Ladies and gentlemen, thank you for standing by, and welcome to the Indivior Third Quarter Results Conference call. [Operator Instructions]. I would now like to hand the conference over to first speaker today, Chief Executive Officer, Mark Crossley. Thank you. Please go ahead.

Thank you. Good morning, and good afternoon, everyone. Thanks for participating in our call to review our third quarter results and progress. I'm Mark Crossley, Chief Executive Officer of Indivior. I'm joined today by Ryan Preblick, our Interim Chief Financial Officer; Christian Heidbreder, our Chief Scientific Officer; and Javier Rodriguez, our Chief Legal Officer. In a moment, Ryan will cover the key financial drivers and detail our fiscal year 2020 guidance. Let me first provide my perspective on our performance, outlook and priorities. My key takeaway is we're successfully navigating through the challenging COVID-19 environment, while continuing to press forward on the strategic priorities that we believe will create long-term shareholder value. As you're aware, we took a major step to create greater certainty for all stakeholders by settling with the DoJ. This agreement is expected to be approved on November 12, and we look forward to moving on from this to, again, focus all our resources on patients. Additionally, we executed on 3 critical business priorities to help ensure we're positioned to outperform in a normalizing environment as and when the pandemic subsides. First, despite severely limited access to health care providers, the agility of our teams helped us to deliver a strong operating performance, including 90% year-over-year growth in SUBLOCADE through the first 9 months of the year. Our progress across the business to date provides us with sufficient visibility to reinstate fiscal year 2020 guidance, and we now expect to be profitable on an adjusted pretax basis for the full year. Second, we initiated a number of strategic alignment actions in September to address the group's cost base and enhance our long-term profitable growth profile. These actions will help us maximize the substantial patient opportunities we see in the U.S. for SUBLOCADE in the organized health system…

Good morning, and good afternoon. Overall, our financial performance was solid, especially considering the challenges brought about by the COVID-19 pandemic. Our top and bottom line results were ahead of our expectations, including a modest operating profit on an adjusted basis and our cash position remains strong. As Mark noted, we have reinstated full year 2020 guidance, and we expect to be profitable this year. I'll detail our guidance assumptions in a moment. But first, taking a closer look at the third quarter, starting with net revenue. Overall, we saw an expected decline versus the previous year. As you may have read, the story hasn't changed much here. While overall net revenue has continued to outperform our expectations from the resilience in SUBOXONE Film, continued overall share erosion compared to a year ago and the discontinuation of the generic film program last year were the principal factors of the net revenue decline in the quarter and year-to-date. The decline was partially offset by net revenue growth, mainly from SUBLOCADE, which grew 74% to $33 million versus the year ago quarter and almost doubled to $91 million from the year ago 9-month period. Focusing on the U.S. market dynamics for a moment, SUBOXONE Film share averaged 21% in the quarter, which is down only 5 share points from 26% in the year ago quarter and down only 1 percentage point from the previous quarter. While the share resilience is certainly welcome and reflects the competitiveness of the product, we continue to caution that it is not a controllable dynamic, and we are continuing to plan the business based on the share ultimately eroding to industry analogs. As we move into 2021, despite the worsening opioid crises, greater formulary scrutiny by payers could accelerate erosion of our branded share from current levels.…

Thank you, Ryan. That concludes our formal remarks on a strong third quarter, which saw SUBLOCADE return to both quarter-over-quarter growth of 14% and year-over-year growth year-to-date of 90%. I'll hand it to the operator to facilitate questions and answers.

[Operator Instructions]. And your first question comes from the line of Harry Sephton from Jefferies.

So just to start with on the organized health system channel. You mentioned that there's been a good performance in that channel. Do you have any additional detail that you can provide on the percentage of sales -- percentage of SUBLOCADE sales coming from that channel? And also the sense of percentage growth currently coming from the OHS channel as well? And then on from that also on SUBLOCADE, can you give us any detail on any preparations you're making ahead of the potential Brixadi launch in December? And then also just on the financials, on the gross margin, they were a bit weak even with the exceptionals. Could you just go over what exactly is driving the lower gross margin there?

Thanks, Harry. And I'll go ahead and take the first two, and then I'll ask Ryan to handle the gross margin question. I think with regards to the organized health channels, the percentage that's in organized health associated with SUBLOCADE, a year ago, at the half year 2019, we talked about it being 15%. And then at the half year, we talked about it accelerating to 30%. What we're seeing here at the end of Q3 is approximately 35% of the revenues coming from there, and the majority of our growth that we've seen on both a quarter-over-quarter and a year-over-year basis is coming from those channels, which are higher importance in which we've increased our investment and to accelerate. If I go to your question on Brixadi launch, I think, again, this is one where we have to step back and look at the broader market, and we have a double-digit growing market. We have a very low penetration for patients that are suffering opioid use disorder, a very small percentage of them, 20% to 25%, are actually in treatment at any one time. And we've had a paradigm of treatment which has been suboptimized for a number of years moving forward. And I think in that context, we continue to focus on operations associated with SUBLOCADE, creating trial, repeat and getting exposure to our medication, which we think breaks that paradigm that previously existed. If I think through, adding another long-acting into the space, I think given that landscape, there is plenty of room for multiple players in that sort of paradigm. We've seen it in other spaces where multiple voices have at times accelerated the change to long actings. So with that, I'll hand over to Ryan with regards to the gross margin fluctuations quarter-to-quarter.

Yes. So that's a fair question. And just to start off, just want to reiterate that we believe by the end of the year, we will be back to the mid-80s in terms of our gross margin expectations. All we're seeing in Q3 is just primarily tied to the mix of our business. We had a strong quarter on the film, which, as you know, has the lower margin at this point as well as some slight plant variances in terms of production, but majority of those are bound and the margin is tied to the mix.

Okay. That's very helpful. And just one quick follow-up on the Rest of the World business. Do you have any timings around the launch of Subutex's extended release in the European markets?

Harry, we're currently, as you know, in Canada and Australia, and the rest of the launches that we're contemplating, we're awaiting to see where reimbursement comes out. We expect those to be coming throughout 2021. As you know, we've done a decentralized sort of procedure over there. So those will be staggered out depending on the individual jurisdictions.

And your next question comes from the line of Nick Nieland from Citi.

I've got three, please. Firstly, can you comment on the realized pricing for SUBOXONE and SUBLOCADE because both of these seems to have been better than our expectations, at least? Is this more sort of stocking effect? Or is this a positive net pricing environment? And can you comment on how this is going to look for the rest of the year in 2021, especially with the potential launch of a competitor coming in December? Secondly, on the pipeline, you dosed the first subject in your election I trial in July. I wonder when we might hear about results of that trial. And can you also comment on your -- two early-stage projects and when you might see those into the clinic? And then finally, just on the finalization of the DoJ agreement on the 12th of November. Is this merely a formality? Or is there any risk around this event for the terms of the agreement?

Thank you, Nick. Let's start with the DoJ. I think from a DoJ perspective, we see this as a bit of a formality. We have agreement across all of the different organizations within the DoJ, the FTC and the state AGs, and it's just going to the judge for his formal acceptance. So we expect that to occur on November 12. I think what I'll do is, I'll hand over first to Christian with regards to OX1 development, and then your question with regards to further on the GABAB. And then we'll transition to Ryan with regards to the broader pricing environment. So Christian, if I could ask you to talk through the OX1 and then the GABAB?

Absolutely, Mark. So we are currently dosing healthy volunteers in what we call a single ascending dose protocol. This is a fairly long study because we are basically investigating several doses that is going to be completed as per the planned protocol around the third quarter of 2021, at which point you may expect to see some results of that single sending dose study. 2021 will then, depending on the outcome of that study, be dedicated to the start of what we call the multiple ascending. Those, again, in the third quarter of 2021. So that is for the orexin 1. For GABAB positive elastic modulator. We are initiating what we call a late lead optimization program, which means that we identified some lead molecules that are now ready to go through further evaluation or optimization. 2021 will be totally dedicated to that late lead optimization program, at the end of which, hopefully, we will have a couple of candidate selection molecule that will be ready for IND-readiness activities towards the end of 2021 and the beginning of 2022.

Thanks, Christian. I'll hand over to Ryan to talk through the pricing question that you had, Nick.

Yes. So just to be clear, there were no pricing actions taken between Q2 and Q3. Nothing fundamentally changed in our strategy. It could be due to 2 main reasons: one, just mix of the business as we grow into certain channels that could be creating some of that as well as I just want to also call out that the volume that you're seeing in the release are -- those volumes, they're based on sales out into the marketplace, while our total net revenue numbers are based upon our sales to our customers. So there could be a gap there.

So just a follow-up there. Do you anticipate any net pricing impact from having to basically compete with a new competitor from December for SUBLOCADE?

We've got great access across and have been told that pricing is not an issue with regards to that access. In the specialty arena, we're a relatively low-priced product and have relatively low rebating. And we see in other site-oriented areas where the price isn't typically the issue that the battleground is typically with regards to efficacy. And we think in an area such as opioid use disorder, where so many people around not just the U.S. but around the globe are suffering from this horrible epidemic, we're hoping that it's -- everyone gets access to treatment, and we're able to base it on efficacy moving forward.

And your next question comes from the line of Paul Cuddon from Numis Securities.

Firstly, I mean, just on SUBOXONE Film in the U.S., are there any major kind of accounts or formularies we should be aware of that have potential to fall away kind of into FY '21? And secondly, on SUBLOCADE. With telemedicine prescribing now kind of a more commonplace, and I suppose, likely to stay kind of into perpetuity, does that sort of impact the logic for kind of SUBLOCADE as a means to kind of reduce clinic workload and burden? And so is the actual kind of attractiveness of SUBLOCADE reduced in this telemedicine era?

So I'll start with that one, Paul, and then I'll hand off to Ryan to handle the Film question. With regards to telemedicine, I think we applaud the DAA and the agencies that put that in place, especially in the pandemic, where isolation has really accelerated the disease and it's accelerated the ability for people that are struggling to get in for treatment. I think as you've highlighted, many of those people come in and they're getting on sublingual because of the nature of telemedicine, where a doctor can see that patient digitally and give them a script and go to a regular pharmacy versus SUBLOCADE, where it requires an in-person visit for administration of the medication itself. It is a chronic relapsing disease addiction, and we are continuing to see growth on SUBLOCADE, as you saw in the third quarter, 14% quarter-over-quarter growth as people continue to increase both the patients per HCP and we continue to get further broader HCPs prescribing. And so while patients initially get help with the increased oral, eventually with the chronic relapsing nature, they can turn to SUBLOCADE to help them maintain their treatment. So Ryan, could you help with the Film?

Yes. So just a couple of things on the film: One, we are still quite happy with the cash generation of the Film business, but keep in mind that we no longer do promote the Film product. What we're anticipating, as we get to the end of Q4 into Q1 is the plans will start -- taking a look at their plans as they get into next year, that's where we think some of the key final decision will be made, what products they want to keep on their formularies. Keep in mind that we did lose Express Scripts in July. What will most likely happen or you would assume would happen with generics is they would put a full block on a branded product. So net-net at this point, again, we've done nothing fundamentally different in our business to prevent the share getting back to analogs, and we'll see how this plays out as we go into 2021.

Okay. And then just another question. I mean you have provided some OpEx guidance into kind of 2021 as well, a reduction over the kind of 470 to 480 baseline, but that must assume a kind of certain level of revenue. So could you provide, not your baseline revenue assumption that goes with those costs, but some means for us to be able to flex that OpEx for the various element, if you outperform on revenue on SUBOXONE.

Paul, fully respect to your question. I think given the circumstances, the external forces on the business, I think that's probably a question best answered when we get to February with the full year results, and we're a bit more informed. And that's normally when we handle the issue of guidance for the 2021 year.

[Operator Instructions]. And your next question comes from the line of Max Herrmann from Stifel.

Firstly, I wanted to get a feel for what you're seeing in Australia, where I believe both yourselves and Camurus promoting the long-acting buprenorphine injectables. So how that market is sort of acting as a test case for perhaps what we might see in the U.S. or reasons why it might be different there? In terms of Express Scripts, obviously, over the summer, you highlighted the loss of the Express Scripts from the coverage plans. I was surprised that, that didn't really impact on the prescription. So some sort of understanding why that couldn't have the loss in share that you might have expected from that? And then just on this organized health systems and channel on being -- clearly, the route to treat patients at the moment and gain more traction there. How does that make you view the overall market? And do you expect that the OHS systems will end up taking more and more patients, and therefore, you can address the whole market? Or are you effectively going to be limited to a subset of patients because of the drift of only some of those to the OHS systems.

Thanks for the questions, Max. I'll handle the 2 SUBLOCADE, and then I'll hand it over to Ryan to talk about the ESI loss. In Australia, obviously, we're in a position where we're a follower in that market, and we're bringing the SUBLOCADE paradigm to that market for the first time after Camurus' launch. And as you can tell from the results, we're seeing some very strong penetration, but it will take time to get our share of voice over there with regards to SUBLOCADE and to educate them with regards to the two nanograms per milligram of treatment, the 70% to 80% occupancy. And then the benefits that, that provides because for us, we don't see any other medication out on the market that provides that benefit. So we're very excited to continue to work with the physicians in that country as well as other countries around the world with regards to the benefits of SUBLOCADE. If I was to talk through the organized health system paradigm, where we do see that organized health systems because of the administrative burden on the physician in the retail side, it is very beneficial to focus there. And we have over 25,000 physicians within the 500 targeted organized health systems that we're looking to open and get access to. There is over 1 million patients. So 50% or more of the patients in those organized health systems. We will continue to have a presence calling in the retail. This isn't 100% focus on organized health systems, and we have a number of prescribing physicians in the retail. It's just a higher focus in that area, and it will require -- the paradigm on the retail side will require a bit of a shift in some of the policy before we expect to see major accelerated growth there. And I think something such as an alternate injection facility, where -- similar to what they have in schizophrenia, where the HCPs don't have to take care of a lot of the administrative-oriented items. They can prescribe it, and the patient could take that to another facility, but that sort of legislation is in the works. There is quite a bit of time before that comes to market. So we are going to focus on those organized health systems which have the highest number of prescribers, over 50% of the patients. And when we open up access there, we see that the patients per HCP accelerate at a much faster rate than they do on the retail side. So that's why we're focused there in the short term, Max. So with that, I'll hand off to Ryan to talk through the dynamics of the ESI.

Yes. So with ESI, as you recall, they did represent about 10% to 15% of our business. And since they did pull us over their formulary in July, as you mentioned, we have retained a large component of that share. However, the trade team breaks it down into 2 pieces: One, they either call it a softer block or a hard block. And what we're thinking now, it's more of a softer block as we progress through the second half of 2020 because with this patient population, these payers tend to be somewhat more careful with trying to switch patients mid-treatment. So our thought, without being able to talk to ESI, one-to-one about their rationale, our thought is they're letting the current patients fulfill their treatments on SUBOXONE Film, and then they're going to reevaluate at the end of this year going into 2021.

There are no further questions at this time. Please continue.

Okay. Well, with no more questions, I'd like to thank you for your continued support of Indivior and its team. We look forward to further engagement at the upcoming conferences regarding our role as the leaders in addiction, and the exciting growth thesis that we have. Thank you, and have a good day.

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