Indivior first quarter disappoints, but guidance maintained

Indivior's revenues fell 6% in the first quarter even though sales volumes improved, as the company's opioid addiction treatment came under pressure from generic competition and trade de-stocking in the USA.

Sales in the first three months of the year of $255m were down 4% at the reported level, which was short of the average analyst estimate of $265m.

Volume was ahead of last year, but low double-digit market growth was offset by a decline in market share from continued competition in the most price sensitive accounts and wholesaler destocking resulting from a build-up of supply towards the end of 2017.

List pricing was up but was more than offset by unfavourable mix of sales channels, with increased volumes via the lower-margin US Medicaid business and the paying of "tactical rebates" to gain formulary access in commercial managed care and certain Medicaid accounts in response to continued discounting by both branded and generic tablet competitors.

US revenues were down 8% despite market growth remaining strong as channel mix and competition from - INDV share 55% from 60% - has come under pressure in certain segments along with trade destocking despite volumes being up.

Rest of the world revenues were up 4% on constant exchange rates driven by growth in Australasia and Canada as the opioid crisis spreads.

Even though costs were lower than expected, investment in the launch of its new Sublocade monthly opioid addiction treatment meant operating profits were 9% lower than in the prior year at $116m, or 23% lower at $99m if excluding the $17m gain from the out-licensing of intranasal naloxone opioid overdose patents.

Lower interest and tax led to net income coming in at $93m, tracking in line with management's full year guidance for $290-320m.

The launch of Sublocade was said to be "progressing well, with positive patient and physician feedback and strong initial payor coverage".

Net cash stood at $407m at the end of March and there was no change to legal provisions of $438m ahead of the Federal Appeal against Dr Reddy's and others scheduled for a first brief on 4 June.

Shares in Indivior were down 2% to 451.2p by midday on Wednesday, but are up 13% so far this year despite stumbles over its ongoing legal battles.

Broker Numis said it expected Inidivior to lose the Federal Court Appeal, expect FDA approval of at least one generic and an Inter Partes Review on the new patents. "A settlement with DRL, Teva (branded generic) and Alvogen remains the most likely outcome in our view with generics in late 2019."