Indivior Regulatory News (INDV)

http://www.rns-pdf.londonstockexchange.com/rns/0027U_1-2022-7-27.pdf

July 28, 2022

Strong H1 and Q2 2022 results announced; Increases SUBLOCADE NR guidance for FY 2022;

Pursuing shareholder approval for US listing

*Adjusted Basis excludes the impact of exceptional items as referenced and reconciled in Notes 4 and 6. Adjusted results are not a substitute for, or superior to, reported results presented in accordance with International Financial Reporting Standards.

Comment by Mark Crossley, CEO of Indivior PLC

"We delivered another strong performance in the second quarter driven by the team's relentless focus on our strategic priorities as well as benefits from our incremental investments behind SUBLOCADE® (buprenorphine extended-release) and PERSERIS® (risperidone). Second quarter SUBLOCADE net revenue grew 61% to $98m, as our Organized Health System strategy resulted in broadened account access and increased depth of prescribing. Based on our stronger-than-expected H1 performance, we are increasing our full year guidance for SUBLOCADE to $390m to $420m. Our PERSERIS national expansion also continues to deliver against expectations with net revenue increasing 75% in the second quarter.

We continue to focus on delivering value for all shareholders as demonstrated by our disciplined capital allocation policy which has allowed us to maintain a strong and flexible balance sheet while also executing on the $100m share repurchase program announced in May. Additionally, we have completed extensive consultations with key stakeholders on the potential for an additional US listing and based on positive feedback we now intend to seek shareholder approval for this important strategic step at a September EGM."

H1 / Q2 2022 Financial Highlights

· H1 2022 total net revenue (NR) of $428m increased 12% (H1 2021: $381m); Q2 2022 total NR of $221m increased 10% (Q2 2021: $201m). Net revenue growth in each period was primarily driven by SUBLOCADE.

· H1 2022 reported operating profit of $117m decreased 10% (H1 2021: $130m); Q2 2022 reported operating profit of $63m decreased 14% (Q2 2021: $73m). On an adjusted basis, H1 2022 operating profit of $114m decreased 3% (Adj. H1 2021: $117m). Adj. Q2 2022 operating profit of $60m decreased 9% (Adj. Q2 2021: $66m). Declines in both reported and adjusted operating profit in each period reflect the impact of an expected increase in operating expenses, mainly SG&A investments to grow SUBLOCADE and PERSERIS.

· H1 2022 reported net income of $89m decreased 37% (H1 2021: $142m); Q2 2022 reported net income of $48m decreased 23% (Q2 2021: $62m). On an adjusted basis, H1 2022 net income of $86m decreased 1% (Adj. H1 2021 net income: $87m). Adj. Q2 2022 net income of $45m decreased 8% (Adj. Q2 2021: $49m).

· Gross cash and investments totalled $1,015m at the end of Q2 2022 (FY 2021: $1,102m). See discussion of Group obligations in Notes 9 & 10.

· Cash used in operations was $14m. Excluding exceptional litigation settlement payments of $108m, cash generated from operations was approximately $94m.

H1 / Q2 2022 Operating Highlights

· H1 2022 SUBLOCADE NR of $183m (+76% vs. H1 2021); Q2 SUBLOCADE NR of $98m (+61% vs. Q2 2021 and +15% vs. Q1 2022) reflects strong growth in the OHS channel and increased new US patient enrolments. The Group has now achieved access to its targeted 500+ OHS priority accounts. SUBLOCADE Q2 2022 NR growth was 81% excluding the $7m large order from a new criminal justice system (CJS) customer in the year-ago quarter. Q2 2022 US dispenses were approx. 75,500 units (+76% vs. Q2 2021 excluding the CJS order and +18% vs. Q1 2022). Total SUBLOCADE patients on a 12-month rolling basis at the end of Q2 2022 were approximately 65,000 (+76% vs. Q2 2021 and +14% vs.Q1 2022).

· H1 2022 PERSERIS NR of $12m (+50% vs. H1 2021); Q2 2022 PERSERIS NR of $7m (+75% vs. Q2 2021 and +40% vs. Q1 2022) reflects investment in national field force coverage and improving commercial access in the US healthcare system.

· SUBOXONE (buprenorphine & naloxone) Film share in Q2 2022 averaged 19% (Q2 2021: 20%) and exited the quarter at 19% (Q2 2021: 20%).

· Aelis Farma commenced the 330-patient Phase 2b study of AEF0117 in the treatment of moderate to severe cannabis use disorder (ClinicalTrial.gov identifier: NCT05322941).

Share Repurchase Program

On May 3, 2022, the Group announced a share repurchase program of up to $100m. Through June 30, 2022, the Group repurchased and cancelled 7,627,542 of the Group's ordinary shares at a daily weighted average purchase price of 301.83p at a cost of approximately $29m, which includes directly attributable transaction costs. See Note 14 for further discussion.

Optimal Listing Structure for Indivior Shares

On March 31, 2022, Indivior announced the commencement of shareholder consultations on the potential for an additional listing for Indivior shares on a major US exchange. The Group believes an additional US listing will be beneficial in elevating Indivior's visibility and profile in its largest market, and in potentially attracting a broader group of biopharma investors.

Since the March 31 announcement, the Group has consulted extensively with institutional shareholders representing the majority of Indivior's issued share capital and, together with its advisers, has carefully considered the shareholder feedback received. Having completed this consultation process, the Board confirms that it intends to seek shareholder approval in September 2022 to facilitate an additional listing in the US, which would be expected to take place in Spring 2023. In addition, due to US exchange requirements for share price minimums and norms, the Group will pursue a share consolidation (based on a to-be-determined ratio) as part of this process later this year.

The Group expects to incur pre-tax costs of $10m to $15m in FY 2022 as it prepares for an additional US listing, of which approximately 50% are expected to be recorded as exceptional.

FY 2022 Guidance

The Group is updating SUBLOCADE guidance for FY 2022. Net revenue guidance for SUBLOCADE is being increased following the stronger-than-expected performance in the year to date period. Total Group net revenue and adjusted operating income guidance are being maintained based on the potential impact on US SUBOXONE Film share from a fourth buprenorphine/naloxone sublingual film generic entering the US market and on unfavorable currency translations. All guidance commentary assumes that constraints in the US healthcare system related to COVID-19 continue to ease.

· Total FY 2022 expected NR range maintained at $840m to $900m (+10% vs. FY 2021 at the mid-point).

· SUBLOCADE FY 2022 expected NR range increased to $390m to $420m (from $360m to $400m; now +66% vs. FY 2021 NR at the mid-point), primarily based on continued expected strong penetration and growth in the OHS channel.

· Risk of accelerated market share loss for SUBOXONE Film in the second half of 2022 due to the potential launch of a fourth generic sublingual film competitor in the US. While the Group has no visibility on commercial availability of the additional generic, it has assumed launch at the start of the fourth quarter and that SUBOXONE Film will consequently be subject to an accelerated rate of share erosion. Indivior will provide a further update, if or when required, but with its Q3 results in October at the latest.

· PERSERIS FY 2022 NR expected to be in the range of $27m to $32m (unchanged vs. prior guidance, +74% vs. FY 2021 at the mid-point).

· Adjusted gross margin expected to be in the low- to mid-80% range (unchanged vs. prior guidance), reflecting higher cost inflation and the relative share resilience of SUBOXONE Film in the first half of 2022.

· Adjusted SG&A expected to be in the range of $440m to $455m (unchanged vs. prior guidance), primarily reflecting the annualization of growth investments behind SUBLOCADE and PERSERIS and costs related to the US listing.

· R&D expected to be in the range of $80m to $85m (unchanged vs. prior guidance), primarily reflecting additional SUBLOCADE lifecycle management studies, SUBLOCADE manufacturing capacity expansion and early-stage asset advancement; phasing of these activities is expected to result in higher R&D expenditures in the second half of 2022 versus the first half of 2022.

· Adjusted operating income expected to be broadly similar to FY 2021's adjusted operating income of $187m (unchanged vs. prior guidance).

· Guidance assumes no material change in exchange rates for key currencies compared with average year to date rates, notably USD/GBP and USD/EUR; the impact of unfavorable translations on total NR guidance is now anticipated to be higher than previously expected due to further strengthening of the USD.

US Opioid Use Disorder (OUD) Market Update

In Q2 2022, the US buprenorphine medication-assisted treatment (BMAT) market grew in mid-single digits. The Group continues to expect long-term US market growth to be sustained in the mid- to high-single digit percentage range due to increased severity and overall public awareness of the opioid epidemic and approved treatments, together with regulatory and legislative actions that have expanded OUD treatment funding and treatment capacity. The number of physicians, nurse practitioners and physician assistants who have received a waiver to administer medication-assisted treatment and those able to treat up to the permitted level of 275 patients continued to grow in Q2 2022.

As a result, there is increasing patient access to BMAT. Indivior supports efforts to encourage more eligible healthcare practitioners (HCPs) to provide BMAT, and the Group continues to expand its compliance capabilities for the growing number of BMAT prescribers and patients.

The Group's focus is to continue to expand access to SUBLOCADE amongst OHS and core HCPs to ensure availability of this potentially important treatment option to the estimated 1 million+ patients per month in the US who are prescribed BMAT by HCPs.

Financial Performance in H1 and Q2 2022

Total net revenue in H1 2022 increased 12% to $428m (H1 2021: $381m) at actual exchange rates (+14% at constant exchange rates). In Q2 2022, total net revenue increased 10% at actual exchange rates (+12% at constant exchange rates) to $221m (Q2 2021: $201m).

US net revenue increased 21% in H1 2022 to $344m (H1 2021: $284m) and by 16% in Q2 2022 to $179m (Q2 2021: $154m). Strong year-over-year SUBLOCADE net revenue growth, along with underlying BMAT market growth were the principal drivers of the net revenue increase in both periods.

Rest of World (ROW) net revenue decreased 13% at actual exchange rates in H1 2022 to $84m (H1 2021: $97m) (-6% at constant exchange rates). In Q2 2022, ROW net revenue decreased 11% at actual exchange rates to $42m (Q2 2021: $47m) (-2% at constant exchange rates). Positive contributions from new products (SUBLOCADE / SUBUTEX prolonged release and SUBOXONE Film) were more than offset by unfavorable foreign currency translation, austerity measures and ongoing competitive pressure on legacy tablet products in Western Europe and Canada. H1 2022 and Q2 2022 SUBLOCADE / SUBUTEX prolonged release net revenue in ROW were $12m and $6m (at actual exchange rates), respectively.

Gross margin as reported in H1 2022 was 82% (H1 2021: 84%) and 83% in Q2 2022 (Q2 2021: 85%), respectively. The expected gross margin decline for H1 2022 and Q2 2022 mainly reflects unfavorable product mix due to the continued market share resilience of SUBOXONE Film in certain government channels, which are less profitable.

SG&A expenses as reported in H1 2022 were $217m (H1 2021: $168m) and $109m as reported in Q2 2022 (Q2 2021: $85m). H1 2022 and Q2 2022 included $2m of exceptional consulting costs incurred in preparation for a potential additional listing of Indivior shares on a major US exchange. H1 2021 and Q2 2021 included $12m and $7m, respectively, of exceptional benefits primarily due to a release of provisions related to US Department of Justice (DOJ) matters.

On an adjusted basis, H1 2022 SG&A expense increased 19% to $215m (Adj. H1 2021: $180m); Q2 2022 adjusted SG&A expense increased 16% to $107m (Adj. Q2 2021: $92m). The increases in H1 2022 and Q2 2022 primarily reflect sales and marketing investments to grow the Group's long-acting injectable technologies, SUBLOCADE and PERSERIS, along with increased travel and entertainment expenses.

H1 2022 and Q2 2022 R&D expenses were $23m and $14m, respectively (H1 2021: $22m; Q2 2021: $13m). The increases over the year-ago periods reflect higher R&D activity generally, as certain projects and post-market studies were slowed in 2021 due to the pandemic.

H1 2022 and Q2 2022 net other operating income was $4m and $3m, respectively, (H1 2021: $1m; Q2 2021: $nil). H1 2022 included unrealized losses on equity investments, net proceeds received from the out-licensing of nasal naloxone opioid overdose patents and a Directors & Officers insurance claim settlement which were recorded as exceptional other operating income.

H1 2022 operating profit as reported was $117m (H1 2021: $130m). Exceptional benefits of $3m are included in the current period. Net exceptional benefits of $13m were included in H1 2021. On an adjusted basis, H1 2022 operating profit was $114m (H1 2021: $117m). The decrease on an adjusted basis primarily reflects higher net revenue offset by higher expenses, mainly related to increased sales and marketing investments to grow the Group's long-acting injectable technologies, SUBLOCADE and PERSERIS, along with increased travel and entertainment expenses.

Q2 2022 operating profit as reported was $63m (Q2 2021: $73m). Exceptional benefits of $3m are included in the current period. An exceptional benefit of $7m is included in the Q2 2021 result. On an adjusted basis, Q2 2022 operating profit was $60m (Adj. Q2 2021: $66m). The decrease on an adjusted basis primarily reflects higher net revenue offset by higher operating expenses.

H1 2022 net finance expense as reported was $11m (H1 2021: $11m expense). An exceptional expense of $1m is included in the year-ago period which is due to the write-off of deferred financing costs related to the previous term loan. On an adjusted basis, H1 2022 net finance expense was $11m (Adj. H1 2021: $10m expense).

H1 2022 reported tax expense was $17m, or a rate of 16% (H1 2021 tax benefit: $23m, -19%). There were no exceptional tax items recorded in H1 2022 and Q2 2022. Excluding the $43m tax benefit on exceptional items in H1 2021, tax expense was $20m, or an effective rate of 19%. Q2 2022 reported tax charge was $10m, or a rate of 17% (Q2 2021: $4m, 6%). Excluding the exceptional tax expense of $7m in Q2 2021, tax expense was $11m, or an effective rate of 18%.

H1 2022 reported net income was $89m (H1 2021 net income: $142m). On an adjusted basis, H1 2022 net income was $86m and excludes the $3m after-tax impact from exceptional items (Adj. H1 2021: $87m). The decrease in net income on an adjusted basis primarily reflects higher net revenue being more than offset by the increase in operating expense, primarily SG&A investments behind SUBLOCADE and PERSERIS. Q2 2022 net income on a reported basis was $48m (Q2 2021: $62m), and $45m on an adjusted basis excluding the net after-tax impact from exceptional items (Adj. Q2 2021: $49m). Lower Q2 2022 net income on an adjusted basis was primarily due to the same factors described above.

Diluted earnings per share on a reported and adjusted basis were 12 cents in H1 2022 (H1 2021: 18 cents earnings per share on a diluted basis and 11 cents earnings per share adjusted diluted basis). In Q2 2022, diluted earnings per share was 7 cents and 6 cents on an adjusted diluted basis (Q2 2021: 8 cents and 6 cents earnings per share on a diluted and adjusted diluted basis, respectively).

Balance Sheet & Cash Flow

The Company's gross liquidity, defined as cash and investments, totaled $1,015m at the end of Q2 2022 (FY 2021: $1,102m). Cash used in operations was $14m. Excluding exceptional litigation settlement payments of $108m, cash generated from operations was approximately $94m. The cash impact from settlement payments was partially mitigated after quarter-end (July 2022) with the return of $64m of cash collateral as a result of settlement with Dr. Reddy's Laboratories, S.A., and Dr. Reddy's Laboratories Inc. (collectively, "DRL"). Gross borrowings, before issuance costs, were $248m at the end of H1 2022 (ending FY 2021: $249m).

Net working capital (inventory plus trade receivables, less trade and other payables) was negative $388m on June 30, 2022, versus negative $423m at the end of FY 2021. The change in the period was primarily a result of expected unwind of trade payables.

Cash used in operations during H1 2022 was $14m (H1 2021 cash generated: $161m). Excluding exceptional litigation settlement payments of $108m, cash generated from operations was approximately $94m. Net cash outflow from operating activities was $40m in H1 2022 (H1 2021 cash inflow: $160m) reflecting higher interest paid on the Group's term loan facility, interest paid on settlement payments and income taxes paid in H1 2022 vs. income tax refunds received in H1 2021.

H1 2022 cash outflow from investing activities was $162m (H1 2021 cash outflow: $30m) which reflects the net investment in a portfolio of investment-grade debt securities and ordinary shares of Aelis Farma.

H1 2022 cash outflow from financing activities was $34m (H1 2021 cash inflow: $11m) which reflects payments made for the Group's share repurchase program and principal lease payments.

R&D / Pipeline Update

Indivior's quarterly R&D and pipeline update may be found here.

Risk Factors

The Group utilizes a formal process to identify, evaluate and manage significant risks. The Directors have reviewed the principal risks and uncertainties for the remainder of the 2022 financial year. The principal risks and uncertainties affecting the Group's business activities are detailed on pages 47 to 56 of the Indivior PLC Annual Report and Accounts 2021. The principal risks and uncertainties include:

· Business Operations

· Product Pipeline, Regulatory and Safety

· Commercialization

· Economic and Financial

· Supply

· Legal and Intellectual Property

· Compliance

The nature and potential impact of the principal risks, uncertainties, and emerging risks facing the Group did not change in the first half of 2022, and are not expected to change in the second half of 2022, except for supply:

Supply - The global supply chain continues to experience significant challenges disrupting all industries. The Ukraine/Russia war compounded supply chain troubles caused by the COVID-19 pandemic which include: shortages of materials and labor; unprecedented demand for goods and services; constricted logistics capacity; and raising commodity and energy prices. The Group has noted lead time extension, constricted capacity and minor disruption in some supply components. Through ongoing management and proactive mitigation, as described in our Annual Report and Accounts on page 53, the Group has not experienced any significant disruption to its supply-to-patient delivery process to date. However, despite these mitigating measures, if major delays or shortages occur, the delivery of products to our patients could be disrupted and impact the short-term Group's financial performance.

Exchange Rates

The average and period end exchange rates used for the translation of currencies into US dollars that have most significant impact on the Group's results were:

Webcast Details

There will be a live webcast presentation at 13:00 BST (8:00 am EDT) hosted by Mark Crossley, CEO. The details are below. All materials will be available on the Group's website prior to the event at www.indivior.com.

Webcast link: https://edge.media-server.com/mmc/p/n3frngii

Participants may access the presentation telephonically by registering with the following link:

https://register.vevent.com/register/BI73d5563731f344dbbe611807e18a276d

(Please note this is a change from prior calls - 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

Corporate Website www.indivior.com

This announcement does not constitute an offer to sell, or the solicitation of an offer to subscribe for or otherwise acquire or dispose of shares in the Group to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation.

About Indivior

Indivior is a global pharmaceutical company working to help change patients' lives by developing medicines to treat substance use disorders (SUD) and serious mental illnesses. Our vision is that all patients around the world will have access to evidence-based treatment for the chronic conditions and co-occurring disorders of SUD. Indivior is dedicated to transforming SUD from a global human crisis to a recognized and treated chronic disease. Building on its global portfolio of OUD treatments, Indivior has a pipeline of product candidates designed to both expand on its heritage in this category and potentially address other chronic conditions and co-occurring disorders of SUD, including alcohol use disorder and cannabis use disorder. Headquartered in the United States in Richmond, VA, Indivior employs more than 900 individuals globally and its portfolio of products is available in over 40 countries worldwide. Visit www.indivior.com to learn more. Connect with Indivior on LinkedIn by visiting www.linkedin.com/company/indivior.

Forward-Looking Statements

This announcement contains certain statements that are forward-looking. Forward-looking statements include, among other things, statements regarding the Indivior Group's financial guidance for 2022 and its medium- and long-term growth outlook, the potential for an additional US stock exchange listing, expected market growth rates, expected changes in market share, future exchange rates, its operational goals, its product development pipeline, ongoing litigation and other statements containing the words "subject to", "believe", "anticipate", "plan", "expect", "intend", "estimate", "potential", "project", "may", "will", "should", "would", "could", "can", the negatives thereof, variations thereon and similar expressions.

By their nature, forward-looking statements involve risks and uncertainties as they relate to events or circumstances that may or may not occur in the future. Actual results may differ materially from those expressed or implied in such statements because they relate to future events.

Forward-looking statements speak only as of the date that they are made and should be regarded solely as our current plans, estimates and beliefs. Except as required by law, we do not undertake and specifically decline any obligation to update, republish or revise forward-looking statements to reflect future events or circumstances or to reflect the occurrences of unanticipated events. Various factors may cause differences between Indivior's expectations and actual results, including, among others, the risk factors described in the most recent Indivior PLC Annual Report and in subsequent releases, and: factors affecting sales of Indivior Group's products and financial position; the outcome of research and development activities; decisions by regulatory authorities regarding the Indivior Group's drug applications or authorizations; the speed with which regulatory authorizations, pricing approvals and product launches may be achieved, if at all; the outcome of post-approval clinical trials; competitive developments; difficulties or delays in manufacturing and in the supply chain; disruptions in or failure of information technology systems; the impact of existing and future legislation and regulatory provisions on product exclusivity; trends toward managed care and healthcare cost containment; legislation or regulatory action affecting pharmaceutical product pricing, reimbursement or access; challenges in commercial execution; claims and concerns that may arise regarding the safety or efficacy of the Indivior Group's products and product candidates; risks related to legal proceedings, including the Indivior Group's compliance with its agreements with the US Department of Justice and with the Office of Inspector General of the Department of Health and Human Services, non-compliance with which could result in potential exclusion from participating in US Federal health care programs; the ongoing investigative and antitrust litigation matters; the opioid national multi-district litigation and securities class action litigation; the Indivior Group's ability to protect its patents and other intellectual property; the outcome of patent infringement litigation relating to Indivior Group's products, including the ongoing ANDA lawsuits; changes in governmental laws and regulations; issues related to the outsourcing of certain operational and staff functions to third parties; risks related to the evolving COVID-19 pandemic and the potential impact of COVID-19 on the Indivior Group's operations and financial condition, which cannot be predicted with confidence; uncertainties related to general economic, political, business, industry, regulatory and market conditions; and the impact of acquisitions, divestitures, restructurings, internal reorganizations, product recalls and withdrawals, changes in inflation or foreign exchange rates, and other unusual items.

Condensed consolidated interim income statement

Condensed consolidated interim statement of comprehensive income

The notes are an integral part of these condensed consolidated interim financial statements.

Condensed consolidated interim balance sheet

The notes are an integral part of these condensed consolidated interim financial statements.

Condensed consolidated interim statement of changes in equity

The notes are an integral part of these condensed consolidated interim financial statements.

Condensed consolidated interim cash flow statement

1Changes in the line item provisions and other liabilities for H1 2022 include exceptional litigation settlement payments totaling $108m to the DOJ, DRL and RB (H1 2021: $10m to RB). $4m of interest paid on the DOJ Resolution in H1 2022 has been recorded in the interest paid line item.

The notes are an integral part of these condensed consolidated interim financial statements.

Notes to the condensed consolidated interim financial statements

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

Indivior PLC (the 'Company') is a public limited company incorporated on September 26, 2014 and domiciled in the United Kingdom. In these condensed consolidated interim financial statements ('Condensed Financial Statements'), reference to the 'Group' means the Company and all its subsidiaries.

The Condensed Financial Statements have been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting" ("IAS 34"). The Condensed Financial Statements should be read in conjunction with the Annual Report and Accounts for the year ended December 31, 2021, which have been prepared in accordance with UK-adopted International Accounting Standards and in conformity with the Companies Act 2006 as applicable to companies reporting under those standards. In preparing these Condensed Financial Statements, the significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2021, except for changes in estimates that are required in determining the provision for income taxes. In 2022, the Group purchased ordinary shares of a listed company and invested in a portfolio of investment-grade debt securities and has therefore adopted new accounting policies as disclosed in Note 7. The Q2 and H1 2021 condensed consolidated income statement and Note 3 have been expanded to present net other operating income as a separate line item to provide a consistent comparative presentation.

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 and therefore should be read in conjunction with the Group's Annual Report and Accounts as at December 31, 2021. These Condensed Financial Statements were approved for issue on July 27, 2022.

As disclosed in Note 10 the Group has liabilities and provisions totaling $478m (FY 2021: $537m) for the Department of Justice (DOJ) Resolution, False Claims Act Allegations, and the Reckitt Benckiser (RB) settlement. The Directors have assessed the Group's ability to comply with the minimum liquidity covenant in the Group's debt facility, maintain sufficient liquidity to fund its operations and fulfill obligations under the DOJ resolution and RB agreement. The Directors have also modeled the risk that SUBLOCADE will not meet revenue growth expectations (considering a 15% decline on forecasts), an accelerated reversion to generic analogues for SUBOXONE Film, and the risk the ongoing legal proceedings may result in reasonably possible payments in a severe but plausible downside scenario as part of the Group's going concern assessment. These risks were balanced against the Group's current and forecast working capital position. As a result of the factors set out above, the Directors have a reasonable expectation the Group has adequate resources to continue in operational existence for at least one year from the approval of these Condensed Financial Statements and therefore consider the going concern basis to be appropriate for the accounting and preparation of these Condensed Financial Statements.

The financial information contained in this document does not constitute statutory accounts as defined in section 434 and 435 of the Companies Act 2006. The Group's statutory financial statements for the year ended December 31, 2021, were approved by the Board of Directors on March 17, 2022, and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

2. SEGMENT INFORMATION

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker ('CODM'). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer (CEO). The Group is predominantly engaged in a single business activity, which is the development, manufacture, and sale of buprenorphine-based prescription drugs for treatment of opioid dependence and related disorders. The CEO reviews disaggregated net revenue on a geographical and product basis. Financial results are reviewed on a consolidated basis for evaluating financial performance and allocating resources. Accordingly, the Group operates in a single reportable segment.

Net revenue and non-current assets

Revenues are attributed to countries based on the country where the sale originates. The following tables represent net revenues from continuing operations and non-current assets, net of accumulated depreciation and amortization, by country. Non-current assets for this purpose consist of intangible assets, property, plant and equipment, right-of-use assets, and other assets. Net revenues and non-current assets for the three and six months to June 30, 2022 and 2021 were as follows:

Net revenue:

On a disaggregated basis, the Group's net revenue by major product line:

Non-current assets:

3. OPERATING EXPENSES AND NET OTHER OPERATING INCOME

The table below sets out selected operating costs and expense information:

Operating expenses

1 Depreciation and amortization expense is included in research and development and selling, general and administrative expenses. Additionally, depreciation and amortization expense in H1 2022 of $5m (H1 2021: $5m) for intangibles and ROU assets is included within cost of sales.

Medical affairs functional costs are included in administrative and general expenses. Administrative and general expenses include exceptional items in the current and prior period as outlined in Note 4.

Net other operating income

Net other operating income is credited to the income statement as incurred. H1 2022 included unrealized losses on equity investments, net proceeds received from the out-licensing of nasal naloxone opioid overdose patents, and a Directors & Officers insurance claim settlement, which were recorded as exceptional other operating income as outlined in Note 4.

4. EXCEPTIONAL ITEMS AND ADJUSTED RESULTS

Exceptional items

Where significant expenses or income occur that do not reflect the Group's ongoing operations, these items are disclosed as exceptional items in the income statement. Examples of such items could include income or restructuring and related expenses from the reconfiguration of the Group's activities and/or capital structure, impairment of current and non-current assets, gains and losses from the sale of intangible assets, certain costs arising as a result of material and non-recurring regulatory and litigation matters, and certain tax related matters. Exceptional items are excluded from adjusted results consistent with the internal reporting provided to Management and the Directors. Adjusted results are not a substitute for, or superior to, reported results presented in accordance with IFRS. Management performs a quantitative and qualitative assessment to determine if an item should be considered for exceptional treatment.

The table below sets out exceptional income/(expense) recorded in each period:

1. Negotiation with DOJ related qui tams in Q2 2021 and H1 2021 led to a change in the Group's provision for these matters and a release of $8m and $13m, respectively.

2. Debt refinancing costs in Q2 2021 consist of advisory and legal fees incurred related to the Group's June 2021 debt refinancing. These costs are included in SG&A. Additionally, in Q2 2021 the Group wrote-off $1m of unamortised deferred financing costs due to extinguishment and settlement of the previous term loan. These costs are included within finance expense.

3. In Q2 2022, the Group recognized $2m exceptional consulting costs in preparation for a potential additional listing of Indivior shares on a major US exchange. The Group expects to incur pre-tax costs of $10m to $15m in FY 2022 as it prepares for an additional US listing, of which approximately 50% are expected to be recorded as exceptional.

4. The Group recognized $5m of exceptional income in Q2 2022 related to the proceeds received from a Directors & Officers insurance reimbursement claim. Exceptional other operating income in H1 2021 relates to the proceeds received from the out-licensing of nasal naloxone opioid overdose patents.

5. Exceptional tax benefit recorded in Q2 2021 relates to the tax impact of settlement costs incurred with RB which was recorded in FY 2020. Exceptional tax benefit recorded H1 2021 relates to the approval of tax credits by the Internal Revenue Service in relation to development credits for SUBLOCADE claimed for years 2014 to 2017 and the benefit recorded in Q2 2021.

Adjusted results

The Board and management team use adjusted results and measures to provide incremental insight to the financial results of the Group and the way it is managed. The tables below show the list of adjustments between the reported and adjusted results for both Q2/H1 2022 and Q2/H1 2021.

Reconciliation of operating profit to adjusted operating profit

Reconciliation of profit before taxation to adjusted profit before taxation

Reconciliation of net income to adjusted net income

5. TAXATION

The Group calculates tax expense for interim periods using the expected full year rates, considering the pre-tax income and statutory rates for each jurisdiction. To the extent practicable, a separate estimated average annual effective income tax rate is determined for each taxing jurisdiction and applied individually to the interim period pre-tax income of each jurisdiction. Similarly, if different income tax rates apply to different categories of income (such as capital gains or income earned in particular industries), to the extent practicable a separate rate is applied to each individual category of interim period pre-tax income. The resulting expense is allocated between current and deferred taxes based upon the forecasted full year ratio.

In the six months ended June 30, 2022, the reported total tax expense was $17m, or a rate of 16% (H1 2021 tax benefit: $23m, -19%). There were no exceptional taxation items recorded in H1 2022 and Q2 2022. The tax expense on H1 2021 adjusted profits amounted to $20m, excluding the $43m tax benefit on exceptional items, which represented an effective tax rate of 19%. The change in the effective tax rate on adjusted profits was primarily driven by the relative contribution to pre-tax income by taxing jurisdiction in the period and remains lower than the statutory tax rate in the UK due to permanent items such as the availability of tax incentives for innovation.

The Group's balance sheet at June 30, 2022 includes a current tax receivable of $16m (FY 2021: $13m), a current tax payable of $5m (FY 2021: $7m), and deferred tax asset of $101m (FY 2021: $105m).

The Group recognizes deferred tax assets to the extent that sufficient future taxable profits are probable against which these future tax deductions can be utilized. At June 30, 2022, the Group's net deferred tax assets of $101m relate primarily to inventory costs capitalized for tax purposes, litigation liabilities (including exceptional items that are not expected to recur), share-based compensation, and other short term timing differences. Recognition of deferred tax assets is driven by the Group's ability to utilize the deferred tax asset which is reliant on forecast taxable profits arising in the jurisdiction in which the deferred tax asset is recognized. The Group has assessed recoverability of deferred tax assets using Group-level budgets and forecasts consistent with those used for the assessment of viability and asset impairments, particularly in relation to levels of future sales. These forecasts are therefore subject to similar uncertainties to those assessments. This exercise is reviewed each quarter and, to the extent required, an adjustment to the recognized deferred tax asset may be made. With the exception of specific assets that are not currently considered accessible, Management have concluded full recognition of deferred tax assets to be appropriate and do not consider there a significant risk of a material change in their assessment in the next 12 months.

Other tax matters

In 2019, a European Commission review into State Aid concluded that the UK's Finance Company Partial Exemption rules are only partly justified. The UK government was required to initiate recovery of the alleged State Aid where they assess a benefit of the potential State Aid has been received. As HMRC previously confirmed there has been no such benefit to the Group and therefore the enquiry in relation to this matter up to December 31, 2017 is closed. HMRC had opened enquiries in relation to the years ended December 31, 2018 and December 31, 2019 in relation to this matter but has concluded that there has been no benefit in relation to years 2018 and 2019 and the enquiry in relation to this matter is closed. Based on the similar fact pattern applicable to the later years, the Group had determined no provision is required.

The enacted United Kingdom Statutory Corporation Tax rate is 19% for the year ended December 31, 2022. On March 3, 2021, the UK Chancellor announced an increase in the corporation tax rate from 19% to 25% with effect from April 1, 2023. The increase to the corporation tax rate was substantively enacted on May 24, 2021. The effect of the rate change on these financial statements is immaterial. During 2021, the OECD published a framework for the introduction of a global minimum effective tax rate of 15%, applicable to large multinational groups. On 20 July 2022, HM Treasury released draft legislation to implement these 'Pillar 2' rules with effect from 1 January 2024 in the UK. The Group will review these draft rules to understand any potential impacts.

As a multinational group, tax uncertainties remain in relation to Group financing, intercompany pricing, the location of taxable operations and the tax treatment of exceptional items. Management have concluded tax provisions made to be appropriate and do not believe a significant risk of material change to uncertain tax positions exists in the next 12 months.

6. EARNINGS PER SHARE

Basic

Basic earnings per share ("EPS") is calculated by dividing profit for the period attributable to owners of the Company by the weighted average number of ordinary shares in issue during the period.

Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has dilutive potential ordinary shares in the form of stock options and awards. The weighted average number of shares is adjusted for the number of shares granted assuming the exercise of stock options.

The weighted average number of ordinary shares outstanding for Q2 2022 (on a basic basis) includes the favorable impact of 33,763,488 ordinary shares repurchased in FY 2021 and 7,627,542 ordinary shares repurchased through H1 2022. See Note 14 for further discussion. In 2022, conditional awards of 7,491k (2021: 14,175k) were granted under the Group's Long-Term Incentive Plan.

Adjusted Earnings

The Directors believe that diluted earnings per share, adjusted for the impact of exceptional items after the appropriate tax amount, provides more meaningful information on underlying trends to shareholders in respect of earnings per ordinary share. A reconciliation of net income to adjusted net income is included in Note 4.

7. INVESTMENTS

Investments comprise holdings in equity and debt securities. Investments in equity securities held for trading or for which the Group has not elected to recognize fair value gains and losses through other comprehensive income are initially recorded and subsequently measured at fair value through profit or loss (FVPL). Investments in debt securities are initially recorded at fair value plus or minus directly attributable transaction costs and remeasured on the basis of the Group's business model and the contractual cash flow characteristics. Interest income from debt securities is included in finance income using the effective interest method.

Equity securities at FVPL

In February 2022, the Group purchased ordinary shares of Aelis Farma. The shares are subject to a holding period of 365 days from the acquisition. The investment is classified as a current investment at June 30, 2022 as the holding period expires in less than 12 months. Unrealized loss recorded in H1 2022 was $2m and included as an offset within net other operating income.

Debt securities held at amortized cost

In January 2022, the Group initiated purchases of a portfolio of investment-grade corporate debt securities. The Group's investments in debt securities are held at amortized cost based on the Group's intention to hold the investments to maturity and collect contractual cash flows that are solely payments of principal and interest. Debt securities held at amortized cost are classified as non-current investments, except for those with maturities less than 12 months from the end of the reporting period, which are classified as current investments.

The Group's investments in debt securities do not result in significant changes to the Group's credit risk, liquidity risk, or interest rate risk. All the Group's investments in debt securities are considered to be of low credit risk based on investment-grade credit ratings from Standard and Poor's or Moody's (BBB-/Baa3 or higher). The majority of the Group's debt securities are issued at fixed interest rates and changes in floating rates would not have a significant impact on interest rate risk.

The Group applies an expected credit loss impairment model to financial instruments held at amortized cost. The recognition of a loss allowance is limited to 12-month expected credit losses unless credit risk increases significantly, which would require lifetime expected credit losses to be applied. When measuring expected credit losses, investments are grouped based on similar credit risk characteristics. The Group uses judgment in selecting the inputs to the impairment model based on historical loss rates for similar instruments, current conditions, and forecasts of future economic conditions. As of June 30, 2022, expected credit losses for the Group's investments in debt securities 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 June 30, 2022.

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 June 30, 2022, the carrying value of debt securities held at amortized cost was below the fair value by $2m. The fair value of the debt securities held at amortized cost was calculated based on quoted market prices which would be classified as Level 1 in the fair value hierarchy above.

8. CURRENT AND NON-CURRENT OTHER ASSETS

Other current and non-current assets primarily represent the funding of surety bonds in relation to intellectual property related matters (see Note 12 for further discussion). As a result of the settlement agreement with DRL, the surety bond holders have returned $64m of collateral in July 2022, causing a reclassification between current and non-current as of June 30, 2022. Long-term prepaid expenses relate primarily to payments for contract manufacturing capacity.

9. FINANCIAL LIABILITIES - BORROWINGS

In April 2022, the Group completed an amendment to its existing term loan which provides the Group greater flexibility in the use of cash being generated and changes the variable interest rate base from USD LIBOR to USD SOFR plus a credit spread adjustment of 26 bps. As part of the modification, the Group incurred $1m of issuance costs, banking fees and legal fees which are deemed to be incremental and directly attributable to the amendment. Accordingly, the Group capitalized these costs, which were netted against the total amount borrowed and are amortized over the maturity period.

The table below sets out the current and non-current portion obligation of the Group's term loan:

\* Total term loan borrowings reflect the principal amount drawn including debt issuance costs of $8m (FY 2021: $7m).

At June 30, 2022, the term loan fair value was approximately 99% (FY 2021: 99%) of par value. The key terms of the term loan in effect at June 30, 2022, are as follows:

• Nominal interest margin is calculated USD SOFR plus a credit spread adjustment of 26 bps, subject to a floor of 0.75%.

·  The minimum liquidity is the larger of $100m or 50% of the outstanding loan balance.

· There are no revolving credit commitments.

10. PROVISIONS AND OTHER LIABILITIES

Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, an outflow of resources to settle that obligation is probable, and the amount can be reliably estimated. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the reporting date.

The Group carries a provision of $5m (FY 2021: $5m) pertaining to all outstanding False Claims Act Allegations as discussed in Note 12. These matters are expected to be settled within the next 12 months.

The provision for intellectual property related matters has been substantially transferred to other liabilities as a result of the settlement with Dr. Reddy's Laboratories S.A. and Dr. Reddy's Laboratories, Inc. (together, "DRL"). See Note 12, Intellectual property related matters - ANDA litigation.

Other provisions totaling $3m (FY 2021: $3m) primarily represent retirement benefit costs which are not expected to be settled within one year.

Other liabilities

Other liabilities represent contractual obligations to third parties where the amount and timing of payments is fixed. Where other liabilities are not interest-bearing and the impact of discounting is significant, other liabilities are recorded at their present value, generally using a risk-free rate.

On July 24, 2020, the Group settled with the United States Department of Justice (DOJ), the US Federal Trade Commission (FTC), and US state attorneys general the criminal and civil liability in connection with a multi-count indictment brought in April 2019 by a grand jury in the Western District of Virginia, a civil lawsuit joined by the DOJ in 2018, and an FTC investigation. In November 2020, the first payment of $103m (including interest) was made. In January 2022, an additional payment of $54m (including interest) was made pursuant to the resolution agreement. Subsequently, five annual instalments of $50m will be due every January 15 from 2023 to 2027 with the final instalment of $200m due in December 2027. Interest accrues on certain portions of the resolution which will be paid together with the annual instalment payments. For non-interest-bearing portions, the liability has been recorded at the net present value based on timing of the estimated payments. The discount rate and interest rate are 1.25%. In H1 2022, the Group recorded interest expense totaling $3m (H1 2021: $3m).

· Under the terms of the resolution agreement with the DOJ, the Group has agreed to compliance terms regarding its sales and marketing practices. Compliance with these terms is subject to annual Board and CEO certifications submitted to the US Attorney's Office.

· As part of the resolution with the FTC and as detailed in the text of the stipulated order, for a ten-year period Indivior Inc. is required to make specified disclosures to the FTC and is prohibited from certain conduct.

· In addition to the resolution agreement, the Group entered into a five-year Corporate Integrity Agreement with the HHS Office of the Inspector General (HHS-OIG), pursuant to which the Group committed to promote compliance with laws and regulations and committed to the ongoing evolution of an effective compliance program, including written standards, training, reporting, and monitoring procedures. The Group is subject to reporting and monitoring requirements, including annual reports and compliance certifications from key management and the Board's Nominating & Governance Committee, which is submitted to HHS-OIG. In addition, the Group is subject to monitoring by an Independent Review Organization, which submits audit findings to HHS-OIG, and review by a Board Compliance Expert, who prepared a compliance assessment report in the first reporting period and will prepare a compliance assessment report in the third reporting period.

· To date, the Group reasonably believes it has met all of the requirements specified in these three agreements.

The Group carries other liabilities for intellectual property related matters totaling $21m (FY 2021: $73m; previously classified as a provision), which relates to a settlement in intellectual property litigation with DRL as outlined in Note 12, Intellectual property related matters - ANDA litigation. As announced in June, 2022, the Group together with Aquestive Therapeutics, Inc. entered into a settlement agreement with DRL resolving the historical intellectual property litigation. Under the settlement agreement, the Group made a settlement payment to DRL in June 2022 with final payments in 2023 and 2024. This provision has been recorded at the net present value, using a risk-free rate, considering the timing of payments. In H1 2022, the Group recorded $1m of finance expense (H1 2021: $1m) for time value of money on the liability.

On January 25, 2021, the Group reached a resolution with RB to resolve claims which RB issued in the Commercial Court in London on November 13, 2020, seeking indemnity under the 2014 Demerger Agreement. Pursuant to the settlement, RB withdrew the US $1.4b claim to release the Group from any claim for indemnity under the Demerger Agreement relating to the DOJ and FTC settlements which RB entered into in July 2019, as well as other claims for indemnity arising from those matters. The Group has agreed to pay RB a total of $50m and has agreed to release RB from any claims to seek damages relating to its settlement with the DOJ and the FTC. The Group made an initial payment of $10m in February 2021, followed by an installment payment of $8m in January 2022. Subsequently, annual instalment payments of $8m will be due every January from 2023 to 2026. The Group carries a liability totaling $32m (FY 2021: $40m) related to this settlement. The effect of discounting was not material.

Other liabilities primarily represent deferred revenue related to a supply agreement.

11. CONTINGENT LIABILITIES

The Group has assessed certain legal and other matters to be not probable based upon current facts and circumstances, including any potential impact the DOJ resolution could have on these matters. Where these matters are determined to be possible, they represent contingent liabilities. Except for those matters discussed in Note 12 under "False Claims Act Allegations" and "Intellectual Property Related Matters - ANDA Litigation", for which liabilities or provisions have been recognized, Note 12 sets out the contingent liabilities for legal and other disputes for which the Group has assessed as contingent liabilities. Where the company believes that it is possible to reasonably estimate a range for the contingent liability this has been disclosed. Refer to Note 5 for discussion on State Aid and other tax related contingent liabilities.

12. LEGAL PROCEEDINGS

There are certain ongoing legal proceedings or threats of legal proceedings in which the Group is a party, but in which Group believes the possibility of an adverse impact is remote and they are not discussed in this Note 12.

False Claims Act Allegations

· In August 2018, the United States District Court for the Western District of Virginia unsealed a declined qui tam complaint alleging causes of action under the Federal and state False Claims Acts against certain entities within the Group predicated on best price issues and claims of retaliation. See United States ex rel. Miller v. Reckitt Benckiser Group PLC et al., Case No. 1:15-cv-00017 (W.D. Va.). The suit also seeks reasonable attorneys' fees and costs. The Group was served with the complaint in January 2021. The Group filed a Motion to Dismiss in June 2021. The case was stayed for mediation in September 2021, but the parties did not reach agreement. In March 2022, Relator submitted a request for oral argument on the Motion to Dismiss. On July 21, 2022, the Court entered an order staying the action and reserving a decision on the Group's Motion to Dismiss pending rehearing en banc by the U.S. Court of Appeals for the Fourth Circuit in U.S. ex rel. Sheldon v. Allergan Sales, LLC, which rehearing is currently not scheduled until September 2022.

· 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.

Intellectual Property Related Matters

ANDA Litigation

· The Group filed actions against DRL in the United States District Court for the District of New Jersey ("NJ District Court") alleging that DRL's generic buprenorphine/naloxone film product infringes US Patent Nos. 9,687,454 and 9,931,305 ("the '454 and '305 Patents") in 2017 and 2018, respectively. The cases were consolidated in May 2018. In July 2018, the NJ District Court granted the Group a Preliminary Injunction (PI) pending the outcome of a trial on the merits of the '305 Patent and required the Group to post a surety bond for $72m in connection with the PI. In November 2018, the Court of Appeals for the Federal Circuit (CAFC) issued a decision vacating the PI against DRL. Separately, DRL filed an amended answer alleging various antitrust counterclaims. The parties reached a settlement following mediation in June 2022, and the case accordingly was dismissed on June 27, 2022. See Note 10 for further discussion regarding settlement payments and timing of those payments.

· The Group filed actions against Alvogen Pine Brook LLC and Alvogen Inc. (together, "Alvogen") in the NJ District Court alleging that Alvogen's generic buprenorphine/naloxone film product infringes the '454 and '305 Patents in 2017 and 2018, respectively. The cases were consolidated in May 2018. In January 2019, the NJ District Court granted Indivior a temporary restraining order ("TRO") to restrain the launch of Alvogen's generic buprenorphine/naloxone film product pending a trial on the merits of the '305 Patent and Indivior was required to post a surety bond of $36m. Indivior and Alvogen entered into an agreement whereby Alvogen was enjoined from selling in the US its generic buprenorphine/naloxone film product unless and until the CAFC issued a mandate vacating Indivior's separate PI against DRL. The CAFC's mandate vacating Indivior's PI as to DRL issued in February 2019 and Alvogen launched its generic product. Any sales in the US by Alvogen are on an "at-risk" basis, subject to the ongoing litigation against Alvogen in the NJ District Court. In November 2019, Alvogen filed an amended answer alleging various antitrust counterclaims. In January 2020, Indivior and Alvogen stipulated to noninfringement of the '305 Patent under the court's claim construction, but Indivior retained its rights to appeal the construction and pursue its infringement claims pending appeal. Indivior's infringement claims concerning the '454 patent and Alvogen's antitrust counterclaims remain pending in the NJ District Court. Summary judgment motions have been fully briefed, but the NJ District Court has not ruled on those motions. No trial date has been set. In June 2022, the parties participated in court-ordered mediation. The parties did not reach settlement. The court has scheduled oral arguments on the parties' summary motions for August 29, 2022.

Antitrust Litigation and Consumer Protection

Antitrust Class and State Claims

· Civil antitrust claims have been filed by (a) a class of direct purchasers, (b) a class of end payor plaintiffs, and (c) a group of states, now numbering 41, and the District of Columbia. The various plaintiffs generally allege, among other things, that Indivior violated US federal and/or state antitrust and consumer protection laws in attempting to delay generic entry of alternatives to SUBOXONE Tablets. Plaintiffs further allege that Indivior unlawfully acted to lower the market share of these products. These antitrust cases are pending in federal court in the Eastern District of Pennsylvania. The court has not set a trial date. Summary judgment motions related to the Direct Purchaser, End Payor, and States actions were fully briefed and were argued in December 2021. The deadline for the class exclusion or "opt out" was June 5, 2022.

· In 2013, Reckitt Benckiser Pharmaceuticals, Inc. (now known as Indivior Inc.) received notice that it and other companies were defendants in a lawsuit initiated by writ in the Philadelphia County (Pennsylvania) Court of Common Pleas. See Carefirst of Maryland, Inc. et al. v. Reckitt Benckiser Inc., et al., Case. No. 2875, December Term 2013. The plaintiffs include approximately 79 entities, most of which appear to be insurance companies or other providers of health benefits plans. The Carefirst Plaintiffs have not served a complaint, but they have indicated that their claims are related to those asserted by the plaintiffs in In re SUBOXONE, MDL No. 2445 (E.D. Pa.). The Carefirst case remains pending.

· The Group has evaluated the antitrust class and state claims in light of the DOJ settlement under which a Group subsidiary pled guilty to one count of making a false statement relating to health care matters in one state in 2012 (as discussed above under DOJ Resolution). The Group continues to believe its defenses and continues to vigorously defend itself. Select plaintiffs in these matters previously made settlement demands, which were not accepted and are not current offers, totaling approximately $290m, which was used for contingency planning only to model possible downside financial effects. The final aggregate cost of these matters, whether resolved by litigation or by settlement, may be materially different. If the Group were to entertain further settlement discussions, we make no representations as to what amounts, if any, it may agree to pay, nor regarding what amounts the plaintiffs will demand.

Other Antitrust and Consumer Protection Claims

· In 2020, the Group was served with lawsuits filed by several insurance companies, some of whom are proceeding both on their own claims and through the assignment of claims from affiliated companies. Cases filed by (1) Humana Inc. and (2) Centene Corporation, Wellcare Healthcare Plans, Inc., New York Quality Healthcare Corp. (d/b/a Fidelis Care), and Health Net, LLC were pending in the Eastern District of Pennsylvania. The complaints were dismissed in July 2021. Plaintiffs filed Notices of Appeal in August 2021 to the United States Court of Appeals for the Third Circuit ("Third Circuit"). The Third Circuit heard oral arguments on this appeal on March 31, 2022. Humana also filed a Complaint in state court in Kentucky with substantially the same claims as were raised in the Federal Court case. That case has been stayed pending a decision in the Third Circuit appeal. Cases filed by (1) Blue Cross and Blue Shield of Massachusetts, Inc., Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc., (2) Health Care Service Corp., (3) Blue Cross and Blue Shield of Florida, Inc., Health Options, Inc., (4) BCBSM, Inc. (d/b/a Blue Cross and Blue Shield of Minnesota) and HMO Minnesota (d/b/a Blue Plus), (5) Molina Healthcare, Inc., and (6) Aetna Inc. (collectively, the "Roanoke Plaintiffs") are pending in the Circuit Court for the County of Roanoke, Virginia. These plaintiffs have asserted claims under federal and state RICO statutes, state antitrust statutes, state statutes prohibiting unfair and deceptive practices, state statutes prohibiting insurance fraud, and common law fraud, negligent misrepresentation, and unjust enrichment. In June 2021, defendants' motion to stay was denied and certain claims were dismissed without prejudice. The Roanoke Plaintiffs have filed amended complaints, and the Group has filed demurrers, seeking dismissal of some of the asserted claims. Oral arguments on the demurrers are scheduled to occur on September 1, 2022.

· The Group has begun its evaluation of the claims, believes in its defenses, and intends to vigorously defend itself. Engagement with the claimants has been minimal. Accordingly, no estimate of the range of potential loss can be made at this time.

Civil Opioid Litigation

· The Group has been named as a defendant in more than 400 civil lawsuits brought by state and local governments, public health agencies against manufacturers, distributors, and retailers of opioids alleging that they engaged in a longstanding practice to market opioids as safe and effective for the treatment of long-term chronic pain to increase the market for opioids and their own market share, as well as individuals alleging personal injury claims. Most of these cases have been consolidated and are pending in a federal multi-district litigation (MDL) in US District Court for the Northern District of Ohio. Litigation against the Group in the MDL is stayed. Motions to remand are currently being considered by the court in over 50 cases to which the Group is a party (among numerous other defendants).

· The Court in the MDL held a status conference on June 22, 2022, with county and municipality plaintiffs and certain manufacturer defendants (including the Group) and distributor defendants to discuss what information the parties needed to proceed, whether the parties would entertain settlement and whether there should be any bellwether trials from this subset of plaintiffs and defendants. The court agreed no additional bellwether trials are needed, provided that all of the parties were progressing on a settlement track. Additionally, the court ordered a status conference with this same group of plaintiff and defendants for September 23, 2022.

· Separately, the Group's response to five individual complaints filed in West Virginia state court that have not been transferred to the MDL is due by August 5, 2022.

· Given the status and preliminary stage of litigation in both the MDL and state courts, no estimate of possible loss in the opioid litigation can be made at this time.

13. TRADE AND OTHER PAYABLES

Sales return and rebate accruals, primarily in the US, are provided in respect of the estimated rebates, discounts, or allowances payable to direct and indirect customers. Accruals are made at the time of sale while the actual amounts to be paid are based on claims made some time after the initial recognition of the sale. The estimated amounts may not reflect the final outcome and are subject to change dependent upon, amongst other things, the payor channel (e.g., Medicaid, Medicare, Managed Care, etc.) and product mix. Accrual balances are reviewed and adjusted quarterly in the light of actual experience of rebates, discounts or allowances given and returns made and any changes in arrangements. Future events may cause the assumptions on which the accruals are based to change, which could affect the future results of the Group.

14. SHARE CAPITAL

Ordinary shares issued

During the period 3,840,414 ordinary shares (H1 2021: 1,203,975) were issued to satisfy vesting/exercises under the Group's Long-Term Incentive Plan and US Employee Stock Purchase Plan.

Shares repurchased and cancelled

On May 3, 2022, the Group commenced a share repurchase program for an aggregate purchase price up to no more than $100m or 39,698,610 of ordinary shares, which is expected to end no later than March 31, 2023. Through June 30, 2022, the Group has repurchased and cancelled 7,883,597 of the Company's ordinary shares for an aggregate nominal value of $1m ($0.10 per share), including 256,055 ordinary shares purchased as part of the Group's share repurchase program executed in 2021 and cancelled in January 2022. All ordinary shares repurchased under the share repurchase program 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 $29m. A net repurchase amount of $13m has been recorded as a financial liability and reduction in retained earnings which represents the amount to be spent under the program for the month of July 2022, the period closed for modification or termination of the program. The effect of discounting is not material. Total purchases under the share repurchase program will be made out of distributable profits.

15. RELATED PARTIES

On July 7, 2022 the Group announced that it has amended the existing relationship agreement with Scopia. Under the original terms, the Relationship Agreement terminated in the event that Scopia (and its affiliates) ceased to have interests in at least 10% of the Company's issued share capital. As announced on July 1, 2022, Scopia has sold interests in the Company representing 2.28% which has taken the total holding of Scopia (and its affiliates) to 9.71%, below this 10% threshold, and down from 16.9% at origination of the agreement.

The Group has agreed not to exercise its right to terminate the Relationship Agreement immediately, and instead has agreed:

· To continue with the agreement until the expiration of its original term of December 31, 2023, unless the Relationship Agreement is otherwise extended by mutual agreement or terminated earlier in accordance with its terms; and

· The threshold for automatic termination will be amended, such that the Relationship Agreement will terminate in the event that Scopia (and its affiliates) cease to have interests in at least 5% of the Company's issued share capital (reduced from 10% under the original terms).

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

July 27, 2022

Independent review report to Indivior PLC

Report on the condensed consolidated interim financial statements

We have reviewed Indivior PLC's condensed consolidated interim financial statements (the "interim financial statements") in the H1 and Q2 2022 Results of Indivior PLC for the three and six month periods ended 30 June 2022.

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

The interim financial statements comprise:

· the Condensed consolidated interim balance sheet as at 30 June 2022;

· the Condensed consolidated interim income statement and Condensed consolidated interim statement of comprehensive income for the three and six month periods then ended;

· the Condensed consolidated interim statement of changes in equity for the six month period then ended;

· the Condensed consolidated interim cash flow statement for the six month period then ended; and

· the explanatory notes to the interim financial statements.

The interim financial statements included in the H1 and Q2 2022 Results of Indivior PLC have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

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). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the H1 and Q2 2022 Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

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 this ISRE. However, future events or conditions may cause the group to cease to continue as a going concern.

The H1 and Q2 2022 Results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the H1 and Q2 2022 Results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the H1 and Q2 2022 Results, including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

Our responsibility is to express a conclusion on the interim financial statements in the H1 and Q2 2022 Results based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.