Ladies and gentlemen, thank you for standing by and welcome to the Indivior PLC's Half Year Results 2020. 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] I must advise you that this conference is being recorded today. And I would now like to turn the conference to your speaker Mark Crossley, Chief Executive Officer. Please go ahead.

Good morning and good afternoon everyone. Thank you for joining us today. I'm Mark Crossley, CEO and I'm joined today by my colleagues Ryan Preblick, Interim Chief Financial Officer; Javier Rodriguez, Chief Legal Officer; and Christian Heidbreder, Chief Scientific Officer. I'll make some opening remarks and then Ryan will provide a rundown of our first half and Q2 financials as well as fiscal year 2020 planning assumptions. Finally, Christian will update you on R&D activities before we close and take your questions. Turning to slide five, before I get into the detail of our performance and progress, I would like to say a few words in my new role as CEO. I want to leave you with no doubt that I believe Indivior has a great future based on its compelling vision its people and its unique capabilities. In the face of the challenging backdrop over the past several years from generic film entry to the various legal matters and now COVID-19, we have persevered and continued to make strong strategic progress in establishing a durable growth platform with our two differentiated depot technologies SUBLOCADE and PERSERIS. The evidence of our future success has been building. As you'll recall, we were seeing tangible results of our SUBLOCADE strategy in the first part of 2020 as KPIs and net revenue started to accelerate. As such my near-term strategic priorities are to manage through COVID-19 and to recapture the previous strong momentum with SUBLOCADE and PERSERIS; to maintain our financial flexibility as we remain in a transition period with film erosion expected to continue and the need to invest behind our depot technologies in the U.S.; and three, to resolve remaining litigation having put the important DOJ matter behind us. With increased financial flexibility and visibility, we have the opportunity in due…

Thank you, Mark. Good morning and good afternoon everyone. Let me now take you through the financials for the second quarter and first half 2020. On slide 15, starting with total net revenue of $150 million in Q2 declined 30% versus the comparable period and the $303 million in first half was 33% lower. The overall decline in the half year period mainly reflects the increasing effect of the entry of generic film competition in the first quarter of last year along with termination of our authorized generic program towards the end of 2019. Second quarter U.S. net revenue declined by 34%, primarily due to the factors that I just outlined for the half year despite the acceleration in BMAT market growth to the low teens. SUBOXONE Film share declined a modest 1 percentage point from 22% at the end of the first quarter. The rate of share decline continues to be significantly slower than historical industry analogs would suggest. As we have consistently maintained, we do not have a strong basis to explain this outperformance and you will see from our planning assumptions that we do not expect to sustain this in the second half. The decline in the U.S. Film business was partially offset by SUBLOCADE net revenue of $29 million in the second quarter, a 71% increase versus the prior year. This was unchanged versus the $29 million we reported in Q1 despite the sharp reduction in new patient starts that Mark described as the pandemic lockdowns took effect. Looking at the rest of the world, sales decreased by 17% in the second quarter, leaving first half sales unchanged on the prior year. This reflected a continuation of the underlying trends we have previously highlighted of competitive pressures in the EU region set against solid performance in…

Thank you very much, Ryan. This R&D update is four-fold. First, I will take you through progress with our Opioid Use Disorder treatment franchise with activities to support SUBLOCADE in the U.S., as well as SUBLOCADE and SUBOXONE Film outside of the U.S.; second, activities to support PERSERIS in the U.S. and our regulatory filing in Canada in partnership with HLS Therapeutics; third, early stage assets development with a focus on our selective orexin one receptor antagonist and GABAB positive allosteric modulator programs; and fourth, peer-reviewed publications and conference presentations. So let me start with treatment of Opioid Use Disorder with first SUBLOCADE in the U.S. You may remember that, at the time of SUBLOCADE approval, we had a series of post-marketing commitment and post-marketing requirement stories. The commitments are now all approved by the FDA and are considered closed. With respect to post-marketing requirement studies, we had a series of non-clinical studies all of those have been submitted to the FDA and are currently under review. We also have two clinical post-marketing requirement studies. The first one was dedicated to the rapid induction with SUBLOCADE. This is now completed and will be submitted to the FDA. The last clinical post-marketing requirement study is dedicated to a better understanding and characterization of those patients, who may benefit from the highest maintenance dose of SUBLOCADE of 300 milligram. That is a study that is currently under a feasibility assessment and protocol finalization and has been slightly delayed, because of the COVID-19 pandemic. We also initiated a series of life cycle management studies and there are really five main pillars in our strategy here to generate more real-world evidence to support SUBLOCADE. First, we investigated how high plasma concentrations of buprenorphine that are consistent with those delivered by the two approved dosing…

Thank you, Christian. So to quickly summarize our first half results. We delivered a solid first half performance, while focusing on our patients and safety of our employees through the pandemic. We resolved our most important outstanding legal matter, which allows us to plan for the future with much greater certainty. We're making great strategic progress with SUBLOCADE and PERSERIS, which have the power to drive a new era of growth for the company. Our immediate job is to recapture the strong momentum we had in the first quarter as we exit the COVID-19 lockdowns. Finally, as the new CEO of Indivior, I want to reassure you that the group's vision and overall strategy remain unchanged. I'm committed to building our long-term success, sustaining our global leadership in addiction for the benefit of our patients, our employees and our shareholders. With that, I'd like to turn the call over to your questions.

[Operator Instructions] And our first question comes from the line of Max Herrmann from Stifel. Please go ahead.

Afternoon, good morning. Thanks. Three questions if I may. Firstly, just on your anticipation or your expectations for SUBLOCADE longer term. Obviously, in the past you've talked about a peak sales potential of -- in excess of $1 billion. I wondered whether you were still comfortable with that expectation given the impact of COVID-19 perhaps in the near term. And just your attitude to it longer term. That's question one. Then just on the competition for SUBLOCADE, potentially coming later this year from Camurus, Braeburn, Brixadi. What are your sort of attitudes towards the impact that that may have on the growth of SUBLOCADE? And also how do you read the launches of that product in Europe and rest of world markets, where I think certainly the revenues we're seeing are ahead of certainly where some estimates have had the product. Maybe giving you some hope for SUBLOCADE in Europe as well. And then a final question is more on finance. And how do you view managing the profitability of Indivior going forward balancing the investment behind SUBLOCADE and PERSERIS with the actual P&L opportunity to drive earnings? Thank you.

Thanks, Max. I'll take the first couple and then hand over to Ryan with regards to the balancing of the -- our strategic focus with the current P&L. So with regards to the $1 billion, I'm fully confident in the $1 billion-plus net revenue target. We have novel product which transforms the treatment paradigm. This product is in a market with strong low-teen market growth under-penetration of medically assisted treatment. So I still confirm that. I think portions of that answer also carry over to when we talk about the competitive landscape with Brixadi, potentially coming out in December. This market is in double-digit growth. There is an unmet need in the disease space with a low penetration in treatment of patients, plenty of room for multiple sort of players in the injectable market. With regards to us, we think if we could get to similar access across all treatment areas, similar to what happens in the schizophrenia arena, then we can leave it to the doctor's offices with regards to which product they believe is the most efficacious. And we've spoken in the past obviously with why we believe that the benefits of SUBLOCADE are superior. So that's kind of our thoughts there. I'll hand it over to Ryan with regards to your discussion on balancing the investment versus the P&L.

Yes. Hey, Max good morning. And it's nice to finally meet you on the phone. In regards to your question look, we just closed out the biggest risk that this company had to deal with over the last couple of years. And to be honest with you we're not back to a full steady state just yet. We still have to work through the crisis of COVID. We do not know how long that's going to be and how severe it's going to be. And we also have to work through our transition period that we've talked about over the last couple of quarters, which is where we have our film business coming down and then the uptick of both SUBLOCADE and PERSERIS. So at this point, our priority is to make sure that we're putting our resources behind the growth of SUBLOCADE and PERSERIS. And also what's key is our cash flexibility during the next couple of months. So…

Thanks, Ryan.

Thank you.

Our following question comes from the line of Harry Sephton from Jefferies. Please go ahead.

Hi, there. Thanks for taking my questions. So firstly, just to start on SUBLOCADE, you mentioned the first quarter call that you were seeing the patient enrollment is down sort of in line with industry analogues at around 40%. Just curious as to how that's changed as we exit the second quarter. My second question is on SUBOXONE Film. And do you have an indication as to how much of that remaining market share you have is in the cash pay market and whether there's a possibility of any sustained brand value in that portion of sales? And then my third question is on the rest of the world business. I'm just curious as to -- so you said that SUBLOCADE is available in Canada and Australia. Just curious as to whether your marketing SUBLOCADE in those geographies currently? Thank you.

Thanks for the questions, Harry. I'll handle the SUBLOCADE and the rest of world business and then I'll hand it over to Ryan on the film. I could confirm during the second quarter when the sales force was out of the field. We were in line with the IQVIA sort of industry metrics that we saw with overall patient enrollments down about 40% to 45%. As we've started to enter the second quarter and started to have our sales force out in the field starting to do face to face as we discussed there's a modest amount of growth starting to claw back some of that erosion in enrollment. So we're encouraged that as the social restrictions start to ease, we can return to the quarter one levels of growth that we are experiencing where they were starting to accelerate moving forward that we were all so excited about before the COVID pandemic hit. On the rest of world business, we are out in the field with regards to SUBLOCADE in both Australia and Canada. It is early days, but the teams there are working vigorously and doing detailing, as well as some web advertising with regards to that. We look forward to seeing the results of that throughout the balance of the year and moving forward. So, Ryan, on the film?

Yes. Good morning, Harry. So, yes, our share profile looks like the following. The majority of our business is in the state Medicaid programs, with no doubt. And then, after that, it's your -- a pure commercial business, but as we noted in our release, we did lose formulary status on ESI, which is about 10% of our business. So that portion of our channel will become smaller. What we have left there are some Part D plans. And then, to your question around the cash percentage of our business, that at this point is a very small amount of our business after the share erosion since last year.

Okay, great. That’s very helpful. Thank you.

Thank you.

And our following question comes from the line of Nick Nieland from Citi. Please go ahead.

Hi, guys. Thanks for taking the questions. So can you just talk about how your plans now change with the clarity of the DOJ settlement? So particularly regarding your promotional spend on SUBLOCADE, are you planning to step up DTC advertising in 2021? And secondly, perhaps more importantly, your ability to now participate in M&A to augment your pipeline. Is this a priority for you? Will you stick to assets in the addiction space, or would you go outside of that area if you think it's appropriate? Quick question, if I can probably, again, on your ongoing OpEx. Can we expect similar levels as to what you've guided in the -- to the second half in the medium term, or will this structurally increase [indiscernible] corporate [indiscernible] actually change the way you can operate day to day and will it pivot you in any way? Thank you.

Thanks, Nick, for the questions. I think, I got them all, you broke up a little bit in the last one, but I took it to be how we can operate within the CIA. So let me maybe go through those. With regards to our plans, with clarity of the DOJ, what will that do with our near-term strategy? It doesn't change our near-term strategy. We're in this transition period, where the film revenues are coming down, because of the competitive pressures. And we're solely focused on the launch of our two transformational technologies of SUBLOCADE and PERSERIS. We're really excited about those. We were seeing great results in Q1. As it pertains to direct-to-consumer sort of advertising, I mean, putting that in place during a time where you don't have your sales force out in full stead with these, sort of, overriding pressures from COVID wouldn't seem appropriate and we'll reassess that as we look into the medium term. On the ability of the M&A, I think, the clear focus here for us is we are in this transition period. And we're truly laser-focused on delivering on these two depots, getting to the $1 billion-plus on SUBLOCADE and the $200 million to $300 million that we've guided on PERSERIS. Like most of the world with the onset of COVID, despite the resolution of the DOJ, we are in this transition period with the net revenue loss in the film and the launch of the products. So we're going to focus our allocation of resources on those and delivering those with excellence. Then we can turn at some point in the medium to long term, where we start to think about M&A and broadening out our leadership position in addiction and its comorbidities. And we can become a bit more…

Thanks very much.

Thank you, Nick.

Our following question comes from the line of Paul Cuddon from Numis. Please go ahead.

Hi, guys. Firstly, just congratulations on settling the DOJ and look forward to seeing those results in October. And the first question for me would be on the Organized Health System strategy and to what extent it changes the pricing dynamic and your OpEx requirement? Is this incrementally [indiscernible] coming from the OHS? And do you need to drive up the number of ways as healthcare professionals? And you can start with that and I've got a couple more to follow.

Paul, again, I think you were breaking up a little bit. Let me -- I know you were talking and asking a question on Organized Health strategy. I think the first part of it was on pricing. We don't see a real impact on pricing with regards to organized health systems. What you're doing is, you're focusing your efforts on institutions that have the infrastructure to support specialty products versus the small doctors' offices where even though we're at or better than most analogues on specialty pharmacy products, it is an increased burden on those. So these institutions have pharmacies on site, back offices to take care payments and the doctors can truly focus on making the right decision on behalf of patients. On the OpEx side, with regards to organized health systems, what we've been doing is continuing to shift our resource allocation, within the current sort of budgets that we have towards those organized health systems. So we think we have the right mix at this time, with regards to those. In the future, we could allocate more resources and we first look internally to reallocate before adding incremental OpEx.

Okay. So just to be clear the organized health system is where the vast majority of the 100 and 275 waivered HCPs would be?

I'm not familiar with the number you have there. We have talked about our top 500 targets where there's, one million patients and about 25,000 waivered physicians there. Which we think is a dense population that we're targeting and are seeing considerable amounts of growth there. And that was what was really driving, the first quarter results where we started to see the accelerated growth on both the KPIs, but also the net revenue.

Okay. Thank you. And secondly, for the rest of the world business, which has proven pretty resilient over the years to competition. And now you've got SUBOXONE Film and SUBLOCADE or SUBUTEX prolonged-release coming, so I'm just wondering to what extent that's got potential to either cannibalize the existing business, or do you see it actually helping grow the rest of the world now?

Yeah. Great, question Paul, I think, we're super-proud of our rest of world team and what they've been able to do. They've continued to really stem off the erosion associated with both, the branded and generic competition that they've had, over the last five to seven years, and are excited that they're starting to get the new technologies that we've had in the U.S. We think that, they are the best people in the globe to have those and bring those to market with their experience with the HCPs and partners across the globe. And we think this is an opportunity for that business to not just trade out, potential business on a sublingual basis, but also return to growth with the new technology. So we're extremely excited for, our team-mates that are in the rest of world business.

Fantastic and last one if I may. The capital allocation decisions, I presume, we need to wait through October. But could there be anything between October and February, or should we be waiting for kind of final results in the sort of February time to get a clearer picture there?

I think we're in this transition period Paul, which I think we need to get more certainty on. And if I had an answer to that, I'd be in really good shape. But I think what we'll have to do is, wait out what is the length and the depth of the impact of the disease. And that's truly in the disease's hands not in mine. So we'll continue to assess that. The impacts to our business and at the right time make those decisions.

Okay. Thank you very much and again congratulations.

Thank you, Paul.

Our following question comes from the line of Eric Fischer from Scopia Capital. Please go ahead.

Hi guys. Thanks for taking my questions. Two questions from me. One, now that the DOJ issues are behind you, can you talk a little bit about whether now or when might be the right time to revisit a U.S. listing? And secondly, it's great to hear, your continued commitment to reinvesting in the sales force and driving SUBLOCADE volumes. But given the depressed stock price the cash on the balance sheet and improved visibility with the DOJ resolution, it seems there's sufficient capital to take advantage of the current share price and potentially repurchase a meaningful amount of shares. So can you talk about, how stock buybacks might fit into your capital allocation strategy from here?

Sure, Eric. Thanks for the questions. I think with regards to the U.S. listing, as well as your discussions with regards to capital allocation and potential usage of cash, I think that falls similar to the answer that I spoke, with Paul. I mean we are in the midst of a transition period, with regards to the pandemic. We do have the impacts of the loss of film, while we're launching these transformative products. And I think it's best to remain conservative in the short-term, before we start to turn to our medium- and long-term aspirations, which would -- the first priorities would be to start to diversify the business. So really, really appreciate the question. But I think probably now is not the time, to come to conclusions on those.

Great. Thank you.

There are no further questions, at this time. Please go ahead.

With no more questions, I want to thank you for attending, the half one results. Thank you for your continued interest, in Indivior. Look forward to, the continued engagement in one-to-ones and the virtual conferences that are happening. And I hope you all have a great day. Thank you very much.

Thank you everyone.

That does conclude our conference for today. Thank you for participating. You may all disconnect.