TIDMINDV
RNS Number : 3989V
Indivior PLC
02 November 2017
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Nine Month Financial Results - FY 2017 Revenue and Net Income
Guidance Reconfirmed.
Period to September Q3 Q3 % % YTD YTD % %
30th
2017 2016 Actual Constant 2017 2016 Actual Constant
$m $m FX FX $m $m FX FX
--------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Net Revenue 275 268 +3 +2 828 799 +4 +4
--------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Operating Profit 63 (121) * * 308 78 * *
--------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Net Income 50 (149) * * 203 (43) * *
--------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
EPS (cents per
share) 7 (21) * * 28 (6) * *
--------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Adjusted Operating
Profit(1) 63 102 -38 -39 333 315 +6 +5
--------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Adjusted Net
Income(1) 47 71 -34 -34 216 205 +5 +5
--------------------- ------ ------ -------- ---------- ------ ------ -------- ----------
Adjusted EPS(1) 7 10 -30 -35 30 28 +7 +5
===================== ====== ====== ======== ========== ====== ====== ======== ==========
(1) Adjusted basis excludes the impact of exceptional items as
referenced in Notes 3 and 5.
* Not meaningful
Solid YTD 2017 Financial Results and FY 2017 Guidance
Reconfirmed
-- YTD 2017 net revenue of $828m (YTD 2016: $799m) increased 4%
on a reported basis (4% at constant exchange) primarily due to
continued strong market growth in the US that was partially offset
by generic competition in the most price sensitive US payors
(Managed Medicaid) and lower wholesaler stocking activity.
-- YTD 2017 operating profit was $308m (YTD 2016: $78m)
reflecting higher net revenues and lower R&D and legal
expenses. On an adjusted basis, excluding $25m of exceptional items
YTD and $237m in the year-ago period, YTD 2017 adjusted operating
profit increased 6% to $333m (YTD 2016 adj: $315m).
-- YTD 2017 net income was $203m (YTD 2016 net loss: $43m). On
an adjusted basis, YTD 2017 net income increased 5% to $216m (YTD
2016 adj: $205m).
-- Cash balance at the end of Q3 2017 was $806m (FY 2016:
$692m); net cash was $322m (FY 2016: $131m).
-- FY 2017 guidance reconfirmed. Net revenue expected to be in a
range of $1,090m to $1,120m and adjusted net income of $265m to
$285m assuming no material changes to current market conditions,
excluding exceptional items and at constant FX. Guidance includes
$40m to $60m of pre-launch investments for late stage pipeline
assets.
YTD 2017 Operating Highlights
-- US market growth in 2017 continues at low double-digit percentage levels.
-- Suboxone(R) Film market share averaged 58% in YTD 2017 (YTD
2016: 61%), exiting Q3 2017 at 56% primarily due to ongoing generic
competition in the most price sensitive US payors (Managed
Medicaid).
-- RBP-6000 buprenorphine monthly depot for the treatment of
opioid use disorder (OUD) recommended for approval at joint meeting
of the Psychopharmacologic Drugs Advisory Committee and the Drug
Safety and Risk Management Advisory Committee on October 31st;
November 30th PDUFA (Prescription Drug User Fee Act) date.
-- New drug application (NDA) submitted September 28th for
RBP-7000 risperidone monthly depot for the treatment of
schizophrenia.
-- Indivior initiated the appeals process against Dr Reddy's
after the US District Court for the District of Delaware found the
asserted claims of Patent Nos. '150, '514 and '497 valid but not
infringed by Dr. Reddy's proposed generic buprenorphine/naloxone
film. As of November 2nd, 2017, FDA has not announced that it has
granted tentative or final marketing authorization to any generic
buprenorphine/naloxone film, except for Actavis's proposed generic
version of buprenorphine/naloxone film granted tentative approval
on October 24th, 2017, which was enjoined from launch until April
2024 by the Delaware court ruling of 2016.
-- Indivior took additional actions to secure its intellectual
property position by reaching a settlement with Mylan and asserting
its new Orange Book-listed patent covering Suboxone(R) Film, US
Patent No. 9,687,454 (the "'454 patent").
-- The Group continues in discussions with the Department of
Justice about a possible resolution to its investigation. Please
see pages five to eight for a comprehensive Litigation Update.
Shaun Thaxter, CEO of Indivior commented:
"Continued solid execution in the quarter against a strong US
market backdrop leaves us on track to meet our FY 2017 guidance,
which we increased significantly with our H1 2017 results. We have
also taken important steps to protect our intellectual property
rights by initiating our appeal in the Dr Reddy's ANDA litigation,
settling with Mylan, including termination of their IPR, and
asserting our recently-granted '454 patent. Most importantly, we
have continued to progress our pipeline with the successful NDA
submission of RBP-7000 in schizophrenia and, in recent days, by the
endorsement of the FDA's Psychopharmacologic Drugs Advisory and
Drug Safety and Risk Management Advisory Committees for RBP-6000,
our potentially transformational product for the treatment of
opioid use disorder. We are finalizing our launch plans and are
working closely with our third-party manufacturing partners to
ensure appropriate delivery of product to enable our target launch
in Q1 2018. We are looking forward to the PDUFA date of November
30th."
YTD 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
the first nine months of 2017 versus the same year-ago period.
Market growth continues to benefit from legislative changes that
have expanded opioid use disorder 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 Q3
2017. In addition, the number of waivered nurse practitioners and
physician assistants continued to grow in Q3 2017.
Suboxone(R) Film had an average market share of 58% in YTD 2017,
compared to 61% in YTD 2016, and average market share in Q3 2017
was 56%, compared to 60% in Q3 2016. The decline in share during
both periods 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 the benefits were mostly
offset by tactical rebating in connection with maintaining
formulary access.
Financial Performance: YTD 2017 & Q3 2017
Total net revenue in YTD 2017 increased by 4% to $828m (YTD
2016: $799m) on both an actual and constant exchange rate basis. Q3
2017 total net revenue increased 3% at actual exchange rates (2% at
constant exchange rates) to $275m (Q3 2016: $268m). In the YTD 2017
and Q3 2017 periods revenue growth primarily reflected volume gains
from stronger market conditions in the US and from growth and
one-off shipments in Rest of World markets. These gains were
partially offset by a decline in Suboxone(R) Film market share and
lower wholesaler stocking activity in 2017. Price improvement was
mostly offset by tactical rebating activity in the US in connection
with formulary access. Additionally in Q3 2017, mix was unfavorable
due to an increase in the US Medicaid channel as more previously
underserved populations are now accessing treatment.
YTD 2017 US net revenue increased by 3% to $670m (YTD 2016:
$651m) and was unchanged in Q3 2017 at $219m (Q3 2016: $219m). In
both periods, market growth was ahead of last year primarily
reflecting legislative action to expand treatment capacity. YTD
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) and lower wholesaler stocking
activity in 2017. Improved pricing was largely offset by tactical
rebating activity in connection with formulary access. In Q3 2017,
benefits from volume and pricing were offset by the decline in
market share, lower wholesale stocking activity and unfavorable mix
from an increase in the Medicaid channel as more previously
underserved populations are now accessing treatment.
YTD 2017 Rest of World net revenue increased by 7% at actual
exchange rates (8% at constant exchange rates) to $158m (YTD 2016:
$148m). Continued growth from market share gains in Australasia and
one-off shipments primarily drove the overall net revenue
improvement. In Q3 2017, Rest of World net revenue increased 14% at
actual exchange rates (12% at constant exchange rates) to $56m (Q3
2016: $49m).
YTD 2017 gross margin was 91%, ahead of last year (YTD 2016:
90%). This increase primarily reflects exceptional items of $11m in
the year-ago period that related to costs for negative ANDA outcome
strategic planning. Excluding the exceptional items last year,
gross margin was 92%. In Q3 2017, gross margin was 90% (Q3 2016:
91%). Exceptional items of $1m were included in costs of sales in
Q3 2016.
YTD 2017 SD&A expenses were $381m (YTD 2016: $556m). YTD
2017 SD&A includes exceptional items of $25m, reflecting the
legal settlement of the Amneal antitrust matter (booked in Q2
2017). In the year-ago period, results included exceptional items
of $220m for a legal provision related to investigative and
antitrust litigation matters (booked in Q3 2016) and $6m reflecting
the costs of negative ANDA outcome strategic planning ($4m booked
in Q2 2016; $2m booked in Q3 2016). On an adjusted basis, YTD 2017
SD&A expenses increased 8% to $356m (YTD 2016 adj: $330m).
Q3 2017 SD&A expenses were $162m (Q3 2016: $335m). Q3 2016
SD&A included total exceptional items of $222m, as described
above. On an adjusted basis, Q3 2017 SD&A expenses increased
43% to $162m (Q3 2016 adj: $113m). The underlying SD&A increase
in both the YTD 2017 and Q3 2017 periods primarily reflects
expected pre-launch investments for key investigational drugs,
RBP-6000 and RBP-7000, and higher legal expenses related to ongoing
ANDA litigation activity and related patent defense costs.
YTD 2017 and Q3 2017 R&D expenses decreased by 23% to $67m
and by 21% to $23m, respectively (YTD 2016: $87m; Q3 2016: $29m).
The decreases in both periods reflect lower clinical activity as
Phase III trials on key pipeline assets have been completed.
YTD 2017 operating profit of $308m increased 295% over the prior
year (YTD 2016: $78m). Exceptional items of $25m and $237m are
included in both the current and year-ago period results,
respectively. On an adjusted basis, YTD 2017 operating profit was
$333m (40% margin), a 6% increase versus $315m (39% margin) in the
year-ago period. The underlying year-over-year improvement
primarily reflects the benefit of higher net sales and lower
R&D expenses offset by higher legal expenses related to ongoing
ANDA litigation activity and related patent defense costs.
Q3 2017 operating profit was $63m, compared to an operating loss
in the prior year (Q3 2016: loss of $121m), which includes
exceptional items totaling $223m. On an adjusted basis, Q3 2017
operating profit declined 38% versus the prior year (Q3 2016 adj:
$102). The decrease primarily reflects expected pre-launch
investments for key investigational drugs, RBP-6000 and RBP-7000,
and higher legal expenses related to ongoing ANDA litigation
activity and related patent defense costs.
YTD 2017 EBITDA was $317m (YTD 2016: $90m). Excluding $25m and
$237m of exceptional items in the current and year-ago period
results, respectively, YTD 2017 adjusted EBITDA increased 5% to
$342m (YTD 2016: $327m).
YTD 2017 finance expense was $34m (YTD 2016: $39m) representing
the interest and amortization on the $750m borrowing facility,
which was slightly offset by modest interest income and was lower
than prior year resulting from the benefit of required repayments
of $86m in YTD 2017. As a result, outstanding borrowing on the
facility was reduced to $484m. Q3 2017 finance expense was $9m (Q3
2016: $12m).
YTD 2017 tax charge was $71m (YTD 2016: $82m), a rate of 26%
(YTD 2016: 210%). The year-ago YTD period tax charge assumes
non-deductability for tax purposes of the exceptional legal
provision. Excluding exceptional items in pre-tax income and within
taxation totalling $12m in the YTD 2017 period and an expense of
$11m in the same year-ago period, the rate was 28% (YTD 2016 adj:
26%). The increase was due to changes in the geographic mix of
earnings. Q3 2017 tax charge was $4m (Q3 2016: $16m), or a rate of
7% (Q3 2016: 12%). Excluding exceptional items of $3m (Q3 2016:
$16m), the rate was 13%. (Q3 2016 adj: 21%). Based on current
projections, the full year effective tax rate is expected to be
24%, excluding exceptional taxation items.
YTD 2017 net income was $203m (YTD 2016 net loss: $43m) as
reported. Excluding exceptional costs, YTD 2017 net income was
$216m (YTD 2016 adj: $205m). The current and year-ago periods
include $13m and $248m of exceptional items, respectively. In Q3
2017, net income was $50m (Q3 2016 net loss: $149m). Excluding
exceptional costs, net income for the quarter was $47m (Adj. Q3
2016: $71m). The current and year-ago quarters include $3m and
$220m of exceptional items, respectively.
YTD 2017 basic EPS were 28 cents (YTD 2016: loss of 6 cents) and
27 cents on a diluted basis (YTD 2016: loss of 6 cents). On an
adjusted basis, excluding the effect of exceptional items, YTD 2017
basic EPS were 30 cents (YTD 2016: 28 cents) and diluted EPS were
29 cents (YTD 2016: 28 cents).
Balance Sheet & Cash Flow
Net working capital (inventory plus trade and other receivables,
less trade and other payables) was negative $332m at the end of Q3
2017, an increase of $58m since FY 2016 primarily due to phasing of
payables and accruals, including those related to trade payables
and the completion of Phase III clinical trials.
Cash and cash equivalents at the end of Q3 2017 were $806m,
reflecting an increase of $114m in YTD 2017 (FY 2016: $692m).
Borrowings, net of issuance costs, were $470m at the end of Q3 2017
(FY 2016: $535m), reflecting required repayments of $86m.
Consequently, net cash stood at $322m at the end of Q3 2017 (FY
2016: $131).
Cash generated from operations in YTD 2017 was $274m (YTD 2016:
$359m), a decrease of $85m primarily due to the increase in working
capital.
YTD 2017 net cash inflow from operating activities was $233m
(YTD 2016: $280m), reflecting the lower cash from operations offset
by lower tax payments of $19m and lower net financing costs of $22m
in YTD 2017.
Cash outflow from investing activities increased $23m to $38m.
The increase was primarily related to the purchase of certain
patent rights from DURECT Corporation that further enhance
RBP-7000's IP position.
R&D / Pipeline Update
Treatment of Opioid Use Disorder
-- RBP-6000, Monthly Depot Buprenorphine: New Drug Application
(NDA) submitted May 30th, 2017. Filing accepted by FDA July 31st,
2017 with Priority Review designation with a PDUFA target action
date of November 30th, 2017. FDA Advisory Committees recommend
approval on October 31st, 2017.
-- HEOR Study from Phase III (RB-US-13-0001) trial: Findings to
be presented at the 41st Association for Medical Education and
Research in Substance Abuse National Conference (AMERSA), November
5th-7th, 2017. Final report expected in Q4 2017.
-- RECOVER Study (REmission from Chronic Opioid Use: Studying
EnVironmental and socioEconomic factors on Recovery): Last subject
expected to complete the study in January 2018 with final report
expected June 2018.
-- Pre-submission meetings related to RBP-6000 held with
Regulatory Agencies ex-USA in Q4 2016: TGA (Australia); HC
(Canada); ANSM (France); MHRA (United Kingdom); MPA (Sweden); BfArM
(Germany).
-- SUBOXONE(R) Film: On June 20(th) , 2017, added to the List of
Drugs for an Urgent Public Health Need in British Columbia,
Canada.
-- SUBOXONE(R) Tablet China: Submission of NDA to Chinese FDA
(CFDA) on December 27th, 2016. Priority Review granted by CFDA June
6th, 2017. NDA review ongoing.
Treatment of Schizophrenia
-- RBP-7000, Monthly Depot Risperidone: NDA submitted to FDA on
September 28th, 2017. Planning for Q4 2018 launch.
Overdose Rescue Products
-- Intranasal Naloxone: French regulatory agency ANSM approved
marketing authorization on July 31st, 2017.
Treatment of Alcohol Use Disorder
-- Arbaclofen Placarbil: All three parts of the new Phase I
Bioavailability Clinical Study Protocol (INDV-AP-102) of a new
formulation of Arbaclofen Placarbil are now completed. Data
analysis and interpretation ongoing.
Other Key Events Q3 2017
-- July 2017: Redevelopment completed of Research and
Development Center in Ft. Collins, Colorado.
-- August 2017: Officially opened new Research and Development Center in Hull, United Kingdom.
Key Pipeline Dates 2017
Oct. 15th-18th: American Conference on Pharmacometrics (ACoP) -
RBP-6000 Combined Population Pharmacokinetic Analysis;
Exposure-Response analysis.
Oct. 17th-20th: Colloque International Addictions Toxicomanies
Hépatites SIDA (ATHS) - RBP-6000 Phase 3 clinical efficacy and
safety.
Oct. 19th-21st: Canadian Society of Addiction Medicine (CSAM) -
RBP-6000 Phase 3 clinical efficacy and safety.
Oct. 26th-29th: 19th Annual Meeting of the International Society
of Addiction Medicine (ISAM) - RBP-6000 Phase 3 clinical efficacy
and safety and exposure-response analysis.
Nov. 5th-7th: Association for Medical Education and Research in
Substance Abuse (AMERSA) Conference - RBP-6000 Phase III health
economics & outcomes research data.
Nov. 12th-15th: Australasian Professional Society on Alcohol and
other Drugs (APSAD) - RBP-6000 Phase 3 clinical efficacy and safety
and exposure-response analysis.
Nov. 30th: PDUFA date for RBP-6000.
Dec. 3rd - 7th: Annual Meeting of the American College of
Neuropsychopharmacology (ACNP) - RBP-6000 PK/PD/RO model and
RBP-7000 Phase 3 Long-Term Safety and Tolerability.
Dec. 7th - 10th: 28th Annual Meeting and Scientific Symposium of
the American Academy of Addiction Psychiatry (AAAP) - Predictors of
dropout in RBP-6000 Phase 3 trials.
Litigation Update
The Group carries a provision of $217m for the investigative and
antitrust litigation matters noted below. The provision was reduced
by $25m compared to period ending Q2 2017, reflecting payment of
previously reserved settlement amount to Amneal Pharmaceuticals LLC
(Amneal). Other than reducing by the Amneal settlement amount, the
Group has not changed the previously recorded provision, as the
other litigation and investigations are ongoing. 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 other parties,
or the ultimate cost of resolving all of the matters. The final
cost may be materially higher than this provision.
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 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 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, subject to certain stays.
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 24, 2017 Actavis received
tentative approval from FDA for at least its 8 mg/2 mg generic
product under ANDA 204383. 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 were 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 intends to appeal.
-- 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 favorable ruling from the
District Court. That agreement has been modified in light of a 3
week extension of the post-trial briefing schedule, but the terms
are currently under seal.
-- 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 12(th) , 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, and Par in the District of New
Jersey; and against Actavis in the District of Utah. 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
also filed suit against Teva in the District of New Jersey,
although a Paragraph IV Notice letter has not been received
yet.
-- 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, and
the Group's pipeline products fail to 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 intends 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 intends to vigorously
defend this action.
Risk Factors
The Directors have reviewed the principal risks and
uncertainties for the financial year 2017.
The assumptions in arriving at the Group's financial guidance
for the full year 2017 are described on page 1 of this
announcement. To the extent that actual market conditions differ
from these assumptions, alternative financial outcomes are
possible. However, the Group has issued this guidance based on
industry analogues and its own estimates at this time.
Therefore, other than in respect of guidance for the full year
2017, the Directors consider that the principal risks and
uncertainties which could have a material impact on the Group's
performance in the remaining term of 2017 remain the same as
described on pages 49 to 53 of the 2016 Annual Report, with the
addition of a risk factor relating to mutual indemnification
obligations with Reckitt Benckiser described below. These
include:
Business operations and business continuity
-- The Group's revenues are primarily derived from sales of
SUBOXONE(R) Film and any decrease in sales due to competition or
supply or quality issues could significantly affect the results of
operations and prospects.
-- 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 results of operations and prospects.
-- Competition for qualified personnel in the biotechnology and
pharmaceutical industries is intense and high-performing talent in
key positions is a business-critical requirement.
-- Failures or disruptions to the Group's systems or the systems
of third parties on whom the Group relies, due to any number of
causes, particularly if prolonged, could result in a loss of key
data and/or affect operations.
-- The Group's computer systems, software and networks may be
vulnerable to unauthorized access, computer viruses or other
malicious code or cyber threats that could have a security impact.
All of these could be costly to remedy and we may be subject to
litigation.
Product 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 {5-8} 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 {20-22, 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.
-- 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.
Compliance with law and ethical behaviour
-- Business practices in the pharmaceutical industry are subject
to increasing scrutiny by government authorities. Failure to comply
with applicable laws and rules and regulations in any jurisdiction
may result in fines, civil and/or criminal legal proceedings.
Specifically, see disclosures under Litigation Update on page {5-8}
referring to the current status of the investigative and litigation
matters involving the Group, as well as the contingent liabilities
disclosures on pages {20-22, 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 Group's pharmacovigilance processes 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. 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 time lines and
identifies safety signals with an assessment of changes to
benefit/risk profile, determines actions needed to optimize the
safe and effective use of our product, including communicating any
relevant changes to key stakeholders.
-- The Group's annual report for the 2016 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:
9 Months to Sept. 9 Months to Sept.
30, 30,
2017 2016
------------------ ------------------ ------------------
GB GBP period
end 1.3387 1.3023
------------------ ------------------ ------------------
GB GBP average
rate 1.2748 1.3945
------------------ ------------------ ------------------
EUR Euro period
end 1.1748 1.1214
------------------ ------------------ ------------------
EUR Euro average
rate 1.1124 1.1162
------------------ ------------------ ------------------
Webcast Details
There will be a presentation at 12pm UK time (8am 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
Company's website at www.indivior.com.
Webcast link: https://edge.media-server.com/m6/p/b6jz7h6i
Confirmation Code: 9592820
Participants, Local - London,
United Kingdom: +44(0)20 3427 1901
Participants, Local - New York,
United States of America: +1 646 254 3361
For Further Information
Investor Jason Thompson VP Investor +1 804 423 8916
Enquiries Relations, jason.thompson@indivior.com
Indivior PLC
Media Enquiries Jonathan Tulchan Communications +44 207 353 4200
Sibun 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 Company 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 harbour provisions of
the United States Private Securities Litigation Reform Act of 1995.
By their nature, forward-looking statements involve risk and
uncertainty as they relate to events or circumstances that 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 2017 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 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 (ie, sedatives,
tranquilizers, or alcohol). It is extremely dangerous to take
nonprescribed benzodiazepines or other medications that act on the
nervous system while taking SUBOXONE(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 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.
Condensed consolidated interim income statement
Unaudited Unaudited Unaudited Unaudited
Q3 Q3 YTD YTD
2017 2016 2017 2016
Notes $m $m $m $m
Net Revenues 2 275 268 828 799
Cost of Sales (27) (25) (72) (78)
Gross Profit 248 243 756 721
Selling, distribution
and administrative
expenses 3 (162) (335) (381) (556)
Research and development
expenses 3 (23) (29) (67) (87)
----------------------------- ------ ---------- ---------- ---------- ----------
Operating Profit 63 (121) 308 78
----------------------------- ------ ---------- ---------- ---------- ----------
Operating profit before
exceptional items 63 102 333 315
Exceptional items 3 - (223) (25) (237)
Operating profit 63 (121) 308 78
----------------------------- ------ ---------- ---------- ---------- ----------
Net finance expense (9) (12) (34) (39)
----------------------------- ------ ---------- ---------- ---------- ----------
Profit before taxation 54 (133) 274 39
----------------------------- ------ ---------- ---------- ---------- ----------
Income tax expense (4) (16) (71) (82)
----------------------------- ------ ---------- ---------- ---------- ----------
Taxation before exceptional
items 4 (7) (19) (83) (71)
Exceptional items within
taxation 4 3 3 12 (11)
----------------------------- ------ ---------- ---------- ---------- ----------
Net income 50 (149) 203 (43)
----------------------------- ------ ---------- ---------- ---------- ----------
Earnings per ordinary
share (cents)
Basic earnings per
share 5 7 (21) 28 (6)
Diluted earnings per
share 5 7 (20) 27 (6)
Condensed consolidated interim statement of comprehensive
income
Unaudited Unaudited Unaudited Unaudited
Q3 Q3 YTD YTD
2017 2016 2017 2016
$m $m $m $m
-------------------------------- ---------- ---------- ---------- ----------
Net income 50 (149) 203 (43)
Other comprehensive
income
Items that may be reclassified
to profit or loss in
subsequent years:
Net exchange adjustments
on foreign currency
translation 3 3 6 3
Other comprehensive
income 3 3 6 3
Total comprehensive
income 53 (146) 209 (40)
-------------------------------- ---------- ---------- ---------- ----------
The notes are an integral part of these condensed consolidated
interim financial statements.
Condensed consolidated interim balance sheet
Unaudited Audited
Sep 30, Dec 31,
2017 2016
Notes $m $m
ASSETS
Non-current assets
Intangible assets 94 83
Property, plant and equipment
and other assets 49 27
Deferred tax assets 4 84 109
Other receivables 6 -
233 219
Current assets
Inventories 51 41
Trade and other receivables 247 227
Current tax receivable 30 30
Cash and cash equivalents 6 806 692
1,134 990
Total assets 1,367 1,209
------------------------------- ------ ---------- ---------
LIABILITIES
Current liabilities
Borrowings 6 (129) (101)
Provision for liabilities
and charges (219) (219)
Trade and other payables 8 (630) (658)
Current tax liabilities 4 (80) (52)
------------------------------- ------ ---------- ---------
(1,058) (1,030)
------------------------------- ------ ---------- ---------
Non-current liabilities
Borrowings 6 (341) (434)
Provisions for liabilities
and charges (42) (40)
(383) (474)
Total liabilities (1,441) (1,504)
------------------------------- ------ ---------- ---------
Net liabilities (74) (295)
------------------------------- ------ ---------- ---------
EQUITY
Capital and reserves
Share capital 9 72 72
Share preminum 2 -
Other Reserves (1,295) (1,295)
Foreign currency translation
reserve (16) (22)
Retained Earnings 1,163 950
------------------------------- ------ ---------- ---------
Total equity (74) (295)
------------------------------- ------ ---------- ---------
The notes are an integral part of these condensed consolidated
interim financial statements.
Condensed consolidated interim statement of changes in
equity
Foreign
Currency
Share Share Other Translation Retained Total
Capital Premium Reserve Reserve Earnings equity
Unaudited $m $m $m $m $m $m
At January 1, 2016 72 - (1,295) (23) 967 (279)
------------------------- --------- --------- --------- ------------- ---------- --------
Comprehensive income
Net income - - - - (43) (43)
Other comprehensive
income - - - 3 - 3
Total comprehensive
income - - - 3 (43) (40)
------------------------- --------- --------- --------- ------------- ---------- --------
Transactions recognised
directly in equity
Share-based plans - - - - 6 6
Dividends paid - - - - (69) (69)
Total transactions
recognised directly
in equity - - - - (63) (63)
------------------------- --------- --------- --------- ------------- ---------- --------
Balance at September
30, 2016 72 - (1,295) (20) 861 (382)
------------------------- --------- --------- --------- ------------- ---------- --------
At January 1, 2017 72 - (1,295) (22) 950 (295)
------------------------- --------- --------- --------- ------------- ---------- --------
Comprehensive income
Net income - - - - 203 203
Other comprehensive
income - - - 6 - 6
Total comprehensive
income - - - 6 203 209
------------------------- --------- --------- --------- ------------- ---------- --------
Transactions recognised
directly in equity
Share-based plans - 2 - - 10 12
Total transactions
recognised directly
in equity - 2 - - 10 12
------------------------- --------- --------- --------- ------------- ---------- --------
Balance at September
30, 2017 72 2 (1,295) (16) 1,163 (74)
------------------------- --------- --------- --------- ------------- ---------- --------
The notes are an integral part of these condensed consolidated
interim financial statements.
Condensed consolidated interim cash flow statement
Unaudited Unaudited
2017 2016
For the nine months ended September 30 $m $m
------------------------------------------------------ ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit 308 78
Depreciation and amortization 9 12
Share-based payments 10 9
Impact from foreign exchange movements 6 5
(Increase) in trade and other receivables (20) (38)
(Increase)/decrease in inventories (5) -
(Decrease)/increase in trade and other payables (34) 72
Increase in provisions - 221
Cash generated from operations 274 359
Net financing costs (22) (33)
Taxes paid (19) (46)
Net cash inflow from operating activities 233 280
------------------------------------------------------ ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (24) (23)
Purchase of intangible assets (14) -
Net cash (outflow) from investing activities (38) (23)
------------------------------------------------------ ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash movement in borrowings (86) (69)
Dividends paid - (69)
Proceeds from issuance of ordinary shares 2 -
Net cash (outflow) from financing activities (84) (138)
------------------------------------------------------ ---------- ----------
Net increase in cash and cash equivalents 111 119
Cash and cash equivalents at beginning of the period 692 467
Exchange differences 3 -
Cash and cash equivalents at end of the period 806 586
------------------------------------------------------ ---------- ----------
The notes are an integral part of these condensed consolidated
interim financial statements.
Notes to the condensed consolidated interim financial
statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Indivior PLC (the 'Company') is a public limited company
incorporated and domiciled in the United Kingdom on September 26,
2014. In these condensed consolidated interim financial statements
('Interim Financial Statements'), reference to the 'Group' means
the Company and all its subsidiaries.
These Interim Financial Statements have been prepared in
conformity with IAS 34 'Interim Financial Reporting'. The financial
information herein has been prepared in the basis of the accounting
policies set out in the annual accounts of the Group for the year
ended December 31, 2016. 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 interim financial statements, the
significant judgments made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended December 31, 2016, with the exception
of changes in estimates that are required in determining the
provision for income taxes for interim periods.
The Interim 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 Interim
Financial Statements have been reviewed and not audited. These
Interim Financial Statements have been approved for issue as at
November 1st, 2017.
As disclosed in Note 7, the Group carries a provision of $217m
relating to the Department of Justice and Federal Trade Commission
investigations and antitrust litigation. The final settlement
amount may be materially higher than this reserve. This could
impact the Group's ability to operate, which would be further
adversely impacted should revenues decline and pipeline products
fail to obtain regulatory approval, all of which could mean the
Group 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. 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. The Group's statutory financial statements for the year ended
December 31, 2016 were approved by the Board of Directors on March
7, 2017, and have been delivered to the Registrar of Companies.
2. SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
('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 YTD 2017 and 2016 were as follows:
Revenues from sale of goods:
Q3 Q3 YTD YTD
2017 2016 2017 2016
$m $m $m $m
--------------- ------ ------ ------ ------
United States 219 219 670 651
ROW 56 49 158 148
--------------- ------ ------ ------ ------
Total 275 268 828 799
--------------- ------ ------ ------ ------
Non-current assets:
September December
30, 2017 31,
$m 2016
$m
--------------- ---------- ---------
United States 68 64
ROW 81 46
--------------- ---------- ---------
Total 149 110
--------------- ---------- ---------
3. OPERATING COSTS AND EXPENSES
The table below sets out selected operating costs and expenses
information:
Q3 Q3 YTD YTD
2017 2016 2017 2016
$m $m $m $m
------------------------------------- ------ ------ ------ ------
Research and development
expenses (23) (29) (67) (87)
------------------------------------- ------ ------ ------ ------
Marketing, selling and distribution
expenses (42) (39) (112) (102)
Administrative expenses (113) (294) (255) (439)
Depreciation and amortization (5) (1) (9) (12)
Operating lease rentals (2) (1) (5) (3)
------------------------------------- ------ ------ ------ ------
Total (162) (335) (381) (556)
------------------------------------- ------ ------ ------ ------
Exceptional Items (Pre-tax)
Q3 Q3 YTD YTD
2017 2016 2017 2016
$m $m $m $m
------------------------- ------- ------ ------ ------
Cost of sales - (1) - (11)
Legal expenses - (220) (25) (220)
Consulting costs - (2) - (6)
------------------------- ------- ------ ------ ------
Total exceptional items - (223) (25) (237)
------------------------- ------- ------ ------ ------
$25m of year to date 2017 pre-tax exceptional items are for a
conclusive legal settlement with Amneal Pharmaceuticals LLC in
conjunction with anti-trust litigation. $237m of pre-tax
exceptional items in YTD 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
The Group calculates tax expense for interim periods using the
expected full year rates, considering the pre-tax income and
statutory rates for each jurisdiction. The resulting expense is
allocated between current and deferred taxes based upon the
forecasted full year ratio.
In YTD 2017, tax on total profits amounted to $71m (YTD 2016:
$82m) and represented a year to date effective tax rate of 26% (YTD
2016: 210%); $9m of these relate to the tax effects of the
exceptional items within operating profit (YTD 2016: $5m); $3m
relates to release of provisions for unresolved tax matters,
related primarily to favorable developments in an IRS position.
Prior YTD tax expense also included an exceptional benefit of $19m
related to the tax effect on the movement of assets within the
Group and additional provisions for unresolved tax matters. The
reduction in deferred tax assets of $24m relates primarily to
temporary differences on unrealized profit on the sale of inventory
between Group entities. This reduction is expected to be
sustained.
The decrease in the effective tax rate to 26% was primarily
driven by the relative contribution to pre-tax income by taxing
jurisdiction in the third quarter. Excluding exceptional items of
$3m (Q3 2016: $16m), the tax rate was 13% (Q3 2016 adj: 21%) in the
third quarter.
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
Q3 Q3 YTD YTD
2017 2016 2017 2016
cents cents cents cents
------------------------------- ------- ------- ------- -------
Basic earnings per share 7 (21) 28 (6)
Diluted earnings per share 7 (20) 27 (6)
Adjusted basic earnings per
share 7 10 30 28
Adjusted diluted earnings per
share 6 10 29 28
------------------------------- ------- ------- ------- -------
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. The weighted average number of shares is adjusted for the
number of shares granted assuming the exercise of stock
options.
2017 2016
Average Average
number number
of of
shares shares
---------------------------------- ------------ ------------
On a basic basis 721,011,124 720,597,566
Dilution for Long-Term Incentive
Plan (LTIP) 26,627,518 22,614,143
Employee Sharesave Scheme 1,050,182 -
---------------------------------- ------------ ------------
On a diluted basis 748,688,824 743,211,709
---------------------------------- ------------ ------------
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:
Q3 Q3 YTD YTD
2017 2016 2017 2016
$m $m $m $m
--------------------------- ------ ------ ------ ------
Net income 50 (149) 203 (43)
Exceptional items - 223 25 237
Tax effect of exceptional
items - - (9) (5)
Exceptional items within
taxation (3) (3) (3) 16
--------------------------- ------ ------ ------ ------
Adjusted net income 47 71 216 205
--------------------------- ------ ------ ------ ------
6. FINANCIAL LIABILITIES - BORROWINGS
September December
30 31
2017 2016
Current $m $m
------------ ---------- ---------
Bank loans (129) (101)
------------ ---------- ---------
(129) (101)
------------ ---------- ---------
September December
30 31
2017 2016
Non-current $m $m
------------- ---------- ---------
Bank loans (341) (434)
------------- ---------- ---------
(341) (434)
------------- ---------- ---------
September December
30 31
2017 2016
Analysis of net cash $m $m
--------------------------- ---------- ---------
Cash and cash equivalents 806 692
Borrowings* (484) (561)
Net cash at end of period 322 131
--------------------------- ---------- ---------
*Borrowings reflects the outstanding principal amount drawn,
before debt issuance costs of $14m and $26m, respectively.
September December
30 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 114 225
Net repayment of/(increase in)
borrowings and overdraft 86 78
Exchange adjustment (9) 2
Net cash at end of period 322 131
--------------------------------------- ---------- ---------
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 September 30, 2017 are as follows:
Nominal Required Maximum Minimum
interest annual leverage liquidity
Currency margin Maturity repayments ratio $m
-------------------- ---------- ----------- ---------- ------------ ---------- -----------
Libor
(1%) +
Term loan facility USD 6% 2019 10% 2.50 150
Libor
(1%) +
Term loan facility EUR 6% 2019 10% 2.50 150
-------------------- ---------- ----------- ---------- ------------ ---------- -----------
-- Nominal interest margin is calculated over 3m LIBOR, subject
to a 1% 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 stepped down to 2.50x on
June 30, 2017.
-- The minimum liquidity covenant requires the Group to maintain
cash on hand plus the undrawn amount available under the Group's
$50 million revolving credit facility of at least $150 million.
-- An annual cash sweep may be required depending on the Group's
leverage ratio.
7. CONTINGENT LIABILITIES
The Group carries a provision of $217m for the investigative and
antitrust litigation matters noted below. The provision was reduced
by $25m compared to period ending Q2 2017, reflecting payment of
previously reserved settlement amount to Amneal Pharmaceuticals LLC
(Amneal). Other than reducing by the Amneal settlement amount, the
Group has not changed the previously recorded provision, as the
other litigation and investigations are ongoing. 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 other parties,
or the ultimate cost of resolving all of the matters. The final
cost may be materially higher than this provision.
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 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 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, subject to certain stays.
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 24, 2017 Actavis received
tentative approval from FDA for at least its 8 mg/2 mg generic
product under ANDA 204383. 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 intends to appeal.
-- 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 modified in light of a 3
week extension of the post-trial briefing schedule, but the terms
are currently under seal.
-- 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 12(th) , 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 20(th) , 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, and Par in the District of New
Jersey; and against Actavis in the District of Utah. 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
also filed suit against Teva in the District of New Jersey,
although a Paragraph IV Notice letter has not been received
yet.
-- 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, and
the Group's pipeline products fail to 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 intends 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 intends 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
company has appealed the proposed disallowance and as now completed
its appeals process with the IRS. The Group has evaluated its
positions with respect to the IRS closing agreement and has
provided $19m tax reserve for amounts claimed on all open periods
as its best estimate of its expected settlement position for this
issue.
8. TRADE AND OTHER PAYABLES
September December
30 31
2017 2016
$m $m
------------------------------- ---------- ---------
Sales returns and rebates (377) (402)
Trade payables (41) (33)
Accruals (194) (212)
Other tax and social security
payables (18) (11)
Total (630) (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 September 30, 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 September 30, 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 YTD 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 $5m.
11. POST BALANCE SHEET EVENTS
There have been no material post balance sheet events.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors declare that, to the best of their knowledge:
-- This condensed set of interim financial statements, which
have been prepared in accordance with IAS 34 "Interim Financial
Reporting" as adopted by the European Union, gives a true and fair
view of the assets, liabilities, financial position, and profit or
loss of Indivior; and
-- The interim management report gives a fair review of the
information required pursuant to regulations 4.2.7 and 4.2.8 of the
Disclosure Guidance and Transparency Rules (DTR)
The Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Indivior's Directors are listed in the Annual Report and
Accounts for 2016. There have been no changes in the period.
Details of all current Directors are available on our website at
www.indivior.com
By order of the Board
Shaun Thaxter Mark Crossley
Chief Executive Chief Financial Officer
Officer
November 1st, 2017
Independent review report to Indivior PLC
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Indivior PLC's condensed consolidated interim
financial statements (the "Interim Financial Statements") in the Q3
Financial Results of Indivior PLC for the three and nine month
periods ended 30 September 2017. Based on our review, nothing has
come to our attention that causes us to believe that the Interim
Financial Statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Emphasis of matter - Going concern
In forming our conclusion on the Interim Financial Statements,
which is not modified, we have considered the adequacy of the
disclosure made in note 1 to the Interim Financial Statements
concerning the Group's ability to continue as a going concern. As
more fully stated in note 7 the Group is involved in investigations
by the Department of Justice and the Federal Trade Commission as
well as antitrust litigation. An amount of $217 million has been
established as a provision for potential settlement for all of
these matters. The amount accepted in the final agreed settlement
might be materially higher 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
cannot continue in business without taking necessary measures to
reduce its cost base and improve its cash flow. The Directors
believe that they are able to carry out the necessary measures and
that the Group can continue as a going concern for the foreseeable
future. Accordingly, the Directors continue to adopt the going
concern basis for accounting in preparing these Interim Financial
Statements. These conditions, along with the other matters
explained in note 7 to the Interim Financial Statements, indicate
the existence of a material uncertainty which may cast significant
doubt about the Group's ability to continue as a going concern. The
Interim Financial Statements do not include the adjustments that
would result if the Group was unable to continue as a going
concern.
Emphasis of matter - Outcome of litigation
In forming our conclusion on the Interim Financial Statements,
which is not modified, we draw your attention to note 7 that
describes the uncertain outcome of the ongoing ANDA patent
litigation over Suboxone(R) Film. 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, and if the Group's pipeline products fail
to 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. As a result of this potential decline and the extent of
its impact, the Directors are prepared to change the structure of
the business and to reduce its cost base, as also described in note
7.
What we have reviewed
The Interim Financial Statements comprise:
-- the Condensed consolidated interim balance sheet as at 30 September 2017;
-- the Condensed consolidated interim income statement and
Condensed consolidated interim statement of comprehensive income
for the period then ended;
-- the Condensed consolidated interim cash flow statement for the period then ended;
-- the Condensed consolidated interim statement of changes in
equity for the period then ended; and
-- the explanatory notes to the Interim Financial Statements.
The Interim Financial Statements included in the Q3 Financial
Results have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
As disclosed in note 1 to the Interim Financial Statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Q3 Financial Results, including the Interim Financial
Statements, are the responsibility of, and have been approved by,
the Directors. The Directors are responsible for preparing the Q3
Financial Results in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the Interim
Financial Statements in the Q3 Financial Results based on our
review. This report, including the conclusion, has been prepared
for and only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Q3 Financial
Results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the Interim Financial Statements.
PricewaterhouseCoopers LLP Chartered Accountants London
1 November 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
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