TIDMINDV
RNS Number : 1432O
Indivior PLC
02 November 2016
November 2nd, 2016
Nine Month Financial Results: Litigation Provision of $220m
booked : Guidance raised.
Period to % %
September Act Cons
30th Q3 Q3 Q3 % % 9m 9m 9m FX FX
Act Cons
2016 2016 2015 FX FX 2016 2016 2015
$m Adj* $m $m Adj* $m
------------------ ------- ------ ------- ------ ------- ------ ------ ------ ----- ------
Net Revenue 268 268 249 +8 +9 799 799 766 +4 +5
------------------ ------- ------ ------- ------ ------- ------ ------ ------ ----- ------
Operating
(loss) / Profit (121) 102 78 - - 78 315 308 -75 -75
------------------ ------- ------ ------- ------ ------- ------ ------ ------ ----- ------
Net (loss)
/ Income (149) 71 48 - - (43) 205 191 - -
------------------ ------- ------ ------- ------ ------- ------ ------ ------ ----- ------
(Loss)/EPS
(cents) (21) 10 7 - - (6) 28 27 - -
================== ======= ====== ======= ====== ======= ====== ====== ====== ===== ======
* adjusted basis, excluding impact of exceptional items of $237m
in 9m and $223m in Q3.
This announcement contains inside information.
The Company has recorded a charge of $220m in the third quarter
of 2016 for the investigative and antitrust litigation matters
noted on pages 6-7. Because these matters are in various stages,
Indivior cannot predict with any certainty the ultimate resolution
or cost of all of the matters. The final amount might be materially
different from this reserve.
Nine Months Financial Highlights
-- Net revenue at $799m (2015: $766m) increased +4% versus prior
year due to continuing market growth and slightly higher market
share offset by higher rebates, in connection with formulary access
in the US, versus prior year and exchange. Net revenue at constant
FX increased by 5%.
-- Operating profit of $78m (2015: $308m), reflected higher net
revenues, offset by higher operating costs as a standalone public
company and higher legal costs, and $237m (2015 $7m) of exceptional
costs. On an adjusted basis, operating profit was $315m (2015:
$315m).
-- Net income was a loss of $43m (2015: $191m) after net
financing costs of $39m (2015: $47m) and an unadjusted tax rate of
210% (2015: 27%). On an adjusted basis, net income was $205m (2015:
$196m) with a tax rate of 26% (2015: 27%).
-- Cash balance at period end of $586m. Net cash of $11m (vs. Year End 2015: net debt $174m).
Nine Months Operating Highlights
-- US market growth in 2016 year to date continues to be in mid
to high single digits with a slight increase in growth in recent
months. SUBOXONE(R) Film market share was 60.5% (2015: 60%),
slightly ahead of the end of 2015 share.
-- New product pipeline progress. Positive top line results from
the Phase III Efficacy study of RBP-6000 (Monthly Depot
Buprenorphine) published August 17th, 2016 achieving both primary
and secondary endpoints. Phase III Safety extension study completed
Q3 2016.
-- The process leading to US listing is temporarily suspended
pending clarification of the Company's position in respect to
outstanding litigation and investigations.
-- The next round of ANDA trials is due to commence on November
7th with trial against Dr.Reddy, on the Orange Book listed patents
and against Actavis, Par and Dr.Reddy on the process patent.
Outlook
-- Full year guidance, reflecting faster market growth in the
US, is today raised to net revenue in a range of $1,060m-$1,075m
(previously $1,000m-$1,030m) and adjusted net income in a range of
$250m-$265m (previously $180m-$200m), at constant exchange and
excluding all exceptional items. The guidance assumes current
market conditions continue for the rest of the year and that the
effect of accelerated shipments in Q3 in US and Europe do not
repeat in Q4.
Comment by Shaun Thaxter, CEO of Indivior PLC
"Our performance this year to date continues to be strong"
commented Shaun Thaxter, CEO of Indivior PLC. "This is the third
consecutive quarter of net revenue growth, with our development
reflecting the growth in the market. Suboxone(R) Film share has
been stable at over 60% this year."
"As market growth has modestly improved, we are now able to
raise our previous guidance for the full year. This over-delivery
against our plan allows us to use a proportion of the over-delivery
to reinvest in the long-term organic growth drivers of our
business, particularly in pre-launch education and market
preparation for the launch of our Monthly Depot of Buprenorphine.
We look forward to giving more insight into these investments at
our R&D Day for investors on December 9th. At the same time, we
are continuing with our project to optimize our new organisation
and structure."
"Indivior PLC is focused on empowering patients and striving to
improve their quality of life by pioneering innovative,
high-quality, accessible and cost effective treatments," Shaun
Thaxter continued. "I am pleased with our progress towards
realizing our vision and achieving key strategic priorities for
2016. We continue to demonstrate the resilience of Suboxone(R) Film
in the market place. Our pipeline is making excellent progress with
both our depot products, the Monthly Depot of Buprenorphine which
we believe can potentially transform the treatment of opioid use
disorder, if approved, and the Monthly Risperidone Depot for
treatment of schizophrenia, nearing completion of their clinical
development phase and both should be filing NDAs next year. The
Board has recorded a $220m provision in connection with the ongoing
litigation and investigation."
Nine Months Operating Review
US Market Update
The market for buprenorphine products continued to grow in 2016,
showing volume growth of mid-to-high single digit percentage and
with signs of a slight improvement in recent months. A key driver
of growth remains the certification of new physicians to practice
addiction medicine as patients look to find treatment, with new
certifications running ahead of last year. In addition, over 1,400
physicians have already qualified for the higher patient cap of 275
through October. Suboxone Film had a market share of 60.5% in the
first nine months, compared to 60% in the same period in 2015. This
was ahead of the exit share at the end of 2015, so market share has
slightly increased in the year to date. The Company has enhanced,
and continues to enhance, its compliance capability to deal with
this growth.
Update on Guidance for Full Year
We said in July that if the environment continued to be
favourable we would update our full-year guidance at Q3. Full year
guidance, reflecting faster market growth in the US, is today
raised to net revenue in a range of $1,060m-$1,075m (previously
$1,000m-$1,030m) and net income in a range of $250m-$265m
(previously $180m-$200m), at constant exchange and excluding all
exceptional items. The guidance assumes current market conditions
continue for the rest of the year and that the effect of
accelerated shipments in Q3 in US and Europe do not repeat in
Q4.
Financial Performance for nine months to September 30, 2016
The Company has recorded a charge of $220m in the third quarter
of 2016 for the investigative and antitrust litigation matters
noted on pages 6-7. Because these matters are in various stages,
Indivior cannot predict with any certainty the ultimate resolution
or cost of all of the matters. The final amount might be materially
different from this reserve. The analysis below shows the financial
performance both as reported and on an adjusted basis, excluding
the exceptional items. A full profit & loss account on an
adjusted basis for both Q3 and 9 months 2016 (and 2015) is shown on
page 25.
For the nine month period, total net revenue grew 4% to $799m
(2015: $766m) at actual exchange rates reflects continuing US
market growth, slightly higher market share versus prior year,
slightly offset by the annualisation of rebate increases in
connection with formulary access in 2015 plus the impact of adverse
translation into USDs from weaker currencies in Rest of World
(Euro, Australian Dollar and Sterling). At constant exchange rates,
the growth in net revenue was 5%.
In Q3, total net revenue grew 8% at actual exchange rates to
$268m (Q3 2015: $249m). At constant exchange rates the growth in Q3
was 9%. This acceleration in growth reflects an increase in market
growth and an improving trend in net pricing as the Company passes
the anniversary of significant rebate increases in 2014-2015 plus
some accelerated shipments in both US and Europe.
US net revenue grew in the nine month period by 6% to $651m
(2015: $613m). Volume was well ahead of last year reflecting market
growth and slightly higher market share compared to prior year.
Pricing reflected a combination of a price increase in January
2016, offset by the annualisation of rebate increases from
2014-2015, and slightly adverse channel mix.
In Q3, net revenue grew by 9% in the US to $219m (Q3 2015:
$201m) reflecting an increase in market growth, higher market share
and an improving trend in net pricing, plus some accelerated
shipments which do not repeat in Q4.
For the nine month period, Rest of World net revenue declined by
3% to $148m (2015: $153m) as reported in USDs but the majority of
this decline was due to translation from weak sterling. At constant
exchange, the net revenue decline was 1%, reflecting volume growth
offset by continuing price constraints in Europe, and continuing
growth in Australia and New Zealand.
In Q3, Rest of World net revenue increased 2% to $49m (Q3 2015:
$48m) helped by accelerated shipments in Europe which do not repeat
in Q4; at constant exchange rates the increase was 8%.
Gross margin for the nine month period was 90%, broadly in line
with last year (2015: 91%). Excluding the exceptional charge of
$11m within cost of goods, the underlying Gross Margin was 92%.
Exceptional costs in the nine month period amounted to $237m
(2015: $7m); these consisted of the $220m legal provision for the
investigative and antitrust litigation matters noted on pages 6-7;
$11m charged in cost of goods and $6m included in SD&A
primarily in relation to manufacturing, legal and advisory costs in
the exploration of strategic initiatives for the event of a
potential negative ANDA ruling.
SD&A expenses for the period were $556m (2015: $295m), the
increase being principally due to the exceptional costs referred to
above. On an adjusted basis, SD&A expenses for the nine month
period increased by 15% to $330m (2015: $288m). This increase was
driven by annualisation of standalone PLC costs and by higher legal
costs.
In Q3, SD&A expenses were $335m (2015: $111m) reflecting the
exceptional costs referred to above. On an adjusted basis, SD&A
expenses increased by 4% to $113m (Q3 2015: $109m) mainly
reflecting increased legal expenses.
R&D expenses in the nine month period were $87m (2015:
$91m), reflecting the reducing level of activity in the Company's
clinical development pipeline, with the two pivotal Phase III
trials nearing completion. In Q3, R&D expenses were $29m (Q3
2015: $36m).
Operating profit in the nine month period was $78m, 75% below
prior year (2015: $308m). On an adjusted basis, excluding
exceptional costs of $237m (2015: $7m), operating profit was $315m,
in line with prior year (2015: $315m). In Q3, operating loss was
$121m (2015: profit of $78m). On an adjusted basis, operating
profit increased 28% to $102m (2015: $80m).
EBITDA for the nine month period was $90m (2015: $326m), and
excluding the exceptional costs was $327m (2015: $333m).
Operating margin was 10% (2015: 40%) as reported. Excluding the
exceptional costs, the operating margin was 39% (2015: 41%).
Finance expenses in the nine month period were $39m (2015:
$47m), the decline reflecting the benefit of repurchasing $120m of
the Company's debt facility over the past year.
The tax charge in the nine month period was $82m (2015: $70m)
including $11m of exceptional items within taxation. This
represented a rate of 210% (2015: 27%) as reported, and 26% (2015:
27%) on the adjusted pretax profit for the period reflecting the
mix of profits in the period. Based on current projections we
continue to expect our full year effective tax rate to be 25% on an
adjusted basis. The tax charge as reported assumes that the
exceptional legal provision is non-deductible for tax purposes at
this point in time but will be re-assesssed once a final
determination of the litigation charge has been reached.
Net income for the nine month period was therefore a loss of
$43m (2015: profit of $191m) as reported. Excluding exceptional
costs, the net income was $205m (2015: $196m) an increase of 5%. In
Q3 net income was a loss of $149m (Q3 2015: profit of $48m); on an
adjusted basis, Q3 net income was a profit of $71m (Q3 2015
adjusted profit of $50m).
EPS for the nine month period was a loss of 6 cents (2015:
profit of 27 cents). On an adjusted basis, excluding the effect of
exceptional costs, EPS were 28 cents (2015: 27 cents). In Q3 EPS
were a loss of 21 cents (Q3 2015: profit of 7 cents), but on an
adjusted basis, Q3 EPS were 10 cents (Q3 2015: 7 cents).
Cash Flow
Cash generated from operations in the nine month period was
$359m (2015: $446m), a decrease of $87m reflecting the exceptional
costs and reduced profitability, offset by an improvement in net
working capital of $33m and the effect of the non-cash legal
provision of $220m leading to a release of cash of $253m (2015:
$117m released).
In the nine month period, net cash inflow from operating
activities was $280m (2015: $274m) reflecting the reduction in cash
from operating activities offset by lower tax paid in the period of
$46m (2015: $109m).
During the nine month period, investment in property, plant and
equipment, primarily related to the development of the company's
ERP system, the development of new and improved R&D
laboratories and building refits was $23m (2015: $12m).
During the nine month period, the Group repaid $69m of its term
loan as part of its commitment under the syndicated debt facility
(see below). In the same period in 2015, the Group repaid $37m in
outstanding overdrafts and borrowings. In addition, in July the
Group paid the second dividend in relation to 2015, in line with
its prospectus commitment, amounting to $69m (2015: nil).
The net increase in cash and cash equivalents in the period
therefore was $119m (2015: $221m), being the sum of the cash inflow
from operating activities of $280m, less net cash outflows from
investing and financing activites of $23m and $138m respectively.
Added to the cash and cash equivalents at the beginning of the
period of $467m, that gave the Group a total cash and cash
equivalents balance of $586m at the period end.
The increase in cash and cash equivalents in Q3 was $9m (Q3
2015: $29m). The slower rate of cash generation in Q3 was due to
payment of the dividend of $69m.
Balance Sheet at September 30th
Non-current assets were $213m at the period end (YE 2015:
$216m), due to net increases in property, plant and equipment
(PPE), offset by amortisation of intangible assets and lower
deferred tax assets.
Inventories were maintained at $48m (YE 2015: $48m). Trade and
other receivables were $242m (YE 2015: $206m). The overall increase
in current assets was primarily due to the $119m increase in cash
and cash equivalents in the year to date to $586m (YE 2015:
$467m).
Trade and other payables increased to $593m (YE 2015: $528m),
reflecting higher levels of rebates in the US in connection with
formulary access and in response to heightened branded competition,
and to higher overall sales by volume and net revenue.
Current provisions for liabilities and charges of $220m (YE
2015: nil) reflect the legal provision booked in the period.
Current tax liabilities increased to $70m (YE 2015: $41m).
Net working capital (inventory plus trade and other receivables,
less trade and other payables) was minus $303m at the period end,
an improvement of $29m on December 2015.
Cash and cash equivalents at the period end was $586m,
reflecting a net cash increase of $119m in the period ($9m in Q3).
Borrowings, net of issuance costs, were $546m at the period end (YE
2015: $605m) a decrease of $59m reflecting repurchase of
outstanding debt and amortisation of principal and issuance costs
during the period.
The net cash of the Group was $11m at the period end (YE 2015:
net debt of $174m) including the unamortised issuance costs.
At the period end, therefore, the Group had net liabilities of
$382m (YE 2015: $279m), consisting of assets of $1,089m (YE 2015:
$937m), and liabilities of $1,471m (YE 2015: $1,216m), the increase
in liabilities primarily reflecting the provision booked in the
quarter.
R&D / Pipeline Update
Developments since Half Year 2016 results announcement: -
Treatment of Opioid Dependence
-- Suboxone Tablet. China Efficacy Study (RB-CN-10-0013)
completed. On track to submit NDA to Chinese FDA by end Q4
2016.
-- RBP-6000, Monthly Depot Buprenorphine: Phase III Efficacy
study (RB-US-13-0001); top line results published on August 17th
2016 showing RBP-6000 achieved both primary and secondary
endpoints. Phase III Safety Extension Study (RB-US-13-0003)
completed with last patient last visit in August 2016.
US Fast Track Designation granted May 23rd, 2016.
Pre-NDA meeting scheduled by end 2016.
Overdose Rescue Products
-- Intranasal Naloxone for treatment of opioid overdose.
Nalscue(R) launched in France under Temporary Authorisation for US
(ATU) in July 2016.
-- RBP-8000 Cocaine Esterase for treatment of Cocaine
Intoxification. Second type B meeting with FDA held March 2016.
Treatment of Alcohol Use Disorder
-- Arbaclofen Placarbil for alcohol use disorder: Phase IIa
study (RB-US-14-0001) reported July 2016 finding Arbaclofen
Placarbil to be safe and well tolerated in controlled abstinence
setting, but with high inter-individual PK variability observed.
New formulation development under way.
Treatment of Schizophrenia
-- RBP-7000, Monthly Depot Risperidone for the treatment of
schizophrenia. Preliminary data from pivotal Phase III Efficacy
study were published on May 5th, 2015; more detailed information
regarding these data is available at www.indivior.com and in the
separate press release issued on May 5th, 2015.
Phase 3 long-term safety study (RB-US-13-0005) Completed in
September 2016 with database lock achieved October 2016.
Pre-NDA meeting held August 2016.
Litigation Update
The Company has recorded a charge of $220m in the third quarter
of 2016 for the investigative and antitrust litigation matters
noted below. Because these matters are in various stages, the
Company cannot predict with any certainty the ultimate resolution
or cost of all of the matters. The final amount might be materially
different from this reserve.
Department of Justice Investigation
-- A federal criminal grand jury investigation of Indivior
initiated in December 2013 is continuing, and includes marketing
and promotion practices, pediatric safety claims, and
overprescribing of medication by certain physicians. The U.S.
Attorney's Office for the Western District of Virginia has served a
number of subpoenas relating to SUBOXONE(R) Film, SUBOXONE(R)
Tablet, SUBUTEX(R) Tablet, buprenorphine and our competitors, among
other issues. We are in the process of responding by producing
documents and other information in connection with this on-going
investigation, and in preliminary discussion about a possible
resolution of the investigation. It is not possible at this time to
predict with any certainty the potential impact of this
investigation on us or to quantify the ultimate cost of a
resolution. We are cooperating fully with the relevant agencies and
prosecutors and will continue to do so.
FTC investigation, Antitrust Litigation, Connecticut
Subpoena
-- The Judge overseeing the legal privilege dispute in the FTC
investigation has appointed a Special Master (an independent
external lawyer) to investigate the claims of legal privilege and
provide a recommendation to the Court on how the documents at issue
should be treated. An initial report and recommendation relating to
the first tranche of privileged documents reviewed by the Special
Master was finalized in April 2016 and adopted by the Court on
August 1(st) , 2016. Pursuant to this report and the Court's order,
Indivior produced certain additional documents. A second tranche of
documents remains under review. Following that review, the Court's
decision then may be subject to appeal by either party.
-- Fact discovery is continuing in the antitrust class action
litigation described on our Annual Report ("Class Action
Litigation"). Plaintiffs allege, among other things, that Indivior
violated federal and state antitrust laws in attempting to delay
generic entry of alternatives to SUBOXONE tablets, and plaintiffs
further allege that Indivior unlawfully acted to lower the market
share of these products.
-- Amneal Pharmaceuticals LLC, a manufacturer of generic
buprenorphine / naloxone tablets, filed a complaint against the
Company in December 2015. This case has been coordinated with the
Class Action litigation. Amneal's complaint contains antitrust
allegations similar in nature to those set out in the class action
complaints, and Amneal has also alleged violations of the Lanham
Act.
-- On October 12, 2016, the Company was served with a subpoena
for records from the state of Connecticut Office of the Attorney
General under its Connecticut civil false claims act authority. The
subpoena requests documents related to the Company's marketing and
promotion of SUBOXONE(R) products and its interactions with a
non-profit third party organization. The Company is cooperating in
this investigation.
ANDA Litigation
-- The ruling after trial against Actavis and Par in the lawsuit
involving the Orange Book-listed patents for Suboxone(R) Film
issued on June 3(rd) , 2016. Ruling found the asserted claims of
the '514 patent valid and infringed; the asserted claims of the
'150 patent valid but not infringed; and the asserted claims of the
'832 patent invalid, but found that certain claims would be
infringed if they were valid.
-- Based on the ruling as to the '514 patent, Actavis and Par
are currently enjoined from launching a generic product. Par has
appealed and Actavis is expected to appeal this ruling. The
generics have also moved to reopen the judgment based on a more
stringent claim construction in the Teva case. In light of the
motions to reopen, Par's appeal has been deactivated until the
District Court rules on the motions, and the deadlines for Actavis
to file a notice of appeal has been postponed.
-- Trial against Dr. Reddy's, Actavis and Par in the lawsuits
involving the process patent (US Patent No. 8,900,497) scheduled
for November 16(th) and 21(st) -23(rd) , 2016.
-- Trial against Dr. Reddy's in the lawsuit involving the Orange
Book-listed patents for Suboxone(R) Film scheduled for November
7(th) , 16(th) , and 21(st-) -23(rd) , 2016, with Dr. Reddy's
30-month stay of FDA approval on ANDA No. 20-5806 expiring April
17(th) , 2017. Indivior believes Dr. Reddy's 30-month stay of FDA
approval on ANDA No. 20-5299 also expires on April 17(th) , 2017,
however, Dr Reddy's disputes the applicability of the stay to this
ANDA.
-- Trial against Alvogen in the lawsuit involving the Orange
Book-listed patents and the '497 process patent for Suboxone(R)
Film originally scheduled for April 2017 is expected to be
rescheduled to a date later in the year, with Alvogen's 30-month
stay of FDA approval expiring October 29(th) , 2017.
-- By a Court order dated August 22(nd) , 2016, Indivior's
Suboxone(R) Film patent litigation against Sandoz has been
dismissed without prejudice because Sandoz is no longer pursuing
Paragraph IV certifications for its proposed generic formulations
of Suboxone(R) film.
-- Trial against Mylan in the lawsuit involving the Orange
Book-listed patents for Suboxone(R) Film is scheduled for September
25(th) , 2017, with Mylan's stay expiring March 24, 2018.
-- Indivior received a Paragraph IV notification from Teva,
dated February 8, 2016, indicating that Teva had filed a 505(b)(2)
New Drug Application (NDA) for a 16mg/4mg strength of
Buprenorphine/naloxone sublingual film. The Indivior Group and Teva
agreed that infringement by Teva's 16mg/4mg dosage strength will be
governed by the infringement ruling on the accused 8 mg/2 mg dosage
strength in its ANDA currently scheduled for trial in November
2016.
-- The USPTO declined to institute Teva's petitions for inter
partes review of the three Orange Book-listed patents on procedural
grounds.
-- Dr. Reddy's has filed an inter partes review petition on each
of the three Orange Book Patents. These petitions are substantively
similar to those filed by Teva.
-- Certain claims of the '832 patent were found invalid in an
IPR proceeding, a decision that has been affirmed by the Court of
Appeals for the Federal Circuit.
-- In the event of a ruling in these matters that none of the
claims of the asserted patents are valid and infringed by the
ANDA-filers, and should there be FDA approval of one or more of the
ANDAs and subsequent commercial launch of generic SUBOXONE(R) film
and pipeline of products fail to obtain regulatory approval, there
is the likelihood that revenues and operating profits of the
Company will decline. In these circumstances, the Directors believe
they would be able to take the required steps to reduce the cost
base, however this would result in a significant change to the
structure of the business.
Exchange Rates
The average and period end exchange rates used for the
translation of currencies into US dollars that have most
significant impact on the Group's results were: -
9 Months to September 9 Months to September
30, 30,
2016 2015
US $: GB GBP
period end 1.3023 1.5180
---------------------- ----------------------
US $: GB GBP
average rate 1.3945 1.5328
---------------------- ----------------------
US $: EUR Euro
period end 1.1214 1.1194
---------------------- ----------------------
US $: EUR Euro
average rate 1.1162 1.1146
---------------------- ----------------------
Risk Factors
The Directors have reviewed the principal risks and
uncertainties for the financial year 2016.
The assumptions in arriving at the Company's financial guidance
for the full year are described on page 3 of this release. To the
extent that actual market conditions differ from these assumptions,
alternative financial outcomes are possible. However, the Company
has issued this guidance based on industry analogues and its own
estimates at this time.
Therefore, other than in respect of guidance for the full year
2016, the Directors consider that the principal risks and
uncertainties which could have a material impact on the Group's
performance in the remaining term of 2016 remain the same as
described on pages 47 to 51 of the 2015 Annual Report. These
include:
Business operations and business continuity
-- The Group's revenues are primarily derived from sales of
Suboxone(R) Film and any decrease in sales due to competition or
supply or quality issues could significantly affect the results of
operations and prospects.
-- Competition for qualified personnel in the biotechnology and
pharmaceutical industries is intense and high-performing talent in
key positions is a business-critical requirement.
-- Failures or disruptions to the Group's systems or the systems
of third parties on whom the Group relies, due to any number of
causes, particularly if prolonged, could result in a loss of key
data and/or affect operations.
-- The Group's computer systems, software and networks may be
vulnerable to unauthorized access, computer viruses or other
malicious code or cyber threats that could have a security impact.
All of these could be costly to remedy and we may be subject to
litigation.
Product safety, regulation & litigation
-- As an innovative pharmaceutical company, the Group seeks to
obtain appropriate intellectual property protection for its
products. Its ability to obtain and enforce patents and other
proprietary rights particularly for its products, drug formulation
and delivery technologies and associated manufacturing processes is
critical to business strategy and success. Specifically see
disclosures on pages 6 and 7 under litigation update referring to
the current status of the Department of Justice and Federal Trade
Commission investigations, the antitrust litigation, and ANDA
litigation and the contingent liabilities disclosures on pages
19-20, note 7.
-- The manufacture of the Group's products is highly exacting
and complex due in part to strict regulatory and manufacturing
requirements. Active Pharmaceutical Ingredients (API) in many of
the Group's products and product candidates are controlled
substances that are subject to extensive regulation in all the
countries in which the Group markets its products.
-- The testing, manufacturing, marketing, and sales of
pharmaceutical products entail a risk of product liability claims,
product recalls, litigation, and associated adverse publicity, each
of which could have a material adverse impact on the business,
prospects, results of operations and financial condition.
Product development
-- The regulatory approval process for new pharmaceutical
products and expansion of existing pharmaceutical products is
expensive, time-consuming and uncertain. Even if product candidates
are approved there is no guarantee that they will be able to
achieve expected market acceptance.
Commercial and Governmental payor account, pricing and
reimbursement pressure
-- The Group's revenues are partly dependent on the availability
and level of coverage provided to the Group by private insurance
companies and governmental reimbursement schemes for pharmaceutical
products, such as Medicare and Medicaid in the US.
-- Changes to governmental policy or practices could adversely
affect the Group's revenues, financial condition and results of
operations. In addition, the reimbursement of treatment established
by healthcare providers, private health insurers and other
organizations may be reduced.
Compliance with law and ethical behavior
-- Business practices in the pharmaceutical industry are subject
to increasing scrutiny by government authorities. Failure to comply
with applicable laws and rules and regulations in any jurisdiction
may result in fines, civil and/or criminal legal proceedings.
Specifically see disclosures above on page 6-7 under litigation
update referring to the current status of the investigative and
litigation matters involving the Company, and the contingent
liabilities disclosures on pages 19-20, note 7.
Acquisitions and business development
-- The Group may seek to acquire businesses or products as part
of our strategy to enhance our current portfolio.
The Group's annual report for the 2015 financial year contains
additional detail on these principal business risks together with a
report on risk appetite.
Forward--Looking Statements
This announcement contains certain statements that are
forward--looking and which should be considered, amongst other
statutory provisions, in light of the safe harbour provisions of
the United States Private Securities Litigation Reform Act of 1995.
By their nature, forward--looking statements involve risk and
uncertainty as they relate to events or circumstances that will or
may occur in the future. Actual results may differ materially from
those expressed or implied in such statements because they relate
to future events. Forward--looking statements include, among other
things, statements regarding the Indivior Group's financial
guidance for 2016 and its medium-- and long--term growth outlook,
its operational goals, its product development pipeline and
statements regarding ongoing litigation. Various factors may cause
differences between Indivior's expectations and actual results,
including: factors affecting sales of Suboxone(R) Tablet,
Suboxone(R) Film, Subutex Tablet and any future products; the
outcome of research and development activities; decisions by
regulatory authorities regarding the Indivior Group's drug
applications; the speed with which regulatory authorizations,
pricing approvals and product launches may be achieved; the outcome
of post--approval clinical trials; competitive developments;
difficulties or delays in manufacturing; 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; 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; the Indivior Group's ability to protect its
patents and other intellectual property; the outcome of the
Suboxone(R) Film patent litigation relating to the ongoing ANDA
lawsuits; changes in governmental laws and regulations; issues
related to the outsourcing of certain operational and staff
functions to third parties; uncertainties related to general
economic, political, business, industry, regulatory and market
conditions; and the impact of acquisitions, divestitures,
restructurings, internal reorganizations, product recalls and
withdrawals and other unusual items.
For Further Information
Investor Tom Corran IR Director, +44 1753 423965
Enquiries Indivior tom.corran@indivior.com
PLC
Stephen
Malthouse Tulchan +44 207 353 4200
Jonathan Communications
Sibun
Biosector
Media Enquiries Kathy Vincent 2 +1 310 403 8951
---------------- ----------------- -------------------------
Conference call details
There will be a conference call for analysts and investors at
1300hrs UK time (0900hrs Eastern) today hosted by Shaun Thaxter,
CEO, and Cary Claiborne, CFO. Dial in details are below. The call
will be archived on the company's website at www.indivior.com later
today for replay.
Confirmation Code: 7339092
Participants, Local - London, +44(0)20 3427
United Kingdom: 1909
Participants, National free
phone - United Kingdom: 0800 279 5004
Participants, Local - New York, +1 646 254
United States of America: 3364
Participants, National free +1 877 280
phone - United States of America: 2342
About Indivior
Indivior is a global specialty pharmaceutical company with a
20-year legacy of leadership in patient advocacy, health policy and
evidence-based best practice models that have revolutionized modern
addiction treatment. The name is the fusion of the words individual
and endeavour, and the tagline "Focus on you" makes the Company's
commitment clear. Indivior is dedicated to transforming addiction
from a global human crisis to a recognized and treated chronic
disease. Building on its robust, global portfolio of opioid
dependence treatments featuring SUBOXONE(R) (buprenorphine and
naloxone) Sublingual Film (CIII), SUBOXONE(R) (buprenorphine and
naloxone) Sublingual Tablet, and SUBUTEX(R) (buprenorphine)
Sublingual Tablet, Indivior has a strong pipeline of product
candidates designed to both expand on its heritage in this category
and address other chronic conditions and co-morbidities of
addiction including alcohol use disorder, cocaine intoxication and
schizophrenia. 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.
www.indivior.com
Indication
SUBOXONE(R) (buprenorphine and naloxone) Sublingual Film (CIII)
is a prescription medicine indicated for treatment of opioid
dependence and should be used as part of a complete treatment plan
to include counseling and psychosocial support.
Treatment should be initiated under the direction of physicians
qualified under the Drug Addiction Treatment Act.
IMPORTANT SAFETY INFORMATION
Do not take SUBOXONE Film if you are allergic to buprenorphine
or naloxone as serious negative effects, including anaphylactic
shock, have been reported.
SUBOXONE Film can be abused in a manner similar to other
opioids, legal or illicit.
SUBOXONE Film contains buprenorphine, an opioid that can cause
physical dependence with chronic use. Physical dependence is not
the same as addiction. Your doctor can tell you more about the
difference between physical dependence and drug addiction. Do not
stop taking SUBOXONE Film suddenly without talking to your doctor.
You could become sick with uncomfortable withdrawal symptoms
because your body has become used to this medicine.
SUBOXONE Film can cause serious life-threatening breathing
problems, overdose and death, particularly when taken by the
intravenous (IV) route in combination with benzodiazepines or other
medications that act on the nervous system (ie, sedatives,
tranquilizers, or alcohol). It is extremely dangerous to take
nonprescribed benzodiazepines or other medications that act on the
nervous system while taking SUBOXONE Film.
You should not drink alcohol while taking SUBOXONE Film, as this
can lead to loss of consciousness or even death.
Death has been reported in those who are not opioid
dependent.
Your doctor may monitor liver function before and during
treatment.
SUBOXONE Film is not recommended in patients with severe hepatic
impairment and may not be appropriate for patients with moderate
hepatic impairment. However, SUBOXONE Film may be used with caution
for maintenance treatment in patients with moderate hepatic
impairment who have initiated treatment on a buprenorphine product
without naloxone.
Keep SUBOXONE Film out of the sight and reach of children.
Accidental or deliberate ingestion of SUBOXONE Film by a child can
cause severe breathing problems and death.
Do not take SUBOXONE Film before the effects of other opioids
(eg, heroin, hydrocodone, methadone, morphine, oxycodone) have
subsided as you may experience withdrawal symptoms.
Injecting the SUBOXONE Film product may cause serious withdrawal
symptoms such as pain, cramps, vomiting, diarrhea, anxiety, sleep
problems, and cravings.
Before taking SUBOXONE Film, tell your doctor if you are
pregnant or plan to become pregnant. If you are pregnant or become
pregnant while taking SUBOXONE Film, alert your doctor immediately
and you should report it using the contact information provided
below.*
Neonatal opioid withdrawal syndrome (NOWS) is an expected and
treatable outcome of prolonged use of opioids during pregnancy,
whether that use is medically-authorized or illicit. Unlike opioid
withdrawal syndrome in adults, NOWS may be life-threatening if not
recognized and treated in the neonate. Healthcare professionals
should observe newborns for signs of NOWS and manage
accordingly.
Before taking SUBOXONE Film, talk to your doctor if you are
breastfeeding or plan to breastfeed your baby. The active
ingredients of SUBOXONE Film can pass into your breast milk. You
and your doctor should consider the development and health benefits
of breastfeeding along with your clinical need for SUBOXONE Film
and should also consider any potential adverse effects on the
breastfed child from the drug or from the underlying maternal
condition.
Do not drive, operate heavy machinery, or perform any other
dangerous activities until you know how SUBOXONE Film affects you.
Buprenorphine in SUBOXONE Film can cause drowsiness and slow
reaction times during dose-adjustment periods.
Common side effects of SUBOXONE Film include nausea, vomiting,
drug withdrawal syndrome, headache, sweating, numb mouth,
constipation, painful tongue, redness of the mouth, intoxication
(feeling lightheaded or drunk), disturbance in attention, irregular
heartbeat, decrease in sleep, blurred vision, back pain, fainting,
dizziness, and sleepiness.
This is not a complete list of potential adverse events
associated with SUBOXONE Film. Please see full Prescribing
Information for a complete list.
*To report negative side effects associated with taking SUBOXONE
Film, please call 1-877-782-6966. You are encouraged to report
negative side effects of prescription drugs to the FDA. Visit
www.fda.gov/medwatch or call 1-800-FDA-1088.
For more information about SUBOXONE Film, SUBOXONE(R)
(buprenorphine and naloxone) Sublingual Tablets (CIII), or
SUBUTEX(R) (buprenorphine) Sublingual Tablets (CIII), please see
the respective full Prescribing Information and Medication Guide at
www.suboxoneREMS.com.
Condensed consolidated interim income statement
Unaudited Unaudited Unaudited Unaudited
Q3 Q3 9 Months 9 Months
2016 2015 2016 2015
Notes $m $m $m $m
-------------------------- ------ ---------- ---------- ---------- ----------
Net Revenues 2 268 249 799 766
Cost of Sales (25) (24) (78) (72)
Gross Profit 243 225 721 694
Selling, distribution
and administrative
expenses 3 (335) (111) (556) (295)
Research and development
expenses 3 (29) (36) (87) (91)
-------------------------- ------ ---------- ---------- ---------- ----------
Operating (Loss)/Profit (121) 78 78 308
-------------------------- ------ ---------- ---------- ---------- ----------
Operating profit before
exceptional items 102 80 315 315
Exceptional items 3 (223) (2) (237) (7)
Operating (loss)/profit (121) 78 78 308
-------------------------- ------ ---------- ---------- ---------- ----------
Finance expense (12) (16) (39) (47)
-------------------------- ------ ---------- ---------- ---------- ----------
Net finance expense (12) (16) (39) (47)
-------------------------- ------ ---------- ---------- ---------- ----------
(Loss)/Profit before
taxation (133) 62 39 261
Taxation 4 (19) (14) (71) (72)
Exceptional items within
taxation 4 3 - (11) 2
Net (loss)/income (149) 48 (43) 191
-------------------------- ------ ---------- ---------- ---------- ----------
(Loss)/Earnings per
ordinary share (cents)
Basic (loss)/earnings
per share 5 (21) 7 (6) 27
Diluted (loss)/earnings
per share 5 (20) 7 (6) 26
Condensed consolidated interim statement of comprehensive
income
Unaudited Unaudited Unaudited Unaudited
Q3 Q3 9 Months 9 Months
2016 2015 2016 2015
$m $m $m $m
-------------------------- ---------- ---------- ---------- ----------
Net (loss)/income (149) 48 (43) 191
Other comprehensive
income
Items that may be
reclassified to profit
or loss in subsequent
years:
Net exchange adjustments
on foreign currency
translation 3 (5) 3 (9)
Other comprehensive
income 3 (5) 3 (9)
Total comprehensive
income (146) 43 (40) 182
--------------------------- ---------- ---------- ---------- ----------
The notes on pages 16 to 21 are an integral part of these
condensed consolidated interim financial statements.
Condensed consolidated interim balance sheet
Unaudited Audited
Sep 30, Dec 31,
2016 2015
Notes $m $m
ASSETS
Non-current assets
Intangible assets 48 62
Property, plant and equipment 53 32
Deferred tax assets 112 122
213 216
Current assets
Inventories 48 48
Trade and other receivables 242 206
Cash and cash equivalents 6 586 467
876 721
Total assets 1,089 937
------------------------------- ------ ---------- --------
LIABILITIES
Current liabilities
Borrowings 6 (55) (34)
Provisions for liabilities (220) -
and charges
Trade and other payables 8 (593) (528)
Current tax liabilities (70) (41)
------------------------------- ------ ---------- --------
(938) (603)
------------------------------- ------ ---------- --------
Non-current liabilities
Borrowings 6 (491) (571)
Provisions for liabilities
and charges (42) (42)
(533) (613)
Total liabilities (1,471) (1,216)
------------------------------- ------ ---------- --------
Net liabilities (382) (279)
------------------------------- ------ ---------- --------
EQUITY
Capital and reserves
Share capital 9 72 72
Other Reserves (1,295) (1,295)
Foreign currency translation
reserve (20) (23)
Retained Earnings 861 967
------------------------------- ------ ---------- --------
Total equity (382) (279)
------------------------------- ------ ---------- --------
The notes on pages 16 to 21 are an integral part of these
condensed consolidated interim financial statements.
Condensed consolidated interim statement of changes in
equity
Foreign
Currency
Share Share Other Translation Retained Total
capital Premium Reserve reserve earnings equity
Unaudited $m $m $m $m $m $m
------------------------------- --------- --------- --------- ------------- ---------- --------
At January 1, 2015 1,437 - (1,295) (16) (601) (475)
-------------------------------- --------- --------- --------- ------------- ---------- --------
Comprehensive income
Net income - - - - 191 191
Other comprehensive
income - - - (2) (7) (9)
Total comprehensive
income - - - (2) 184 182
-------------------------------- --------- --------- --------- ------------- ---------- --------
Transactions recognised
directly in equity
Share awards - - - - 4 4
Capital reduction (1,365) - - - 1,365 -
Balance at September
30, 2015 72 - (1,295) (18) 952 (289)
-------------------------------- --------- --------- --------- ------------- ---------- --------
At January 1, 2016 72 - (1,295) (23) 967 (279)
-------------------------------- --------- --------- --------- ------------- ---------- --------
Comprehensive income
Net (loss)/income - - - - (43) (43)
Other comprehensive
income - - - 3 - 3
Total comprehensive
income - - - 3 (43) (40)
-------------------------------- --------- --------- --------- ------------- ---------- --------
Transactions recognised
directly in equity
Share-based plans - - - - 9 9
Deferred taxation on
share-based plans - - - - (3) (3)
Dividends paid - - - - (69) (69)
Total transactions recognised
directly in equity - - - - (63) (63)
-------------------------------- --------- --------- --------- ------------- ---------- --------
Balance at September
30, 2016 72 - (1,295) (20) 861 (382)
-------------------------------- --------- --------- --------- ------------- ---------- --------
The notes on pages 16 to 21 are an integral part of these
condensed consolidated interim financial statements.
Condensed consolidated interim cash flow statement
Unaudited Unaudited
2016 2015
For the nine months to September 30 $m $m
------------------------------------------------------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit 78 308
Depreciation and amortization 12 18
Share-based payments 9 4
Impact from foreign exchange movements 5 (1)
(Increase)/decrease in trade and other receivables (38) (2)
Decrease/(increase) in inventories - (12)
Increase in trade and other payables 72 131
Increase in provisions 221 -
Cash generated from operations 359 446
Net financing costs (33) (40)
Transaction costs related to loan - (23)
Taxes paid (46) (109)
Net cash inflow from operating activities 280 274
-------------------------------------------------------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (23) (12)
Purchase of intangible assets - (4)
Net cash (outflow) from investing activities (23) (16)
-------------------------------------------------------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash movements on overdraft - (9)
Cash movements in borrowings (69) (28)
Dividends paid (69) -
Net cash (outflow) from financing activities (138) (37)
-------------------------------------------------------- ---------- ----------
Net increase in cash and cash equivalents 119 221
Cash and cash equivalents at beginning of the period 467 331
Cash and cash equivalents at end of the period 586 552
-------------------------------------------------------- ---------- ----------
The notes on pages 16 to 21 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 and domiciled in the United Kingdom on September 26,
2014. In these condensed consolidated interim financial statements
('Interim Financial Statements'), reference to the 'Group' means
the Company and all its subsidiaries.
These interim financial statements have been prepared in
conformity with IAS 34 Interim Financial Reporting. The financial
information herein has been prepared in the basis of the accounting
policies set out in the annual accounts of the Group for the year
ended December 31, 2015 and should be read in conjunction with
those annual accounts. The Group prepares its annual accounts in
accordance with International Financial Reporting Standards (IFRS)
and IFRS Interpretations Committee (IFRS IC) interpretations as
adopted by the European Union and the Companies Act 2006 (the Act)
applicable to companies reporting under IFRS. In preparing these
condensed consolidated interim 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, 2015, with the exception
of changes in estimates that are required in determining the
provision for income taxes.
The interim condensed consolidated financial statements do not
include all the information and disclosures required in the annual
financial statements, and should be read in conjunction with the
Group's annual financial statements as at December 31, 2015. These
interim condensed consolidated financial statements have been
reviewed and not audited. These interim condensed consolidated
financial statements have been approved for issue as at November 1,
2016.
As disclosed in Note 7 relating to the Department of Justice and
Federal Trade Commission investigations and antitrust litigation an
amount of $220m has been established as a reserve for all of these
matters. The final amount might be materially different from this
reserve. This could impact the Group's ability to operate, which
would be further adversely impacted should revenues decline and
pipeline products fail to obtain regulatory approval, all of which
could mean the Group cannot continue in business without taking
necessary measures to reduce its cost base and improve its cash
flow. As such, this indicates a material uncertainty that may cast
significant doubt on the Group's ability to continue as a going
concern. However, the Directors believe they have the ability to
carry out the necessary measures and that the Group can continue as
a going concern for the foreseeable future. Accordingly, the
Directors continue to adopt the going concern basis for accounting
in preparing these financial statements, which do not include any
adjustments that might result from the outcome of this
uncertainty.
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 auditors issued an unqualified opinion
and did not contain a statement under section 498 of the Companies
Act 2006 on the Group's statutory financial statements for the year
ended December 31, 2015. The Group's statutory financial statements
for the year ended December 31, 2015 were approved by the Board of
Directors on March 8, 2016 and has been delivered to the Registrar
of Companies.
2. SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker (CODM), who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Chief Executive Officer
(CEO).
As the Indivior Group is engaged in a single business activity,
which is the development, manufacture and sale of prescription
drugs that are based on Buprenorphine for treatment of opioid
dependence, the CEO reviews financial information presented on a
combined basis for evaluating financial performance and allocating
resources. Accordingly, the company reports as a single reporting
segment.
Revenues
Revenues are attributed to countries based on the country where
the sale originates. The following table represents revenue from
continuing operations attributed to countries based on the country
where the sale originates and non-current assets, net of
accumulated depreciation and amortisation, by country. Non-current
assets for this purpose consist of property, plant and equipment
and intangible assets. Revenues for the three and nine months to
September 30, 2016 and 2015 were as follows:
Revenues from sale of goods:
Q3 Q3 9 Months 9
Months
2016 2015 2016 2015
$m $m $m $m
--------------- ------ ------ --------- --------
United States 219 201 651 613
ROW 49 48 148 153
--------------- ------ ------ --------- --------
Total 268 249 799 766
--------------- ------ ------ --------- --------
Non-current assets at September 30, 2016 and December 31, 2015
were:
September December
30 31
2016 2015
$m $m
--------------- ---------- ---------
United States 91 80
ROW 10 14
--------------- ---------- ---------
Total 101 94
--------------- ---------- ---------
3. OPERATING COSTS AND EXPENSES
The table below sets out selected operating costs and expenses
information:
Q3 Q3 9 9
Months Months
2016 2015 2016 2015
$m $m $m $m
------------------------------- --- ------ ------ -------- --------
Research and development
expenses (29) (36) (87) (91)
------------------------------------ ------ ------ -------- --------
Marketing, selling and
distribution expenses (39) (43) (102) (122)
Administrative expenses (294) (60) (439) (150)
Depreciation and amortisation (1) (6) (12) (18)
Operating lease rentals (1) (2) (3) (5)
------------------------------------ ------ ------ -------- --------
Total (335) (111) (556) (295)
------------------------------------ ------ ------ -------- --------
Exceptional Items
Q3 Q3 9 9
Months Months
2016 2015 2016 2015
$m $m $m $m
------------------------- --- ------ ------ -------- --------
Cost of Sales (1) - (11) -
Reconfiguration and
separation costs - (2) - (7)
Consulting costs (2) - (6) -
Legal Provisions (220) - (220) -
------------------------------ ------ ------ -------- --------
Total Exceptional items (223) (2) (237) (7)
------------------------------ ------ ------ -------- --------
$237m (2015: $7m) of exceptional items include legal provisions,
write offs of manufacturing costs and legal and advisory costs
related to the exploration of strategic initiatives for the event
of a potential negative ANDA ruling. The Company has recorded a
charge of $220m in the third quarter of 2016 for the investigative
and antitrust litigation matters set out in note 7 below. Because
these matters are in various stages, the Company cannot predict
with any certainty the ultimate resolution or cost of all of the
matters, and may in the future take additional charges. These have
been included within operating expenses and Costs of Sales.
4. TAXATION
In the nine months ended September 30, 2016, tax on total
profits amounted to $82m and represented a nine-month effective tax
rate of 210% (9 Month 2015: 27%); $16m of these relate to the tax
effect on the movement of assets within the Group and additional
provisions for unresolved tax matters and prior year adjustments,
and are considered to be exceptional. ($5m) relate to the tax
effect of exceptional items within SD&A and Cost of Sales. No
deferred tax has been recognized on the litigation charge in the
period as it is uncertain whether the charge will be available for
tax relief. Adjustments will be made once a final determination of
the litigation charges has been made. Excluding the impact of
exceptional items the effective tax rate for the nine months ended
September 30, 2016 is 26% (2015: 27%).
The Group's balance sheet at September 30, 2016 included a tax
payable liability of $70m and deferred tax asset of $112m.
5. EARNINGS PER SHARE
Q3 Q3 9 9
Months Months
2016 2015 2016 2015
cents cents cents cents
--------------------------- --- ------- ------- -------- --------
Basic (loss)/earnings
per share (21) 7 (6) 27
Diluted (loss)/earnings
per share (20) 7 (6) 26
Adjusted basic earnings
per share 10 7 28 27
Adjusted diluted earnings
per share 10 7 28 27
-------------------------------- ------- ------- -------- --------
Basic
Basic earnings per share ("EPS") is calculated by dividing
profit/(loss) for the period attributable to owners of the Company
by the weighted average number of ordinary shares in issue during
the period. 720,597,566 shares were in issue at the reporting
date.
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 awards. The
weighted average number of shares is adjusted for the number of
shares granted assuming the vesting of the awards.
2016 2015
Average Average
number number
of shares of shares
---------------------------------- ------------ ------------
On a basic basis 720,597,566 718,577,618
Dilution for Long Term Incentive
Plan (LTIP) 22,614,143 14,459,717
----------------------------------- ------------ ------------
Adjusted diluted shares 743,211,709 733,037,335
----------------------------------- ------------ ------------
Adjusted Earnings
The Directors believe that diluted earnings per share, adjusted
for the impact of exceptional items after the appropriate tax
amount, provides additional useful information on underlying trends
to shareholders in respect of earnings per ordinary share.
A reconciliation of net income to adjusted net income is as
follows:
Q3 Q3 9 Months 9
Months
2016 2015 2016 2015
$m $m $m $m
--------------------------- --- ------ ------ --------- --------
Net (loss)/income (149) 48 (43) 191
Exceptional items 223 2 237 7
Tax effect of exceptional
items - - (5) (2)
Exceptional items within
taxation (3) - 16 -
-------------------------------- ------ ------ --------- --------
Adjusted net income 71 50 205 196
-------------------------------- ------ ------ --------- --------
6. FINANCIAL LIABILITIES - BORROWINGS
September December
30 31
2016 2015
Current $m $m
------------ --- ---------- ---------
Bank loans (55) (34)
----------------- ---------- ---------
(55) (34)
---------------- ---------- ---------
September December
30 31
2016 2015
Non-current $m $m
------------- --- ---------- ---------
Bank loans (491) (571)
------------------ ---------- ---------
(491) (571)
----------------- ---------- ---------
September December
30 31
2016 2015
Analysis of net debt $m $m
--------------------------- --- ---------- ---------
Cash and cash equivalents 586 467
Borrowings* (575) (641)
11 (174)
------------------------------- ---------- ---------
*Borrowings reflects the outstanding principal amount drawn,
before debt issuance costs
September December
30 31
2016 2015
Reconciliation of net debt $m $m
--------------------------------- --- ---------- ---------
The movements in the period
were as follows:
Net debt at beginning of period (174) (428)
Increase in cash and cash
equivalents 119 136
Net repayment of borrowings
and overdraft 69 121
Exchange adjustment (3) (3)
Net debt at end of period 11 (174)
-------------------------------------- ---------- ---------
The carrying value less impairment provision of current
borrowings and cash at bank, as well as trade receivables and trade
payables, are assumed to approximate their fair values.
On March 16, 2015, the Company completed syndication of its $750
million debt facility. As a result of the syndication the new terms
of the loan on March 16, 2015 were as follows:
Nominal Issuance Face Carrying
interest Scheduled cost value amount
Currency margin Maturity repayments* $m $m $m
---------------- ---------- ----------- ---------- ------------- --------- ------- ---------
Libor
Unsecured bank (1%) 5
loan USD + 6% years 5% 40 644 644
Libor
Unsecured bank (1%) 5
loan EUR + 6% years 5% 6 106 106
---------------- ---------- ----------- ---------- ------------- --------- ------- ---------
*For years 1 and 2 only; 10% thereafter
Also included within the terms of the loan were:
-- A financial covenant to maintain a leverage covenant (Net
debt to Adjusted EBITDA ratio) of 3.25x with step down to 3.00x on
June 30, 2016.
-- An additional covenant requiring minimum liquidity of $150
million (defined as cash on hand plus the undrawn amount available
under the Company's $50 million revolving credit facility).
7. CONTINGENT LIABILITIES
The Indivior Group is currently subject to other legal
proceedings and investigations, including through subpoenas and
other information requests, by various governmental authorities. It
is not possible at this time to predict with any certainty the
potential impact of these matters on the Company, or to quantify
the ultimate cost of a resolution of these matters. The Board of
Indivior has recorded a charge of $220m in the third quarter of
2016 for the investigative and antitrust litigation matters noted
below. Because these matters are in various stages, Indivior cannot
predict with any certainty the ultimate resolution or cost of all
of the matters, and the final amount might be materially different
from this reserve.
The Indivior business (previously Reckitt Benckiser
Pharmaceuticals (RBP)) was demerged from Reckitt Benckiser Group
plc (RB) on December 23(rd) 2014 and Indivior PLC became the new
ultimate holding company of the group.
Department of Justice Investigation
-- A federal criminal grand jury investigation of Indivior
initiated in December 2013 is continuing, and includes marketing
and promotion practices, paediatric safety claims, and
overprescribing of medication by certain physicians. The U.S.
Attorney's Office for the Western District of Virginia has served a
number of subpoenas relating to SUBOXONE(R) Film, SUBOXONE(R)
Tablet, SUBUTEX(R) Tablet, buprenorphine and our competitors, among
other issues. We are in the process of responding by producing
documents and other information in connection with this on-going
investigation, and in preliminary discussion about a possible
resolution of the investigation. We are cooperating fully with the
relevant agencies and prosecutors and will continue to do so.
FTC Investigation Antitrust Litigation, Connecticut Subpoena
-- The Judge overseeing the legal privilege dispute in the FTC
investigation has appointed a Special Master (an independent
external lawyer) to investigate the claims of legal privilege and
provide a recommendation to the Court on how the documents at issue
should be treated. An initial report and recommendation relating to
the first tranche of privileged documents reviewed by the Special
Master was finalized in April 2016 and adopted by the Court on
August 1(st) , 2016. Pursuant to this report and the Court's order,
Indivior produced certain additional documents. A second tranche of
documents remains under review. Following that review, the Court's
decision then may be subject to appeal by either party.
-- Fact discovery is continuing in the antitrust class action
litigation described on our Annual Report ("Class Action
Litigation"). Plaintiffs allege, among other things, that Indivior
violated federal and state antitrust laws by attempting to delay
generic entry of alternatives to SUBOXONE tablets, and plaintiffs
further allege that Indivior unlawfully acted to lower the market
share of these generic products.
-- Amneal Pharmaceuticals LLC, a manufacturer of generic
buprenorphine / naloxone tablets, filed a complaint against the
Company in December 2015. This case has been coordinated with the
Class Action litigation. Amneal's complaint contains antitrust
allegations similar in nature to those set out in the class action
complaints, and Amneal has also alleged violations of the Lanham
Act.
-- On September 22, 2016, 35 states and the District of Columbia
filed a complaint against the Company in the same district where
the Class Action and Amneal litigation is pending. The States'
complaint is similar to the other pending complaints, and alleges
violations of state and federal antitrust and consumer protection
laws. On October 25, 2016, the Company was informed that the States
plan to amend their complaint to add six additional states as
plaintiffs. This lawsuit relates to the investigation conducted by
various states, as discussed in previous filings.
-- On October 12, 2016, the Company was served with a subpoena
for records from the state of Connecticut Office of the Attorney
General under its Connecticut civil false claims act authority. The
subpoena requests documents related to the Company's marketing and
promotion of SUBOXONE(R) products and its interactions with a
non-profit third party organization. The Company is cooperating in
this investigation.
ANDA Litigation
-- The ruling after trial against Actavis and Par in the lawsuit
involving the Orange Book-listed patents for Suboxone(R) Film
issued on June 3(rd) , 2016. Ruling found the asserted claims of
the '514 patent valid and infringed; the asserted claims of the
'150 patent valid but not infringed; and the asserted claims of the
'832 patent invalid, but found that certain claims would be
infringed if they were valid.
-- Based on the ruling as to the '514 patent, Actavis and Par
are currently enjoined from launching a generic product. Par has
appealed and Actavis is expected to appeal this ruling. The
generics have also moved to reopen the judgment based on a more
stringent claim construction in the Teva case. In light of the
motions to reopen, Par's appeal has been deactivated until the
District Court rules on the motions, and the deadline for Actavis
to file a notice of appeal has been postponed.
-- Trial against Dr. Reddy's, Actavis and Par in the lawsuits
involving the process patent (US Patent No. 8,900,497) scheduled
for November 16(th) and 21(st) -23(rd) , 2016.
-- Trial against Dr. Reddy's in the lawsuit involving the Orange
Book-listed patents for Suboxone(R) Film scheduled for November
7(th) , 16(th) , and 21(st-) -23(rd) , 2016, with Dr. Reddy's
30-month stay of FDA approval on ANDA No. 20-5806 expiring April
17(th) , 2017. Indivior believes Dr. Reddy's 30-month stay of FDA
approval on ANDA No. 20-5299 also expires on April 17(th) , 2017,
however, Dr Reddy's disputes the applicability of the stay to this
ANDA.
-- Trial against Alvogen in the lawsuit involving the Orange
Book-listed patents and the '497 process patent for Suboxone(R)
Film originally scheduled for April 2017 is expected to be
rescheduled to a date later in the year, with Alvogen's 30-month
stay of FDA approval expiring October 29(th) , 2017.
-- By a Court order dated August 22(nd) , 2016, Indivior's
Suboxone(R) Film patent litigation against Sandoz has been
dismissed without prejudice because Sandoz is no longer pursuing
Paragraph IV certifications for its proposed generic formulations
of Suboxone(R) film.
-- Trial against Mylan in the lawsuit involving the Orange
Book-listed patents for Suboxone(R) Film is scheduled for September
25(th) , 2017, with Mylan's stay expiring March 24, 2018.
-- Indivior received a Paragraph IV notification from Teva,
dated February 8, 2016, indicating that Teva had filed a 505(b)(2)
New Drug Application (NDA) for a 16mg/4mg strength of
Buprenorphine/naloxone sublingual film. The Indivior Group and Teva
agreed that infringement by Teva's 16 mg/4 mg dosage strength will
be governed by the infringement ruling on the accused 8 mg/2 mg
dosage strength in its ANDA currently scheduled for trial in
November 2016.
-- The USPTO declined to institute Teva's petitions for inter
partes review of the three Orange Book-listed patents on procedural
grounds.
-- Dr. Reddy's has filed an inter partes review petition on each
of the three Orange Book Patents. These petitions are substantively
similar to those filed by Teva.
-- Certain claims of the '832 patent were found invalid in an
IPR proceeding, a decision that has been affirmed by the Court of
Appeals for the Federal Circuit.
-- In the event of a ruling in these matters that none of the
claims of the asserted patents are valid and infringed by the
ANDA-filers, and should there be FDA approval of one or more of the
ANDAs and subsequent commercial launch of generic SUBOXONE(R) film,
and pipeline products fail to obtain regulatory approval, there is
the likelihood that revenues and operating profits of the Company
will decline. In these circumstances the Directors believe they
would be able to take the required steps to reduce the cost base,
however this would result in a significant change to the structure
of the business.
IRS Notice on Manufacturing Deductions
In August 2015 the IRS issued notices of a proposed adjustment
for the disallowance of certain manufacturing deductions claimed by
the Company following its audit of 2011 and 2012 income tax years.
During the 4th quarter of 2015, the Company was notified by the IRS
of their intention to audit 2013 and 2014 income tax years and have
since been notified that the IRS intend to disallow these claims in
2013 and 2014 audit cycle. The Company will appeal the proposed
disallowance. The Company has evaluated its positions with respect
to these claims and has provided $19m tax reserve for amounts
claimed on all open periods as its best estimate of its expected
settlement position for this issue.
8. TRADE AND OTHER PAYABLES
September December
30 31
2016 2015
$m $m*
------------------------------- --- ---------- ---------
Sales returns and rebates (335) (287)
Trade payables (19) (27)
Accruals (212) (202)
Other tax and social security
payables (27) (12)
Total (593) (528)
------------------------------------ ---------- ---------
*The December 31 2015 balances have been adjusted to correct a
prior period classification between Trade payables and
Accruals.
Customer return and rebate accruals, primarily in the US, are
provided for by the Group at the point of sale in respect of the
estimated rebates, discounts or allowances payable to customers.
Accruals are made at the time of sale but the actual amounts paid
are based on claims made some time after the initial recognition of
the sale. As the amounts are estimated they may not fully reflect
the final outcome and are subject to change dependent upon, amongst
other things, the channel (e.g. Medicaid, Medicare, Managed Care,
etc) and product mix. The level of accrual is reviewed and adjusted
quarterly in the light of historical experience of actual rebates,
discounts or allowances given and returns made and any changes in
arrangements. Future events could cause the assumptions on which
the accruals are based to change, which could affect the future
results of the Group.
9. SHARE CAPITAL
Equity Nominal
Ordinary Issue value
Shares price $m
----------------------- ------------ ------- --------
Issued and fully paid
At January 1, 2016 718,577,618 $0.10 72
Allotments 2,019,948 $0.10 -
At September 30, 2016 720,597,566 $0.10 72
------------------------ ------------ ------- --------
Equity Nominal
Ordinary Issue value
Shares price $m
------------------------- ------------ -------- --------
Issued and fully paid
At January 1, 2015 718,577,618 $2.00 1,437
Nominal value reduction - ($1.90) (1,365)
At September 30, 2015 718,577,618 $0.10 72
-------------------------- ------------ -------- --------
The holders of ordinary shares (par value $0.10) are entitled to
receive dividends as declared from time to time and are entitled to
one vote per share at general meetings of Indivior PLC.
The initial shareholders resolved, by a special resolution,
passed on October 30, 2015, to reduce Indivior PLC's share capital
by decreasing the nominal value of each Indivior Ordinary Share
from $2.00 to $0.10. This created distributable reserves on the
balance sheet that will provide Indivior with, among other things,
capacity for the payment of future dividends.
As required under section 645 of the Companies Act 2006, the
High Court of Justice has confirmed the reduction of the Company's
share capital. Following the registration of the Order of the Court
with the Companies House, the Capital Reduction became effective on
January 21, 2015.
Allotment of ordinary shares
During the year, 2,019,948 ordinary shares (2015: nil) were
allotted to satisfy vestings/exercises under the Group's Long Term
Incentive Plan.
10. RELATED PARTIES
Subsequent to the demerger from former parent, RB, on December
23, 2014, Indivior continues to receive certain services like
office space rental and other operational services on commercial
terms and on an arm's length basis. Adrian Hennah, the RB CFO,
served on the Indivior PLC Board of Directors until the AGM on May
11(th) , 2016. The amount included within SD&A in respect of
these services is $5m.
11. POST BALANCE SHEET EVENTS
There have been no material post balance sheet events.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors declare that, to the best of their knowledge:
-- This condensed set of interim financial statements, which
have been prepared in accordance with IAS 34 "Interim Financial
Reporting" as adopted by the European Union, 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 required pursuant to regulations 4.2.7 and 4.2.8 of the
Disclosure Guidance and Transparency Rules (DTR)
The Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Indivior's Directors are listed in the Annual Report and
Accounts for 2015; with the following exceptions:
Adrian Hennah, who stepped down as a Director on May 11,
2016
Rupert Bondy, who stepped down as a Director on September 30,
2016,
Lizabeth Zlatkus, who joined the Board as a Director on
September 1, 2016
There have been no other changes in the period.
Details of all current Directors are available on our website at
www.indivior.com
By order of the Board
Shaun Thaxter Cary J. Claiborne
Chef Executive Officer Chief Financial Officer
November 1, 2016
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
quarterly financial report of Indivior PLC for the 3 and 9 month
period ended 30 September 2016. 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 International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Rules and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Emphasis of Matter - going concern
In forming our conclusion on the interim financial statements,
which is not modified, we have considered the adequacy of the
disclosure made in note 1 to the interim financial statements
concerning the Group's ability to continue as a going concern. As
more fully stated in note 7 the Group is involved in investigations
by the Department of Justice and the Federal Trade Commission as
well as antitrust litigation. An amount of $220m has been
established as a reserve for potential settlement for all of these
matters . The amount accepted in the final agreed settlement might
be materially different from this reserve. This could impact the
Group's ability to operate, which would be further adversely
impacted should revenues decline and pipeline products fail to
obtain regulatory approval, all of which could mean the Group
cannot continue in business without taking necessary measures to
reduce its cost base and improve its cash flow. As such, this
indicates a material uncertainty that may cast significant doubt on
the Group's ability to continue as a going concern. However, the
Directors believe that they are able to carry out the necessary
measures and that that the Group can continue as a going concern
for the foreseeable future. Accordingly, the Directors continue to
adopt the going concern basis for accounting in preparing these
financial statements which do not include any adjustments that
might result from the outcome of this uncertainty.
Emphasis of matter - outcome of litigation
Without modifying our conclusion on the interim financial
statements, we draw your attention to note 1 that describes the
uncertain outcome of the ongoing ANDA patent litigation over
Suboxone Film. In the event of a negative ruling against the Group,
and should there be a regulatory approval and subsequent commercial
launch of generic Suboxone Film, and pipeline products fail to
obtain regulatory approval there is the likelihood that revenues
and operating profits may decline. In these circumstances the
Directors believe they would be able to take the required steps to
reduce the cost base, however this would result in a significant
change to the structure of the business. As a result of this
decline and extent of its impact, the Directors would consider a
change in the structure of the business and methods to reduce its
cost base, as also described in note 7.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated interim balance sheet as at 30 September 2016;
-- the condensed consolidated interim income statement and condensed consolidated statement of comprehensive income for the three and nine month periods then ended;
-- the condensed consolidated interim statement of cash flows
for the nine month period then ended;
-- the condensed consolidated interim statement of changes in
equity for the nine month period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the quarterly
financial report have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the Disclosure
Rules and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The quarterly financial report, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the
quarterly financial report in accordance with the Disclosure Rules
and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the quarterly financial report based on our
review. This report, including the conclusion, has been prepared
for and only for the company for the purpose of complying with the
Disclosure Rules and Transparency Rules 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.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. 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
Ireland) 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 quarterly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
1 November 2016
a) The maintenance and integrity of the Indivior PLC website is
the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the interim financial statements since
they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Condensed cons. interim income statement (Adjusted)
Unaudited Unaudited Unaudited Unaudited
Q3 Q3 9 Months 9 Months
2016 2015 2016 2015
ADJUSTED Notes $m $m $m $m
-------------------------- ------ ---------- ---------- ---------- ----------
Net Revenues 2 268 249 799 766
Cost of Sales (24) (24) (67) (72)
Gross Profit 244 225 732 694
Selling, distribution
and administrative
expenses 3 (113) (109) (330) (288)
Research and development
expenses 3 (29) (36) (87) (91)
-------------------------- ------ ---------- ---------- ---------- ----------
Operating Profit 102 80 315 315
-------------------------- ------ ---------- ---------- ---------- ----------
Finance expense (12) (16) (39) (47)
-------------------------- ------ ---------- ---------- ---------- ----------
Net finance expense (12) (16) (39) (47)
-------------------------- ------ ---------- ---------- ---------- ----------
Profit before taxation 90 64 276 268
Taxation 4 (19) (14) (71) (72)
Net income 71 50 205 196
-------------------------- ------ ---------- ---------- ---------- ----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRTUURARNWAARAA
(END) Dow Jones Newswires
November 02, 2016 08:00 ET (12:00 GMT)
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