Indivior Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
July 27, 2023

There are 11 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Indivior Plc Half Year Results 2023 Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today, Jason Thompson.

Operator

Please go ahead.

Speaker 1

Thanks, Sharon, and good day, everyone. Before we begin, I need to remind everyone that on today's call, we may make forward looking statements that are subject to risks and uncertainties and that actual results may differ materially. We list the factors that may cause our results to be materially different On Slide 2 of our presentation, we also may refer to non GAAP measures, the reconciliations for which may be found in the appendix of this presentation and also at the back of our published press release. These Items are now posted on our website atindivior.com. I'll now turn the call over to Mark Crossley, our CEO.

Speaker 2

Thank you, Jason, and good morning and good afternoon, everyone, and thanks for joining to discuss our half year results. I'll start with some opening remarks, Review our progress against our strategic priorities. Christian will then provide a scientific update and then Ryan will wrap it up with details on our financial performance and our updated guidance before heading on to Q and A session. Turning to the key messages, it was another strong quarter of execution by the entire Indivior team, which keeps us on track to deliver the attractive Medium term growth profile we set out at our Capital Markets Day last December. Recall, this framework contemplates double digit net revenue CAGR and positive operating leverage.

Speaker 2

Looking first at the financials, our 2nd quarter results were above our expectations powered by another very good performance by SUBLOCADE. Total second quarter net revenue of $276,000,000 and adjusted operating profit of $71,000,000 grew by 25% 18% respectively versus the same period last year. On a half year basis, we were able to maintain our adjusted operating margin despite the incremental operating expenses from the Opiant acquisition. What stood out most to me about our performance was the solid contribution from all of the growth levers of our business. SUBLOCADE year over year growth of 58% in the quarter is certainly the headliner, But we also saw an encouraging acceleration in net revenue from PERSERIS.

Speaker 2

And on a constant currency basis, we delivered a 4th consecutive quarter of year over year growth in the Rest of World, driven by new products including SUBLOCADE, which is now delivering Double digit quarterly net revenue outside the United States. Our strong half year performance along with the outlook of the remainder of 2023, now lead us to raise our full year guidance for SUBLOCADE and total company net revenue as well as our adjusted operating profit. On top of our strong business performance, we achieved key strategic milestones in the quarter, which we expect will help secure our future growth potential. These included the successful integration of Opiant and the approval of its key asset, Opvie, which we're projecting to launch in the Q4 of this year. We also have integrated Opiant's Pipeline of assets for substance use disorders, which you'll hear a little more about from Christian during his scientific update.

Speaker 2

We also took a step forward in clearing the backlog of legacy litigation through partial settlement of the antitrust MDL litigation, something I will come back to in just a moment. And then lastly, we successfully affected the additional U. S. Listing of our shares in the NASDAQ Global Select Market. Turning to our report card and looking at our performance in a bit more detail.

Speaker 2

SUBLOCADE had a strong quarter with net revenue of $155,000,000 This represented growth of 58% year over year and 17 Expect SUBLOCADE to deliver net revenue in the range of $590,000,000 to $630,000,000 At the midpoint, this $30,000,000 increase would represent growth of 50% versus fiscal year 2022. This performance continues to be driven by the of our strategy to focus on and invest behind our organized health systems. In the quarter, we saw increased breadth and depth of prescribing in each of our targeted organized health systems subsegments, including large private health systems, federal healthcare systems and the U. S. Justice System.

Speaker 2

Focusing for a moment on the U. S. Justice System, it's still early days for us in this important subcategory. To date, we've accessed approximately 275 of the top 1,000 priority Justice facilities we've targeted in the U. S.

Speaker 2

However, the Justice system is our fastest growing sub segment and now represents 10% of total SUBLOCADE net revenue. Encouragingly, we're seeing growth across all 3 major Justice System customer groups, federal, state and local systems. The success of our OHS strategy has taken the number of SUBLOCADE patients above the 100,000 milestone for the first time. This is an important milestone, but still only represents about 3.5% of the 3,100,000 people diagnosed with opioid use disorder in the U. S.

Speaker 2

Showing just how much more work there is still to be done. Finally, The elimination of DATA 2000 waiver as part of our as part of the mainstreaming Addiction Treatment Act now offers the potential to administer SUBLOCADE at alternate sites of care. In other words, outside the prescriber's office at qualified off-site locations. In response, we're working with Albertsons Companies, one of the largest food and drug retailers in the U. S.

Speaker 2

With over 1700 in store U. S. Pharmacies, 700 of which are now involved in this program across 15 states. If this proves beneficial for patients and health We would assess targeted incremental investment to accelerated growth as this initiative should make prescribing SUBLOCADE An option for offices that are smaller or have less resources. It's just another step in allowing for treatment choice based solely on scientific merits.

Speaker 2

To conclude on SUBLOCADE, our strong second quarter performance speaks to the continued successful execution against our strategy with this groundbreaking treatment for patients with moderate to severe opioid use disorder. When we then layer on top the favorable funding and legislative backdrop, This supports our expectation of delivering a $1,000,000,000 net revenue run rate for SUBLOCADE as we exit 2025 and ultimately our $1,500,000,000 plus net revenue goal. Turning to diversification and starting with PERSERIS, we're seeing benefits from our expanded national field force in terms of increasing awareness of PERSERIS among behavioral health treatment providers. 2nd quarter net revenue growth was strong year over year, but importantly and as expected, We saw healthy renewed sequential growth in the quarter after some destocking in the Q1. Looking at the Rest of World business, It's encouraging to report another quarter of growth.

Speaker 2

We continue to face challenges in Europe to our legacy tablet business, But this has been more than offset by the introduction of our new differentiated products SUBLOCADE and SUBOXONE Film. Most recently, we've launched SUBLOCADE in Germany and we're pleased to gain U. K. Approval earlier this month. We expect these contrasting Overall dynamics to continue.

Speaker 2

And as a reminder, our expected double digit growth CAGR for the medium term includes modest growth in the rest of world. Of course, the new news in the quarter in terms of diversification was the approval of OTVI, our new opioid overdose rescue medication. We're pleased with the FDA approved label given it specifically mentions synthetic opioids, which as you know are now the main cause of Opioid Related Overdoses. Our launch plans are underway. The opv.com splash page is live.

Speaker 2

Our digital marketing strategy has kicked off And we're making outreach across public and private entities to help ensure maximum access, all in anticipation of going into the market with product in the Q4. We've not yet announced pricing yet, but we recognize the innovation Opdiv brings to the market while also considering the broad access that we will seek for this important new product. We continue to expect modest net revenue in 2023 Given the Q4 launch timing with peak net revenue of $150,000,000 to $250,000,000 Looking at the pipeline, Christian will provide a more fulsome update at the conclusion of my remarks. That said, I must say, I'm pleased to report that the timelines for our key assets And post marketing studies are all on track. Finally, turning to our 4th strategic pillar, optimizing our operating model.

Speaker 2

We achieved important milestones in the quarter that we expect will enhance both value and create greater certainty for shareholders. First, we successfully delivered the additional listing of our shares on NASDAQ. We expect the listing to generate significant benefits for Indivior, including increased awareness among U. S. Investors and securities analysts and most importantly, increasing awareness of OUD treatment overall.

Speaker 2

2nd, we remain on track for final validation and commencement of commercial supply at our 2nd long acting injectable manufacturing site in the second half of 2023. Before turning over to Christian, I want to update you on the status of our antitrust Multi District Litigation, where we've been actively pursuing our strategy of seeking resolution at the right value through mediation. As you know, we were able to reach settlement agreement with the states and the District of Columbia and we paid the $102,500,000 settlement amount last month, which is in line with the existing provision. To date, we've been unable to reach settlement With the remaining two classes of plaintiffs, but we remain open to settlement at the right value And the trial has now been scheduled to start in late October. We've updated our disclosures to reflect this progress as well as the proximity of the trial.

Speaker 2

Our adjusted provision of $187,500,000 continues to be our best estimate for settlement purposes with the remaining claimants. As a reminder, our overriding goal is to continue to create greater certainty for Indivior's stakeholders. While clear progress has been made, these matters are ongoing and we cannot predict with any certainty whether we'll be able to reach settlement with the remaining classes and continue to caution That the final aggregate costs could be materially different. Before handing over to Christian, Let me close out this section by saying the team continues to execute well and deliver strong financial results and we're making good progress in advancing each of our strategic priorities. With that as an opening, I'll turn it over to Christian for his scientific update.

Speaker 3

Thank you, Mark, and good morning, good afternoon, everyone. Our contribution to SUBLOCADE success He's focused and will continue to focus on breaking barriers to treatment access by creating new evidence through 4 strategic pillars. First, we have initiated 5 Phase 4 studies aiming at addressing knowledge gaps in the area of SUBLOCADE rapid induction, Patients of populations that may benefit from the 300 milligram maintenance dose, alternate injection sites, Long term recovery outcomes, treatment cessation guidance and comparative effectiveness with other medications for the treatment of opioid use disorder. We also launched a platform called ROAD for data integration and sharing with the scientific and medical communities. 2nd, we are pursuing 4 long term collaboration studies to understand the long term outcomes of SUBLOCADE treatment, its differentiation versus current standard of care and the journey towards recovery.

Speaker 3

3rd, We have launched a broad range of real world evidence studies with 21 work streams along three themes: Health disparity, recovery and harm reduction. 4th, 9 Sponsored studies are supporting research areas of interest, including high risk opioid overdose patients, Patients in the criminal justice system, rapid initiation in different treatment settings, comorbidities and the long term efficacy and safety. Our intranasal nalmefene product, AbbVie, as you know, was approved by the FDA on May 22 this year for the emergency treatment of known All suspected overdose induced by natural or synthetic opioids in adults and pediatric patients aged 12 years and older. We are currently planning the implementation of post marketing studies, including pediatric studies as well as development reproductive toxicity studies on DDM, the nasal absorption enhancer in the formulation. An enhanced pharmacovigilance request is also being implemented.

Speaker 3

On the next slide, you can see that we are making significant progress with our pipeline in Opioid Use Disorder, Alcohol Use Disorder, Cannabis Use Disorder and acute cannabinoid overdose. First, our selective orexin 1 receptor antagonist for the treatment of opioid use disorder, INDV2000 is on track to complete the multiple ascending dose study with the last subject, the last visit At the end of the Q3 of this year and the preparation of an end of Phase 1 meeting with the FDA in the Q4 of this year. Supportive clinical and non clinical studies as well as tablet formulation development and manufacturing are currently ongoing. In the alcohol use disorder space, we are expecting preliminary data from a Phase II trial on our intranasal naltrexone INDV1000 has led to the characterization of 2 new lead molecules. A decision for lead selection is on track for the end of the In the cannabis use disorder space, our strategic collaboration with Aelis Pharma for the development of The AEF-one hundred and seventeen is progressing as planned.

Speaker 3

The estimated last subject last The visit for the Phase IIb trial is in the Q1 of next year with a final clinical study report in the Q3 of next year. In the meantime, other CMC, chemistry manufacturing controls, non clinical toxicology and clinical work streams are progressing as planned. Finally, the development of Drinabant for the treatment of acute cannabinoid overdose is on track towards INND enabling activities With support from Grant from NIH and Katz. On the last slide, I would like to draw your attention to a seminal paper that was published By Ailes Pharma in the journal Nature Medicine, which summarizes the entire development of AEF-eleven seventeen from its Inception all the way to the data generated in clinical Phase 1 and Phase 2a trials. Thank you.

Speaker 3

And let me hand it over Ryan for the financials update.

Speaker 4

Thanks, Christian, and good morning and good afternoon to everyone. Overall, I'm pleased to report another good quarter of execution and business momentum. We delivered very strong top line growth driven by SUBLOCADE and we grew our adjusted operating income versus the prior year despite absorbing a full quarter's worth of opening expenses. I'll now provide some more detail on the performance drivers in the quarter. Starting with top line, total net revenue of 276,000,000 reflected growth of 25% versus the year ago quarter, both on a reported basis and at constant exchange rates.

Speaker 4

By geography, total U. S. Net revenue grew by 26% versus the prior year quarter, while the rest of the world was up 19% year over year and 20% excluding FX. Our rest of the world is benefiting from the launch of SUBLOCADE And SUBOXONE Film in new markets, as Mark discussed, as well as strong performance in more established markets, particularly Canada. SUBLOCADE net revenue outside of the U.

Speaker 4

S. Grew 67% year over year to $10,000,000 in the quarter. Total SUBLOCADE net revenue of $155,000,000 for the Q2 of 2023 was stronger than what we had expected. Sequential net revenue growth for SUBLOCADE was 17%. I would note that based on the timing of the July 4 U.

Speaker 4

S. Holiday, There was stocking in the low single digits late in the quarter that we expect to gradually unwind in Q3. U. S. Dispensers were up 16% sequentially in the quarter and aligned with net revenue adjusting for the stocking impact.

Speaker 4

Moving to PERSERIS. Net revenue of $11,000,000 was up 57% versus the prior year. Sequential growth of 38% was positively impacted by the destocking we highlighted in the Q1 of 2023. We continue to be encouraged by the performance we are seeing in PERSERIS on a number of internal metrics and are confident of reaching our net revenue guide of $45,000,000 to $55,000,000 for the full year. Turning to SUBOXONE Film.

Speaker 4

The average share of approximately 19 In the Q2 was flat compared with both the Q1 and the year ago quarter. I'll come back to the outlook for this product in a moment with my guidance discussion. But as a reminder, we do not promote SUBOXONE Film in the U. S. Moving down the P and L.

Speaker 4

Our 2nd quarter adjusted gross margin of 83% was similar to the prior year quarter, mainly reflecting improved product mix offset by inflationary impact. Adjusted SG and A expenses were $125,000,000 in the quarter, An increase of 17% versus Q2 of last year, reflecting the full quarter of added Opiant expenses, together with increased legal costs and inflationary impacts. R and D expenses were $32,000,000 in the quarter. The expected increase in R and D was primarily driven by the progression of SUBLOCADE studies and pipeline assets as well as activities relating to our additional contract manufacturing site. As Mark mentioned, We expect start up of this site in second half of twenty twenty three and are pleased with this extra supply and risk mitigation initiative.

Speaker 4

Our strong net revenue performance helped to absorb the Opiant and Opvii pre launch expenses that were added when we closed the transaction in early March. As a result, adjusted operating income of $71,000,000 in the 2nd quarter was up 18% versus the prior year's 60,000,000 You should note that we continue to expect Opiant Transaction to be accretive to earnings after the 2nd full year of the Opry launch. Lastly, on the P and L, our adjusted net income of $56,000,000 grew 24% in the second quarter versus last year, reflecting the dynamics I just highlighted. Quickly touching on the balance sheet and our capital position, We ended the Q2 with gross cash and investments of $782,000,000 During the first half, Positive operating earnings were offset by litigation related payments, including the antitrust MDL settlement of $102,500,000 in June. Lastly, taking a closer look at guidance.

Speaker 4

We are increasing total company full year 2023 net revenue guidance to $1,030,000,000 to 1.90 $1,000,000 from $970,000,000 to $140,000,000 primarily due to the strong performance of SUBLOCADE in the first half of twenty twenty three. For SUBLOCADE based on current performance trends, we are raising the full year 20 23 net revenue guidance to a range of $590,000,000 to $630,000,000 which represents a growth rate of 50% at the midpoint compared to full year 2022. With our gross margin and OpEx expectations unchanged with the opening expenses Added in the last guidance revision in Q1 2023, we now expect adjusted operating income to be higher than last year's performance of $212,000,000 For film, our guidance now assumes commercial availability of a 4th film generic in the U. S. At the start of Q4, whereas our previous guidance assumed this entry more in the mid-twenty 23 timeframe.

Speaker 4

As we have stated previously, we have no specific market intelligence as to exactly when or even if this generic will launch. In the event that the additional generic does not launch by the start of the Q4, we may choose to reinvest some of the net revenue upside and tactical commercial initiatives to accelerate the uptake and adoption of SUBLOCADE. Let me close by saying we are pleased with our execution and our financial results for the quarter. We believe our first half performance puts us solidly on track to deliver strong results in 2023. Importantly, we are confident that we can deliver our increased full year guidance.

Speaker 4

I would now turn the call back over to Mark.

Speaker 2

Thank you, Ryan. Sharon, I think we're now ready to take questions from the audience.

Operator

Thank We will now go to your first question. One moment please. And your first question comes from the line of James Vane Tempest from Jefferies. Please go ahead.

Speaker 5

Hi, good afternoon. Thanks for taking my questions. I have 3, if I may, please. Firstly, just curious the underlying earnings power of the business. If we were to kind of exclude Opiant and all the kind of the costs that are integrated, what The EBIT growth been in 2Q.

Speaker 5

My second question is, you've obviously seen Brixardi U. S. Approval. I was just kind of curious how you're viewing that product in the market as we get towards later in the year. You've obviously taken the decision to raise SUBLOCADE guidance, but I guess anything around How that could impact pricing or your strategy would be useful?

Speaker 5

And then the third question is just regarding the ongoing Disclosures, I guess, which you've made from a risk perspective. I was wondering how frequently is the risk language updated around going concern on a rolling 18 month view. And I was just wondering if either direct or end payers settle and does that remove essentially the going concern risk language? And if so, when could we see that? Thank you.

Speaker 2

Thanks for the questions, James. We don't carve out on a quarterly basis the impact Of Opiant, what I would say is, I think we did highlight an incremental cost factor within the year of about $50,000,000 That would ramp up through the year and into launch. So we just don't carve out at that level of detail. On BRXOTI, Listen, obviously, we do note, that they have been approved, and are expected to be in the market in the 4th quarter. I think questions with regards to their launch strategy and items of that matter are best left to the Braeburn team, as well as their partner Camrys.

Speaker 2

From our standpoint, I continue to kind of highlight there is such a huge Unmet need in this disease space, where only about 20% of patients actually get treatment That LAIs in this space are a huge opportunity. And even if our current updated guidance, we're still only talking About 3.5% of patients having access to SUBLOCADE. So there's plenty of room for multiple players. But what I will say We remain extremely proud of the differentiated profile that SUBLOCADE provides. It's one that's backed by 5 years of HCP End patient experience, it has SUBLOCADE has an immediate boost to therapeutic levels.

Speaker 2

They're Unique therapeutic levels that on the maintenance dose of 100 milligrams is over 2 nanograms per ml. The 300 milligram maintenance dose It's about 5 nanograms per ml, which we believe really protects patients in their moments of weakness, especially with a market that Fentanyl has taken over the illicit supply chain. So for us, we're focused on our asset, which we think is differentiated versus Other LAIs and we'll continue on our organized health system strategy. So as it relates to the disclosure, I think it's really, really important that The facts of this case haven't changed. And really, we review our language, we review our going concern every quarter when we come to the market.

Speaker 2

And this cautionary language update is more due to the passage of time and the potentially simpler Trial with less classes involved in it. We're continuing on our strategy to get Resolution at the right value via mediation. And I think a good first step of that was the resolution we had with the states, Which was in line with the reserve. So we'll continue to pursue the strategy through the updated trial date of October 30.

Speaker 5

Thank you.

Speaker 2

Thank you, James.

Operator

Thank you. We will now go to your next question. And your next question comes from the line of Max Herrmann from Stifel. Please go ahead. Your line is open.

Speaker 6

Great. Thanks for taking my questions. 3, if I may. So firstly, just on the R and D Spend phasing, I noticed you've left the guidance range Unchanged there with $100,000,000 at the top end, although you've spent, I think, dollars 59,000,000 in the first half and historically last few years, Definitely been second half weighted. So I wondered if you can explain a little bit, do you expect a lighter spend in R and D?

Speaker 6

And what would be the reasons For that tailing off in spend against historical norms. Secondly, just in terms of profitability, I know now you're guiding To greater profit than in 2022. I wondered if you could give us a little bit of Indicator of how you think that will be phased. Are you expecting a lower profitability or operating profit terms in the second half of the year than the first half Because of the launch costs on Opiant, just a little bit more detail there. And then just maybe in the Litigation, is there any more color you can give in terms of I know you talked about in the Q1 Results, you talked about having interactive discussions with the state's payer at the time.

Speaker 6

I wondered if you've had any more kind of Interactive discussions with either of the 2 other plaintiff classes. Thank you.

Speaker 2

What we'll do, Max, I'll start with the last question and then I'll hand over to Ryan to talk about the R and D spend phasing and then the profitability. I think just due to the ongoing nature of the matters there before the court, there are many elements which remain confidential. I think we have to let My previous comments on the call as well as the updates to the disclosures stand as they are. And again, it's Because of the nature of the proceedings. So with that as kind of an answer to the litigation side, I'll go ahead and hand over to Ryan to talk through The R and D spend and the profitability profile.

Speaker 4

Good morning, Max. On the R and D spend, what you're seeing there, Well, first of all, it's our R and D priorities are still the same, right? It's the studies and trials that we continue on SUBLOCADE that Christian walked through. It's continued work on building out that second manufacturing site with the tech transfer. And then third, it's the continued progress On some of our new early stage assets with CUD and AALIS.

Speaker 4

What you saw starting at Q3 of last year Was us really getting scaled up on the SUBLOCADE trials and then you saw that increase in Q3 and Q4 and you're really seeing us At full run rates in the first half. So I would say, some of that should decline a little bit in the back half in regards to those activities Tied to SUBLOCADE, but still feel very confident in the number that we put forth for the full year. In regards to your second question around profitability, First thing I would just call out is we are quite excited about raising the operating income number for the year even after Layering in, as Mark said, dollars $40,000,000 to $50,000,000 of expenses tied to Opvy and Opiant. Around Q3 and Q4, we tend not to provide guidance on a quarterly basis because there's a couple of pulls and pushes there. As you inferred, R and D could come down a little bit, But on the back end of that, in the second half, we're going to have some more commercial programs as well as some support costs for the launch of OPBI.

Speaker 4

So Still feel really good about the full year number.

Speaker 6

Great. Thank you.

Speaker 2

Thank you, Max.

Operator

Thank you. We'll now go to your next question. And your next question comes from the line of Paul Cuddon from Numis. Please go ahead.

Speaker 5

Thank you very much guys. I've got two questions, Firstly, just probing the range you've provided for kind of SUBLOCADE for the full year, still quite wide. And I mean the upper end, I'm just wondering what your assumption would be quarter to quarter kind of growth in dispense rates, whether there's anything I mean, Q1 and Q2 that led to that elevated quarter on quarter growth rate that wouldn't necessarily continue into Q3. And then secondly, just on Subutex, XR and Rest of the World, were there any stocking dynamics in the first half of the year that may not recur into the 2nd half or is that something that's now on a much more sustainable growth plane? Thank you.

Speaker 2

Good afternoon, Paul, and thanks for the questions. With regards to the range on SUBLOCADE, I think the strong first half results Really demonstrate the team's execution against the strategy, being over 100,000 patients in route The 270,000 patients required to get to the $1,500,000,000 waypoint because we've always said $1,500,000,000 plus, All very key. And that's allowed us also in the short term within the year to raise our guidance to by $30,000,000 at the midpoint, which Gets to the year over year at 50%. Now when I look at the quarter over quarter, I think Ryan mentioned a bit of stocking in the 2nd quarter that's Flattered the Q2 results a bit, but we expect continued strong growth in the back half

Speaker 3

and continued momentum.

Speaker 2

With regards to Subutex XR, I would say that with regards to those results, we haven't Seeing material stocking in those markets. This is continued structural progress across all the markets we're in that have led to the kind of Year over year growth and achieving kind of a nice milestone of $10,000,000 of net revenue within the quarter.

Operator

Excellent. Thank you. And just

Speaker 5

a final one, if I may, just on this kind of pilot program that you're launching with Potentially smaller clinics. Is this something that perhaps in the future you'll have to materially sort of scale up Kind of Resource 4, is it something that the partner could handle more of the OpEx that will be required?

Speaker 2

It's a great question, Paul. And just for a bit of color, I mentioned it a bit in my opening remarks, but Albertsons is the 2nd largest Supermarket chain in the U. S, they have 2,200 stores. Of those stores, there's 1700 that have pharmacies on-site. And what we're really excited about is that the leadership of Albertsons has recognized the instrumental role they could play in helping fight the opioid epidemic in the U.

Speaker 2

S. So the elimination of DADA 2,000 allows for these alternate sites of care where the administration of SUBLOCADE It can be done at an alternate treatment space and allow physicians who just don't have the infrastructure in their office To manage a controlled specialty pharmacy product, it allows them to prescribe based on patients' needs. And for us, it also allows patients to have the medication administered in a more normalized fashion that Similar to vaccines or in schizophrenia, they can go to these pharmacies to have the medication administered. From Engagement with HCPs that is a responsibility of Indivior's, and that's where I've talked about potential targeted investments To come back to some of these smaller doctors' offices moving forward. But for us, this is about accelerating growth, Having SUBLOCADE help more patients on their journey to recovery.

Speaker 5

Super. Thank you very much and I hope that goes well.

Speaker 2

Thank you, Paul.

Operator

Thank you. We will now go to your next question. And your next question comes from the line of Tywild Botheren from Morgan Stanley. Please go ahead.

Speaker 7

Thank you. Just a couple of questions. The first one, just a follow-up on the strategy to decouple prescription and registration. So you're making SUBLOCADE available in potentially more places for administration. But is it addressing one of the key Upstaker for the uptake, which historically has been the difficulty for some physicians to treat this patient population and access this patient.

Speaker 7

So is it an initiative that's going to address this specific issue? So just if you could give some details on this. And then second question on capital allocation. Should we exclude you could have any cash deployment either towards M and A Are we totaling cash to shareholders until the litigation situation is resolved? Or is it an option that you maintain in the short term until you have more clarity on the Thank you.

Speaker 2

Ivo, thanks for the questions. I think you're hitting the nail right on the head with regards to having alternate It does address a tremendous need out there in doctors' offices. Recall when we pivoted our strategy To organize health systems, we're pivoting to large systems with infrastructure, with the back office To support physicians in procuring and arranging for administration of a controlled specialty pharmacy product. That infrastructure and those demands in these smaller doctors' offices, which historically have treated a significant number of patients, It was just too much in there. That's why we made the pivot to the organized health systems, which has driven our growth.

Speaker 2

What this is doing is addressing those physicians who have remained in these small offices, who just don't have the infrastructure. They can now Meet with their patients, prescribe SUBLOCADE and have this script either be written or electronically delivered to The Albertsons Pharmacy where they can go and get this administered. I think of it just like if you went and got a vaccine, You could go and get your shot for the vaccine at the front of one of these pharmacies. So it does address some need. It addresses an area where physicians Are unable to prescribe because of the burden and I think this is a great action by the Congress to pass this Act which eliminates this barrier and normalizes the treatment space.

Speaker 2

So really good stuff here. On the capital allocation, it's a great question. Listen, I think for us, we're very consistent in our capital allocation policy. We've reviewed this as a management team and with the Board on a regular basis as we actively manage it. And the priorities We remain extremely consistent with our previous discussions.

Speaker 2

We're reinvesting in growth including the current products. We're maintaining financial And to meet our obligations and then if there's excess cash, we look to either diversify the business via business development or return Excess cash to shareholders as we've shown that we're doing. In the short term, we're focused on reinvesting in the business, delivering on SUBLOCADE, Delivering on integration and launch of Atvii and we'll continue to actively manage our capital allocation moving forward.

Speaker 7

Thank you.

Operator

Thank you. We will take your next question. And your next question comes from the line of Carl Burns from Northland Capital Markets. Please go ahead.

Speaker 8

Thanks for the question and congratulations on your progress on results. I was just wondering if you might be able to provide a little bit on the specific detailing Of Op P, particularly to the public sector and first responders. And do you see the label, which is inclusive of synthetic opioid language for overdose treatments that Opdiv would be positioned to emerge as a standard of care among first responders. How do you see that sort of

Speaker 2

Thanks for the questions, Karl, and great to have you covering Indivior. With regards to the detailing of OPVI, this is a much different sort of call platform than SUBLOCADE or PERSERIS where You're not calling 90% of the volume runs through the public interest sort of markets, first responders, Community Action Groups. And so you're calling more on decision makers and purchasing sort of groups. So the call platform is much more focused. And so it's a much smaller sales team focused in this space, much, much more focused.

Speaker 2

I think when you think about OPVI, and this new and differentiated sort of option for overdose rescue, We're pleased with the label we've gotten. We're pleased with 90% of opioid overdose deaths caused by synthetic opioid Census Fentanyl, OTVI is the 1st and only nasal opioid rescue medicine that's specifically indicated for synthetic opioids like Fentanyl. So and for me during an opioid overdose every second matters with regards to the quality of the recovery to minimize long term damage or death. So really critical and for us with the Nalmefene Nasal Rescue, OTVI, being fast acting And having a long half life about 11.5 hours, which is longer than Fentanyl's, we're excited About the opportunity has to help more patients. So, we'll let the first responders and the people in the market Decide if it's going to be the new standard of care, but we're excited to have it as an option out there to help save people's lives.

Speaker 8

Great. Thank you and congratulations again.

Speaker 2

Thank you, Karl.

Operator

Thank We will now go to your next question and it comes from the line of Edward Thomason from Liberum. Please go ahead. Your line is open.

Speaker 9

Hello. Thank you for taking my question. I had 2, if I may. Firstly, just on Subutade, particularly in markets where you have launched it in the rest of the world, in the same market as Brix Aldi, Such as Finland and Australia, what has been your learnings from those specific markets? And then I'll follow-up with the second question of that.

Speaker 2

Yes. We're in the Rest of World. We're in Canada, Where we don't have competition in Australia, where there is competition, as well as in the Nordics and More recently the Nordics and Germany. So the primary market, where there's been competition for a period of time is in Australia. Because of our registration strategy, which was focused on the U.

Speaker 2

S, we were second to market in Australia During a period of COVID. And I think what we're seeing is a tale of different geographies and health payers within Australia. In one area, we see that the standards have been written for BRXADE And SUBLOCADE in those markets have a much lower market share. And in the other areas where it's more open access where they're letting Physicians make the choices. We're seeing a much more sort of normalized competitive environment and SUBLOCADE's benefits are able To be better utilized by physicians and in those markets, we're seeing higher share in the 35% to kind of 45% Region, which is important.

Speaker 2

Now of course, these are markets with a socialized payer scheme. In Australia, fentanyl has not yet hit the shores. So it is a very different competitive market than I think what you would see here in the U. S, which is it's just disproportionately been hit by the opioid crisis than other countries.

Speaker 9

Okay. Thank you. The second question I had was just on the updated risk factors, and particularly that Worst case scenario where that you illustrated exceeded the existing cash resources. In that scenario, what price erosion are you factoring in to Suboxone

Speaker 2

Edward, I think as we look to SUBOXONE Film, we've always planned the business As it will eventually return to analogs with additional entrants. That's the way typically Generic Markets Works and we factored that in the short term. The stock or the film has Much stickier in its share. And despite an approval of a 4th generic, we haven't seen them enter the market. And so We think having that film out there is good for patients and for shareholders.

Speaker 2

It's a nice incremental cash in the short term.

Speaker 9

Okay. But sorry, that doesn't really answer the question, which is related to the Erosion of price, if that 4th generic ends with the market, I can understand you can see volume switching to the generic, But particularly on the price, and do you have an answer to that specific part of the question?

Speaker 2

Yes, apologies. I'm not trying to dodge it. It's just the share drop is so significant when you go to analogs That in those sort of plannings, you drop off from a revenue standpoint. But the pricing we have, we're already at pricing in government entities, which Tends to be the lower in the market. So we wouldn't see, incremental pricing impacting us.

Speaker 2

It just could be that the generic pricing might lower and take share. So from an Indivior standpoint, we wouldn't see much of an impact to price or mix because we're already in the lowest price accounts. But for the generics, we would expect that their prices to drop.

Speaker 9

Okay. All right. Thanks for taking my questions.

Speaker 2

Thank you, Edward.

Operator

Thank you. We will now go to our next question. And your next question comes from the line of Peter Testa from 1 Investments. Please go ahead.

Speaker 10

Hi, thank you for taking the question. It's just one question on how the OHS systems are adjusting to The opportunities they now have with the legal changes. I mean, you talked a bit about how you're using Albertsons, but how they may be organizing themselves also to handle patients And trained doctors given the different limits and so on, if you could give any words of what you're seeing there, please?

Speaker 2

It's a good question, Peter. And The Albertsons opportunity is so new that you're not really seeing adjustments. I mean it just went into place at the end of the quarter. Now The good thing is it's gone in and it's been activated in those 700 systems and we have already had a number of administrations. But recall in the organized health systems, whether it's justice systems, large government or large health systems, They tend to have the infrastructure around these physicians from a pharmacy on-site, a back office to manage Reimbursement and scheduling, they have the infrastructure to support the physician.

Speaker 2

It's not that they might not use an alternate site of care for a reason now and then, But the reason we've had the growth is because they have the infrastructure to support both the physician and the patient in the administration of SUBLOCADE.

Speaker 10

I was also wondering about the training rules and doctor prescribing limits and other factors which have changed since legislation. Do you see whether you see them Working with the doctors or handling penetration through the systems differently, or other things they can do?

Speaker 2

No, it's another great question and another aspect that we haven't addressed on the call with regards to the data 2000 elimination. And I think this is one where it's going to this is going to be a journey through time, as this disease space through that legislation continues to normalize. Means that any doctor can administer buprenorphine. We're not seeing a rush of new physicians to do that. It's still remaining highly concentrated with the physicians that are there.

Speaker 2

When we are seeing some physicians Increase their number of patients. But again, this isn't something that's a light switch or a faucet where you turn it on and everything's migrating over. This Happening through time, bit by bit, with regards to the overall treatment for opioid use disorder.

Speaker 10

That's great. Thank you for the help.

Speaker 2

No. Thank you, Peter. Appreciate it.

Operator

Thank you. We now have a follow-up question. And your follow-up question comes from the line of Max Herman from Stifel. Please go ahead.

Speaker 6

Great. Thanks for taking my additional questions. A couple. One is just discussions on RP. Obviously, the product is now approved.

Speaker 6

I wondered whether you've been able to have many of these discussions ahead of the Q4 launch with the 1st responder Payers, so that's the first question. And the second one is just in terms of just trying to understand The Albertson opportunity here. In terms of your calls on Currently on non OHS psychiatrists and opioid use disorder treatment physicians, And since you've been so focused on the OHS and the criminal justice system, are you currently calling on non OHS Doctors and Criminal Justice System Doctors.

Speaker 2

Thanks for both questions Max. On the Opdiv side, Since it's been approved, we've not set price. People have had initial discussions with regards to OPVI, its profile, But the discussions will really start to increase over the next 2 to 3 weeks when we set our final pricing. With regards to Albertsons, we do have a percentage of calls, a small percentage of calls, probably 10% or so That are outside of organized health systems and physicians who have continued to prescribe SUBLOCADE and shown a willingness to manage the complexity. But that's one of the things I highlighted in my comments is because this reopens up that historic call platform, We're going to have to take a look at resource allocation on this.

Speaker 2

We don't see this As a doubling of the sales force, it's a more targeted sort of look, but we want to make certain that we're able to help those physicians Get SUBLOCADE to the patients to help them enter recovery with this new channel or new administration route for the medication.

Speaker 6

Great. Thanks very much.

Speaker 2

Thanks again, Max.

Operator

Thank you. I will now hand the call back to Mark Crossley for closing remarks.

Speaker 2

Thank you, Sharon, and thanks to everyone for your continued interest in Indivior. In closing, I just want to thank our teams again for their continued hard work and the dedication to patients. It's been another quarter of strong financial results, Delivery against our strategic priorities and entering the second half of the year, we have good momentum across our key growth drivers and are working hard to create greater certainty for all of our stakeholders. We look forward to reporting our progress in the coming months. Thank you very much.

Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

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Earnings Conference Call
Indivior Q2 2023
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