TIDMINDV
RNS Number : 9372E
Indivior PLC
15 February 2018
http://www.rns-pdf.londonstockexchange.com/rns/9372E_-2018-2-14.pdf
February 15, 2018
Full Year 2017 Adjusted Financial Results In-Line with
Guidance.
Period to December Q4 Q4 % % FY FY % %
31st
2017 2016 Actual Constant 2017 2016 Actual Constant
$m $m FX FX $m $m FX FX
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Net Revenue 265 259 +2 +1 1,093 1,058 +3 +3
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Operating (Loss)/Profit (115) 71 * * 193 149 +30 +25
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Net (Loss)/Income (145) 78 * * 58 35 +66 +57
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
(Loss)/EPS (cents
per share) (20) 11 * * 8 5 +60 +57
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Adjusted Operating
Profit(1) 70 72 -3 -9 403 387 +4 +3
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Adjusted Net Income(1) 54 49 +10 +7 270 254 +6 +5
------------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Adjusted EPS(1) 7 7 +10** +7 37 35 +6 +5
========================= ====== ====== ======== ========== ====== ====== ======== ==========
(1) Adjusted basis excludes the impact of exceptional items as
referenced in Notes 3, 4 and 5.
* Not meaningful. **Due to rounding.
This Release Contains Inside Information.
The Group increased its provision for investigative and
antitrust litigation matters to $438m. Because these matters are in
various stages, Indivior cannot predict with any certainty the
ultimate resolutions, costs, or timing of the ultimate resolution
of any of the matters. The final aggregate settlement amount may be
materially different from this provision. The Group continues in
discussions with the Department of Justice about a possible
resolution to its investigation. The Group cannot predict with any
certainty whether it will reach an ultimate resolution with the
Department of Justice or any or all of the parties to the other
matters referred to under the Litigation Update on Page 6.
Full Year 2017 Financial Highlights
-- Net revenue at $1,093m (FY 2016: $1,058m) increased 3% on a
reported basis (3% at constant exchange). The increase was
primarily due to stronger US market growth and growth in Rest of
World (ROW) that was partially offset by share loss to generic
competition in price sensitive US payors, unfavorable mix from
increased US Medicaid business and continued tactical rebating in
the US.
-- Operating profit was $193m (FY 2016: $149m) reflecting the
impact of exceptionals in both periods. On an adjusted basis,
excluding $210m of exceptional items in FY 2017 and $238m in FY
2016, FY 2017 operating profit grew 4% to $403m (FY 2016 adj.:
$387m). The improvement was primarily due to increased sales and
lower R&D expenses, partially offset by increased pre-launch
investments for SUBLOCADE(TM) and RBP-7000.
-- Net income was $58m (FY 2016: $35m) reflecting the impact of
exceptionals discussed above as well as one-off refinancing costs,
a non-cash charge of $15m related to US tax reform and other tax
adjustments. On an adjusted basis, FY 2017 net income grew 6% to
$270m (FY 2016 adj.: $254m).
-- Indivior entered into an amendment and extension with various
lenders to provide replacement term loans that improve the Group's
overall financial flexibility; the new arrangements feature a
reduced interest coupon, an extended maturity and more favorable
covenants.
-- Cash balance at period end was $863m (FY 2016: $692m). Net cash was $376m (FY 2016: $131m).
Full Year 2017 Operating Highlights
-- US market growth rate in FY 2017 improved to low double-digits levels.
-- SUBOXONE(R) Film market share averaged 57% in FY 2017 (FY
2016: 61%), exiting the year at 56% (FY 2016: 61%) primarily due to
ongoing generic tablet competition in the most price sensitive US
payors (Managed Medicaid).
-- SUBLOCADE(TM) became the first once-monthly buprenorphine
long-acting injection delivery system approved by FDA for the
treatment of moderate-to-severe opioid use disorder (OUD); US
launch scheduled for the week of February 26, 2018.
-- FDA accepted NDA for RBP-7000, a once-monthly risperidone
long-acting injection for the treatment of schizophrenia; PDUFA
date of July 28, 2018 established; setting up new business
unit.
-- Indivior entered into a strategic collaboration with Addex
Therapeutics on January 3, 2018 that includes exclusive global
license rights to their GABA(B) positive allosteric modulator
program.
-- Indivior initiated an appeals process against Dr. Reddy's
after the US District Court for the District of Delaware found
asserted claims of Patent Nos. '150, '514 and '497 valid but not
infringed by Dr. Reddy's proposed generic buprenorphine/naloxone
film. The appeal is progressing in the Federal Circuit Court of
Appeals.
-- Indivior took additional actions to secure its intellectual
property position by reaching a settlement with Mylan, including
the termination of their inter partes review (IPR), and is
asserting its new Orange Book-listed patents covering SUBOXONE(R)
Film, US Patent Nos. 9,687,454 (the '454 patent) and 9,855,221 (the
`221 patent), against the other abbreviated new drug application
(ANDA) filers.
-- The Group continues in active discussions with the various
governmental and other entities about possible resolutions to their
investigative and antitrust litigation matters. Please see pages 6
to 9 for a comprehensive Litigation Update.
FY 2018 Guidance
-- FY 2018 guidance: net revenue of $1,130m-$1,170m and net
income in a range of $290m-$320m, excluding exceptional items and
at constant FX.
-- FY 2018 net revenue guidance assumes the following:
o No material changes in current market conditions in the US,
chiefly that an 'at risk' launch of a generic
buprenorphine/naloxone film product will not take place during the
year;
o Intensifying competitive pressure in ROW due to continued
healthcare austerity measures and increased competition in Europe,
partially offset by continued growth in Australasia; and,
o Initial net revenue expectations for SUBLOCADE(TM), which as
previously indicated by Indivior are likely to be relatively modest
in the early stages of launch.
-- FY 2018 net income guidance assumes the following:
o Strategic investments to drive organic growth priorities
(SUBLOCADE(TM) and RBP-7000), increase access to treatment for OUD
patients and to support continued compliance enhancements;
o Finance expense benefits from the recently replaced term loan
facilities; and,
o A high-teens effective tax rate from the recently enacted
(effective January 1, 2018) tax law change in the US, along with
the Group's existing tax position.
Comment by Shaun Thaxter, CEO of Indivior PLC
"2017 was a year of significant accomplishment for Indivior,"
said Shaun Thaxter, CEO of Indivior. "By executing strongly across
the business, we continued to build our leadership position in
treating addiction and its co-occurrences. On an operational basis,
we maintained our growth trajectory against a strong US market
backdrop, we raised our financial guidance at the half-year stage,
and we delivered improved bottom-line results that were in-line
with our raised expectations. Additionally, we took major steps to
mitigate enterprise risk, including our ongoing effort to settle
outstanding litigation, for which we took a further provision, and
by making additional investments in our internal compliance systems
and processes. We also reduced financial risk by replacing legacy
loans with new obligations that enhance our overall financial
flexibility. Furthermore, our R&D organization delivered on its
key objectives with the FDA approval of SUBLOCADE(TM) for
moderate-to-severe OUD and the successful NDA submission for
RBP-7000 targeting schizophrenia.
"We face the future with enthusiasm and we are guiding to
another year of top- and bottom-line growth in 2018," said Thaxter.
"We look forward to launching SUBLOCADE(TM) later this month, and
we continue to expect peak annual net sales of at least $1 billion.
We are also excited about the potential for RBP-7000 based on the
unmet needs we see in schizophrenia. We are establishing a new,
stand-alone business unit to launch this asset in the fourth
quarter of 2018, assuming approval, and we target peak annual net
sales of $200 to $300 million.
"Our 2017 achievements have continued to de-risk our business,
enhance our compliance programs, and placed Indivior on a solid
path to deliver long-term shareholder value," concluded
Thaxter.
Full Year 2017 Operating Review
US Market Update
The market for buprenorphine products continued to grow strongly
in 2017, resulting in low double-digit percentage volume growth in
FY 2017 versus FY 2016. Market growth continues to benefit from
legislative changes that have expanded OUD treatment capacity.
Growth in both the number of physicians waivered to administer
medication-assisted treatment and those able to treat to the new
allowable level of 275 patients (from 100 patients) continued in Q4
2017. In addition, the number of waivered nurse practitioners and
physician assistants continued to grow in Q4 2017.
SUBOXONE(R) Film had an average market share of 57% in 2017,
compared to 61% in 2016, and 2017 exit share was 56%, compared to
61% exiting 2016. The decline in share during 2017 was largely due
to continued competition in the most price sensitive payors that
have prioritized lower priced generic tablet options. Overall
commercial formulary access remains solid for SUBOXONE(R) Film. The
list price of SUBOXONE(R) Film in the US increased modestly in
January 2017, but this was offset by tactical rebating in
connection with maintaining formulary access.
FY 2017 & Q4 2017 Financial Performance
Total net revenue in FY 2017 increased 3% to $1,093m (FY 2016:
$1,058m) at actual exchange rates (3% at constant exchange rates).
In FY 2017, revenue grew primarily from low double-digit volume
improvement in the US, along with ROW growth from one-off net
revenue benefits in Europe and strong growth in Australasia and
Canada. These net revenue gains were partially offset by a decline
in US Suboxone(R) Film market share, while price in the US was
offset by tactical rebating activity in connection with formulary
access. Mix was also unfavorable from increased lower margin US
Medicaid business. Q4 2017 total net revenue increased 2% at actual
exchange rates (1% at constant exchange rates) to $265m (Q4 2016:
$259m).
FY 2017 US net revenue increased 2% to $877m (FY 2016: $857m)
and grew 1% in Q4 2017 to $207m (Q4 2016: $206m). In FY 2017,
volume benefits from increased market growth were partially offset
by a decline in SUBOXONE(R) Film market share in the most price
sensitive payors (Managed Medicaid). Pricing was offset by tactical
rebating activity, while mix was unfavorable from increased
Medicaid business. In Q4 2017, benefits from market growth and
wholesaler stocking were substantially offset by the share decline
in SUBOXONE(R) Film, while improved pricing was more than offset by
increased tactical rebating and unfavorable mix.
FY 2017 ROW net revenue increased 7% at actual exchange rates
(7% at constant exchange rates) to $216m (FY 2016: $201m). In Q4
2017, ROW net revenue increased 9% at actual exchange rates (2% at
constant exchange rates) to $58m (Q4 2016: $53m). In both the FY
2017 and Q4 2017 periods, continued growth in Australasia and
Canada and some one-off revenue benefits in Europe drove the
overall net revenue improvement.
FY 2017 gross margin was 90%, unchanged from last year (FY 2016:
90%). FY 2016 results include exceptional items of $11m related to
costs for negative ANDA outcome strategic planning. Excluding the
exceptional items last year, gross margin was 91%; the current year
did not include any exceptional items within gross margin. In Q4
2017, gross margin was 88% (Q4 2016: 89%). The modest decline in
both periods primarily reflects the geographic mix of net revenue,
reflecting the increased portion from Australasia and Canada which
is lower margin.
FY 2017 SD&A expenses increased 4% to $707m (FY 2016:
$683m). The periods include exceptional items of $210m and $227m,
respectively. FY 2017 SD&A included exceptional items of $185m
(booked in Q4 2017) for an increased legal provision related to
investigative and antitrust litigation matters partially offset by
the release of a legacy litigation reserve. Also included in FY
2017 was the legal settlement of the Amneal antitrust matter of
$25m (booked in Q2 2017). FY 2016 results included exceptional
items of $220m for a legal provision related to investigative and
antitrust litigation matters (booked in Q3 2016) and $7m reflecting
the costs of negative ANDA outcome strategic planning ($4m booked
in Q2 2016; $2m booked in Q3 2016; $1m booked in Q4 2016). On an
adjusted basis, FY 2017 SD&A expenses increased 9% to $497m (FY
2016 adj.: $456m). The increase primarily reflected the expected
pre-launch investments for SUBLOCADE(TM) and RBP-7000 and higher
legal expenses related to ongoing ANDA litigation activity and
related patent defense costs compared to the prior year.
Q4 2017 SD&A expenses increased 157% to $326m (Q4 2016:
$127m). Q4 2017 SD&A included total exceptional items of $185m
(Q4 2016: $1m), as described above. On an adjusted basis, Q4 2017
SD&A expenses increased 12% to $141m (Q4 2016 adj.: $126m). The
increase in underlying SD&A (excluding exceptionals) in Q4 2017
primarily reflected the expected pre-launch investments for
SUBLOCADE(TM) and RBP-7000, which were partially offset by lower
legal expenses compared to the prior period.
FY 2017 and Q4 2017 R&D expenses decreased by 25% to $89m
and by 31% to $22m, respectively (FY 2016: $119m; Q4 2016: $32m).
The decreases in both periods reflect lower clinical activity as
key pipeline assets either have entered the commercial phase
(SUBLOCADE(TM)) or have been successfully submitted to FDA for
approval (RBP-7000).
FY 2017 operating profit of $193m increased 30% over the prior
year (FY 2016: $149m). Exceptional items of $210m and $238m are
included in the FY 2017 and FY 2016 results, respectively. On an
adjusted basis, FY 2017 operating profit was $403m (37% margin), a
4% increase versus $387m (37% margin) in FY 2016. The underlying
year-over-year improvement, which excludes exceptionals, primarily
reflects the benefit of higher net sales and lower R&D
expenses, partially offset by expected pre-launch investments for
SUBLOCADE(TM) and RBP-7000, as well as higher legal expenses
related to ongoing ANDA litigation activity and related patent
defense costs.
Q4 2017 operating loss was $115m, compared to an operating
profit in the prior year (Q4 2016: $71m). On an adjusted basis,
which excludes exceptional items totaling $185m, Q4 2017 operating
profit declined 3% to $70m versus the prior year on the same basis
(Q4 2016 adj. $72m). The decrease primarily reflects expected
pre-launch investments for SUBLOCADE(TM) and RBP-7000, which were
partially offset by lower legal and R&D expenses.
FY 2017 EBITDA (operating profit plus depreciation and
amortization) was $206m (FY 2016: $163m). Excluding $210m and $238m
of exceptional items in the current and year-ago period results,
respectively, FY 2017 adjusted EBITDA increased 4% to $416m (adj.
FY 2016: $401m).
FY 2017 net finance expense was $56m (FY 2016: $51m),
representing the interest and amortization on the Group's term loan
borrowing facility, which was slightly offset by modest interest
income. FY 2017 interest expense also includes $14m of exceptional
costs related to the replacement term loan facilities. In December
2017, Indivior entered into an amendment and extension with various
lenders to provide replacement term loans in an aggregate principal
amount of approximately $487m, replacing all of the Group's U.S.
dollar and Euro denominated term loans outstanding under the
existing credit agreement. The new term loan facilities reduce the
Group's interest coupon to LIBOR plus 4.50% from LIBOR plus 6.00%.
The final maturity date has been extended by three years from
December 19, 2019 to December 18, 2022.
On an adjusted basis, FY 2017 net finance expense of $42m was
lower than the prior year resulting from the benefit of required
repayments during FY 2017. Q4 2017 net finance expense was $22m (Q4
2016: $12m), including exceptional costs described above. On
adjusted basis, Q4 2017 net finance expense was $8m.
FY 2017 tax charge was $79m, or a rate of 58% (FY 2016 tax
charge: $63m; 64% rate). FY 2017 tax charge reflects a $15m
one-time non-cash charge related to the lowering of the US
corporate income tax rate to 21%, requiring a revaluation of US
deferred tax assets and liabilities. FY 2017 also includes other
one-time items related to the release of uncertain tax provisions
of $24m upon close out of IRS tax audits. FY 2017 and FY 2016
full-year tax charge also assume non-deductibility for tax purposes
of the exceptional legal provisions. Excluding exceptional items in
FY 2017 pre-tax income and taxation totaling $12m (FY 2016: $19m),
the adjusted rate was 25% (FY 2016 adj.: 25%). Q4 2017 tax charge
was $8m (Q4 2016 credit: $19m), or a rate of 6% (Q4 2016: 32%).
There were no net exceptional items in Q4 2017. Q4 2017 tax rate
excluding exceptionals was 13%. Q4 2016 included exceptionals of
$30m (Q4 2016 adj.: 18%).
FY 2017 net income was therefore $58m (FY 2016: $35m) as
reported. Excluding exceptional costs, FY 2017 net income increased
6% to $270m (FY 2016 adj.: $254m). The current and year-ago annual
periods include a net amount of $212m and $219m of exceptional
items, respectively. In Q4 2017, net loss was $145m (Q4 2016 net
income: $78m). Excluding exceptional costs, net income for the most
recent quarter was $54m (Q4 2016 adj.: $49m). Q4 2017 and Q4 2016
include a net of $199m and $29m of exceptional items,
respectively.
FY 2017 basic EPS were 8 cents (FY 2016: 5 cents) and 8 cents on
a diluted basis (FY 2016: 5 cents). On an adjusted basis, excluding
the effect of exceptional items, FY 2017 basic EPS were 37 cents
(FY 2016: 35 cents) and diluted EPS were 36 cents (FY 2016: 34
cents).
Balance Sheet & Cash Flow
Net working capital (inventory plus trade and other receivables,
less trade and other payables) was negative $335m at the end of FY
2017, an increase of $55m from negative $390m in FY 2016 primarily
driven by an increase in receivables and inventory.
Cash and cash equivalents at the end of FY 2017 were $863m,
reflecting an increase of $171m in 2017 (FY 2016: $692m).
Borrowings, net of issuance costs, were $482m at the end of FY 2017
(FY 2016: $535m), reflecting required repayments. Consequently, net
cash stood at $376m at the end of FY 2017 (FY 2016: $131).
Cash generated from operations in FY 2017 was $369m (FY 2016:
$512m), a decrease of $143m primarily due to the investment in
working capital driven by a smaller movement in trade payables
compared to the prior year.
FY 2017 net cash inflow from operating activities was $295m (FY
2016: $407m), reflecting the lower cash from operations and lower
tax payments of $33m in the year compared to $63m last year.
Cash outflow from investing activities increased $8m to $43m.
The increase was primarily related to additional investments in the
Group's R&D facilities.
R&D / Pipeline Update
Treatment of Opioid Use Disorder (OUD)
-- SUBLOCADE(TM) (once-monthly buprenorphine long-acting injection):
- FDA approval November 30, 2017.
- Commercial launch in the US expected for the week of February 26, 2018.
- Patient-reported outcomes (PROs) study from open-label,
long-term safety and tolerability study of SUBLOCADE(TM) in 669
treatment-seeking subjects with OUD (NCT# 02510014): Findings to be
presented at the 49(th) Annual Conference of the American Society
of Addiction Medicine (ASAM), April 12-15, 2018, San Diego,
California.
- RECOVER Study (REmission from Chronic Opioid Use: Studying
EnVironmental and socioEconomic factors on Recovery): Baseline data
have been submitted for peer-reviewed publication and 12-month
top-line data will be available by December 31, 2018.
- Post Marketing Requirement (PMR) and Commitment (PMC) studies
undergoing planning and draft protocol phases.
- Regulatory submissions in Canada, Australia and Europe currently being prepared.
- SUBLOCADE(TM) addition to the List of Drugs for an Urgent
Public Need for the Canadian correctional service facilities on
December 28, 2017.
-- SUBOXONE(R) Film: SUBOXONE(R) Film addition to the List of
Drugs for an Urgent Public Health Need in British Columbia on June
28, 2017 and for the Canadian correctional service facilities on
December 28, 2017. Regulatory submission currently being
prepared.
-- SUBOXONE(R) Tablet China: Submission of NDA to Chinese FDA
(CFDA) on December 27, 2016. Priority Review granted by CFDA June
6, 2017. NDA review ongoing.
Treatment of Schizophrenia
-- RBP-7000, Monthly Long-Acting Risperidone: NDA filing
accepted by FDA on December 12, 2017. PDUFA date of July 28, 2018.
Planning for Q4 2018 launch.
Treatment of Alcohol Use Disorder (AUD)
-- Arbaclofen Placarbil: All three parts of the Phase I Bioavailability Clinical Study Protocol (INDV-AP-102) of a new formulation of Arbaclofen Placarbil are now completed. Preparation for Type C meeting with the FDA to discuss next steps for the development of Arbaclofen Placarbil for AUD-induced liver disease with cirrhosis.
Treatment of Stimulant Use Disorder (SUD)
-- Creation of Joint Research Committee with Addex Therapeutics
to drive the development of ADX71441 and the research activities
for lead identification of new positive allosteric modulators at
the GABA(B) receptor.
Other Key Events 2017
-- Completion and inauguration of extension of Indivior R&D
facilities in Fort Collins (CO, USA) (1,700m(2) /18,500Ft(2) ) and
new R&D Center of Excellence in Hull (UK) (5,000m(2)
/54,000Ft(2) ) on July 25, 2017 and August 22, 2017,
respectively.
-- Additional dosage strengths (SUBOXONE(R) 12mg/3mg and
16mg/4mg sublingual tablets) approved by Health Canada on Sep 1(st)
, 2017.
-- NALSCUE(R) (intranasal naloxone) MAA approval in France on July 28, 2017.
-- 6 peer-reviewed publications and 12 Conference abstracts to
support SUBLOCADE(TM) and RBP-7000.
Key R&D Dates H1 2018
American Association for the Treatment of Opioid Dependence
(AATOD): March 10 to 14, New York City
American Society for Clinical Pharmacology and Therapeutics
(ASCPT): March 21 to 24, Orlando, Florida
American Society of Addiction Medicine (ASAM): April 12 to 15,
San Diego, California
American College of Preventive Medicine (ACPM): May 23 to 26,
Chicago, IL
College on Problems of Drug Dependence (CPDD): June 9 to 14, San
Diego, CA
American Association of Nurse Practitioners (AANP): June 26 to
July 1, Denver, CO
Litigation Update
The Group increased its provision for investigative and
antitrust litigation matters to $438m. Because these matters are in
various stages, Indivior cannot predict with any certainty the
ultimate resolutions, costs or timing of the resolutions of any of
the matters. The final aggregate settlement amount may be
materially different from this provision. The Group continues in
discussions with the Department of Justice about a possible
resolution to its investigation. The Group cannot predict with any
certainty whether it will reach an ultimate resolution with the
Department of Justice or any or all of the parties to the other
matters noted below under State Subpoenas and FTC Investigation and
Antitrust Litigation.
Department of Justice Investigation
-- A U.S. 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. The Group continues in discussions with the
Department of Justice about a possible resolution to its
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.
State Subpoenas
-- On October 12th, 2016, Indivior 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 Group's marketing and
promotion of SUBOXONE(R) products and its interactions with a
non-profit third-party organization. On November 16th, 2016,
Indivior was served with a subpoena for records from the State of
California Department of Insurance under its civil California
insurance code authority. The subpoena requests documents related
to SUBOXONE(R) Film, SUBOXONE(R) Tablet, and SUBUTEX(R) Tablet. The
State has served additional deposition subpoenas on Indivior in
2017. The Group is fully cooperating in these civil
investigations.
FTC investigation and Antitrust Litigation
-- The U.S. Federal Trade Commission's investigation remains
pending. Litigation regarding privilege claims has now been
resolved. Indivior has produced certain documents that it had
previously withheld as privileged; other such documents have not
been produced.
-- Fact discovery is continuing in the antitrust class action
litigation. Plaintiffs allege, among other things, that Indivior
violated U.S. federal and state antitrust laws in attempting to
delay generic entry of alternatives to SUBOXONE(R) tablets, and
plaintiffs further allege that Indivior unlawfully acted to lower
the market share of these products.
-- Amneal Pharmaceuticals LLC (Amneal), a manufacturer of
generic buprenorphine / naloxone tablets, alleged antitrust
violations similar in nature to those alleged in the class action
complaints, and Amneal also alleged violations of the U.S. Lanham
Act. The Company has settled the dispute with Amneal, and Amneal
has dismissed its claims against the Company with prejudice.
-- A group of states, now numbering 41, and the District of
Columbia filed suit against Indivior in the same district where the
antitrust class action litigation is pending. The States' complaint
is similar to the other antitrust complaints, and alleges
violations of U.S. state and federal antitrust and consumer
protection laws. This lawsuit relates to the antitrust
investigation conducted by various states, as discussed in previous
filings. Discovery has been coordinated with the antitrust class
action litigation.
ANDA Litigation and Inter Partes Review
-- The ruling after trial against Actavis and Par in the lawsuit
involving the Orange Book-listed patents for SUBOXONE(R) Film
issued on June 3rd, 2016. The 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. In an August 31st, 2017 ruling, the
Court denied motions of Actavis and Par to reopen the June 2016
judgment.
-- Based on the ruling as to the '514 patent, Actavis and Par
are currently enjoined from launching a generic product until April
2024. Par and Actavis have appealed this ruling, and Indivior has
filed notices of cross-appeal. On October 24th, 2017 Actavis
received tentative approval from FDA for at least its 8 mg/2 mg
generic product under ANDA 204383 and on November 15th, 2017 it
received tentative approval for its 12 mg/3 mg generic product
under ANDA 207087. A tentative approval does not allow the
applicant to market the generic drug product and postpones the
final approval until all patent/exclusivity issues have been
resolved. Actavis therefore remains enjoined by the Delaware court
ruling.
-- Trial against Dr. Reddy's, Actavis and Par in the lawsuits
involving the process patent (U.S. Patent No. 8,900,497) took place
on November 16th and 21st - 23rd, 2016. Trial against Dr. Reddy's
in the lawsuit involving two of the Orange Book-listed patents for
SUBOXONE(R) Film (U.S. Patent Nos. 8,017,150 and 8,603,514) took
place on November 7th, 16th, and 21st - 23rd, 2016. The rulings in
these trials issued on August 31st, 2017. The rulings found the
asserted claims of the '497, '514, and '150 patents valid but not
infringed. Teva had filed a 505(b)(2) New Drug Application (NDA)
for a 16 mg/4 mg strength of buprenorphine/naloxone film. The
parties had agreed that infringement by Teva's 16 mg/4 mg dosage
strength would be governed by the infringement ruling as to Dr.
Reddy's 8 mg/2 mg dosage strength that was the subject of the trial
in November 2016; therefore, the non-infringement ruling in the Dr.
Reddy's case means that the Teva 16 mg/4 mg dosage strength has
been found not to infringe. Indivior has appealed the Dr. Reddy's
and Teva rulings.
-- Dr. Reddy's 30-month stay of FDA approval expired on April
17th, 2017. So far as Indivior is aware, FDA to date has not
granted tentative or final marketing authorization to Dr. Reddy's
generic SUBOXONE(R) Film alternative.
-- If FDA were to grant final approval to Dr. Reddy's (or Teva
for the 16 mg / 4 mg strength of buprenorphine/naloxone film) this
would enable them to market a generic film alternative to
SUBOXONE(R) Film in the U.S. However, any market launch by Dr.
Reddy's (or by Teva) before the court of appeals renders its
decision would be on an "at risk" basis because Indivior would have
a claim for damages against Dr. Reddy's (or Teva) if Indivior
ultimately prevails after any appeal.
-- Trial against Alvogen in the lawsuit involving the '514
Orange Book-listed patent and the '497 process patent for
SUBOXONE(R) Film took place on September 26th - 27th, 2017. Trial
was limited to the issue of infringement because Alvogen did not
challenge the validity of either patent. The 30-month stay of FDA
approval of Alvogen's Abbreviated New Drug Application was set to
expire October 29th, 2017. Alvogen agreed not to launch until March
29th, 2018 or until it receives a favourable ruling from the
District Court. That agreement has been extended until April 19th,
2018 in light of a 3-week extension of the post-trial briefing
schedule.
-- By a Court order dated August 22nd, 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.
-- On September 25th, 2017, Indivior settled its SUBOXONE(R)
Film patent litigation in District Court against Mylan.
-- Mylan filed a petition seeking an inter partes review (IPR)
of the '514 and '497 patents. On May 12th, 2017, the US Patent
& Trademark Office decided to institute the '514 IPR
proceedings. On September 29th, 2017, Mylan and MonoSol submitted
joint motions to terminate the '514 and '497 IPRs in light of the
parties' settlement of their disputes in the District Court
litigation. On October 6th, 2017 the Patent Board terminated both
the '514 and '497 IPR proceedings as to MonoSol and Mylan. Dr.
Reddy's and Par had filed petitions and motions in June 2017 to
join the Mylan '514 IPR proceeding. On October 20th, 2017 the
Patent Board refused to institute IPR proceedings and dismissed Dr.
Reddy and Par's petitions.
-- Since August 2017, Indivior received Paragraph IV Notice
letters from Actavis, Par, Alvogen, Mylan, and Dr. Reddy's for
Indivior's recently granted '454 patent. Indivior has filed suit
against Alvogen, Dr. Reddy's, Par, and Teva in the District of New
Jersey; and against Actavis in the District of Utah. Par has filed
a corresponding declaratory judgment action in the District of
Virginia. Motions to transfer to another District are pending in
all the cases. Although a complaint against Mylan was filed in the
District of West Virginia, it was dismissed in light of the
parties' settlement of their disputes in the Delaware District
Court litigation.
-- Indivior has in February 2018 filed suit against Dr. Reddy's,
Actavis, Par, Alvogen and Teva for infringement of US Patent No.
9,855,221 (the '221 patent), which is listed in the FDA's Orange
Book and relates to certain polymer film compositions having a
substantially uniform distribution of active drug.
-- In the event that one or more of the generic companies are
successful in their patent challenges on a final non-appealable
basis, and should there be FDA approval of one or more of the ANDAs
and subsequent commercial launch of generic SUBOXONE(R) Film,
including the potential on an 'at-risk' basis, and the Group's
pipeline products, including SUBLOCADE(TM), fail to launch
successfully or obtain regulatory approval, there is the likelihood
that revenues and operating profits of the Group will significantly
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.
Rhodes Pharmaceuticals
-- On December 23rd, 2016 Rhodes Pharmaceuticals filed a
complaint against Indivior in the District of Delaware, alleging
that Indivior's sale of SUBOXONE(R) Film in the U.S. infringes one
or more claims of a patent. The asserted patent, which was issued
in June 2016 traces back to an application filed in August 2007.
Indivior believes this claim is without merit and will continue to
vigorously defend this action.
Estate of John Bradley Allen
-- On December 27th, 2016, the Estate of John Bradley Allen
filed a civil complaint against Indivior, among other parties, in
the Northern District of New York seeking relief under
Connecticut's products liability and unfair trade practices
statutes for damages allegedly caused by SUBOXONE(R). Indivior
believes this lawsuit is without merit and will continue to
vigorously defend this action.
Risk Factors
The Board of Directors have carried out a robust assessment to
ensure that the principal risks, including those that would
threaten the Group's business model, future performance, solvency
or liquidity are effectively managed and/or mitigated to help
ensure the Group is viable. While the Group aims to identify and
manage such risks, no risk management strategy can provide absolute
assurance against loss.
Set out below are what the Group considers to be the principal
risks that could cause the Group's business model, future
performance and solvency or liquidity to differ materially from
expected and historical results, and how the risks relate to the
Group's strategic priorities. Additional risks, not listed here,
that the Group cannot presently identify or does not believe to be
equally significant, may materially and adversely affect the
business, results of operations and financial position. The
principal risk factors and uncertainties are not listed in order of
significance.
Business operations and business continuity
-- The Group's revenues are expected to be primarily derived from sales of SUBOXONE(R) Film and SUBLOCADE(TM) 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 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 could subject the Group to litigation.
-- The Group has a single source of supply for buprenorphine, an
active ingredient in the Group's products including SUBOXONE(R)
Film, and any disruption to this source of supply could
significantly affect the Group's results, operations, and
prospects.
-- Indivior utilizes contract manufacturers for SUBOXONE(R) Film and SUBLOCADE(TM) and material interruptions could impact the Group's results, operations, and prospects.
Product liability, regulation and 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 under Litigation Update on pages 6-9 referring to the
current status of the Department of Justice and Federal Trade
Commission investigations, state subpoenas, antitrust litigation,
ANDA litigation and Inter Partes Reviews, as well as the contingent
liabilities disclosures on pages 22-24, 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.
Specifically, see disclosures under Litigation Update on pages
{6-9} referring to the current status of the Department of Justice
and Federal Trade Commission investigations, state subpoenas,
antitrust litigation, ANDA litigation and Inter Partes Reviews, as
well as the contingent liabilities disclosures on pages 22-24, note
7.
-- As previously disclosed in the Prospectus dated November 17,
2014, Indivior has indemnification obligations in favour of RB
(page 43). The demerger agreement between Indivior and Reckitt
Benckiser ("RB") has certain mutual indemnification provisions in
respect of any claims and expenses of or incurred by any company
within the Indivior Group or the RB Group arising out of or
associated with the Indivior Business prior to the Demerger
(whether or not in the ordinary course of business) and in respect
of certain tax liabilities that may arise after, or as part of, the
Demerger. Some of these indemnities are unlimited in terms of
amount and duration, and amounts potentially payable by the
Indivior Group pursuant to such indemnity obligations could be
significant and could have a material adverse effect on the
Indivior Group's business, financial condition and/or operating
results. Requests for indemnification may be subject to legal
challenge.
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.
-- SUBLOCADE(TM) requires a very different reimbursement and
logistics system that is unfamiliar for current OUD prescribing
physicians. A significant amount of revenue could be dependent upon
HCP offices learning and adopting these new processes so that they
are able to prescribe SUBLOCADE(TM).
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 each
of which could have a material adverse impact on the business,
prospects, results of operations and financial condition.
Specifically, see disclosures under Litigation Update on page {6-9}
referring to the current status of the DOJ investigation and other
investigative and anti-trust litigation matters involving the
Group, as well as the contingent liabilities disclosures on pages
22-24, note 7. The Group has taken steps to enhance its compliance
capability to handle the expected growth in the business, and will
continue to monitor changing compliance requirements due to growth,
changes in the business, and changing regulatory requirements.
Acquisitions and business development
-- The Group may seek to acquire businesses or products as part
of its strategy to enhance its current portfolio.
Product Safety
-- The pharmacovigilance process has been established to monitor
the safety of the Group's products in a comprehensive and thorough
manner. This includes capturing safety-related data from multiple
sources (e.g. Medical Information Unit (MIU), market research,
literature search and clinical trials) and entering all adverse
events received into a safety database. The Group reports to health
authorities across the globe within the required and mandatory
timelines and identifies safety signals with an assessment of
changes to benefit/risk profile and determines actions needed to
optimize the safe and effective use of our products, including
communicating any relevant changes to key stakeholders.
The Group's annual report for the 2017 financial year contains
additional detail on these principal business risks together with a
report on risk appetite.
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:
FY 2017 FY 2016
----------------------- -------- --------
GB GBP period end 1.3513 1.2340
----------------------- -------- --------
GB GBP average rate 1.2881 1.3579
----------------------- -------- --------
EUR Euro period end 1.2001 1.0519
----------------------- -------- --------
EUR Euro average rate 1.1287 1.1070
----------------------- -------- --------
Webcast Details
There will be a presentation at 12pm UK time (7am Eastern in the
USA) hosted by Shaun Thaxter, CEO. This presentation will also be
webcast live. The details are below and are available on the
Indivior's website at www.indivior.com.
Webcast link: https://edge.media-server.com/m6/p/es78akq6
Confirmation Code: 8967922
Participants, Local - London, United Kingdom: +44(0)330 336 9105
Participants, Local - New York, United
States of America: +1 646 828 8156
For Further Information
Investor Enquiries Jason Thompson VP Investor Relations, +1 804 423 8916
Indivior PLC jason.thompson@indivior.com
Media Enquiries Jonathan Sibun Tulchan Communications +44 207 353 4200
US Media Inquiries +1 804 594 0836
Indiviormediacontacts@indivior.com
Corporate Website www.indivior.com
This announcement does not constitute an offer to sell, or the
solicitation of an offer to subscribe for or otherwise acquire or
dispose of shares in the Group to any person in any jurisdiction to
whom it is unlawful to make such offer or solicitation.
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 harbor 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 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 include, among
other things, statements regarding the Indivior Group's financial
guidance for 2018 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 Indivior Group's 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, including the ongoing
investigative and antitrust litigation matters; 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; 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.
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 healthcare
providers qualified under the Drug Addiction Treatment Act.
Important Safety Information
Do not take SUBOXONE(R) Film if you are allergic to
buprenorphine or naloxone as serious negative effects, including
anaphylactic shock, have been reported.
SUBOXONE(R) Film can be abused in a manner similar to other
opioids, legal or illicit.
SUBOXONE(R) Film contains buprenorphine, an opioid that can
cause physical dependence with chronic use. Physical dependence is
not the same as addiction. Your healthcare provider can tell you
more about the difference between physical dependence and drug
addiction. Do not stop taking SUBOXONE(R) Film suddenly without
talking to your healthcare provider. You could become sick with
uncomfortable withdrawal symptoms because your body has become used
to this medicine.
SUBOXONE(R) 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 (i.e., sedatives,
tranquilizers, or alcohol). It is extremely dangerous to take
nonprescribed benzodiazepines or other medications that act on the
nervous system while taking SUBOXONE(R) Film.
You should not drink alcohol while taking SUBOXONE(R) Film, as
this can lead to loss of consciousness or even death.
Death has been reported in those who are not opioid
dependent.
Your healthcare provider may monitor liver function before and
during treatment.
SUBOXONE(R) Film is not recommended in patients with severe
hepatic impairment and may not be appropriate for patients with
moderate hepatic impairment. However, SUBOXONE(R) 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(R) Film out of the sight and reach of children.
Accidental or deliberate ingestion of SUBOXONE(R) Film by a child
can cause severe breathing problems and death.
Do not take SUBOXONE(R) Film before the effects of other opioids
(eg, heroin, hydrocodone, methadone, morphine, oxycodone) have
subsided as you may experience withdrawal symptoms.
Injecting the SUBOXONE(R) Film product may cause serious
withdrawal symptoms such as pain, cramps, vomiting, diarrhea,
anxiety, sleep problems, and cravings.
Before taking SUBOXONE(R) Film, tell your healthcare provider if
you are pregnant or plan to become pregnant. If you are pregnant,
tell your healthcare provider as withdrawal signs and symptoms
should be monitored closely and the dose adjusted as necessary. If
you are pregnant or become pregnant while taking SUBOXONE(R) Film,
alert your healthcare provider immediately and you should report it
using the contact information provided below.
Opioid--dependent women on buprenorphine maintenance therapy may
require additional analgesia during labor.
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(R) Film, talk to your healthcare provider
if you are breastfeeding or plan to breastfeed your baby. The
active ingredients of SUBOXONE(R) Film can pass into your breast
milk. You and your healthcare provider should consider the
development and health benefits of breastfeeding along with your
clinical need for SUBOXONE(R) 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(R) Film affects
you. Buprenorphine in SUBOXONE(R) Film can cause drowsiness and
slow reaction times during dose-adjustment periods.
Common side effects of SUBOXONE(R) 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(R) Film. Please see full Prescribing
Information www.suboxoneREMS.com.
for a complete list.
*To report pregnancy or side effects associated with taking
SUBOXONE(R) 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(R) 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.
INDICATION AND USAGE
SUBLOCADE(TM) is indicated for the treatment of moderate to
severe opioid use disorder in patients who have initiated treatment
with a transmucosal buprenorphine-containing product followed by a
dose adjustment period for a minimum of seven days.
SUBLOCADE(TM) should be used as part of a complete treatment
program that includes counseling and psychosocial support.
WARNING: RISK OF SERIOUS HARM OR DEATH WITH INTRAVENOUS ADMINISTRATION;
SUBLOCADE(TM) RISK EVALUATION AND MITIGATION STRATEGY
* Serious harm or death could result if administered
intravenously. SUBLOCADE(TM) forms a solid mass upon
contact with body fluids and may cause occlusion,
local tissue damage, and thrombo-embolic events,
including life threatening pulmonary emboli, if
administered intravenously.
* Because of the risk of serious harm or death that
could result from intravenous self-administration,
SUBLOCADE(TM) is only available through a restricted
program called the SUBLOCADE(TM) REMS Program.
Healthcare settings and pharmacies that order and
dispense SUBLOCADE(TM) must be certified in this
program and comply with the REMS requirement.
----------------------------------------------------------------------------
IMPORTANT SAFETY INFORMATION
Prescription use of this product is limited under the Drug
Addiction Treatment Act.
CONTRAINDICATIONS
SUBLOCADE(TM) should not be administered to patients who have
been shown to be hypersensitive to buprenorphine or any component
of the ATRIGEL(R) delivery system
WARNINGS AND PRECAUTIONS
Addiction, Abuse, and Misuse: SUBLOCADE(TM) contains
buprenorphine, a Schedule III controlled substance that can be
abused in a manner similar to other opioids. Monitor patients for
conditions indicative of diversion or progression of opioid
dependence and addictive behaviors.
Respiratory Depression: Life threatening respiratory depression
and death have occurred in association with buprenorphine. Warn
patients of the potential danger of self-administration of
benzodiazepines or other CNS depressants while under treatment with
SUBLOCADE(TM).
Neonatal Opioid Withdrawal Syndrome: Neonatal opioid withdrawal
syndrome is an expected and treatable outcome of prolonged use of
opioids during pregnancy.
Adrenal Insufficiency: If diagnosed, treat with physiologic
replacement of corticosteroids, and wean patient off of the
opioid.
Risk of Opioid Withdrawal With Abrupt Discontinuation: If
treatment with SUBLOCADE(TM) is discontinued, monitor patients for
several months for withdrawal and treat appropriately.
Risk of Hepatitis, Hepatic Events: Monitor liver function tests
prior to and during treatment.
Risk of Withdrawal in Patients Dependent on Full Agonist
Opioids: Verify that patient is clinically stable on transmucosal
buprenorphine before injecting SUBLOCADE(TM).
Treatment of Emergent Acute Pain: Treat pain with a non-opioid
analgesic whenever possible. If opioid therapy is required, monitor
patients closely because higher doses may be required for analgesic
effect.
ADVERSE REACTIONS
Adverse reactions commonly associated with SUBLOCADE(TM) (in
>=5% of subjects) were constipation, headache, nausea, injection
site pruritus, vomiting, increased hepatic enzymes, fatigue, and
injection site pain.
The full prescribing information, including BOXED WARNING, for
SUBLOCADE(TM) can be found here:
http://www.indivior.com/wp-content/uploads/2018/01/2018_01_12-CLEAN-USPI-SUBLOCADE.pdf
Condensed consolidated income statement
Unaudited Unaudited Unaudited Audited
Q4 Q4 FY FY
2017 2016 2017 2016
Notes $m $m $m $m
Net Revenues 2 265 259 1,093 1,058
Cost of Sales (32) (29) (104) (107)
Gross Profit 233 230 989 951
Selling, distribution and
administrative expenses 3 (326) (127) (707) (683)
Research and development expenses 3 (22) (32) (89) (119)
------------------------------------- ------ ---------- ---------- ---------- --------
Operating (Loss)/Profit (115) 71 193 149
------------------------------------- ------ ---------- ---------- ---------- --------
Operating profit before exceptional
items 70 72 403 387
Exceptional items 3 (185) (1) (210) (238)
------------------------------------- ------ ---------- ---------- ---------- --------
Net finance expense (22) (12) (56) (51)
------------------------------------- ------ ---------- ---------- ---------- --------
Net finance expense before
exceptional items (8) (12) (42) (51)
Exceptional items 3 (14) - (14) -
(Loss)/Profit before taxation (137) 59 137 98
------------------------------------- ------ ---------- ---------- ---------- --------
Income tax expense/(credit) (8) 19 (79) (63)
------------------------------------- ------ ---------- ---------- ---------- --------
Taxation before exceptional
items 4 (8) (11) (91) (82)
Exceptional items within taxation 4 - 30 12 19
------------------------------------- ------ ---------- ---------- ---------- --------
Net (Loss)/income (145) 78 58 35
------------------------------------- ------ ---------- ---------- ---------- --------
Earnings per ordinary share
(cents)
Basic earnings per share 5 (20) 11 8 5
Diluted earnings per share 5 (20) 10 8 5
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Unaudited Audited
Q4 Q4 FY FY
2017 2016 2017 2016
$m $m $m $m
----------------------------------- ---------- ---------- ---------- --------
Net (loss)/income (145) 78 58 35
Other comprehensive income
Items that may be reclassified
to profit or loss in subsequent
years:
Net exchange adjustments on
foreign currency translation 2 (2) 8 1
Other comprehensive income 2 (2) 8 1
Total comprehensive (loss)/income (143) 76 66 36
----------------------------------- ---------- ---------- ---------- --------
The notes are an integral part of these condensed consolidated
financial statements.
Condensed consolidated balance sheet
Unaudited Audited
2017 2016
Notes $m $m
ASSETS
Non-current assets
Intangible assets 92 83
Property, plant and equipment and other
assets 54 27
Deferred tax assets 4 58 109
Other receivables 15 -
219 219
Current assets
Inventories 52 41
Trade and other receivables 278 227
Current tax receivable 32 30
Cash and cash equivalents 6 863 692
1,225 990
Total assets 1,444 1,209
----------------------------------------- ------ ------------------------ --------
LIABILITIES
Current liabilities
Borrowings 6 (5) (101)
Provision for liabilities and charges (143) (219)
Trade and other payables 8 (665) (658)
Current tax liabilities 4 (41) (52)
----------------------------------------- ------ ------------------------ --------
(854) (1,030)
----------------------------------------- ------ ------------------------ --------
Non-current liabilities
Borrowings 6 (477) (434)
Provisions for liabilities and charges (316) (40)
(793) (474)
Total liabilities (1,647) (1,504)
----------------------------------------- ------ ------------------------ --------
Net liabilities (203) (295)
----------------------------------------- ------ ------------------------ --------
EQUITY
Capital and reserves
Share capital 9 72 72
Share premium 2 -
Other Reserves (1,295) (1,295)
Foreign currency translation reserve (14) (22)
Retained Earnings 1,032 950
----------------------------------------- ------ ------------------------ --------
Total equity (203) (295)
----------------------------------------- ------ ------------------------ --------
The notes are an integral part of these condensed consolidated
financial statements.
Condensed consolidated statement of changes in equity
Foreign
Currency
Share Share Other Translation Retained Total
Capital Premium Reserve Reserve Earnings equity
Audited $m $m $m $m $m $m
At January 1, 2016 72 - (1,295) (23) 967 (279)
---------------------------------- --------- --------- --------- ------------- ---------- --------
Comprehensive income
Net income - - - - 35 35
Other comprehensive income - - - 1 - 1
Total comprehensive income - - - 1 35 36
---------------------------------- --------- --------- --------- ------------- ---------- --------
Transactions recognised directly
in equity
Share-based plans - - - - 10 10
Deferred taxation on share-based
plans - - - - 7 7
Dividends paid - - - - (69) (69)
Total transactions recognised
directly in equity - - - - (52) (52)
---------------------------------- --------- --------- --------- ------------- ---------- --------
Balance at December 31, 2016 72 - (1,295) (22) 950 (295)
---------------------------------- --------- --------- --------- ------------- ---------- --------
Unaudited
---------------------------------- --------- --------- --------- ------------- ---------- --------
At January 1, 2017 72 - (1,295) (22) 950 (295)
---------------------------------- --------- --------- --------- ------------- ---------- --------
Comprehensive income
Net income - - - - 58 58
Other comprehensive income - - - 8 - 8
Total comprehensive income - - - 8 58 66
---------------------------------- --------- --------- --------- ------------- ---------- --------
Transactions recognised directly
in equity
Share-based plans - 2 - - 16 18
Deferred taxation on share-based
plans - - - - 8 8
Total transactions recognised
directly in equity - 2 - - 24 26
---------------------------------- --------- --------- --------- ------------- ---------- --------
Balance at December 31, 2017 72 2 (1,295) (14) 1,032 (203)
---------------------------------- --------- --------- --------- ------------- ---------- --------
The notes are an integral part of these condensed consolidated
financial statements.
Condensed consolidated cash flow statement
Unaudited Audited
2017 2016
For the twelve months ended December 31 $m $m
------------------------------------------------------ ---------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit 193 149
Depreciation and amortization 13 14
Share-based payments 16 10
Impact from foreign exchange movements 6 1
(Increase) in trade and other receivables (59) (27)
(Increase)/decrease in inventories (6) 4
Increase in trade and other payables 5 142
Increase in provisions 201 219
Cash generated from operations 369 512
Net financing costs (36) (42)
Transaction costs related to loan (5) -
Taxes paid (33) (63)
Net cash inflow from operating activities 295 407
------------------------------------------------------ ---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (30) (20)
Purchase of intangible assets (13) (15)
Net cash (outflow) from investing activities (43) (35)
------------------------------------------------------ ---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 487 -
Repayment of borrowings (573) (78)
Dividends paid - (69)
Proceeds from issuance of ordinary shares 2 -
Net cash (outflow) from financing activities (84) (147)
------------------------------------------------------ ---------- --------
Net increase in cash and cash equivalents 168 225
Cash and cash equivalents at beginning of the period 692 467
Exchange differences 3 -
Cash and cash equivalents at end of the period 863 692
------------------------------------------------------ ---------- --------
The notes are an integral part of these condensed consolidated
financial statements.
Notes to the condensed consolidated 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 financial statements
('Financial Statements'), reference to the 'Group' means the
Company and all its subsidiaries.
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, 2016. No standards or
interpretations have been adopted before the required
implementation date. The Group prepares its annual accounts in
accordance with International Financial Reporting Standards (IFRS)
and IFRS Interpretations Committee (IFRIC) 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 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, 2016, with the exception of changes
in estimates that are required in determining the provision for
income taxes for periods.
The 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, 2016. These
consolidated financial statements have been authorized for issue as
at February 14, 2018.
As disclosed in Note 7, the Group carries a provision of $438m
relating to the Department of Justice and Federal Trade Commission
investigations and antitrust litigation. The final settlement
amount may be materially different than this provision. 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 could not 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 measures that would be necessary 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 Act. For the Group's financial statements for the year ended
December 31, 2017, the auditors expect to issue (1) an emphasis of
matter dealing with the outcome of the Department of Justice and
Federal Trade Commission investigations and antitrust litigation
details of which are included above and in note 7; and (2) a
material uncertainty related to going concern section dealing with
the existence of a material uncertainty which may cast significant
doubt about the Group's ability to continue as a going concern in
relation to the Group's involvement in investigations by the
Department of Justice and the Federal Trade Commissions as well as
antitrust litigation, which would be further adversely impacted
should revenues decline, pipeline products fail to obtain
regulatory approval and if the uptake of SUBLOCADE(TM) is slower
than expected. The inclusion of the above in the auditors' report
would not represent a modification to the auditors' report.
The auditors issued an unqualified opinion and did not contain a
statement under section 498 of the Act on the Group's statutory
financial statements for the year ended December 31, 2016. Emphasis
of matters were included with respect to the outcome of the ANDA
litigation, as well as in respect of a material uncertainty which
may have cast doubt on the Group's ability to continue as a going
concern in relation to the Department of Justice and Federal Trade
Commission investigations and antitrust litigation. The auditors'
report on the Group's statutory financial statements for the year
ended December 31, 2016 was not modified in this respect.
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 Indivior Group
is engaged in a single business activity, which is the development,
manufacture and sale of buprenorphine-based prescription drugs for
treatment of opioid dependence. The CEO reviews financial
information on a geographic basis for evaluating financial
performance and allocating resources. The Group has a single
reportable 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 amortization, by country. Non-current
assets for this purpose consist of property, plant and equipment,
intangible assets, and other receivables. Revenues and non-current
assets for FY 2017 and 2016 were as follows:
Revenues from sale of goods:
Q4 Q4 FY FY
2017 2016 2017 2016
$m $m $m $m
--------------- ------ ------ ------ ------
United States 207 206 877 857
ROW 58 53 216 201
--------------- ------ ------ ------ ------
Total 265 259 1,093 1,058
--------------- ------ ------ ------ ------
Non-current assets:
2017 2016
$m $m
--------------- ----- -----
United States 68 64
ROW 93 46
--------------- ----- -----
Total 161 110
--------------- ----- -----
3. OPERATING COSTS AND EXPENSES
The table below sets out selected operating costs and expenses
information:
Q4 Q4 FY FY
2017 2016 2017 2016
$m $m $m $m
------------------------------------- ------ ------ ------ ------
Research and development expenses (22) (32) (89) (119)
------------------------------------- ------ ------ ------ ------
Marketing, selling and distribution
expenses (51) (42) (163) (144)
Administrative expenses (270) (81) (525) (520)
Depreciation and amortization (4) (2) (13) (14)
Operating lease rentals (1) (2) (6) (5)
------------------------------------- ------ ------ ------ ------
Total (326) (127) (707) (683)
------------------------------------- ------ ------ ------ ------
Exceptional Items (Pre-tax)
Q4 Q4 FY FY
2017 2016 2017 2016
$m $m $m $m
------------------------- ------ ------ ------ ------
Cost of sales - - - (11)
Legal expenses (185) - (210) (220)
Consulting costs - (1) - (7)
Financing costs (14) - (14) -
------------------------- ------ ------ ------ ------
Total exceptional items (199) (1) (224) (238)
------------------------- ------ ------ ------ ------
$210m of FY 2017 pre-tax exceptional items are for investigative
and antitrust litigation matters set out in Note 7. $14m of
financing costs are non-cash and relate to demerger debt issuance
costs written off early due to the debt restructuring. $238m of
pre-tax exceptional items in FY 2016 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.
4. TAXATION
In the year to December 2017, tax on total profits amounted to
$79m and represented a full year effective tax rate of 58% (2016:
64%). A benefit of $9m is included relating to a release of
provisions for unresolved tax matters, netted by the impact of the
re-measurement of deferred tax assets, and are exceptional. The
company also benefited by $3m for Research credits in both the US
and the UK. Excluding the impact of exceptional items, the
effective tax rate for the year ended December 31, 2017 is 25%
(2016: 25%). The prior year included exceptionals of $19m in the
full year and $30m in the quarter.
The Group's balance sheet at December 31, 2017 included a tax
payable liability of $41m, corporate tax receivable of $32m, and
deferred tax assets of $58m.
On December 22, 2017, the US Tax Cuts and Jobs Act (H.R. 1), the
tax reform bill (the "Act"), was signed into law. The Act includes
numerous changes in existing tax law, including a permanent
reduction in the federal corporate income tax rate from 35% to 21%.
The rate reduction takes effect on January 1, 2018. As a result of
the reduction of federal corporate income tax rates, the Group has
recorded a one-time non-cash charge to tax expense for the
revaluation of the Group's deferred tax assets of $15m.
The United Kingdom ('UK') decision to withdraw from the European
Union ('EU') could have a material effect on our taxes. The impact
of the withdrawal will not be known until both the EU and the UK
develop the exit plan and the related changes in tax laws are
enacted. We will adjust our current and deferred income taxes when
tax law changes related to the UK withdrawal are substantively
enacted and/or when EU law ceases to apply in the UK.
5. EARNINGS PER SHARE
Q4 Q4 FY FY
2017 2016 2017 2016
cents cents cents cents
------------------------------------- ------- ------- ------- -------
Basic earnings per share (20) 11 8 5
Diluted earnings per share (20) 10 8 5
Adjusted basic earnings per share 7 7 37 35
Adjusted diluted earnings per share 7 7 36 34
------------------------------------- ------- ------- ------- -------
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.
2017 2016
Weighted average number of shares thousands thousands
--------------------------------------- ------------ ------------
On a basic basis 721,126 719,875
Dilution for share awards and options 27,356 23,346
On a diluted basis 748,482 743,220
--------------------------------------- ------------ ------------
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 as
follows:
Q4 Q4 FY FY
2017 2016 2017 2016
$m $m $m $m
----------------------------------- ------ ------ ------ ------
Net (loss)/income (145) 78 58 35
Exceptional items 199 1 224 238
Tax effect of exceptional items 6 (1) (3) (6)
Exceptional items within taxation (6) (29) (9) (13)
----------------------------------- ------ ------ ------ ------
Adjusted net income 54 49 270 254
----------------------------------- ------ ------ ------ ------
6. FINANCIAL LIABILITIES - BORROWINGS
December December
31 31
2017 2016
Current $m $m
------------ --------- ---------
Bank loans (5) (101)
------------ --------- ---------
(5) (101)
------------ --------- ---------
December December
31 31
2017 2016
Non-current $m $m
------------- --------- ---------
Bank loans (477) (434)
------------- --------- ---------
(477) (434)
------------- --------- ---------
December December
31 31
2017 2016
Analysis of net cash $m $m
--------------------------- --------- ---------
Cash and cash equivalents 863 692
Borrowings* (487) (561)
Net cash at end of period 376 131
--------------------------- --------- ---------
*Borrowings reflects the outstanding principal amount drawn,
before respective issuance costs of $5m and $26m, respectively.
December December
31 31
2017 2016
Reconciliation of net cash/(debt) $m $m
---------------------------------------------- --------- ---------
The movements in the period were as follows:
Net cash/(debt) at beginning of period 131 (174)
Increase in cash and cash equivalents 171 225
Net repayment of borrowings and overdraft 86 78
Exchange adjustment (12) 2
Net cash at end of period 376 131
---------------------------------------------- --------- ---------
The net carrying value of current borrowings before issuance
costs and cash at bank, as well as trade receivables and trade
payables are assumed to approximate their fair values. The terms of
the loan in effect at December 31, 2017 are as follows:
Nominal Required Maximum
interest annual leverage
Currency margin Maturity repayments ratio
-------------------- ---------- ------------ ---------- ------------ ----------
LIBOR (1%)
Term loan facility USD + 4.5% 2022 1% 3.0
LIBOR (0%)
Term loan facility EUR + 4.5% 2022 1% 3.0
--------------------- ---------- ------------ --------- ------------ ----------
-- Nominal interest margin is calculated over 3m LIBOR subject
to the LIBOR floor.
-- The maximum leverage ratio is a financial covenant to
maintain net secured leverage below a specified maximum (Adjusted
net debt to Adjusted EBITDA ratio) which stands at 3.0x, following
the debt restructuring.
7. CONTINGENT LIABILITIES
The Group increased its provision for investigative and
antitrust litigation matters to $438m. Because these matters are in
various stages, Indivior cannot predict with any certainty the
ultimate resolutions, costs or timing of the resolutions of any of
the matters. The final aggregate settlement amount may be
materially different from this provision. The Group continues in
discussions with the Department of Justice about a possible
resolution to its investigation. The Group cannot predict with any
certainty whether it will reach an ultimate resolution with the
Department of Justice or any or all of the parties to the other
matters noted below under State Subpoenas and FTC Investigation and
Antitrust Litigation.
Department of Justice Investigation
-- A U.S. 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. The Group continues in discussions with the
Department of Justice about a possible resolution to its
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.
State Subpoenas
-- On October 12th, 2016, Indivior 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 Group's marketing and
promotion of SUBOXONE(R) products and its interactions with a
non-profit third-party organization. On November 16th, 2016,
Indivior was served with a subpoena for records from the State of
California Department of Insurance under its civil California
insurance code authority. The subpoena requests documents related
to SUBOXONE(R) Film, SUBOXONE(R) Tablet, and SUBUTEX(R) Tablet. The
State has served additional deposition subpoenas on Indivior in
2017. The Group is fully cooperating in these civil
investigations.
FTC investigation and Antitrust Litigation
-- The U.S. Federal Trade Commission's investigation remains
pending. Litigation regarding privilege claims has now been
resolved. Indivior has produced certain documents that it had
previously withheld as privileged; other such documents have not
been produced.
-- Fact discovery is continuing in the antitrust class action
litigation. Plaintiffs allege, among other things, that Indivior
violated U.S. federal and state antitrust laws in attempting to
delay generic entry of alternatives to SUBOXONE(R) tablets, and
plaintiffs further allege that Indivior unlawfully acted to lower
the market share of these products.
-- Amneal Pharmaceuticals LLC (Amneal), a manufacturer of
generic buprenorphine / naloxone tablets, alleged antitrust
violations similar in nature to those alleged in the class action
complaints, and Amneal also alleged violations of the U.S. Lanham
Act. The Company has settled the dispute with Amneal, and Amneal
has dismissed its claims against the Company with prejudice.
-- A group of states, now numbering 41, and the District of
Columbia filed suit against Indivior in the same district where the
antitrust class action litigation is pending. The States' complaint
is similar to the other antitrust complaints, and alleges
violations of U.S. state and federal antitrust and consumer
protection laws. This lawsuit relates to the antitrust
investigation conducted by various states, as discussed in previous
filings. Discovery has been coordinated with the antitrust class
action litigation.
ANDA Litigation and Inter Partes Review
-- The ruling after trial against Actavis and Par in the lawsuit
involving the Orange Book-listed patents for SUBOXONE(R) Film
issued on June 3rd, 2016. The 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. In an August 31st, 2017 ruling, the
Court denied motions of Actavis and Par to reopen the June 2016
judgment.
-- Based on the ruling as to the '514 patent, Actavis and Par
are currently enjoined from launching a generic product until April
2024. Par and Actavis have appealed this ruling, and Indivior has
filed notices of cross-appeal. On October 24th, 2017 Actavis
received tentative approval from FDA for at least its 8 mg/2 mg
generic product under ANDA 204383 and on November 15th, 2017 it
received tentative approval for its 12 mg/3 mg generic product
under ANDA 207087. A tentative approval does not allow the
applicant to market the generic drug product and postpones the
final approval until all patent/exclusivity issues have been
resolved. Actavis therefore remains enjoined by the Delaware court
ruling.
-- Trial against Dr. Reddy's, Actavis and Par in the lawsuits
involving the process patent (U.S. Patent No. 8,900,497) took place
on November 16th and 21st - 23rd, 2016. Trial against Dr. Reddy's
in the lawsuit involving two of the Orange Book-listed patents for
SUBOXONE(R) Film (U.S. Patent Nos. 8,017,150 and 8,603,514) took
place on November 7th, 16th, and 21st - 23rd, 2016. The rulings in
these trials issued on August 31st, 2017. The rulings found the
asserted claims of the '497, '514, and '150 patents valid but not
infringed. Teva had filed a 505(b)(2) New Drug Application (NDA)
for a 16 mg/4 mg strength of buprenorphine/naloxone film. The
parties had agreed that infringement by Teva's 16 mg/4 mg dosage
strength would be governed by the infringement ruling as to Dr.
Reddy's 8 mg/2 mg dosage strength that was the subject of the trial
in November 2016; therefore, the non-infringement ruling in the Dr.
Reddy's case means that the Teva 16 mg/4 mg dosage strength has
been found not to infringe. Indivior has appealed the Dr. Reddy's
and Teva rulings.
-- Dr. Reddy's 30-month stay of FDA approval expired on April
17th, 2017. So far as Indivior is aware, FDA to date has not
granted tentative or final marketing authorization to Dr. Reddy's
generic SUBOXONE(R) Film alternative.
-- If FDA were to grant final approval to Dr. Reddy's (or Teva
for the 16 mg / 4 mg strength of buprenorphine/naloxone film) this
would enable them to market a generic film alternative to
SUBOXONE(R) Film in the U.S. However, any market launch by Dr.
Reddy's (or by Teva) before the court of appeals renders its
decision would be on an "at risk" basis because Indivior would have
a claim for damages against Dr. Reddy's (or Teva) if Indivior
ultimately prevails after any appeal.
-- Trial against Alvogen in the lawsuit involving the '514
Orange Book-listed patent and the '497 process patent for
SUBOXONE(R) Film took place on September 26th - 27th, 2017. Trial
was limited to the issue of infringement because Alvogen did not
challenge the validity of either patent. The 30-month stay of FDA
approval of Alvogen's Abbreviated New Drug Application was set to
expire October 29th, 2017. Alvogen agreed not to launch until March
29th, 2018 or until it receives a favourable ruling from the
District Court. That agreement has been extended until April 19th,
2018 in light of a 3-week extension of the post-trial briefing
schedule.
-- By a Court order dated August 22nd, 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.
-- On September 25th, 2017, Indivior settled its SUBOXONE(R)
Film patent litigation in District Court against Mylan.
-- Mylan filed a petition seeking an inter partes review (IPR)
of the '514 and '497 patents. On May 12th, 2017, the US Patent
& Trademark Office decided to institute the '514 IPR
proceedings. On September 29th, 2017, Mylan and MonoSol submitted
joint motions to terminate the '514 and '497 IPRs in light of the
parties' settlement of their disputes in the District Court
litigation. On October 6th, 2017 the Patent Board terminated both
the '514 and '497 IPR proceedings as to MonoSol and Mylan. Dr.
Reddy's and Par had filed petitions and motions in June 2017 to
join the Mylan '514 IPR proceeding. On October 20th, 2017 the
Patent Board refused to institute IPR proceedings and dismissed Dr.
Reddy and Par's petitions.
-- Since August 2017, Indivior received Paragraph IV Notice
letters from Actavis, Par, Alvogen, Mylan, and Dr. Reddy's for
Indivior's recently granted '454 patent. Indivior has filed suit
against Alvogen, Dr. Reddy's, Par, and Teva in the District of New
Jersey; and against Actavis in the District of Utah. Par has filed
a corresponding declaratory judgment action in the District of
Virginia. Motions to transfer to another District are pending in
all the cases. Although a complaint against Mylan was filed in the
District of West Virginia, it was dismissed in light of the
parties' settlement of their disputes in the Delaware District
Court litigation.
-- Indivior has in February 2018 filed suit against Dr. Reddy's,
Actavis, Par, Alvogen and Teva for infringement of US Patent No.
9,855,221 (the '221 patent), which is listed in the FDA's Orange
Book and relates to certain polymer film compositions having a
substantially uniform distribution of active drug.
-- In the event that one or more of the generic companies are
successful in their patent challenges on a final non-appealable
basis, and should there be FDA approval of one or more of the ANDAs
and subsequent commercial launch of generic SUBOXONE(R) Film,
including the potential on an 'at-risk' basis, and the Group's
pipeline products, including SUBLOCADE(TM), fail to launch
successfully or obtain regulatory approval, there is the likelihood
that revenues and operating profits of the Group will significantly
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.
Rhodes Pharmaceuticals
-- On December 23rd, 2016 Rhodes Pharmaceuticals filed a
complaint against Indivior in the District of Delaware, alleging
that Indivior's sale of SUBOXONE(R) Film in the U.S. infringes one
or more claims of a patent. The asserted patent, which was issued
in June 2016 traces back to an application filed in August 2007.
Indivior believes this claim is without merit and will continue to
vigorously defend this action.
Estate of John Bradley Allen
-- On December 27th, 2016, the Estate of John Bradley Allen
filed a civil complaint against Indivior, among other parties, in
the Northern District of New York seeking relief under
Connecticut's products liability and unfair trade practices
statutes for damages allegedly caused by SUBOXONE(R). Indivior
believes this lawsuit is without merit and will continue to
vigorously defend this action.
IRS Notice on Manufacturing Deductions
In 2015, the IRS issued notices of a proposed adjustment for the
disallowance of certain manufacturing deductions claimed by the
Group following its audit of the 2010 to 2014 income tax years. The
IRS audits for income tax years 2010 to 2014 have now been
completed and the company has accrued for all taxes due for the
agreed audit adjustments, and have no unagreed audit positions for
these periods. The company continues to maintain tax reserves for
uncertain tax positions in open tax periods.
8. TRADE AND OTHER PAYABLES
December December
31 31
2017 2016
$m $m
---------------------------------------- --------- ---------
Sales returns and rebates (433) (402)
Trade payables (40) (33)
Accruals (179) (212)
Other tax and social security payables (13) (11)
Total (665) (658)
---------------------------------------- --------- ---------
Sales 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 direct and
indirect customers. Accruals are made at the time of sale but 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
fully 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 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 value
shares $m
----------------------- ------------ --------
Issued and fully paid
At January 1, 2017 720,597,566 72
Allotments 865,167 -
At December 31, 2017 721,462,733 72
------------------------ ------------ --------
Equity Nominal
ordinary value
shares $m
----------------------- ------------ --------
Issued and fully paid
At January 1, 2016 718,577,618 72
Allotments 2,019,948 -
At December 31, 2016 720,597,566 72
------------------------ ------------ --------
Allotment of ordinary shares
During the period, 865,167 ordinary shares (2016: 2,019,948)
were allotted to satisfy vestings/exercises under the Group's Long
Term Incentive Plan and US Employee Stock Purchase Plan.
10. RELATED PARTIES
Indivior's former parent, Reckitt Benckiser Group PLC, was a
related party through 2016 as a result of certain transition
management agreements. During FY 2016, Indivior purchased certain
services such as office space rental and other operational services
on commercial terms and on an arm's length basis. The amount
included within administrative expenses in respect of these
services was $4m.
11. POST BALANCE SHEET EVENTS
Indivior entered into an agreement on January 3, 2018 to secure
exclusive global license rights to Addex Therapeutics' GABA(B)
positive allosteric modulator program. Under the terms of the
agreement, Indivior is making an upfront payment to Addex of $5m,
and will also invest in joint research efforts.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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