|
| (12) | - |
1. In Q1 2023, the Group recognized $12m of exceptional costs related to the acquisition of Opiant (refer to Note 17). The Group expects to incur approximately $3m in additional pre-tax acquisition-related costs in FY 2023 which would be recorded as exceptional.
2. In Q1 2023, the Group recognized $2m of exceptional costs in preparation for a potential additional listing of Indivior shares on a major US exchange. The Group expects to incur approximately $3m in additional exceptional pre-tax costs in FY 2023 as it prepares for an additional US listing.
Adjusted results
Management believes adjusted results may be useful to investors as they exclude items which do not reflect the Group's day-to-day operations or may help with comparisons to prior periods. Similar concepts of adjusted results are frequently used by securities analysts, investors and other interested parties in their evaluation of the Group and in comparison to other companies, many of which also present adjusted performance measures when reporting their results. Adjusted results have limitations as analytical tools. They are not recognized terms under IFRS and therefore do not purport to be an alternative to operating profit as a measure of operating performance. Adjusted results as presented by the Group are not necessarily comparable to similarly titled measures used by other companies. As a result, these performance measures should not be considered in isolation from, or as a substitute analysis for, the Group's reported results presented in accordance with IFRS.
The tables below show the list of adjustments between the reported and adjusted results for both Q1 2023 and Q1 2022.
Reconciliation of selling, general and administrative expenses to adjusted selling, general and administrative expenses
|
|
|
2023 |
2022 |
For the three months ended March 31 |
|
| $m | $m |
Selling, general and administrative expenses |
|
| (131) | (109) |
Exceptional selling, general and administrative expenses |
|
| 14 | - |
Adjusted selling, general and administrative expenses |
|
| (117) | (109) |
Reconciliation of operating profit to adjusted operating profit
|
|
|
2023 |
2022 |
For the three months ended March 31 |
|
| $m | $m |
Operating profit |
|
| 57 | 54 |
Exceptional selling, general and administrative expenses |
|
| 14 | - |
Adjusted operating profit |
|
| 71 | 54 |
Reconciliation of profit before taxation to adjusted profit before taxation
|
|
|
2023 |
2022 |
For the three months ended March 31 |
|
| $m | $m |
Profit before taxation |
|
| 58 | 48 |
Exceptional selling, general and administrative expenses |
|
| 14 | - |
Adjusted profit before taxation |
|
| 72 | 48 |
Reconciliation of net income to adjusted net income
|
|
|
2023 |
2022 |
For the three months ended March 31 |
|
| $m | $m |
Net income |
|
| 44 | 41 |
Exceptional selling, general and administrative expenses |
|
| 14 | - |
Tax on exceptional items |
|
| (2) | - |
Adjusted net income |
|
| 56 | 41 |
5. NET FINANCE INCOME (EXPENSE)
|
|
|
2023 |
2022 |
For the three months ended March 31 |
|
| $m | $m |
Finance income |
|
|
|
|
Interest income on cash and cash equivalents/investments |
|
| 11 | - |
Total finance income |
|
| 11 | - |
Finance expense |
|
|
|
|
Interest expense on borrowings |
|
| (7) | (4) |
Interest expense on lease liabilities |
|
| (1) | - |
Interest expense on legal matters |
|
| (2) | (2) |
Total finance expense |
|
| (10) | (6) |
Net finance income (expense) |
|
| 1 | (6) |
The increases to finance income and finance expense were primarily due to higher interest rates. Investments in corporate debt and U.S. Treasury securities in 2022 also contributed to the increase in finance income.
6. 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 on actual movement in deferred tax for the quarter, with the balance recorded to the current tax accounts.
In the three months ended March 31, 2023, the reported total tax expense was $14m, or a rate of 24% (Q1 2022 tax expense: $7m, 15%). The tax expense on Q1 2023 adjusted profits amounted to $16m, excluding the $2m tax benefit on exceptional items, which represented an effective tax rate of 22%. There were no exceptional items recorded in the prior period. The increase in the effective tax rate on adjusted profits was primarily driven by the increase in the UK tax rate from 19% to 23.5%, and the temporary reduction in innovation incentives due to 2022 losses.
The Group's balance sheet at March 31, 2023 includes a current tax receivable of $33m (FY 2022: $5m), current tax liabilities of $7m (FY 2022: $9m), and deferred tax assets of $201m (FY 2022: $219m). The main decrease in deferred tax assets is due to share-based compensation.
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 March 31, 2023, the Group's net deferred tax assets of $201m relate primarily to net operating loss carryforwards, share-based compensation, inventory costs capitalized for tax purposes, litigation liabilities, and other non-current temporary differences. Recognition of deferred tax assets 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 net revenues. These forecasts are subject to similar uncertainties to those assessments. This 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 realizable, Management have concluded full recognition of deferred tax assets to be appropriate and do not believe a significant risk of material change in their assessment exists in the next 12 months.
Other tax matters
In September 2022, the Company's shareholders approved an additional listing in the U.S., which is expected to take place in June 2023. Once listed in the U.S., U.S. tax laws limit deductibility of compensation for certain management roles. The Group currently carries approximately $6m of deferred tax assets that are not expected to be realized once the listing is complete. Approximately 55% of this amount will be charged to equity and 45% will be presented as an exceptional tax charge in the period the listing takes place, as a reversal of the original booking.
The enacted UK Statutory Corporation Tax rate has increased to 25% as of April 1, 2023, providing a blended rate of 23.5% for the year ended December 31, 2023. A framework for the introduction of a global minimum effective tax rate of 15%, applicable to large multinational groups has been published. In the Spring Finance Bill that followed the 2023 Spring Budget, the UK Government proposed legislation to implement the OECD Global Anti-Base Erosion Model Pillar Two rules in the UK. The legislation is expected to be enacted in summer 2023 and will be effective for accounting periods starting on or after December 31, 2023. The Group is reviewing these draft rules to understand any potential impacts when ultimately enacted.
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.
7. EARNINGS PER SHARE
Share consolidation
In September 2022, the Company's shareholders approved a 5-for-1 share consolidation. On October 10, 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. All share and per share information of the Group, including 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) reflect the share consolidation for all periods presented.
The table below sets out basic and diluted earnings per share for each period:
|
|
|
2023 |
2022 |
For the three months ended March 31 |
|
| $ | $ |
Basic earnings per share |
|
| $0.32 | $0.29 |
Diluted earnings per share |
|
| $0.31 | $0.28 |
|
|
|
|
|
Adjusted basic earnings per share |
|
| $0.41 | $0.29 |
Adjusted diluted earnings per share |
|
| $0.40 | $0.28 |
Basic
Basic earnings per share is calculated by dividing net income for the period attributable to owners of the Group 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 Group has dilutive potential ordinary shares in the form of stock options and awards. These options and awards reflect the share consolidation for all periods presented, referred to above. The weighted average number of shares is adjusted for the number of shares granted to the extent performance conditions have been met at the balance sheet date and as determined using the treasury stock method.
Weighted average number of shares
The weighted average number of ordinary shares outstanding (on a basic basis) for Q1 2023 includes the favorable impact of 484,362 ordinary shares repurchased in Q1 2023, 17,815,033 ordinary shares repurchased prior to the share consolidation in 2022 (equivalent post consolidation: 3,563,007), and 1,280,914 ordinary shares repurchased after the share consolidation in 2022. See Note 16 for further discussion. Conditional awards of 1,760,805 and 7,491,252 (equivalent post consolidation approximately 1,498,000) were granted under the Group's Long-Term Incentive Plan in Q1 2023 and Q1 2022, respectively.
|
|
|
2023 |
2022 |
For the three months ended March 31 |
|
| thousands | thousands |
On a basic basis |
|
| 136,536 | 140,740 |
Dilution from share awards and options |
|
| 4,452 | 5,498 |
On a diluted basis |
|
| 140,988 | 146,238 |
Adjusted Earnings
Management believes that diluted earnings per share, adjusted for the impact of exceptional items after the appropriate tax amount, may provide 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.
8. INTANGIBLE ASSETS
| Mar 31,2023 | Dec 31,2022 |
Intangible assets, net of accumulated amortization and impairment | $m | $m |
Products in development | 167 | 36 |
Marketed products | 29 | 29 |
Software | 4 | 5 |
Total | 200 | 70 |
The increase in products in development is primarily due to the acquisition of Opiant which resulted in the recognition of an intangible asset related to the in-process research and development value for the pipeline product OPNT003, nasal nalmafene, for $126m (refer to Note 17).
9. INVESTMENTS
| Mar 31,2023 | Dec 31,2022 |
Current and non-current investments | $m | $m |
Equity securities at FVPL | 11 | 10 |
Debt securities held at amortized cost | 106 | 109 |
Total investments, current | 117 | 119 |
Debt securities held at amortized cost | 98 | 98 |
Total investments, non-current | 98 | 98 |
Total | 215 | 217 |
The Group's investments in debt and equity securities do not create significant credit risk, liquidity risk, or interest rate risk. Debt securities held at amortized cost consist of investment-grade debt. At March 31, 2023, approximately 25% of the Group's portfolio was invested in the banking sector; none of those securities were downgraded as a result of the recent market events in that sector.
As of March 31, 2023, 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 March 31, 2023.
Financial assets at fair value | Level 1 $m | Level 2 $m | Level 3 $m | Total $m |
Equity securities at FVPL | 11 | - | - | 11 |
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 March 31, 2023, the carrying value of investments held at amortized cost was above the fair value by $2m, 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.
10. CURRENT AND NON-CURRENT OTHER ASSETS
| Mar 31,2023 | Dec 31,2022 |
Current and non-current investments | $m | $m |
Current prepaid expenses | 26 | 14 |
Other current assets | 22 | 13 |
Total other current assets | 48 | 27 |
Non-current prepaid expenses | 20 | 20 |
Other non-current assets | 26 | 18 |
Total other non-current assets | 46 | 38 |
Total | 94 | 65 |
Non-current assets primarily represent the funding of surety bonds in relation to intellectual property related matters (see Note 14 for further discussion). Long-term prepaid expenses primarily relate to payments for contract manufacturing capacity.
11. FINANCIAL LIABILITIES - BORROWINGS
The table below sets out the current and non-current portion obligation of the Group's term loan:
| Mar 31,2023 | Dec 31,2022 |
Term loan* | $m | $m |
Term loan - current | (3) | (3) |
Term loan - non-current | (236) | (237) |
Total term loan | (239) | (240) |
\* Total term loan borrowings reflect the principal amount drawn including debt issuance costs of $6m (FY 2022: $6m).
At March 31, 2023, the term loan fair value was approximately 98% (FY 2022: 98%) of par value. The key terms of the term loan in effect at March 31, 2023, are as follows:
|
| Currency | Nominal interest margin | Maturity | Required annual repayments | Minimum liquidity |
Term Loan facility |
| USD | SOFR + 0.26% + 5.25% | 2027 | 1% | Larger of $100m or 50% of Loan Balance |
The term loan amounting to $245m (FY 2022: $246m) is secured against the assets of certain subsidiaries of the Group in the form of guarantees issued by respective subsidiaries.
• Nominal interest margin is calculated as USD SOFR plus 0.26%, subject to a floor of 0.75%, plus a credit spread adjustment of 5.25%.
• There are no revolving credit commitments.
12. PROVISIONS AND OTHER LIABILITIES
Provisions
|
| Total |
|
| Total | |
| Current | Non-Current | Mar 31, 2023 | Current | Non-Current | Dec 31, 2022 |
Current and non-current provisions | $m | $m | $m | $m | $m | $m |
Multidistrict antitrust class and state claims | (290) | - | (290) | (290) | - | (290) |
Federal false claims allegations | (5) | - | (5) | (5) | - | (5) |
Intellectual property related matters | - | (3) | (3) | - | (3) | (3) |
Other | (3) | (2) | (5) | (8) | (2) | (10) |
Total provisions | (298) | (5) | (303) | (303) | (5) | (308) |
The Group carries a current provision of $290m (FY 2022: $290m) for certain multidistrict antitrust class and state claims. The provision is the Group's estimate at this time of a potential aggregate settlement. However, the Group cannot predict with any certainty whether Indivior Inc. will reach a settlement with any of the Plaintiffs, and the final aggregate cost of these matters, whether resolved by settlement or trial, may be materially different. See Note 14, Antitrust Litigation and Consumer Protection for further details. The effect of discounting was not material.
The Group carries a provision of $5m (FY 2022: $5m) pertaining to all outstanding False Claims Act Allegations as discussed in Note 14. These matters are expected to be settled within the next 12 months and are not expected to materially change.
The Group carries a provision of $3m (FY 2022: $3m ) for intellectual property related matters (see Note 14, Intellectual property related matters). The Group does not expect the remaining matters to be settled within a year and therefore the provision is classified as non-current.
Other provisions totaling $5m (FY 2022: $10m) primarily represent general legal matters expected to be settled within the next 12 months and retirement benefit costs which are not expected to be settled within one year.
Other liabilities
|
|
| Total |
|
| Total |
| Current | Non-Current | Mar 31, 2023 | Current | Non-Current | Dec 31, 2022 |
Current and non-current other liabilities | $m | $m | $m | $m | $m | $m |
DOJ resolution | (51) | (342) | (393) | (52) | (392) | (444) |
Intellectual property related matters | (11) | - | (11) | (10) | (11) | (21) |
RB indemnity settlement | (8) | (15) | (23) | (8) | (22) | (30) |
Share repurchase | - | - | - | (9) | - | (9) |
Other | - | (10) | (10) | - | (3) | (3) |
Total other liabilities | (70) | (367) | (437) | (79) | (428) | (507) |
DOJ resolution
In July 2020, the Group settled criminal and civil liability with the United States Department of Justice (DOJ), the U.S. Federal Trade Commission (FTC), and U.S. 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 and 2023, additional payments of $54m and $53m (including interest) were made pursuant to the resolution agreement, respectively. Subsequently, four annual installments of $50m plus interest will be due every January 15 from 2024 to 2027 with the final installment of $200m due in December 2027. Interest accrues at 1.25% 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 and using a discount rate equal to the interest rate on the interest-bearing portions. In Q1 2023, the Group recorded interest expense totaling $1m (Q1 2022: $2m) related to this resolution.
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 U.S. 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.
IP related matters
The Group has other liabilities for intellectual property related matters totaling $11m (FY 2022: $21m), which relates to the settlement of intellectual property litigation with DRL in June 2022. Under the settlement agreement, the Group made payments to DRL in June 2022 and March 2023 with a final payment due in 2024. This liability has been recorded at the net present value, using a market interest rate at the time of the settlement determined to be 4.50%, considering the timing of payments and other factors.
RB resolution
In January 2021, the Group reached a settlement with RB to resolve claims which RB issued in the Commercial Court in London in November 2020, seeking indemnity under the Demerger Agreement between amongst others, RB and the Group (Demerger Agreement). Pursuant to the settlement, RB withdrew the U.S. $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 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 installment payments of $8m in January 2022 and 2023, respectively. Subsequently, annual installment payments of $8m will be due every January from 2024 to 2026. The Group carries a liability totaling $23m (FY 2022: $30m) related to this settlement. This liability has been recorded at the net present value, using a market interest rate at the time of the settlement determined to be 3.75%, considering the timing of payments and other factors.
Other
Other liabilities primarily represent employee related liabilities and deferred revenue related to a supply agreement, which are non-current as of March 31, 2023.
13. 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 liabilities related to these matters are determined to be possible, they represent contingent liabilities. Except for those matters discussed in Note 14 under "Multidistrict Antitrust Class and State Claims", "False Claims Act Allegations", and "Intellectual Property Related Matters", for which liabilities or provisions have been recognized, Note 14 sets out the details for legal and other disputes for which the Group has assessed as contingent liabilities. Where the Group believes that it is possible to reasonably estimate a range for the contingent liability this has been disclosed.
14. 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 14.
Antitrust Litigation and Consumer Protection
Multidistrict Antitrust Class and State Claims
• Civil antitrust claims have been filed by (a) a class of direct purchasers, (b) a class of end payors, and (c) a group of states, now numbering 41, and the District of Columbia (collectively, the "Plaintiffs"). The Plaintiffs generally allege, among other things, that Reckitt Benckiser Pharmaceuticals, Inc. (now known as Indivior Inc.) violated U.S. federal and/or state antitrust and consumer protection laws in attempting to delay generic entry of alternatives to SUBOXONE Tablets. Plaintiffs further allege that Indivior Inc. unlawfully acted to lower the market share of these products. These antitrust cases are pending in multidistrict litigation (the "Antitrust MDL") in federal court in the Eastern District of Pennsylvania. The court denied Indivior Inc.'s motion for summary judgment by order dated August 22, 2022. Trial is currently scheduled for September 18, 2023.
• In the first quarter of 2023, Indivior Inc. participated in mediation sessions related to the Antitrust MDL. The Plaintiffs and Indivior Inc. submitted initial monetary demands and offers prior to the mediation. Additional demands and offers have been exchanged with the States. Additional mediation sessions may take place in the future.
• The Group believes Indivior Inc. has meritorious defenses and will continue to vigorously defend itself in this matter. The Group has evaluated the current status of mediation, the strengths and weaknesses of the Plaintiffs' liability and damages claims, the Group's defenses, the inherent uncertainty of trial, the remaining legal issues to be resolved, and the benefits of certainty to the Group in resolving these claims and savings in legal fees and costs. The Group has determined that it is in the interests of its stakeholders to explore settlement of these matters. As a result, an exceptional provision of $290 million has been recognized by the Group, although any settlement could occur at a lower or higher amount. The provision is the Group's estimate at this time of a potential aggregate settlement in light of the above analysis. However, the Group cannot predict with any certainty whether Indivior Inc. will reach a settlement with any of the Plaintiffs, and the final aggregate cost of these matters, whether resolved by settlement or trial, may be materially different.
• If Indivior Inc. is found liable in a trial to any of the Plaintiffs and is unable to reduce the claimed damages of such Plaintiff group or groups during such trial (or in any subsequent proceeding), which the Directors believe is beyond "severe but plausible" (and therefore remote) within the going concern period, then its financial position, results and future cash flows could be materially adversely affected. If the Group continues with mediation or other settlement discussions, it makes no guarantee as to whether any settlement can be reached and if so, what amounts, if any, it may agree to pay, or what amounts the Plaintiffs will demand.
Other Antitrust and Consumer Protection Claims
• 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 in the Antitrust MDL. The Carefirst case remains pending.
• 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. The plaintiffs filed Notices of Appeal in August 2021 to the United States Court of Appeals for the Third Circuit ("Third Circuit"). The Third Circuit affirmed the district court's dismissal by opinion and order dated December 15, 2022. Humana also filed a Complaint in state court in Kentucky on August 20, 2021 with substantially the same claims as were raised in the federal court case. See Humana Inc. v. Indivior Inc., No. 21-CI-004833 (Ky. Cir. Ct.) (Jefferson Cnty). That case was stayed pending a decision by the Third Circuit, and remains stayed. Centene Corporation and the above-referenced related companies filed a complaint in the Circuit Court for the County of Roanoke, Virginia alleging similar claims on January 13, 2023 following the mandate from the Third Circuit affirming the district court's dismissal. See Centene Corp. v. Indivior Inc., No. CL23000054-00 (Va. Cir. Ct.) (Roanoke Cnty). Indivior has not been served in the Centene action.
• 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. are pending in the Circuit Court for the County of Roanoke, Virginia. See Health Care Services Corp. v. Indivior Inc., No. CL20-1474 (Lead Case) (Va. Cir. Ct.) (Roanoke Cnty). 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 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 30 - November 3, 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 defend itself. 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 alleging that manufacturers, distributors, and retailers of opioids 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 shares for opioids, or alleging individual personal injury claims. Most of these cases have been consolidated and are pending in a federal multi-district litigation ("the Opioid MDL") in the U.S. District Court for the Northern District of Ohio. See In re National Prescription Opiate Litigation, MDL No. 2804 (N.D. Ohio). Nearly 2/3 of the cases in the Opioid MDL were filed by cities and counties, while nearly 1/3 of the cases were filed by individual plaintiffs, most of whom assert claims relating to neonatal abstinence syndrome ("NAS"). Litigation against the Group in the Opioid MDL is stayed. On December 12, 2022, the court in the Opioid MDL set forth procedures requiring plaintiffs to show cause why the court should not dismiss cases in which plaintiffs have not submitted a plaintiff fact sheet or timely served the relevant defendants. On April 6, 2023, the court ordered that plaintiffs must perfect service and governmental subdivision plaintiffs must serve plaintiff fact sheets within 45 days, or the cases will be dismissed without prejudice . Separately, motions to remand have been denied or withdrawn in more than 50 cases to which the Group is a party (among numerous other defendants). Motions to remand remain pending in additional cases to which the Group is a party.
• The court in the Opioid 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. During the status conference and at subsequent conferences, the court expressed its view that no additional bellwether trials should be needed for these cases, provided that the parties were progressing on a settlement track. By order dated February 28, 2023, the court indicated that it will not select hospital cases for bellwether trials at this time, and set forth a process for selecting six bellwether third-party payor trials.
• Regarding civil opioid cases not in the Opioid MDL:
◦ In 2017, Indivior Inc. was named as one of numerous defendants in International Brotherhood of Electrical Workers Local 728 Family Healthcare Plan v. Allergan, PLC et al., Case ID: 190303872 (C.P. Phila. Cnty). That case was consolidated with Lead Case No. 2017-008095 in Delaware County and stayed.
◦ Indivior also was named as one of numerous defendants in various other federal and state court cases that are not in the Opioid MDL and were brought by municipalities. Many were only recently filed. Indivior is not yet currently required to respond to the complaints in those actions.
◦ Indivior Inc. was named as a defendant in five individual complaints filed in West Virginia state court that were transferred to West Virginia's Mass Litigation Panel. See In re Opioid Litigation, No. 22-C-9000 NAS (W.V. Kanawha Cnty. Cir. Ct.) ("WV MLP Action"). All five of Indivior Inc.'s cases in the WV MLP Action involved claims related to NAS. Indivior Inc. moved to dismiss all five complaints on January 30, 2023. The plaintiffs in those cases separately have moved to strike the defendants' notices of non-party fault. A hearing on motions to dismiss in the WV MLP Action, including Indivior Inc.'s motions, was held on March 24, 2023. By order dated April 17, 2023, the court granted Indivior's motions to dismiss.
• Given the status and preliminary stage of litigation in both the Opioid MDL and the separate federal and state court actions, 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 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, and instead has further stayed the proceedings pending decisions by the Supreme Court of the United States in two cases concerning the False Claims Act-United States ex rel. Proctor v. Safeway, Inc., and United States ex rel. Schutte v. Supervalu, Inc.
• 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. On January 16, 2023, the representative served its Particular of Claims setting forth in more detail the claims against the Group, while the same law firm that represents the representative also sent its draft Particular of Claims for the multiparty action. The claims made in both the representative and multiparty actions generally allege that Indivior PLC 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® tablets to SUBOXONE® film. Indivior PLC filed an application to strike out the representative action on February 27, 2023. A hearing on the application to strike out has been scheduled for November 20-21, 2023.
• The Group has begun its evaluation of the claims, believes it 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.
Intellectual Property Related Matters
• Various subsidiaries of the Group filed actions against Alvogen Pine Brook LLC and Alvogen Inc. (together, "Alvogen") in the United States District Court for the District of New Jersey (the "NJ District Court") alleging that Alvogen's generic buprenorphine/naloxone film product infringes U.S. Patent Nos. 9,687,454 (the "454 Patent") and 9,931,305 (the "305 Patent") 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 the subsidiaries of the Group that were a party to the case were required to post a surety bond of $36m. The parties entered into an agreement whereby Alvogen was enjoined from selling in the U.S. its generic buprenorphine/naloxone film product unless and until the Court of Appeals for the Federal Circuit ("CAFC") issued a mandate vacating Indivior's separate preliminary injunction entered against Dr. Reddy's Laboratories, Inc. ("DRL") in a related case. The CAFC's mandate vacating Indivior's preliminary injunction as to DRL issued in February 2019, and Alvogen launched its generic product. Any sales in the U.S. 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.
15. TRADE AND OTHER PAYABLES
|
| Mar 31,2023 | Dec 31,2022 |
|
| $m | $m |
Accrual for rebates, discounts and returns |
| (466) | (428) |
Accounts payable |
| (36) | (36) |
Accruals and other payables |
| (134) | (138) |
Other tax and social security payable |
| (21) | (15) |
Total trade and other payables |
| (657) | (617) |
16. SHARE CAPITAL
|
| Equity ordinary shares | Nominal value paid per share | Aggregate nominal value $m |
Issued and fully paid |
|
|
|
|
At January 1, 2023 |
| 136,480,995 | $0.50 | 68 |
Ordinary shares issued |
| 1,878,796 | $0.50 | 1 |
Shares repurchased and cancelled |
| (484,362) | $0.50 | - |
At March 31, 2023 |
| 137,875,429 |
| 69 |
|
| Equity ordinary shares | Nominal value paid per share | Aggregate nominal value $m |
Issued and fully paid |
|
|
|
|
At January 1, 2022 |
| 702,439,638 | $0.10 | 70 |
Ordinary shares issued |
| 3,840,414 | $0.10 | 1 |
Shares cancelled |
| (256,055) | $0.10 | - |
At March 31, 2022 |
| 706,023,997 |
| 71 |
Ordinary shares issued
During the period, 1,878,796 ordinary shares at $0.50 each (Q1 2022: 3,840,414 at $0.10 each) were issued to satisfy vesting/exercises under the Group's Long-Term Incentive Plan and U.S. Employee Stock Purchase Plan. In Q1 2023, net settlement of tax on employee equity awards was $21m (Q1 2022: $10m).
Share consolidation
In October 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.
Shares repurchased and cancelled
On May 3, 2022, the Group commenced a second share repurchase program for an aggregate purchase price up to no more than $100m or 39,698,610 of ordinary shares (equivalent shares post consolidation: 7,939,722), which concluded on February 28, 2023. During the period, the Group repurchased and cancelled 484,362 of the Company's ordinary shares at $0.50 per share. In Q1 2022, 256,055 ordinary shares at $0.10 purchased in 2021 as part of the Group's share repurchase program were cancelled in January 2022.
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 $11m. Total purchases under the share repurchase program will be made out of distributable profits.
17. ACQUISITION OF OPIANT
On March 2, 2023, the Group acquired 100% of the share capital of Opiant, a publicly traded company in the United States, for upfront cash consideration of $146m and an additional amount to be potentially paid upon achievement of net sales milestones. Opiant is a specialty pharmaceutical company focusing on developing drugs for addictions and drug overdose. As a result of the acquisition, the Group added the pipeline product OPNT003, nasal nalmefene, an opioid overdose treatment well-suited to confront illicit synthetic opioids like fentanyl, to its addiction and science portfolio. The U.S. Food and Drug Administration (FDA) has accepted for review the New Drug Application (NDA) for OPNT003, granted a Priority Review designation and has given a Prescription Drug User Fee Act (PDUFA) action date of May 22, 2023.
Management has elected to apply the optional concentration test under IFRS 3. As substantially all of the fair value of the gross assets acquired (excluding cash and cash equivalents, deferred tax assets, and goodwill resulting from the effects of deferred tax liabilities) are concentrated in a single asset, the Group will account for the transaction as an asset acquisition. For the acquisition of Opiant, substantially all of the fair value of the gross assets acquired is concentrated in the in-process research and development associated with OPNT003. As a result, the acquisition has been accounted for as an asset acquisition. With the closing of this transaction, a relative fair value approach was taken for allocating the purchase consideration to the acquired assets and liabilities with no goodwill recognized. The Group has recorded an intangible asset associated with OPNT003 for $126m. The Group used a multi-period excess earnings method, a form of the income approach, to determine the fair value of the intangible asset.
As part of the acquisition of Opiant, the Group agreed to provide a maximum of $8.00 per share in Contingent Value Rights (CVR) post-acquisition. The Group will pay $2.00 per CVR for each of the following net revenue thresholds achieved by OPNT003, during any period of four consecutive quarters prior to the seventh anniversary of the U.S. commercial launch: (i) $225m, (ii) $300m and (iii) $325m. The remaining (iv) $2.00 per CVR would be paid if OPNT003 achieves net revenue of $250m during any period of four consecutive quarters prior to the third anniversary of the U.S. commercial launch. The potential undiscounted payout of contingent consideration ranges from nil to $68 million based on the achievement of the milestones. The Group accounts for contingent consideration associated with asset acquisitions using a cost accumulation model. No liabilities are initially recognized at the date of acquisition. When an obligation associated with a variable payment is no longer uncertain, it is capitalized as part of the cost of the asset, as it represents a direct cost of the acquisition.
An initial recognition exception applies to the tax attributes acquired whereby only certain items are recognized with the transaction, such as net operating loss carryforwards, other tax carryforwards, and tax credits. Such attributes totaled $9m, recorded as deferred tax assets.
The cash outflow for the acquisition was $124m, net of cash acquired. Direct transaction costs of $10m are included in this cash outflow and capitalized as a component of the total cost of the asset acquisition. Of the $146m upfront consideration, $2m represents acceleration of vesting of employee share compensation and has been recognized as a post-combination expense. As part of the acquisition, the Group assumed outstanding debt of $10m which was settled and included as a cash outflow from financing activities.
Exceptional costs of $12m were incurred during the quarter, primarily relating to severance, acceleration of vesting of Opiant employee share compensation, and short-term retention accruals (refer to Note 4).
The following table summarizes the net assets acquired:
Net assets acquired |
|
| $m |
Cash and cash equivalents |
|
| 30 |
Inventories |
|
| 3 |
Right-of-use assets |
|
| 2 |
Intangible assets |
|
| 126 |
Deferred tax assets |
|
| 9 |
Other assets |
|
| 6 |
Trade and other payables |
|
| (10) |
Lease liabilities |
|
| (2) |
Borrowings |
|
| (10) |
Total net assets acquired |
|
| 154 |
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 |
April 27, 2023
Independent review report to Indivior PLC
Report on the condensed consolidated interim financial statements
Our conclusion |
We have reviewed Indivior PLC's condensed consolidated interim financial statements (the "interim financial statements") in the Q1 2023 Financial Results of Indivior PLC for the three month period ended 31 March 2023 (the ''period'').
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 31 March 2023;
• the Condensed consolidated interim income statement and Condensed consolidated interim statement of comprehensive income for the period then ended;
• the Condensed consolidated interim statement in changes in equity for the period then ended;
• the Condensed consolidated interim cash flow statement for the period then ended; and
• the explanatory notes to the interim financial statements.
The interim financial statements included in the Q1 2023 Financial 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 (UK) 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 Q1 2023 Financial 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 (UK) 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 Q1 2023 Financial Results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Q1 2023 Financial Results in accordance with IAS 34. In preparing the Q1 2023 Financial 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 Q1 2023 Financial 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 April 2023