Good day, and thank you for standing by. Welcome to the Indivior PLC Half Year Results 2024 Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please note that today's conference is being recorded. I would now like to have the conference over to your first speaker, Mr. Jason Thompson, Head of Investor Relations. Please go ahead.

Thanks, Raz, and good morning, everyone. Before we begin, I need to remind everyone that on today's call, we may make forward-looking statements that are subject to risks and uncertainties and that actual results may differ materially. We list the factors that may cause our results to be materially different on Slide 2 of this presentation. We also may refer to non-GAAP measures, the reconciliations for which may also be found in the appendix to our presentation that is now posted on our website@indivia.com. I'll now turn the call over to Mark Crossley, our CEO.

Thank you, Jason, and good morning and good afternoon, everyone. Thanks for joining us. Joining me today are Doctor Christian Heidbreder, our Chief Scientific Officer, Jeff Burris, our Chief Legal Officer and Ryan Preblick, our Chief Financial Officer. I'll quickly highlight our results and some updates from our release earlier in the month, and then Ryan will detail the financials and our full year 2024 outlook. We'll then open the line for questions. Our results for the second quarter were in line with the expectations we preannounced earlier this month. SUBLOCADE delivered year-over-year net revenue growth in the quarter of 24%. As we previously discussed, SUBLOCADE's growth continued to be impacted by transitory headwinds, which we expect to ease during the second half and especially as we look into 2025. There are two significant new items in today's announcement. The first is that we've taken a $75 million provision for the agreed quantum of an expected settlement for opioid litigation brought by certain municipalities and tribal nations. This continues our path of proactively resolving legacy litigation items at the right value for shareholder certainty. The second item is the board's decision to initiate a new $100 million share repurchase program, which we will seek to execute in an accelerated timeframe, given the attractive value the shares currently represent. This new buyback program is a strong indication of our confidence in delivering on our intermediate and long term objectives for SUBLOCADE, exiting 2025 at $1 billion net revenue run rate and achieving greater than $1.5 billion in peak annual net revenue. I'm not going to repeat everything we outlined in our July 9 release, but I do want to provide a few incremental updates since that announcement. First, we're starting to see the benefits of our increased commercial investments behind SUBLOCADE.…

Thanks Mark and good morning and good afternoon to everyone. This was a challenging quarter as a result of the transitory headwinds affecting SUBLOCADE and the changed market outlook for PERSERIS. I nevertheless want to reiterate Mark's confidence that we are on track to deliver against our medium term profitable framework and to create significant shareholder value For today, I will start my comments by summarizing the financial impacts of our decision to end the sales and marketing of PERSERIS before briefly walking you through the financials. For the second quarter and closing on our full year guidance, which we revised on July 9. Our strategic decision to end the promotion of procerus will result in a charge of approximately $65 million, with $42 million recognized this quarter and the balance of approximately $23 million in Q3. This charge includes severance costs, write offs for inventory, equipment and intangibles, and other termination payments. The cash impact will be approximately $20 million and will largely be incurred in Q3. On an annualized basis. We expect this result in savings of approximately $50 million, with $20 million included in the revised SG&A guidance for full year 2024. Turning to the performance drivers in the quarter, starting with the top line, total net revenue of $299 million reflected growth of 8% versus the year ago quarter, both on a reported basis and at constant exchange rates. By geography, total us net revenue grew by 12%. The rest of the world business was down 10% 8% when excluding FX. The quarter was negatively impacted by shipment timing in this quarter and elevated stocking in the comparable period last year. SUBLOCADE net revenue outside of the US grew 30% year-over-year to $13 million in the quarter. Total SUBLOCADE net revenue was $192 million, up 24%…

Thanks, Ryan. Despite a challenging first half, I hope we've demonstrated that we remain highly confident that the underlying fundamentals of our business and strategy remain intact and that we're on a path to help patients in this largely undertreated market while generating substantial shareholder value. We're happy to now take questions.

Thank you, sir. [Operator instructions]. We are now going to proceed with our first question. The questions come from the line of David Amsellem from Piper Sandler. Please ask a question.

Hey, thanks. Just have a few. First, can you talk about what percent of new starts you're getting versus the competitor Brixadi, and more importantly, how you're thinking about the mix between SUBLOCADE and Brixadi as we move through the second half of the year and into 25? That's number one. Number two, looking at the guide for SUBLOCADE, can you talk about the extent to which it contemplate competitive headwinds related to Brixadi. In other words, does it just contemplate the disenrollment or does it contemplate competitive headrooms as well? And then lastly, just on the inventory, is that a statement on the competitive dynamics or is there something else going on there? Thank you.

Thanks, David. Let's start with the Brixadi question and I think as we look to the market, we continue to see a market where nothing hinders our conviction behind our belief that SUBLOCADE is a paradigm shift in treatment and we don't see other products that match the offering, especially in a market where the opioid epidemic has transitioned to Fentanyl and other highly powered synthetic Opioids. This is further reinforced into your question David, that we're seeing, four out of five new patients are choosing SUBLOCADE. So a significant patient choice as new patients are coming into treatment. With regards to the guide. The guide, we have extreme confidence with regards to what we've guided on SUBLOCADE, and that includes all the factors we currently see in the market, the transitory issues as well as competitive pressures. And if you could repeat your third question. I missed it when? When you asked it.

Oh, Yes, sure. On the inventory, just the lower stocking levels, is that a statement on the competitive dynamics or is there something else going on there? Thank you.

I'll hand that to Ryan.

Yes, no, that's a good question and at this point, we believe it's a. It's a one time reset as we get through 2024.Primarily driven by, as we become more focused on these OHS larger networks, they tend to be able to streamline their order patterns. So the turns at the wholesalers have become lower, which then has the byproduct of requiring less stocking at this point.

Okay, if I may just sneak in one follow up, just on net pricing, net realized price over time. You know, with a two player LAI market now, how do you think about the trajectory of net price, not just for this year, but also as we move through next year? Thanks.

Yes, I think we'll probably guide on '25 in February. But what we see now is on an absolute pricing basis, is it's incredibly stable and any of the sort of variances I think that folks would be modeling are going to be more mix related as the channel sort of mix shifts through time. And David, let me just say a bit remiss. I probably should have started with this. Welcome to coverage. Saw the initiate this week. Thanks for joining.

Thank you.We're now going to proceed with our next question. The questions come from the line of Paul Cudden from Deutsche Numis. Please ask a question.

Good morning, guys. Just two questions for me, please. Just noting the success in the alternate sites of care between Q1 and Q2. I'm just wondering if you could elaborate on those five partners. What exactly is working well there, and are they exclusive relationships? And there has been. Secondly, just for me, on uncertainty over the impact of Medicaid dis-enrollments you had a peer with high Medicaid sales site that they hadn't seen any impact. So I'm just wondering if you could just help me quantify the impact that you have seen and why that might be different. Thank you.

Certainly. So, with regards to ASOC. Yes, we're really pleased with that and the progress that we've had and continue to have and just to remind everyone, this is something that's going to take quarters and years to build out a nationwide network to open this up for these independent physicians who've previously been held out because of the administrative burden of a specialty pharmacy product. So we now have over 12,000 locations across 22 states with five partners and seeing injection growth grow over 55%. As we're able to start calling on these independent physicians and be able to highlight that there are those local pharmacies there is very important. So very excited about over 1200 locations. With regards to the Medicaid re-enrollment. Listen, I can't speak to other people's business, but what I can say is we spent an immense amount of time diagnosing our business and where we are. And what we've seen with the waves of both the change healthcare and the re-enrollments is we've seen a major shift in our retention curves that have fluctuated through time that we believe have impacted our business of the $60 million reduction on SUBLOCADE, about $30 million, or about 5% growth year-over-year. I still do have to highlight, you know, we're still forecasting that we're going to grow over 25% on SUBLOCADE year-over-year. So while a bit slower than we expected because of the transitory issues, we're still seeing significant growth and are excited about, you know, the fact that we are receiving four out of five new patients.

Thank you. We are now going to proceed with our next question. The questions come from the line of Chase Knickerbocker from Craig-Hallum. Please ask your question.

Good morning, everyone. Thanks for taking the questions. So just starting on SUBLOCADE just to kind of work off a question that David had asked. So you had said kind of when we were originally doing 2024 guidance that and with the update earlier this month that the competitive kind of headwind, so to say, was kind of in line with your expectations when you had originally guided. Can you kind of walk us through what it assumes from kind of new patient starts from your competitor in the second half of the year? Does your guide assume that those new patient starts for your competitor kind of ramp up further from the 21% that I think you referenced earlier? Just kind of benchmarking us on guidance for the second half there?

Yes, Chase. Listen, we don't provide guidance on all kind of the leading and lagging KPI's. I think the key part here is we've given a guidance range for the balance to go that we have extreme confidence in. We highlighted at the interim update that the transitory nature, the transitory items have made it more difficult to forecast what, you know, the move forward on a quarter to quarter basis, but we have confidence in the range on the year that we'll achieve that.

Got it. And then maybe just one for Jeff, if he's on the call here on the new provision. There's obviously quite a few plaintiffs kind of around the opioid MDL items. Can you just kind of help us clarify this preliminary settlement? Kind of what you would expect it to settle when it comes to the opioid litigation? Is this kind of a wholesome potential preliminary settlement or just kind of help us there?

Yes, sure. Chase, thanks for the question. So the settlement is, potential settlement is with the municipalities and tribal nations, which if you look at our note 13 when we talk about that, about one third of the cases are private plaintiffs and two thirds of those 400 cases are municipalities and tribal nations. So we would expect it to settle, put those cases with municipalities behind us.

Got it. And just last one, we haven't really talked about it too much with kind of all the recent items. Maybe just speak to kind of how the reception has been from potential customers relative to what your original expectations were and then kind of just the main drivers for kind of the revision and expectations that we've seen recently and then a little bit more context, if you would, on kind of the pushback that you're receiving from some harm reduction advocates. Thanks for the questions.

Yes, thank you, Chase. And what I'd say is maybe I'll start with your last point and then build that into what we're seeing. I think the pushback that we're seeing from certain harm reduction folks has been larger than we would expect it. We have a medication here that we believe is very suited for the synthetic opioids that have overtaken the drug supply, that are causing poisonings of non addicted people as well as overdose of those that are choosing to recreationally use opioids. And we believe that nalmefene is a breakthrough paradigm shift for these folks. And it's the only one specifically called out for synthetic opioids on the label. So we've seen a stronger than expected voice from harm reduction who have a fear of precipitated withdrawal. And obviously that's not been studied in market, which makes it tough. I think from our standpoint, what we're doing is helping drive experience through our experience program. As we mentioned at the interim results, we have over 170 activations of new experience programs where people are able to get product, use it. I think for me, the extreme positives there is that as people are getting this product and using it, the average units used in our initial pilot up in Michigan was 1.2 units. So you're using less units. It's a simpler rescue and it's acting exactly as we'd expected with differentiation versus Narcan in the initial samples. Now we have to translate that into real world evidence that we can use with customers. But we expect through time that the experience program, the in market performance, will translate into sales to customers and in line with our expectations.

Thank you. We are now going to proceed with our next question. The questions come from the line of Thibault Boutherin from Morgan Stanley. Please ask your question.

Yes, thank you very much. My first question is on the average number of disciplines per patient. So we see the number of patients increasing faster than the number of dispense. And, you know, if we do a very good math on the average distance per patient, that number has been coming down for a number of quarters. Just wanted to know if you could help us understand what this means. I interpret this as a faster turnover of the patient population. So in average, lower duration of treatments. First of all, is this correct? And also, is it related to the Medicaid disruption of your patient base? And so could we expect the average number of dispense per patient coming back up as we get out of the Medicaid disruption? So that's the first question. And second question on the share buyback. Could there be any potential technical constraints here because you're buying a large proportion of the outstanding shares over a relatively short amount of time. So just wanted to know if you could potentially run into any technical limitation. And then last question on the opioid civil opioid agreement. So can you just clarify that all public entities have been dealt with, and so the remaining ones are only the kind of private individual claims? And also, if you could give us any insight into where you are in managing these remaining individual claims for the similar MDR, is it possible to see potentially also settlements dealing with all of these at the same time at some point? Thank you.

If you could just repeat the end of your last question, please. It broke up a little bit. I heard the portion on the opioid MDL public versus individual, or what we would call more product related neonatals. What was the second part of that where you broke up? The second part was just if you could give us any insight on where you are on managing these claims. So if you could also see a potential settlement at some point. Thank you for that. Sorry you broke up. So I'll handle the first one. I'll ask Ryan to handle the share buyback and then let Jeff talk through the nuances of the opioid MDO, which is again a preliminary settlement agreement on quantum, with more to come on the exact details of the papering. So when it comes to the average number of dispensers, I think you virtually have answered your own question, Thibault, is you are seeing a little bit of a disconnect on patient growth versus dispenses, and you indicated a faster turnover. I think it is due to that retention curve shift that we saw associated with change health associated with the Medicaid disenrollment, where we're seeing patients out of treatment faster. Our expectation is that that retention curve will shift back to what's been a very consistent retention curve, you know, for the past four years. So we expect that as the transitory issues ease, to come back and reconnect, so to speak, moving forward. So with that on the SUBLOCADE dynamics, Ryan, you want to talk about the technical constraints with regards to the buyback that Tebow was asking?

Yes, So the plan is to first wrap up the current program as soon as possible. We anticipate that end of July, early August, and then start this new program right after that. We have a plan of front loading that to certainly take advantage in the disconnecting the share price and have a structure in place to have it last over six months. In regards to any constraints, we certainly have to abide by more trading rules and the most common one is if the share price is 5% above the five day average, we do have to halt purchases at that point. That's something that's happened in the past and something that we will have to adhere to going forward.

Thanks, Ryan. Jeff, do you want to talk to the opioid MDL?

Yes, let me move this microphone a little closer to me. Really appreciate the question. So, first, I didn't say this to chase, but I just want to make sure everybody understands. We are really pleased to have reached an agreement on the quantum for the settlement because we do believe it will ultimately put the municipality litigation substantially behind us. Obviously, we still have to negotiate the final material terms, but we have reached that agreement with the plaintiff's executive committee in certain states. Attorney general, I think you had asked a question about the private plaintiffs. So as it relates to the private plaintiffs, those cases are very early in their stage, right. They've all been stayed. There has been little to no activity on them. You should view those claims, I think, as Mark mentioned, more along the lines of a product liability claim. But because they're in the very early stage, we have only begun our evaluation of the claims. Obviously, we believe we have meritorious defenses and we intend to vigorously defend ourselves in these private plan of actions. And then lastly, we do expect and would plan on fulsome participation from municipalities in the cases. So we would expect fulsome participation, but until we get to final settlement terms, we won't know how that's going to play out.

Thank you. We're now going to proceed with our next question. The questions come from the line of Max Herrmann from Stifel. Please ask your question.

Great. Thanks for taking my questions. I've got a couple of them. A firstly, just in terms of looking towards the cannabis use disorder AEF data in September, what should we be looking for in terms of where do you see success in terms of the clinical outcomes? Obviously conscious that you then have to wait till the end of phase two, meeting with the FDA and make a decision on whether to exercise your options. That's the first question. The second is just a bit more clarity on the, I guess a third of the cases. I think you talk about 400 cases in the opioid MDL and the third private cases. What is that case? Because obviously I thought the basis of most of these cases was to do with use of opioids for treatment of pain in individuals. What are the cases that they've got against Indivia then?

Thanks for those questions, Max. I'm going to go ahead and start with Christian to talk about the end of phase ii results and meeting with the FDA, and then I'll ask Jeff to talk a little bit more color on those remaining cases that aren't part of the settlement.

Hi, Max. So, as you know, I cannot comment clearly on the results at this stage. The study is complete. We are currently locking the database, and over the next several weeks and couple of months, we are going to thoroughly curate the data, analyze the data, and interpret the data. So we are currently on track to have top line results in September. Following these top line results, we will then prepare the submission to the FDA. This is a. A pretty substantial submission to the FDA in order to organize an end of phase two meeting with the agency before the end of the year. And then it is, as Mark has mentioned, the combination of the data of the phase II B study as well as the feedback from the FDA at the end of phase 2 meeting, it will help us to make the decision as to whether or not we exercise the option, these assets in the first quarter next year. Yes, I think the key on that one, Max, is it is truly like a lock and key. The results will come out and they'll be what they are versus the end point in the phase two, which was an 80% reduction. But that will then inform a dialogue with the FDA with regards to a potential phase three and what those endpoints would be, which could differ from the phase two. So truly, you have to first see the results and then you have to have the discussion with the FDA. And only the two of those, when added with the market research on what it would mean commercially, will inform the option.

Jeff, could you please speak to the remaining cases?

Yes, sure. Mark and Max. So your question is, what about the individual plaintiffs, the private plaintiffs? Most of them are asserting claims for what is called a neonatal abstinence syndrome. So these would be mothers or family members that have suede alleging that a child was born with an addiction to opioids. And we have been named in a number of those lawsuits. So this would be individuals who were taking, I guess, SUBOXONE, and as a result of their treatment, then in pregnancy, the child was born addicted to opioids. Yes, Max. I would maybe re-characterise it, as they allege. They've taken SUBOXONE. That's part of the issue. Right. These are very early in their stages, so we don't really have a lot more information than they filed the claims. But yes, the allegations would be that they took some product that we had and that the child was born with neonatal abstinence syndrome.

Thank you. [Operator instructions]. The questions come from the line of Paul Cudden from Deutsche Numis. Please ask your question.

Yep. Thank you, guys. I just got a couple of follow up questions, if I may just firstly, now there are two companies, but at least two companies out there promoting kind of long acting injectables for opioid use disorder. I mean, are you starting to see any new clients come on board then getting in contact with you to ask about the potential benefits of SUBLOCADE that you may not have activated yourself. And then secondly, for me, a question for Christian on the start of the longer acting product. Once you've shown the two nanograms per milliliter for 90 days, I mean, what really would there be sort of needed to do to get that product through into kind of more kind of pivotal studies? Thank you.

Maybe I'll handle the first one and then I'll ask Christian to talk through the longer acting. Listen, I think our belief has always been that when you look at this disease space, the high unmet need that's out there, less than two in ten people in treatment, there is a huge role to play for long acting and certainly plenty of room for multiple, multiple people to participate. Our expectation is that the increased share of voice for long actings will actually drive market growth in the medium and long term as we continue to help more patients. And I think as I detailed in my prepared comments, what we are seeing is continued strong HCP and patient growth that are active prescribers. So now we're over 7000 active prescribers of supplicate. So we continue to see good growth and see it that we're in the early days because we only have about a 6% penetration of LAIs in the market. So excited about the bright future ahead, Christian, you want to speak to the Alar partnerships?

So the of a three month ADI with buprenorphine using the Alar drug delivery platform. This is based, however, on a single dose study. So the next step for us is to organize what we call a multiple dose pharmacokinetics study to really inform us and understanding the pharmacokinetics properties of this new product in order to then organize a meeting with the FDA before we embark on pivotal phase three trials.

Thank you. We have no further questions at this time. I will now hand back to Mark for closing remarks. Thank you.

Thank you, Ros. With no more questions, this will conclude our second quarter half one results presentation. I'd like to thank everyone for their continued interest in Indivior and we look forward to updating the market as we progress. Have a great day.

This concludes today’s conference call. Thank you all for participating. You may now disconnect your lines. Thank you.