Oaktree Capital calls on Indivior to refresh board of directors

The letter, sent on Wednesday and published in a regulatory filing on Thursday, came just under a month after Indivior cut its full-year revenue forecast for the second time following a weaker-than-expected third-quarter performance from Sublocade, sending its shares tumbling.

In its letter to the board of directors, Oaktree expressed concern about the stock's underperformance and the 50% drop in the share price in the past year.

Oaktree - which owns an interest of about 7.5% in Indivior - highlighted strategic and communications problems at the company, including failures to address competition to its core product Sublocade and guidance reductions.

It said these have exacerbated investor concerns around the company’s strategy and the board’s willingness and ability to hold management accountable.

Oaktree urged the board of Indivior to address these issues immediately and work with the investment fund on refreshing the board "with directors who are committed to taking all steps necessary to improve shareholder value and hold management accountable as they seek to address" its performance.

Oaktree wrote: "It is unacceptable that Indivior’s stock price has plummeted more than 50% in the past year. In the face of that value destruction, Oaktree has attempted to engage constructively with the company’s board to address shareholder concerns and improve shareholder value.

"However, instead of coming to the table collaboratively and demonstrating that they are taking action, the board and management seem to be doubling down on a failing strategy, ignoring competitive threats and allowing costs to spiral."

It said the board and management’s actions, "or lack thereof", have caused Indivior to underperform the S&P Composite 1500 Pharmaceuticals Select Industry Index by 68%, 71% and 77%, over a one-year, two-year and three-year period, respectively.

Oaktree said that rather than focusing on its core product - Sublocade - Indivior spent valuable time and money on "unproductive acquisitions, a now-discontinued business line, and excessive R&D".

"All the while, the company essentially disregarded Brixadi’s entrance into the market by failing to take basic steps to protect Sublocade’s competitive position."

It pointed out that Indivior waited seven years after Sublocade’s initial FDA approval and more than a year after its competitor’s entry into the market before submitting its prior approval supplements to the FDA for Rapid Induction and Alternative Injection Sites.

This was "a pivotal step that would have solidified Sublocade’s dominant position and subdued the competitive threat from Brixadi," Oaktree said.

"As a result, shareholders have suffered a more than 50% loss."

Indivior responded with a brief statement, saying it had engaged actively with Oaktree in recent weeks on these topics "and remains open-minded about all proposals to enhance value creation".

"The board is focused on acting in the best interests of all shareholders as we continue to execute on our strategy," it said.

"Indivior looks forward to further engagement with Oaktree and other shareholders."

Indivior shares closed up 10.6% at 792p.