US strength sees Indivior lift guidance

Indivior beat half-year expectations and raised guidance for revenues and earnings thanks to continued strong market growth in the US, which was partially offset by generic competition in more price sensitive payors in the US.

The FTSE 250 speciality pharmaceutical company posted a 4% year-on-year rise in first half revenue to $553m, or 4% at constant currencies, and operating profit that was 23% higher in the six month period at $244m, which it said reflected higher net revenues and lower expenses, primarily legal and research and development expenses.

On an adjusted basis, excluding $25m of exceptional items in the current period and $14m in the year-ago period, first half adjusted operating profit increased 27% to $269m.

First half net income was $153m, up from $107m, while on an adjusted basis excluding exceptional items in both periods, first half net income increased 25% to $169m.

It did report that a $25m exceptional item was booked in the second quarter, reflecting a legal settlement of antitrust litigation with Amneal Pharmaceuticals.

At the end of the period, Indivior’s cash balance stood at $792m, up from $692m at the start of the period, while it reported net cash of $295m, rising from $131m.

Indivior also raised its full-year guidance as a result of the “strong” US market conditions, market share resilience of its ‘Suboxone Film’ and lower expenses.

It now expected full-year net revenue to be in a range of $1.09bn to $1.12bn, up from previous guidance of $1.05bn to $1.08bn, and adjusted net income of $265m to $285m, lifting from $200m to $220m, assuming no material changes to current market conditions, excluding exceptional items and at constant currencies.

That raised guidance included $40m to $60m of previously announced pre-launch investments for late stage pipeline assets that were largely phased to the second half.

“We have maintained good business momentum and executed well throughout H1 2017, as underlying market growth in our largest market remains strong,” said CEO Shaun Thaxter.

“This, combined with lower expenses, has allowed us to generate strong overall H1 2017 results and to raise our FY 2017 revenue and net income guidance.”

On the operational front, Indivior said its US market growth in the first half continued at low double-digit percentage levels.

Market share for its ‘Suboxone Film’ averaged 59% in the first half, down from 61% year-on-year, exiting the second quarter at 57%, which the board said was primarily due to ongoing generic competition in more price sensitive US payors.

A new drug application was submitted for its RBP-6000 buprenorphine monthly depot for the treatment of opioid use disorder on 30 May, with a priority review being sought.

Development on RBP-8000 (Cocaine Esterase for Cocaine Intoxication) was terminated during the period due to clinical complexity on the relatively small commercial opportunity, although the board said research and development efforts on broader stimulant use disorder treatments continued.

The group said it was also continuing discussions with the Department of Justice about a possible resolution to its investigation.

“We are also pleased in the quarter to have conclusively resolved outstanding litigation with Amneal, which we believe is in the best interest of shareholders and is another step in resolving the legal risks to our business,” Shaun Thaxter added.

“More importantly, we achieved a major landmark in securing the long-term future of Indivior: the submission of the NDA for RBP-6000 takes us a critical step closer to making this potentially transformational treatment option available to US patients with moderate-to-severe opioid use disorder.”

Shares in Indivior rose more than 12% on Thursday morning to hit 355.2p by 1020 BST, their highest level since March.

Analysts at RBC Capital Markets said the interims were "nicely ahead" of its and consensus estimates – 3% at revenue, but 15% at EBIT and 11% at EPS thanks to lower spend.

They noted there was no update on ANDA litigation or FTC/DoJ case, but key pipeline asset remains on track with an FDA response due end of the month on gaining fast-track status.

"We note the company has now shelved the cocaine esterase product, which is non-core but another blow to its R&D capabilities and pipeline (worth some 2p in our valuation, so more than offset by the strong financial performance seen today)."